On Friday the dollar completely broke down, with the USDX collapsing to about 82.5, as monetizations by the Fed became a stark reality. A world stock market collapse could be imminent as a source of dollar support. We wonder how low they will let the dollar go before they collapse the stock markets to chase people back into US treasuries, which have also broken down, with treasury interest rates on the rise despite various Fed purchases of treasuries in the hundreds of billions. So much for the bogus stress tests as things turn much uglier than anticipated by the boneheads in Goldman Sachs South who are attempting to resurrect the Goldilocks Matrix. The suckers rally is simply the loading and winding of a catapult meant to throw the dollar upward as the stock market spring unwinds at the moment chosen by the PPT, which moment has already been telegraphed to Illuminist insiders for their continued looting of the sheople and for the filthy aggrandizement of their growing mountain of ill-gotten gains. The stock market shorts are being set up in the dark pools of liquidity beyond the purview of regulators as this article is being written, so if you plug yourself back into the pod electrodes of the Goldilocks Matrix again, you are in for a major shock.
Stock market rallies aimed at sucking in sheople-dupes based on bogus hedonic financial statistics, fairytale financial statements, fascistic injections of monopoly money into the economy and false Goldilocks news spin will continue on as a source of insider trading profits and as a ready source of capital to boost the dying dollar. As the world's stock markets collapse in sympathy with the US stock markets as the PPT withdraws its support globally, stocks around the world will be sold off, and the proceeds will be channeled into the perceived safe-haven of US treasuries. This boosts the dollar because sales proceeds from the liquidation of foreign stocks that are denominated in foreign currencies are exchanged for dollars in order to purchase US treasuries, thereby creating a dramatic demand for dollars. Sell into this current stock market strength and get out of the stock markets, or prepare to get vaporized by an Illuminist laser beam that is being focused on the sheople for a nice roasting so the elitists can enjoy some more mutton chops while they watch the dollar anti-gravity machine perform its magic for their entertainment and profit. Also, a dollar boost provides some assistance for carrying out JOB ONE at the Fed, which is gold suppression, so you can take a stock decline to the bank based on that principle alone.
The Consumers Confidence Index, the lowest since records began in 1967 came off the bottom in March, just barely. The market has rallied 30% off its bottom, just as it did in 1933, and we are told by Wall Street and Washington that the recession is over. Housing starts are off 80.4% from three years ago. We forecast 75% would have been sufficient, but in a depression things are different. The question is how long will starts bump along the bottom with as 12.2-month inventory? Healthy markets have a 5-month overhang - not to mention used home inventory. Prices are off 20% or more and the median may eventually fall 40%. Buying in this atmosphere is foolhardy at best. Then again, a fool and his money are soon parted.
Job losses result in foreclosure 15% of the time and if the monthly average of 570,000 in the first quarter falls to 325,000, almost 3 million jobs will be lost by yearend and another 450,000 foreclosures and an unemployment rate of 11%. Experts say another 7.8 million jobs will be lost by the end of 2009, and industrial production will fall another 17%. This would cause the loss of 5.1 million more jobs as opposed to 2 million.
Industrial production was off 12.8% yoy, as capacity utilization fell to 69.3%, the lowest since records began in 1967. At the same time the amount of excess capacity utilization is unprecedented. Never mind lost jobs, the economy has to create 125,000 jobs a month just to absorb new entrants into the labor market. It will be at least six years before employment will grow again under the best of circumstances. We are already in a depression as bad as in the 1930s.
The elitists continue to throw money at the problem and after 75 years of going to the well, the debt structure is unsustainable. That is with many years of inflation. We all know as professionals what has to happen as a result of these policies. Then to add to the madness some economists have suggested negative interest rates. The act of the Fed lending money and paying you to borrow the funds. This supposedly would increase economic activity. The theory is for the Fed to increase inflation, which would make cash trash and force people to spend. There is a problem with that theory other than it won’t work and that is people can buy gold and silver with their depreciating dollars. Even if they do not go up they’ll hold their value, something the dollar won’t do under those circumstances. All current problems can be traced to low interest rates and unsustainable levels of borrowing and spending. This theory in the long run increases the problem and causes further monetization. Such ideas as usual emanate from Harvard, that seat of illuminist intellectual power, the August hub of learning, which bestowed a master’s degree on that idiot George W. Bush. Am I happy I chose Northeastern instead.
The negative interest policy has been put forward by former White House Chief Economist and Harvard professor of economics Gregory Mankiw. He wants to target interest rates at a negative 3%. You could borrow $100.00 from the Fed and pay back $97.00. Gregory believes zero interest rates are not working and he is right. Does he really believe negative rates of 3% would work better? We don’t think so. The psychology of spending has been dead-ended just as the lust for real estate. It will take sometime to build a new spending foundation and a new spending psychology. We forecast this would happen and the only way this can be offset is by massive injections of more money and credit to offset these very negative factors. This month hyperinflation begins. Two or three years from now, perhaps sooner, the plug will be pulled on hyperinflation voluntarily or involuntarily. Supposedly this tax on money will force people to spend. Again we say people do not have too. All they have to do is buy gold and silver related assets. Mr. Mankiw isn’t going to tell you that.
Stock market rallies aimed at sucking in sheople-dupes based on bogus hedonic financial statistics, fairytale financial statements, fascistic injections of monopoly money into the economy and false Goldilocks news spin will continue on as a source of insider trading profits and as a ready source of capital to boost the dying dollar.
Commercial bank loans are off 2.2% over the past six months. Banks are loaded with cash that continues to pile up over at the Fed that now pays them for the privilege of depositing their cash there. We are told banks have excess reserves of some $862 billion, up $91 billion in just this past month. Over the past eight years that average reserve was $1.6 billion. Why are the banks not lending? We’ll tell you why, because of all the bad or worthless assets they have on their balance sheets – that is why. Negative interest rates, zero interest rates and massive money and credit expansion are impoverishing wealth producers, keeping them from taking risks and driving them into gold and silver. Is our President really taking on the transnational elitist conglomerates and their tax havens? These are paying about 2% in taxation by parking their profits abroad. American companies might decide as a result of legislation to domicile in other countries. This would cost some taxation and the further loss of American jobs.
The truth of the matter is that such legislation could be used as a bargaining tool in other legislation, such as universal health insurance. There is $700 billion in offshore corporate accounts that could be used to assist the US economy and bring in $200 billion in taxes.
Then again he may do what was done four years ago under the ruse of creating jobs. The transnationals bought back $350 billion at 5-1/4% taxation, whereas normal taxation was 3.3%. America is already one of the most heavily taxed nations worldwide in the corporate area.
The GM management virtually destroyed the company along with the labor unions and now they want a 1 for 100 reverse stock split. That is why we went short GM long ago.
The pending home sales numbers indicated a 3.2% increase from February to March. These are contracts signed. Cancellation rates are about 30% and have been for two years. That increase will be adjusted downward next month. The inventory of existing homes continues to mount with foreclosures making up 60% to 75% of sales by speculators.
Bruce Bent, the inventor of money market funds and the proprietor of the Reserve Primary Fund, was charged with lying about the stability of the fund last year. He was investing in toxic garbage. This again should tell you how safe money market funds are. Both Ken Lewis and Paulson are lying about the threats over Bank of America and Merrill Lynch. Bernanke then lied before Congress. We see no outrage. No charges of perjury, only more of the same criminal corruption. As you can see at Harvard and the Ivy League schools they have courses in lying. We’ll eventually get them into court on criminal charges, if the mob doesn’t get them first.
In recent years, never mind through more than a thousand years of history, tactics such as those being used today by America’s Federal Reserve have been a failure. Those at the Fed are well aware of that. It should be noted in the late 1980s and again in 2001-03, that it was possible to use stimulus, and other money and credit measures to resuscitate the economy. The troubles this time is different. They are far beyond fixing. We have seen the same thing happen in Japan since 1991. They inflated and inflated, incurred massive debt and even zero interest rates and they could not resurrect their economy. The only thing that kept them afloat was unlimited access with low tariffs to US markets.
It wasn’t easy in the 1970s. We were already 13 years in the brokerage business, so we lived and were part of those years as well. We saw loose monetary policy in the early 1960s when we began collecting gold and silver coins. We saw the preparation in the early 1970s, which led to the debacle that culminated in the collapse and purging of the economy in the early 1980s. There were a number of recoveries in the years since the war but this time it is really very different.
The stimulus package of only a year ago was ineffective and it increased government borrowing requirements as you saw recently. The Treasury had to have the Fed monetize bond purchases.
The monetary and fiscal stimulus used in the last eight months should soon start to show up in the form of inflation. Do not forget the move to stop inflation began five years ago and it still hasn’t been effective.
We are told that there will be no increases in Social Security and Medicare for the next two years. All government funds are being used to bail out Illuminists on Wall Street, banks and insurance companies.
The number of mortgage applications rose 2% in the week ending May 1, the Mortgage Bankers Association said Wednesday, with borrowers seeking both more refinance and home-purchase loans.
The MBA's seasonally adjusted composite index of mortgage applications rose to 979.7 from 960.6 a week earlier. The refinance index was up 1.2% while the purchase index increased 5%.
The purchase-index number adds to signs of housing market stabilization, as low mortgage rates and falling home prices have energized bargain hunters. The National Association of Realtors said this week its index of pending home sales, a measure of signed contracts for sales which have yet to close, rose 3% in March.
The refinance share of mortgage activity decreased to 74.4% of total applications from 75.3 percent the previous week. The adjustable-rate mortgage share of activity remained unchanged at 2.1% of total applications.
The average contract interest rate for 30-year fixed-rate mortgages increased to 4.79% from 4.62%, with points increasing to 1.17 from 1.14 (including the origination fee) for 80 percent loan-to-value ratio loans. A point is 1% of the loan amount, charged as prepaid interest.
The survey covers approximately 50 percent of all U.S. retail residential mortgage applications and includes responses from mortgage bankers, commercial lenders and thrifts.
Wells Fargo & Co. told employees on Monday it will no longer contribute to their traditional pension plan, effectively cutting the total compensation of its workers less than two weeks after announcing record first-quarter profit.
Wal-Mart pays $2M to avoid charges in death probe 05.06.09 The San Francisco bank is combining its existing program with that of Wachovia Corp., the Charlotte, N.C., bank it acquired in December, and freezing both companies' cash balance plans, a type of defined benefit plan.
"We must manage expenses prudently to help Wells Fargo continue our long track record of profitable growth so have decided to have one team member retirement plan for the combined company," spokesman Chris Hammond said in a statement. "These decisions were difficult and we are confident that we're taking the right steps to ensure the long-term strength of our company."
He said the bank will maintain the dollar-for-dollar match for its 401(k) plan, up to 6 percent of pay.
At least three of the nation's 19 largest banks have passed government stress tests of their financial strength.
American Express Co., JPMorgan Chase & Co. and Bank of New York Mellon Corp. will not be asked to raise more capital when federal officials announce the test results Thursday afternoon, according to people briefed on the results. The people requested anonymity because they were not authorized to discuss the results.
The stress tests were designed to see how the large banks and finance companies would fare if the economy worsens. Analysts expect about half the companies will be asked to raise capital.
Citigroup Inc., Bank of America Corp. and Wells Fargo & Co. all will be asked to raise money, sources have told The Associated Press.
Spokesmen for New York-based American Express and JPMorgan would not comment. A Bank of New York Mellon representative did not immediately respond to requests for comment Wednesday afternoon.
Bank of America stock rose Wednesday after reports that the Charlotte, N.C.-based company would need to raise $34 billion in additional capital. The New York Times and Wall Street Journal reported the figure. The Times quoted a bank executive, while the Journal cited unnamed people familiar with the situation.
The stress tests are a centerpiece of the Obama administration's plan to stabilize the financial industry. They measure how much the banks would be hurt if unemployment rose to 10.3 percent and home prices dropped an additional 22 percent.
The government wants the firms to have enough money to keep lending even if the economy gets much worse. Officials have said none of the banks will be allowed to fold.
Signs of an economic recovery aren't showing up in the latest bankruptcy statistics.
Phoenix-area bankruptcy filings jumped 91 percent in April compared with a year earlier, pushing above 2,000 a month for the first time since bankruptcy laws were changed in late 2005.
MetLife Inc., the biggest U.S. life insurer, said net unrealized losses on corporate debt holdings increased 9.9 percent to $15.4 billion in the first quarter as borrowers struggled to repay loans.
The loss, disclosed by the New York-based insurer in a regulatory filing today, compares with $14 billion at the end of 2008 and $8.22 billion at the end of September. Unrealized losses, which aren’t subtracted from earnings, are calculated as the difference between a holding’s market value and what the company says the investment is worth.
Bank of America Corp. is likely to convert preferred stock into common shares, and traders betting on a potential swap should use options, Barclays Plc said.
Regulators have concluded Bank of America needs about $34 billion in capital to withstand a weaker economy, according to a person with knowledge of U.S. stress tests of lenders. The company may be able to accomplish that by exchanging preferred shares for common stock.
Citigroup Inc. announced a plan in February to convert as much as $52.5 billion in preferred stock to replenish capital, creating an arbitrage opportunity for investors who bought those shares and shorted the bank’s common equity. The New York-based bank reduced profits for Third Point LLC’s Daniel Loeb and other investors after delaying the swap. Venu Krishna, a Barclays analyst, said trading options is safer than shorting Bank of America’s common shares.
“Given the experience of Citi preferred holders who hedged themselves with the common, we believe a more optimal choice is to sell combos (i.e. buy puts and sell calls at the same strike) as a hedge,” Krishna wrote in a report yesterday.
Hedge funds and speculators rushed to buy preferreds and shorted Citigroup stock to profit from the difference in prices between the two securities. Gains for investors in the strategy were eroded by delays in completing the transaction and a surge in the costs to borrow the common shares sold short.
Half a century prompted companies to lower expenses by squeezing more from remaining staff.
Productivity, a measure of employee output per hour, rose at a 0.8 percent annual rate, more than forecast, after a 0.6 percent decline in the fourth quarter, the Labor Department said today. Labor costs increased 3.3 percent after climbing 5.7 percent at the end of 2008.
DuPont Co., the third-biggest U.S. chemical maker, plans to cut an additional 2,000 jobs as global demand remains weak.
Claims for state unemployment benefits fell sharply last week, the fourth decline in five weeks, providing further evidence that the pace of layoffs has slowed after months of steep job cuts.
Still, the total number of unemployed drawing jobless benefits hit its 14th-straight record high and now stands at over 6.3 million, an indication that even if layoffs have tapered off, there's little evidence that new jobs are being created.
Initial claims for state jobless benefits tumbled 34,000 to 601,000 in the week ended May 2, the Labor Department said in a weekly report Thursday. That's the lowest level since late January.
Wall Street economists had expected a 4,000 rise, according to a Dow Jones Newswires survey. The prior week's level was revised higher.
The four-week average - which aims to smooth volatility - slid for a fourth-straight week,
by 14,750 to 623,500, the lowest since mid-February.
The US has lost over 5 million jobs since the recession started in late 2007, with over 2 million of those losses occurring in the first three months of 2009 alone, pushing the unemployment rate to a 25-year high of 8.5%.
The current global crisis is “vastly worse” than the 1930s because financial systems and economies worldwide have become more interdependent, “Black Swan” author Nassim Nicholas Taleb said. “This is the most difficult period of humanity that we’re going through today because governments have no control,” Taleb, 49, told a conference in Singapore today. “Navigating the world is much harder than in the 1930s.”
Europe’s central banks are $40bn poorer than they might have been after they followed a British move taken 10 years ago on Thursday to shrink the Bank of England’s gold reserves, analysis by the Financial Times has shown.London’s announcement on May 7 1999 that it would sell a large share of the Bank’s gold reserves in favour of assets offering a return, such as government bonds, was the high water mark of so-called “anti-gold” sentiment among European central banks.