Friday, December 5, 2008

Dissent Will Not be Tolerated

Home late again. The wife and I selected the Christmas tree and I had to set it up. The house has that great pine smell and the dog seems uninterested in the needles, so that is good.

Silver Bars Bonanza
A little while back I had gone over all the trouble I had locating silver bullion bars online. At a local coin shop I was able to procure 10 silver eagles, and they were not shall we say low markup! I had about quit on the idea of getting a stash when I stumbled upon EBAY.

Now you have to put in the time and be crafty, but so far I have been able to get a good amount of 1 ounce bars at reasonable markups to spot. One set of 10 one ounce Pan American bars I got for just about $11.50 each, not too shabby! So the silver buy is on again. This is great as both gold and silver crash and burn, it seems I am always right on time!

The Second Great Depression Will End in Second Half of 2009; The Markets Say So
As you are all well aware, the stock market looks ahead 6-9 months and prices in that future with neverending accuracy. The market is always right and is a forward looking mechanism. So what does the recent action say?

Well except for that horrible down day (over 700 down on the DOW) the markets have had a nice two weeks. The major down day was blamed on the call of a technical recession, but today's scary job loss number (-553k for November) obviously mean things are at the bottom. And if that is not right, well more government help is on the way so a bottom is here in either case. Can't argue with that logic!

Here is a Yahoo Finance story with all the details:
Stocks shake off jobs report to end with big gains
Stocks shake off dismal jobs report to end with sharp gains; indexes jump more than 3 percent
NEW YORK (AP) -- Wall Street put an upbeat spin Friday on the government's report that the nation lost more than half a million jobs last month. Stocks reversed early losses and closed sharply higher as the data raised hopes that Washington will again step in to help the economy.
"In a kind of paradoxical sense, the really ugly employment numbers probably helped the case for more help from Washington, whether it's through the broader stimulus plan or more targeted industry measures," said Craig Peckham, equity trading strategist at Jefferies & Co.

Now if journalism existed the question to Mr. Peckham would be: "How successful up until now has the government intervention been?". Remember last August the government really got into the help business and things have certainly been on the mend ever since!

Again, this is why the markets are worthless right now. The markets are priced to reflect an idea that the FED/Treasury/Congress can or will be able to do anything helpful. Shoveling out money has failed, but what else can they do? It is easier to play make believe than think things out and thus you will see days like today and dumb comments like Mr. Peckham's. One might ask that guy if he thinks government hands in the pocket of his company Jeffries and Co is bullish for their earnings.

Dissent Will Not be Tolerated
On Wednesday I poked fun at the FDIC chair Sheila Bair (The Crutch that is Soon to be a New Appendage)when she said the government needed an "exit strategy" while on the same day Paulson was saying the Treasury was targeting loan rates to 4.5% and Nouriel Roubini was calling for massive government intervention. It seemed funny to me to be so at odds on core principle.

Well as we all know many, if not all, employees of the FED/Treasury read this blog and they were not amused at the contradiction. In fact incoming Treasury man Timmy G was so incensed at Mrs. Bair breaking the "government is going all out" mantra he has hatched a plan to dump the poor old bird (from Bloomberg):
Geithner Seeks to Push FDIC’s Bair Out After Clashes
Dec. 4 (Bloomberg) -- Timothy Geithner, President-elect Barack Obama’s choice for U.S. Treasury Secretary, is seeking to push Federal Deposit Insurance Corp. Chairman Sheila Bair out of office.
Geithner, president of the Federal Reserve Bank of New York, has argued Bair isn’t a team player and is too focused on protecting her agency rather than the financial system as a whole, according to two congressional officials and a person familiar with his thinking. Bair has battled with Geithner and fellow regulators over aid to Citigroup Inc. and other emergency actions, making her enemies in the Bush administration.
The idea of having an independent actor on the stage with you who might not be singing the same tune can make you nervous,said Wayne Abernathy, a former Treasury official who is now executive vice president with the American Bankers Association in Washington. “They recognize that she’s a very independent person.”

HAHAHA! I love it. The FDIC chair is concerned with keeping her agency equipped to do what it has to, protect savings at troubled banks! The nerve! The gall! How could she do this? Add to this that Mrs. Bair is an independent actor that does not engage in blatant group think and she is as good as gone. There simply will be no disagreement about help for Wall Street. The markets cannot take any hint that help mat be slow or not coming at all. Silly Sheila, brains are a hindrance in the new paradigm.

Friday Night Entertainment
Not much in the way of requests, so I guess it is up to me.

Outlaw Josey Wales Clip
Love the scene when Wales faces down the bounty hunter:

Music To Make the World Go Round
Friday night means tunes to get you going.

I am a soundtrack maniac. I love the great music great films often have. Listen to this wildly pretty though sad tune from the "Lord of the Rings" called "Gandalf has Fallen":

From the really really strange vault I submit Primus with the song "Winona has a Big Brown Beaver". Very out there:

This song by Bon Jovi always gets me going. Great tune to drive to, listen to "It's My Life":

One more for this evening. Another great Ipod find was the amazing band Faith No More. You caanot dislike the song "Epic":

Have a good night.


Anonymous said...


I believe there may be a lot of fund mangers trying to get their dismal bonus up for the year. The Yen topped this morning and rolled over right at the bottom and headed higher all day. Looks like on and A-B-C up we are headed to 971 on the S&P. This is the 10th day of the rally and they typically last 17-25 days so looks like Santa is coming to town. Option expiration is on the 20th and then we have the Friday after Christmas. This ain't over on the downside IMHOP, not even close.
Corn hit 3.06 today, them farmers that didn't get hedge or sell above 5.5 are a hurt'en

watchtower said...

So Timma wants to s***can Sheila Bair.

Ongoing consolidation of power is what I say.

Will they be satisfied when the world is completely theirs?

watchtower said...

One more thing, Antal Fekete said that gold went into "backwardation" for the first time in history.
Here is a short excerpt:

by Antal E. Fekete,

"December 2, 2008, was a landmark in the saga of the collapsing international monetary system, yet it did not deserve to be reported in the press: gold went to backwardation for the first time ever in history."

DAVID said...

I wonder how long everyone can continue to believe the fed and treasury who have been wrong and behind the curvr at every stage since the'crisis' began in July 2007.

Also, who really appreciate a post on the US Treasury market.
- What will be the impact as foreign central banks invest less of their forex reserves in treasuries, as they struggle to support local currencies, and local infrastructure projects.
- Also the lack of petrodollars from the middle east thanks to low oil prices, is negative for US Treasuries long term( given the scale of borrowing that will need to be done).
- As chinese exports clow/collapse, they will also be less aggressive while buying US Treasuries.

Any thoughts?

ps( excellent work on you blog as always.)


Anonymous said...

As expected, Mr Paulson urged Beijing not to abandon efforts to let the renminbi appreciate, said US officials, amid fears China might want to let its currency weaken to help local exporters weather the global slowdown.

But Mr Paulson also found himself facing calls for the US to address its own economic problems. Wang Qishan, a vice-premier and leader of the Chinese delegation at the two-day talks, called on the US to take swift action to address the crisis.

“We hope the US side will take the necessary measures to stabilise the economy and financial markets as well as guarantee the safety of China’s assets and investments in the US,” he said.

The dialogue was dominated by the global crisis. Zhou Xiaochuan, governor of the Chinese central bank, urged the US to rebalance its economy. “Over-consumption and a high reliance on credit is the cause of the US financial crisis,” he said. “As the largest and most important economy in the world, the US should take the initiative to adjust its policies, raise its savings ratio appropriately and reduce its trade and fiscal deficits.”

Although China also faces a rapidly slowing economy and rising unemployment, the tone of the comments reflected an underlying shift in power.

Eswar Prasad, a senior fellow at the Brookings Institution, said: “One result of the crisis is that the US no longer holds the high ground to lecture China on financial or macroeconomic policies.”


Anonymous said...

Treasury Department officials are laying the groundwork for seeking the second half of the $700 billion financial rescue package from Congress and have approached President-elect Barack Obama's transition team in an effort to gain access to the funds, sources familiar with the matter said.

With lawmakers on both sides of the aisle expressing heated opposition to such a request, Treasury officials have come to realize that they need the president-elect's help to obtain the rescue money, the sources said.

The Treasury aired the possibility of seeking the second half of the funds with transition team officials, who said they would attend a meeting with lawmakers and the Bush administration if the department pulled one together.

Of the first $350 billion in rescue money provided by Congress, the Treasury has only $15 billion left, which may not be enough to save a major financial institution if it collapses.

Why is I think that if over the next week and a half if Hanky ain't got his money some key company may run into a few financial problems. Hummmmmmmm


watchtower said...

@ Kevin
It was possibly over a year ago, maybe longer that you made a statement to the effect that in the future infrastructure would come to the forefront as a way for the US to create jobs and stimulate the economy.
As we all know this seems to be President Elect Obama's main talking point here lately...good call Kevin!

watchtower said...

Obama Plans Largest Building Program Since 1950s

By Hans Nichols

"Dec. 6 (Bloomberg) -- President-elect Barack Obama said he’ll make the “single largest new investment” in roads, bridges and public buildings since the Eisenhower Administration to lift the sagging economy and create jobs."

watchtower said...

by Antal E. Fekete

"Here is an update on the backwardation in gold that started on December 2. It continued and worsened on December 3, 4, and 5. So far this is the most serious signal of the economic crisis: the world is rushing headlong into a Great Depression, possibly worse than that of the 1930’s."

"This is why this battle is so crucial: it is the first real confrontation between physical gold and the paper dollar."