Goldman Sachs is bigger than the FED and the FED is bigger than CON-gress. Towards the end he says it and it was time to end the interview. How about that for the mainstream media?
Tuesday, September 15, 2009
Thursday, September 3, 2009
Why Our Economy Is Utterly Screwed
From: www.market-ticker.com Karl Denninger
Steve Liesman once again stunned me with his lack of understanding of matters economic today, when he commented that "in all recessions since 1970 at least the original part of it (recovery) has been jobless."
Yes, Steve, but why is any of this a surprise? What part of this graph isn't instantly obvious to anyone with more than two firing neurons in their head?
That's credit and population growth normed to a base of 1970. Population went from roughly 205 million to roughly 304 million during that time, a 50% increase.
Outstanding consumer credit went from $128 billion to $2,525 billion, or a 1,973% increase - and this is only consumer credit, ignoring mortgages, financial firm credit, business credit, commercial real estate and of course government debt!
Why are we not seeing "robust" economic growth when we exit recessions? Why is there no real hiring going on? Why can we not have a robust economic recovery? Why are we are replacing good jobs with "McJobs" that pay half as much - or less? And more importantly, where did all the "so-called prosperity" really come from, especially from 1994 on?
In each and every instance of recession from 1970 onward we have "pulled forward" more and more demand and created fake "prosperity" through the creation of ever more debt that we have goaded consumers to take on. By doing so we have crippled the ability of the economy to grow, redirecting as much money as possible to a handful of people and firms (commonly known as "banks" and other "financial companies") instead of directing that effort and money into productive enterprises such as building cars, television sets and similar items.
THIS time though the recession didn't come from "ordinary business conditions"; it instead happened because the credit carrying capacity among both consumers and businesses hit the wall - they could no longer make the debt service payments and started to default.
It began with "subprime" mortgages but that was nothing other than the first "hiss" of trouble out of the pressure vessel as the structural integrity of the fraud-laced credit system, where "capacity to pay" became a bad joke, had begun to disintegrate.
We pushed the envelope of fraudulent credit creation and the sale of fraudulently-underwritten debt too far - and it blew up in our collective faces!
Rather than admit complicity in the myriad Ponzi-style scams that underlay all of the financial system for more than thirty years (or have it shoved in their face) The Fed and financial "wizards" along with The Bush Administration (who was responsible for and complicit in refusing to fix the fraud during the 00-07 timeframe) chose to try to sweep it under the rug with "yet more liquidity" and "yet more lending."
President Obama and his administration made a critical error after having won in November by refusing to stand up and take these scammers on face-to-face.
He decided to instead continue and even accelerate the scam!
It can't and won't work because the underlying issues have not been resolved and the bogus debt has not been forced out and defaulted - it remains clogging up the system, destroying the ability of the credit-intermediation system to function properly.
Period.
Folks, the facts are impossible to ignore. We are in this recession because consumer and business borrowing capacity hit the wall. We have removed almost none of that outstanding credit from the top to today, as this chart shows (which I have printed here an endless number of times!)
We have taken a measly 4.5% off the maximum outstanding credit amount (incidentally reached in January of this year) to date. 4.5%! That's nothing - it is absolutely insufficient to return the system to normal functioning and restore sound economic growth - we need five times or more that much contraction!
The bad news folks is that we will get that contraction, and if The Government and Fed do not force it to happen "voluntarily" we'll get double that much - as much as a 50% decrease in outstanding credit - coupled with a deflationary credit collapse.
The small crack in the market the last few days is a warning: The fraud-laced game is about up and we are running out of time to do the right thing.
Stop listening to the media idiots - they have not and will not discuss this facet of the crisis because doing so means admitting that their corporate parents are a huge part of how we found ourselves in this mess, along with all the advertising they've stuck in your face for the last 30 years to "go on, buy now, pay later!"
But irrespective of whether CNBC talks about it or not the mathematical reality of credit capacity as it relates to both population and earnings capacity is a mathematical reality. No amount of magical handwaving will change it, leaving us with only two choices: we either force the bad debt out into the open and default it, thereby shrinking both the balance sheets of banks and consumers (at the same time) or we continue to try to "press our bets" and take the risk of a second credit-system dislocation that will be far worse than what we experienced last fall and this spring.
At present we are choosing path #2 - a river that is quickening in pace.
Does anyone have an idea what that funny roaring noise around the next corner might be?
Thursday, August 27, 2009
PCP
It looks like PCP will get a pop up today because of the Boeing news. I think it is going to fly through the stop price.
Of course, the news from Boeing, we have heard before. They announce that the first flight of the 787 is scheduled for such and such a date, then they have to push it forward again. I am glad I didn't get in yesterday. Will re-evaluate to see if a short trade is still good on it.
Of course, the news from Boeing, we have heard before. They announce that the first flight of the 787 is scheduled for such and such a date, then they have to push it forward again. I am glad I didn't get in yesterday. Will re-evaluate to see if a short trade is still good on it.
Wednesday, August 26, 2009
Possible Shorts
Looking at PCP and BNI for shorting opportunities. These stocks hit resistance areas and are looking to reverse.
PCP
Current Price $86.75
Stop $88.76
Target $81.00
BNI
Current Price $83.32
Stop $84.91
Target $79.00
Looking for entry today. I will probably use JAN 2010 ATM options.
I will update if I enter any positions.
PCP
Current Price $86.75
Stop $88.76
Target $81.00
BNI
Current Price $83.32
Stop $84.91
Target $79.00
Looking for entry today. I will probably use JAN 2010 ATM options.
I will update if I enter any positions.
Thursday, August 20, 2009
Cash for Clunkers to end on Monday
Cash for Clunkers program sold 457,000.
You know what I find amazing. This program cost $3 billion. GM plans to rehire 1300 of its workers back. So what does that equal; $2.3 million for each job saved. How about that for $3 billion well spent. So, for the government to save 10 million jobs we need to spend $23,000,000,000,000. Yes that is 23 trillion!!! Brilliant.
Also I find it amazing that we have taken people with no car payments and now have provided them with a $25,000 debt plus higher insurance costs. Isn't that wonderful.
To go with my previous post: "If you cannot enslave an individual by virtue of his own debts then enslave the entire population by casting their government into debt." This fills both sides of that quote.
You know what I find amazing. This program cost $3 billion. GM plans to rehire 1300 of its workers back. So what does that equal; $2.3 million for each job saved. How about that for $3 billion well spent. So, for the government to save 10 million jobs we need to spend $23,000,000,000,000. Yes that is 23 trillion!!! Brilliant.
Also I find it amazing that we have taken people with no car payments and now have provided them with a $25,000 debt plus higher insurance costs. Isn't that wonderful.
To go with my previous post: "If you cannot enslave an individual by virtue of his own debts then enslave the entire population by casting their government into debt." This fills both sides of that quote.
Tuesday, August 18, 2009
Anonymous Quote
"If you cannot enslave an individual by virtue of his own debts then enslave the entire population by casting their government into debt."
Trading Update QID
I am still holding my position in QID that a purchased a few weeks ago. I am looking for a $33 target to sell.
Thursday, August 6, 2009
SRS Class Action Lawsuit filed 08/05/2009
This is an ETF that I trade regularly. It looks like we things are going to get ugly.
Labaton Sucharow LLP Files Class Action Lawsuit Against Proshares’ Ultrashort Real Estate Proshares Fund (SRS)
Labaton Sucharow LLP filed a class action lawsuit on August 5, 2009 in the United States District Court for the Southern District of New York, on behalf of all persons who purchased or otherwise acquired shares in the UltraShort Real Estate ProShares fund (the “SRS Fund”), an exchange-traded fund (“ETF”) offered by ProShares Trust (“ProShares”), pursuant or traceable to ProShares’ false and misleading Registration Statement, Prospectuses, and Statements of Additional Information (collectively, the “Registration Statement”) issued in connection with the SRS Fund’s shares (the “Class”). The Class is seeking to pursue remedies under Sections 11 and 15 of the Securities Act of 1933 (the “Securities Act”).
If you bought shares in the SRS Fund pursuant to the Registration Statement and would like to consider serving as lead plaintiff or have any questions about the lawsuit, please contact Stefanie J. Sundel, Esq. of Labaton Sucharow, at 800-321-0476 or (212) 907-0700, or via email at ssundel@labaton.com. Lead Plaintiff motion papers must be filed with the United States District Court for the Southern District of New York no later than October 5, 2009. A Lead Plaintiff is a court-appointed representative for absent class members. You do not need to seek appointment as Lead Plaintiff to share in any class recovery in this action. If you are a class member and there is a recovery for the class, you can share in that recovery as an absent class member. You may retain counsel of your choice to represent you in this action.
If you are a member of this class you can view a copy of the complaint and join this class action online at http://www.labaton.com/en/cases/Newly-Filed-Cases.cfm
The complaint names ProShares; ProShare Advisors LLC, SEI Investments Distribution Co., Michael L. Sapir, Louis M. Mayberg, Russell S. Reynolds, III, Michael Wachs, and Simon D. Collier, as defendants (collectively, “Defendants”). ProShares sells its Ultra and UltraShort ETFs as “simple” directional plays. As marketed by ProShares, Ultra ETFs are designed to go up when markets go up; UltraShort ETFs are designed to go up when markets go down. The SRS Fund is one of ProShares’ UltraShort ETFs. The SRS Fund seeks investment results that correspond to twice the inverse (–200%) daily performance of the Dow Jones U.S. Real Estate Index (“DJREI”), which measures the performance of the real estate sector of the U.S. equity market. Accordingly, the SRS Fund is supposed to deliver double the inverse return of the DJREI, which fell approximately 39.2 percent from January 2, 2008 through December 17, 2008, ostensibly creating a profit for investors who anticipated a decline in the U.S. real estate market. In other words, the SRS Fund should have appreciated by 78.4 percent during this period. However, the SRS Fund actually fell approximately 48.2 percent during this period—the antithesis of a directional play.
The complaint alleges the Defendants violated the Securities Act by failing to disclose that the SRS Fund is altogether defective as a directional investment play. Defendants failed to disclose the following risks in the Registration Statement: (1) inverse correlation between the SRS Fund and the DJREI over time would only happen in the rarest of circumstances, and inadvertently if at all; (2) the extent to which performance of the SRS Fund would inevitably diverge from the performance of the DJREI—i.e., the probability, if not certainty, of spectacular tracking error; (3) the severe consequences of high market volatility on the SRS Fund’s investment objective and performance; (4) the severe consequences of inherent path dependency in periods of high market volatility on the SRS Fund’s performance; (5) the role the SRS Fund plays in increasing market volatility, particularly in the last hour of trading; (6) the consequences of the SRS Fund’s daily hedge adjustment always going in the same direction as the movement of the underlying index, notwithstanding that it is an inverse leveraged ETF; (7) the SRS Fund causes dislocations in the stock market; (8) the SRS Fund offers a seemingly straightforward way to obtain desired exposure, but such exposure is not attainable through the SRS Fund.
Plaintiff is represented by the law firm Labaton Sucharow LLP. Labaton Sucharow is one of the country’s premier national law firms that represent institutional and individual investors in class action, complex securities and corporate governance litigation. The firm has been a champion of investor rights for over 40 years and has been recognized for its reputation for excellence by the courts. More information about Labaton Sucharow is available at www.labaton.com.
Labaton Sucharow LLP Files Class Action Lawsuit Against Proshares’ Ultrashort Real Estate Proshares Fund (SRS)
Labaton Sucharow LLP filed a class action lawsuit on August 5, 2009 in the United States District Court for the Southern District of New York, on behalf of all persons who purchased or otherwise acquired shares in the UltraShort Real Estate ProShares fund (the “SRS Fund”), an exchange-traded fund (“ETF”) offered by ProShares Trust (“ProShares”), pursuant or traceable to ProShares’ false and misleading Registration Statement, Prospectuses, and Statements of Additional Information (collectively, the “Registration Statement”) issued in connection with the SRS Fund’s shares (the “Class”). The Class is seeking to pursue remedies under Sections 11 and 15 of the Securities Act of 1933 (the “Securities Act”).
If you bought shares in the SRS Fund pursuant to the Registration Statement and would like to consider serving as lead plaintiff or have any questions about the lawsuit, please contact Stefanie J. Sundel, Esq. of Labaton Sucharow, at 800-321-0476 or (212) 907-0700, or via email at ssundel@labaton.com. Lead Plaintiff motion papers must be filed with the United States District Court for the Southern District of New York no later than October 5, 2009. A Lead Plaintiff is a court-appointed representative for absent class members. You do not need to seek appointment as Lead Plaintiff to share in any class recovery in this action. If you are a class member and there is a recovery for the class, you can share in that recovery as an absent class member. You may retain counsel of your choice to represent you in this action.
If you are a member of this class you can view a copy of the complaint and join this class action online at http://www.labaton.com/en/cases/Newly-Filed-Cases.cfm
The complaint names ProShares; ProShare Advisors LLC, SEI Investments Distribution Co., Michael L. Sapir, Louis M. Mayberg, Russell S. Reynolds, III, Michael Wachs, and Simon D. Collier, as defendants (collectively, “Defendants”). ProShares sells its Ultra and UltraShort ETFs as “simple” directional plays. As marketed by ProShares, Ultra ETFs are designed to go up when markets go up; UltraShort ETFs are designed to go up when markets go down. The SRS Fund is one of ProShares’ UltraShort ETFs. The SRS Fund seeks investment results that correspond to twice the inverse (–200%) daily performance of the Dow Jones U.S. Real Estate Index (“DJREI”), which measures the performance of the real estate sector of the U.S. equity market. Accordingly, the SRS Fund is supposed to deliver double the inverse return of the DJREI, which fell approximately 39.2 percent from January 2, 2008 through December 17, 2008, ostensibly creating a profit for investors who anticipated a decline in the U.S. real estate market. In other words, the SRS Fund should have appreciated by 78.4 percent during this period. However, the SRS Fund actually fell approximately 48.2 percent during this period—the antithesis of a directional play.
The complaint alleges the Defendants violated the Securities Act by failing to disclose that the SRS Fund is altogether defective as a directional investment play. Defendants failed to disclose the following risks in the Registration Statement: (1) inverse correlation between the SRS Fund and the DJREI over time would only happen in the rarest of circumstances, and inadvertently if at all; (2) the extent to which performance of the SRS Fund would inevitably diverge from the performance of the DJREI—i.e., the probability, if not certainty, of spectacular tracking error; (3) the severe consequences of high market volatility on the SRS Fund’s investment objective and performance; (4) the severe consequences of inherent path dependency in periods of high market volatility on the SRS Fund’s performance; (5) the role the SRS Fund plays in increasing market volatility, particularly in the last hour of trading; (6) the consequences of the SRS Fund’s daily hedge adjustment always going in the same direction as the movement of the underlying index, notwithstanding that it is an inverse leveraged ETF; (7) the SRS Fund causes dislocations in the stock market; (8) the SRS Fund offers a seemingly straightforward way to obtain desired exposure, but such exposure is not attainable through the SRS Fund.
Plaintiff is represented by the law firm Labaton Sucharow LLP. Labaton Sucharow is one of the country’s premier national law firms that represent institutional and individual investors in class action, complex securities and corporate governance litigation. The firm has been a champion of investor rights for over 40 years and has been recognized for its reputation for excellence by the courts. More information about Labaton Sucharow is available at www.labaton.com.
Friday, July 24, 2009
What the FED doesn't want you to know.
Visit msnbc.com for Breaking News, World News, and News about the Economy
Friday, July 17, 2009
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