Wednesday, October 19, 2011

SAR #11290

What follows the end of growth? The rest of the 21st Century.

Keep One Hand On Your Wallet: BofA has shifted derivatives with a notational value of $75 trillion from Merrill Lynch into a subsidiary insured by the FDIC. The Federal Reserve thinks this is fine because it takes pressure off of BofA, the counter-parties are grinning from ear-to-ear, BofA says it doesn't need FDIC's approval, the FDIC says it's been kidnapped and the taxpayer is being feed roofies.

No Offer Refused: Germany, trying to sell €5 billion in 10-year Bunds could only find buyers for €4.075 billion. What sort of euro-saving superhero can only sell 80% of its debt?

Magic Pumpkin: Once more European leaders say they will end the debt crisis soon, promising that “the results of the October 23 summit will be decisive." By issuing 200 billion euros worth of new debt and conjuring up 2 trillion more in make believe money, they will make the problem vanish. When Merkel and Sarkozy claim they’ve got everything under control, remember that they are politicians and their lips are moving. Realistically, Greece is not the issue; Europe as a whole is broke and running out of credible creditors to band-aid the banking crisis. A banking system collapse over there is over due.

Do As I Say Not As I've Done For 40 Years: The IMF is lecturing the G20, telling them that their focus on austerity cuts is wrong, wrong, and wrong.

Autumn Leaves: The MBA reports a 8.8% decline in mortgage purchase applications and 16.6% fall in refinance applications last week. This is the lowest level for the purchase index since 1996. The four largest US banks report a 24% y/y decline in the value of mortgages written in the third quarter.

Check's In The Mail: European banks have pledged to reduce lending and sell off assets to the tune of $1trillion over the next two years. This is the same as taking €775 billion out of circulation, which is the very essence of deflation.

Down and Down We Go... The big banks are reporting that both homeowners and credit-card borrowers are falling further behind on their payments. Also, the banks report their 64% increase in subprime credit card issuance is turning out to have been a Bad Idea.

Underwhelmed: Some are making a big stink out of the FBI and police infiltration and surveillance of the #Occupy protests around the country. Why they don't add in the surveillance provided by the cell-phone providers, the CIA, NSA and Homeland Schierheit Security shows how accustomed we have become to having no privacy.

Day Late... The UN says the world should prepare for a civil war in Syria. Prepare?

Progress: Wages for the average American male peaked in 1973. The median inflation-adjusted household income hasn't changed in over 30 years. The top 1 percent of U.S. households gobble up about a quarter of all income.

Downer: The headline - “Geithner Plan for Europe is last chance to avoid global catastrophe” - depressed me on so many levels I couldn't bring myself to read it.

Unforgiveable: Student loans are not dischargeable in bankruptcy. Unlike a no-recourse mortgage loan, student loans are forever. That's important to remember because the $850 billion student loan bubble is bigger than the credit card market. Things are so bad that – to quote a banker who knows, “lenders are no longer pushing loans to people who can't afford them.” And if you can't find a job, you can't pay back the loan. But when you do find a job you gotta pay it back. Remember, education is a lifetime investment.

The “g” is Silent: At a professional Scrabble tournament, contestants wanted a suspected letter thief strip searched to locate a missing “G” tile.

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