Capitalism, the process of maximizing profits by socializing costs.
On The Cuff: People are stashing their money into Treasuries, looking for safety and willing to take 0.00% interest in return. Not just for overnight lodging, but for two months at a gulp. They'll accept 0.22% on a two year note, while all T-bills for the next 3 months are yielding negative returns. All this no-interest stuff is... interesting.
Bad, Bad Idea: Spain is incorporating a balanced-budget amendment into its constitution. If you know of a state or nation that has successfully operated within the confines of an honest balanced-budget regime, raise your hand.
The Short Course: Bank of America – after nearly $450 billion in government loans and guarantees - is collapsing, mostly because the market does not believe its claim that its reserves are worth $222 billion. But if you mention this, BofA gets upset. If BofA goes bust, it may take the economy down with it, so it seems likely that Geithner will, at some point, arrange a marriage. JPMorgan is the whispered about favorite, but the Feds would have to sweep aside legal constraints to such a merger. The government could seize BofA, but is reluctant to have one of the world's largest capitalist institutions taken over by the government. And taxpayers are not likely to be excited about such a deal either, so whatever funding the government puts in the pot will be a state secret.
Worser, Slower: New houses sold slower than expected again last month, down 0.7% from June. 2011 will easily be the worst year for new houses in half a century. The Mortgage Bankers Association reports a 5.7% decrease in its Purchase Index in the last week. It now stands at its lowest level since 1996. A comatose housing market will be with us for years – years.-
This Much I Know Is True: The Obama administration will not hold bankers accountable. For anything. No matter how egregious. And there will be no help for families destroyed by the housing collapse if doing so would harm Wall Street. That's why Geithner told Andy Cuomo (then NY AG) not to prosecute bankers for fraud. And that's why the administration is working feverishly to force the 50 states to accept a settlement with the banks that amounts to a get out of jail free card.
Another Precint Heard From: The Richmond Fed's manufacturing index came in at a -10, the lowest reading since June 2009.
Questioning The Questions: Headlines now ask “Has Ron Paul suddenly become electable?”, while reporting his 45 to 47 match-up with Obama. The question ought to be “Has the media finally caught on that a lot of voters like this guy?”
Bad Apples: Only 7 percent of all physicians faced a malpractice claim during any given year, and just 1.6 percent of physicians in any given year faced a claim that resulted in payment. Hard to believe that 98.4% of physicians are perfect.
I Remember, Mama: Do you remember the pre- 9/11 America? Back when you weren’t stripped in the airport or body-wanded at the ballpark, and cops didn't arrest you for taking pictures of City Hall? Back when we looked to the courts for justice? Before successive administrations decided that years of pre-trial punishment was the American Way?
The Crone's Cackle: Alan Greenspan has noticed that "the euro is breaking down and the process of its breaking down is creating very considerable difficulties in the European banking system.” Good eye there, Alan, good eye. He also thinks “the major thrust in the demand for gold is not for jewelry.” Is there any way to shut this guy up?
Run & Hide: Get your hands on some real, physical gold, put it in “safe deposit box ideally outside the US, in various locations- Switzerland, Singapore, Hong Kong, Australia, Canada,” lay low and wait for Marc Faber to give you the all clear. Or Chicken Little, whichever.
Porn O'Graph:Bunch'a delinquents.