Copenhagen shows this is China's Century

A Fascinating piece on the closed door talks in Copenhagen from the Guardian UK

Copenhagen was a disaster. That much is agreed. But the truth about what actually happened is in danger of being lost amid the spin and inevitable mutual recriminations. The truth is this: China wrecked the talks, intentionally humiliated Barack Obama, and insisted on an awful "deal" so western leaders would walk away carrying the blame. How do I know this? Because I was in the room and saw it happen.

China's strategy was simple: block the open negotiations for two weeks, and then ensure that the closed-door deal made it look as if the west had failed the world's poor once again. And sure enough, the aid agencies, civil society movements and environmental groups all took the bait.

He goes on to explain how China expertly played on the desperation of the US and other developing countries to pass legislation.

Here's what actually went on late last Friday night, as heads of state from two dozen countries met behind closed doors. Obama was at the table for several hours, sitting between Gordon Brown and the Ethiopian prime minister, Meles Zenawi. The Danish prime minister chaired, and on his right sat Ban Ki-moon, secretary-general of the UN. Probably only about 50 or 60 people, including the heads of state, were in the room. I was attached to one of the delegations, whose head of state was also present for most of the time.

What I saw was profoundly shocking. The Chinese premier, Wen Jinbao, did not deign to attend the meetings personally, instead sending a second-tier official in the country's foreign ministry to sit opposite Obama himself. The diplomatic snub was obvious and brutal, as was the practical implication: several times during the session, the world's most powerful heads of state were forced to wait around as the Chinese delegate went off to make telephone calls to his "superiors".

Their reasons are obvious:

...China's growth, and growing global political and economic dominance, is based largely on cheap coal. China knows it is becoming an uncontested superpower; indeed its newfound muscular confidence was on striking display in Copenhagen. Its coal-based economy doubles every decade, and its power increases commensurately. Its leadership will not alter this magic formula unless they absolutely have to.

Copenhagen was much worse than just another bad deal, because it illustrated a profound shift in global geopolitics. This is fast becoming China's century, yet its leadership has displayed that multilateral environmental governance is not only not a priority, but is viewed as a hindrance to the new superpower's freedom of action. I left Copenhagen more despondent than I have felt in a long time. After all the hope and all the hype, the mobilisation of thousands, a wave of optimism crashed against the rock of global power politics, fell back, and drained away.

Citi Pays Back Tarp for Billions in Tax Savings

This is pathetic

The Internal Revenue Service on Friday issued an exception to long-standing tax rules for the benefit of Citigroup and a few other companies partially owned by the government. As a result, Citigroup will be allowed to retain billions of dollars worth of tax breaks that otherwise would decline in value when the government sells its stake to private investors.

So basically the Government gave Citi a 38 billion dollar tax exemption for paying back tarp money. So all this lip flapping about making profits off tarp is complete and utter crap. I am furious as to how our government is able to get away with doing this.

From Denninger:

Obama was touting the "profits" made by Treasury on the TARP repayments. What he wasn't saying is that not only did we flush the money (from TARP) that went into Chrysler (disclosed last night), we now find out that at the same time he was "touting" the so-called "profits" The President was handing that money straight back to the bailed-out companies via tax breaks!

So no, Mr. President, Treasury (and The American People by extension) did not "make a profit" on TARP, nor "will we recover every penny" that was paid out.

There have been several banks that have failed after receiving TARP money - we will get zero from them. We will get zero from Chrysler and GM. We lost 100% of the money injected into CIT, and now you have handed out billions of tax credits to Citibank.

Where's the so-called "populism" - that is, the protection of "the little guy" while making those who were responsible for this economic mess pay for their sins Mr. President?

If you're a Democrat and believe that you were electing "Hope and Change", you might want to think about what you actually bought with your vote - not what you were sold.

Anecdote of the Day

“At a party given by a billionaire on Shelter Island, the late Kurt
Vonnegut informs his pal, the author Joseph Heller, that their host, a
hedge fund manager, had made more money in a single day than Heller had
earned from his wildly popular novel, Catch-22, over its whole history. Heller responds, ‘Yes, but I have something he will never have: Enough.’ “

Scary: North Korea Revalues Currency

From the Washington Post:

TOKYO -- Chaos reportedly erupted in North Korea on Tuesday after the government of Kim Jong Il revalued the country's currency, sharply restricting the amount of old bills that could be traded for new and wiping out personal savings.

The revaluation and exchange limits triggered panic and anger, particularly among market traders with substantial hoards of old North Korean won -- much of which has apparently become worthless, according to news agency reports from South Korea and China and from groups with contacts in North Korea.

Apparently the North Korean Government has punished those who have been saving their cash and running businesses that the government hasn't been able to control. Their solution? To devalue the currency, bankrupting these individuals.

The revaluation replaces 1,000-won notes with 10-won notes but strictly limits the amount of old currency that can be exchanged, news reports said.

According to two Web-based groups with sources in the North, that limit was set Monday at 100,000 won, which at current black-market rates amounts to $40. All North Korean currency that individuals possess in excess of that amount becomes worthless under the revaluation.

Amid widespread protests, the limit was raised to 150,000 won in cash and 300,000 won in bank savings

Here's the kicker:

the government did not explain why the revaluation had occurred.

Asset Bubbles of the past 10 years and the fed

A really fascinating chart showing Apparently easy money has just led to more and more Asset Bubbles and its looking like gold is turning into another one of them. Hopefully Bernanke isn't just blowing smoke when he makes comments like this.

“The best approach here if at all possible is to use supervisory and regulatory methods to restrain undue risk-taking and to make sure the system is resilient in case an asset price bubble bursts in the future.”

Given his comments on protecting the dollar as a store of wealth, consider me suspect.

Food Stamps up 32% Since 2007

The Number of Americans receiving food stamps has increased by 10 million over the past two years, resulting in a program that now feeds 1 in 8 Americans and nearly 1 in 4 children.




http://www.nytimes.com/interactive/2009/11/28/us/20091128-foodstamps.html

Glen Beck and the Dollar Carry Trade

Remember how a couple of days ago I was explaining how this runup in the market is nearly perfectly correlated to the decline/debasement of the USDollar? Well for those of you who want things explained as simply as possible Glen Beck does an excellent job. Love him or hate him he really got it right this time. Please Make sure to watch all 3 parts.

This is what "Made In China" really gets you

Not $20 DVD players, not cheaper toys, not cheaper clothes or steel but the kind of pollution that ruined American waterways for more than a half century and in some cases permanently. This photojournal is what you should think of the next time you pick up an item that is made in China. In some way shape or form someone is paying.






Please click over and see the rest.

Buy American or European and pay for someone increasing their quality of life instead of ruining the land they live in.

The State Of Commercial Real Estate

Hey citizens of Pontiac you know that $55.7 Million we took from you?

Pontiac -- Nearly 35 years after taxpayers spent $55.7 million building the Pontiac Silverdome and a year after a $20 million sale fell through, city officials have sold the arena once called the most desirable property in Oakland County.

The price: $583,000.

Niiiice.

99% depreciation over 35 years, plus of course all the money poured into property taxes and maintenance.

"The citizens of Pontiac deserve better," Seay said. "This is pennies on the dollar (of what it cost). It goes to show how bad times are ... Worse, we don't even know who bought it."

This sale is emblematic of the general state of Commercial Real Estate. Bluntly, too many people built too much crap on wishes and dreams - dreams they financed with other people's money, either the taxpayer's (in this case) or with some poor fool who believed the prospectus on some CMBS deal that screamed "PRIME Commercial Space!"

Well, perhaps. But there are only so many business interests that can inhabit a given area and turn a profit, especially when you send all the good jobs overseas to CHINA and INDIA, rendering unemployed the middle-class call-center employee who used to make $30,000 a year but now makes zero while the Indian or Chinese employee makes $2/day.

Worse, all real estate (that has buildings on it anyway) has a carrying cost, meaning that if you don't have a revenue-producing use for it the value is actually negative. In the case of the Silverdome basic maintenance on the building and grounds is about $1.5 million a year. If you can't make enough to cover those costs, "ownership" just bleeds you out.

Welcome to the "new normal."

If this doesn't send a shiver up your spine on the "quality" of regional banks that are stuffed to the gills with commercial real estate loans made in the last few years, you're not paying attention.

Don't worry, you soon will be, as nearly all of these deals are interest-only and have to roll over between now and 2013.

They can't and won't.

Rail Traffic - A very bullish sign?

The most interesting weekly statistic last week was rail traffic, which held steady. Why is that interesting? Because by now rail traffic should be well into its seasonal decline (last year the decline was a "cliff dive"), but traffic has generally held steady at September-early October's levels or even improved, as shown on this graph:



This is a bullish sign for the economy if this keeps up.

Market Trivia

Since first closing above 10,000 (March 29, 1999), how many times, on a closing basis, has the Dow Jones Industrial Average traversed that level?


Answer: 29 Times (Highlight over the blank area to get your answer)

Barrons: US Government = Worlds Worst trader

From Barrons

THERE ARE SOME LISTS YOU WANT TO SEE your name on, and others you'd rather not. It would be nice to make the Forbes 400, for instance, but not so great to be mentioned in the obituaries.

When listing the worst traders of all time, many of you would include some sports teams that made infamous deals. In football, the Atlanta Falcons traded Brett Favre to the Green Bay Packers. In baseball, you can debate whether the Chicago Cubs trading Lou Brock to the St. Louis Cardinals for Ernie Broglio was worse than the Philadelphia Phillies trading Ryne Sandberg and Larry Bowa to the Cubs for Ivan DeJesus. As bad as those swaps were, there is one that's far worse.


To paraphrase my friend Mark Fisher, founder of MBF Clearing and one of the biggest energy trader/brokers in the world, the federal government let the trade of the century slip through its fingers at the depths of the financial crisis. Worse, Warren Buffett had already drawn up the perfect blueprint, in steps so easy even a Treasury secretary could follow. Doesn't that make the government a candidate for worst trader of all time?

Long before his acquisition of the Burlington Northern Santa Fe (ticker: BNI) railroad, the Oracle of Omaha agreed, on Sept. 23, 2008, to invest $5 billion in Goldman Sachs (GS) through a purchase of perpetual preferred stock. The shrewd chairman and CEO of Berkshire Hathaway also got warrants to buy up to $5 billion of Goldman common shares at $115 each, some 8% below where the stock was trading at the time.

In a single bold stroke, when Goldman and the global markets needed it most, Buffett put his money and reputation on the line. He stood to own roughly 10% of the bank, and his convertible shares also pay a fat 10% dividend.

Yet even with this trade serving as a very public model, what did then-Treasury Secretary Hank Paulson ask for? When the Wall Street giants had their backs to the wall, he gave them billions of our taxpayer dollars for a relative pittance. In mid-October 2008, Goldman and Morgan Stanley (MS) each got $10 billion from the Treasury; Bank of America (BAC), Citigroup (C), JPMorgan Chase (JPM) and Wells Fargo (WFC) each got $25 billion.

Fast-forward to Oct. 21 of this year, and now Paulson's successor at Treasury, Timothy Geithner, is telling us what a great investment the government made in Goldman. His office touts the 23% return on our $5 billion in taxpayer money. Let's compare that with what we might have gotten with terms similar to Buffett's.

Goldman was trading at $115, so a $5 billion stake bought the taxpayers 43 million shares. With the stock subsequently running up to $180, that $5 billion stake would be worth $7.8 billion, a gain of $2.8 billion. But wait, it gets better -- or worse, depending on your view. Given the added kicker of warrants on another $5 billion, 8% under the market, we'd also own warrants for 43 million shares at $105. So we'd have made another $3.2 billion.

Thus, the total gain before dividends would be $6 billion on a $5 billion investment. Last time I checked, that's 120% on our money, versus the 23% that Hank got us. I didn't go to Dartmouth, as Secretaries Paulson and Geithner did, but I think Buffett got the better deal.

Gold at $5000+?

They are all making good points but I'm leaning towards this being a contrary indicator. My friend sold a plain old ordinary oz of gold on Ebay last week and it sold for $1600.



Might be interesting to see where these next 3-6 months trade in the metal.

Why are you wrong?

People often ask me what my opinion about the stock market is and when I tell them my theory they often express their disagreement. My theory has always been that over the next 3-5 years the market will hover in a range between 1100 and 700 and I would be a seller of stocks right now. Most people are near term thinkers with the "what have you done for me lately" mentality. They have long forgotten that the market is still well off its highs and at the same level as it was in 2003-2004 and are focused on the tremendous rally from the March lows. I have been suspect all along of this rally and here's another data point to consider. The following Chart is the performance of the S&P vs the US dollar. It is almost perfectly inversely correlated.


Now you wonder why Bernanke et all aren't pushing a strong dollar policy and are happy enough to see our dollar tank. The question I pose to you readers is how much further can the dollar trade lower before it becomes a hugely crowded trade and we get a violent short squeeze? What do you think will happen to US equities?

60% Rally and how it compares to prior ones.

Hope Springs Eternal.

* Year over Year Retail Sales: 9.3% average in prior 60% rallies versus -5.3% in the current one
* Consumer Confidence: 95.5 average; 53.1 now
* Capacity Utilization: 79.9% average; 66.6% now
* Year over Year Industrial Production: 4.1% avereage; -10.7% now
* ISM: 53.9 average; 52.6 now
* Payroll employment gains over period: 2.2% average; -2.0% now
* Decline in continued unemployment claims from cycle peak: -26.3 average; -11.6% now
* Year over Year growth in total credit market debt: 9.3% average; 3.0% now
* Year over Year growth in household debt: 8.8% average; -0.1% now
* P/E Multiple: 16.8x average; 20.0x now

With the exception of ISM, this 60% rally is completely nonsensical. On 9 out of the key 10 economic dimensions we are cruising purely on hope and on expectations that Uncle Sam will continue printing trillions of dollars simply to get us out of this mess. Or not even that, but merely the excess hundreds of billions in liquidity courtesy of Ben Bernanke, are following the path of least resistance straight to equities. Whatever the reason, the current rally, at least when juxtaposed with previous ones, is a complete sham. Anyone who believes there is any ounce of economic fundamental credibility to it needs to take a careful look at the data. Unfortunately, all will be happy to be blissfully ignorant until, as always, it is too late.

Single Best Investment in history = 258,449%

The single best investment — in terms of greatest return on invested dollars — has been the lobbying efforts of the major banks and finance firms and the bailouts that they received.

They spent $114.2 million dollars in contributions toward the 2008 election, according to the the nonpartisan Center for Responsive Politics. The companies that have been awarded taxpayers’ money from Congress’s bailout bill spent $77 million on lobbying and $37 million on federal campaign contributions, the Center finds.

These firms political activities have yielded them $295.2 billion from Recapitalization, TARP and other assorted bailouts.

The return on investment: 258,449 percent.

Why you shouldn't be invested in the market

The fed is blatantly monetizing debt. They issued debt and 30 minutes later bought it back.

click here for zero hedge where i got this information

Below is the 10:00 am announcement of a new $5 billion auction of 2 Year Fannie Agencies:



A mere half hour later, the NY Fed announced that as part of tomorrow's "Outright Agency Coupon Purchase" precisely this CUSIP would be one of the securities repurchased:

These shell games are getting tiresome. A half an hour turnaround time between issuance and buyback? Really Ben?

As Jim Bianco comments, some answers are far overdue, when trying to explain this most blatant example of monetization to date.

1. Who bought these securities at auction? The potential for foul play here is high if the news of such a buyback accidentally leaked to a few individuals in the market
2. Who does the Federal Reserve think it is fooling by monetizing in such a roundabout way?

Hey FED why is Goldman so special?

This is exactly why I own a ton of Goldman debt (bought last march).

A Short Question For Senior Officials Of The New York Fed

At the height of the financial panic last fall Goldman Sachs became a bank holding company, which enabled it to borrow directly from the Federal Reserve. It also became subject to supervision by the Federal Reserve Board (with the NY Fed on point) – hence the brouhaha over Steven Friedman’s shareholdings.

Goldman is also currently engaged in private equity investments in nonfinancial firms around the world, as seen for example in its recent deal with Geely Automotive Holdings in China (People’s Daily; CNBC). US banks or bank holding companies would not generally be allowed to undertake such transactions - in fact, it is annoyed bankers who have asked me to take this up.

Would someone from the NY Fed kindly explain the precise nature of the waiver that has been granted to Goldman so that it can operate in this fashion? If this is temporary, is it envisaged that Goldman will cease being a bank holding company, or that it will divest itself shortly of activities not usually allowed (and with good reason) by banks? Or will all bank holding companies be allowed to expand on the same basis. (The relevant rules appear to be here in general and here specifically; do tell me what I am missing.)

Increasingly, the issue of “too big to regulate” in the public interest is being brought up – an issue that has historically attracted the interest of the Department of Justice’s Antitrust Division in sectors other than finance. Should Goldman Sachs now be placed in this category?

Given that the Fed has slipped up so many times and in so many ways with regard to regulation over the past decade, and given the current debate on Capitol Hill, now might be a good time to get ahead of this issue.

In addition, there is the obvious carry trade (borrow cheaply; lend at higher rates) developing from cheap Fed dollar funding to the growing speculative frenzy in emerging markets, particularly China. Are we heading for another speculative bubble that will end up damaging US bank balance sheets and all American taxpayers?

The FED is the Mortgage Market

Here are the numbers according to Chris Martinson:

Federal Reserve Buys More Than 100% of Mortgages Issued in 2009
So far in 2009 (through August), a total of 3.2 million existing homes were sold for an average price of $217,000, while 263,000 new homes were sold for an average price of $264,000.

Taken together, and assuming that we live in a world where 10% is the average down payment, we get this table:
That is, a total of ~$686 billion in new mortgages were issued in 2009 (through August).

Now let's look at how many Mortgage Backed Securities (MBS) and agency debt obligations were accumulated by the Federal Reserve on its balance sheet over the same period of 2009:It turns out that in 2009 (again, through August), the Federal Reserve has bought $624 billion of MBS and a further $98 billion of Agency debt, for a total of $722 billion in money injection into the housing market through Fannie Mae, Freddie Mac, and the FHLB.

In other words, the Federal Reserve alone bought $722 billion of mortgages and agency debt when only $686 billion in new mortgages were issued. So, through August, the Fed bought more than 100% of the entire supply of new (purchase) mortgages in 2009.

That's not a free housing market; that's a market bought, owned, and sustained by the Federal Reserve's willingness to print up three quarters of a trillion dollars out of thin air.

Head over and check out the rest of the post.

An Interesting Fact about this Overbought Market (part 2)

The NASDAQ has had 13 straight positive days. Today will/might be the 14th.

An Interesting Fact about this Overbought Market

The S&P 500 is now trading 20% higher than its 200-day average. Although there have been rare occasions this deviation has been higher, note that this is typically an "extreme".

• During the 2002/2007 bull market, we never hit +20%.
• 1986 and 1987 saw 19%/20%, but no higher.
• 1982 saw the deviation briefly above 20%.
• 1975 saw a marginal move above 20%.
• 1943 saw the 20% deviation again prove good resistance.
• 1935 and 1936 though saw the deviation above 20%.
• 1933 saw the S&P 500 59% rich to its 200-day.
• 1929 saw the 20% deviation again prove good resistance.
• 94% S&P 500 stocks also now above their 200-day average.

Thank You Simon Hobbs

The man succinctly summarizes our current situation and absolutely owns the Fast Money talking heads.

For those of you who want to know who Simon Hobbs is click here

The Recession is Ending, so lets extend Unemplyment benefits by 13 weeks!

So all of the governments talking heads keep spewing this baloney that the recession is over yet they turn around and do something like this. From AP

WASHINGTON (AP) - Despite predictions the Great Recession is running out of steam, the House is taking up emergency legislation this week to help the millions of Americans who see no immediate end to their economic miseries.

A bill offered by Rep. Jim McDermott, D-Wash., and expected to pass easily would provide 13 weeks of extended unemployment benefits for more than 300,000 jobless people who live in states with unemployment rates of at least 8.5 percent and who are scheduled to run out of benefits by the end of September.

The 13-week extension would supplement the 26 weeks of benefits most states offer and the federally funded extensions of up to 53 weeks that Congress approved in legislation last year and in the stimulus bill enacted last February.

People from North Carolina to California "have been calling my office to tell me they still cannot find work a year or more after becoming unemployed, and they need some additional help to keep their heads above water," McDermott said.

They claim the recession is easing but need to extend unemployment benefits another 13 weeks? What this does is understates the unemployment number as those people covered under unemployment insurance aren't factored into the jobless numbers or jobless rates that the government announces.

Doesn't exactly sound like the recession is ending.

James Mill, Of the National Debt, in: Commerce defended (1808).

Were the exhortations to consumption, of Mr. Spence and others, addressed only to individuals, we might listen to them with a great deal of indifference; as we might trust with abundant confidence that the disposition in mankind to save and to better their condition would easily prevail over any speculative opinion, and be even little affected by its practical influence. When the same advice, however, is offered to government, the case is widely and awfully changed. Here the disposition is not to save but to expend. The tendency in national affairs to improve, by the disposition in individuals to save and to better their condition, here finds its chief counteraction.

[…] One of the most powerful restraints upon the prodigal inclinations of governments, is the condemnation with which expence, at least beyond the received ideas of propriety, is sure to be viewed by the people. But should this restraint be taken off, should the disposition of government to spend become heated by an opinion that it is right to spend, and should this be still farther inflamed by the assurance that it will by the people also be deemed right in their government to expend, no bounds would then be set to the consumption of the annual produce. Such a delusion could not certainly last long: but even its partial operation, and that but for a short time, might be productive of the most baneful consequences.

[…] It might be not useless to those who are the most averse to hear of the fact, barely to allow themselves for one moment to suppose it real, and then to ask themselves, whether it ought to be disguised or to be made known; whether the fatal cause is most likely to be removed by concealment or by exposure.

You do realize its a Recession Mrs. Obama

From the Washington Post:

Let's say you're preparing dinner and you realize with dismay that you don't have any certified organic Tuscan kale. What to do?

Here's how Michelle Obama handled this very predicament Thursday afternoon:

The Secret Service and the D.C. police brought in three dozen vehicles and shut down H Street, Vermont Avenue, two lanes of I Street and an entrance to the McPherson Square Metro station. They swept the area, in front of the Department of Veterans Affairs, with bomb-sniffing dogs and installed magnetometers in the middle of the street, put up barricades to keep pedestrians out, and took positions with binoculars atop trucks. Though the produce stand was only a block or so from the White House, the first lady hopped into her armored limousine and pulled into the market amid the wail of sirens.

Then, and only then, could Obama purchase her leafy greens. "Now it's time to buy some food," she told several hundred people who came to watch. "Let's shop!"

So i can't even begin to put a price on what this certified organic Tuscan kale cost us taxpayers. Why not just have some intern go out and get you some? It is this kind of showboating and wanton spending that drives me nuts especially during these hard economic times. Now I realize that Bush was a huge abuser of his privileges as president and spent more time at his ranch and in Kennebunkport than he did in the White House, but people are more willing to overlook these things when times are good. You are supposed to be setting an example for the American people. Exercise some restraint as everyone else in America is doing so.

Picture of the Day

Random Thoughts

Over the past month or so I've been overhearing a lot of people bragging about their investing prowess during this 6 month relentless rally. Granted this has been mostly in NYC so its not a fair sampling, but I am Curious as to whether or not anyone has been hearing the same from their neck of the woods. This is usually a great contrarian indicator.

The other thing that I checked on upon returning from Europe to find that gold has breached 1000/oz was the number of Google searches on Gold and other gold related terms. There has not been any sort of increase in these searches and while I'm thinking gold needs a lot of technical work to be done at this current 1000 level before powering higher, it tempers a tiny amount of my worry about this break being weak hands.

Finally Dylan Ratigan From MSNBC tells it like it is:

The American people have been taken hostage to a broken system...As hostages -- was there any sum of money we wouldn't have given AIG? Why did we pay Goldman Sachs and all the other banks 100 cents on the dollar for their contracts with AIG, using taxpayer money, while we forced GM and others to take massive payment cuts? Why hasn't any of the bonus money paid to the CEOs that built this financial nuclear bomb been clawed back?

And more than anything else -- why does the US Congress refuse to outlaw the most anti-competitive structure known to our economy, one summed up as TOO BIG TOO FAIL?
As we approach the anniversary of the bailouts for our banks and insurers -- and watch the multi-trillion taxpayer-funded programs at the Federal Reserve continue to support banks and subsidize their multibillion bonus pools, we must ask if our politicians represent the interests of America? Or those who would rob America of its money and its future?

The Devil's Dictionary - Financial Edition

Hilarious Piece in the WSJ with financial definitiions relevant during the past couple years.

AAA, n., obsolete. A rhetorical device used to dupe buyers into purchasing securities backed by shacks dressed as houses, and to secure the highest possible spot in telephone directories. Common usage: AAA Septic Drainage and Mortgage Backed Security Services.

BAILOUT, n. First known use: Noah. Novel regressive taxation scheme whereby vast sums of capital are transferred from those citizens who didn’t participate in the illusory Bacchanalia of the housing bubble to those who did and weren’t clever enough to get out in time.

BANK, GOOD, n., archaic. Sober, conservative, risk-averse institutions designed to midwife customers’ capital and enable prudent lending to deserving businesses and consumers. See Capra, F., the Bailey Building & Loan Association.

BANK, BAD, n. 1. Everyone else. 2. Especially Goldman Sachs.

CREDIT-DEFAULT SWAP, n. loose translation from the original Latin “ubi mel ibi apes,” or “where there’s honey there are bees.” 1. A complex financial instrument vital to the functioning of a modern economy in the way it spreads risk among consenting parties. (Greenspan, A., pre-Sept. 2008.) 2. A complex financial instrument that nearly destroyed modern capitalism (Greenspan, A., post-Sept. 2008).

CREDIT LINE, n. A set amount of borrowed money available only to those who don’t need it.

CREDIT-RATING FIRMS, n. Firms that do scant rating of people with scant credit.

DEFICIT, n. For the party in power, at worst a minor irritant and at best a precondition for economic growth. For the minority, the gravest threat to the stability of the Republic.

TOO BIG TO FAIL, idiom. Banks, insurance companies, car companies, presidential approval ratings, Fed chairmen seeking second terms, other people who think they should be Fed chairman, the reputations of people who’d be responsible for letting things fail. Antonym: TOO BORING TO SAVE.

I'm BAAACK

Ok I am back and have a ton of things to catch up on. I had almost no internet access for the past 2 weeks or so and there is an amazingly large amount of news and market action for me to digest. So bear with me and I hope to get back up to speed by the end of this week.

Taking the time to remove yourself from the markets often allows for some great introspection on your general feelings towards news items and market events. We all carry some bias one way or another and it is generally reflected in our writings. As anyone who reads this blog knows, I am very bearish on the prospects of our economy and country and think that we have a long road ahead and desperately need massive changes towards more laissex-faire economic structure and our inability to do so will prolong this rough period further (think 10 years of growth lost in Japan due to their leveraging of their future). I see things moving in a similar way.

What has changed with my trip abroad is that I have come to realize that this current period is still in the stages of denial and the old adage "you can't fight the tape" is holding true. No matter how bad everything is getting. The market seems keen to key on Bernanke saying "The worst is over" and many other massaged data points showing that things are less worse than previously. This is a time period where I can say with conviction that I don't get it. This is starting to happen with more regular frequency due to the massive involvement of our government in the financial markets as well as the general business environment.

Just yesterday I saw a television commercial with the head of Chrysler attempting to coax people into his cars with a 90 day return policy. I could only shake my head in disgust. This company is hemorrhaging taxpayers money like crazy and what minuscule profit margins they already have are probably going to get eroded away by this absurd return policy. This is the perfect example of what government intervention does it gives poorly run companies the security to take on non-profitable actions to generate revenue at the expense of its competitors. AIG is doing it by offering rates that are according to actuaries not profitable and therefore artificially suppressing prices and driving their competitors slowly our of business. GM is doing the same thing. Government intervention ruins the free market economy.

The even sadder aspect of all of this is that we are no longer long term forward looking people. The average holding period of a stock on the NYSE is now under 9 months. In the 1980's and even the 90's it was measured in years (5+ in the 80s and 2+ in the 90's). We are a market of speculators and not investors. Don't try and invest in a speculators market. People think that a couple of less worse data points indicates that we have solved the massive glut of excess leverage and easy lending that has occurred for the past 15 years. People real solutions will not come until years from now. This will not last.

Whether or not the market will reflect this is a completely different story. This is no longer a market of Buy and hold. I cannot advise anyone to be fully invested without some hedge on the risk inherent in a system not run by the market but by our government. Until that changes I will never advocate holding stocks for the long run.

There is no easy solution to an investment strategy these days. I can only think to tell people that they are better off accepting that their money isn't going to grow at all over the next 3-5 years and sit and wait with the powder dry for the time to come when rationality returns to the market. That time period will be fancifully ugly and only then will I chose to truly Invest.

I Leave You with the Following Charts

Short Term



Longer Term

Off to Europe.....

Not going to be around until the 14th. As per usual, the market decides to be entertaining when I go on vacation. Best of luck to everyone.

Gotta Love Lobbying: Third-party safety tests not required for Mattel

Yahoo News:

WASHINGTON – Toy-makers, clothing manufacturers and other companies selling products for young children are submitting samples to independent laboratories for safety tests. But the nation's largest toy maker, Mattel, isn't being required to do the same.

The Consumer Product Safety Commission recently, and quietly, granted Mattel's request to use its own labs for testing that is required under a law Congress passed last summer in the wake of a rash of recalls of toys contaminated by lead. Six of those toys were produced by Mattel Inc., and its subsidiary Fisher-Price.

The new law sets strict limits for lead, lead paint and chemicals known as phthalates. It mandates third-party testing for companies, big and small, making products geared for children 12 and under.

"It's really ironic that the company that was a principal source of the problem" is now getting favorable treatment from the government, said Michael Green, executive director of the Center for Environmental Health in Oakland, Calif.

It sure does make me happy to know that the government is looking out for our kids and not our corporations....

The agency approved seven Mattel labs as "firewalled third party laboratories" — the first to get that designation under the new law, which permits the "firewall" exception. Mattel pushed hard for the firewalled labs provision when Congress was considering the legislation. The company spent more than $1 million in 2008 on lobbying, according to federal records.

Mattel's "firewalled" labs are in Mexico, China, Malaysia, Indonesia and California.

CPSC issued no press release about the 3-0 vote in Mattel's favor, and information on the vote was not posted on the commission's Web site section pertaining to the CPSIA law.

Picture of the Day

Market Update: I hate to say I told you so....

So apparently the market has decided to start listening to me once again and we got some seriously ugly action this morning. Overnight the S&P decided to head up and test the 1025 area, only to be rejected creating a new trend low at 1011ish. Usually overnight action sort of helps with patterns but real actionable stuff needs to happen during the cash session (normal market hours). So lo and behold, the market goes on to test that ever important 1025 area only to reject it VIOLENTLY. Remember folks i was telling you that the only way to get out of this range is to do so violently. Here it is. THe other scary thing is that my 1007 level is actually a very significant level and by not bouncing there or even hesitating, it shows the strength of the sellers today. We'll probably get an obligatory bounce at 1000 but 1007 should hold as resistance.

The Coming Deposit Insurance Bailout

From the WSJ

Americans are about to re-learn that bank deposit insurance isn't free, even as Washington is doing its best to delay the coming bailout. The banking system and the federal fisc would both be better off in the long run if the political class owned up to the reality.

We're referring to the federal deposit insurance fund, which has been shrinking faster than reservoirs in the California drought. The Federal Deposit Insurance Corp. reported late last week that the fund that insures some $4.5 trillion in U.S. bank deposits fell to $10.4 billion at the end of June, as the list of failing banks continues to grow. The fund was $45.2 billion a year ago, when regulators told us all was well and there was no need to take precautions to shore up the fund.

The FDIC has since had to buttress the fund with a $5.6 billion special levy on top of the regular fees that banks already pay for the federal guarantee. This has further drained bank capital, even as regulators say the banking system desperately needs more capital. Everyone now assumes the FDIC will hit banks with yet another special insurance fee in anticipation of even more bank losses. The feds would rather execute this bizarre dodge of weakening the same banks they claim must get stronger rather than admit that they'll have to tap the taxpayers who are the ultimate deposit insurers.

I still can't believe that the mainstream media is so willing to overlook all these huge issues that still exist in our system and carry on with their "Recession is over" ranting.

Market Update: Still Ranging

So I would have liked to have seen a close under 1018'25 (which by measurements sake is the lower part of the range) instead we get a last 1/2 hour surge and close at 1018'50. Although not entirely clear, it tells me that we need one more attempt by buyers to get back to that magical 1025 area before sellers come in and do damage to the chart. This close means tomorrow is another wait and see kind of day. these ranges are proving to be tough to break free of.

Sellers would show that they were in control with a gap down tomorrow. Next downside target is 1006-1007 (the upper end of the previous ranging action)

Picture of the Day: Autumn

Market Update: Calling a Top

There have now been 3 new market highs since breaking out of the previous range (where 996-997 held the gravitational pull). None of which have been validated by more buying. Each new high as subsequently been rejected and that days close has been back in the range. This is a text book example of a top. Now I have said previously that it is going to take a lot of selling pressure to get out of this range and today didn't amount to enough as we tested the lower end of it once again. The market needs to gap down (or up) to get out of this range and the pattern that is emerging leads me to believe that it is going to be down.

This bearish prediction will be delayed further and partially damaged by a close above 1025 today.

But I can say with conviction that 1038'75 looks like the top

Rep. Frank eyes Fed audit, emergency lending curbs

We may be getting somewhere with Dr. Paul's bill to audit the fed. Hopefully Frank won't demand too many changes in the bill and it can get passed. Color me surprised!

From Yahoo News

WASHINGTON (Reuters) - Rep. Barney Frank, the chairman of the U.S. House of Representatives Financial Services Committee, said he plans legislation to restrict the Federal Reserve's emergency lending powers and subject the central bank to a "complete audit."

At a recent town hall meeting, Frank said the House would pass a bill to use an audit to crack open the central bank's books more widely, but in a way that will not encroach on the central bank's monetary policy independence.

In addition, he said the House would move to rein in the authority that allows the Fed to lend to a wide range of non-bank firms in "unusual and exigent circumstances."

A bill sponsored by Texas Republican Rep. Ron Paul that would allow the Government Accountability Office, a federal watchdog agency, to audit Fed interest-rate decisions has won the co-sponsorship of more than half of the House.

Fed Chairman Ben Bernanke has warned that the bill would compromise the U.S. central bank's policy-making independence and could undermine financial markets and the economy.

Frank said he has been working with Paul on compromise language. "He agrees that we don't want to have the audit appear as if it is influencing monetary policy because that would be inflationary,"
....
Frank said the audit and emergency lending provisions would be incorporated in broader legislation to revamp U.S. financial regulation that would likely pass the House in October. By seeking a compromise with Paul, Frank could strengthen the broader legislation's chance at passage.
....
The Obama administration has proposed giving the Fed responsibility for overseeing firms whose collapse could endanger the entire financial system. At the same time, it wants to strip the central bank of its consumer protection function, and invest that authority in a new agency.

Frank expressed unease at what he called the Fed's power to "lend money to anybody they want" in emergency circumstances. "We are going to curtail that lending power. We are going to put some restraints on it," he said.

Since the financial crisis struck two years, the Fed has used this emergency authority to prop up a number of non-bank financial firms with billions of dollars in loans, including insurer American International Group.

The Fed's actions have angered many lawmakers who are concerned the central bank has put taxpayer money at risk. Fed officials have defended their actions as necessary to prevent a deeper credit crisis and widespread damage to the economy.
.....
Frank said the House legislation would pave the way for an audit to look into what the central bank "buys and sells," but he said the data would be released after a period of several months to avoid impacting financial markets.

Bernanke is widely expected to win needed Senate backing for a new term as Fed chairman, but the central bank's aggressive efforts to stem the financial crisis have stirred controversy that is likely to color his re-nomination hearing.

Single Molecule Finally Pictured!

From the Daily Mail

It may look like a piece of honeycomb, but this lattice-shaped image is the first ever close-up view of a single molecule.

Scientists from IBM used an atomic force microscope (AFM) to reveal the chemical bonds within a molecule.

'This is the first time that all the atoms in a molecule have been imaged,' lead researcher Leo Gross said.
pentacene

The delicate inner structure of a pentacene molecule has been imaged with an atomic force microscope

The researchers focused on a single molecule of pentacene, which is commonly used in solar cells. The rectangular-shaped organic molecule is made up of 22 carbon atoms and 14 hydrogen atoms.

In the image above the hexagonal shapes of the five carbon rings are clear and even the positions of the hydrogen atoms around the carbon rings can be seen.

To give some perspective, the space between the carbon rings is only 0.14 nanometers across, which is roughly one million times smaller than the diameter of a grain of sand.

Read more: http://www.dailymail.co.uk/sciencetech/article-1209726/Single-molecule-million-times-smaller-grain-sand-pictured-time.html#ixzz0PccKWqQw

Today in History: How the "Colonel" Saved the Whales

It was 150 years ago today — on Friday, August 27, 1859 — that “Colonel” Edwin Drake struck oil 69.5 feet below the surface at his well near Titusville, Pennsylvania.

(The title of “colonel” was entirely honorific. Drake was a native of New York who grew up in Vermont and began his adult life in Connecticut. He had worked mainly as a railway clerk and conductor. He was a newcomer to Pennsylvania, and he was never commissioned in any military organization.)

Drake would not know of the strike until the next morning, Saturday, August 28, 1859, when workers, returning to the well after drilling late on the previous day, noticed that crude oil was bubbling to the surface and they reported it to the Colonel.

Although it was already known that petroleum oil (”rock oil”, as it was then called) would yield kerosene, it was not yet available in sufficient quantities and qualities to make its use commercially viable. People still depended in the mid-19th century on sperm whale oil for lighting homes, businesses, and streets, a product obtainable only by capturing and slaughtering whales.

The lowest historical prices of the least expensive type of whale oil was reached in the 1820s, when it was priced at $200 per barrel (in 2003 dollars). By 1855 whale oil was selling at more than $1,500 per barrel (in 2003 dollars). At 42 gallons per barrel, that works out to $35 per gallon (in 2003 dollars).

In short, whale oil was extremely expensive — and, of course, came at a catastrophic price to whales. By the late 1850s the worldwide sperm whale population was seriously dwindling and was coming close to extinction. Meanwhile, people in America and elsewhere throughout the world were approaching a crisis in lighting and energy supply.

Aware that previous attempts at drilling for oil had ended in failure, Drake had an idea that would made his discovery possible: He surrounded his drill with a pipe down to bedrock, thereby preventing water seepage from causing the drill hole to collapse. This enabled the drilling of holes sufficiently deep to permit oil to be tapped in large quantities. (Before Drake, only very small quantities of oil were recoverable, mainly through chance locations of oil percolating up to the surface.)

Drake’s initial production ranged from 10 to 35 barrels per day. He used the containers that were readily at hand on short notice — recycled whiskey barrels. In generating even that small amount of crude from a single well, Drake single-handedly doubled the world’s oil supply.

Drake’s achievement on this day in 1859 led directly and swiftly to the development of the petroleum oil industry, producing oil in sufficient quantities and grades — at amazingly low prices — to allow it to be used both for energy and for lubricants and in home, business, and industrial applications. This, in turn, led to rapid mechanization and industrialization, as well as to a revolution in the supply of energy to people’s residences, schools, places of business, and vehicles.

The whale oil business — not the whales — went extinct almost overnight, replaced by the petroleum industry.

Petroleum oil and its derivatives remain abundant and, in comparison both with historic prices and with the prices of all known alternatives, cheap to this day.

This is not to say that better and cheaper sources of energy may not yet be found and made practical. Such progress is, indeed, possible. After all, no one uses whale oil any more!

But on this anniversary it is worth noting, and celebrating, three important facts about Drake and his deeds:

1. An individual can make a huge difference in history. An entire industry and a civilizational revolution flowed from the ingenuity and enterprise of one man.

2. No government planner directed Drake; no government subsidy financed him. A thoughtful man observed rising prices and realized that there was a ready market for a better and cheaper product. He had an idea about where and how to look for that product. Backed by private capital that he used to acquire drilling rights, buy good equipment, and hire willing workers — all at private risk — Drake found that product.

3. No single human act has ever done more to preserve and perpetuate a major non-human species. Drake saved the whales!

Technically it was 2 days ago, but work with me here people!

Picture of the Day

Enjoy your Weekend everyone

Steeerike! Right down the middle. I don't know why he didn't swing at that one

1025 proves to have a huge magnetic attraction which in turn will require a HUGE push either to the upside or the downside. There are no outstanding objectives above so closing above 1035 (preferably 1038) will result in a move probably to 1054 on the way to 1100+. That said there are far more outstanding targets on the downside that still need to be tested all the way back to 880 and lower. When this range does break, I will be on the lookout for signs that the first break will be false (which is usually the case). However being that the market hates to repeat itself and the previous ranging around 995-997 had a breakout lower only to fail and make higher highs, I'm willing open to the theory of an over exuberant run to 1054 only to have it fail miserably and start the resumption of the bear market. Only time will tell.............

Pre Open Update

We often see similarities in chart patterns and the most important thing to understand about interpreting them is that the second time around the resolution is most likely going to be different.

If you look at the two trading ranges i have indicated by thick blue lines, they are defined not by their upper and lower limits but by the 995-997 level in the previous trading range and the 1025 level during this current one.

The key to these levels is that they offer a sort of gravitational pull and when they get established it requires a tremendous amount of either buying or selling pressure to break free of it. The farther it goes away from its normal orbit without breaking the more violent the snapback. This what is happening today at the pre-open shows what happens with a failed attempt to break free of the trading range. yesterdays test of the 1017 level didn't produce a break and as a result we are back in the upper range.

A close above 1035 would make me start to add into a small long position and a close above 1038 would make me long for a run up to at least 1054.

There really isn't a bearish perspective other than a rejection of this test of the upper end of the range.

Once Again Trying to Fan the Fires of Debate

So my first attempt at getting some healthy debate worked marginally well and therefore I am stepping it up a notch. From Breitbart's Big Hollywood. The rest of the article isn't worth your time but this nugget certainly is...

I saw a real fat girl once, slowly walking down the middle of an empty street in a “poor” neighborhood. She was eating from a bag of Cheetos. I was in my car at a stop light, watching her. I thought maybe no one told her that Cheetos make you fat, or maybe her life is so sad that that bag of Cheetos is the highlight of her day. Sometimes, Cheetos is the highlight of my day. I said a little prayer for her. Then, she dropped the empty bag in the middle of the street.

My empathy dissipated.

Statistics confirm the fact that most “poor” people have no fathers. My father told me that Cheetos makes you fat. He also built a gym in our backyard. We lived in a very “poor” neighborhood. Our house cost $10,000 when he bought it in the 50’s. The neighborhood then got worse. All of our neighbors’ houses began to look dirty and have five broken cars and beer cans in their front yards. Our house was always immaculate and our front yard always had freshly mown grass. My father took us to church 3 times a week. He read the Bible out loud to Grandma and Grandpa every Sunday night, at Grandma’s house, because Grandpa was an agnostic and wouldn’t go to church. My father taught me how to read when I was 5, so that when I started first grade I was the best reader. I skipped second grade. My father played the piano every night and taught us show tunes, and how to harmonize. My father taught us how to water ski. My father was a gymnastics coach, so he taught me a “flip flop” and I was the only cheerleader who could do that. My father protected us. He bought a bee bee gun that looked like a real gun, to scare burglars away. We were robbed four times. He said, “I could never kill anyone.” My father made us feel safe. He gave us confidence and a history and a future.

That Cheetos girl probably doesn’t have a father. And, no amount of government assistance, housing, food stamps, free college, or ObamaCare can give her that. She needs a father.

I wholeheartedly believe that there is much truth to what the author is saying that the problems existing in our society stem mostly from the lack of real authoritative role models in a child's upbringing. My posed question on this topic is who is to blame for what has happened to our lower class society and why is the Father figure missing?

Racketeering 101: Bailed Out Banks Threaten Systemic Collapse If Fed Discloses Information

Verbatim From Zero Hedge because i couldn't have said it better myself:
And so the guns come out blazing. The Clearing House Association, another name for all the banks that were bailed out over the past year with the generous contributions from all of you, dear taxpayers, are now threatening with another instance of complete systemic collapse if Bloomberg's lawsuit is allowed to proceed unchallenged, let alone if any of the "Audit The Fed" measures are actually implemented.

As a reminder, The Clearing House Association consists of ABN Amro, Bank Of America, The Bank Of New York, Deutsche Bank, HSBC, JP Morgan Chase, US Bank and Wells Fargo.

In a declaration filed in the Bloomberg Case (08-CV-9595, Southern District of New York), the banks demonstrate no shame in attempting to perpetuate the status quo with regard to the Federal Reserve and demand that the wool over the eyes of the general population remain firmly planted in perpetuity.

The Clearing House submits this declaration because the Court's Order threatens to impair the ability of our members to access emergency funds through the New York Fed's Discount Window without suffering the severe competitive harm that public disclosure of their identity will cause.

Our members have accessed the New York Fed's Discount Window with the understanding that the Fed will not publicly disclose information about their borrowing, especially their identity. Industry experience, including very recent and searing experience, has shown that negative rumors about a bank's financial condition - even completely unfounded rumors - have caused competitive harm, including bank runs and failures.
Surely transparency would facilitate rumor-mongering to an unprecedented degree. After all rumors spread much easier when everyone knows the true financial condition of banks.

And here, in plain written Times New Roman, you see what racketeering by a major bank consortium looks like:

If the names of our member banks who borrow emergency funds are publicly disclosed, the likelihood that a borrowing bank's customers, counterparties and other market participants will draw a negative inference is great. Public speculation that a financial institution is experiencing liquidity shortfalls - which would be a natural inference from having tapped emergency funds - has caused bank customers to withdraw deposits, counterparties to make collateral calls and lenders to accelerate loan repayment or refuse to make new loans. When an institution's customers flee and its credit dries up the institution may suffer severe capital and liquidity strains leaving it in a weakened competitive position.

Pardon me if I am a broken record here, but would rumors not spread much less if there was more transparency, if investors and other financial intermediaries were fully aware of the conditions of their counterparties, if banks did not have to cover their billions in reserve losses by pretending they are viable and essentially being constant wards of the state?

The Banks' racketeering has gone on for far too long.

And yet, it does not stop: the conclusion from the banks' letter:

In sum, our experience differs from the factual conclusions the Court appears to have reached about the nature of competition in the banking industry:

• The competitive harm to institutions that are publicized as needing emergency funding is not "speculative," but demonstrated by the recent multiple failures of financial institutions whenever information about their funding difficulty has been disclosed.


• The disclosure does not involve mere "embarassing publicity" but information that could result in the immediate demise of an institution.


• The disclosure would not merely "stigmatize "the institution or make it "look weak," but goes to its very viability.


• The disclosure of accessing emergency funding is not an "inherent risk" of market participation, but an extraordinary risk in extraordinary circumstances.


• Competitors can use the disclosure to advertise or publicize that they are financial stronger because they don't need emergency funding.

In a nutshell - the banks want their complete opacity cake and eat it too, or else, the racket goes, the transparency that will somehow promote massive rumor mongering will again destroy capitalism. In the meantime, the Ken Lewises of the world can continue touting how stable their businesses are based on optimistic future projections, while implicitly, they continue to survive merely thanks to the cash granted them by you, taxpayers.

AIG- Ex Squeeze me

Yet another reason why this is not a market for investors, but speculators......

With no significant news to speak of, AIG stock soared more than 29% to $48.89 midday Thursday in a move that appeared to be motivated by a wash of speculative trading and a possible short squeeze. Volume reached 73 million shares; daily average turnover is about 103 million.

The firm's stock price has exploded by more 250% since Aug. 4, a surge that has largely mystified market observers.

So AIG has a low of 6.60 mid July and today cross 50. So in 6 weeks with perfect timing you could have made 667% on AIG. AIG people not some random high beta internet stock. And people call this the end of the recession. Speculation like this is not the fuel for a market bottom or a new bull market, but a bear market rally. consider yourself warned.

Picture of the Day

Housing, there aint no cure....

Cure rates on mortgages are exactly what you think they are, people that are delinquent on their mortgage payments returning their payment status to current and therefore "curing" their delinquency. One would think that in a recovery these cure rates would be increasing.....
From Businesswire

NEW YORK--(BUSINESS WIRE)--While the number of U.S. prime RMBS loans rolling into a delinquency status has recently slowed, this improvement is being overwhelmed by the dramatic decrease in delinquency cure rates that has occurred since 2006, according to Fitch Ratings. An increasing number of borrowers who are 'underwater' on their mortgages appear to be driving this trend, as Fitch has also observed.

Delinquency cure rates refer to the percentage of delinquent loans returning to a current payment status each month. Cure rates have declined from an average of 45% during 2000-2006 to the currently level of 6.6%. It is important not only to observe total roll rates, but delinquency cure rates as well, according to Managing Director Roelof Slump.

'Recent stability of loans becoming delinquent do not take into account the drastic decrease in delinquency cure rates experienced in the prime sector since the peak of the housing market,' said Slump. 'While prime has shown the most precipitous decline, rates have dropped in other sectors as well.'

In addition to prime cure rates dropping to 6.6%, Alt-A cure rates have dropped to 4.3%, from an average of 30.2%, and subprime is down to 5.3% from an average of 19.4%. 'Whereas prime had previously been distinct for its relatively high level of delinquency recoveries, by this measure prime is no longer significantly outperforming other sectors,' said Slump.

I think that it is important for me to reiterate this statistic. Cure rates for prime mortgages have declined to 6.6% from 45%. Keep in mind that we have a lot of prime and Alt-A mortgages resetting in the next year or 2, and delinquent payers probably don't have the best chance of refinancing at a significantly better rate. Now think about what that means for the banks who are holding these loans........

Fed Official: Real Unemployment Rate is 16%

From Breitbart:

The real US unemployment rate is 16 percent if persons who have dropped out of the labor pool and those working less than they would like are counted, a Federal Reserve official said Wednesday.

"If one considers the people who would like a job but have stopped looking -- so-called discouraged workers -- and those who are working fewer hours than they want, the unemployment rate would move from the official 9.4 percent to 16 percent, said Atlanta Fed chief Dennis Lockhart.

He underscored that he was expressing his own views, which did "do not necessarily reflect those of my colleagues on the Federal Open Market Committee," the policy-setting body of the central bank.

Lockhart pointed out in a speech to a chamber of commerce in Chattanooga, Tennessee that those two categories of people are not taken into account in the Labor Department's monthly report on the unemployment rate. The official July jobless rate was 9.4 percent.

Close Update: A whole lotta nuttin.

So apparently what today indicates is that the market is going nowhere without gapping either up or down. It is going to take a pretty violent move to get things going and even so, moves that start from a standstill (which is what these past 5 or so trading days have been technically) are usually retraced at some point. So back to wait and see mode.

Idea: Long Heart Surgeons

New KFC "Double Down" Dumps the Bun

Sometimes a sandwich is so big, so tasty and so thick that those carb-loaded bookends we call buns just aren’t necessary.
That’s the premise behind Kentucky Fried Chicken’s latest calorie-laden creation: the Double Down Chicken Sandwich, two chicken fillets hugging cheeses, bacon and sauce, sans the bun.

KFC hasn’t released actual caloric counts, but has told media outlets such as the Huffington Post that it estimates the sandwich to weigh in at roughly 600 calories. The Vancouver Sun, however, estimates the Double Down at nearly double that number, with 1,228 calories.

KFC has made more than one headline this year with new products. Untold numbers of consumers flocked to the chain earlier this year hoping to get a free taste of KFC’s new grilled chicken. But Georgians shouldn’t rush to a nearby KFC for this bird, however, as it’s only being tested in parts of Nebraska and Rhode Island.

No word on whether the Double Down will be offered with two grilled fillets, instead.

Long awaited Market update

The yellow line I have drawn is the proverbial line in the sand. There are no outstanding requirements above the current price level of 1025 and there are a couple of outstanding requirements below. Most notably the 1018'50. For me to "buy" any rally to new highs having durable sponsorship I would expect that level and even down to 1015 to be tested before setting new highs. However this market has been ignoring most of what I like to see in a neat and tidy pattern so I will try and summarize best what the most likely outcomes will be:

If we close above this "line in the sand" then we are going back up to test the highs and any subsequent closes above 1035 will make me convinced we are in the beginnings of a new upleg to 1100+

If we close below the LITS (convincingly) then this means we are on our way to 1018'50 and then I will have to reassess depending on price action. But if 1015 breaks convincingly, let that be a great indicator that we might be starting a HUGE down leg back to at least 880 and maybe even 666

Ted Kennedy Dead at 77

Boston.com

Senator Edward M. Kennedy, who carried aloft the torch of a Massachusetts dynasty and a liberal ideology to the citadel of Senate power, but whose personal and political failings may have prevented him from realizing the ultimate prize of the presidency, died at his home in Hyannis Port last night after a battle with brain cancer. He was 77.

Chart it to Me!

Not really much to say here... You know what they say about pictures....

Global Recession Status

A very cool interactive map. Doesn't mean much, shows us where we have been. The important thing is where we are going......

Picture of the Day

Seth Godin on the tribes we lead

Absolutely fascinating... please watch

Court Orders Federal Reserve to Disclose Emergency Loan Details

Very Excited about all the upcoming data that must be divulged... From Bloomberg

The Federal Reserve must for the first time identify the companies in its emergency lending programs after losing a Freedom of Information Act lawsuit.
...
The Fed has refused to name the financial firms it lent to or disclose the amounts or the assets put up as collateral under 11 programs, most put in place during the deepest financial crisis since the Great Depression, saying that doing so might set off a run by depositors and unsettle shareholders.
...
The judge said the central bank “improperly withheld agency records” ... She gave the Fed five days to turn over documents it told the reporters it located ...

The case is Bloomberg LP v. Board of Governors of the Federal Reserve System, 08-CV-9595, U.S. District Court, Southern District of New York (Manhattan).

Well thats not how its supposed to happen!

I apologize for not updating my TA for quite some time now. I am in the process of switching charting software and i got caught up in all the new features. Anyhoo, just a quick note on today's morning action. Failed breakouts are not good for bullish chart patterns and unless we can close above the previous high of 1035 this damages any bullish sentiment tremendously. I will follow up after the close with some potential targets and what this means short term and long term.