Don’t Monetize the Debt…

the President of the Dallas Fed on Inflation and central bank independence….

I din’t think anyone realized the size of unfunded liabilities of health care and pensions totalled $99 trillion, conventional wisdom had it at approximately more than half that…this is a disturbing revelation. It is refreshung to be presented with the frank verbiage from the Fed branches, referring also to the San Francisco Fed Economic letter I sent out last week.

http://online.wsj.com/article/SB124303024230548323.html

OK, we’ve added another state in the last little while (we’re running out)…The Crisis isn’t California’s alone….According to a study 47 (yes 47) states face a budget gap and there aren’t a lot of good solutions….Not to add fuel to the fire, but at last count about 80% of municipalities were in the same boat. Los Angeles recently declared a state of financial emergency…NY can’t be too far behind as their transit system just got a $2+ billion bail out in the past few weeks…

http://www.businessweek.com/bwdaily/dnflash/content/may2009/db20090522_625957.htm?chan=top+news_top+news+index+-+temp_news+%2B+analysis

50% of employers suspend graduate recruitment in the UK….

http://www.guardian.co.uk/business/2009/may/26/employers-slash-graduate-recruitment-schemes

David Rosenberg – Breakfast with Dave

I attach the latest from Rosie the unflappable…

Hot Points

- massive easing by the Fed has not stopped credit from contracting indicating that the money multiplier is breaking down

- NY Times data indicates Euro banks face $1 trillion in new Eastern European loan losses

- inflows into Gold ETFs has soared 6 fold over the past year to 455.2 tons

- retailers to face an imminent major margin squeeze

- have to break above 4.10% to declare end of bull run in 10 yr Treasuries

- CDN $ overdone, $0.80-0.85 is the range

- S&P 600-840  From here, more downside than upside

- deflation

- deflation

- deflation

A Must Read Barron’s Article: The Housing Hurricane…

I don’t know what to say other than read this carefully, especially the part about the banks…

here’s a teaser on the home builders…(can it get more insane???)

There’s no light at the end of the tunnel yet. We’re still supporting builders through misguided programs that are only adding to the inventory woes. California decided to offer a $10,000 credit to buyers of new homes, on top of the $8,000 federal credit. But California made the $10,000 available only for new homes purchased directly from builders. That shows the power of the builders’ lobby, but it only adds to California’s housing-industry problem. It encourages builders to construct dwellings we don’t need, and it penalizes anyone else trying to sell a home.

http://online.barrons.com/article/SB124303112018248371.html

Bank of America to revise loans, more write-downs coming?

http://www.youtube.com/watch?v=KYlrrAWCTRg&feature=PlayList&p=47BEB398D8965CFC&playnext=1&playnext_from=PL&index=2

Carmakers’ woes may cost up to 6 million jobs says Union

http://www.bloomberg.com/apps/news?pid=20601087&sid=aOnaBArvseJg

US Bond Sales face resistance…

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5379733/US-bonds-sale-faces-market-resistance.html

This is a beauty: Simon Property Group (SPG) says things will get better in REIT land..

I guess they haven’t been reading Goldman Sachs recent shocking report that things are looking, er, not so good on that front. Disclosure: I have sold long OTM calls on this lipsticked pig and can’t wait to do more.  I guess their optimism did not preclude them from cutting their divdend after releasing their 1st quarter earnings report… Let’s see, 8.6 million sq ft of retail space vacated in the US in all of 2008, and 8.7 million sq ft vacated in the 1st quarter of 2009…..Let’s see, an estimated 230,000 retail store closures expected across the US in 2009, Let’s see, oh never mind, sounds like a buy to me, (as in bye, bye).

http://community.investopedia.com/news/IA/2009/Simon-Says-Things-Will-Get-Better-SPG-GGWPQ-KIM-TCO-BXP-VNO0525.aspx

Recent quote “…2 years ago a 539,000 job loss number (which by the way has been revised upward since – big surprise) would have been a national emergency, now it’s a green shoot…”

More later….

My good friend Dan Hachey does a lot of reading and is kind enough to circulate those articles he finds interesting. I will be posting his contributions as they arrive. Enjoy!

Next stage of the financial crisis?

http://www.telegraph.co.uk/finance/financetopics/recession/5373334/SandPs-warning-to-Britain-marks-the-next-stage-of-this-global-crisis.html

I guess the previous story is an eerie intro to the following video clip. I sent out a link to this print story yesterday, where President Obama, in a recent C-SPAN interview, states “…we’re out of money…”.  Fast forward to minute 13:34 to get an idea of the state of affairs of the economy….

http://www.youtube.com/watch?v=znZkxN0Ks0M

This makes too much sense…sounds like a disciple of David Rosenberg’s….role reversal: employment as a leading indicator…….too much focus on credit supply, not enough on credit demand….this is very much worth reading

http://www.financialsense.com/Market/wrapup.htm

The real ugly truth about European banks…scroll down for the article….

http://www.highyieldblog.com/2009/05/european-banks.html

This should be of great assistance in preventing the worsening of the economy…

Excellent read….Great Depressions are so Methodical…

http://www.howestreet.com/articles/index.php?article_id=9582

British Banks Revolt against Obama Tax Plan: Unintended Consequences…

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/5374095/British-banks-revolt-against-Obama-tax-plan.html

Different thinking: A New Economy

http://www.wired.com/culture/culturereviews/magazine/17-06/nep_essay