STB Morning Post 09/13/11

Not much to say other than China saved the day yesterday (again). It seems that you can always count on intervention of some sort to save the day (till you can't). Bottom line is they will continue to stick save till they can't. As noted on STB a few months back, it appears that the power brokers in governments around the world are tired of bailing out the banks.

The bankers have bled the system and their puppet politicians as much as possible (times two). The governmental representatives have gained nothing politically as their voter base has become increasingly dissatisfied with their performance. On the other hand, you would assume that the money flowing into their coffers from these special interests is coming in at an astounding rate. Quite the trade off, sacrifice your country and political career while you go for the big cash grab. How American!

I think they are thru throwing good money after bad. I think the politicians are actually beginning to see the light. After throwing a DISCLOSED $4 trillion at the problem (not the actual $30 trillion it took to bail out the world) and getting nothing out of it, maybe, just maybe they are growing a set large enough to take on the banks and the default issues that are coming.

I hope you all like the new look old blog. STB.com is still down and I am actually considering staying here at this point till the new blog is up and running. Comments and suggestions are always welcome. What you like and don't like I need to know so it can be incorporated into the new blog. Don't tell me after the fact, you need to tell me now.

Minis this morning have made quite the recovery (not sure who came in with the big stick (or wantons filled with dollars as sellputs put it yesterday). All it takes is a rumor to move the DOW 100 points either way in minutes. Thus, this is a dangerous playground to bring your ball to. Remember to have a trading plan for each trade and to always use stops.

Minis - yellow channel support being backtested. the blue triangle backtest is just above. 1161 (price at now) is first resistance and then 1178. Those can get run thru with the right "solution" today. Inversely 1123 is the magic number for severe downside action continuation. Bottom line is the markets are consolidating at these levels and remain range bound. Note - I adjusted the channel a bit this morning to what should be a more accurate representation of the channel capturing the last low at 1138 - where it was below the support diagonal yesterday. This is an allowable thing to do and is sometimes necessary when working with charts. STB always reviews his trendline positions and if adjustments are necessary, then I make them (and you should as well).

Every Day Is One Step Closer To The End

Long, slow, painful (yet titillating at the same time if you are into that kind of thing) march to the end. The set up is right in front of your face. Banks hoarding cash and not lending. They know the breadth and depth of the problems. They are now enacting rules and legislation to guard against runs on the banks. Do you really think if things were getting better they would be enacting such policies?

Infowars.com did a nice piece on Citibank Controversy Puts Dubious FDIC Guarantee Back In The Spotlight that covers the issues facing the banks and FDIC limits. "Alarmingly, The Federal Deposit Insurance Corp. only has about $50 billion to “insure” about $1 trillion in assets across the nation’s financial institutions. This was even admitted in a Yahoo.com article shortly after the collapse of Lehman Brothers in 2008. When Americans realize the fact that banks are “going to run out of money”, the article nonchalantly stated, a run on the banks will accelerate." Do not forget the FDIC is basically bankrupt (and the banks are refusing to come off of cash even to fund their obligations with them).

From the same post - ready for this? Want to be scared shitless? “The requirement is part of Regulation D of the Securities Act of 1933. It applies to all accounts classified as Negotiable Order of Withdrawal [NOW] accounts – basically interest-bearing checking and savings accounts held by individuals and non-profits. Banks are not required to hold reserves in place to cover NOW accounts, so the rule prevents a run on withdrawals for which there are no reserves,” states the report." (emphasis mine) Nice! I feel a lot better. Thanks Congress. Thanks a bunch! Uh, isn't that ass friggin backwards? Apparently not.

That is mostly right. A run on the banks from the citizens would be a big deal, but remember Dubai and that nasty thing called fractal lending that has caused this credit driven fuck up. They are not worried about you or me getting the funds. They are worried about Dubai demanding their $10 billion in deposits (fractal that). They are worried about sovereign runs on the banks. It will get ugly cause they don't have the money.

As always Mish does a nice job with the unemployment report. He has a unique way of bringing the worts ot of it almost every time. In Weekly Unemployment Claims Spike To 496,000; Will Reality Soon Set In? "At some point however, reality will eventually set in. Without jobs, all this happy talk about the impending recovery, and all of Bernanke's yapping about low rates, will not satisfy the market. It is going to take both jobs and an increase in consumer spending to lift the economy. From where I sit, neither is coming."

Your daily Greece update comes courtesy of Zero Hedge in Greece Deterioration Hits Nitrous: IMF, EU, ECB Find Greek Plan €4.8 Billion Short. You can only squeeze so much blood out of the turnip. This is it. This is what I see spreading globally. this is the main point of denial. Massive wage deflation and everyone is held captive to the banksters that we bailed out that caused this mess. What a friggin job that must be, huh?

Well the NYT has Banks Bet Greece Defaults on Debt They Helped Hide. Well? You don't think they KNEW this was coming did you? Nah, GS did not sell them (and numerous other countries) the systemic CDO's that caused their financial system to rot from the inside, all while knowing they would and having handsome bets on the other side. Friggin amazing stuff. Who needs regulations? ZH gave a nice graphic in Greek Treasuries Pancake As Bond Vigilantes Chant Death Chorus of their sexy looking bond spreads today.

Late yesterday Denninger put out Clap-Clap (Weil and The Mark-To-Market Scam) which covers the mark-to-myth scandal I do not cover enough (In plain terms the reason the banks are all actually insolvent). The Enron style accounting has led us to this, "We've done nothing other than making legal accounting lies. The impairment and thus the actual economic loss still exists, and while we may have pushed it off another year that actually makes it worse, because these non-accruing loans gather more and more hair on them the longer they sit around without being either foreclosed, put back, or otherwise disposed of. This part of The Bezzle is one of the worst examples in this entire sordid mess and if Congress won't grow a pair then FASB needs to - right now." I keep telling you we're really screwed. Like really deep shit. 

On the issue of lack of regulation Washington's blog has Economist With Financial Services Committee For Eleven Years, Assisting With Oversight of the Fed, Lends Support to Ron Paul's Questions "Today, Ron Paul accused the Federal Reserve of having a hand in nefarious plots such as Watergate and arming Saddam Hussein. House Financial Services Committee Chair Barney Frank said that the Committee should look into it." We really need to audit the Fed before it is to late. Heck, I'm not sure I want to even do it now. Scared of what we might find. Talk about Armageddon?

We're getting closer every day. Sure more QE may be coming but what good will it really do? Kick the can down the road another 6 month to a year and just dig an even deeper hole while stuffing the banksters balance sheets with more of your future tax dollars. Friggin GREAT! Sign me up! TWICE! I hope you all realize I am not blowing smoke here. Every night I bring you real world situations that should scare you to death. Massive deflation is coming to a street near you. Greece should be your model. I just hope like hell we come out of this a free nation.

This is AWESOME - Max at 7:00 - paints a really clear picture. the whole world will hate us when this is all over. 

GL and have a good evening!

No, Things Are Not Getting Better

No matter what they say. No matter what they do. Do not believe a word of it. You are witnessing the greatest con-game ever perpetrated on anyone anywhere.

The latest debacle, paying back tarp funds so bonuses can be paid out so they can retain "talent", is like piling on after the play. It is a personal foul, and I'm taking it personally. You should to. In Ratigan Dissects TARP Repayments Dylan hammers home the rail road spike that should push most over the edge. Is the public in an uproar over this one? Nooooooo. Should they be? Yessssss. Americans yet have another reason to be lighting up the phone and fax lines of their representatives but are they? Nope. Well, our representatives can't really do anything to stop them from repaying TARP funds, but they can correct the issue with a windfall profit tax. Will they? Nooooo. Should they? Yesssss! they can not challenge the true powers that be. You should have figured this out by now, but our government is really at the mercy of the banksters. The bastards have raped America again during the worst economic downturn in history and the friggin bastards that were responsible for most of this mess get rewarded? You tell me, should we be in the streets protesting this action or just enjoying our credit laden lives watching our 46" plasmas?

So how do we continue to pay for these bonuses, the capitalization efforts and keep the market hovering while the Fed has begun the repo machine? For Second Time In A Row, One Month Bill Auction Closes At 0.000% That's right, you issue one month treasuries at 0.00% interest rates. I know, there still may not be a safer place to store your funds (that's right - simply parking BILLIONS for a month earning NOTHING is the safest place for their funds right now). Take a minute and fully absorb that statement. Soak it in. This should tell you that risk even in their world is peaking. It should also bring caution that this may be another form of monetization. So while they lie to you on TV and tell you everything is fine (look at the right hand), the left hand is doing things that you do not need to see or know about. 

Well its a darn good thing that the banks are paying back those billions cause here comes subprime again. Fannie Freddie May Need Another $400 Billion Taxpayer Assistance is most likely just the tip of the iceberg to get housing fixed. You see when they are looking for, say, uh, another $400 BILLION while the housing market is churning out numbers like Latest NAHB Confidence Number Edges Down To 16, Misses Consensus, Lowest Since June. 

But things really are fine. Just look at Best Buy's earnings (don't look at anything else but the earnings - nothing - nope - don;t turn that page - you just get to see the earnings). Did anyone pick up on Cramer’s Best Buy Earnings Recommendation Gets Crushed? Not that it mans anything (good laugh though). Bottom line is the recession is over and the consumer is fine. Is That A Door Slamming? You see the credit card charge offs are a normal part of the cycle and should be expected to be at these levels. This is a natural part of the process of ending a recession (I could go to work for CNBS spewing lines like that). 

But have no fear For Week Ending December 14, Insider Selling Outpaces Buying By A Factor Of 32.

Look folks. I can't (and don't) make this stuff up. Night after night I produce some profound posts from the net. Stuff that I am finding on a nightly basis should take a half a year to produce. The shit is hitting he fan, but since they have built a massive propaganda machine and coordinated efforts across all boarders and oceans to hide the truth most are oblivious to the facts. The rising market has taken the public's eye off of the ball, but that curtain will drop soon exposing the puss filled sore that our banks and governments have propagated over the past decade. Nasty thought? Yeah, it should be.

GL and happy holidays. 

Newsworthy Items

I'm really not sure about the economic horizon. Just kidding.

The audacity of government officials that continuously spew lie after lie telling us all is well, the recession is over, nothing to see here, move along is getting under my skin again. The honeymoon is almost over. I have not forgotten all of the fraud, misleading statements, the lies, the sheer criminal actions. I have not been lulled to sleep and have not partaken of the kool-aide or hopium distributed by the pushers in Washington and on Wall Street. I hope you have not either. All is not better. Sooner or later the top is gonna blow and the magnitude of the devastation will be historic. I have a self imposed "no rant" policy in place thru the holiday season, but you can be reassured that one is building in me like a mini Mount Vesuvius.

As my regular readers know I have speculated all along that it would take and "external event" to rip the market from the manipulators. Dubai was a close call. If the rumors of the withdrawal of funds from CITI were true, that would have totally devastated the whole financial system. You and I both know that if Dubai were to w/d all their funds from CITI they would not have them and then the trickle down effect would have been disastrous (think It's a Wonderful Life but there is no backstop). That said, what happens to Greece here Greece Enters Twilight Zone As It Announces 90% Banker Bonus Tax Plans, Expectations For Sub 3% Deficit By 2013 or Mexico Mexico Downgrade By S&P From BBB+ To BBB Means Everyone Get On The Bailout Train? Troubles in Austria? No More Failures Ever As Moral Hazard Goes Global: Austria's Hypo Alpe Adria Nationalized. The global ship is taking on water (actually the first two decks are full, they just won't admit that to you). It will not be long before a country defaults and tears down the financial house of cards. They are doing their best to hide the truth from you and me, but in reality we know, so why the charade? The global Ponzi scheme/musical chairs will end.


So most Americans disapprove of everything that is going on and polls say we would like things done differently (take HC for example), but they refuse to listen to us and go along their merry socialist path of righteousness. What is this country becoming? Cities Shut Off Streetlamps to Save Money; Indianapolis Threatens $2500 Fines for Challenging Traffic Tickets is a good example of what coming down the pike. Cities are strapped for cash and it will become painfully more obvious over the next year. Never mind that Paterson: 'New York Has Run Out Of Cash' or the 20% unemployed are running out of cash as well (wonder what types of actions that will bring?)

This one will being a smile to your face (and get you to questioning why we have not wiped out the poppy fields in Afghanistan). Do Summers, Geithner and Bernanke Have to Share Credit for Saving the Banks with Drug Kingpins? It is an interesting though and if proven true the conspiracy nuts will be, well, right again. 

And last but not least THE 5 REASONS GOLD IS IN A BUBBLE AND AT RISK OF SIGNIFICANT CORRECTION  Who am I to argue with Roubini? OK, I'll take the bait since I challenged myself. I think it corrects with the initial plunge of the market as people do not understand what they have and they rush for the exits and trade for profit. Then the smart ones (me) come in and buy it up and make it their only holding. Sounds good on paper at least. 

Take care and have a great holiday season.

News Time!

Since unemployment numbers appear to be steady (which is a great thing!), the market salutes the 169k newly canned (jit for Xmas) Americans by piercing to new highs! Nothing like spiking that 401(k) to make them feel better about their current situation. Have you figured out the liquidity driven, carry trade supported HFT dominated market yet? Nah, I did not think so. I have not either. I do know one thing, look for a few sharts coming soon to signal the top is near.

Let me put the pieces together for you!

Zero Hedge - October Credit-Card Delinquencies Rise Again, Approach Record Highs Says Fitch - "As Zero Hedge pointed out, and as Meredith Whitney has voiced her concernes about, the biggest threat to the economy going into 2010 may be that not only are banks dropping reducing overall credit availability, but that ongoing credit contraction to the tune of almost $2 trillion over the next several years will mean existing credit limits are tapped out as existing ones become increasingly maxed out." No consumer = No GDP The government can't perpetually support 70% of GDP (esp in non job producing efforts). The HNW (high net worth) can not spend enough to make up for the loss os the little guy. The balance is gone and the consumer is dead and getting worse. The banks are hoarding cash for some sort of impending rainy day disaster that is in the plans. It is painfully obvious.

Mish - 24 States Borrow Money To Pay Unemployment Benefits  - Was there an unemployment report today? Do they really even matter anymore? "The key take-away from this series are the millions of workers whose hours will rise before companies start hiring more workers. Unemployment will be structurally high for a decade." Uh huh, he said structurally high for a DECADE. I agree. Uh, Mish, how about the wage deflation that comes with the increased hours? Hell, where is all the money coming from? (I believe you know and feel the answer - and will feel it even worse in the future). "I sense a huge tax increase coming. Add that tax increase to concerns over cap-and-trade, rising taxes on the wealthy (many are small business owners), concerns over health care costs, etc, and small businesses have lots of reasons not to hire."  We are soooooo screwed. 23 friggin states? Half of the US of A? Our saviors have done nothing but plug the hole in the employment damn with some expensive chewing gum, and if you remember those cartoons when they tried the same remedy, it always failed miserably. NOTHING has been done (or really can be done) to stem the tide of Americans hitting the streets right now. Wait till the new year and those businesses that have been hanging on just to get thru one more Xmas start shuttering their doors. More empty retail space coming! 

Washington's Blog - Robert Reich Confirms Permanent Destruction of Jobs in America - Since we are dealing with some serious unemployment issues, why not highlight them and give them the moment in the sun they deserve (no one else is covering the topic). "Under the pressure of this awful recession, many companies have found ways to cut their payrolls for good. They've discovered that new software and computer technologies have made workers in Asia and Latin America just about as productive as Americans, and that the Internet allows far more work to be efficiently outsourced abroad."  Sounds reasonable to me. More with less for less pay! BRILLIANT! Folks, we have some serious problems. If there is not enough work for say a 4% unemployment number (real not fake), we're really screwed.


naked capitalism -AmTrust Financial bankruptcy a bad sign for regional banks - (via Edward Harrison of Credit Writedowns) "AmTrust Financial, a privately held regional bank holding company based in Cleveland, has just filed for bankruptcy. With $11 billion in assets, AmTrust Bank is fairly large. The circumstances surrounding its failure are unusual in that the Bank Holding Company (BHC) has filed for bankruptcy but the banking subsidiary is still operating. The picture this event reveals is one of continued distress in the banking industry, especially for regionals." This is a good one. "What does that tell you? I see it as a sign of many more busts to come. You might recall that I mentioned a growing dichotomy between the fortunes of big banks and small banks about two weeks ago. Too big to fail banks have been bailed out. Regional banks not so much. Therefore, regional banks have turned off the spigot and are holding on for dear life. This is what is behind the drop in lending."  Was I just covering above something about unemployment and lack of credit and banks hoarding money for some reason? Yup, I thought so. (more on AmTrust HERE from Calculated Risk)

The Pragmatic Capitalist -THE BANK PROFIT MIRAGE  -"The following is a guest contribution from Annaly Capital Management.  They eloquently show how bank earnings are still in dire capital positions and that their profits are nothing more than a mirage.  There are many hurdles ahead for the banks:"

SUMMARY - Mmmmkayyy, so banks are hoarding cash, not lending and the profits they make are a mirage leading to more impending bankruptcies while unemployment continues to rise while states have to borrow money to pay unemployment claims while we will not be able to create enough jobs to solve the current employment black hole while the the consumer credit card default rates near record levels while the government is looking to tax you for every fart over the legal limit. Got it? Good! So do you now understand the physics underlying the bull market 2009 and all the upgrades that are based on increased earnings assumptions?

Kind of scary that little 'ol me can put the pieces together and the greatest economists on the planet totally disagree with my fact driven assumptions. Guess if I was on the Fed's payroll I would not be able to figure it out either.

Have a great night and enjoy the season.