Friday, August 14, 2009

SAR #9225

By now we should have learned not to trust them.

Tattle Tale : Elizabeth Warren observes that despite some cosmetic touch-ups like mark-to-myth accounting and letting banks pretend their toxic assets are worth 80 cents on the dollar, we have done nothing to correct the real problems. No wonder Big Ben and Tiny Tim want to shut her up – she keeps telling the truth about the emperor's clothing. “If what you really believe is our economy and our world is [..] 115 million American households that are out there, that need jobs, you start to see it very differently... “

The Cold Facts: Despite record low temperatures in parts of the US, this July turned out to be the second warmest July on record globally. The global land-ocean temperature was 0.6C (1.1F) above normal. (Visit the site for some good maps.)

Catch The Wave: Robert Prechter of Elliott Wave fame says the next step down will be “the kind of drop “we haven't seen for a couple of hundred years.”

Check's in the Mail: Geithner promises that the administration will not permit Wall Street to go back to such old habits as taking excessive risks. With both the Fed and the US Treasury underwriting and guaranteeing their every move, there will be no risk whatsoever.

Well, Darn: General Mills, Kraft and the rest of America's “food” supply warn that they could run out of the sugar they use to make their profits if the government doesn't ease import restrictions. Sugar imports have been restricted for years as both parties pander to South Florida Cubans. But now, with obesity at sake, action will be taken.

Cautious Optimism: The number of cancer deaths in the US has declined steadily for three decades.

Panic in the Streets: The conspiracy wing nuts are panicked that the government is looking for a way to make sure children are fed if schools have to close due to H1N1 flu. This is not some sneaky government intrusion. Folks, there are some schools – my wife teaches in one such – where more than 60% of the kids receive free or low cost lunches, and often breakfast. Too often these are the only meals the kids get. Schools give out 'snack' packages to the kids on Friday so they will have something to eat over the weekend. If the schools must close, a lot of kids are going to go without – and thus the planning the nuts are panicking over. Don't be stupid: this is government at it's best.

Porn O'Graph: See Europe's CPI!

If 'A', then 'B' ? When a bank's loans do not 'perform' the bank uses its capital to cover the loss. More than 5% of the loans at over 150 US banks are non-performing and at a 20:1 leverage – which is not uncommon - these banks are essentially broke. It's Friday, let's see who gets to take the long weekend off...

Expect the Unexpected For those who think the recession is over, retail sales unexpectedly fell 0.1% in June, weekly jobless claims unexpectedly rose, and foreclosures continue to roil the housing market. Excluding the cash from clunkers, sales were down 0.6%

Our Gang: The number of US households on the way to homelessness increased 7% from June to July, as some 360,000 received foreclosure notices. That's up 32% y/y. In South Florida 47% of all mortgaged single-family houses are underwater – a growing indicator of probable default

Porn O'Graph: The real tale.


Anonymous said...

The link for "Porn O'Graph: Revised doesn't mean better." is broken.

Keep up the good work!

Charles Kingsley Michaelson, III said...

Thanks for the head's up. It was a neat chart showing that auto sales were up and everything else in the tank... But I'm a tad rushed, so I just deleted it.

Bill said...

Tattle Tale: We need more high integrity "outsiders" like Elizabeth Warren to shine a light on the rat-infested banking system and our bought-and-paid-for politicians from both parties inside the Beltway. Great interview; thanks.

Well, Darn: How much sense does it make to be putting your food in your gas tank? Talk about unintended consequences! Here's a novel idea: Let the free market work and get government out of the way.

Panic in the Streets: The same idiots you describe would be the 1st to point fingers if we weren't prepared!

If 'A', then 'B'?: Combined with woefully inadequate FDIC reserves, this is frightening. The FDIC has a "credit line" with Treasury, but there is no possible way for it to be able to absorb the potential losses without rocking both the stock and credit markets.

Catch The Wave: I agree with Karl Denninger's assessment: "Enjoy the rally, but keep your eye on the door and your path to it. The curtains are on fire."

Anonymous said...

Tattle Tale : Elizabeth Warren observes ...

Hey, alternative news folks: first, what is in IT for Liz?
For starters, she is a Hahvad Prof, you don't get there without some significant butt kissing.
Second, who appointed her, who is her eminence grise? Ted Kennedy??
Third, she may talk a good talk because she can't and is not able to do anything about the corruption and sleaze.
Somehow, one gets the feeling Liz is just playing her hand to pony it up into more Power and more for her, just like all the DC Players.
Make Liz Treasury Secretary and she will sing a different tune.
Anyway, how about reporting on the real deal and not the cosmetics?
(I am reminded of Saint Buffet who for years railed against all that is BAD on Wall Street and DC and then turned around and took $65 BILLION. Hush money? Liz would like to get hers no doubt!)

Seems like healthy skepticism must be learned over and over again.

Bill said...

Point well taken, but if not her, then who? The mere fact that these watchdogs are appointed by the insiders creates skepticism and doubt.

The game is rigged from that perspective. Indeed, that's why Geithner was confirmed even with his obvious history of tax evasion: he was already a corrupt insider and therefore a "safe" choice.

Ideally, we need a William Black, but the banksters would never permit him to be appointed. We instead have to settle on Warren and hope she does her job.

Anonymous said...

I really enjoy your summaries of these articles. It's amazing how you have the time to do this. Keep up the good work.

Charles Kingsley Michaelson, III said...

Jeff - Sometimes it feels like I don't have the time... But I read all this stuff anyway and my dog doesn't even pretend to listen when I start spouting off, so I might as well scribble, scribble and maybe amuse some folks.

K Ackermann said...

The Chinese propping up equity markets...

When the Fed buys all those treasuries in open market operations, the dealers get a huge chunk of cash. We know excess reserves have gone hyperbolic, but are they going up as fast as the Fed is buying paper? Not any more.

So where is all the money going? It's not being lent out. It's not collecting interest as excess reserves, could it be going into the equity market?

It would be just that easy to float the market. Why else has it gone up so much? The P/E ratio on the S&P500, based on 'as reported' earnings, is 143.

If you like apples, how do you like them apples?