Rosenberg On The Visible Hand Of Central Planning (ZH)
Wednesday, 01 September 2010 14:09
Steve Meyers
So you thought communist states go down without a fight? Wrong: here is Rosenberg who explains why both China and the US are now actively involved in the business of propping up anything and everything. And totally off topic, Rosie confirms that the liquidity trends in the mutual fund industry continue to deteriorate: "
As for liquidity ratios, equity funds portfolio manages have theirs at an all-time low of 3.4%, down from 3.8% in June.
Tack on the fact that there are really not very many shorts to be covered – since the market peaked in April, short interest is 4.3% of the S&P 500 market cap (in August 2008 it was 6%) and there’s not a whole lot of underlying fund-flow support for the stock market here." In other words, throw in a few more market down days, a few more weeks of redemptions (and at 16 weeks in a row, there is no reason why this should change), and the liquidation theme will promptly be added to the new normal.
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Update
Wednesday, 01 September 2010 09:35
Steve Meyers
I will be out this morning. Audio posted
Today's message
Tuesday, 31 August 2010 14:15
Steve Meyers
Proverbs 6:27 Can a man take fire in his bosom, and his clothes not be burned?
Yesterday, a 400-year dormant volcano erupted in Indonesia spewing lava and sand high into the sky. It reminded me of another volcano that erupted in 1991.
Mount Pinatubo, dormant for over 500 years, began to erupt on June 12, 1991, and three days later exploded with twice the power of the 1980 Mount St. Helen's eruption. The release of power blasted a cubic mile off the mountaintop and the earth shook for eight hours. The eruption produced an ash cloud that rose over 50,000 feet into the atmosphere. If that wasn't enough, Typhoon Yunga then struck the island nation with fierce winds and torrential rains which mixed with the ash creating what the locals called "Black Saturday!"
The United States was forced to abandon and eventually close Clark Air Force base, located just a few miles from Mount Pinatubo, due to the devastating blanket of fallen ash. When a vulcanologist was asked to account for the widespread damage which sent thousands of American soldiers and Filipinos fleeing, he replied, "When a volcano is silent for many years, people forget it's a volcano and begin to treat it like a mountain."
Now here's a lesson from nature. We should always be aware of how our sinful nature has the potential to erupt. It would be a big mistake to ignore this possibility simply because it has lain dormant for a season...even a seemingly long one.
Solomon writes a profound statement in his book of Proverbs, which, when paraphrased goes something like this; "Can someone play with fire in his lap without incinerating his clothes?"
The enemy of our souls would love for us to believe that we can somehow play with sin, without it negatively affecting our spirit and our walk with the Lord -- oh how deceptive Satan can be!
D.L. Moody was a fairly simple man and I love the way he dealt with sin. He said, "When you're thinking sin, think scripture!"
Friend, let's be on guard! Sin is a dormant volcano which can erupt at ANY moment and set our house on fire. How do we prepare? First, by being aware of the possibility...then...;"Thy word have I hid in my heart that I might not sin against thee". [Psalm 119:11] Let's meditate upon His Word, allowing it to sink deep into our minds and our hearts, so that the only fire which burns there...is the fire of God's Holy Spirit. Amen.
Market Update
Tuesday, 31 August 2010 13:11
Steve Meyers
Chop Suey is on the menu today. We sit and wait for any movement to tip us off. The ranges could narrow going into Friday's number. Will 1040 give way or will they run back up to 1070? We only have to wait 3 days to get our answer. The whole system is in jeopardy. That is why we see so many hedge funds shutting their doors. This will only get worse going forward. Forget running the market up, with everybody wanting to hit the exits, just holding it up is a monumental task. Bad news is everywhere. When we do get a "positive" number, there is always a story behind it. We will continue to chop until we break 1040 or we get above 1080. Treasuries have regained all of their Friday losses. Who predicted that? Nobody that I read. I have been trading a very long time and I never could have imagined what kind of markets we have today. I too may soon walk away.
Don't get fooled by Bernanke
Tuesday, 31 August 2010 11:19
Steve Meyers
By Brett Arends
BOSTON (MarketWatch) -- When are investors going to stop getting suckered by Ben Bernanke?
The Dow Jones Industrial Average (DJIA 10,051, +40.86, +0.41%) jumped nearly 200 points Friday after the Federal Reserve chairman's pep talk on the economy. Worldwide markets followed suit. And long-term interest rates rose on his sunnier outlook.
Yes, the Fed chairman seemed to rule out a double dip. And yes, he said he stands ready to pump more money into the system if it should falter.
But so what?
 Reuters
Federal Reserve Chairman Ben Bernanke (R) speaks with Federal Reserve Vice Chairman Donald Kohn.
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On forecasts, the Fed chairman is about as useful as a New England weatherman.
As for the talk of more quantitative easing: A close reading of Bernanke's word's make you wonder if he even understands the crisis at all.
Let's look at the forecasts first. "I expect the economy to continue to expand in the second half of this year, albeit at a relatively modest pace," Bernanke said at Jackson Hole.
Richard Russell - Fiat Money To Meet Its End (King World)
Monday, 30 August 2010 21:46
Steve Meyers
Richard Russell - Fiat Money To Meet Its End
In Richard Russell’s latest commentary, the Godfather of newsletter writers discusses bear markets, gold, silver and fiat money. Russell is always focused on the big picture. This time he highlights the biggest fraud of the last half a century and how it will end. Here are a few snippets from his latest commentary...
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EXCLUSIVE: Mayo Says Citi Can't Be Trusted
Monday, 30 August 2010 13:29
Steve Meyers
Securities analyst Mike Mayo ramped up his increasingly bitter battle with the management of Citigroup (NYSE:C) Monday morning issuing a note stating that the big bank can't be trusted to provide investors with accurate disclosure about its financial
condition or future plans to make money, and that the firm is setting the stage for future problems similar to those that nearly caused the bank to fail two years ago, prompting a massive government bailout.
"We believe that Citigroup’s financial targets can encourage short-term excesses over long-term prudence," Mayo wrote in a note to clients titled "A Matter of Trust." Mayo, an analyst at the securities firm CLSA, added: "Citi has an aggressive financial target of 5% asset growth when so much of its past problems stem from excessive asset growth." READ MORE
Moody's Issues Stern Warning On China's Pyramid Bank Recapitalization Scheme
Monday, 30 August 2010 10:53
Steve Meyers
Moody's is out with a surprisingly frank appraisal of the Chinese banking system's precarious capitalization trend, by looking at the recent RMB 54 billion capital raise in the interbank market by the domestic arm of the Chinese Sovereign Wealth fund (CIC), which was "the first part of an RMB 187.5 billion overall fund-raising program mainly to provide additional capital to the three largest state-owned banks, a policy lender, and a policy insurance company." As Moody's oh so correctly concludes: " Recapitalizing banks with bond proceeds from banks is credit negative because it increases the effective leverage of the banking system. The transaction’s impact on the system is limited in this case because the increased leverage is not significant, but it would be problematic if effective leverage continues to increase and China’s economic growth stalls." Moody's stops one step short of calling this transaction what it is: using debt purchased by other banks to recapitalize deteriorating loans on the banks' asset side: " the increases in assets and equity are artificial and without real economic substance: the increase in reported equity on banks’ balance sheets enables the banks to lend more and effectively leverages up the system. Assuming banks fully deploy the capital raised, the resulting increase in the risk-weighted assets would be RMB 187.5 billion divided by 11.5% (the minimum capital requirement)." What is also not said, but is glaringly obvious, is that the Chinese sovereign wealth fund is likely in a major need of recapitalization, courtesy of its extensive US financial sector equity holdings. READ MORE
Joe Gibbs GamePlan For Life
Monday, 30 August 2010 10:47
Steve Meyers
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Work Slowdown
We put a lot of pressure on ourselves to achieve and succeed. And if we're not careful, the pursuit of one more sale, one more percentage point, or one more dollar sign can utterly consume our lives. If it doesn't, we know they can find someone else who will.
This makes the following statement from the Bible a brave one: "Make it your ambition to lead a quiet life, to mind your own business and to work with your hands, just as we told you, so that your daily life may win the respect of outsiders and so that you will not be dependent on anybody" (1 Thessalonians 4:11-12). It's a call to hard work, yes, but also to the pursuit of work's greater goal—a "quiet life."
This is not the same as a lazy life, one with never a care or concern. A quiet life is one of perspective and balance. Business, labor, and career will always have certain seasons that call for an extra ummph of exertion. Not every day will be "quiet," and we shouldn't expect it to be. Still, a quiet life should remain our general "ambition"—our overall normal—so that when work expectations are keeping our lives noisy and chaotic week after month after year, courage and conviction will call us to make some changes. Our lifestyle becomes our lifetime quicker than we know it. And quiet only comes to those who seek it.
Pray this prayer: I need your help, God, to understand what this means for me. I don't want to do anything rash, but I do want to be in your will. I want to experience life the way you intend it to be.
Please visit Joe Gibbs' Website at www.GamePlanForLife.com for Joe's Video Blog and more!
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Bernanke Hallucinating
Monday, 30 August 2010 09:49
Steve Meyers
If Fed Chairman Ben Bernanke honestly believes what he said at Jackson Hole on Friday — that he can save the economy by printing more money and buying more bonds — he’s hallucinating.
Through the first quarter of this year, he printed $1.5 trillion of paper money and promptly bought $1.5 trillion in mortgage bonds, government agency bonds, and Treasury bonds.
But the entire effort was a dismal failure; the U.S. economy is still sinking and most large American banks are still weak.
The underlying reason: While the government has been borrowing massively, nearly everyone else has embarked on unprecedented debt LIQUIDATIONS.
In other words …
While Washington is gorging itself on new debts, nearly every other sector is undergoing massive liposuctions.
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