The Markets
The rhetoric in President Obama's address to a joint session of congress last night was so far over the top with his screeching, "Pass this jobs bill" over and over ad nauseam that the conclusion is that congress, though they may like some of it, will do everything in its power to delay, disrupt, debate and defeat Obama's American Jobs Act (AJA), and this time they would be doing everyone a favor.
Here's a Daily Kos blogger who lavishes on the praise for Obama's oratorial skill a bit too heavily (for our tastes), but basically has most of the details right.
Here's NPR's take:
The very last thing we need in this country is a bill wrapped in the flag (lest we forget the president advising congressional Republicans to put "country over party") which delivers little more than promises of tax credits to small business, but spends billions on teachers ($35 billion to be exact), repairing schools (the bulk of the $100 billion in infrastructure spending) and cuts the payroll tax contributions for both individuals and small businesses.
If this jobs bill is passed in any form, it's effect on unemployment will be minimal because businesses hire when they need work done, as in servicing more customers, and that just isn't happening in many small, medium and large American businesses. Consumers have been cutting back, and business cuts back to accommodate the slackening demand for their goods and/or services. Nobody hires because the government offers an incentive to do so, except those wishing to game the system, and there are plenty of those around.
No, the congress should delay and defeat any bill which proposes to spend more money we don't have. The first Obama stimulus - a much larger package - has already proven to be a failure, and this bill comes a number of months late and many dollars - and ideas - short.
The reaction from the markets on Friday was a collective sigh and a return to the "sell" button.
Obama's public bust was not the only item that rattled traders over the final session of the week. European markets were hammered down again, and that sent the dollar soaring against the Euro, which meant that the carry trade of shorting the dollar and buying stocks has gone up in smoke and the machines don't have an algo for that.
Persistent rumors that Greece was about to default, possibly over the weekend, sent European bourses down in droves and sent the US Treasury 10-year note to a record low yield of 1.92%. Also roiling markets was the abrupt resignation of ECB chief economist Juergen Stark, apparently over the continued buying of bonds by the ECB.
The combination of the European crisis escalating again and the failure of the president to offer any convincing plan to combat unemployment sent stocks back to levels not seen in nearly three weeks with the Dow closing below 11,000 for the first time since August 22nd.
The S&P 500 broke through several support levels and is only 31 points away from its August 8 closing low of 1119. The NASDAQ fared better, though not by much, finishing 126 points above its August 19 closing low of 2341.84.
If the rumors about Greece prove true, monday's markets could prove a bloodbath of monstrous proportions, but, even if the Greeks decide to play along, the European financial crisis won't simply fade away, nor will the sluggish environment in which the United States is currently embrolied.
Dow 10,992.13, -303.68 (2.69%)
NASDAQ 2,467.99, -61.15 (2.42%)
S&P 500 1,154.23, -31.67 (2.67%)
NYSE Composite 7,045.01, -212.35 (2.93%)
NASDAQ Volume 2,066,526,125
NYSE Volume 5,467,812,500
Combined NYSE & NASDAQ Advance - Decline: 1083-5459
Combined NYSE & NASDAQ New highs - New lows: 22-353
WTI crude oil futures: 87.24, -1.81
Gold: 1859.00, -10.60
Silver: 41.60, -0.74
The woes of Bank of America continue. They and other banks tied up in the robo-signing scandal may still face extensive civil and criminal charges after the 50-state Attorneys General reaches a "global solution" which has been rumored to be about $20 billion. New York AG Eric Schneiderman has been pursuing Bank of America through his own offices and is not participating in the investigation by the other 49 state AGs. Schneiderman is pushing to claim that BofA and others fraudulently transferred securities to investors, pledging the same notes to more than one group. His investigation continues.
Of all the bright guys out there who cover finance, bank analyst Chris Whalen, the founder and managing director of Institutional Risk Analytics, is among the very brightest of all, so when he says Bank of America (BAC) should file for bankruptcy, maybe CEO Brian Moynihan and others should listen. See Whalen make his case in the video below.
Friday, September 9, 2011
Thursday, September 8, 2011
Markets Down Without Cause; Bike Riding offers Solutions
The Markets
Stocks could not follow through - as expected - yesterday's momentum rally, despite there being a paucity of news - good or bad. The only actionable events were the pre-open release of weekly unemployment claims, which came in poorly again, at 414,000, up 2,000 from an upwardly-revised 412,000 in the prior week.
Other than that, the ECB and Bank of England kept key interest rates unchanged, so all there was to do was to sell those stocks which were profitable in yesterday's trading and sit in cash until after the president's 7:00 pm EDT speech in which he is supposed to unveil some sort of jobs program.
The Bernanke speech in Milwaukee was a disappointment to those who wished he would announce QE3 - it's not going to happen - and consisted mainly of the Fed chairman droning on about how weak the economy is and how the Fed stands vigilant to do whatever it can to fix it. The takeaway was that the fed really doesn't have much power any more, having used up all the bullets in their six-shooter. The speech, thus, was a big non-event.
While there's been a multitude of opinion surrounding what the president might say in his speech tonight, whatever his jobs program might be, it's proabably going to consist mainly of an extension of the payroll tax holiday, tax credits to businesses who hire new employees (a program that has great potential to be scammed heavily), some kind of infrastructure "bank" (read: borrow and spend, also great scam potential) to repair more highways, bridges and tunnels, and little else.
The president is relying on bad economic information, which he has since he took office. Mr. Obama neither understands the US economy nor the travails of the average American. If he truly wanted to fix things in this country, he'd force phone, cable and power companies to cut their exorbitant rates, put a nationwide cap of $3.00 per gallon on gasoline at retail, announce a larger and more-encompassing tax holiday, slash medicare and social security contributions and simultaneously cut the pay of every federal government employee by five to ten percent (the tax cuts would ease the pain completely), and repeal the monstrosity that is known as Obamacare.
That isn't going to happen, so expect the US economy to remain moribund for at least another year, probably 18 months, and quite possibly longer. Until the government gets it's act together and begins to understand that the problem is that there aren't enough real jobs in the country to re-employ the 14 million out of work and that borrowing more on band-aid programs aren't going to jump start anything any time soon. The time is right for fundamental changes to entitlements and the grotesque tax code. Whether there's the political will to make these changes is highly doubtful, especially when all the politicians are focused only on keeping their jobs and fighting for control of the White House. The election is still 14 months away, but that's all that occupies the minds of our beloved "leaders."
Dow 11,295.81, -119.05 (1.04%)
NASDAQ 2,529.14, -19.80 (0.78%)
S&P 500 1,185.90, -12.72 (1.06%)
NYSE Compos 7,257.36, -97.81 (1.33%)
NASDAQ Volume 1,951,654,250
NYSE Volume 4,277,785,000
Combined NYSE & NASDAQ Advance - Decline: 1603-4886
Combined NYSE & NASDAQ New highs - New lows: 58-56
WTI crude oil futures: 89.05, -0.29
Gold: 1865.80, +48.50
Silver: 42.34, +0.79
Idea: Ride a Bike Whenever Practical or Possible
It's been said that when you learn how to ride a bike, you never forget, and since most Americans grew up riding bikes as kids and teens, there's probably about 150-200,000 million of us who could get on one and ride without fear of falling off. For many, especially those whose diets have caused them to become grossly overweight or obese, a good, sturdy mountain bike and a two mile ride every day would go a long way toward reducing both their weight and future medical costs from everything from diabetes to heart disease.
The advantages of riding a bike are probably too numerous to mention, but beyond the obvious health benefits, bikes require no fuel at all, except that which comes from the furious pedaling of our little legs. With the price of gas hovering near $4.00 a gallon, every mile trekked on a bicycle is a savings in fuel use and expense. Not only does the savings accrue to the individual, but if enough people substituted driving their cars for trips of under two miles and instead rode a bike, it wouldn't be long before those ridiculous gas prices began coming down, providing a benefit to the whole country.
Economic change is usually accomplished at the fringes, and promoting bike riding as a health and financial benefit is right out there on the outer limits, where economists are generally blind.
Stocks could not follow through - as expected - yesterday's momentum rally, despite there being a paucity of news - good or bad. The only actionable events were the pre-open release of weekly unemployment claims, which came in poorly again, at 414,000, up 2,000 from an upwardly-revised 412,000 in the prior week.
Other than that, the ECB and Bank of England kept key interest rates unchanged, so all there was to do was to sell those stocks which were profitable in yesterday's trading and sit in cash until after the president's 7:00 pm EDT speech in which he is supposed to unveil some sort of jobs program.
The Bernanke speech in Milwaukee was a disappointment to those who wished he would announce QE3 - it's not going to happen - and consisted mainly of the Fed chairman droning on about how weak the economy is and how the Fed stands vigilant to do whatever it can to fix it. The takeaway was that the fed really doesn't have much power any more, having used up all the bullets in their six-shooter. The speech, thus, was a big non-event.
While there's been a multitude of opinion surrounding what the president might say in his speech tonight, whatever his jobs program might be, it's proabably going to consist mainly of an extension of the payroll tax holiday, tax credits to businesses who hire new employees (a program that has great potential to be scammed heavily), some kind of infrastructure "bank" (read: borrow and spend, also great scam potential) to repair more highways, bridges and tunnels, and little else.
The president is relying on bad economic information, which he has since he took office. Mr. Obama neither understands the US economy nor the travails of the average American. If he truly wanted to fix things in this country, he'd force phone, cable and power companies to cut their exorbitant rates, put a nationwide cap of $3.00 per gallon on gasoline at retail, announce a larger and more-encompassing tax holiday, slash medicare and social security contributions and simultaneously cut the pay of every federal government employee by five to ten percent (the tax cuts would ease the pain completely), and repeal the monstrosity that is known as Obamacare.
That isn't going to happen, so expect the US economy to remain moribund for at least another year, probably 18 months, and quite possibly longer. Until the government gets it's act together and begins to understand that the problem is that there aren't enough real jobs in the country to re-employ the 14 million out of work and that borrowing more on band-aid programs aren't going to jump start anything any time soon. The time is right for fundamental changes to entitlements and the grotesque tax code. Whether there's the political will to make these changes is highly doubtful, especially when all the politicians are focused only on keeping their jobs and fighting for control of the White House. The election is still 14 months away, but that's all that occupies the minds of our beloved "leaders."
Dow 11,295.81, -119.05 (1.04%)
NASDAQ 2,529.14, -19.80 (0.78%)
S&P 500 1,185.90, -12.72 (1.06%)
NYSE Compos 7,257.36, -97.81 (1.33%)
NASDAQ Volume 1,951,654,250
NYSE Volume 4,277,785,000
Combined NYSE & NASDAQ Advance - Decline: 1603-4886
Combined NYSE & NASDAQ New highs - New lows: 58-56
WTI crude oil futures: 89.05, -0.29
Gold: 1865.80, +48.50
Silver: 42.34, +0.79
Idea: Ride a Bike Whenever Practical or Possible
It's been said that when you learn how to ride a bike, you never forget, and since most Americans grew up riding bikes as kids and teens, there's probably about 150-200,000 million of us who could get on one and ride without fear of falling off. For many, especially those whose diets have caused them to become grossly overweight or obese, a good, sturdy mountain bike and a two mile ride every day would go a long way toward reducing both their weight and future medical costs from everything from diabetes to heart disease.
The advantages of riding a bike are probably too numerous to mention, but beyond the obvious health benefits, bikes require no fuel at all, except that which comes from the furious pedaling of our little legs. With the price of gas hovering near $4.00 a gallon, every mile trekked on a bicycle is a savings in fuel use and expense. Not only does the savings accrue to the individual, but if enough people substituted driving their cars for trips of under two miles and instead rode a bike, it wouldn't be long before those ridiculous gas prices began coming down, providing a benefit to the whole country.
Economic change is usually accomplished at the fringes, and promoting bike riding as a health and financial benefit is right out there on the outer limits, where economists are generally blind.
Wednesday, September 7, 2011
The Beginning of a Bear Market
Today was yet another example of the wickedness of having computer algorithms doing what humans used to do. The momentum play was on the upside after German court ruled that Germany's participation in the bailout of Greece and other cash-strapped European nations was constitutional, meaning, for the investing class, that the party of low interest rates, cheap money and free spending without responsibility would continue on the continent without interruption from annoying laws or moral hazard.
The rest of the day-long rally in equities was the work of machines, following the momentum flow of the day.
But what do these sharp rallies really mean? Are they signs of health in US equity markets and the global economy or are they false flag events designed only to be sold off minutes, hours or days later as a bear market commences?
The answer to those questions probably lies somewhere in the recent charts of the major indices, which all show the same pattern of a sharp drop-off at the end of July, followed by a series of volatile rallies and sell-offs, leaving the indices well below their 50 and 200-day moving averages (which have all already crossed over). The high bar for markets is to get back to those July levels, which seem like distant specs on the horizon from where the market now resides.
These high water marks are roughly 12750 for the Dow, 2875 for the NASDAQ, 1350 for the S&P and 8490 for the NYSE Composite. Just take a look below to see just how far stocks would have to rally to regain those levels and your thinking about whether or not this is a good time to invest in stocks might be changed radically because if they don't get there, technicians will call this environment a sustained correction - that is until the indices fall to 20% below their highs made back at the end of April, which would then confirm a bear market.
European indices are already in bear market territory, and the sharp rallies over there are nothing more than short-covering or knee-jerk rallies that belie the true nature of the environment, which has most of Europe falling into recession in the next quarter. If Europe goes, the US will not be far behind, and some say we're already there.
So, what will it be in the coming months? Recession and a bear market (and one which could be particularly brutal) or a sustained recovery, upon which the middle class of America has been waiting nearly three years? Choose wisely.
Bear in mind that today's rally, like so many before it, was punctuated by embarrassingly low volume.
Dow 11,414.86, +275.56 (2.47%)
NASDAQ 2,548.94, +75.11 (3.04%)
S&P 500 1,198.62, +33.38 (2.86%)
NYSE Composite 7,355.17, +207.04 (2.90%)
NASDAQ Volume 1,755,357,500
NYSE Volume 4,312,856,500
Combined NYSE & NASDAQ Advance - Decline: 5655-944
Combined NYSE & NASDAQ New highs - New lows: 35-46
WTI crude oil futures: 89.33, +3.31
Gold: 1817.00, -56.60
Silver: 41.64, -0.32
Idea: Buy Gold and Silver on eBay
Unless you've been living under a rock for the past decade, you know how gold and silver have outperformed stocks and bonds and just about all other asset classes (maybe all of them), but if you are reluctant to purchase some for your own portfolio, you might take a look at eBay's offerings and do a little bit of research into why gold and silver will continue to rise as fiat currencies devalue.
One fine site n which to do some research about pre-1965 silver coins is Coinflation.com, which offers a nice selection of metals-related news and some great charts and tools to determine present and future value of mostly 90% silver coins, which just happened to be the standard way back when the US was a net exporter and a strong, growing nation.
After 1964, coinage was dramatically changed, with the percentage of silver in dimes, quarters, halves and silver dollars substantially reduced. Once you check out the values, head over to ebay and buy a few Morgans or Walking Liberties or Washington Quarters. Prices are fair and right around spot, including shipping and the sellers are 99.99% honest and fair dealers.
The rest of the day-long rally in equities was the work of machines, following the momentum flow of the day.
But what do these sharp rallies really mean? Are they signs of health in US equity markets and the global economy or are they false flag events designed only to be sold off minutes, hours or days later as a bear market commences?
The answer to those questions probably lies somewhere in the recent charts of the major indices, which all show the same pattern of a sharp drop-off at the end of July, followed by a series of volatile rallies and sell-offs, leaving the indices well below their 50 and 200-day moving averages (which have all already crossed over). The high bar for markets is to get back to those July levels, which seem like distant specs on the horizon from where the market now resides.
These high water marks are roughly 12750 for the Dow, 2875 for the NASDAQ, 1350 for the S&P and 8490 for the NYSE Composite. Just take a look below to see just how far stocks would have to rally to regain those levels and your thinking about whether or not this is a good time to invest in stocks might be changed radically because if they don't get there, technicians will call this environment a sustained correction - that is until the indices fall to 20% below their highs made back at the end of April, which would then confirm a bear market.
European indices are already in bear market territory, and the sharp rallies over there are nothing more than short-covering or knee-jerk rallies that belie the true nature of the environment, which has most of Europe falling into recession in the next quarter. If Europe goes, the US will not be far behind, and some say we're already there.
So, what will it be in the coming months? Recession and a bear market (and one which could be particularly brutal) or a sustained recovery, upon which the middle class of America has been waiting nearly three years? Choose wisely.
Bear in mind that today's rally, like so many before it, was punctuated by embarrassingly low volume.
Dow 11,414.86, +275.56 (2.47%)
NASDAQ 2,548.94, +75.11 (3.04%)
S&P 500 1,198.62, +33.38 (2.86%)
NYSE Composite 7,355.17, +207.04 (2.90%)
NASDAQ Volume 1,755,357,500
NYSE Volume 4,312,856,500
Combined NYSE & NASDAQ Advance - Decline: 5655-944
Combined NYSE & NASDAQ New highs - New lows: 35-46
WTI crude oil futures: 89.33, +3.31
Gold: 1817.00, -56.60
Silver: 41.64, -0.32
Idea: Buy Gold and Silver on eBay
Unless you've been living under a rock for the past decade, you know how gold and silver have outperformed stocks and bonds and just about all other asset classes (maybe all of them), but if you are reluctant to purchase some for your own portfolio, you might take a look at eBay's offerings and do a little bit of research into why gold and silver will continue to rise as fiat currencies devalue.
One fine site n which to do some research about pre-1965 silver coins is Coinflation.com, which offers a nice selection of metals-related news and some great charts and tools to determine present and future value of mostly 90% silver coins, which just happened to be the standard way back when the US was a net exporter and a strong, growing nation.
After 1964, coinage was dramatically changed, with the percentage of silver in dimes, quarters, halves and silver dollars substantially reduced. Once you check out the values, head over to ebay and buy a few Morgans or Walking Liberties or Washington Quarters. Prices are fair and right around spot, including shipping and the sellers are 99.99% honest and fair dealers.
Tuesday, September 6, 2011
Swiss Shock Starts Stock Slide
The Markets
While most Americans were munching on burgers, hots and potato salads Monday, the rest of the world was working, and stocks took a major beating in exchanges across the globe. Both Asian and European markets suffered 3-6% declines, capped by a huge fall in the German DAX, as financial woes continue to spread globally, but are hitting the Eurozone especially hard.
On Monday, Asian markets were mixed, but all except the UK and Swiss markets finished in the red.
The workweek in the US began with news that the Swiss National Bank (SNB) decided to peg its "safe haven" currency at 1.20 Euros to stave off a recession and halt the strengthening of its currency that has proceeded at a swift pace since the collapse of Lehman Bros. in 2008.
"The current massive overvaluation of the Swiss franc poses an acute threat to the Swiss economy and carries the risk of a deflationary development," the SNB said in a brief statement. "The SNB will enforce this minimum rate with the utmost determination and is prepared to buy foreign currency in unlimited quantities."
"Unlimited quantities" indeed. The Swiss are prepared to match the Euro and US dollar print for print as the debasement of fiat currencies has now reached a new level of madness/stupidity/desperation (take your pick).
The Swiss move sent the US dollar soaring to two month highs (75.92), and dropped the 10-year note to an historic low yield of 1.91%. The 10-year ended the day at 1.98%.
The trading day began with steep declines, with the Dow off by 308 points at its lows and the NASDAQ shedding 66 points just prior to 11:00 am EDT. After that, it was an uphill climb with a huge ramp job in the final 30 minutes of the session, on either short covering or blithe spirits, though the former seems more appropriate.
With trading on the light side, cutting the losses on the major indices was probably easy work for the criminal Wall Street cartel. Shares will likely be dumped by Thursday when a troika of events - one by Ben Bernanke, one by President Obama and one in Europe by German Chancellor Angel Merkel when she must quell a threatened revolt in her own parliamentary bloc when the Bundestag begins debating the controversial expansion of the European rescue fund, which increases Germany's share of guarantees to up to €211bn (£184bn) from a previous €123bn – about two-thirds of the annual federal budget. Merkel will be first, prior to the open of US markets, followed by Bernanke in Minnesota, with President Obama's highly-anticipated, nationally-televised speech to introduce his jobs program to joint session of congress slated for 7:00 pm, hoping to avoid a conflict with the opening of the NFL season. The Green Bay Packers play the New Orleans Saints at 8:30 pm.
One sector that did not participate in the afternoon rally off the lows was financial, with bank stocks being hit hard once again. Bank of America pared some of its earlier losses, closing at 6.99, down 26 cents, but below the 7.14 price of 700,000 warrants recently offered to billionaire Warren Buffett as a sweetener to his $5 billion investment in the flailing bank. Message to Warren: Don't be in a hurry to own a big chunk of another bank.
Dow 11,139.30, -100.96 (0.90%)
NASDAQ 2,473.83, -6.50 (0.26%)
S&P 500 1,165.24, -8.73 (0.74%)
NYSE Composite 7,148.13, -102.60 (1.42%)
NASDAQ Volume 1,740,810,000
NYSE Volume 5,077,949,500
Combined NYSE, NASDAQ Advance - Decline: 1942-4640
Combined NYSE, NASDAQ New highs - New lows: 32-451
WTI crude oil futures: 86.02, -0.43
Gold: 1873.70, -26.60
Silver: 41.96, -0.91
Idea: Ready to get really scared?
How about a report by UBS, which outlines the frightening aspects of Euro dissolution, i.e., the end of the EMU (European Monetary Union) and the resulting chaos, civil strife and even civil wars. Full text below.
xrm45126
Then there's this post on a little-known blog called Nathan's Economic Edge, from March 20, 2010, which concludes, via the U.S. Treasury Z1 Flow of Funds report that the diminishing marginal productivity of debt (a well-understood, but not widely-circulated concept) reached debt saturation sometime in 2009, thus adding new debt, as the Fed and the federal government are always so eager to do, but the Tea Party wants stopped ASAP, produces negative results, as in lower GDP.
What that means is that the era of fiat currencies, without backing of any kind, is backfiring in a big way. The more money the Fed or the government throws at the problem only makes it worse and hastens the eventual implosion of the currency. However, these things take a long time to work themselves out, but we may be only years away from financial Armageddon.
While most Americans were munching on burgers, hots and potato salads Monday, the rest of the world was working, and stocks took a major beating in exchanges across the globe. Both Asian and European markets suffered 3-6% declines, capped by a huge fall in the German DAX, as financial woes continue to spread globally, but are hitting the Eurozone especially hard.
On Monday, Asian markets were mixed, but all except the UK and Swiss markets finished in the red.
The workweek in the US began with news that the Swiss National Bank (SNB) decided to peg its "safe haven" currency at 1.20 Euros to stave off a recession and halt the strengthening of its currency that has proceeded at a swift pace since the collapse of Lehman Bros. in 2008.
"The current massive overvaluation of the Swiss franc poses an acute threat to the Swiss economy and carries the risk of a deflationary development," the SNB said in a brief statement. "The SNB will enforce this minimum rate with the utmost determination and is prepared to buy foreign currency in unlimited quantities."
"Unlimited quantities" indeed. The Swiss are prepared to match the Euro and US dollar print for print as the debasement of fiat currencies has now reached a new level of madness/stupidity/desperation (take your pick).
The Swiss move sent the US dollar soaring to two month highs (75.92), and dropped the 10-year note to an historic low yield of 1.91%. The 10-year ended the day at 1.98%.
The trading day began with steep declines, with the Dow off by 308 points at its lows and the NASDAQ shedding 66 points just prior to 11:00 am EDT. After that, it was an uphill climb with a huge ramp job in the final 30 minutes of the session, on either short covering or blithe spirits, though the former seems more appropriate.
With trading on the light side, cutting the losses on the major indices was probably easy work for the criminal Wall Street cartel. Shares will likely be dumped by Thursday when a troika of events - one by Ben Bernanke, one by President Obama and one in Europe by German Chancellor Angel Merkel when she must quell a threatened revolt in her own parliamentary bloc when the Bundestag begins debating the controversial expansion of the European rescue fund, which increases Germany's share of guarantees to up to €211bn (£184bn) from a previous €123bn – about two-thirds of the annual federal budget. Merkel will be first, prior to the open of US markets, followed by Bernanke in Minnesota, with President Obama's highly-anticipated, nationally-televised speech to introduce his jobs program to joint session of congress slated for 7:00 pm, hoping to avoid a conflict with the opening of the NFL season. The Green Bay Packers play the New Orleans Saints at 8:30 pm.
One sector that did not participate in the afternoon rally off the lows was financial, with bank stocks being hit hard once again. Bank of America pared some of its earlier losses, closing at 6.99, down 26 cents, but below the 7.14 price of 700,000 warrants recently offered to billionaire Warren Buffett as a sweetener to his $5 billion investment in the flailing bank. Message to Warren: Don't be in a hurry to own a big chunk of another bank.
Dow 11,139.30, -100.96 (0.90%)
NASDAQ 2,473.83, -6.50 (0.26%)
S&P 500 1,165.24, -8.73 (0.74%)
NYSE Composite 7,148.13, -102.60 (1.42%)
NASDAQ Volume 1,740,810,000
NYSE Volume 5,077,949,500
Combined NYSE, NASDAQ Advance - Decline: 1942-4640
Combined NYSE, NASDAQ New highs - New lows: 32-451
WTI crude oil futures: 86.02, -0.43
Gold: 1873.70, -26.60
Silver: 41.96, -0.91
Idea: Ready to get really scared?
How about a report by UBS, which outlines the frightening aspects of Euro dissolution, i.e., the end of the EMU (European Monetary Union) and the resulting chaos, civil strife and even civil wars. Full text below.
xrm45126
What that means is that the era of fiat currencies, without backing of any kind, is backfiring in a big way. The more money the Fed or the government throws at the problem only makes it worse and hastens the eventual implosion of the currency. However, these things take a long time to work themselves out, but we may be only years away from financial Armageddon.
Saturday, September 3, 2011
Government Sues 17 Banks Over Faulty Mortgage Backed Securities
This news broke early on Friday, but details were just coming in as the markets were closing.
The Federal Housing Finance Agency is the conservator for failed federal GSEs, Fannie Mae and Freddie Mack. The agency seeks a total of $196 billion in damages in state and federal courts from the named defendants, including some $24.853 billion from Merrill Lynch and First Franklin Financial (owned by Bank of America). All of the charges are made in connection with false or misleading representations and warranties made to Fannie and Freddie by the banks.
The list is pretty much a who's who of the sub-prime and general mortgage crisis which pushed the global economy to the brink of disaster back in 2008, including such notables as Goldman Sachs, Bank of America, JP Morgan Chase, Citigroup, Countrywide Financial (now part of Bank of America), Deutsche Bank and others.
American Banker points out that the largest exposure - $57 billion - belongs to Bank of America (BAC) because the bank not only sold $6 billion of MBS to Fannie and Freddie, but the figure grows larger when factoring in the damages charged against Merrill Lynch and Countrywide, both acquired by BofA during the financial crisis. JP Morgan Chase has to deal with $33 billion in claims, including those of Bear Stearns and Washington Mutual, both of which were taken over by JP Morgan Chase.
Below is the press release in which the agency lays out the charges. Here is a link to the individual cases.
FHFA
While most of the American public must be cheering this news, it's about the worst that could happen to the TBTF banks, being that their reputations and balance sheets are both on shaky footing. The hardest hit will surely be Bank of America, which is being sued by virtually the whole planet, including AIG and USBancorp.
The litigation involved in these cases will likely take many months, if not years, to settle and will cost the banks dearly in legal costs, which are already taking their tolls on profits.
In addition to the banks, a multitude of individuals are charged with various violations of securities laws, though none of the CEOs - such as Jaime Dimon, Dick Fuld or Lloyd Blankfein - are among the defendants. Obviously, the government is going after the lowest-hanging fruit in an attempt to garner public support by going after "bad guys."
This is a developing story with far-reaching implications for the global economy. MoneyDaily will stay abreast of events as they develop.
With any luck, we may witness actual "perp walks" as the lower-level employees implicate the top rung of the banking elite. The thought of seeing Jaime Dimon or Lloyd Blankfein in leg irons and handcuffs is almost too delicious to consider.
The Federal Housing Finance Agency is the conservator for failed federal GSEs, Fannie Mae and Freddie Mack. The agency seeks a total of $196 billion in damages in state and federal courts from the named defendants, including some $24.853 billion from Merrill Lynch and First Franklin Financial (owned by Bank of America). All of the charges are made in connection with false or misleading representations and warranties made to Fannie and Freddie by the banks.
The list is pretty much a who's who of the sub-prime and general mortgage crisis which pushed the global economy to the brink of disaster back in 2008, including such notables as Goldman Sachs, Bank of America, JP Morgan Chase, Citigroup, Countrywide Financial (now part of Bank of America), Deutsche Bank and others.
American Banker points out that the largest exposure - $57 billion - belongs to Bank of America (BAC) because the bank not only sold $6 billion of MBS to Fannie and Freddie, but the figure grows larger when factoring in the damages charged against Merrill Lynch and Countrywide, both acquired by BofA during the financial crisis. JP Morgan Chase has to deal with $33 billion in claims, including those of Bear Stearns and Washington Mutual, both of which were taken over by JP Morgan Chase.
Below is the press release in which the agency lays out the charges. Here is a link to the individual cases.
FHFA
While most of the American public must be cheering this news, it's about the worst that could happen to the TBTF banks, being that their reputations and balance sheets are both on shaky footing. The hardest hit will surely be Bank of America, which is being sued by virtually the whole planet, including AIG and USBancorp.
The litigation involved in these cases will likely take many months, if not years, to settle and will cost the banks dearly in legal costs, which are already taking their tolls on profits.
In addition to the banks, a multitude of individuals are charged with various violations of securities laws, though none of the CEOs - such as Jaime Dimon, Dick Fuld or Lloyd Blankfein - are among the defendants. Obviously, the government is going after the lowest-hanging fruit in an attempt to garner public support by going after "bad guys."
This is a developing story with far-reaching implications for the global economy. MoneyDaily will stay abreast of events as they develop.
With any luck, we may witness actual "perp walks" as the lower-level employees implicate the top rung of the banking elite. The thought of seeing Jaime Dimon or Lloyd Blankfein in leg irons and handcuffs is almost too delicious to consider.
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