CNBC reported that the 30 year auction was “a dog”. Stating that the government had to pay much more interest than expected. Does that mean that rates are headed up for now?

from ZH on the auction results:”Put A Tail On It And Call It Lassie”http://zerohedge.blogspot.com/2009/05/put-tail-on-it-and-call-it-lassie.html

because they want ALL the money?

From Bloomberg earlier today – but if you read the text it is very telling for two reasons”Wal-Mart Sales Top Analyst Estimates on Store Visits (Update1)”May 7 (Bloomberg) — Wal-Mart Stores Inc., the world’s largest retailer, reported comparable-store sales for April that rose more than analysts estimated after consumers shopped more often for $4 medicines and $1 Easter candy. … The shift of Easter to April 12 from March 28 in 2008 also lifted sales. “____________How did the largest retailer in the world beat the numbers according to Bloomberg:$1.00 Easter candy and Easter shifted from March to April (like none of the analysts new when Easter was going to be)All in all a sad commentary on the state of financial reporting and given the surge in $1 candy sales, the American consumer.

Is it still a suckers’ rally, my good professor?

As always, for those interested I have a new post up at The Light of Day:http://medic-thelightofday.blogspot.com/2009/05/better-than-expected.htmlI have little doubt that the Stress Test results will be “better than expected”…….

from a previous post…If you have any doubt as to whether or not this administration’s plans to revitalize the economy will work or not, there is only one sentence from Timothy Geithner’s article in today’s New York Times that you need to read:”This is just a beginning, however. Our work is far from over. The cost of credit remains exceptionally high, and businesses and families across the country are still finding it too hard to borrow to meet their needs.”The purpose of this administrations actions is to create a system that will further indebt its citizens. This cannot, will not, and never has worked. It may prop up the Tower of Pisa, but everybody knows it will fall someday.Any individual, family, community, or country that must borrow to meet its “needs” is in trouble. As Mark likes to say, it’s just not sustainable. The foundation of a healthy economy is the ability to meet one’s needs without taking on debt. Indeed, if one has to take out loans to meet one’s needs, one is, by definition, a slave! So in effect, Mr. Geithner is telling me that he’s doing his best to heal my master so that I can place myself back into his service. Well, thank you Mr. Geithner, but I think I’ll take a pass – and I hope that there are many more like me who will do the same.Damocles’ sword dangles above our head. This administration wishes to tie us to the ground, so that we can’t avoid our fate. The vast majority of the world’s citizens seem to think that they have no choice – so they bring the rope for their own hanging. I, for one, refuse the demands of my “leaders”. No more debt, no more doing business with the oligarchs, no more blind fealty to self-serving leaders. There are things I can’t avoid due to my duties as a citizen, but in all other respects, I’m taking my life back, one step at a time. Husband first, father second, disciple third, citizen fourth – the rest is just the details.Reply to this comment By econoprophet on 2009-05-07 12:40:43

It came and went so fast that I’m not sure anyone noticed, but in the last post the author summarized Robin Wells comments in this way:First, she says it should be no surprise the contraction is slowing down. With the rapid rate of decline over such a short period, if it didn’t slow down, we would soon be knocked back into “the stone age.”This is the most concise and understandable argument against the “green shoots of recovery” argument that seems to have the media drooling all over themselves these days.There’s a very real tension that is playing itself out in the mind of the American public. On one hand, they’re being told to trust the government, spend their money, and go about business as usual. On the other hand, there’s a general feeling that all is not well: people are hoarding cash (a savings rate of over 4%, consumer credit down 5.2% in March), looking for hope, and wondering why, if all is well, they feel a little pinched.The government is engaged in the greatest PR campaign since the New Deal. They are all in on the idea that words shape reality, and actions have no consequences. It should be an interesting ride.

Spot on … on that last paragraph especially. What you are seeing here, no more and no less, is a huge head fake by Obama, Summers, Geithner and Bernanke. There is no doubt that they are deeply worried about the real state of the US economy – and they are willing to go to any lengths to put a facelift on the financial system.On the one hand – if they decide to spend the $$$ to make it happen, then don’t underesimate the power of the banks, Fed and Treasury to pump the markets higher. Sure enough – the markets are going higher right now. Even on bad news and crummy volume.But nobody in their right mind is fooled by what is going on. Least of all the bankers and brokers on Wall St itself. One of the newspapers (Wall St Journal?) ran a major story yesterday talking about how MANY bankers and brokers are quitting the Street and going somewhere else for a job. Can you blame them? The future is much brighter in places like Mumbai, Singapore, Hong Kong, and Shanghai.What’s happening with Wall St and Washington DC is a national tragedy. The American people need a serious government effort to re-shape the US economy in new directions that are actually going to work in the 21′st century. We’re facing a major structural collapse as financial sector, service sector and manufacturing jobs hit a brick wall. And we’ve got leadership that doesn’t have answers – and is in denial.PeteCA

If you had any doubt whatsoever of the scumsucking leaches that are orchestrating the bailouts then read this press release from the NY Fed – and how their Chair had his hand in the Goldman Cookie Jar and got caught red handed.http://www.newyorkfed.org/newsevents/news/aboutthefed/2009/oa090507.htmlStephen Friedman Resigns as Chairman of the New York Fed’s Board of Directors “May 7, 2009NEW YORK—The Federal Reserve Bank of New York announced today that Stephen Friedman, chairman of the board of directors of the New York Fed, has informed William C. Dudley, president and chief executive officer of the New York Fed, and the Board of Governors of his decision to resign effective immediately….He was extraordinary. And, with respect to Steve’s purchases of Goldman shares in December of 2008 and January of 2009, which have been the object of some attention lately, it is my view that these purchases did not violate any Federal Reserve statute, rule or policy. I enjoyed working with Steve, and will miss his contributions in the boardroom.”“I would like to thank Steve Friedman and his fellow directors on the New York Fed’s board for their service,” said Donald L. Kohn, vice chairman of the Board of Governors of the Federal Reserve System. “I particularly appreciate the very rigorous process Steve established to select the new president of the New York Fed.”May 7, 2009 Letter of resignation pdf

Um, I don’t know. Record earnings as opposed to *net* earnings, maybe?

That list is comprised of corporate insiders. They could be selling to the “real” insiders: Specialists and the more powerful Exchange Members who in turn will raise prices even more to instigate demand.IMO, investors are better off picking a few moving averages and using them as their exit and entry points. This approach eliminates the guess work involved in forcasting price movements, something I’ve never seen anyone do, consistantly.In fact, forcasts of experts tend to be wrong at the most critical times. The median prediction made by top Wall St. Analysts for where the S&P would be at the end of 2008 was ~1500. The same thing happened in 1929. Guys like Ben Graham and Irving Fisher got cleaned out and would’ve been much better off using an arbitrary sell point.Hell, I saw that sideshow freak Cramer crowing that he got his followers out at Dow 10.5K (Of course, he forgets to mention how many times he got them back “in” as the market was tanking). Had an investor used a 150 day moving average as an exit point, he would’ve gotten out at ~12.5k. So, Cramer’s vast “expertise” was worth about -15% compared to a method that anyone, regardless of experience, could’ve employed.

It sure is. The banks are only profitable due to the money from tarp, and the promise that the taxpayer will buy the bad debts. Earnings were dismal. Two major companies are either being liquidated, or about to be. Unemployment is terrible, and people who are out of work don’t buy over priced houses or cars. The credit default swaps are still indicating a huge number of foreclosed houses are out there. The fed is printing money to prop the whole charade up, and last week started acting as though they were part of a cheer leading squad. What does the DOW ever have to do with reality? Bear rally.

Possibly.But the corp. insiders could also be selling because they know (or suspect) that the real capital requirements for the banks may be a lot higher than Giethner’s “stress test” plan is saying. So the insiders might be expecting a move down by the markets when it becomes clear that home prices have not bottomed and assets have substantially further to fall. “Buy” and “Sell” signals using this type of advice are probably not super-accurate. But it certainly does give people some room for caution … buyer beware.PeteCA

First, the banks appear to be saying that they will raise new money by selling assets, selling common stock, or converting preferred stock to common stock. But selling assets at what price, exactly? This looks a lot like selling over-priced assets under the infamous PPIP program, where eventually the losses are transferred to the FDIC and the US taxpayer.But let’s dig a little deeper. The folks at the Fed were not exactly stupid here. The “average” assumptions for the bank stress test were that US housing would fall by 14% in 2009 and a further 4% in 2010. But the Fed also asked for a parallel study assuming a worse set of assumptions: US home prcies to fall by 22% in 2009 and a further 7% in 2010. Have you noticed something? Nobody has released the results of how much these banks would need in capital if the “worst-case” conditions from the Fed were to come true.Interesting.But for one view of losses in the US housing market see the following article, which does not paint a pretty picture.More Pain In Housing ComingPeteCA

Actually … let me modify the above statement. I get the feeling that something is wrong in the markets. But I doubt it just has to do with this so-called stress test. The dollar is set up to take a substantial drop, China is getting very nervous, and bond prices are under growing pressure at recent sales. The odor looks like it is coming from the credit markets.

sidewinder

ATTENTION!Please keep lines in your posts short ( dont use entirelenth of the visible area) because of SIDEWINDER problem.I hate it when that happens. Thank YOU Hint! make your postmake bit look like one.Thank You very much

Disciple first, econoprophet.

I think what Bernanke wants is a smooth transition. A gradual slow drop on the dollar. Slow but steady drop in demand for US debt – which he hopes to monetize steadily (and within his budget). But if the market dumps debt quickly, that poses a problem. A lot of buying recently has been in T-Bills and short-term debt. These might be the people to watch.PeteCA

Besides it could be said that it was the Chinese economy that grew faster because of lack of US worker protection laws. But that is a different story altogether.

technically the fed has missed the critical point for the most effect of intervention in bond prices. i speculated previously and even longed bonds but now I would just watch it sinking – because now the fed has lost credibility in maintaining the price level they want to be. i doubt the fed has run out of the 300b funds for jacking up bond prices, probably the dumping by the market has been much heavier than expected, and that’s why the fed felt unable to take any more.

Roosevelt stumbled around a lot at first and did not understnad economics at all. Look at the disasterous Warren Plan.But he could learn. Hoping for the same from O’bama.

GM supposedly needs $11.6 billion in aid to survive 2009.They could just sell more of their assets – I am sure theycan scrape together $11 billion (in fact they need less ifthey have less assets).Besides they have sold a large amount of cars in China lately.Are they hiding the profits received from that?To survive year, GM says it needs $11.6 billion in aidhttp://www.freep.com/article/20090508/BUSINESS01/905080415/To+survive+year++GM+says+it+needs+$11.6+billion+in+federal+aid

An interesting read from Krugman’s Op-Ed in today’s NYTStressing the PositiveBy PAUL KRUGMANPublished: May 7, 2009Hooray! The banking crisis is over! Let’s party! O.K., maybe not.http://www.nytimes.com/2009/05/08/opinion/08krugman.html?_r=1

http://archive.wbai.org/.Thursday, May 7, 2009 3:00 pmPublic Affairs.30 min. into segment bill moyers.speach in california..”.. it is time to fight back.”

But What If The Worst Isn’t Over?http://www.businessinsider.com/but-what-if-the-worst-isnt-over-2009-5The market seems to be operating under the assumption that the worst is over. We’re never going back to the old lows, the second derivative of unemployment and housing is all good, and with the stress test behind us, the banks are finally on a stable footing. Maybe.The market’s move has been powerful, and we’d hesitate to discount what it (might) be telling us.But we continue to be nagged by a few things, namely some big macro problems that aren’t going away. Massive muni and pension shortfalls, for example. We still don’t see how California — which now has to borrow more just to pay off its borrowings — gets out of its budgetary crisis without massive structural changes. Mini Californias are everywhere.We still don’t know what happens to New York when the Wall Street severance payments run out.And is this crisis — ostensibly the worst since the 1930s — really going to go away without a fundamental shift in lifestyle? How could this be it?And finally, where the heck are people going to go to work? We see tons of people with skills and experience designed for the last economy: real estate, finance, etc. Without real, non-public industries for these people to go to, the odds of a recovery seem slim.Roger Ehrenberg is thinking along similar lines:But what if, just what if, the economy hasn’t turned the corner? What if job losses continue apace, residental mortgage defaults continue to rise and corporate bankruptcies spike? As defaults ripple through the system, given the lack of transparency and granular, easily accessible data around mortgage-backed security vehicles (CMBS, RMBS) and credit default swap (CDS) positions, how are we to untangle the mess in a timely and efficient manner? How are investors supposed to accurately price risk in the absence of this data? The US Government can continue its posture of uber-borrower, but this game can only go on for so long. Let’s say the Chinese government gradually reduces its net purchases of US Treasuries, and also shortens the duration of its Treasury portfolio. As the US Treasury continues to run the printing presses, the Chinese would gradually build a compelling argument (and a powerful economic position) as to why the US Dollar should no longer be the global reserve currency and the basis of exchange in oil. Profligate spending coupled with fewer willing buyers will drive up US dollar long rates, debase the currency and set off a very unpleasant inflationary cycle. With plummeting real asset values, spiking inflation and high credit costs, the US would be in a very uncomfortable position, indeed.Let’s hope that bad bond auction yesterday wasn’t the start of something big.

Whatever happened to all the ‘service industries’? Can’t they accomodate the 25 million?

To temporarily fix this – find the post from guest, above, with all the ‘AAAAAHHHHHH’ text and click hide reply.The sidewinder strikes again when you refresh the page, but it’s better than nothing…

The service industry requires that people first earn money doing productive, real work, non-service type jobs; i.e manufacturing, farming etc. Then those honest hard workers may have some money to pay service workers.

On CNBC entertainment right now. Hospitals hiring. Methodist Hospital System says 70% for nursing, the other for IT, managerial, non-clinical etc.Consider:1.)If more people losing insurance because no jobs=no insurance, then will there continue to be hiring?2.) Who ultimately pays for a lot of this health care? Ans:Government!: Govt workers, tax deductions, military,medicaid, medicare..these are paid by govt. What it boils down to is that about 45% of health care money directly or indirectly paid for by government.Now where does the govt get money? Well we know the answer.Enjoy the medical system largesse while it lasts.

My fault, everyone. I didn’t know my angst would cause so many problems.IT guys, maybe you can take a look at this problem?

THE BELARUSIAN GAMBLEREurope’s New Eastern Friend

ROUBINI’S STAR IS FADINGhttp://www.businessinsider.com/roubinis-star-is-fading-2009-5Look, his star may be fading, but his dating life is obviously in full swing (is that blond his daughter, or what?)You go, Doctor!

Don’t forget the millions of May college graduates that will be out of work. But conveniently this number won’t be in U3 unemployment.

He sure looks happier in these pics than he does he does during regular economic related interviews.The girls look hot. And why not? Dr Roubini deserves his success, having toiled in obscurity and ridicule for so long. Rub it in the media’s face Dr Roubini. This in no way diminishes my respect for your opinions /analysis, even if I don’t completely agree with everything you say. My impression is that you are an OK guy as well.

Next time, leave out the 30 somethings when you criticize the younger generation.The 30 somethings are in a different generation from the 20 somethings.The entitled or as you call “spoiled” generation you refer to arethe millennials – born after early 1980′s. Most 30 somethingshad to work hard to go to college w/o Mommy and Daddy and are notthe later childern of the boomers that received the spoils from the boomers.

another article by the same author from business insiderDoes Nassim Taleb Have Any Understanding Of Private Equity?http://www.businessinsider.com/does-nassim-taleb-have-any-understanding-of-private-equity-2009-4I guess he missed the fact that Taleb runs a successful hedge fund and included in Taleb’s resume (taken from Taleb’s website: Was inducted in the Derivatives Strategy Derivatives Hall of Fame (Feb 2001). I was mostly a prop trader until 1993, then became more arbitrage oriented. I held positions of managing director and head trader at Union Bank of Switzerland, worldwide chief derivatives trader for currencies, commodities and non-dollar fixed income at CS-First Boston, chief currency derivatives trader for Banque Indosuez (age 25), Managing Director and worldwide head of financial option arbitrage at CIBC-Wood Gundy, derivatives arbitrage trader at Bankers Trust, proprietary trader at BNP-Paribas, as well as independent option market maker on the Chicago Mercantile Exchange (…). Owned Empirica LLC a trading/hedging/protection operation (currently the business became the Black Swan Protection Protocol managed by the traders at Universa –I am an advisor). Note that EMPIRICA WAS NEVER CLOSED. Current Corporate Boards: a few hedge funds. A prophetic novel by Viken Berberian about Empiricus Kapital. Other honors: Frost and Sullivan Visionary of the Year (2008).

Ryskamp has surfaced at zerohedge -http://zerohedge.blogspot.com/2009/05/rattner-doctrine-has-won.html

let me restate… I feel sorry for the younger generations, there is a lot of truth in that the parents of thelast 20 years did indeed not do enough to inform the younger generation. 2 parent working families, the needfor greed by the “boomers” a totally and ineffective Educational system that has just deteriorated over the last 20years… to those offended, it was not intentional and kudos to those that do and are paying attention andtrying to better themselves. My daughter graduates from college in 2 weeks, she Double majored and completed 4 yearsand will only be 21 at the time of her graduation, but their are NO JOBS at this point other than 20k-30k jobs forher and that is not why she went to school. I am very connected with those in 20-30′s and i do sense their affinityfor Ipods, Gaming, not valuing saving, not fully understanding hard work, they expect to have what thier parents have orhad, but not fully understanding all that is going on now and wanting to help help effect change. Again, not allareas i described and the boomers and 40,50,60 somethings that created this absolute disaster and theft of our culturaland finanical morals should be held accountable, but again it was not all of us. in fact most of feel as if we have beenswimming upstream the past 10 years or so… in order to fix any problem you have to understand it first. and I’llend with thier are NO JOBS and NO GOOD JOBS on the horizon so how do we FIX that?

MM CA,Well said. Thanks for clarifying. I think we all feel marginalized at this point, and need to find waysto regain a sense of control on a personal and local level. As we change our lives, others will notice,and perhaps we can right the ship before its too late.

More like “nyet” earnings, comrade.

I really think US is no more about Capitalizm we are arrowing twards Socialism (like Lenin, Marksism).homestly I belive we should getting red off UNIONS if youproform bad to bad pal you lose i mean everythink.Banks let them go down.new ones will emerge stronger and smarter. other wise if we let old S.B. it will happen again and this time willbe even worse.