Dear readers, I know dealing with page proofs must sound like a tired excuse, but this process is like the final section of a Romantic symphony, where the music swells to a climax, then the music starts to fade…and then takes off again! Palgrave with no warning sent me the page proofs AGAIN to look at late Wednesday afternoon, due in Thursday PM…and I did have other stuff on my calendar. But this really is the last time, it will finally go to the printer.
Time for Fed to disprove PPT conspiracy theory MarketWatch. Missed pointing to this yesterday. The head of TrimTabs says $600 billion of new funds into the market cannot be accounted for. But other analysts disputed his idea (and I have heard some investors say they take TrimTabs’ analysis with a handful of salt)
Treasurers Embrace Pay-in-Kind Bonds as Ghost of Lehman Fading Bloomberg (hat tip reader j). More signs of bubble behavior.
Spanish unemployment at new records: 19.3% and 40% for the young Merco (hat tip Michael T)
Ben Pavone On MSNBC: ‘Somebody’s Got To Take A Stand’ Huffington Post (hat tip Andrew U). One man is protesting high credit card interest rates.
FDIC eyes linking levies to bank pay Financial Times
Did Demand for Credit Really Fall? James Kwak, Baseline Scenario
Antidote du jour:
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I’d have added the Big Mac Index to your list of links at some point, perhaps. I think the index provides misleading indicators (on the Pound especially), but it’s a nice “quick’n’dirty” indicator.
http://www.economist.com/daily/chartgallery/displayStory.cfm?story_id=15210330&source=features_box_main
Recommended reading: “Nice country you have there, be a shame if anything happened to it” by Ian Welsh on Britain and the Netherlands thuggery towards Iceland over bank failures.
It’s why neoliberalism, at least US-style, always comes joined at the hip with neoconservatism.
When a sovereign government refuses to indemnify foreign banks for their looses from imprudent–insane might be a more apt description–lending practices, not to the sovereign but to private entities within the sovereign state, you have to be able to place a gun to that soveriegn state’s head and and say: “Pay up or else.”
This is why those in the Libertarian-Austrian-Neoliberal axis, despite all their flowery rhetoric about freedom and liberty, at the end of the day always end up being enemies of democracy.
think yves will explode when she sees this
http://www.bloomberg.com/apps/news?pid=20601087&sid=aXIvW4igKV38
Unbelievable!
It boggles the mind why these guys like Geithner aren’t looking at the world from an 8′ x 12′ cell.
Dear Yves, thank you for sharing your knowledge with the rest of us. I rely on blogs like yours to keep informed on the financial happenings of the day.
I watched a couple of videos yesterday that would be of interest to you and your audience, in case you didn’t see them yet:
Sugar: The Bitter Truth
http://www.youtube.com/watch?v=dBnniua6-oM
1 hour 30 min. run time
Robert H. Lustig, MD, UCSF Professor of Pediatrics in the Division of Endocrinology, explores the damage caused by sugary foods. He argues that fructose (too much) and fiber (not enough) appear to be cornerstones of the obesity epidemic through their effects on insulin. Series: UCSF Mini Medical School for the Public [7/2009] [Health and Medicine] [Show ID: 16717]
(The good doctor actually says that our food system has been completely adulterated, that the processed foods are poison due to fructose. he says that fructose is the same as ethanol in the way our bodies react to it. He says they’re using it in baby formula and that’s why he sees 6 month old infants who are obese. The food is designed to make you consume more by bypassing our bodies’ control mechanism that lets us know when we’ve had enough.)
The other video I watched yesterday:
http://mitworld.mit.edu/video/729
Learning to See in the Dark: The Roots of Ethical Resistance
Carol Gilligan, April 24, 2009, Running Time: 1:10:34
From gender, Gilligan goes onto to study patriarchy, and looks into the societal issues on how the masculine qualities of thought, self and body have been elevated while emotion, relationships and body have been devalued, causing the psychological community to conclude that patriarchy is the natural state. Reflecting with great relief that “we now have a map,” she looks at current political landscape offers insights into the election of Barack Obama and what it says about how our political landscape is changing.
“We are born with a voice and into relationship, and if those capacities are encouraged, not traumatized, then we are able to register within ourselves the feeling of what happens, and that’s the grounds, the growing consensus, for ethical action, to be in touch in that sense”.
r.e. Treasurers Embrace Pay-in-Kind Bonds as Ghost of Lehman Fading Bloomberg (hat tip reader j). More signs of bubble behavior.
“Goodman Global Inc. raised $320 million to pay its owner, leveraged buyout firm Hellman & Friedman, a dividend, one of at least seven similar offerings since November.”
There is plenty of buy-side demand for this waste paper. This is why it keeps growing right back like mushrooms after every deluge.
A rhetorical Question: who is so desperate for high-yield they’ll buy 10% bonds knowing in advance the proceeds will merely be used to pay dividends to parent companies? iow leverage the company more highly by replacing equity with debt.
Answer: U.S. state and local public employee defined benefit pension funds.
No matter how artful, “government regulation” that fails to tamp down demand on the buy side is predestined to failure.
Right, it’s the fault of salary and wage workers ….
Right, it’s the fault of salary and wage workers ….
I mainly fault elected officials here. And very often former elected officials at this point. They’re the ones who agreed to public employee pensions funded on the economic assumptions of the Big Rock Candy Mountains in Animal Farm. These policies of expediency led to today’s actuarial disaster.
The real problem here is the essence of simplicity. Either public retirees’ benefits will be reduced or public employee pension funds’ income (from all sources) will be increased.
Raising funds’ income also bifurcates. The two theoretical possibilities are enhanced investment returns or higher local taxes on the serfs.
Let’s consider enhanced investment returns for a moment. Interest rates on investment grade paper are continuing a 25 year downtrend. Stock market returns are generally negative for the last decade. The latest buzz is about the 50% losses that CALPERS’ r.e. equity portfolio has racked up in the last year.
This apparently leaves us with deficiency notices to the plan sponsors (state & local governments), followed by higher taxes on the serfs to pay these notices. Easily rectified by the Governor and Legislature of the State of California, right?
I realize that people working at Wal-Mart for $10/hr and without health insurance unreasonably refuse to agree their taxes should go up more to fund full health insurance and 90% pensions for people with 90k annual government salaries.
Just part of the Age of Selfish Greed, I guess.
Selfish Greed is built-in, if I remember my econ 101 correctly about each maximizing his or her profit.
Somebody can correct me if I’m wrong, but I’m pretty sure pensions can’t buy CCC bonds…
Somebody can correct me if I’m wrong, but I’m pretty sure pensions can’t buy CCC bonds…
Some pension funds. More life insurance companies.
But like the ad said about Oldsmobile, it ain’t your father’s pension fund anymore.
http://www.calpers.ca.gov/index.jsp?bc=/investments/assets/assetallocation.xml
Hyper-leveraged junk bonds are easily worked in under AIM: “Alternative Investment Management”. Part of the 64% of the portfolio dedicated to “equity” of all kinds, including 11.6% “AIM”, which are stakes in hedge funds and private equity outfits.
Investment grade debt comes under “Global Fixed Income”. CALPERS through its many layers of factotums (“consultants”) is a leading player in the dollar carry trade. fyi, CALPERS’ commodity trading programs have also been carried under its Global Fixed Income head, not under Equity and the AIM subhead.
MANHATTAN (CN) – Goldman Sachs is using taxpayer money and wasting corporate assets to pay billions more dollars in pay and bonuses than it does to shareholders, according to a derivative complaint in New York County Court.
http://www.courthousenews.com/2010/01/07/23425.htm
RE Ghost of Lehman:
“At least two dozen borrowers since November have asked lenders to change terms of debt agreements to permit bond sales, extend loan maturities or pay dividends to their owners, Bloomberg data show.
….
Quintiles Transnational Corp., the world’s biggest tester of medicines for drugmakers, sold $525 million of 9.5 percent toggle notes due in 2014 to yield 10.06 percent, or 7.77 percentage points more than Treasuries. The deal was increased from $400 million.
Quintiles said it will use some of the proceeds to pay a dividend to its owners …”
Pride is a sin, I confess, but something about my having no business sense at all makes me feel good….
Yves —
As always, thanks for the headlines. Please, please do a post on Lennar’s earnings report today — reporting a profit because of their tax clawback gift from Uncle Sam of $320M. Taking into account the massive tax refunds that the treasury is now handing back to the homebuilding industry along with the ridiculous homebuyer tax credit structure, is there another industry more criminally coddled by the US Gov’t? (of course, I am excepting the big commercial and I-banks here).
We officially a banana republic.
To quote from the article on Spanish unemployment, the job destruction continues to mild down – that’s like saying the knife initially penetrated the heart 3 inches and it has now gone in an additional 2 inches. Hey, maybe you will see the tip of the knife sticking out the back soon. But relax, the rate is slowing down.
antidote
lovely picture.
as it unrolled i was expecting a kitty.
now me and my dog are looking around in case the mom is standing behind us.
Regarding Kwak’s question about demand for credit falling, I think the pertinent question is whether the demand for credibility is falling or not.
Personally, I think the world’s demand for credibility has been falling for a while.
marketwatch is a regular re-publisher of TrimTab advertorial. I think in this case Bloomberg had to chop them off at the knees to keep the dissidence down.
If, at some point TrimTabs drops a bombshell that’s accurate, it won’t get traction.