Welcome Back to September
This is awesome and brings back wonderful memories of 2008.
Instead of spitting out a bunch of news all day today, here's what's important. You can float around over there -----> and figure out the rest for yourself. What I can point out here is that this feels suspicious as if we've been here and done this before. I don't know if it would be appropriate to call this a correction as it feels more like a purging.
There are still bazillions in toxic assets sloshing around in there with Bernanke's excess liquidity and no one seems to know how to drain it. I'd say that is going to need more than a correction. She's passed out, stop trying to poke her:
"We're beginning to see more of this, where the market is getting good news but not really responding," said David Bellantonio, head of trading at Instinet, a New York brokerage. "It tells you that the market may have gotten ahead of itself."
Via WC Varones, we receive word that There's a bailout comin', but it's not for you. That's wonderful, and it feels awfully familiar except instead of investment banks, car companies are dying, despite multiple government interventions. I'd say FAIL but that's getting old at this point, I just want it to stop.
Anyway. Bailouts are back. We saw this coming in March.
Americans are about to re-learn that bank deposit insurance isn't free, even as Washington is doing its best to delay the coming bailout. The banking system and the federal fisc would both be better off in the long run if the political class owned up to the reality.Yawn, I guess. It gives Bank Fail Friday a new level of excitement I guess, beyond that I can't say there's much we can do to stop it.
We're referring to the federal deposit insurance fund, which has been shrinking faster than reservoirs in the California drought. The Federal Deposit Insurance Corp. reported late last week that the fund that insures some $4.5 trillion in U.S. bank deposits fell to $10.4 billion at the end of June, as the list of failing banks continues to grow. The fund was $45.2 billion a year ago, when regulators told us all was well and there was no need to take precautions to shore up the fund.
Oh and guess what? California was already broke, now we're more broke fighting this fire down South. Shouldn't we have money for that?
Markets aren't doing so well, but that could just be Bernanke indigestion. Maybe it's the letdown as they were counting on Larry Summers' greasy little palms to keep them all slippery. Whatever, that's not how this works. Bernanke isn't the thrill the market craves nor the sanity it needs and somehow it has to process that.
I actually like Sheila Bair and of all of them, she's the only one who I have at least a minimal amount of faith in.
I love that Jim Sinclair carries the thought that Richmond's Lacker and St Louis' Bullard are moving into position:
Richmond Fed President Jeffrey Lacker said yesterday in a speech in Danville, Virginia, that he’ll evaluate “whether we need or want the additional stimulus” from buying the full amount. St. Louis Fed President James Bullard, speaking to reporters in Little Rock, Arkansas, said “it might not be necessary.”
The Fed’s program to buy $1.25 trillion in mortgage bonds guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae is aimed at reducing home-finance costs and arresting the housing slump that triggered the recession. The central bank also intends to buy $300 billion of long-term Treasuries and $200 billion of federal agency debt.
Lacker and Bullard may be “staking out a position rather than reflecting the current consensus on the Federal Open Market Committee,” said Lou Crandall, chief economist at Wrightson ICAP LLC in Jersey City, New Jersey. The FOMC “is going to be much more concerned about how they manage the phasing out of the mortgage program because the Fed is providing a substantial percentage of the investment in conforming home loan bonds.”
Naturally. Isn't it terribly obvious which of them have blatant agendas? Please tell me this is Jon Stewart? Look at how well trained NY Fed's fearless leader is. Bah. He stutters and Liesman feeds him the easy questions. Pffffffft.
Dudley claims the Fed has a number of plans for backing out of its bloated balance sheet and literally trips over his words. Listen to the video and don't watch. He admits that they are borrowing the money that they themselves created to play markets and make money from their investments. At about 3:14 on part one, he explains the exact strategy the Fed is using to clean up in assets leading 3, 3 1/2... up to 5%... whose money is that?
Why would the President of the NY Fed appear in front of television cameras for the first time to tell us how they're cleaning up on investments? Isn't JP Morgan getting sued by UK regulators for doing this same thing?! Worse for his side, he admits to the Fed propping up markets.
That's really all I noticed. Isn't September awesome? Welcome back!