One Big Mess Monday

I think I tried to do too much this weekend and now I am out of gas and have to go back to work tomorrow. Large BBQ cooks, kayak fishing and yard work were all in play this weekend. Just a few items for the holiday Monday.

Blogger Battle
Readers should be aware that I am a big fan of gold and silver and hold physical metals. Anyone who does own metals or anyone who thinks they are a waste of time would do well to check out the lively debate between Zero Hedge contributor Gordon Gekko and Market Ticker author Karl Denninger. Nothing quite like two smart guys going at it in the blogosphere!

Gordon's pro-gold article:
Mr. Denninger and Gold or Why the Dollar-Deflationists Are Wrong

Denninger's rebuttal:
Listen to the Hucksters, Lose Your Ass

Good stuff!

"The Road"
Last night I dialed up some OnDemand and watched "The Road":

The film is based on a novel by Cormac McCarthy, who also penned "No Country for Old Men".

This movie is brutal. It hurts to watch this film. I would recommend it, but you need to know it is a rough film. Even today I am thinking about it and how powerful it was. Add to this some crazy forest fires in Quebec are causing enough smoke to be blown all the way down here in Massachusetts and my eyes are killing me. Bad omen perhaps!

Right now we have the Gulf Oil Spill which continues to be worse than thought, the Quebec fires, and Israel doing all kinds of things (Submarines off coast of Iran, storming ships from Turkey). Everything just seems a big mess right now.

Cooking on the Keg
On Saturday I made twp racks of babyback ribs and 30 MOINKS (meatballs wrapped in bacon). I usually take pictures but I forgot this time as I was doing too many things all at once. Sorry!

I did a simple cook today, just some cheeseburgers and hot dogs. Nothing too exciting:

Here they are about done. In this picture you can see the top grate that swings out for extra cooking space. I used it to toast the buns (go ahead and focus on that line in the comments!):

They were very good!

Added:
Here was Friday's cook; a huge Porterhouse steak for me (I had not eaten all day, was on the kayak all day!) and a couple of filet mignons for the wife and mom in law:

See, variety. Meat, some meat, and then some meat, HA!

I am not ready to go back to work. At least it will already be Tuesday.

Have a good night.

Friday Night For a Long Weekend

Way short on time so here we go!

Kayak Fishing
Obviously I did not drown! That is a good start.

It was really fun. I had a bit more trouble getting the boat on top of the wife's (you did not think I was going to load a kayak on my G35X did you!??) Toyota RAV-4 was harder than I thought. I think I may have pulled my back out a little. I will just ignore it.

The boat was easy to use and very stable. The fish were in a biting mood and I caught some bluegills, a chain pickerel, and the biggest black crappie I have ever seen up here. 8 inches from nose to tail! I switched from shallow flats to deeper water old river channel fishing in the mill pond and I hit some really big largemouth bass. Two were easily over 4 pounds which is pretty good up here. No issue in getting them to the boat. All fish released unharmed, I even use pliers to push the barbs on the hooks down to help the fish.

I will be doing this much more.

Friday Night Entertainment
When in doubt, lay it out!

Random Stuff
Anything goes!

Just in case you wanted to know:
How to Make a 46,000 Calorie Kit Kat Bar
I'd be on that like a rat on a cheeto!
Thanks Ran!

I know I missed this in the film "Back to the Future" and I think you may have too:

Twin Pines Mall becomes Lone Pine Mall! Awesome!

Fun with Pictures
Visual aids for your perusal.

Not quite the film "Vision Quest":

Nasty!

I should not have this one up considering I just started kayak fishing:

I only do freshwater, for obvious reasons.

Poor thing:

see more Lolcats and funny pictures
It will grow back little lion!

I feel the same way about the "Twilight" fanatics:

see more Lolcats and funny pictures
Yup.

Rock Blogging
Unleash the wave of sound!

Leading of is a request from my friend in Michigan, Fleetwood Mac and "Rhiannon":

You knew I would find a live performance.

Fitting in with the horrific graduation Cambridge traffic this week is Lurker's request for "Schools Out" by Alice Cooper:

Nice!

Gawains wanted some Rolling Stones and I had never heard "Shine a Light" and it is a really wonderful tune:

I like it.

The fall of Guns N' Roses was really a bad loss. The newer album Chinese Democracy was pretty bad. One song had some promise but missed by just a little bit. Best song from that album was "Better":

I think 60% of that song is great, but that other 40%....

A band that has very few (any?) bad songs is The Red Hot Chilli Peppers. Try out "Californication" for example:

"The sun may rise in the east, at least, it settles in a final location"....NICE!

Two more, what to play, what to play.....

So I like Bryan Adams music, sue me! My favorite is "Run to You":

That one is really good.

Last call! Anyone with a back that still works can you please grab me a beer??? Please????????!???!?

The last time I played this song was last summer. In that post I offered a writing sample based on a Depeche Mode concert I attended. Feedback was good to not so good (thanks Illargi!) but I have indeed been writing a short to maybe long story based on something I drew (with colored pencils) out of thin air as a young kid. Not much more to add at this point, but say extreme emotions can imprint a "memory" whether it be electron spins, residual changes in substance molecular makeup, or just the latticework of the extreme feelings pouring out. Well, what if there was a "device" that could tune into this history? How useful would that be, say in solving crimes? Other applications? Enough teasing, I am working on it.

One of EconomicDisconnect's favorite songs, "Karma Police" by Radiohead:

Just beautiful.

Added
Added by a reader, nice live performance of REM and "Losing My Religion":


Have a good night.

Economic Disconnect Special Exclusive Interview

It will be the maiden voyage of my new fishing kayak tomorrow. If I do not post something by 7pm tomorrow maybe something went very wrong! Wish me luck!

I am now officially on a 4 day mini vacation. There was plenty of important things going on today in the financial world, but I am already half way out the door on that mindset! A few links, thoughts, and a special exclusive interview will be the content tonight. As always, Friday night is in full effect so get your requests in and if I do not drown I will have the big show up tomorrow night.

Best of the Best
I think I have had my fill of debating small details and following daily gyrations of most things. At this point I am confident in my macro views going forward and all evidence and data supports my view, in my own mind of course! Going forward I would like to spend more time and more pixels writing larger essays instead of snippets and small items of news. I used to do this almost exclusively but time constraints became an issue. We shall see how it goes.

As such, tonight I will feature some more thought provoking essays I came across that will serve as the kind of writing I think is most important to being able to really make your own decisions on things going forward.

Back when I just was out of college and started working I was a political junkie. I loved the stuff. After a bit I saw all the crap that it all really was and lost interest. A fellow I used to read quite a bit for his great sense of balance and truthful speaking was Charles Hugh Smith. As of late I re-discovered his work and lucky for me he has now devoted more and more of his time to things economic. Tonight I offer without excerpt:
The Root of the Housing Bubble Remains Unchanged
When I read this today I felt it was like a huge clue bat to swing at the never ending garbage calls of a "rebounding housing market". Mr. Smith now has a spot on the blogroll, so don't miss him!

Dr. Housing Bubble has also been on fire as of late and returns to the Must Read column. Nobody does housing number breakdown and original research like the Doctor. Nobody. As we enter into the next dip in real estate, his work will become very important. Today's missive is on the ginormous volume of home sales the FHA has to handle to keep things from falling apart. See it here.

No stranger making an appearance here, Jesse has yet another great article covering the money supply and all that entails. Take a look.

Other Tidbits
The blog everyone loves to hate, Zero Hedge, has all kinds of items up tonight so just keep scrolling.

I had to share this one! I almost laughed the soda out of my nose this morning when I read this one.

Barry Ritholtz of The Big Picture was ill yesterday into today, probably from a little food poisoning. We have all had it, it is not fun. The comments section provided the kind of nasty, hilarious humor that is bad taste, but you cannot help but fall apart laughing.

Barry wrote:

I seemed to have eaten something yesterday — breakfast and lunch from the same deli — that caused quite a bit of intestinal distress. I thought I might actually go to the hospital last night to check for Appendicitis.
Flushed out my system with lots of liquids instead.

A few comments down came this one:

NolansDad Says:
May 27th, 2010 at 9:46 am
Barry. These things happen all the time. The guy who made your sandwich probably just got a little chit on his hand when he was wiping his ass and didn’t wash his hands. He than wiped the chit by accident on your sandwich. What you have to be careful about are tapeworms because many illegals have worms and pass it to coworkers. Now if it was a lady who made your sandwich she may have
been bloody and wiped herself and you picked a bacteria. Either way I would make sure to get my hands on the tapeworm pill. No charge for the free advice. You are on my team and I am looking out for you.

OMG, that was so bad but too funny.

Economic Disconnect Special Exclusive Interview
At a time when so much seems to be so confusing I thought I would seek out a voice of calm and advice. I was granted an interview under the following conditions:
-Quite a few pictures would be shown
-The interview would not interfere with bedtime
-The guest did not have to leave the couch
-A milkbone would be provided as compensation, and not the really small ones

I agreed to all terms and so here is our special guest for the evening, my Pug.

GYSC: Welcome Pug!

Pug: Hello, and hello to all the readers. Let's do this, "Milo and Otis" is on at 9pm.
GYSC: Again? Ok, lets start.
Pug: Yes, Lets.
GYSC: A major concern right now is that the debt problems of some Eurozone nations will cause the breakup of the Euro currency and result in chaos in the world. What is your take?
Pug: It will not happen.
GYSC: Care to elaborate?
Pug: I guess, it's your milkbone. It will not happen because it CANNOT happen. You get me?
GYSC: Not really, can you help me out?
Pug: Oh boy. Ok, if the Euro splintered what would happen? A total madhouse for a while, yes? So it will not happen and any effort needed in that regard will be performed.
GYSC: What if things really get bad in Spain and ....
Pug: Let me stop you right there. All the major US banks are insolvent by any reasonable measure, correct?
GYSC: I guess so...
Pug: Well, you can guess, but I can talk so they are. So what has happened?
GYSC: They are all open and getting record bonuses.
Pug: I have to lay down for this one, it's going to bend your mind:

Pug: Nothing has happened because IT CANNOT HAPPEN. You understand? In any system built on confidence and notional values of things as important as money and debt, keeping the game going is not that hard when you get down to it. I mean, who wants the stone age? Who wants a lowered living standard? Who wants to miss their DVR? The whole show is set up this way. Another example because I can tell you are not quite there. With all the crazy forex moves up and down as well as bond spreads moving in ways rarely seen how come not one hedge fund has blown up?
GYSC: That's a good question.

Pug: Yeah, Ya think? With an 80% rally off the lows are you to think not one fund was way off on that and blew up? Maybe a few baby ones, but not one with any connections. Systemic Risk prevention is like that. Wonder why all those reserves are just sitting at the banks? Maybe they are spoken for.
GYSC: I never thought about that way, nifty.
Pug: Yeah, I know. What else.
GYSC: Please do not do that.
Pug: Do what?
GYSC: Sit like that, it looks almost like you are a person and it is creepy.

Pug: Look, sitting like this helps my lower back. Are we going to continue?
GYSC: I guess. What do you make of the action this week?
Pug: I saw no action that you had.
GYSC: I meant the markets, smartass.
Pug: My bad. Well it is a sign of a solid market when some rumor that China wants to "re-evaluate" their Euro bond position causes a sell off , but when they say they are not doing that it, it ignites a huge rally. Markets move up and down 3% daily all the time.
GYSC: Come on, this is supposed to be a serious interview.
Pug: Yes, and you think your hair is serious, HAHAHA! Sorry could not help it. Ok, when everyone knows the game is up all want to hit the exit first, hence the overreaction to things both silly and maybe true. Of course nobody wants to miss a move up, so they cannot stay away.
GYSC: Some would call this a "stock pickers" market, what's your take?
Pug: It's a donkey market. You should write a fake headline on a popular blog comment thread with a fake headline like: "China says no more US bonds; Commies hate Capitalists as well as the Socialist USA!". See if you get a move in the futures.
GYSC: Are you serious?
Pug: Try it. Look leave a paper out on the garage floor instead of the doggy pad, when I pee during the day on the markets section just buy those stocks. Especially for Mondays and Fridays.
GYSC: You are indeed cynical.
Pug: It's called realistic. Anything else? I am getting bored.
GYSC: Ok. A never ending debate is between the outcomes of inflation, hyper or regular, or deflation, regular or extra sugar, HA!
Pug: Was that a joke?
GYSC: A small attempt.
Pug: Yes, very little. To be honest I just do not think about those things.
GYSC: Why not?
Pug: Look, I live what, 12-16 years? How much have biscuits changed in price in that time? Maybe in Zimbabwe, but here its not an issue. I have heard the tales from my super-great-grandfather that a box of biscuits in 1918 cost 1 cent. Today it is $4.99. So what? Who lives that long?
GYSC: Now how could you know your super-great-grandfather?
Pug: It is passed through our genes like stories. You dummy humans need cave paintings, hieroglyphs, and books to record history, us pugs just know.
GYSC: Well assume you did live longer.
Pug: Explain both to me in terms I can understand.
GYSC: In inflation the price of biscuits goes up so fast that an income, say MY INCOME, cannot keep pace and thus I cannot buy them.

Pug: WHAT????
GYSC: Oh, now you perk up?
Pug: Well that's nuts, tell me about deflation.
GYSC: In deflation things get way cheaper...
Pug: Praise be the god of dogs....I am SAVED!
GYSC: Let me finish! In deflation things get way cheaper, but MY INCOME gets smaller and all my assets shrink....why are you chuckling?
Pug: Your ass shrink? Not since you stopped hitting the boxing bags buddy!
GYSC: OK Mr. Smarty Man, let me finish. In deflation things get way cheaper, but MY INCOME gets smaller and all my assets shrink so I cannot spare any money for things like dog biscuits.
Pug: I'm sorry, what's the difference?
GYSC: Semantics I guess, plus some think if they buy certain things if either happens they can be safe.
Pug: Well it sounds the same to me. Terrifying!

Pug: Can't you just stockpile biscuits now while you have money? What about those shiny metal things I always see you counting and polishing?
GYSC: Down low Pug, Down low! I could, but I think we are ok for a bit.
Pug: So you say. It bed time. Can I ask a question?
GYSC: Why not? Go ahead.
Pug: Is it true that you and my human mother are going to get another pug to usurp my authority here at my castle?
GYSC: Well, we may get another pug, but....
Pug: Be careful on the stairs usurper!
GYSC: Hey, come back, lets talk about this!
END OF INTERVIEW.

NOTE: The opinions of the Pug are his own, but may reflect some of mine, his human mom's, and various other voices. This post was inspired by a doggie related post over at Kid Dynamite's site.

Have a good night.

It is Easy to Get Sidetracked

It has been hot and humid here for two days and I just love it! It can never be too hot as far as I am concerned. One more day of work and then a nice 4 day weekend is at hand. Things are looking up.

I should finish Yves Smith's book "Econned" this evening. Early report is the book features some excellent history of economic theory and how certain ones gained widespread appeal even though they sucked. As a scientist I LOVE how Smith tears apart economics as a piss poor scientific endeavor. A bit on the wordy side, but so far a winner. Full recap upon conclusion.

It is Easy to Get Sidetracked
As I have written, on any given day there are a few stories that grab my attention that I set aside for a write up or just to think about. Of course in the headline hungry news cycle we have there is always plenty to find interesting. Here are a few stories out over the past two days that are all interesting. The exercise is to figure which story has the most to offer a reader in terms of importance and meaning. Here they are:

1. Wait: Why Did Ron Paul Just Introduce An Extension To The Homebuyer Tax Credit?
Ron Paul in favor of permanently extending the first time home buyer tax credit and expanding it to cover any home buy in disaster areas.

2. A Tale of Irrational Premium (and Risk)
Karl Denninger takes a look at the premium of the gold ETF PHYS.

3. Treasury gets $6.2 billion from Citigroup sales
The biggest hedge fund in the world, the US Treasury/FED/Willing partners ready to dump Citi shares.

4. New $3bn Foreclosure Prevention Program Added to Wall Street Reform Bill
More help for those that should walk away.

5. Dow Closes Under 10,000 For First Time Since February 7
A sub 10,000 close for the DOW. What to do with those hats now?

These 5 stories all have aspects that can be interesting. Some serve as an entry point into thinking about things on a deeper level. Others are just side notes. My recap of 1-5:

1. -A Libertarian having an ideology war with himself? All taxes are bad so any tax credit is good. Government intervention in markets is bad, but here it is ok? It is fun to see a politician tying themselves into a pretzel, but not much here.

2. -I noted the other day the premium that the gold ETF PHYS was commanding and today a follow on offering was done for the fund. Karl Denninger (who usually stays away from anything gold related) had some nice charts showing the GLD/PHYS spread. Unless you are into gold then who cares? I am a big metals fan (gold and silver) and I wanted to watch the new PHYS fund for a bit to see how things went. Either the premium would vanish or it would continue to creep up as many find this fund more believable in terms of gold holdings than others. I am still watching. Gold has caught plenty of news as of late, here are a few more from tonight:
-Huge Additions to GLD Inventory by Tim Iacono
-Greek Scramble For Physical Brings Gold Price To $1,700 Per Ounce An overblown headline by Zero Hedge, but still an interesting read.

Back to story 2.; should gold holders get ripped off or blow up gold somehow there will be no bailout nor any damage to the system. You could look forward with gold at $5 an ounce to gold Ipad/Ipod jacks and such at that point.

3. The biggest volume traded stock, C, hits the open (?) market and the government makes some cake. Great job guys! This one will bear watching going forward and the government still has tons of C stock to sell.

5. The DOW could cross back over 10,000 at the open tomorrow. Who cares.

The biggest story to me was #4. This story shows just how wrong things are and how debt overhang cannot go away by pretending and extending.

From the story:

The Senate passed the Restoring American Financial Stability Act last week, approving a new program that would reduce mortgage payments for the unemployed.
The program would provide $3bn from the Troubled Asset Relief Program (TARP) to lend up to $50,000 to unemployed homeowners, who could reasonably resume making payments again within two years. The program was modeled after the Homeowners’ Emergency Mortgage Assistance Program (HEMAP) in Pennsylvania.

There is so much here.

First off, I always said the TARP would become a permanent slush fund, and so it has. That was easy to see coming.

The real story here is the disgusting stretch being made to extend debt no matter what no matter the situation.

Now I know not every single applicant will take the full amount and all that. Say they did though. $3 Billion/$50k = 600,000 potential loans to unemployed. At $25k that would be 1.2 Million. These are not small numbers.

Now if a person was unemployed for up to two years, but COULD make payments IF they found a job that could support it THEN they would not only have to continue to pay their mortgage but also repay this loan on top of that? Insanity anyone?

Forget any interest rate (say 0%), just assume the repayment plan was a 10 year program, that would add over $400 debt service payment to the newly re-employed stress level. Of course it would probably be some long term repayment or just forgotten about at some point.

This story right here leads to many great questions/thoughts:
-Why would the plan be needed? Helping home-owers is good press, but it is really the banks that get help here.
-How many loans can continue to be made to those is the same bad spots?
-The FED is sitting on Trillions of mortgage paper that they really cannot sell. This paper is valued at far less than what the amount the FED issued treasuries for them, now they are an active position defender in the area. This is far beyond the scope of the FED.
-If everything is great and getting better, why is this still going on?

All these things and more have been covered on this blog over the years. This one story has many layers of important information and macro view changing data. I saw this story in ONE place all day.

Another Tim Iacono item today on debt was the kind of far reaching, thinking sort of essay I find the best kind of work:
In a Word, The Problem is "Debt"
You need to read the whole thing. Probably the best essay I have read in some time.

Have a good night.

Heavy Traffic

I forgot that this week and next cover just about every college graduation in the Cambridge area. As such my drive home was amazingly long and of course I am out of time. Just a few things I wanted to throw out there.

Big Market Rally, Ok.
A bad open on high volume and then the usual late day heroics on no volume. Great comeback market!:

Too funny.

COMEX Gold Expiration
Gold closed for the COMEX options expiration just under the line in the sand of $1200. Of course it went right past that after the close. Pure chance no doubt. Jesse has some thoughts:

Gold traded all day below 1200, at times rising to within fifty cents of the key strike price of 1200 where a large concentration of call options were clustered.
Well, since the call options at 1200 have expired worthless, why bother using the energy to continue to suppress the price?

Everything strikes me as funny tonight.

On a related note, this may not strike the gold bullion dealers as funny at all (via Zero Hedge):

Eric Sprott To Buy $235 Million In Gold, Or Over 6 Metric Tonnes, As Part Of PHYS Follow-On Offering
At a post-announcement per unit price of $11.40, this means Sprott will buy $235 million worth of gold in the open market. At today's gold price of $1,200 this translates into 195,833 troy ounces of gold to be acquired, or roughly 6 metric tonnes. Somehow, we don't think the LBMA will be too thrilled with this extraction of physical gold out of the controlled synthetic precious metal ponzi system.

That is funny indeed.

One more for a laugh, Marc Faber channels Economic Disconnect's long term view that low rates are now structural and needed, not a short term phenomena:
Marc Faber: Central Banks Will Not Tighten Rates Ever Again
The Central Banks will not tighten, but other forces may have a hand in this before the end.

Have a good night.

Drawing a Blank

I had a very busy Monday at work so I got home a bit late. Which is fine because I cannot think of anything to write about anyway!

Drawing a Blank
Usually I have a set of 2-5 stories I find to be important but today I am empty. Not one thing jumped out at me.

Crisis Garden notes in the comments section last post:

Your Monday prediction was off mark GYC. Glad I didn't act on it.
And that's the whole problem with making predictions. It seems like it should be a quite easy matter for a fully engaged and functional mind, but it's closer to impossible to get right. There's definitely a degree of randomness to the whole thing.

The prediction in question was from Thursday:

I would not be short (I never short by the way) going into the weekend, and even 10am tomorrow may be too long. Something WILL be announced and it should be large and in charge. Monday could erase half or all of the last two day losses.

Well what can you do!

I really did expect some news this weekend, so I missed that one for sure. But hey, it's only Monday.

If you saw something interesting today, leave it in the comments section.

Happy Birthday
Christmas is a big deal to me but birthdays are even more important I think. It is the one day a year that is all yours in a sense.

Happy Birthday goes out to loyal reader Gawains! Our literary sage turns 21 today so now he can buy booze legally, HA! Just kidding.

Anyways, Economic Disconnect goes ALL OUT for a birthday present and thus here for your listening enjoyment (yours, not mine!) is the band that will never make another appearance on the blog. The Beatles and "Birthday":

All my best Gawains!

Have a good night.

Sunday Sirloin Skewers

If it's Sunday it usually means some food pictures!

Gulf Oil Spill
I watched the morning news this weekend and the coverage of the Gulf oil spill is almost non-existent. I saw quite a few observers trying to say that the coverage has been quiet as not to damage the president. Come On! Are you serious???!

What I think is that this spill is bad, like really bad. Just like any other major problem the play book calls for ignoring it and pretending it is no big deal. It does seem very annoying to me that every trick BP has to stop the leak always entails collecting the oil and hopefully still being able to use the well. This is absurd and could wind up being something with huge consequences later.

Sunday Sirloin Skewers
On tap for dinner today, Sirloin Tip Skewers!

I bought a package of tip steaks and cut them up into pieces. I marinaded the meat using Stubbs Beef Marinade for about 4 hours. Some whole mushrooms were on hand and also some cut up bell peppers and onions. A little EVOO coating and I was ready to start.

Here are the components pre-assembly:


Here are the completed skewers after sticking my hand quite a few times:


I cook these a little lower in temp, about 400 degrees, as not to blow away the veggies. About 15 minutes later they were about done on the Big Steel Keg:

Nice!

Meat was perfect and the mushrooms were very good. Is it really Monday tomorrow?

Have a good night.

What I am Watching

The glory that is YouTube,

Hagler vs. Leonard round 9 at the 4:00 minute mark:

Great stuff!

Extended Friday Frivolity

I will have a few points to make but I am pretty sure I said all I wanted to and more in yesterday's post and the comments section. The blogosphere is a great thing and ideas and opinions can vary or even be directly opposed. The main thing is to keep reading plenty and keep thinking.

Today's Market
The markets were a bit ugly first thing in the morning and then found footing. OPEX usually wraps up Thursday evening with residual action at Friday's open. I figured no one would want to be caught short or stuck in certain positions heading into a weekend that my bring some kind of headline risk.

Right before the close the indices ramped up big on minimal volume once again. Whether this is banks trading shares ever higher back and forth raising bids and then banking the gains in the books for the day or just a lack of selling orders as everyone went home for the weekend is open for interpretation.

Perspective Matters
As a "Zero Hedge Head" I have to admit that the site features off beat market information, hilarious headlines, and brings to light some of the inner workings of the markets. I read it daily and often will link various items. I would offer that at times the crew over there gets a little out of hand with sensationalism and also could benefit from follow up work before going to post. Two quick examples.

TED Spread
This no forgotten measure of inter bank stress used to be held as proof the banking system was in trouble back in the collapse. It has been on an uptrend as of late, and the Zero offered this article and graphs to portray a big surge in the TED spread.

Now I used to watch this indicator quite a bit so I knew it was still really, really low but elevated for recent times. Jesse at the Cafe has a more broad look at this measure and it should put things in perspective. Last time I looked 450 (peak reading) is more than 10 times bigger than 35.

Senator Response Letters
In the piece "The FED's Racket Exposed" the Zero includes two letters from senators to readers concerning the FED head Bernanke's reappointment to his position. The letters read just as we have been told by officials on the record:
Senator Mikulski response to a voter on why she voted for Bernanke included:

I was advised that rejecting his nomination would cause markets to nose dive, which would hurt retirees and families saving for their future. I am not enthusiastic in my support. But I think Mr. Bernanke understands the job that he still has to do.

Remember "Tanks in the Street" if TARP was not passed? This follows the same threat pattern.

Tom Harkin was not overly scared and wrote to a voter of his thus:

While I have heard the concerns of many that the failure to confirm Mr. Bernanke would have damaged the financial markets and jeopardized our economy recovery, I do not believe that anyone, including Mr. Bernanke, is too big to be replaced. We should not hold our economy hostage to the Wall Street threat that total economic collapse is the sure result of not doing everything they want.

Again, follows the same line of thought.

So what's the problem? A great follow up would have been to get both senator's staff to confirm these letters were indeed sent by their offices. In the day and age when fake memos (remember Dan Rather?) can be made up it would add weight with a confirmation. I would also feel a bit uneasy about the line "jeopardized our economy recovery" which should have read "economic recovery" not economy. Still, I always miss type everything (if you read the comments you know this!) but that alone would have demanded a confirmation via the senator offices. Sloppy details are a new focus of mine, HA!

Mish has some funny stuff; some letters from CONgress staffers (not a miss type) concerning financial terrorism that is too funny. Mish also backs it up with a chain of evidence.

Friday Night Entertainment
Ok, I got a little worked up last night but through the force I have been able to re-center and get focused on what is important, Friday Night!

Bringing Sexy Back
Now some blogs use the promise of sexy ladies to attract viewers. I would never, ever resort to such an attempt to create more Google search hits. Never.

I offer true sexy, the sexiest engine of all time (in my opinion!) the GM L-98 small block V-8:

Those curved intake runners are really something! I did not say best engine (great low end torque but the motor ran out of power in the higher RPM bands) just the best looking.

Picture Pages
Visual cues to get you laughing.

One of these things is not like the other:

Wow.

Well, I guess there is a difference between Walmart and the Dollar store:

A great read.

We all love the animals!

Too cute:

see more Lolcats and funny pictures
AWEEEE!

Tales of the glory days:

see more Lolcats and funny pictures
Just like "Hoosiers"!

Items of Interest
Some stuff you may not be aware of.....

-How they filmed the old "Star Wars" crawls before technology.

-Kryptos still unsolved, but there may have been an error in the making of the display that the designer cannot figure out. Oh well.

-Mackinac Island was a Wiki featured article this week, and for those with sharp eyes, it was the setting for the film "Somewhere in Time".

Rock Blogging
It is now time to get the tunes going for a weekend sendoff.

Reader Moneta had some great observations this week and thus his request leads off the night. I had 3 to choose from so here is Men at Work and "Land Down Under":

I love this song.

Via loyal reader Gawains I found the song "Willin" but on the sidebar I saw Linda Ronstadt do the tune and well, here she is:

Very nice.

Inside joke with my friend from Michigan, The Go-Go's with "Our Lips are Sealed":

All my best.

The lead singer of Depeche Mode, David Gahan was solo for a while and the song "Saw Something" is really a nice piece of work:

Nice!

Two more and that's all!

You know I am going to heavy it up! Try out "Balls to the Wall" by Accept:

Not bad!

Last call! You know what to do.

A YouTube post by some guy on his Top 20 Metal Songs was pretty good and his number one, while I would disagree, was not bad at all. Take a real ride, lyrically and musically with Iron Maiden and "Hallowed By Thy Name" (live version only way to go!):

"The sands of time, for me, are running lowwwwwww, running loww Yeahhhh, Yeah yeah!"
Great vocals and everything else.

Have a good night.

Market Meltdown May 20, 2010

Are you awake yet? Did 8 months of non stop green shoots and never ending moves up in the market put you into a complacent sleep? You should be at least a little interested now!

If not, tomorrow is always Friday night! Get your requests in for the fun stuff. Reader Moneta has first dibs on a pick after a great comment last post.

All That's Wrong in One Story
I will do a run down of a few particulars in a bit. Right before starting my post I saw a story over at Yahoo Fiance that sums up the problem with the psychology of the US at all levels and why we seem to be unable to break free of the same stupid behavior over and over again.

The article is titled:
Fading of inflation helps buyers and borrowers
Fading of inflation keeps rates low and makes it cheaper to buy a car or refinance a mortgage
I know, it just jumps out at you. Some sections with my commentary:

WASHINGTON (AP) -- It's a good time to buy a car or refinance a mortgage, thanks to super-low inflation and interest rates.
Invest in a savings account? Forget it.

Yes, you read that right. Of course rates have been this low for 2-3 years but it's a fresh headline. Moving on:

Consumer inflation has all but disappeared, the government reported Wednesday. The Federal Reserve may now be emboldened to keep interest rates at record lows well into next year -- and possibly into 2012.

Possibly? Good one. Next:

So what do persistent low inflation and record-low rates mean for consumers?

Low inflation, it is deflation. So what does this article suggest for fighting deflation? Here it comes:

-- The time is right to buy a car. New-car prices were flat in April. And they've fallen 1 percent over the past 12 months. Big banks are offering super-low rates in the 3 percent to 4 percent range, says Greg McBride, senior financial analyst at Bankrate.com. Normally, such rates are available only to companies, not individuals, McBride says.
-- For homeowners who qualify, it's a good time to refinance. The average rate on a 30-year fixed rate mortgage dipped this week to the lowest rate of the year -- 4.84 percent, down from 4.93 percent a week earlier. Homeowners who took out adjustable-rate loans at 4.5 percent in 2005 are now seeing their rates fall to 3 percent to 3.25 percent, McBride says. As a result, they have extra cash to spend.
-- People planning to drive to a vacation getaway won't pay as much. Gasoline prices fell sharply in April -- 2.4 percent. Analysts expect further declines this summer because crude oil prices have fallen nearly 20 percent since April.
-- Shoppers who want to update their summer wardrobes, and those hankering for cakes and cookies, are in luck. Prices for clothing and baked goods dropped in April and are down sharply over the past year. Soaring prices for cotton and other fibers make it likely that clothing prices will rise in the next year.

The country is in too much debt already and has spent everything they could lay their hands on, and now is the time to keep going? If indeed deflation is here to stay, depreciating assets like a car or a throw away of cash on a vacation is about as dumb a things as you can do.

This article stands on its own as the poster child for the US consumer debt problems.

Market Meltdown May 20, 2010
Today was filled with plenty of action and even more voices screaming over the top of each other in confusion and frustration.

I wonder why all through about a year and an 80% run up in the markets all was as quiet as outer space (hint: no air to conduct sound) but a couple of down days commands 24/7 coverage and shrill voices. Well I do not really wonder, and by now I hope you are not either.

The indices were all down almost 4% after a rough day yesterday as well. Still this brings stocks all the way back to......February levels so why all the panic escapes me.

As of late (like in the last 10 minutes; see comments section here) I have been called a conspiracy theorist and a Zero Hedge disciple. I do love Zero Hedge! I do like conspiracy but quite a few have proven true enough (wait till Area 51 gets exposed!!!) so I guess I am guilty.

I am going to keep this short as I am now aggravated.

The bulk of the US market rally, and it was just a stock market phenomena, was based on low volume moves up rumored to involve some trading programs (this cannot be confirmed) and thus did not have a backfill of resistance to stop a move down. At the start the ignition of the rally was sparked by the US FED/Treasury stepping in and backstopping every financial vehicle out there. Money markets, overnight bank lending, MBS collection from banks, you name it. It was a green light to carry on as usual.

There was a Trillion dollar Euro backstop/bailout plan proposed, and it was rejected by the markets as too small and/or not all encompassing enough. That plan is voted on in Germany (the main boat rocker) tomorrow. Is it out of the realm of possibility that market weakness was related to such a fear of a "No" vote?

This evening the panic has taken form of calls for the Eurozone to pull a US move and guarantee anything and everything financial. Mr. market has called the Eurozone bluff and no nothing less than a full effort will suffice. Again, it sounds crazy.

Of course this is all a game. Germany will vote "Yes" to the program and this weekend will bring some other intervention (because we all know intervention is not a daily occurrence, not at all) that should meet expectations.

ADDED:
I forgot US financial reform bill vote, thanks Calculated Risk!

If you are a bull, you should still be up so sit tight.

If you are a bear, you are probably still down, but at least it was a nice two day run.

I would not be short (I never short by the way) going into the weekend, and even 10am tomorrow may be too long. Something WILL be announced and it should be large and in charge. Monday could erase half or all of the last two day losses.

The problem now is this serious hiccup may impact the whole "rate of change, second derivative" data massaging because panic tends to make most nervous. The unemployment number today was bad by any account and should initial claims climb back to 500k, no spin on job creation will work I don't care how many census workers they hire.

Things economic can be strange; movement at a glacial pace and then a quick snap. Perhaps a better analogy is Plate Tectonics.

Gold Fund Divergence
I have not made up my mind as yet on the (hat tip Tim Iacono) huge divergence between the gold fund PHYS and other gold ETF's. PHYS is backed (at least it should be) 100% by physical gold stored off site in Canada. This gold is off limits to the major bullion markets and I think (I will have to make sure) it cannot be leased out. This bears watching, though I still think there will be (is?) a electronic and paper gold market and a physical one. Again with the conspiracy!

Have a good night.

A Real Mess

Ever since I returned from vacation I have been in slow motion. Of course I am out of time again tonight so just a few items and an open thought experiment.

A Real Mess
It is probably better I am out of time because there was plenty of breathless screaming headlines today of all sorts that seemed a bit over the top. Enough confusion for one day. Here are some things I found most important.

via Zero Hedge (among many others):
FOMC Minutes: No Asset Sales Until After First Rate Hike
Take home point:

A majority preferred beginning asset sales some time after the first increase in the Federal Open Market Committee’s (FOMC) target for short-term interest rates. Such an approach would postpone any asset sales until the economic recovery was well established and would maintain short-term interest rates as the Committee’s key monetary policy tool. Other participants favored a strategy in which the Committee would soon announce a general schedule for future asset sales, with a date for the initiation of sales that would not necessarily be linked to the increase in the Committee’s interest rate target. A few preferred to begin sales relatively soon...

No decisions about the Committee’s longer-run strategy for asset sales and redemptions were made at this meeting. For the time being, participants agreed that the Desk should continue the interim approach of allowing all maturing agency debt and all prepayments of agency MBS to be redeemed without replacement while rolling over all maturing Treasury securities. Participants agreed to give further consideration to their longer-run strategy at a later date.

See you in 2013.

One of the more screamer headlines but still worth a look (via The Telegraph):
Germany's 'desperate' short ban triggers capital flight to Switzerland
Case in point, the Swiss intervention in the FX market was very huge and was news. Here is the "capital flight" number:

The short ban set off instant capital flight to Switzerland. BNP Paribas said €9.5bn flowed into Swiss franc deposits in a matter of hours on Wednesday morning.

Is that figure outsized? I am not 100% sure but I would think it is not. Still, worth noting money direction.

The thought experiment for this evening comes from a find by The Illusion of Prosperity on CNBC with Dennis Kneale providing the following quote:

I'm, I'm sorry but update me please... why is it that we've doubled the money supply of dollars around the world... how could we possibly have the opposite of inflation? - Dennis Kneale, May 18, 2010

It is an excellent question. Things to consider:
-By what mechanism is this even possible?
-What would the next step be (if there is one) given this dynamic?

Added:
On a related note:
Japanese GDP Deflator Plunges To Multi-Year Low As GDP Comes Below Expectations
Consider that Keynesians think Japan has failed to stop deflation becasue they simply did not go hard enough and long enough into QE.

Have a good night.

Germany Lowers the Boom on Being Naked

I have no idea where the time has been going but I am late again. Huge rainstorm coming tonight, maybe 2 inches of rain. Spring time indeed.

All Time Low Rates for All Time?
A point I have hammered home many times is the total reliance on all time low rates for the economy to even function these days. By now you are well aware of the hazards of zero rates, and it seems a few others are voicing some concern:
Michale Pento on Prudent Bear:
U.S. Solvency Contingent on Low Interest Rates
I would not agree 100% with everything in the piece but he does cover the important ground. Snippet:

The United States is the largest debtor nation in history. Our continued solvency depends upon low interest rates. But low rates are engendered either naturally from increased savings or artificially from money printing. Without having the adequate savings to bring down rates, the Fed has supplanted savings with monetization of debt. However, money printing eventually leads to intractable inflation and will send bond yields much higher, especially on the long end of the curve.

A risk aversion mindset or a flight to quality (stop laughing) cannot account for the ultra low bond yields in the face of the kinds of deficits the US is running and projected to run. I think that forces are at work to keep yields low. I would say this is going to change, but I thought that a year ago. V shaped recovery and a 3% 10 year bond. Sounds about right.

For more on this topic:
Greek Crisis Is Latest Excuse for Fed’s 0% Rate: Caroline Baum

Foreclosure Numbers are Getting Better, NOT!
You have to check out the foreclosure maps over at Housing Doom today for the Phoenix Metro area. My first thought was that this could not be correct but I am almost sure it is. See the maps here. The names of the towns are El Mirage and Surprise. How fitting.

Germany Lowers the Boom on Being Naked
Yes, I did have that title in mind all day, HA!

In a move that was quite out of left field, Germany has now prohibited naked short selling of various instruments until March 31, 2011 or forever whichever comes first. Included are:
-Sovereign government debt
-Credit default swaps involving eurozone debt
-10 Institutions in the banking industry. A run down is on Clusterstock. About half are insurance or re-insurance firms

Karl Denninger had this take:

It appears that the German Government has just plain had enough of the crap that the banksters have tried to pull, and has decided to do what Barack Obama should have done in early 2009.
That is:
•No more naked credit crap, especially against sovereigns but not only against sovereigns. No insurable interest, no CDS - period.
•Naked shorting will now be actually stopped in 10 leading financial institutions.
•Germany has had it with naked shorting of Gold, and specifically noted bank manipulation of gold prices via naked shorts beyond intent or ability to deliver.
•Germany has also said that they're not going to permit Euro derivatives that are not a "bonafide" FX hedge. That is, no more naked bets on Euro movements either.
•Hedge funds are going to be regulated, position size limits mandated and enforced, reporting enhanced and a transaction tax is coming.
It's about damn time.

Oh, and it appears that instead of telling all the banksters what they were going to do and "getting permission" first, or even discussing it with other governments, the German Government did what all governments should do - make up your mind and then do it without giving a good damn whether the banksters or other governments like it - and without giving them input into the decision or notice that it's coming.

The details are available on the web so I will not run down all that again.

What is interesting here is that nothing happens in a vacuum. What would be the reason Germany felt this action was needed and on so little notice? There was no way these kinds of positions could have been closed out during market hours. What's the deal?

I wish I knew. I imagine we will have a better idea by the weekend. Until then, I will speculate because it is so much fun! Reasons for this event could be:
-Germany was aware of a new and very large influx of naked shorts on debt instruments and worried about a panic run. They were convinced the threat was real enough to pull the trigger in a hurry. If this is true the details should be coming out very soon.
-This was a temper tantrum by Germany and Merkel in particular after being dragged into a huge Greece bailout and overall Eurozone bailout package.
-This was an angry response to the clear usage of Quantitative Easing by the ECB.

I suggest you leave other ideas in the comments section.

Overall I would say I am in favor of banning this kind of trading. It is one shade shy of outright fraud and is yet another from of leverage. Still, markets hate "uncertainty" and this opens up some serious cans of worms not limited to enforcement issues as well as intermarket crossover questions. Again I think the "why" is more important than the "what" here. I imagine I will be coming back to this!

Not to be out done, the SEC opened up some new rules for US markets as well:

SEC proposes new trading rules
Major exchanges to impose stock 'circuit breakers' to prevent plunges under new SEC rules
The rules would take effect in mid-June under a six-month pilot program agreed to by major U.S. exchanges and the Securities and Exchange Commission. The SEC announced them and put them forward for public comment, in a response to the stunning plunge of May 6.
Under the plan, trading of any Standard & Poor's 500 stock that rises or falls 10 percent or more -- within a five-minute span -- would be halted for five minutes. These rules, known as "circuit breakers," would be applied if the price swing occurs between 9:45 a.m. and 3:35 p.m. Eastern time. That's almost the entire trading day.
Importantly, the new circuit breakers would apply to all U.S. exchanges. Most of the 50 or so U.S. exchanges regulate themselves and design their own tools for slowing or halting trading.

I am a little surprised they allowed this to be applied on the way UP as well as DOWN when it is clear the DOWN is all that matters. It will be funny to see some daytrader freaking out when his stock keeps getting halted all day on one of our rally days, usually Monday's right at the open. "Dudes, you are killing my MOMO model with this crap!". Too funny.

And again, while this seems harmless there is no way to know just how this is going to work out.

Why don't they all just quit fooling around and just makes stocks unable to cross below where they are on today's date? That way you can weed out any "outlier" prices not tied to solid fundamentals. I always thought that kind of thinking was a joke, but we get closer everyday. What a mess.

Added:
If you think I am sarcastic, wait until you get a read on Tom of the North's newest entry at The Looming Doom:

Superhyperinflation Just Around The Corner
The Looming Doom has learned leading experts are advising the Obama Administration that the U.S. is poised to experience the most painful economic cycle of all: the Super-Hyper-Inflation Trauma (SHIT). While there is yet slight division amongst the experts as to whether the U.S. is already in SHIT or not, once the U.S. is fully in deep SHIT, there is no quick fix. Furthermore, if the SHIT is too deep, the economy may never recover.

The rest just gets better.

Have a good night.

A Few Notes

I am out of any real time. I had to finalize a contract for some kitchen work to be done and it took longer than I thought it would. What can you do? Just a few notes for tonight. Anyone rememebr those notes we used to write in grade school that you would fold up in nifty ways so the teacher could not open them? HA!

Quote of the Week
I had one of those "I Wish I Had Said That"moments today on this section from Brendan O'Connor in the Irish Independent (via Bill Fleckenstein's MSN piece):

"If there is plenty of money in the world, it has to make you wonder. It gradually became apparent during the week that any bailouts of countries are actually bailouts of banks, German banks more often than not.

"And given that there is plenty of money in the world, and yet everybody is up to their neck in debt, there is something not adding up, and maybe it's time to start again.

"Maybe it's time for not just us to default, but for everyone to default. They (whoever 'they' are) will get over it soon enough and they'll give us more money to buy stuff from them.

" Exactly!
I have been saying this for a long time. The two oldest professions are prostitution and banking. Both are easy money and very hard to screw up (pun intended). The whole "if bond holders get hurt the world will end" baloney was just that; baloney. The debt markets will always work because there is money to be made.

Housing Bust Still Going On
While many really dumb, I mean savvy buyers ran out to scoop up a "free" 8k towards a home buy they may find out that 8k matters little when you are underwater on a new mortgage by 50k. Of course the days of no documentation loans is over right? Well, not exactly. From Diana Olick of CNBC:
Mortgage Mods Doomed by Back End Debt
The whole thing is worth a read but check this glaring jaw dropper;

While most don't want to go on the record with me, lest they rile the regulators, Bank of America's Rick Simon says initially, "All the major banks, at Treasury's suggestion, went to non-verified income for verification."

This should be criminal. More:

That seems to be the crux of the problem.
Imagine that: Folks who didn't have to show any proof of anything to get a trial modification, weren't able to sustain that modification. The big guys have now changed that, requiring full documentation.

A 64.3% DTI is so far out of scope with the pre-bubble years safe and sound 36% total DTI — and even typical bubble-years full-doc DTI's of 50% — it is absolutely irresponsible," says mortgage analyst Mark Hanson. "Servicers are pushing the envelope with respect to getting people to qualify," he adds.

I have to wonder if any mortgage originator today would even offer a new loan to anyone with those kinds of stats. My guess is no.

And that is the point. No bank would offer this loan, but the government can and does and will. I fully expect housing support program take 10 to begin in the fall.

Gold and Silver in the Near Term
As always, Jesse over at the Cafe Americain has a good write up and this one is metals specific:
Gold and Silver Intermediate Targets
If you are a metals watcher then you should read this one. Some snippets:
On Gold:

Gold is currently above the neckline which is around $1200. While it remains above this neckline, the target for this leg of the move would be $1350 as a minimum measuring objective.
If the price breaks below 1200 it is no longer an active formation, but it remains potential while the price is above 1044.

On Silver:

Silver has a massive inverse H&S bottom, that is 'working' while it is above 18.80. The target for this move is around $30 per ounce. But it remains valid and potential while the price of silver is above 16.
If the price of silver falls below 18.80 then the formation is not active.

On various Wild Cards:

It should be noted that in our opinion both markets are being subjected to significant manipulation by large short interests, which are particularly concentrated in the case of silver, and especially stubborn and 'official' in the case of gold, involving the central banks. This is our judgement based on the circumstantial evidence.
We also suspect that the Fed is buying across the US Treasury curve, but especially at the longer durations, and that the Treasury and Fed are working with one or more groups to support the equity markets primarily through the SP futures.
This adds quite a bit to the picture, although it is difficult to forecast since it is not natural market action and can distort the trends, but only in the short term.

Great stuff!

Using my own proprietary blend of technical analysis, market momentum, gut feelings, the force (darkside only), and macro analysis I have similar targets for the metals. On gold my target is for $1500 an ounce looking out 2-3 months. This is higher than some other calls. My target for silver is $25 over the same time period. Significant headline risk is present for the metals and the total meltdown of the commodities as of late (have you seen Copper prices???) is troublesome for the re-inflation crowd.

I may set up a position in the paper vehicles for a trade tomorrow. You may ask "Why bother with paper when you love the physical stuff" and that is a good question. At this point I would like to have a more nimble position and the paper world can provide that. Long term I think the paper metals are going to have a real issue, but not in the next 3 months, though you never know! Also my neighbor keeps asking me why I am in his back yard with a shovel and a flashlight at 2am and it is getting annoying. I figure no one would think my next door neighbor had any metals and if I bury it in HIS backyard then the odds of it being found are pretty slim! Kidding, just kidding.

Full disclosure: I am LONG gold and silver via physical holdings. None of this is investment advice and should not be used as such. My investment advice is to deposit a large amount of money at my donation button and I will post pictures of the gold and silver I buy with it. I want a 10 ounce Kookaburra!

Added:
You have to see this one. The phrase "Get Out of There" used in countless films:

Very nice.

Have a good night.

Black Pastrami Sunday

It could not have been better weather here this weekend. 70-75 degrees, strong sun, and slight breeze. NICE! My fishing license finally arrived in the mail so now I need to buy some supplies and it will be fishing time soon. Very exciting. For any folks that fish, ever try the new Berkley Trans Optic line? I bought a spool and would like any feedback. Usually I only fish Berkley Fireline and Yo-Zuri Hybrid line (my favorite) but I thought I would try the color changing line. Let me know.

Black Pastrami Weekend
I love pastrami and another factor for me in buying The Big Steel Keg was the ability to do low smoking for just this item. Here is the process.

Some people can brine their own brisket meat into corned beef but I am lazy so I just bought a pre-made one:


The meat is very salty after the corning process so you need to remove a bit of the salt by soaking in water:

I did a 6 hour soak and changed the water 4 times. I will come back to this part.

Next up is the application of a pastrami rub:

I did all this on Saturday and left the brisket in the fridge for overnight with the rub on.

Today I set up the Keg with lump charcoal and some apple wood for smoke. The Keg was solid at 250 degrees for the 4 hours of the cook. Here is the pastrami before I took it off the grill:

I let the pastrami rest for 30 minutes and then sliced it up as thin as I could:

I need better knives, mine are pretty dull and it was hard to cut the pastrami in thin slices.

The pastrami tasted very good and the smoke really adds an extra touch that supermarket pastrami does not have. I had a nice sub roll with lettuce and mustard with 4 slices of pastrami.

I think a longer water soak would have been better; there was still quite a bit of salt in the meat. Maybe 8 hours or more next time. You learn by doing, right?

Back to work tomorrow, is it really Monday already?

Added:
You know me, I just cannot help it!:

Ratt, "Round and Round" is so very good.

Added also:
Man I just can't stop! Maybe I should quit economics and just do music:

Scorpions and Animal Magnetism.

Added again:
On a really down note, Ronnie James Dio has passed away. EconomicDisconnect is really hurt by this. They say "As time goes by all your heroes will fall". It's true. A pioneer and metal god, may I offer:

"Rainbow in the Dark".
Really not happy right now.

Have a good night.

The Week That was May 10-14, 2010

After about 7 months of dormant market excitement things are heating up once again. Plenty to cover tonight, but I must make way for the fun stuff as it is Friday night after all! Here we go....

Currency Traders Being Played?
It is no secret that the Eurozone would love heir currency to move lower. This will help their exports and give them an edge. Of course no on wants a total run down of their money, but a nice orderly move is good enough.

Back on March 1, 2010 I wrote:

How Can Shorting the Euro Be Wrong; It's Policy For Crying Out Loud
My read has the target for the Euro at 1.20 against the dollar in the very near term. Everyone thinks the Euro is going lower and in fact one could argue (I will) that all the hand wringing over the inevitable Greek bailout is nothing more than a show to weaken the Euro. Devaluation can be helpful at times and Euro 1.6 was not quite the exchange European exporters were looking for.

On March 1 the Euro was at 1.36 on the index. Today it sits at 1.24. It's getting close! Too bad I do not trade Forex!

Anyways, It seems to me that the Euro trouncing is policy and the big backstop package was delivered as a parachute to stall the fall around 1.20. Maybe things will get out of hand, but for now the traders are dancing like the marionettes, who swaying to the symphony of destruction. Thanks Dave Mustaine!

Largest Drop in Foreign Weekly Holdings of US Paper
The blog Housing Doom always runs a weekly check on central bank activity that is well worth a look. This week there seems to have been some serious action:
Foreign Cenbank Holdings of US Obligations Largest Weekly Drop Ever Recorded
The work is good original research so I would point you that way for a full read up. Summary:

BREAKING: for a variety of reasons this can't wait for the overnight post. Twist's just come up with the calculation that the $21.536 billion combined weekly drop in foreign central bank holdings of treasuries plus agencies is the largest one in the decade-long dataset. Charts and additional commentary to follow.

UPDATE (5/14): Here's what's got the Castle in an uproar. This is (if you'll pardon the expression ) uncharted territory. The weekly drop of foreign central bank holdings of US obligations is even bigger than the previous record in mid-August '07 when the world-wide credit crunch suddenly started.

Now I know the $22 Billion number is not a jaw dropper in the scheme of things, but it is still the largest move in over ten years. It is my belief that this is tied to the opening of the SWAP lines, but I am not that sharp in this area. If this becomes a trend we should see direct bidder take downs of new treasury auction continue to move up as US banks borrow from the FED to buy our own bonds. Great catch over there John and Twist!

The Terminator Lowers the Boom in California
In the grips of an all out V shaped recovery (in the low volume ramped up stock market anyway) some how tax revenues continue to miss expectations. I know, must be a mistake! In any case, today California throws out the first in a long conga line of threats by states to prod the FEDs to give them a hand out. This will become the norm very soon. Via Calculated Risk:

From the SacBee: Schwarzenegger budget would eliminate welfare
Gov. Arnold Schwarzenegger asked lawmakers Friday to eliminate the state's welfare program starting in October and dramatically scale back in-home care for elderly and disabled as part of his May budget revision to close a $19.1 billion deficit.

[Schwarzenegger] also proposed cuts to state worker compensation.
...
Schwarzenegger proposed eliminating state-subsidized child care for all but preschoolers ...
From the LA Times: Schwarzenegger unveils austere budget plan
Gov. Arnold Schwarzenegger outlined a stark vision Friday of a California that would no longer lend a helping hand to some of its poorest and neediest citizens, proposing a budget that would eliminate the state's welfare-to-work program and most child care for the poor.

His $83.4-billion plan would freeze funding for local schools, further cut state workers' pay and take away 60% of state money for local mental health programs.'
During the press conference, Schwarzenegger compared California to Greece. Ouch.

Wow. To stave off "human suffering" expect help to be on the way very soon.

Gold is a Crowded Trade on Both Sides
While some think everyone and their brother have a stash of gold and silver coins and bars on hand and that they used leverage to get them, there are still many on the short side of the gold trade as well. Via Zero Hedge:
Gold Commercial Short Positions Hit All Time High, As Gold Spike Protection Team Keeps Very Busy
Maybe I will see the nasty correction I thought would come after all!

Final thought as gold reaches all time highs:

The Press Misleads on a Gold “Record”
In real dollars it’s barely half the 1980 price
In fact, gold only hit a nominal record of $1219 on Tuesday. If you adjust for inflation, which you must, it’s still a whopping 47 percent below the real record, which was hit more than three decades ago at an inflation-adjusted $2309.

Friday Night Entertainment
After a week like this one, we all need a little break!

Comic Relief
You know the funny pictures are good stuff!

Even the cat knows that grilled food is the way to go:

see more Lolcats and funny pictures
No Big Steel Keg, but it will do! On this note I will be attempting a Pastrami cook on the smoker Sunday so wish me luck!

Now I know people love to do EVERYTHING with their kids, but you have to set limits at some point, yes?:

He looks scared!

Film Clips
A few film leads to draw your rental attention.

I love the film "Underworld". I mean Kate Beckinsale is enough, but what a flick! Here is my favorite part, as Lucian tells his tale (watch from 6:00 mark on and Part 10 completes the scene):

"There's no going back. There's no going anywhere."
Nice!

A nice find on YouTube, the full "blood test" scene from the film "The Thing":

Kurt Russell will always be Snake to me!

Rock Blogging
It is time to get ready for the weekend. We will need some tunes. Have no fear, I will deliver!

Inspired by The Illusion of Prosperity here is a sure fire set up to get rocking. Lita Ford and "Kiss Me Deadly":

Darling, you can kiss me anytime!

I had some requests, and I honor requests for the most part!

Lurker would like some Kim Carnes and "Bette Davis Eyes" and I think that works:

I always think of Eddie Murphy when I hear this song.

Besides being a literary genius, reader Gawains KNOWS rock and roll. Try out Ted Nugent and "Stranglehold":

That song is just sick as all get out! Great pick!

RSP submitted:

How about Love is like Oxygen by Sweet, since Greenspan looks like he had a little too much of both in that cover shot.

I will leave it there, good mental picture, but the song is not going to make it on a Friday night! Sorry!

Maybe Billy Squire and "Lonely is the Night" will get you all going?:

Yuppers.

Two more then you are on your own. Oh, that means I am too!

One of my most favorite New Age songs (meaning it's not older than 15 years!) is Evanescene and "My Immortal":

That song just rocks and hurts. I have chills. Good stuff!

Last call! You know the drill! Grab a drink, a girl, or the remote control!

Left to my own devices, I think you can guess what kind of tune will close the show.

When the son by the band "Europe" known as "The Final Countdown" is not embed disabled, I will load it up:

Now that rocks! Close second was a metal song of course!

Addendum:
Lena Horne passed away this week and by request, please see old time talent via "Stormy Weather":


Have a good night.