Friday, January 30, 2009
"Gold is the thing you buy when you suspect that monetary authorities are making a mess of things. The fixers are fixing more than ever before. What are the odds that some of the fixes go bad? We don’t know...but our guess is that gold is looking forward to it."
-Bill Bonner, The Daily Reckoning
Obama calls $18B in Wall Street bonuses shameful
WASHINGTON (AP) -- President Barack Obama issued a withering critique Thursday of Wall Street corporate behavior, calling it "the height of irresponsibility" for Wall Street employees to be paid more than $18 billion in bonuses last year while their financial sector was crumbling.
"It is shameful," Obama said from the Oval Office. "And part of what we're going to need is for the folks on Wall Street who are asking for help to show some restraint, and show some discipline, and show some sense of responsibility."
The president's comments, made with new Treasury Secretary Timothy Geithner at his side, came in swift response to a report that employees of the New York financial world garnered an estimated $18.4 billion in bonuses last year. The figure, from the New York state comptroller, drew prominent news coverage.
Yet Obama's stand also came just one day after he surrounded himself with well-paid chief executives at the White House. He had pulled in those business leaders and hailed them for being on the "front lines in seeing the enormous problems in our economy right now."
The president said the public dislikes the idea of helping the financial sector, only to see the hole get bigger because of lavish spending. The comptroller's report found that Wall Street employees got paid about the same amount of bonuses as they did in the boom time of 2004.
Shameful? That's it? SHAMEFUL? LOOOOOOOOOOOOL.
"You should be ashamed, don't ever do that again. Now go pick up your mess."
Give me a freakin' break! These guys are thieves, pure and simple. The President gives them a little slap on the wrist and a "No, no, no..." speech and expects these thieves to repent and change their evil ways? Mr. Obama, boy have you got a lot to learn...and you better be learning it fast. The American people have contained their anger to this point. You're on your Honeymoon with them "now". The honeymoon will be over sooner than you think if this "kid glove" approach to these banking criminals continues.
$18.4 BILLION is 5.25% of the $350 BILLION TARP payout last fall. Henry Paulson allowed this to happen, he should be held accountable. These clowns that got this money should be forced to return it immediately to the taxpayers, or the FED loans will be recalled immediately by the taxpayers. It is high time somebody puts a gun to these crooks heads, and makes them realize that financial welfare comes with a steep price.
These "bankers" are not interested in "what's happening on main street" because
of their industry's mistakes and greed. They are only interested in getting their money. They could care less about the Taxpayers. The bankers always get paid first. They run the casino...the house always wins. The gamblers, the investors that brought their money to a game that was rigged in the houses favor, leave the game with nothing in return, I.O.U.'s at best.
It's shocking how few of the loser's are upset about their financial losses. Their money, their wealth, has literally been stolen from them, their families, and friends in broad daylight, ...and they all sit there hoping for the best, confident that Uncle Sam and his Team will fix everything. If this financial crisis were a leaky pipe, the homeowner would have to cash in his flood insurance long before the leaky pipe is fixed and this financial crisis is stopped.
The Global Financial System [aka: the US Dollar] is a train wreck, and the American Taxpayer is an unfortunate passenger along for the ride; forced to watch the disaster unfold in slow motion. The American Taxpayer is the proverbial "deer in the headlights". By the time he realizes what is happening to him in real time, he will be roadkill.
There are way too many people in America today that believe President Obama is the answer to all our prayers. May God have mercy on all their souls. The ship is sinking ya'll. It is sinking faster than most of you know. One man can not save a sinking ship. And certainly not with the players he's got his team. These player's shill for the house money. They are there "specifically" to look out for the houses money, NOT the Taxpayer's money. The more money they spend, the worse this crisis will be in the end.
The delusion being spoon fed to these lost souls via the financial media, is that Uncle Sam and You can fix this financial calamity together, and do it while "spending your way to prosperity". Absurd notion that, but these people believe it. If we spend all this money now, particularly if it is money we "take from the rich", we can fix this little fiscal bump in the road, and soon be rich again...and maybe, even make a profit.
Is this really happening?
Look around you, listen... It really is happening.
America will be lucky if this financial folly is resolved within the next two generations. The next two generations will be lucky if there is any America left to inherit should they be lucky enough to pay-off her debt. The children of today AND tomorrow are having their futures stolen from them as the government we elected, and with our embrace, "SPENDS OUR WAY TO PROSPERITY".
Fed ready to provide fresh aid to revive economy
WASHINGTON (AP) -- The Federal Reserve signaled Wednesday that it stands ready to use new unconventional tools, or expand existing ones, to spur lending and consumer spending that could help lift the economy out of a painful recession.
The Fed also agreed to keep the targeted range for the federal funds rate between zero and 0.25 percent for "some time" to help brace the economy. Economists predict the Fed will keep the funds rate, the interest banks charge each other on overnight loans, at that record low level through the rest of this year.
With its key lending rate to banks already near zero, the Fed pledged anew to use "all available tools" to revive the economy.
Specifically, the Fed said it is "prepared" to buy longer-term Treasury securities if the circumstances warrant such action. At its previous meeting in December, the Fed said it was merely evaluating that option.
That head line should read Fed ready to provide fresh [band] aid [s] to revive economy. These guys really don't get it. "...spur lending and consumer spending..."? Who are they gonna lend to? The American consumer is now, for the most part, a giant credit risk. Americans collecting unemployment now exceeds 4.5 million. A number of unemployed not seen since 1967. And that is just the number of Americans collecting unemployment, how many are out of work and not receiving a government handout? How many are afraid they may joining the unemployed ranks soon? Again I ask, who are they going to lend to? If the government is really serious about keeping this game going, they should just send each "consumer" a check every month, and forget about lending, and just get right to the spending. I mean, are we serious about spending our way to prosperity, or not?
Monetization Mania: Federal Reserve Ready to Start Buying Treasuries
Goldman Sachs says the Fed is ready to to bring out the Daisy Cutter of monetary tools:
In our view, it is highly likely that the Federal Reserve will eventually decide to purchase longer-term Treasuries. First, even a 0% nominal federal funds rate is likely to look much too high by 2010 if our forecasts for inflation and the unemployment rate are roughly on the mark ... Fed officials will therefore have to pedal harder and harder to “mimic” the effects of cuts in short-term interest rates via unconventional monetary policy options, and buying longer-term government securities is one of the most conventional of these unconventional options.
Bernanke: Game Over?
...Bernanke is "contemplating" buying the long end of the Treasury Curve due to "bond market instability."
There is nothing "unstable" about any of this. Rates are going higher. Why? Gee, let's see, Obama says he's going to blow $1 trillion on a "stimulus" package, the other $350 billion of the TARP was released, the GAO says we're going to run well north of a Trillion in deficits, and people are wondering why the bond market expects the government to pay up in higher interest rates for the right to borrow more than 10% (and that's almost certainly a LOW estimate) of the total outstanding debt in one freaking year after having added 16% in the last one?
You're kidding, right? America is acting like a subprime credit-card customer who has decided to go nuts in the local "bigbox" electronics retailer, and the market is (appropriately) reacting to that by repricing RISK.
Bernanke thinks he will simply cap the market by intervening?
If Bernanke actually attempts to suppress the Treasury Market's interest rates, that is, "support the long end of the curve's price", then he will wind up having to buy all, or essentially all, of the supply. People who own Treasuries will sell to him, surmising that he is overpaying, and gleefully taking what is an "extra" profit from his hands.
If you're wondering why the commercial and consumer lending market has gone straight to hell, this is the reason. Bernanke has interfered with the private credit market in virtually every area, and in each place where he has "supported" the price of debt instruments (suppressing yields) he has wound up as effectively the only buyer in short order.
This is bad when we're talking about the private credit markets but if it shifts to Treasuries then the game is literally over immediately, because at that point you have just created a circle jerk.
Treasury prints Ts to finance its operations but the guy who buys them is the guy who prints the money in exchange. Therefore every additional Treasury sale is no longer a debt sale, it is an act of printing money by the Central Bank and destroys the standard of living of everyone in The United States.
This, should Ben engage in it, is a willful act of destruction of your private property rights, your wealth, and your income. It is not an accident, it is not "necessary" and it solves exactly nothing.
It is simply an attempt to defraud - yet again - the American People, this time by attempting to "make ok" the financing of deficit spending that the market simply will not support at the price Treasury wishes to pay.
Bonds sink on supply worries, tepid 5Y auction
NEW YORK, Jan 29 (Reuters) - U.S. Treasury debt prices fell on Thursday, prompted by weaker-than-expected demand for $30 billion of five-year notes amid heightened anxiety about the deluge of government debt needed to revive the economy.
On the other hand, gloomy data on housing, jobless claims and durable goods reinforced the notion of a prolonged recession. The latest wave of grim economic news helped to spur safety bids and mitigate bond losses.
"Treasuries are extending their losses a bit since the auction," said Mary Ann Hurley, senior Treasuries trader at D.A. Davidson in Seattle. "The auction seems a bit sloppy."
The record amount of five-year debt sold on Thursday garnered mediocre demand with the high yield coming in higher than expected, traders and analysts said.
Did anybody else notice that bond prices were down yesterday along with equity prices? Bond and equity prices usually move in opposite directions. Bonds down, stocks down and Gold UP. Interesting how that works. Why the Dollar was up is any body's guess I suppose. Currency manipulation? Nah, the US would never involve themselves in currency manipulation. That's what the Chinese do... What if the whole world were selling their local currencies [to make their exports cheaper] and buying US Dollars, and then taking those Dollars and using them to buy Gold? Because in Dollars, Gold is still cheap. Gold is is at new all-time highs in Euros, and the Pound. Oh, this is exciting, isn't it?
Stocks fall on fresh worries about economy
NEW YORK (AP) -- Two glaring signs that the economy remains in a deep slump sent stocks reeling Thursday.
News that unemployment claims reached a record high and that new home sales hit a record low forced the major stock indexes to give back all of Wednesday's gains, and then some. The Dow Jones industrial average sank 226 points, or 2.7 percent, while other indicators tumbled more than 3 percent.
Volatility still has a grip on the Street. While stocks had soared Wednesday on hopes that the government will take bad debt off banks' books, investors retreated in response to some harsh reminders that it might be a while before the nation's 14-month-old recession ends, even if banks get more aid.
The Labor Department said the number of people continuing to receive unemployment benefits reached a seasonally adjusted 4.78 million week ending Jan. 17 -- the highest level on records that go back to 1967. As a proportion of the work force, the total is the highest since August 1983.
Jeez, and I thought the TARP legislation Paulson mugged the Congress to get was going to fix everything. I can't wait to see how bad things get once we get The Obama Plan steamrolled past the sleeping US legislature.
Spending our way to prosperity. Can it get any better than this? For a Gold Bug anyways...