Watch Out For Gold/Silver BreakOuts

Watch out for the gold and silver breakouts.Silver after having water fall in 2008 has been consolidating for over year forming a asecending triangle ever since.Silver ETF SLV did break the consolidation pattern which is bullish but we still have key resistance levels around these areas to watch out :

Resistance 1 : $ 15:75 - $16
Resistance 2 : $19 - $20.50

breaking those levels silver can easily reach to $25 initial rally. We are just entering in bullish phase, And my final target on silver before we end this rally is $50 by 2012




Gold has been consolidating for over year now forming reverse H$S which is bullish.Gold is also forming a ascending triangle apart from reverse H$S which is multi year bullish formation.Gold has few resistance levels to watch out and those levels are

Resistance 1 : $1000.
Resistance 2 : $1030.

breaking those levels can easily reach gold to $1200-$1350.My final target on gold could be around $2000 by 2012.

Short term charts click for sharper image


Long Term Charts click for sharper image

Obama to raise 10-year deficit to $9 trillion

WASHINGTON (Reuters) - The Obama administration will raise its 10-year budget deficit projection to approximately $9 trillion from $7.108 trillion in a report next week, a senior administration official told Reuters on Friday.

The higher deficit figure, based on updated economic data, brings the White House budget office into line with outside estimates and gives further fuel to President Barack Obama's opponents, who say his spending plans are too expensive in light of budget shortfalls.

The White House took heat for sticking with its $7.108 trillion forecast earlier this year after the Congressional Budget Office forecast that deficits between 2010 and 2019 would total $9.1 trillion.Full Story

Volatility On The Rocks !!!!

We have volatility index finally got out of the decending wedge which is bullish formation on the index which in turn is bearish for the equity markets.

We have longer and short term charts here :

The longer term below clearly shows that breaking of cup and handle which happen when lehman failure back in march had triggered Oct seller off on markets and now its cooled off after that massive move and came to near support for another move up


(click for sharper view)

Here is another shorter term chart shows that we are decending wedge pattern emerged and breaking out and test the wedge is clear sign that it wants to go higher which means markets will go triple digit up and down days coming, And historically Sept-Oct we have massive sell offs months.So are we expecting the same here.



(Click for sharper view)

Moving To India

Moving for good to India. So I won't be able to post much for next few days starting from today so bear with me. Here's my personal contact info:sureshgajjela@gmail.com and you can always ping me at the bottom of the blog spot through chat section to pass on any info/messages.

Good Luck.

Regards
Suresh

Dow 1929-1933 Vs Current Market

Dow Jones 1929-1933:


Peak was 350+ point and trough was 41+ odd points.

Dow Jones 1929



Dow took a nose dive from 350 odd points to 190 point in span of 100 days and rallied almost 50% retrace to 300 over 6 months before making multiple false bottom to attempt to backup. Finally landed with 41 in 1933 and this took almost 4 years to happen.

Dow Jones 2007- Current



Does the current market looks like 1929 markets after having rallied almost 50% on indices for almost 6 months now? And will it make multiple false bottoms coming? Are we expecting declines coming all the way till 2012?

Note:Click all the images for sharper view

Half Of The Home Owners Equity Wipe Off

NEW YORK (CNNMoney.com) -- Nearly half the nation's mortgage borrowers will soon owe more on their mortgages than their homes are worth, according to a new report.

A Deutsche Bank analysis of the battered housing and mortgage markets estimated that 25 million borrowers, representing 48% of all Americans with mortgage loans, will plunge underwater before home prices are expected to stabilize in the beginning of 2011.

"If our home-price forecast is correct, roughly one in two mortgage borrowers and one in three homeowners will owe more than their home is worth," said Karen Weaver, one of the researchers who authored the report. "That's a dramatic shift from the past several decades when housing was the foundation of middle class wealth."Full Story

China Warns Inflation, Currency Threats

Aug. 6 (Bloomberg) -- China’s central bank warned that monetary easing by developed nations threatens to cause “severe” inflation and currency volatility.

“Failure to manage the degree of easing may lead to concerns about mid- and long-term inflation and exchange-rate stability,” the People’s Bank of China said in a quarterly monetary policy report, posted on its Web site yesterday.

China, the owner of $801.5 billion of Treasuries, pressed the U.S. at a summit in Washington last month for economic polices to protect the dollar’s value. The Bank of England is poised to end a five-month program of bond purchases, part of so-called “quantitative easing,” according to a Bloomberg News survey of firms bidding at government debt auctions.

“The discussion about quantitative easing and the reversal of it is going to capture the market’s attention for the rest of this year,” said Tai Hui, head of Southeast Asian economic research at Standard Chartered Plc in Singapore. “The fact that China is talking about it, again, is reflecting its concern about its holdings of U.S. Treasuries.”Full Story

More Layoffs : USPS may close 1,000 post offices

The U.S. Postal Service is studying roughly 1,000 of its 37,000 post offices for possible closure — the latest cost-cutting step from an agency scrambling to deal with a projected $7 billion deficit this year and larger losses in 2010.

The agency started its review earlier this year with approximately 3,200 post offices, and decided about 1,000 of them are “candidates for further review.” Postal managers say they will consider several factors in deciding whether to close those facilities: mail volume, proximity to other post offices and the potential savings in labor and utility costs.

Post offices generate about 71 percent of the Postal Service’s revenues each year; the rest comes through alternative channels, particularly the Postal Service’s Web site.
“Each year more and more postal transactions are now accomplished online,” said Jordan Small, the Postal Service’s acting vice president for network operations. “We consider this a success ... [but we need] to determine if there is, indeed, excess capacity in the network.”Full Story

Currency Swap , China Dollar exit statergy

Federal tax revenues plummeting

WASHINGTON (AP) -- The recession is starving the government of tax revenue, just as the president and Congress are piling a major expansion of health care and other programs on the nation's plate and struggling to find money to pay the tab.

The numbers could hardly be more stark: Tax receipts are on pace to drop 18 percent this year, the biggest single-year decline since the Great Depression, while the federal deficit balloons to a record $1.8 trillion.

Other figures in an Associated Press analysis underscore the recession's impact: Individual income tax receipts are down 22 percent from a year ago. Corporate income taxes are down 57 percent. Social Security tax receipts could drop for only the second time since 1940, and Medicare taxes are on pace to drop for only the third time ever.

The last time the government's revenues were this bleak, the year was 1932 in the midst of the Depression.

"Our tax system is already inadequate to support the promises our government has made," said Eugene Steuerle, a former Treasury Department official in the Reagan administration who is now vice president of the Peter G. Peterson Foundation.Full Story

The Great Reflation Experiment

California pensions next state financial crisis

SAN FRANCISCO (Reuters) - On the heels of closing a $24 billion state budget deficit, California faces new financial trouble -- from its public pensions.

The loss incurred by California's biggest pension fund in the last year is more than half the size of the state's spending plan, and financial analysts say the market on its own will keep the pension hole open for years or longer, a challenge public pension funds across the United States will also face.

"Pensions will be a major issue, sooner more likely than later, because they're going to bankrupt many jurisdictions," said Bob Stern of the Center for Governmental Studies in Los Angeles.

Governor Arnold Schwarzenegger on Saturday in a radio address put the California Public Employees' Retirement System, the biggest U.S. public pension fund that is best known as Calpers, on notice that its cost to the state government is in his sights.

"In these challenging economic times, we cannot afford everything we have funded in the past," he said. "And we will take on pension reform to cut down on unfunded liabilities and save the state billions of dollars."

By Monday, Calpers officials were discussing how to respond to Schwarzenegger -- and others who may take aim at the fund.Full Story

Whats Going with 5 Years Treasuries

AZ State Govt Building For Sale !!!!

Call it a sign of desperate times: Legislators are considering selling the House and Senate buildings where they've conducted state business for more than 50 years.

Dozens of other state properties also may be sold as the state government faces its worst financial crisis in a generation, if not ever. The plan isn't to liquidate state assets, though.

Instead, officials hope to sell the properties and then lease them back over several years before assuming ownership again. The complex financial transaction would allow government services to continue without interruption while giving the state a fast infusion of as much as $735 million, according to Capitol projections.

For investors, the arrangement means long-term lease payments from a stable source.

Once any deals are approved, money could begin flowing into state coffers in as little as 90 days.

The plan has bipartisan backing, but that doesn't make the prospect of paying rent for buildings once owned free and clear by taxpayers any easier to swallow.

"We've mortgaged the legislative halls," said an exasperated state Rep. Steve Yarbrough, a Chandler Republican. "That just tells you how extraordinary the times are.

"To me, it's something we're going to have to do no matter how much we find it undesirable."Full Story

No escape for Fed

In contrast to Federal Reserve chairman Ben Bernanke's testimony last week, we cannot see a safe "exit strategy" for the Fed from its current loose monetary policy. Bernanke's ambivalent testimony of a safe exit strategy can only heighten uncertainty and exacerbate instabilities. Let's explain.

In his recent testimony on July 21 before the Committee on Financial Services of the House of Representatives, Bernanke was felicitous that aggressive money policy had averted the collapse of the financial system. However, he omitted to say that the same policy had failed to avert a collapse of real gross domestic product (GDP) and private investment and rising unemployment.

The economic recession continues despite interest rates being near-zero, money supply rising at 22% a year, unprecedented stimuli packages, and record fiscal deficits reaching 13% of GDP in 2009. Bernanke and President Barack Obama's team had clearly believed that a combination of aggressive money and fiscal policies would secure the return to full-employment and quickly. After all, Larry Summers had predicted the unemployment cresting at about 8%. These expectations were standard Keynesian predictions that have proven to be substantially off the mark. Full Story

IMF: Risks to financial stability have intensified

Risks to financial stability have intensified since October 2008. Macroeconomic risks have risen as global growth has fallen precipitously alongside a sharp slowdown of global trade. Credit risks have also risen as a deterioration of economic and financial conditions have resulted in rising loan losses. At the same time, the flight from risky assets and illiquid market conditions has increased funding costs, even as risk-free rates have declined with monetary easing. Emerging market countries are also feeling the effects of the advanced economies’ financial and economic difficulties, and there is the potential that the abrupt pullback from emerging market assets by investors and heightened financing costs will erase some of the economic gains these countries have made in recent years.

Until now banks have managed to obtain sufficient capital to offset existing writedowns, but that is mainly due to the massive public sector injections of capital in the fourth quarter (Figure 2). The worsening credit conditions affecting a broader range of markets have raised our estimate of the potential deterioration in U.S.- originated credit assets held by banks and others from $1.4 trillion in the October 2008 GFSR to $2.2 trillion. Much of this deterioration has occurred in the mark-to-market portion of our estimates (mostly securities), especially in corporate and commercial real estate securities, but degradation is also occurring in the loan books of banks, reflecting the weakening outlook for the economy.Full Story

Suspend Mark-To-Market--Now

In late 2007, the Financial Accounting Standards Board (FASB) changed the definition of mark-to-market accounting rules as they applied to the U.S. financial industry. The board forced financial firms and auditors to use "observable," market prices to value securities rather than models or cash flow. Within a year, the U.S. was in the middle of the worst pure financial panic in a hundred years. Coincidence? We think not.

On its surface, market-to-market or "fair value" accounting makes some superficial sense. Markets usually provide transparent and verifiable prices, so companies can't just contrive numbers to make their earnings look good.

The problem with mark-to-market is its failure to recognize that market prices for securities often deviate--sometimes substantially, but always ultimately temporarily--from the underlying fundamental value of the assets. Since markets are forward looking, mark-to-market forces financial firms to take hits to capital over something that "might" happen in the future, but has not happened yet. It's like forcing homeowners to come up with more capital when the weather man forecasts a hurricane because their homes might be destroyed.Full Story

Not Just Humans, Robots are Layoffed Too

Many robots in Japan are now being idled or returned as more manufacturers cut back on production, dealing a blow to the robotics industry.Full Story

Quant Funds(with HFT) and Market Manupulation

It is the hot new thing on Wall Street, a way for a handful of traders to master the stock market, peek at investors’ orders and, critics say, even subtly manipulate share prices.

It is called high-frequency trading — and it is suddenly one of the most talked-about and mysterious forces in the markets.

Powerful computers, some housed right next to the machines that drive marketplaces like the New York Stock Exchange, enable high-frequency traders to transmit millions of orders at lightning speed and, their detractors contend, reap billions at everyone else’s expense.

These systems are so fast they can outsmart or outrun other investors, humans and computers alike. And after growing in the shadows for years, they are generating lots of talk.

Nearly everyone on Wall Street is wondering how hedge funds and large banks like Goldman Sachs are making so much money so soon after the financial system nearly collapsed. High-frequency trading is one answer.

And when a former Goldman Sachs programmer was accused this month of stealing secret computer codes — software that a federal prosecutor said could “manipulate markets in unfair ways” — it only added to the mystery. Goldman acknowledges that it profits from high-frequency trading, but disputes that it has an unfair advantage. Full Story

Will This End Silver/Gold Manupulation ?

Will this hearing from CFTC with their positive note end the manipulation of Commodities(Energy/GOLD/SILVER) by the big banks end after having deregulated back in late 80's so that they have total control on thier position sizing on thier investments. Anyway here is whole story and Hearing.

CFTC to Hold Three Open Hearings to Discuss Energy, Position Limits, and Hedge Exemptions

First Hearing Scheduled for July 28, 2009

WASHINGTON -- The Commodity Futures Trading Commission (CFTC) today announced that it will hold three hearings to address the current application of position limits and exemptions from position limits in energy markets. The hearings are scheduled to be held between 9 a.m. ET and 1 p.m. ET on Tuesday, July 28, Wednesday, July 29, and Wednesday, August 5, 2009.

The first hearing will consist of testimony by Congressman Bart Stupak, CFTC staff presentations and two witness panels:

Panel 1: Jeff Sprecher, Intercontinental Exchange, and
Terry Duffy, Chicago Mercantile Exchange

Panel 2: Todd Petzel, Futures Industry Association; Ben Hirst, Delta Airlines; Laura Campbell, American Public Gas Association; and Sean Cota, Petroleum Marketers Association of America

"The CFTC is directed by statute and provided with broad authorities to ensure the fair, open, and efficient functioning of futures markets," CFTC Chairman Gary Gensler said. "While the CFTC currently sets and ensures adherence to federal position limits for certain agriculture products, the agency does not do the same for energy markets. Our hearings, beginning next week, will be critical as we look into different approaches to regulate energy markets. I look forward to hearing from our panelists as we consider applying position limits to energy markets.Full Story

HyperInflation Vs Deflation

One of the key issues investors have to make a decision on in the next couple of years is what the likely profile for inflation is going to be and how it will affect their investment decisions.

Some have framed this decision as being one between deflation and hyper inflation. Even if we ignore the somewhat ridiculous “hyper” element of the choice, the implications for financial assets are hugely different.

If we see deflation then the obvious choice is government bonds, with equities likely to struggle and commodities still more so, while index linked bonds are likely to be a waste of money.

If we get inflation you can largely turn the order around, although too high an inflation rate is normally not to be good for equities either as interest rates tend to be high and volatile in such an outcome. Yet is this the real choice we are facing? The Financial Times has been full of articles arguing that inflation is a necessary outcome of the quantitative easing, normally citing a likely surge in “inflationary” lending.Full Story

Commercial real estate freefall

Commercial real estate values around the country have dropped 35 percent from their peak in October 2007, according to Moody’s REAL Commercial Property Price Indices.

The decline appears to be accelerating as the index dropped more than 15 percent during April and May. Transactional volume also fell along with value, which is showing signs of effects from distressed sales.

“May marked a new low for both counts,” the report said.

Along the lines of kicking a sector when it’s down, a rise in interest rates caused several deals to unravel, hitting apartment sales the hardest.

To calculate the index, Moody’s used 52 repeat sales, which had a dollar value of $400 million in April 2002.

Dan Fasulo, managing director of Real Capital Analytics, said Moody’s report is beginning to reflect true market pricing conditions “well ahead of any other indicators” and noted that commercial property values have fallen more than residential prices in annual terms.Full Story

Goldman Sachs : The Money Suckers !!!!

Goldman Sachs Internal Memo

After all that federal aid, a resurgent Goldman Sachs is on course to dole out bonuses that could rival the record paydays of the heady bull-market years. Goldman… announced that it had earmarked $11.4 billion so far this year to compensate its workers. At that rate, Goldman employees could, on average, earn roughly $770,000 each this year.

—The Times.

Internal Memorandum No. 8121b

ATTN: Employees of Goldman Sachs

We did it. Bottom of the ninth, down by three, bases loaded, and we cranked another grand slam to the moon. They may have shot Lennon, but nothing can kill the Beatles.

I admit things looked bleak for a minute there. We had to convert to a bank holding company and were forced to accept a taxpayer bailout. It felt un-American. Terribly unbanksmanly. But we accepted the money, knowing that we could magically weave it into a much larger mountain of money.

We had a few hard months there, didn’t we? They regulated our corporate jet so that we could no longer use it to fly from hole to hole on the green. Dave had to drain his money pool to half capacity. I stopped injecting gold into my blood. They don’t call it a recession for nothing. One day, we’ll look back on the year we received only five-figure bonuses and laugh.

Wanting to celebrate our renewed success is natural, but it’s important that we don’t go crazy here. Remember, ten per cent of the non-bank country is unemployed, and even those who are working have “real” jobs, where payment is proportional to the creation of a “product” or a “service.” Those poor bastards. So I ask that, in celebrating our raping of the stock market, we show restraint in the following ways:

* Please limit high-fives and chest bumps to a dozen a day.
* Don’t wear your crowns, except around the office.
* Stop paying for things in Monopoly money—I understand it is the same as real money to us, but there have been some complaints.
* For now, let’s take down the giant scoreboard that reads “Main Street: zero. Wall Street: a billion gazillion bajillion.”

Furthermore, to avoid drawing criticism from the press, this year the bonuses, expected to be comically large, will be distributed in blood diamonds, which can be easily concealed in a briefcase so it looks like we’re working.

I’d like to thank everyone who made this possible—for a second time. Respect to President Obama for keeping us in the green. Thanks to the big guy upstairs (me). And let’s not forget all the ordinary Americans, who, for some unfathomable reason, have refused to put us behind bars. We are literally taking money out of their wallets. Seriously, with these returns we are making Madoff look like a little kid with his hand caught in the cookie jar. Amateur!

Yours in money,

Lloyd Blankfein, C.E.O., Goldman Sachs

Source

The Fed’s Exit Strategy

The depth and breadth of the global recession has required a highly accommodative monetary policy. Since the onset of the financial crisis nearly two years ago, the Federal Reserve has reduced the interest-rate target for overnight lending between banks (the federal-funds rate) nearly to zero. We have also greatly expanded the size of the Fed’s balance sheet through purchases of longer-term securities and through targeted lending programs aimed at restarting the flow of credit.

These actions have softened the economic impact of the financial crisis. They have also improved the functioning of key credit markets, including the markets for interbank lending, commercial paper, consumer and small-business credit, and residential mortgages.Full Story

Barofsky : U.S. Rescue May Reach $23.7 Trillion

uly 20 (Bloomberg) -- U.S. taxpayers may be on the hook for as much as $23.7 trillion to bolster the economy and bail out financial companies, said Neil Barofsky, special inspector general for the Treasury’s Troubled Asset Relief Program.

The Treasury’s $700 billion bank-investment program represents a fraction of all federal support to resuscitate the U.S. financial system, including $6.8 trillion in aid offered by the Federal Reserve, Barofsky said in a report released today.

“TARP has evolved into a program of unprecedented scope, scale and complexity,” Barofsky said in testimony prepared for a hearing tomorrow before the House Committee on Oversight and Government Reform.

Treasury spokesman Andrew Williams said the U.S. has spent less than $2 trillion so far and that Barofsky’s estimates are flawed because they don’t take into account assets that back those programs or fees charged to recoup some costs shouldered by taxpayers. Full Story

Pension Calculus Draws New Scrutiny

A California dustup over large pension payments is shining a spotlight on the practice of spiking -- increasing a salary just before retirement and boosting the lifelong payout.

Pete Nowicki had been making $186,000 shortly before he retired in January as chief for a fire department shared by the municipalities of Orinda and Moraga in Northern California. Three days before Mr. Nowicki announced he was hanging up his hat, department trustees agreed to increase his salary largely by enabling him to sell unused vacation days and holidays. That helped boost his annual pension to $241,000.

The boost was legal, and Mr. Nowicki said he is receiving a permissible pension. "People point to me as a poster child for pension spiking, but I did not negotiate these rules," he said.

The fire district's board agrees. "Chief Nowicki abided by existing rules and guidelines for optimizing his retirement pay," said Frank Sperling, the board's vice president. "I don't fault him. The system itself is broken. We need to change the system."Full Story

Ben Testimony at 10 a.m

Fed Chairman Ben Bernanke will testify before the House Financial Services Committee at 10 AM video links for web users: CNBC feed, And a live feed from C-SPAN.

Semiannual Monetary Policy Report to the Congress

July 21, 2009
Chairman Frank, Ranking Member Bachus, and other members of the Committee, I am pleased to present the Federal Reserve's semiannual Monetary Policy Report to the Congress.

Economic and Financial Developments in the First Half of 2009
Aggressive policy actions taken around the world last fall may well have averted the collapse of the global financial system, an event that would have had extremely adverse and protracted consequences for the world economy. Even so, the financial shocks that hit the global economy in September and October were the worst since the 1930s, and they helped push the global economy into the deepest recession since World War II. The U.S. economy contracted sharply in the fourth quarter of last year and the first quarter of this year. More recently, the pace of decline appears to have slowed significantly, and final demand and production have shown tentative signs of stabilization. The labor market, however, has continued to weaken. Consumer price inflation, which fell to low levels late last year, remained subdued in the first six months of 2009. Full Report

Small Business: Defaults Doubled !!

July 20 (Bloomberg) -- Advanta Corp., the credit-card company that cut off almost 1 million small-business accounts after posting three quarterly losses, said the default rate more than doubled in June from May to 56.95 percent.

Advanta started writing off loans after they were delinquent 120 days, the Spring House, Pennsylvania-based lender said today in a federal filing for its Advanta Business Card Master Trust Advanta Series. Loans previously were deemed uncollectible after 180 days, the industry standard.

The policy “was changed as a result of closing customer accounts to future use,” the filing said.

Advanta’s charge-off rate dwarfs the national average, which set a record in June when it topped 10.4 percent, according to Fitch Ratings. Bank of America Corp. on July 15 posted the highest June write-offs among the nation’s biggest lenders at 13.86 percent, a rate that includes consumer credit cards.

Delinquencies for Advanta loans 30 to 119 days past due rose to 8.12 percent in June, compared with 7.07 percent in May, and “early stage” delinquencies for accounts 30 to 59 days late increased to 3.64 percent, from 2.71 percent, the filing said. Full Story

FDIC : Up To 500 More Banks Could Fail

By Jessica Holzer, Of DOW JONES NEWSWIRES

WASHINGTON -(Dow Jones)- Federal Deposit Insurance Corp. Chairman Sheila Bair believes up to 500 more banks could fail, a U.S. senator said Bair told him in a recent meeting.

"She told us that unless something dramatic happens, we could lose up to 500 more banks," Sen. Jim Bunning, R-Ky., said Thursday at a hearing of the Senate Banking Committee on the foreclosure crisis.

Bunning said Bair made the remarks in a recent meeting.

"That means that people who make mortgages in local places .... people that could really help in a foreclosure will not be there," Bunning said. Full Story

Dark Pools : To Understand Market Manipulators

The US-China Ponzi scheme

By Jon Markman
MSN Money

Imagine becoming so successful at your job that you stack up $2 trillion in income, which you conservatively place in short-term U.S. Treasury bonds for safekeeping.

Now imagine that when you try to cash in those bonds to buy a few things for your kids, the clerk at the bank abruptly shuts her window and tells you to go away. That is essentially the situation faced by China these days as it wonders whether its plan to manufacture goods for U.S. consumers over the past two decades in exchange for a pile of credit slips was really such a hot idea. Full Story

What went wrong with economics ??

OF ALL the economic bubbles that have been pricked, few have burst more spectacularly than the reputation of economics itself. A few years ago, the dismal science was being acclaimed as a way of explaining ever more forms of human behaviour, from drug-dealing to sumo-wrestling. Wall Street ransacked the best universities for game theorists and options modellers. And on the public stage, economists were seen as far more trustworthy than politicians. John McCain joked that Alan Greenspan, then chairman of the Federal Reserve, was so indispensable that if he died, the president should “prop him up and put a pair of dark glasses on him.”

In the wake of the biggest economic calamity in 80 years that reputation has taken a beating. In the public mind an arrogant profession has been humbled. Though economists are still at the centre of the policy debate—think of Ben Bernanke or Larry Summers in America or Mervyn King in Britain—their pronouncements are viewed with more scepticism than before. The profession itself is suffering from guilt and rancour. In a recent lecture, Paul Krugman, winner of the Nobel prize in economics in 2008, argued that much of the past 30 years of macroeconomics was “spectacularly useless at best, and positively harmful at worst.” Barry Eichengreen, a prominent American economic historian, says the crisis has “cast into doubt much of what we thought we knew about economics.”Full Story

Storage space for gold bullion Running Out

Worries about the economy and the success in marketing gold ETFs has seen Swiss banks finding difficulty in meeting secure storage requirements for gold bullion.

In a note entitled No more space for Gold Bars, Swiss news website 20 Minuten Online reports that Swiss banks are running out of secure storage space for gold bullion held by investors and institutions. Fears of hyperinflation, the economic downturn and the success of gold index funds (ETFs), which are supported by physical gold, has led to a run on precious metals investment - and in gold in particular, and in the necessary secure storage space in which to hold it..

One Swiss bank, earlier this year, reported that it was having to relocate some of its stored silver bullion to another site to make room for gold. The Zurich Kantonal bank put this down to the success of its gold ETF.Full Story

Global Economic Meltdown, Political Unrest

BOSTON — I wrote a rather nerdy column in February about the Davies J-Curve, the political science theory put forth by James C. Davies in the 1950s.

Davies' idea was simple but powerful: Political unrest occurs when a people's rising expectations — about how much money they can make, what they can buy, whether they have enough food or medicine — are suddenly dashed by, let's say, a global economic crisis that follows the longest expansion in decades.

Here's how professor Davies put it, in that special language of academia:

"Revolutions are most likely to occur when a prolonged period of objective economic and social development is followed by a short period of sharp reversal. People then subjectively fear that ground gained with great effort will be quite lost; their mood becomes revolutionary."Full Story

Market Villains : Goldman are Scums :)

Market And Gold Updates

Markets to me looks like we are headed for a blow off tops (meaning markets moving higher for brief period ) suggesting significant drop in market value in every asset value. So please don't chase this market. Price to volume action does not a suggest strength in markets but like a house of cards the image below will give u a total pic how this markets are gauged, And it may fall apart at any moment. Markets are manipulative at this juncture for sure and volatility index is getting compressed to escape from the trending range.



Dow Jones Industrial Average

click image for sharper view

Gold Chart

Click image for sharper view

Weekly Natural Gas Storage Report

Click for Sharper Image and Full Report Here

Working gas in storage was 2,886 Bcf as of Friday, July 10, 2009, according to EIA estimates. This represents a net increase of 90 Bcf from the previous week. Stocks were 589 Bcf higher than last year at this time and 454 Bcf above the 5-year average of 2,432 Bcf. In the East Region, stocks were 116 Bcf above the 5-year average following net injections of 62 Bcf. Stocks in the Producing Region were 246 Bcf above the 5-year average of 786 Bcf after a net injection of 19 Bcf. Stocks in the West Region were 91 Bcf above the 5-year average after a net addition of 9 Bcf. At 2,886 Bcf, total working gas is above the 5-year historical range.

Janet Tavakoli On Recent Financial DownTurn

United Future World Currency coin

July 10 (Bloomberg) -- Russian President Dmitry Medvedev illustrated his call for a supranational currency to replace the dollar by pulling from his pocket a sample coin of a “united future world currency.”

“Here it is,” Medvedev told reporters today in L’Aquila, Italy, after a summit of the Group of Eight nations. “You can see it and touch it.”

The coin, which bears the words “unity in diversity,” was minted in Belgium and presented to the heads of G-8 delegations, Medvedev said.

The question of a supranational currency “concerns everyone now, even the mints,” Medvedev said. The test coin “means they’re getting ready. I think it’s a good sign that we understand how interdependent we are.” Full Story

Hope, Markets Won't Dive Like This One

Business Models Changing Stratergy

June 29 (Bloomberg) -- Sears Holdings Corp., the largest U.S. department-store chain, will let customers who lose their jobs suspend payments and keep appliances bought with store credit cards in an effort to bolster sales in the recession.

Customers who spend at least $399 on appliances and related merchandise between July 6 and Aug. 1 will have one-twelfth of the purchase price credited to their account for every month they are out of work, said Larry Costello, a company spokesman. Those who are jobless for more than a year will have the full debt forgiven, he said. The offer period may be extended, he said.

“We thought this would be a way to get folks to jump in where they’d been a little reluctant,” Doug Moore, president of Sears’s home-appliance unit, said in a telephone interview.

The retailer, based in Hoffman Estates, Illinois, is running the trial program to spur spending on refrigerators and washing machines as consumers hold off on bigger purchases amid declining home values and mounting job losses. Full Story

States brace for shutdowns

Reporting from Indianapolis and Denver -- The last time Indiana missed its deadline for passing a budget and had to shut down the government was during the Civil War.

But on Monday, as lawmakers raced to hammer out an agreement over school funding, state agencies began preparing 31,000 workers to be temporarily out of a job. Republican Gov. Mitch Daniels has warned residents that most of the state's services -- including its parks, the Bureau of Motor Vehicles and state-regulated casinos -- would be shuttered unless a budget is passed today.

Indiana is one of five states -- along with Arizona, California, Mississippi and Pennsylvania -- bracing for possible shutdowns this week as time runs out for lawmakers to close billion-dollar gaps in their fiscal 2010 budgets.

Of the 46 states whose fiscal year ends today, 32 did not have budgets passed and approved by their governors as of Monday afternoon, according to the National Conference of State Legislatures.Full Story

Queen Running Out Of Money By 2012

The total cost of keeping the monarchy increased by £1.5 million to £41.5 million during the last financial year, up three pence per persona year, to 69 pence.

The newly published accounts reveal that the Queen raided the reserve fund by £6 million, the largest ever, to supplement the Civil List.

The Queen's Civil List, which pays for the running of the Royal household including staff salaries, was £13.9 million but the government provides only £7.9 million which has been frozen since 1991.

The reserve, which was £35 million at its peak, has now dwindled to £14 million and Buckingham Palace estimates it will have disappeared by the end of 2011 when a new Civil List settlement is due to come into effect.Full Story

Dollar Cliff Diving

Chinese banks : Global Economy Threat

China's banks are veering out of control. The half-reformed economy of the People's Republic cannot absorb the $1,000bn (£600bn) blitz of new lending issued since December.

Money is leaking instead into Shanghai's stock casino, or being used to keep bankrupt builders on life support. It is doing very little to help lift the world economy out of slump.

Fitch Ratings has been warning for some time that China's lenders are wading into dangerous waters, but its latest report is even grimmer than bears had suspected.

"With much of the world immersed in crisis, China appears to be one of the few countries where the financial system continues to function largely without a glitch, but Fitch is growing increasingly wary," it said.

"Future losses on stimulus could turn out to be larger than expected, and it is unclear what share the central and/or local governments ultimately will be willing or able to bear." Full Story

Stock Of The Week: UNG

(Click the above imagine for sharper view)

United States Natural Gas Fund, LP (USNG) is a limited partnership. The Company is a commodity pool that issues units that may be purchased and sold on the NYSE Arca, Inc. The investment objective of USNG is for the changes in percentage terms of its net asset value to reflect the changes in percentage terms of the price of natural gas delivered at the Henry Hub, Louisiana, as measured by the changes in the price of the futures contract on natural gas as traded on the New York Mercantile Exchange (the NYMEX) that is the near month contract to expire, except when the near month contract is within two weeks of expiration, in which case the futures contract will be the next month contract to expire. USNG invests in futures contracts for natural gas, crude oil, heating oil, gasoline, natural gas and other petroleum-based fuels that are traded on the NYMEX, ICE Futures or other United States and foreign exchanges. The Company’s general partner is United States Commodity Funds LLC

Bernanke's Nightmare Cont......

WASHINGTON (Reuters) - If 2008 was a tough year for Federal Reserve Chairman Ben Bernanke, 2009 is looking no easier as political battles pile on top of tough economic challenges.

With the end of his term looming in January, Bernanke's skill in avoiding pitfalls on both fronts will influence whether he wins another four years at the helm of the Fed.

First, there's the economy: with the U.S. unemployment rate at 9.4 percent and rising, Bernanke faces the challenge of fostering a recovery from an 18-month-old recession with unconventional policies that some worry will ignite inflation.

Then, there's politics: he must convince Congress the Fed deserves a leading role in a restructured financial oversight system even as he addresses criticism of Fed failings before the financial collapse and some actions since.Full Story

California Can't Pay Thier Bills

LOS ANGELES — Signaling that California is slipping deeper into financial crisis, the state’s controller said Wednesday that his office would soon be forced to issue i.o.u.’s to scores of the state’s creditors, as lawmakers failed at their first attempt as a body to close the state’s multibillion-dollar shortfall.

If the i.o.u.’s are issued as threatened, it would be the first time since 1992 — when Gov. Pete Wilson paid roughly 100,000 state employees with them — that the warrants were used to hold over those to whom the state owed money. Before that budget crisis, California last issued the warrants during the Depression.

“Next Wednesday we start a fiscal year with a massively unbalanced spending plan and a cash shortfall not seen since the Great Depression,” the controller, John Chiang, said in a written statement. He added, “Unfortunately, the state’s inability to balance its checkbook will now mean short-changing taxpayers, local governments and small businesses.”Full Story

Belated Happy FOMC Meeting

Benjamin Bernanke testifying before congress about the BoF and Merill deal back in Sept before the major decline back in Oct 2008. Posted a video on this and its still there if you can check at the bottom of my blog with Breaking The Bank as title.

So FOMC meeting gone as I thought in previous post i.e pause in the interest rates, not expanding fed's balance sheet and god for the first time they did not see any shoots this time.Y'day's statement predicts "inflation will remain subdued for some time," vs. "inflation will remain subdued," from the last session. Missing: no indication about any exit statergy, And no change to the Fed's Treasury buyback program which way is good for the dollar and overall economy.

Goldman Sachs : World Market Villians

We're in crisis

With $7.5 million less to spend, Charlotte's United Way is slashing next year's grants for virtually all of the 90-plus local charities it supports.

The new spending plan, approved Tuesday by United Way board members, focuses the deepest cuts on nonprofits serving children, seniors and the disabled.

The board's reasoning: The recession and banking crisis are pushing basic needs to unprecedented levels, so limited dollars must be used to get food, clothing and shelter to victims of the economic downturn.

Charities across five counties have been dreading the news for months. Last fall, leaders watched while the recession and fallout from a United Way CEO pay scandal wrecked the agency's 2008 campaign.Full Story

Bailout Nation: 200 Years Of Govt Spending

The amount of US taxpayer money committed to bailouts over the last 12 months by far exceeds the combined cost of major historical events dating back over 200 years.

The combined amount spent, lent, consumed, borrowed, printed, guaranteed, assumed or otherwise committed to bailouts by the government from March 2008 to March 2009 amounts to some $15 TRILLION.

To emphasize how much money that is, the producers of the book Bailout Nation, put together the following graphic, which illustrates how almost every large one time expenditure of the US over the last 206 years is a drop in the ocean compared with the current level of spending.Full Story

Fed: A Game Changer

(Click the imagine for sharper view)

The current market before the fed meeting tells us that :
1. Pause the Interest Rates.
2.Expand fed balance sheet with micro dollar
3.Talks about more green, purple shoots or may talk about the recovery will stall for the rest of year.Lets see how he plays this afternoon but markets looks more speculative on fed's move.

Markets here are showing some positive sign which means fed does not like to pull the plug on equities which is good sign for the broader markets.Anyway here are the possible moves to upside to downside on following indicies:

1.Dow Jones Industrial Average: 8600-8300
2.S&P 500 : 925-890 (closing below 875 will be carnage to markets something fed surprised us)
3. Nasdaq : 1750- 1820

Bigger Crash Is Coming

An international economic forecaster says another big crash lies ahead for global share and property markets within the next two years.

Harry Dent predicted the Japanese recession in the 1990s and also forecast the current global financial crisis.

He has told ABC News Breakfast that the Australian share market will continue to make gains during the next few months, before bottoming in about 2011.

"I'd say maybe the Australian All Ordinaries will get back up near 4,500, the Dow maybe close to 10,000," he said.

"And then you'll see another crash late this year and into next year, as banking systems melt down again. I think the next one's going to start in Europe and Eastern Europe, housing prices would lag.

"I think stocks are going to end up down 60 or 70 per cent before it's all over, and I think housing prices in Australia will probably be down 40, maybe 50, per cent, maybe more than that in the United States and Europe." Full Story

No Recovery For Housing Until 2017

NEW YORK (Reuters) - The U.S. urban commercial real estate markets probably will not recover until 2017, the head analyst of commercial mortgages for Deutsche Bank Securities (DBKGn.DE: Quote, Profile, Research, Stock Buzz) said on Monday.

"The froth is still working itself out," Richard Parkus, Deutsche Bank head of Commercial Mortgage-backed Securities and Asset-Backed Securities Synthetics Research said at the Reuters Global Real Estate Summit in New York. "We are currently in something which is comparable to what we saw in the 1990s and potentially worse."

U.S. commercial real estate values could fall by more than 50 percent from the peak in 2007, he said.

Although asking rents are down about 28 percent in New York, factoring in free rent and other perks by landlords, rents are down about 50 percent, Parkus said.

"Rents will be back to where they were in 2017," Parkus said. Building prices also will take six to eight years to recover, he said.Full Story

Last Resorts in Budget Crisis

In Hawaii, state employees are bracing for furloughs of three days a month over the next two years, the equivalent of a 14 percent pay cut. In Idaho, lawmakers reduced aid to public schools for the first time in recent memory, forcing pay cuts for teachers.

And in California, where a $24 billion deficit for the coming fiscal year is the nation’s worst, Gov. Arnold Schwarzenegger has proposed releasing thousands of prisoners early and closing more than 200 state parks.

Meanwhile, Maine is adding taxes on candy and ski tickets, Wisconsin on oil companies, and Kentucky on alcohol and cellphone ring tones.

With state revenues in a free fall and the economy choked by the worst recession in 60 years, governors and legislatures are approving program cuts, layoffs and, to a smaller degree, tax increases that were previously unthinkable.Full Story

Insiders Exit Statergy

June 22 (Bloomberg) -- Executives at U.S. companies are taking advantage of the biggest stock-market rally in 71 years to sell their shares at the fastest pace since credit markets started to seize up two years ago.

Insiders of Standard & Poor’s 500 Index companies were net sellers for 14 straight weeks as the gauge rose 36 percent, data compiled by InsiderScore.com show. Amgen Inc. Chairman and Chief Executive Officer Kevin Sharer and five other officials sold $8.2 million of stock. Christopher Donahue, the CEO of Federated Investors Inc., and his brother, Chief Financial Officer Thomas Donahue, offered the most in three years.

Sales by CEOs, directors and senior officers have accelerated to the highest level since June 2007, two months before credit markets froze, as the S&P 500 rebounded from its 12-year low in March. The increase is making investors more skittish because executives presumably have the best information about their companies’ prospects. Full Story

25% of Companies Suspending 401(k)

U.S. companies that offer 401(k) plans have recently ended their employer contributions or plan to do so. Details

'Vultures' circling commercial properties

Now that the housing crash appears to be nearing bottom, all eyes have turned to offices, hotels and other commercial real estate as the next properties that might be poised to collapse.

So-called vulture investors have begun popping up in search of troubled commercial buildings, which they hope to acquire at steep discounts.

In San Diego, the latest of these investors is Cypress Realty Advisors LLC, founded by commercial real estate veterans Ron Lack and Mark Wayne.

They say they have commitments from wealthy investors – they wouldn't disclose the amount – to help fund the purchases of offices and other distressed commercial properties in San Diego County, Orange County and Silicon Valley.

“Look at anybody who purchased commercial real estate in the last three years, 2005 to 2008. They're upside down,” said Wayne, a former broker with Cushman & Wakefield. “Their equity has evaporated, their occupancy has evaporated, and their debt is maturing.” Full Story

Happy Father's Day

Happy Father's day.Hacked this to post :)

From
Avi

Watz Goin On In This World

June 17 (Bloomberg) -- It’s a plot better suited for a John Le Carre novel.

Two Japanese men are detained in Italy after allegedly attempting to take $134 billion worth of U.S. bonds over the border into Switzerland. Details are maddeningly sketchy, so naturally the global rumor mill is kicking into high gear.

Are these would-be smugglers agents of Kim Jong Il stashing North Korea’s cash in a Swiss vault? Bagmen for Nigerian Internet scammers? Was the money meant for terrorists looking to buy nuclear warheads? Is Japan dumping its dollars secretly? Are the bonds real or counterfeit?

The implications of the securities being legitimate would be bigger than investors may realize. At a minimum, it would suggest that the U.S. risks losing control over its monetary supply on a massive scale.

The trillions of dollars of debt the U.S. will issue in the next couple of years needs buyers. Attracting them will require making sure that existing ones aren’t losing faith in the U.S.’s ability to control the dollar. Full Story

Recession's Knockout Punch

The End Is Near (for This Recession).

So read some of the economic placards that have been trotted out in policy statements these days with catchphrases such as 'Sustainable Recovery.' 'Recession Is Coming To An End.' 'Policy Actions Having an Effect.' 'Seeing Green Shoots of Growth.' and 'The Crisis Has Stabilized.' Many pointed to the more than 2,000-point climb in the Dow Industrial Average over the last three months as proof that federal stimulus measures appeared to be having an effect in rousing the slumping economy.

Just this week, chief economists from JPMorgan Chase & Co., Wells Fargo & Co., PNC Financial Services Group, Morgan Stanley and others said they expect the economy to "recover from its deep slump by late summer." The group that makes up the Economic Advisory Committee of the American Bankers said they expect the nation's gross domestic product (GDP) to increase 0.5% in the July-September quarter -- this after falling a projected 1.8% in the April-June period.Full Story

Florida fund running dry

WEST PALM BEACH, FL -- The state of Florida is burning through money to pay unemployment claims.

There is $534 million in the Unemployment Compensation Trust Fund but the state is paying out $65 million a week.The fund could be dry by August and the state will have to borrow money from the federal government to pay claims.

Nearly a million Floridians are out of work these days. "There will be no lapse in benefits. Everyone will receive their benefits who is entitled to them," says AWI Spokesman Robby Cunningham.Uncle Sam isn't the only one coming to the rescue.

Florida businesses will also be paying higher taxes to help replenish the fund.The Florida Chamber of Commerce supports the tax increase because it puts money into the hands of consumers. Full Story

S&P Cuts Credit Ratings on 22 Banks

On a day when many banks announced they are paying back their TARP loans, Standard & Poor’s credit analysts cut the credit ratings or revised the outlooks on 22 national and regional banks Wednesday.

The firms on S&P’s list included such large names as Wells Fargo & Co. (WFC), U.S. Bancorp (USB), PNC Financial (PNC), BB&T Corp (BBT) and KeyCorp (KEY).

S&P, the largest of the three major credit agencies, said it was revising the credit ratings of these banks in light that “operating conditions for the industry will become less favorable than they were in the past.”

Several smaller regional banks were also cut to “junk” status as part of S&P’s broad revisions. The banks pushed into junk territory are Carolina First Bank, Citizens Republic Bancorp Inc. (CBRC), Huntington Bancshares Inc. (HBAN), Synovus Financial Corp. (SNV) and Whitney Holding Corp. (WTNY).FullStory

Gold Going vending

TG-Gold-Super-Markt aims to introduce the machines at 500 locations including train stations and airports in Germany.The company, based near Stuttgart, hopes to tap into the increasing interest in buying gold following disillusionment in other investments due to the economic downturn.

Gold prices from the machines – about 30 per cent higher than market prices for the cheapest product – will be updated every few minutes. Customers using a prototype "Gold to go" machine at Frankfurt Airport on Tuesday had the choice of purchasing a 1g wafer of gold for €30, a 10g bar for €245, or gold coins. A camera on the machine monitors transactions for money laundering controls.

Thomas Geissler, who owns the company behind the idea, said: "German investors have always preferred to hold a lot of personal wealth in gold, for historical reasons. They have twice lost everything. Full Story

The biggest bill in history

THE worst global economic storm since the 1930s may be beginning to clear, but another cloud already looms on the financial horizon: massive public debt. Across the rich world governments are borrowing vast amounts as the recession reduces tax revenue and spending mounts—on bail-outs, unemployment benefits and stimulus plans. New figures from economists at the IMF suggest that the public debt of the ten leading rich countries will rise from 78% of GDP in 2007 to 114% by 2014. These governments will then owe around $50,000 for every one of their citizens (see article).

Not since the second world war have so many governments borrowed so much so quickly or, collectively, been so heavily in hock. And today’s debt surge, unlike the wartime one, will not be temporary. Even after the recession ends few rich countries will be running budgets tight enough to stop their debt from rising further. Worse, today’s borrowing binge is taking place just before a slow-motion budget-bust caused by the pension and health-care costs of a greying population. By 2050 a third of the rich world’s population will be over 60. The demographic bill is likely to be ten times bigger than the fiscal cost of the financial crisis.Full Story

Another Blow to US Bonds/Dollar

June 16 (Bloomberg) -- Brazil, Russia, India and China are considering buying each other’s bonds and swapping currencies to lessen dependence on the U.S. dollar, Russian President Dmitry Medvedev’s top economic adviser said.

The leaders of the so-called BRIC countries will discuss measures to promote regional currencies when they meet later today, Arkady Dvorkovich told reporters in the Ural Mountains city of Yekaterinburg before the first BRIC summit.

“There will be talk about increasing the share of mutual trade in national currencies, possibly placing part of reserves in the financial instruments of partner countries,” Dvorkovich said.

Medvedev is hosting back-to-back summits of developing economies in Yekaterinburg as he seeks to lessen the world economy’s dependence on the U.S. dollar. Medvedev will hold talks later today with Chinese President Hu Jintao, Indian Prime Minister Manmohan Singh and Brazilian President Luiz Inacio Lula da Silva. Full Story

U.S. likely to lose AAA rating: Prechter

NEW YORK (Reuters) - Technical analyst Robert Prechter on Monday said he sees the United States losing its top AAA credit rating by the end of 2010, as he stuck by a deeply bearish outlook on the U.S. economy and stock market.

Prechter, known for predicting the 1987 stock market crash, joins a growing coterie of market heavyweights in forecasting the United States will lose its top credit rating as the government issues trillions of dollars in debt to fund efforts to bail out the economy.

Fears about the long-term vulnerability of the prized U.S. credit rating came to the fore after Standard & Poor's in May lowered its outlook on Britain, threatening the UK's top AAA rating. That move raised fears that the United States could face a similar risk, with the hefty amounts of government debt issued in both countries to pay for financial rescues causing budget deficits to swell.Full Story

Next, the Retirement Bubble

POLITICIANS ARE IRRITATING UNDER THE BEST of circumstances, but they are downright dangerous some of the time. How can they profess to have been shocked or surprised by the collapse of the real-estate bubble?

There was nothing secret about the dangerous direction that mortgage lending was taking a few years ago. It was a topic discussed widely in the financial press from all perspectives, including those who hit the nail right on the head. It wasn't just Nouriel Roubini, Peter Schiff and others who were ignored. Even someone as respected as Robert Shiller could get little more than passing notice when he published the second edition of Irrational Exuberance in 2005. In it, he spelled out the dangers for the real-estate market in the same clear terms that he had used earlier, when warning of the stock-market bubble.Full Story

U.S. credit card defaults rise

NEW YORK (Reuters) - U.S. credit card defaults rose to record highs in May, with a steep deterioration of Bank of America Corp's lending portfolio, in another sign that consumers remain under severe stress.

Delinquency rates -- an indicator of future credit losses -- fell across the industry, but analysts said the decline was due to a seasonal trend, as consumers used tax refunds to pay back debts, and they expect delinquencies to go up again in coming months.

"I find it hard to believe that it is really a trend. You need to see stabilization in unemployment before you see anything else," said Chris Brendler, an analyst at Stifel Nicolaus. "It is too early to see some kind of improvement."

Bank of America Corp -- the largest U.S. bank -- said its default rate, those loans the company does not expect to be paid back, soared to 12.50 percent in May from 10.47 percent in April.Full Story

Extended Stay Chain Files for Bankruptcy

By Bob Van Voris and David M. Levitt

June 15 (Bloomberg) -- Extended Stay Hotels, the operator of mid-priced hotels acquired at the peak of the commercial real estate market for $8 billion, filed for bankruptcy protection as the recession cut corporate and leisure travel.

The Spartanburg, South Carolina-based chain, with more than 680 properties in 44 states, collapsed two years after Lightstone Group LLC bought the company with $7.4 billion in financing. The company said it had $7.1 billion in assets and $7.6 billion in debt at the end of last year, according to papers filed today in U.S. Bankruptcy Court in New York.

Lightstone bought the chain from Blackstone Group LP in April 2007 in its first purchase in the lodging business. Since then, prices have declined nationwide. The U.S. hotel industry is enduring its “weakest year on record,” according to PKF Hospitality Research, a research firm based in Atlanta. U.S. hotel occupancy fell 14 percent in the week ended June 6 from a year earlier and average daily room rates declined 11 percent to $95.90, according to data from Smith Travel Service. Full Story

Wall Of Debt

The leveraged loan market got accustomed to big numbers over the past decade. There's $3.6 trillion, the amount of leveraged loans made since 2000, according to Thomson Reuters' Loan Pricing Corp. There's 735-fold, the amount of growth between 2003 and 2007 in the volume of collateralized loan obligations -- the funds that helped fuel the loan market's surge after the tech and telecom bust of 2001. And there's $375 billion, the amount of bank debt used to fund leveraged buyouts completed between 2005 and 2007.

But right now, the leveraged loan market is fixated on one number: $430 billion, the amount in leveraged loans due to mature between 2012 and 2014. Despite the big numbers of the past, this might be simply too big. Indeed, the $430 billion figure is already worrying lenders, borrowers and loan-market investors alike as they struggle with the possibility that a large portion of those loans will neither be repaid nor refinanced, raising the specter of a wave of defaults among the debt-fueled LBO borrowers of 2005 through 2007.Full Story

Obama: America Going Broke

CHICAGO (AP) -- President Barack Obama asked skeptical doctors Monday to get behind an overhaul of the nation's health care system, declaring the system a "ticking time bomb" for the federal budget that could force the entire nation to "go the way of GM."

The difficulty of his sales job was evident when he said he was against limiting awards in malpractice lawsuits, a top priority for doctors. That statement brought him a smattering of boos -- a remarkable public response to a popular president accustomed to cheering audiences.

Flying to his hometown to speak at the annual meeting here of the American Medical Association, Obama struck back at critics of his efforts to reshape the health care delivery system to bring skyrocketing health care costs under control and expand coverage to the millions of uninsured.Full Story

VIX : A Loaded Shot Gun

Stay Away from this markets as the volatility in the markets can increase with the time frame.

Watch out for the support on the indices:
S&P 500 : 925
Dow : 8550
NASDAQ : 1800

Six Flags Nose Dive

NEW YORK (Reuters) - Six Flags Inc (SIXF.OB) will not sell assets or reduce its workforce as a result of its Chapter 11 bankruptcy filing this weekend, the theme park operator's chief executive told CNBC on Monday.

"This isn't a liquidation," said CEO Mark Shapiro. "This is about the past. This is about debt that's been around for just too long."

Six Flags, which operates or owns 20 parks in North America, filed for Chapter 11 bankruptcy protection in the early hours of Saturday morning. The company was saddled with a $2.4 billion debt load and faced a looming cash $300 million payment to preferred stock holders in August.

The company tried to convince lenders to swap debt for equity in the last two months, but abandoned the measure after the measure drew little interest.Full Story

George Soros: Urges To End CDS Markets

Mr Soros, the Hungarian-born US fund manager, said that the swaps were ‘truly toxic’, grossly distorting risk, encouraging speculation and with the potential bring ruin on financial institutions and companies.

Citing the recent bankruptcy of General Motors in America, Mr Soros said that some bondholders had stood to gain more from bankruptcy than re-organisation as a result of their CDS positions.

“It’s like buying life insurance on someone else’s life and owning a licence to kill him,” he said of the swaps, which pay the buyer face value if a borrower defaults, in exchange for the underlying securities or the cash equivalent.

In remarks to a meeting of international bankers and financiers in Beijing, Mr Soros set out his vision for a new regulatory system for global finance that would require regulators to intervene to stop the kind of credit and asset bubbles which precipitated last year’s banking crisis. Full Story

Failed Promise of Innovation

"We live in an era of rapid innovation." I'm sure you've heard that phrase, or some variant, over and over again. The evidence appears to be all around us: Google (GOOG), Facebook, Twitter, smartphones, flat-screen televisions, the Internet itself.

But what if the conventional wisdom is wrong? What if outside of a few high-profile areas, the past decade has seen far too few commercial innovations that can transform lives and move the economy forward? What if, rather than being an era of rapid innovation, this has been an era of innovation interrupted? And if that's true, is there any reason to expect the next decade to be any better?

These are not comfortable questions in the U.S. Pride in America's innovative spirit is one of the few things that both Democrats and Republicans—from Bill Clinton to George W. Bush to Barack Obama—share. Full Story

IMF BONDS : Big Blow To US Bonds

The International Monetary Fund is putting final touches on its plans to issue its first bonds. Russia has already said it would buy $10 billion of the bonds, which would be priced in the IMF’s quasi-currency, “special drawing rights.” SDRs are a basket of currencies consisting of the euro, yen, pound sterling and U.S. dollar. As of Friday, 1 SDR equals $1.55.

China, Brazil and India also have said they are interested in buying IMF bonds, with China likely to purchase more than $20 billion of instrument. The IMF wants to issue bonds as a way to build up its lending war chest as the global economic nosedive continues.

But don’t start lining up at the IMF to buy some yourselves. Only the IMF’s 185 member nations and some central banks will be eligible to purchase them and trade them — among themselves. Some at the World Bank worry that the IMF bonds might push up borrowing rates somewhat for the Bank, though IMF officials doubt the IMF bond issuance will be large enough to affect World Bank borrowing costs much Full Story

California : 50 days away from a meltdown

SAN FRANCISCO (Reuters) - California's government risks a financial "meltdown" within 50 days in light of its weakening May revenues unless Governor Arnold Schwarzenegger and lawmakers quickly plug a $24.3 billion budget gap, the state's controller said on Wednesday.

Underscoring the severity of California's cash crisis, Controller John Chiang, who has previously warned the state's government risks running out of cash without a budget deal, said revenues in May fell by $1.14 billon, or 17.7 percent, from a year earlier.

Additionally, the revenues of the government of the most populous U.S. state fell short of estimates in Schwarzenegger's budget plan by $827 million, Chiang said.

He warned California's state government is speeding toward a financial disaster unless officials act urgently to balance its books.

"Without immediate solutions from the governor and legislature, we are less than 50 days away from a meltdown of state government," Chiang said in a statement.Full Story

Fed Beige Book

Reports from the twelve Federal Reserve District Banks indicate that economic conditions remained weak or deteriorated further during the period from mid-April through May. However, five of the Districts noted that the downward trend is showing signs of moderating. Further, contacts from several Districts said that their expectations have improved, though they do not see a substantial increase in economic activity through the end of the year.
Reports from the twelve Federal Reserve District Banks indicate that economic conditions remained weak or deteriorated further during the period from mid-April through May. However, five of the Districts noted that the downward trend is showing signs of moderating. Further, contacts from several Districts said that their expectations have improved, though they do not see a substantial increase in economic activity through the end of the year.

Manufacturing activity declined or remained at a low level across most Districts. However, several Districts also reported that the outlook by manufacturers has improved somewhat. Demand for nonfinancial services contracted across Districts reporting on this segment. Retail spending remained soft as consumers focused on purchasing less expensive necessities and shied away from buying luxury goods. New car purchases remained depressed, with several Districts indicating that tight credit conditions were hampering auto sales. Travel and tourism activity also declined. A number of Districts reported an uptick in home sales, and many said that new home construction appeared to have stabilized at very low levels. Vacancy rates for commercial properties were rising in many parts of the country, while developers are finding financing for new commercial projects increasingly difficult to obtain. Most Districts reported that overall lending activity was stable or weak, but with mixed results across loan categories. Credit conditions remained stringent or tightened further. Energy activity continued to weaken across most Districts, and demand for natural resources remained depressed. Planting and growing conditions varied across Districts as did agricultural input costs..Full Story

Source: FederalReserve.