GM decideds to kill three brands

http://www.nypost.com/seven/11282008/business/gm_outlines_plan_to_scrap_pontiac__other_141274.htm

Clearly killing off brands is a desperate move. GM has no clue what to do and how to make money. If you think shuting down three brands is the only to due you might as well kill all but one.

Ken Fisher wacked

http://www.nypost.com/seven/11282008/business/fisher_flounders_141277.htm
Pretty much for the last year I have read his market picks and thought he was off mark. Clearly he was. It only remains to see if he can recover or if Mr market is not done schooling him.

Use of math to model behavior of your enemies.

http://www.goodmagazine.com/section/Features/the_new_nostradamus

Awesome read, I love the solution to the Israel-Palestine problem.

Some moves by Carlos Slim

http://www.247wallst.com/2008/11/saks-sks-a-pois.html#more

http://www.bloomberg.com/apps/news?pid=20601086&sid=aoPHoLjgduGY&refer=latin_america

http://www.chron.com/disp/story.mpl/headline/biz/6120083.html

Having made all the Billions he has, it is always interesting to see what he is buying. I would not buy into any of these stocks, I would bet he is acquiring shares in Citi as a short term play and is trying to acquire Saks at a step discount to increase his retail holdings.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a1qy41NFwas4&refer=home

Russia’s ruble headed for its biggest weekly decline against the euro in at least five years as the central bank scaled back its defense of the currency to avoid depleting foreign-cash reserves.

With Dollar reserves shrinking and no end in site to oil's decline which puts pressure on the central bank. Look for russia to curtial spending. However the rubel can only fall so far before the people will pressure the government to do something.

Panic in China

http://www.telegraph.co.uk/news/worldnews/asia/china/3525052/China-slashes-interest-rates-as-panic-spreads.html

Signs of cracks in China.

http://siteresources.worldbank.org/INTCHINA/Resources/Quarterly_December_2008.pdf

In summary china is in or near recession. Long term this is bad for treasuries as china will turn it 'dollars' inward instead of buying treasuries.

Latest from RGE

http://www.rgemonitor.com/roubini-monitor/254591/desperate_measures_by_desperate_policy_makers_in_desperate_times_the_fed_moves_to_radically_unorthodox_policies_as_economy_is_in_free_fall_and_stag-deflation_deepens

Another batch of worse than awful news greeted today Americans getting ready for the Thanksgiving holiday: free falling consumption spending, collapsing new homes sales, falling consumer confidence, very high initial claims for unemployment benefits, collapsing orders for durable goods. It is hard to get any worse than this but the next few months will serve even worse macro news. At this rate of contraction as revealed by the latest data it would not be surprising if fourth quarter GDP were to fall at an annualized rate of 5-6%.

Just think it is only the beginning.

And this week, indeed, the Fed, together with the Treasury, started to implement some of the “crazier” policy actions that we discussed last week: a) outright purchases of agency debt and MBS to the tune of a whopping $600 billion; b) another $200 billion of loans to backstop the consumer and small business credit markets (credit cards, auto loans, student loans, small business loans); c) an effective policy of aggressive quantitative easing as the balance sheet of the Fed – already grown from $800 billion to over $2 trillion – will be expanded further as most of the new bailout actions and new programs will be financed via injections of liquidity rather than issuance of public debt.

Print till there is no tomorrow.

Desperate times and desperate economic news require desperate policy actions, even more desperate than any “desperate housewife” could dream of. The Treasury will be issuing in the next two years about $2 trillion of additional debt (on top of having to refinance and rollover another $1 trillion of maturing debt) while the Fed/Treasury/FDIC are taking on a massive amount of credit risk via outright bailouts and guarantees (TAF, TSLF, PDCF, ABCPFFFMLM, TALF, TARP, Bear Stears, AIG, Citigroup, TALF and another half a dozen new facilities and programs). These policies – however partially necessary – will eventually leads to much higher real interest rates on the public debt and weaken the US dollar once this tsunami of implicit and explicit public liabilities and monetary debt driven by rising twin fiscal and current account deficits will hit a world where the global supply of savings is shrinking – as most countries moves to fiscal deficits thus reducing global savings – and foreign investors start to ponder the long term sustainability of the US domestic and external liabilities.

The only way this will end is the dollar replaced by another currency. Monetary Reset. Along with painful budget cuts. 2009 should be interesting to say the least.

People not following the news

http://www.bloomberg.com/apps/news?pid=20601109&sid=aUYLG7W1nGpM&refer=home
The gamblers remain in charge.

How to short everything via ETF's

http://www.stocktradingtogo.com/2008/07/17/40-great-inverse-short-etfs-for-bearish-investors/

Don't you call this a Ponzi scheme?

http://www.247wallst.com/2008/11/aig-aig-recycli.html

Or is it just me?

Printing presses running 24x7

http://www.nypost.com/seven/11262008/business/start_the_presses_140871.htm

As part of the ambitious moves, the government's two huge printing facilities - in Washington, DC, and Fort Worth, Tex. - will have to expand their already strained, 24-hour output.

Goodbye Dollar bils we hardly knew yeah. Hello $1000 dollar bills.

NJ in trouble

http://globaleconomicanalysis.blogspot.com/2008/11/state-of-new-jersey-is-insolvent.html
This palls to the problems in CA and FL. I fully expect the next bailout to be for the states. Till someone take a sharp knife to spending we will continue to spend like a dunking sailor.


http://www.reuters.com/article/businessNews/idUSTRE4AO1A520081125?feedType=RSS&feedName=businessNews
Give use the money or we are all dead. Idiots.

Nice article about making sure your money is safe.

http://www.moneyandmarkets.com/citigroup-collapses-banking-shutdown-possible-28325?ref=patrick.net

Risk is the most ill understood item for most casual invenstors. Any type of investment with a return has some type of risk. That return is your reward for taking a risk. The higher a return the greater risk you are taking. Look at banks with the highest CD rates and look closer and you will see higher risk somewhere.

It’s because the risk is higher for CDs, but much lower for Treasury securities. It’s because even within the realm of government guarantees, there’s a pecking order.

The first-priority guarantee: Maturing securities that were issued by the U.S. Treasury department itself.

The second-priority guarantee: Maturing securities that were issued by other government agencies, such as Ginnie Mae.

Third: The Treasury’s backing of the FDIC.

What is worse than deflation?

http://ftalphaville.ft.com/blog/2008/11/26/18733/contagious-deleveraging/

Debt deflation. With Banks usually the worse offenders cause they can high leverage.

Just like in 1930, it will be the economic fundamentals that give the best indication of where things are going. House prices continued their downward trend yesterday. High unemployment is not even yet a factor.

We are done with phase 1, sub prime crises, now entering a much worse phase, Global depression brought on by debt deflation.

A couple of thoughts about Hank "The bazooka"

http://www.spiegel.de/international/business/0,1518,592268,00.html

I did not actually anticipate that it would get as bad as it did. It has gone beyond my wildest imagination.

And this in the not the bottom by a wide margin.



http://blogs.wsj.com/deals/2008/11/25/the-paulson-plan-truly-idiotic/

Democrats didn’t want anyone [economists] testifying because it was before an election and no one was willing to stand before that bulldozer known as Paulson. No one wanted to make tough political decision before the election. They didn’t empower any experts to come in and testify. Why is that? They were playing politics, too. That’s what we’re dealing with–a complete leadership failure in Congress and the administration.

Don’t underestimate the role of politics in the decision not to fix things.

We are from the government and here to help you. Famous last words.

The Most Volatile Market Ever

http://bespokeinvest.typepad.com/bespoke/2008/11/the-most-volatile-market-ever.html

Volatile is not your friend. This implies a deep uncertainty about the market. Combined with a lack a volume says the gamblers are in charge and the house always wins in the end.

All About the Dollar

http://www.minyanville.com/articles/C-citigroup-STOCKS-volatility-bailout-liquidity/index/a/20123

Inside story of Citi

http://www.bloomberg.com/apps/news?pid=20601109&sid=ar.ByjvMr3YI&refer=home

In short no leadership, a silent bank run and even the FDIC did not want to get involved.

``The board has let Pandit flounder with no real plan for creating value either for its customers or its shareholders,''

http://clusterstock.alleyinsider.com/2008/11/-it-was-a-complete-death-spiral-

By the end of the week, a small number of clients, including wealthy customers of Citigroup's private bank, had started defecting. Executives and government officials worried about a potential exodus.

And you think I am all doom and Gloom

http://jsmineset.com/index.php/2008/11/22/what-must-be-done-to-avoid-financial-destruction/

I think we have at least till March before anything crazy will happen. In March we will pass the first days of the Obama lift. The first quarter numbers will be bad, horrific will be over used. The treasury will find itself in a terrible position. Stop borrowing money or become the Wiemar republic. Don't count on them not borrowing. From there we will be off book.

Starbucks

http://www.247wallst.com/2008/11/starbucks-sbux.html#more
When Starbucks goes bankrupt it will mark the end of one of the greatest marketing stories ever told. Convince people coffee is worth more than a buck and that venti is a real word.

Fed gets TARP Bailout

http://clusterstock.alleyinsider.com/2008/11/fed-gets-20-billion-tarp-bailout-
Uses $20 Billion from the TARP loan to loan another $200 Billion. I guess Math skills don't work as well as those in Washington.

National Intelligence Council Briefing 2025

http://image.guardian.co.uk/sys-files/Guardian/documents/2008/11/20/GlobalTrends2025_FINAL.pdf
Excellent read, tough to say what the future will look like.

Humor and Doom

http://ftalphaville.ft.com/blog/2008/11/25/18681/the-armageddon-index/

Citi

http://ftalphaville.ft.com/blog/2008/11/24/18618/whitney-on-citi-a-speculative-investment/

Lots of Citi news and reactions today. So Far whitney has been dead on with Citi. If that is the case then 20 Billion is only 10% of what will be needed.

FHA in need of a bailout soon

http://www.cnbc.com/id/27891145

Defense and the Financial Crises

http://blog.wired.com/defense/2008/11/unsolicited-a-2.html#more

A look forward to what may happen in 2010 and beyond as the full effects of the financial crises are felt.

WTF?

http://www.bloomberg.com/apps/news?pid=20601103&sid=arEE1iClqDrk&refer=us

The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers, or half the value of everything produced in the nation last year, to rescue the financial system since the credit markets seized up 15 months ago.

You should read that one twice. Half of the GDP.

The money that’s been pledged is equivalent to $24,000 for every man, woman and child in the country. It’s nine times what the U.S. has spent so far on wars in Iraq and Afghanistan, according to Congressional Budget Office figures. It could pay off more than half the country’s mortgages.

Just an awesome post.

http://www.ritholtz.com/blog/2008/11/what-obama-geithner-aig-fiasco/

Few observers outside Wall Street understand that the hundreds of billions of dollars pumped into AIG by the Fed of NY and Treasury, funds used to keep the creditors from a default, has been used to fund the payout at face value of credit default swap contracts or “CDS,” insurance written by AIG against senior traunches of collateralized debt obligations or “CDOs.” The Paulson/Geithner model for dealing with troubled financial institutions such as AIG with net unfunded obligations to pay CDS contracts seems to be to simply provide the needed liquidity and hope for the best. Fed and AIG officials have even been attempting to purchase the CDOs insured by AIG in an attempt to tear up the CDS contracts. But these efforts only focus on a small part of AIG’s CDS book.

Where did all the AIG money go, into paying out CDS at 100%. Effectually wasted and that is why AIG needed more money.

You see, there are trillions of dollars in outstanding CDS contracts for the Big Three automakers, their suppliers and financing vehicles. A filing by GM is not only going to put the real economy into cardiac arrest but will also start a chain reaction meltdown in the CDS markets as other automakers, vendors and finance units like GMAC are also sucked into the quicksand of bankruptcy. You knew when the vendor insurers pulled back from GM a few weeks ago that the jig was up.

And many of these CDS contracts were written two, three and four years ago, at annual spreads and upfront fees far smaller than the 90 plus percent payouts that will likely be required upon a GM default. That’s the dirty little secret we peripherally discussed in our interview last week with Bill Janeway, namely that most of these CDS contracts were never priced correctly to reflect the true probability of default. In a true insurance market with capital and reserve requirements, the spreads on CDS would be multiples of those demanded today for such highly correlated risks. Or to put it in fair value accounting terms, pricing CDS vs. the current yield on the underlying basis is a fool’s game. Truth is not beauty, price is not value.

The government is now in a rock and hard place. Let GM go Bankrupt and take out the CDS market and everyone else goes down with it or bail them out and hope people will still buy treasuries.

Time to buy

Dollar Bearish Fund (UDN)

Reaction to Citi Bailout

http://economistsview.typepad.com/economistsview/2008/11/the-citigroup-b.html

Citibank is effectively acknowledging that they did not have the resources to survive alone without government assistance. I did not use the words bankrupt or insolvent.

In short, a punt.

Why Citi may go down like Wamu

http://brontecapital.blogspot.com/2008/11/sheila-bair-and-seizing-citigroup.html
Less then 5 hours before Asian makrets open. Betting on some statement. Markets Drop tomorrow.

Emerging Market Debt Costs Jump in Week, Hastening IMF Bailouts

http://www.bloomberg.com/apps/news?pid=20601086&sid=aIJif6jqDY3U&refer=news

``Clearly we are in the early stages of a crisis in emerging markets,'' said Neil Dougall, head of emerging-market research at Dresdner Kleinwort in London. ``The fact we have already seen $80 billion penciled in for possible dispersion indicates that the IMF is going to be facing quite significant pressure.''

Yep and it is going to be very bad.

Irleand

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/3486249/Markets-wary-of-Irish-debt-as-fresh-rescue-looms.html
The collapse of Ireland with be much worse then Iceland

Jim Rogers on current events

http://www.thedailybeast.com/blogs-and-stories/2008-11-23/your-money/

This is the first time in world history that I’m aware of where every government is doing the same thing, printing and spending huge amounts of money,” he said. “This has always led to inflation. Perhaps it’s different this time, but I doubt it. Some of the most dangerous words in the investment business are ‘it is different this time’. I expect a lot of inflation down the road.”

Hyper inflation always has occured in the past when large scale printing was attempted.