Evidence of FED printing money: creating inflation

A graph of Fed borrowing: click here to view in full
Whoops! : May 2008 : Ambrose Evans-Pritchard : Business : Telegraph Blogs: "Posted by Ambrose Evans-Pritchard on 29 May 2008 at 18:42
Tags: Economy, Debt, borrowing, Alan Greenspan, Federal Reserve

This is helicopter policy already. It is what happens when the Fed manouvres itself into such a dire position that it has to invoke the "unusual and exigent circumstances" clause of the Federal Reserve Act (Article 13, 3).

Sadly, we must all put a clothes peg over our nose and accept this debasement. The alternative outcome for free society would be worse.

Greenspan has a lot to answer for..."

Norton's comment: Non-bank borrowing recently open to investment banks etc., allows trading mortgage backed securities (worth junk) at face value for treasury securities...so called temporarily; however, now there is talk of making this mechanism and new regulations long term or permanent. Most banks are still carrying these securities at full value on their books which could ultimately be worth pennies on the dollar. The ponzi scheme is SLOWLY being revealed. We have a long way to go World wide. We are on the edge of a sismic financial unwraveling. Get prepared for the world after oil and after a gutting of the financial systems as billions of dollars of assets vanish. Ultimately the public will pay and it will be the beginning of the Next American Revolution.

10 ways to prepare for a post-oil society

...the best way to feel hopeful for the future is to prepare for it

by James Howard Kunstler Eartheasy.com
"The best way to feel hopeful about our looming energy crisis is to get active now and prepare for living arrangements in a post-oil society.

Out in the public arena, people frequently twang on me for being "Mister Gloom'n'doom," or for "not offering any solutions" to our looming energy crisis. So, for those of you who are tired of wringing your hands, who would like to do something useful, or focus your attention in a purposeful way, here are my suggestions:

1. Expand your view beyond the question of how we will run all the cars by means other than gasoline. This obsession with keeping the cars running at all costs could really prove fatal. It is especially unhelpful that so many self-proclaimed "greens" and political "progressives" are hung up on this monomaniacal theme. Get this: the cars are not part of the solution (whether they run on fossil fuels, vodka, used frymax™ oil, or cow shit). They are at the heart of the problem. And trying to salvage the entire Happy Motoring system by shifting it from gasoline to other fuels will only make things much worse. The bottom line of this is: start thinking beyond the car. We have to make other arrangements for virtually all the common activities of daily life.

2. We have to produce food differently. The Monsanto/Cargill model of industrial agribusiness is heading toward its Waterloo. As oil and gas deplete, we will be left with sterile soils and farming organized at an unworkable scale. Many lives will depend on our ability to fix this. Farming will soon return much closer to the center of American economic life. It will necessarily have to be done more locally, at a smaller-and-finer scale, and will require more human labor. The value-added activities associated with farming -- e.g. making products like cheese, wine, oils -- will also have to be done much more locally. This situation presents excellent business and vocational opportunities for America's young people (if they can unplug their Ipods long enough to pay attention.) It also presents huge problems in land-use reform. Not to mention the fact that the knowledge and skill for doing these things has to be painstakingly retrieved from the dumpster of history. Get busy...."

The Future of Civilization hangs in the balance

by Helga Zepp-LaRouche (LPAC)--May 26, 2008
"The battle between the proponents of ''British imperial free trade''' and the defenders of the general welfare and of food security, is the most important conflict facing us today, because the future of civilization hangs in the balance...

Not a moment too soon, a group of seven former European heads of state, five former finance ministers, and two former presidents of the European Commission, including former EU Commission head Jacques Delors, former French Prime Minister Michel Rocard, and former German Chancellor Helmut Schmidt, have gone public with an open letter to the EU Presidency and the EU Commission. They warn that the systemic collapse of the global financial system--a collapse which had been foreseen by ``farsighted individuals''--brings with it the threat of unprecedented poverty, the proliferation of ``failed states,'' migration of entire populations, and further military conflicts. The financial world, they argue, has accumulated a massive amount of ``fictitious capital'' (!), with very little improvement for humanity. Among the immediate countermeasures they propose, is creation of a European Crisis Committee, and the convening of a world financial conference to ``reconsider'' the current international system and the globalized world order.

Although their letter, which was made public on May 21, does not expressly state so, its unusually sharp tone clearly reflects that the signers are aware of the imminent danger of the eruption of a new fascism: ``But when everything is for sale [for profit--HZL], social cohesion melts and the system breaks down.'' And even though the letter's call for an emergency conference does not use the term ``New Bretton Woods system,'' its tenor clearly reflects

Where are your US Taxes used?

CBSNews.com

Open your wallet for the FED - gas is cheap by comparison

Jesse's Café Américain:

Kohn Signals Wall Street May Get Permanent Access to Fed Loans

"By Scott Lanman and Anthony Massucci May 30 (Bloomberg)
Federal Reserve Board Vice Chairman Donald Kohn raised the possibility of giving Wall Street securities firms permanent access to loans from the central bank, as long as regulators tighten oversight of the companies...."

The Next American Revolution and Long-term Stock Market Cycles

The Next American Revolution and Long-term Stock Market Cycles::
Politics / Cycles Analysis May 30, 2008 - 03:08 PM by: Clif_Droke

"Revolution = radical change in lifestyles

The bottoming of the 120-year Master Cycle always brings about revolution. The first revolution since the founding of our nation in the 1770s was political in nature. The second revolution, when the last 120-year cycle bottomed in the 1890s, was industrial. The third revolution when the current 120-year cycle bottoms next decade will probably be a social one. As Kress has stated concerning the final “hard down” phase of his 120-year cycle, “There's the potential for Big Brotherism to get worse and we'll probably see the U.S. becoming more socialistic as our standard of living deteriorates...

As the 120-year cycle bottoms in 2014, so does its 60-year cycle half component. The 60-year Kress cycle sometimes (though not always) coincides with K-wave bottoms and is known as the market Super Cycle. The last time the 60-year cycle bottomed was in 1954, at which time the 120-year cycle peaked. This saw the peak of America's industrial prowess and shortly thereafter our industrial base began its long decline. "

Unhappy buyers of subprime mortgages - banks to buy back loans?

Financial Armageddon: "Unhappy buyers of subprime mortgages (CDO) ...

In "Investors Press Lenders on Bad Loans," the Wall Street Journal's Ruth Simon reports on the nascent beginnings of what is likely to be a increasingly nightmarish legal tsunami.

Buyers Seek to Force Repurchase by Banks; Potential Liability Could Reach Billions

Already burned by bad mortgages on their books, lenders now are feeling rising heat from loans they sold to investors.

Unhappy buyers of subprime mortgages, home-equity loans and other real-estate loans are trying to force banks and mortgage companies to repurchase a growing pile of troubled loans. The pressure is the result of provisions in many loan sales that require lenders to take back loans that default unusually fast or contained mistakes or fraud.

The potential liability from the growing number of disputed loans could reach billions of dollars, says Paul J. Miller Jr., an analyst with Friedman, Billings, Ramsey & Co. Some major lenders are setting aside large reserves to cover potential repurchases...."

Upcoming bank crisis is going to be far greater than what happened in the 1980's

Mish's Global Economic Trend Analysis: "upcoming bank crisis is going to be far greater than what happened in the 1980's...

So what you say? Well I think as we watch bank after bank (Royal Bank of Scotland(RBS) this morning as an example) take recurring “one-time” write-offs we can begin to see just what a ponzi scheme this has been over the years. Banks book loans, mark them up in value, and show the difference in profits. They've done the same thing with the phantom book value these deals present when consummated. Over the last few decades banks have not really made any money; they have merely been a conduit for the Fed to create massive credit. The U.S. money supply is now over 99% debt...

Looking back at the S&L crisis, I do not recall knowing anyone who was directly affected. This mortgage crisis (credit crisis really) runs far deeper. Ridiculous lending standards compounded by consumer greed and Fed micro-management of interest rates are causing millions of foreclosures.

In the wake, tens of thousands of self-employed real estate agents have not had any income for months on end, the originate to securitize model is dying, and mortgage rates are not dropping in spite of massive rate cuts by the Fed. Unemployment is poised to soar which means still more foreclosures are coming. REOs are piling up on bank books. What was largely an institutional crisis in the 1980's is now a huge consumer crisis as well as a huge institutional crisis..."

Sales of Spam rise as consumers trim food costs - Yahoo! News

Sales of Spam rise as consumers trim food costs - Yahoo! News: "Sales of Spam rise as consumers trim food costs.

By EMILY FREDRIX, AP Business Writer Wed May 28, 4:06 PM ET MILWAUKEE

Love it, hate it or laugh at it — at least it's inexpensive.

Sales of Spam — that much maligned meat — are rising as consumers are turning more to lunch meats and other lower-cost foods to extend their already stretched food budgets.

What was once cheeky, silly and the subject of a musical (as Monty Python mocked the meat in a can), is now back on the table as people turn to the once-snubbed meat as costs rise, analysts say."

How the Financial securitization food chain works - Roubini

Can we afford the rich any more? | Corrente:
"Nouriel Roubini explains the financial food chain:

How will financial institutions make money now that the securitization food chain is broken?

Let’s consider in more detail this loan origination and securitization chain for residential mortgages, commercial real estate mortgages and leveraged loans financing LBOs…

Think of this fee generation process along this long food chain: it started with mortgage brokers whose income/fee was based on maximizing the volume of mortgages being generated and approved; they had all the incentive to ignore the creditworthiness of the borrowers and maximize mortgage volume and their personal income. The fee generation machine then passed to the bank originating the mortgage that was packaging these mortgages into MBS and thus making a fee in this process and transferring the risk down the line to someone else;.. "

CMO Buyers Seek to Force Repurchase by Banks; Potential Liability Could Reach Billions

Financial Armageddon: "Unhappy buyers of subprime mortgages, home-equity loans and other real-estate loans are trying to force banks and mortgage companies to repurchase a growing pile of troubled loans. The pressure is the result of provisions in many loan sales that require lenders to take back loans that default unusually fast or contained mistakes or fraud.

The potential liability from the growing number of disputed loans could reach billions of dollars, says Paul J. Miller Jr., an analyst with Friedman, Billings, Ramsey & Co. Some major lenders are setting aside large reserves to cover potential repurchases.

Countrywide Financial Corp., the largest mortgage lender in the U.S., said in a securities filing this month that its estimated liability for such claims climbed to $935 million as of March 31 from $365 million a year earlier. Countrywide also took a first-quarter charge of $133 million for claims that already have been paid."

Dollar forecast to rebound for 3 months

Bloomberg.com: Worldwide: "Marc Faber Says Dollar May Rebound for Three Months (Correct)
By Lynn Thomasson and Kathleen Hays

April 30 (Bloomberg) -- The U.S. dollar may rise against world currencies for the next two or three months, sending commodity prices and stocks lower, said Marc Faber, managing director of Marc Faber Ltd.

``The U.S. economy is in a recession but that doesn't mean the whole thing is going to fall apart,'' said Faber, publisher of the Gloom, Boom & Doom report, who told investors to buy gold at the start of its six-year rally. A ``relative tightening of global liquidity should be supportive for the dollar and negative for asset markets and commodities,'' he said."

Home price index posts largest drop in 17 year history

By ALAN ZIBEL 05.23.08, 5:24 AM ET
WASHINGTON -
A home-price index considered to be the most comprehensive reading of the U.S. market posted the sharpest decline in its 17-year history, and analysts say housing has yet to bottom out.

Rapidly falling home prices in California, Florida and Nevada skewed the national results.

Last 13 Months Case-Shiller Composite 20 Index Graph: "Previous 13 months of the Case-Shiller Composite 20 Index.
Jim Kimmons"

Rice - preparing the US Public for War with Iran

Rice warns of more sanctions on Iran | Reuters: "Rice said Iran should expect more of these kinds of sanctions but she declined to provide any timeline.
'We continue to assess it practically every day. (U.S. Treasury Secretary) Hank Paulson and I have very close contact about that. This is not something we do as a political matter. It is something we do because the international financial system has got to keep its integrity,...'"

Moody's Defense of Incompetence

Minyanville - Moody's Chooses Incompetence:

Moody's Defense: Incompetence

Moody's Corp. (MCO), the second-largest rating company, is facing government scrutiny after initiating their own internal investigation into whether a 'computer error' gave AAA ratings to securities that didn't deserve them.

According to the Financial Times, internal Moody’s documents show that some senior staff within the credit agency knew early in 2007 that products rated the previous year had received AAA ratings and that, after a computer coding error was corrected, their ratings should have been up to four notches lower. Upon discovering the error early in 2007, Moody’s corrected the coding glitch and instituted methodology changes, the newspaper reported...Look, here's the bottom line: Moody's will essentially have to use incompetence as its defense...

We're not rocket scientists with fancy computer models, so the real question is how a bunch of guys like us knew as early as May of 2007 that deteriorating collateral values in the mortgage market were not being reflected in the credit ratings of complicated credit products?"

Illusions of Candor - Bush jawboning

"W" Is For Wrong Way

Illusions of Candor
By Chris Nelder | Wednesday, May 21st, 2008 Energy and Capital
"It's not like President Bush has been oblivious to peak oil. This wasn't his first statement to the effect that oil won't last forever, although he's been careful to avoid the phrase "peak oil."

Dick Cheney himself explained the reality of peak oil to the Institute of Petroleum in November, 1999:
'By some estimates there will be an average of two per cent annual growth in global oil demand over the years ahead along with conservatively a three per cent natural decline in production from existing reserves. That means by 2010 we will need on the order of an additional fifty million barrels a day. So where is the oil going to come from? Governments and the national oil companies are obviously controlling about ninety per cent of the assets. Oil remains fundamentally a government business. While many regions of the world offer great oil opportunities, the Middle East with two thirds of the world's oil and the lowest cost, is still where the prize ultimately lies, even though companies are anxious for greater access there, progress continues to be slow.'

Adding another 50 million barrels par day is like adding another five Saudi Arabias. Even Bush knows that's not possible. The whole time he's been talking about jawboning our friends, he has known what was to come.

And he has done his level best to ensure that America is completely and utterly unprepared to deal with it.

A president who truly cared about his country, knowing what he has known about peak oil, would have taken the galvanizing effect of 9-11 to ask his fellow citizens to drive less, to conserve, to pull together in a campaign of relocalization, and do to all that we could to wean ourselves from our addiction to oil.

Instead, he encouraged us to jump in our SUVs and go shopping.

President discovers he can't get oil from a stone.

President Bush's trip to Saudi Arabia

Leeb's Market Forecast May 20, 2008 by Stephan Leeb
"Well, you can't bully someone into giving you what they don't have. When OPEC runs out of oil, neither threats from politicians nor tantrums from voters will make more oil magically appear.

Worse, if the U.S. Government actually followed through on its threat and withdrew military support from our allies, all that would happen is that our enemies would grow stronger...

In truth, oil prices are becoming the key to predicting the stock market's near and long term fate. Eventually, higher oil prices will become a major drag on stock prices, while any pullbacks in oil will be a welcome relief to the market. We aren't quite at that point yet, but we are drawing closer...."

Inflation means? Dr Marc Faber investment analyst

The Hindu Business Line : Nuggets: "“Inflation works in three ways. One, by lowering real prices and, two, by threatening continued erosion in purchasing power of cash. A third is through the “wealth effect”: When asset prices inflate, people misperceive the inflation as true wealth and increase their spending.”

“In the long run most things will appreciate in value, but the problem is that most companies live only 30 years and then they die. In other words, they go bankrupt. So when people talk about stocks going up in the long run, one would have to constantly re-balance one’s portfolio. One could also argue that stocks go up sometimes but they fall as a result of inflation adjustment or in other words against another currency or gold.”"

Why rising inflation will trigger a bond market rout

Why rising inflation will trigger a bond market rout | Financial Planning: "But in a real bond crisis that trickle would become a flood. Bond sellers would be buyers of higher yielding currencies, quasi-money assets like gold and silver as well as hard assets in the form of commodities from energy to food.

Terrible investment
The problem is that as Dr Marc Faber argues bonds could well prove to be currently the worst value as a major asset class in 30 years. They pay a miserable return in a devaluing currency and are highly vulnerable to capital value erosion through inflation."

Consumer Sentiment: Is the Worst Yet To Come?

Finding Bottom Is A Process

"There have been four consecutive months of negative job growth. I spoke of this in April Jobs - Another Report From Bizarro World.

Consumer sentiment is unlikely to improve until jobs improve.

However, don't expect that to happen anytime soon. Banks and brokerages are scrambling to raise capital and reduce expenses. Layoffs in the financial sector are massive, but are about to get worse. State budgets are strapped and many states are reporting dramatic falloffs in tax revenue. California is in particularly dire straits as noted in California Leads Way To Consumer Bust. States will have to raise taxes or cut services (jobs), most like both.

Commercial Real estate will add to the downward spiral now that the Shopping Center Economic Model Is History. The auto sector is in deep trouble thanks to the Death of the SUV.

Those buying into the idea of a "second half recovery" are singing the wrong tune. Overcapacity is rampant everywhere you look. There is no reason for businesses to expand, so they won't. Thus, unemployment is poised to rise and consumer sentiment is poised to sink further..."

Baby Boomers' rewards for years of hard work

Graceful Retirement Living

Reached the peak of perfection, now there is nothin' but fun for retirement ahead.....the American Dream retirement.

The Bush Budget - Features and Interviews - Hard Assets Investor

The Bush Budget - Features and Interviews - Hard Assets Investor: "The Bush Budget
Written by Julian Murdoch
Tuesday, 05 February 2008 17:55

The first shot has been fired in the Federal Budget War of FY'09 and it ain't pretty.

This Monday, President Bush released his proposed $3.1 trillion budget (that's trillion with a 'T'), a 6% increase over the projected $2.9 trillion in spending for FY'08. With such a large number, everyone wins, right? Of course not! This is Washington we're talking about.

As the experts gather to dissect the budget, the headlines have mostly touted the increased spending for Homeland Security and the Defense Department and the cuts proposed in education & health care. But we're looking at commodities. Beyond generalized help for the economy (i.e., Bush's stimulus package), the most important places for us to look are at the energy budgets … and particularly, exploration and renewable energy.

Energy Department Budget

The blurb from the White House states the following about the proposed Energy Department budget:

Increases energy security by focusing on renewables, accelerating technological breakthroughs, and expanding traditional sources to reduce our reliance on foreign oil.

In plain English, Bush is throwing more money at cleaning up coal and at increasing the use of nuclear power"

US Government Economic Statistics Are a 'Con Job'

Jesse's Café Américain: US Government Economic Statistics Are a 'Con Job':

CNNMoney.com Wednesday May 14, 10:37 am ET
By Chris Isidore

"But they just managing our perception of inflation. Its for our own good. Its the least costly most efficient way of fixing all our problems. We can just pretend they do not exist.

'Through clever and constant application of propaganda, people can be made to see paradise as hell, and also the other way round, to consider the most wretched sort of life as paradise.' Adolph Hitler

Americans are feeling a lot more economic pain than the government's official statistics would lead you to believe, according to a growing number of experts. They argue that figures for unemployment and inflation are being understated by the government.

Unemployment and inflation are typically added together to come up with a so-called "Misery Index..."

The devastating reality of our economy

Jesse's Café Américain
This interview with Joe Stiglitz originally aired on March 31, 2008 after Hank Paulson floated his proposal for sweeping reforms of our regulatory environment with the Fed taking a key role....

Joseph Stiglitz is Nobel Prize winning economist, former chief economist at the World Bank, also, the coauthor of the new book, "Three Trillion Dollar War: The True Cost of the Iraq Conflict," and also professor of economics at Columbia University just to keep busy.

"STIGLITZ: And so every dollar of this war has been financed by borrowing; 40 percent of this has been borrowing from abroad. First time since the Revolutionary War.

DOBBS: For the first time since the Revolutionary War, as well, we have a -- we have a national debt of $9 trillion, a trade debt of $6 trillion. And that trade debt is rising faster, including the capital that we have to borrow to sustain ourselves. That -- that debt is rising faster than our national debt.

I mean, is there at any point at which we're going to come to terms with the devastating reality of our economy? Whether it's $53 trillion in unfunded liabilities or that $9 trillion national debt, a $6 trillion trade debt, and a $3 trillion war? ..."

Norton's comment: take this in and consider the legacy we are leaving the next generation:
$ 9 trillion dollar national debt
$ 6 trillion dollar trade debt
$ 53 trillion dollar unfunded liabilities to our veterans
$ 3 trillion dollar Iraq / Afganistan War
$ ??? dollar Iran war that is coming before Bush leaves office!

Accounting rule change makes Fannie Mae losses look better

Bloomberg.com: Worldwide: "Freddie Mac Accounting Cuts Losses By $2.6 Billion (Update1)

By Dawn Kopecki
May 14 (Bloomberg) -- Freddie Mac, the second-largest U.S. mortgage-finance company, reported a smaller loss than analysts estimated after accounting changes reduced charges by at least $2.6 billion.
Without the use of two new accounting rules, Freddie Mac would have posted a loss of at least $1.7 billion, analysts said. A change in the way the company values some assets that aren't traded reduced credit losses by $1.3 billion, while a separate rule that lets the company pick and choose which assets to measure contributed an equal amount, Freddie Mac said"

It's a strange Wall Street World: Fannie Mae stock is up when their financial ratings dive!

Reading the fine print

The financial ratings by Moodys on govt backed mortgage securities dropped.

The ratings on other Fannie Mae debt instruments remained stable.

They need to raise / issue more capital to cover their reserve and provide liquidity to compensate for the poor quality of some of their holdings, such as, mortgage backed securities.

The result is the stock is going up! How does that make sense? Watch out what you expect from this volatile market.

by Norton

US foreclosure filings climbed 65 percent YTY

Bloomberg.com: U.S.: "Foreclosures Climb 65% (year-to-year)as Loan Workouts Fall Short (Update3)

By Dan Levy
May 14 (Bloomberg) -- U.S. foreclosure filings climbed 65 percent and bank seizures more than doubled in April from a year earlier as mortgage industry efforts to modify loans fell short."

Norton's comment: It is not over yet.

Moody's cuts Freddie Mac financial strength rating - Forbes.com

financial strength rating on government-backed mortgage lender Freddie Mac to 'B+' from 'A-,

Moody's cuts Freddie Mac financial strength rating - Forbes.com: "NEW YORK - Credit ratings agency Moody's Investors Service downgraded its bank financial strength rating on government-backed mortgage lender Freddie Mac to 'B+' from 'A-,' with a negative outlook...

The agency affirmed all of the lender's other debt ratings. The outlook on Freddie Mac (nyse: FRE - news - people )'s 'Aaa' senior debt and 'Aa2' subordinated debt ratings remains stable..."

Screening for Best Stocks to Buy

This rough market has taken a piece out of the stock price of many companies with great prospects. Buy them near the bottom -- which might be now -- and you could get a bargain.

By Harry Domash
For those who agree with the sunny outlook, here's a screen for finding quality companies likely to shine. These are all big-cap, best-in-class, profitable companies with strong growth prospects.

Even better, they don't carry much debt, so they won't be tripped up if the credit markets turn another somersault. And you can still pick them up at today's bargain prices.

Bush and Cheney are determined not to hand over “the Iran problem” to a successor.

administration neocons want war on Iran.

From True Blue Liberal my 12, 2008
By Stephen Lendman
Earlier on April 7, Haaretz reported still more stirrings. It was about Israel’s “largest-ever emergency drill start(ed) to test the authorities’ preparedness for threats (of) a missile attack on central Israel.” Prime Minister Olmert announced that the “drill (was) no front for Israeli bellicose intentions toward Syria” and by implication Iran. Both countries and Hezbollah see it otherwise and with good reason.

The system itself is the criminal product of wrongly acquired wealth

Why All of Our Efforts Won’t Stop the Attack on Iran

May 11, 2008 by Gary Leupp is a Professor of History, and Adjunct Professor of Comparative Religion at Tufts University

I read tonight a brief article by Philip Giraldi posted on the American Conservative website: “War with Iran Might Be Closer than You Think.”

“There is considerable speculation,” writes the former CIA officer, “and buzz in Washington today suggesting that the National Security Council has agreed in principle to proceed with plans to attack an Iranian al-Qods [Revolutionary Guards]-run camp that is believed to be training Iraqi militants. The camp that will be targeted is one of several located near Tehran...

The system itself, that is to say, is the criminal product of wrongly acquired wealth, much of it obtained through imperialist war. Exposure alone, no matter how voluminous, eloquent and persuasive, will not change it."

Norton's comments: Is your investment portfolio ready for this event? Consider the effects on currencies, economics, and the credit crisis...which is NOT over as JP Morgan just stated!

Nearly Carbon Neutral Transport

100 MPG (miles Per Grain of Wheat); coming to an auto dealer near you

Club of Pioneers - Avoided Deforestation - Blogs - Digging into environmental topics that matter.: "Nearly Carbon Neutral Transport"

Fannie needs the cash to offset losses

After three consecutive quarterly losses,

Fannie needs the cash to offset losses from buckling subprime and Alt-A loans. This is especially true as Washington taps Fannie, and her government-backed mortgage brethren, Freddie Mac, to calm and bolster the troubled U.S. mortgage market.

Is ExxonMobil's future running dry?

Proven oil and gas reserves fell 3.1% YTY since end of 2006 according to Standard & Poor.

Is ExxonMobil's future running dry? - MSN Money: "Proven reserves declining
The company also reduced its projections for annual production to 4.5 million barrels of oil equivalent a day in 2012 from the 4.8 million barrels a day in 2011 that it projected a year ago. Just further evidence that ExxonMobil has a production problem.

But falling production is only part of the problem, the consequence today of a longer-term problem that seems to worsen each year. You see, not only is production likely to stay flat or fall through 2012, but proven oil and gas reserves are declining. Proven oil and gas reserves fell by 3.1% at year-end 2007 from the end of 2006, according to Standard & Poor's."

Slash your grocery bill in half

Slash your grocery bill - MSN Money: "Slash your grocery bill
MSN Money columnist MP Dunleavey lays out an ambitious goal: To use smarter shopping and meal planning to cut her family's food spending in half."

AIG Lays an E-G-G; 9.11 billion dollar loss

Jesse's Café Americain: AIG Lays an E-G-G: "value of risky debt has plummeted, forcing firms like AIG to reduce the value of their investments in products such as credit default swaps and mortgage-backed securities.

'While we anticipated a difficult trading environment, the severity of the unrealized valuation losses and decline in value of our investments were beyond our expectations,' Martin Sullivan, AIG's president and chief executive, said in a statement.

New York-based AIG lost $9.11 billion in its credit-default swaps portfolio during the first quarter."

Wednesday Outlook: The Bad News Is the Good News - Seeking Alpha

Wednesday Outlook: The Bad News Is the Good News - Seeking Alpha: "Do not pay any attention to bad news. That’s the message from Tuesday's action. Bulls ignored record oil prices and crummy news [a dividend cut and wider loss] from Fannie Mae (FNM). Instead they chose to believe that FNM’s position going forward was strong and they would “feast on” market chaos from new products and, of course, the worst conditions were behind them."

Latin America EconoMonitor: Commodities History

RGE - Latin America EconoMonitor: "The results are quite interesting. Metal prices are very high. They are double the post-war average in 2007 and more than double that average in March 2008. There are only a few years in our whole series where real metal prices were as high – indeed only one, 1916, in the midst of the First World War. If we were to add oil to the graph, it would show with an index of over 500 in 2007 and 700 in March 2008. So, we are really in the midst of a boom in mineral prices.
On the contrary, agricultural prices have just recovered from the very depressed levels reached after the collapse of the 1980s and the smaller additional reduction that took place during the Asian crisis. The major reason for the collapse of the 1980s was the “fallacy of composition” effect in the attempt by many developing countries to increase commodity exports to manage their debt crises. The most surprising result is that in March 2008 (which, according to some analysts, such as Otaviano Canuto, may have marked the end of the recent boom—see his piece in this Monitor on April 21, 2008), real agricultural prices just went back to levels similar to the post-war average and the 1970s. Indeed, tropical commodity prices were still somewhat below those averages. As supplies increase and demand weakens during the ongoing world slowdown, they are likely to fall again in the immediate future."

Ron Paul advisor Peter Schiff's economic forecast

YouTube - Ron Paul advisor Peter Schiff's economic forecast: "Economic Forecast - man on the street explanation. Believable."

Business Bankruptcies Up by Nearly 50% in April

naked capitalism: Business Bankruptcies Up by Nearly 50% in April: "Business Bankruptcies Up by Nearly 50% in April

A sharp increase in business bankruptcy filings is not only a tangible sign of business distress, but bodes ill for employment. Although the Bloomberg report does not break out Chapter 11 filings by size of entity, it's a no-brainer than they would be concentrated in smaller companies, and it is those smaller entities that have been the source of job growth in this cycle (large businesses had been shedding jobs even in a nominally strong economy)l. Small businesses also rely far more than large companies on real estate and credit cards for financing, and lenders have been tightening up on both types of loans.

From Bloomberg:

Business bankruptcy filings in the U.S. increased 49 percent in April from a year earlier, the biggest gain so far in 2008, as the slowing economy prompted more companies to shut down."

Fannie Mae loses $2.2B in 1Q; warns of "severe weakness" - Forbes.com

Market rises on Fannie Mae loses! Huh?

Fannie Mae loses $2.2B in 1Q; warns of "severe weakness" - Forbes.com: "Associated Press
Fannie Mae loses $2.2B in 1Q; warns of 'severe weakness'
By MARCY GORDON 05.06.08, 8:13 AM ET
WASHINGTON - Fannie Mae said Tuesday it lost $2.2 billion in the first quarter as home-loan delinquencies mounted and home prices declined more sharply than the mortgage finance company had expected.
The company said it expects 'severe weakness' in the housing market to continue this year, bringing increased mortgage defaults and foreclosures.

Fannie Mae (nyse: FNM - news - people ), the largest U.S. buyer and backer of home loans, said it would raise $6 billion by selling new stock. The company will cut its dividend, starting in the third quarter, to 25 cents a share, to generate around $390 million a year"

Norton's comment: So, how to figure this out. Up on bad news and down on good news. What a challenge.

2008 Berkshire Hathaway Shareholder Meeting: Charlie Munger

2008 Berkshire Hathaway Shareholder Meeting: Detailed Notes - Seeking Alpha:

comment by Charlie Munger: "A University of Chicago Graduate student asked me once, what are we being taught that is wrong? In business school the amount of time spent teaching option pricing is total nonsense.

You only need 2 courses, how to value a business and how to think about stock market fluctuations. The thing is that instructors know the formulas and you don’t, so they have something to fill the time. It has nothing to do with investment success – what matters is buying businesses at the right price. If you were teaching Biblical studies and you could read the Bible forward, backward and in four different languages, you would find it hard to tell everyone that it comes down to the Ten Commandments. The priests want to spend a lot of time preaching. You must have attitude where you aren’t influenced by market. You need a mindset, and you need to have the attitude to divorce yourself from letting the market influence you."

The Importance of Major Asset Class Volatility Ranges

by Seeking Alpha May 6, 2008:
Investors should think about volatility as well as mean returns when planning and analyzing their portfolios.

If we could remain investors for long periods and did not need to take money out for any reason, then volatility would be of less concern. However, the shorter the time horizon for expected withdrawals, the more important volatility (return standard deviation) becomes.

Standard deviation is an important factor in the retiree question “Can I outlive my money?”

Proper allocation among asset classes in light of volatility is a critical aspect of portfolio design for investors who have changed, or are about to change, life stages from accumulation of assets to consumption of assets.

"signaling “euthanasia of the rentier,” it is empowering finance and applying euthanasia to labor and industry."

Michael Hudson: The Fed Sinks the Dollar: "signaling “euthanasia of the rentier,” it is empowering finance and applying euthanasia to labor and industry....

While the Fed lowers its rate for lending to banks, these banks have not been passing on the rate cuts to their customers. Credit card rates are going up, and entire Christmas trees of penalties are further increasing banks’ rake-off. Mortgage rates remain high, so that real estate markets remain in the doldrums. The banks simply are not lending....

An innocent victim of the dollar depreciation caused by the Fed’s action will be Third World food-deficit countries whose currencies are tied to the dollar. Latin America, much of Africa an Asia will find that in their currencies the price of raw materials denominated in euros will rise."

Bush planning to attack Iran this year

Thu, 01 May 2008 06:05:57 Ray McGovern
Ray McGovern, a prominent former CIA analyst, says US President George W. Bush is planning to wage a military attack on Iran this year.

McGovern who has been a CIA officer under seven US presidents--presenting the morning intelligence briefings at the White House for many of them--believes President Bush and his administration have no intention of leaving Iraq and are preparing to attack Iran in the next few months.

"I believe George Bush and Dick Cheney plan to take care of Iran before they leave office," the former CIA official said in an interview with Charleston Gazette, which was published on Wednesday.

Poised for 'Nuclear Deleveraging'?

Financial Armageddon: Poised for 'Nuclear Deleveraging?: "The use of sub-prime debt structures was also a feature of other markets, such as private equity, where $US300 billion in loans were due to be refinanced in the next two years.

Mr Das said another $US1-$US5 trillion of assets would have to come back on to US bank balance sheets as a result of defaults on housing and other debts, and it was unclear how the banks could fund them -- issuance of preference shares by US banks was already at a record high. He said losses at financial institutions from the credit crunch were likely to almost double to $US400 billion.

There were also second-round effects to come as the damage done to the real economy from financial sector losses fed back into further bank losses."

Countrywide Rating Cut to `Junk' By Standard & Poor's

By David Mildenberg
May 2 (Bloomberg) -- "Countrywide Financial Corp.'s credit rating was unexpectedly cut to junk by Standard & Poor's Corp., which cited doubt about whether Bank of America Corp. will back the home lender's debt after a pending takeover is completed.

The revision reflects ``the new level of uncertainty as to the ultimate legal status of Countrywide's creditors'' after the lender's sale to Bank of America, Standard & Poor's said in a statement today. Prices on some of Countrywide's $97.2 billion in debt tumbled and instruments that protect investors from default posted their biggest jump in almost four months...
Countrywide had run short on cash when the deal was announced and continued to lose money since then, posting an $893 million deficit for the first quarter. That means bondholders may have to go to court if Bank of America refuses to stand behind all of the lender's debt.

S&P said doubts about Countrywide's debt were raised by Bank of America in an April 30 regulatory filing that included a passage on whether the bank will honor debt issued by Countrywide. The documents said ``there is no assurance that any such debt would be redeemed, assumed or guaranteed,'' adding that no decision had been reached.

``Until this filing, it was our understanding that Bank of America would acquire all of Countrywide,'' Standard & Poor's analyst Victoria Wagner wrote today. ``This new filing raises the possibility that this assumption is no longer true.''
"

Central banks extend liquidity lifeline to markets | Reuters

Central banks extend liquidity lifeline to markets | Reuters:
"The Fed said it was increasing the amounts offered in its Term Auction Facility auctions, held every two weeks, to $75 billion from $50 billion, beginning with an auction on May 5.
It also said it was increasing an existing temporary currency swap line with the ECB to $50 billion, from $30 billion, and increasing a swap line with the SNB to $12 billion from $6 billion. The timeframe for the swap lines will also be extended until the end of January 2009"

Latin America currency appreciation to the US Dollar

Investment Opportunities in Regional ETFs

RGE - Latin America EconoMonitor: "So, the major outcome has been exchange rate appreciation. This is shown in Figure 1, in which exchange rates are shown in domestic currency per dollar, so down means an appreciation. Four of the six largest Latin American economies have had significant appreciation in recent months (Venezuela is excluded, as it has a fixed exchange rate). Brazil and Colombia had experienced substantial appreciation earlier on, and the currencies of the two countries now look overvalued. The appreciation of Chile and Peru are in line with that of the euro vis-à-vis the US dollar, but Brazil and Colombia have appreciated even in relation to the euro. Argentina and Venezuela are also experiencing real appreciation, through domestic inflation. So, Mexico seems the only large Latin American economy immune to the current malaise, but it is also the one that would be worst hit by US recession.

(Down on the graph means up appreciation)
In recent years, one of the most trumpeted aspects of Latin American performance was that the region was running a current account surplus (not all of countries, of course). The mix of rapid growth with current account surpluses has been common in Asia, but it has been unusual in Latin America, at least since the 1970s. It could be said that it was due to high commodity prices, but then in the past Latin America managed to run current account deficits even when commodity markets were booming, such as during the 1970s. Colombia is already running a sizable deficit, and Brazil joined the deficit club in the last quarter of 2007. Furthermore, excluding Venezuela, Latin America will be running a deficit in 2008. And, if we take out the terms of trade shock, the current account deficit had already gone back in 2007 to the levels of the crisis of the late 1990s and the early part of this decade (see Figure 2)."

Norton's comments: Try ETFs: EWZ for Brazil, EWA for Australia and FXA for the australian dollar against the US Dollar.

Looking ahead: global recession and / or inflation...or both?

RGE - The Coming Global Economic Slowdown and Rising Inflation: Is Stagflation-Lite in the Cards?: "The Coming Global Economic Slowdown and Rising Inflation: Is Stagflation-Lite in the Cards?
Nouriel Roubini | Apr 29, 2008
Is the global economy headed towards a global recession? Or should we worry more about the rising inflationary forces in the global economy? Or will both evils emerge in a stagflationary outcome of contracting output and rising inflation? Certainly recessionary pressures are mounting in many economies; while inflationary pressures are mounting in other ones.
So let us consider in more detail the recessionary and inflationary risks in the global economy…"

Gas tax follies - Paul Krugman

Gas tax follies - Paul Krugman - Op-Ed Columnist - New York Times Blog: "April 29, 2008, 4:44 pm
Gas tax follies
I’ve been on the road (actually doing a public dialog with Barney Frank on financial reform), so I’m just catching up. Anyway, John McCain has a really bad idea on gasoline, Hillary Clinton is emulating him (but with a twist that makes her plan pointless rather than evil), and Barack Obama, to his credit, says no."

Strong Dollar Policy - where?

LIES: Still Dollar Declines, while Paulson claims we are following a strong dollar policy

Jesse's Café Américain

Norton's comment: It appears that the strengthing of the dollar lately has peaked and that the long-term decline is about to continue. Even Paulson said he was following a strong dollar policy. What bold faced lies!!!!!!!!!!!!!!!!!!

Hours work to pay your rent bill - for minimum wage earner

Financial Sense Online Market WrapUp with Chris Puplava 04.30.2008: "What has been even more troubling than the inflation rental rate is how damaging it has been on the minimum wage earner who now has to work over 130 hours just to cover the median monthly rent. This corresponds to 83% of their total income using four forty-hour work weeks per month. After covering the costs for rent, energy, and food, how much is left for anything else? These people are just barely surviving!"

STOCK MARKET - WATCH OUT! On The Eve of Destruction

2005: Indiadaily.com - Converging U.S. Navy aircraft carrier groups in Middle East send strong message to Iran and Syria: "...It seems that Americans are preparing to deal with Syria and Iran in the next several months. The first priority right now is diplomacy in association with the Europeans and the rest of the world. But the leadership in Teheran and Damascus are taking notice of the power build up in the region..."

2008 April 30 2008 Investor's Daily:Mideast: As Iran's role in Iraq becomes clearer, the Pentagon studies attack options. Meantime, the CIA reveals Syria was close to nuclear weapons capability last year. Is the next stage of the global war on terror imminent?....Tehran reportedly is installing 6,000 centrifuges at its enrichment facility in Natanz. They may be advanced IR-3 centrifuges with the ability to enrich uranium two or three times as fast as the machinery Iran has used so far. It takes 3,000 ordinary centrifuges one year to produce the material needed for an atomic bomb, so the clock is ticking down....The risks of pre-emptive attack may be daunting.

But President Bush can't kick this can down the road to his successor, especially if that successor is one of the two Democratic candidates resolved to surrender in the Middle East.

The free world cannot be daunted in preventing the clear and present danger of nuclear terrorism. That means acting, and soon."

Norton's comment: If Bush is intent on carrying this out before the end of his administration, then it will have a major effect on the World's tender economic status: resources war, stock markets volatility, economic disruptions...you name it. All bets are off on existing market forecasts.

Thursday Outlook: Commodities, Emerging Markets

Thursday Outlook: Commodities, Emerging Markets - Seeking Alpha

by: David Fry posted on: May 01, 2008"

Great marked up charts on all commodities for your current decisionmaking BUY or SELL.