Archive for July, 2009

Q2 Stats

Friday, July 31st, 2009

The Commerce Department estimates the U.S. economy shrank at 1% annualized rate in the second quarter of 2009. That’s better than the -1.5% growth predicted, but it’s a little like your doctor saying that the massive arterial bleeding has slowed down now (after an hour) so we probably won’t need that tourniquette. The U.S. economy has now contracted four quarters in a row, the worst streak since the Great Depression

  • GDP has contracted 3.9% in the last year, the worst fall since at least 1947, when the Commerce Department started keeping track
  • First quarter GDP was revised down from -5.5% to -6.4% — the biggest quarterly GDP drop in almost 30 years
  • The Commerce Department revised 2008 down too, from -0.4% annual growth to -1% growth (being wrong by a factor of 2.5x, man I couldn’t get a pass in school doing that badly)
  • Consumer spending, 70% of U.S. GDP, contracted 1.2%. The retrenchment was largely replaced by government spending, up 10.9% (with freshly-minted fiat bucks! No inflation threat there)
  • Employment compensation rose by just 1.8% over the last 12 months, the slowest rate on books that go back to 1982.

Looks like -1% is the new +2% growth. Sucking relatively less is no help, especially when we consider that only some 30% of the unemployed are receiving benefits (and thereby even counted as unemployed). This means a real unemployment of somewhere around 25% (or higher). Mind you, this is not equivalent to the peak of The Great Depression, where unemployment topped out at 35%. But don’t worry, that stat seems to be heading up…

US Govt Yuan Bond Threat

Thursday, July 30th, 2009

Full story here from Jim Willie. Dollar = Charmin substitute.

“The tables are fast turning against the deeply indebted USGovt officials. USA Inc is in deep trouble. Its productive engines in both finance and industry are either wrecked or sputtering, even as its debt burden grows exponentially. Debt default litters the landscape. Next its sovereign bonds will be have to be sold to some extent outside the US$ Sphere, which will put at great risk its stock, namely the USDollar itself. Let’s call them USGovt Dragon Bonds. The custodians desperately seek creditors to supply much needed capital in order to fund the gigantic and growing USGovt debts, which by the way are grossly understated. The last resort is to monetize the USTreasury Bond issuance, a process well along. With the aid of the USDollar Swap Facility, the USFed has been able to secretly bid on USTBonds from foreign soil, have it appear like foreign bids, and conceal the continued and broadening monetization initiative. The United States is boldly defying the creditor nations, printing money, and buying its own debt. When more fully revealed, the USDollar will suffer the consequences. A sense of betrayal will surely come, much like discovery that the CIA has been flooding the globe with counterfeit $100 bills, or Wall Street has been flooding the globe with counterfeit Fannie Mae Bonds. Closer to home, it is akin to selling lemonade has been secretly watered down, or putting lawn mower clippings into the reefer batch before sale. (more…)

Anatomy of the global criminal finance catastrophe

Wednesday, July 29th, 2009

Full story here from Christopher Story. I’m only including the mortgage section of his report.

For instance, a typical housing mortgage Promissory Note for a mortgagor in Virginia dated May 2006 of which we hold a copy, is stamped: Pay to the Order of [Blank] WITHOUT RECOURSE: Bank of America N.A.; By: Christina M. Schmitt [Signature], Assistant Vice President. The accompanying Deed of Trust is stamped: Pay to the order of [Blank] WITHOUT RECOURSE: Bank of America N.A.; By: John E. Mack, Sr. Vice President. The text of the Deed of Trust contains the following language:

‘Lender: the word “lender” means Bank of America, N.A., its successors and assigns. The words “successors and assigns” mean any person or company that acquires any interest in the Credit Agreement’.

From this example, the following is concluded:

(1). Bank of America absolves itself of all responsibility for the fact that the ‘asset’ is ‘dud’ because it has stamped the papers: WITHOUT RECOURSE. (more…)

Scams and bailouts

Wednesday, July 29th, 2009

Full story here from There’s more than I’ve printed here, go check it out.

Your choice, ShadowTrade or live in the shadows of vampire squid bankers.

“…It was just a few months ago that the USDX was 89.5. The USDX is a dollar index, and is computed by using a trade-weighted geometric average of six currencies and their weights are: the euro 57.6%; the Japanese yen 13.6%; the British pound 11.9%; the Canadian dollar 9.1%; the Swedish Korona 4.2% and the Swiss franc 3.6%.

We recommended the sale of the dollar at 89.5. It recently closed at 79.5.

We believe that between now and the end of October that the USDX could fall to 71.18, its former low of 18-months ago. At that time a number of businesses outside the US were refusing to take US dollars and we believe that will happen again, and that is what the Treasury Department is anticipating and the reason for sending the cash to the embassies for conversion to local currencies.

We also believe these events could precipitate a short bank holiday in the US due to disruption of capital flows in and out of the US and concern if not panic in the US banking community. We also believe the government will use such events as a trial run for a future major banking shutdown. They will be interested in the public’s reaction as a precursor to what might happen in the future if there were a major banking shutdown. (more…)

5 companies hold the bulk of derivatives

Tuesday, July 28th, 2009

Full story here at Fitch ratings agency came out with this data. OMFG! No wonder they spout on about the “sanctity of contracts” whenever the “dump derivatives” argument comes up. Over $280 TRILLION worth!

“Fitch has released a comprehensive study on derivatives held by various corporations and has come out with some disturbing results: as Zero Hedge’s recent disclosure of data from the Office of the Comptroller of the Currency confirmed, the bulk of the derivative risk is concentrated not merely in the “financial company” category (99.7%) but in a subset of just five companies, which account for an “overwhelming majority” of derivative assets and liabilities.

The companies in question (Total Notional Derivatives: Assets & Liabilities, $ in Trillions)

  • JP Morgan:$81.7;
  • Bank of America:$80.0;
  • Citigroup:$31.5;
  • Morgan Stanley:$39.3, and of course
  • Goldman Sachs: $47.8 (this is an OCC estimate: Goldman has not disclosed notional amounts in their derivative book, only # of contracts);

If you want a preview of what the Basel III definition of “Too Big To Fail” will look like, the above five companies is a great place to start. (more…)

The dark years are here

Tuesday, July 28th, 2009

Full story here at ZeroHedge. This is awesome, take the time to read it all.

Don’t read this if you don’t want to break out of your MSM-induced happiness daze. Compliments of Matterhorn Asset Management. Snippet:

All the money committed so far has only achieved two things: Firstly it has created some short term hope which together with totally illusionary sightings of green shoots have generated a small stock market correction (which we forecast in our January Newsletter) and some belief that the crisis is ending. Secondly, all the funds printed so far to save the system have gone to Wall Street but has done nothing whatsoever for the real economy. And what is the government doing about it. They are doing the only thing they know which is to print more money.
This is total lunacy! How can any intelligent person believe that printed pieces of paper can solve an economic catastrophe?
If that were the case we could all go home and write out pieces of paper or use Monopoly money to spend in the shops or repay our debts.”

The real economy is getting worse

Monday, July 27th, 2009

Full story here at

“The jobless rate hit a 26-year high of 9.5% last month – and many economists are betting for the jobless rate to hit 10%.

“Of the June total,” reports the Labor Department, “1,235 mass layoffs were reported in the manufacturing sector.”

“All the indicators in the real economy,” said Bill Bonner in his final speech at the Agora Financial Investment Symposium in Vancouver, “are actually getting worse.”

And is it any surprise? What exactly does America make anymore? We have been a nation of consumers for the past decade, spending and borrowing to buy the gee-gaws and gadgets that our friends in the Far East have been so busy producing. But now, consumers are saving…they aren’t buying flat-screen televisions…or new cars…or much of anything for that matter. (more…)

Fed planning 15-fold increase in monetary base

Friday, July 24th, 2009

Full story here at Market Skeptics.

Death by deflation or inflation? They both suck. Whether or not all of this money ends up back in circulation is the question.

“The fed is planning moves that would more than double its balance-sheet assets by September to $4.5 trillion from $1.9 trillion. Whether expressing approval or concern over the fed’s intentions, most commentators fail to understand the real magnitude of the projected expansion of the US monetary base because they don’t take into account the amount of dollars circulating abroad. (more…)

A history of stimulus

Friday, July 24th, 2009

Full story here at

“Those whom the gods would destroy are first granted stimulus. When a man wins the lottery, for example, it has a stimulating effect on everyone around him. He usually spends the money quickly – often even before he gets it. But no matter how much he wins, he is usually broke within a few years…often, even broker than he was before he bought the winning ticket. (more…)

Gold/Dollar paradigm shift

Friday, July 24th, 2009

Full story here from Jim Willie at Jim doesn’t think much of fiat dollars, especially when they’re being created by the billions every second.

Get your own house in order by trading with ShadowTraders.

“…China & Brazil make further progress to sidestep the USDollar in trade, as China establishes its global swap facility for trade with other nations. Given China’s primary role in global trade, and the sour sentiment by exporters, the USDollar will gradually lose status for international settlements. Their bilateral trade pact announced is coming to fruition, as platforms are being built. The development has been blessed from the high priests at the Bank For Intl Settlements, something the US-UK bankers must be very bothered to observe. At the BIS offices in Basel Switzerland, China’s central bank governor Zhou Xiaochuan and Brazil’s Central Bank president Henrique Meirelles heralded progress of the bilateral deal at the meeting. Zhou revealed plans to directly use of Yuan currency with Brazil instead of the global swap facility. (more…)