Category — The US Economy

Stephen Jen of Morgan Stanley says Eastern Europe has borrowed over $1 trillion from Western European banks. The leverage and exposure involved here is incredible… it’s a bigger threat than the U.S. subprime debacle… and it could rip apart the European Monetary Union.

The biggest, bloodiest battle in human history took place in the Russian city of Stalingrad (World War II). Over 1 million people died in the battle. In a modern day monetary version, it looks like Eastern Europe/Russia will be the final resting place for hundreds of billions of dollars.

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SMART MOVES BY LOGICAL-THINKING PRESIDENTS

We were told that we were so near economic collapse, Congress had to approve the bill before they read it. Congress passed it on Friday. Did Obama sign it Friday night?  No.  On Saturday?  No.  We’re talking collapse here for heaven’s sake, but did he sign it on Sunday and save America on Sunday?  No.  How about today?  No

Are you beginning to feel like we’ve been had?  You should! We have been had.  We have become a nation of suckers.

Look at the following:

It has been a long time, but the U.S. Treasury is bringing back the 7-year note. Yesterday the yield on the 10-year note rose to 2.95 percent from just 2% at the end of December 2008, indicating that it’s getting harder to sell U.S. debt. Sale of 30 year Treasury Bonds will double to 8 times/year.

For the Obama administration, the step-up in borrowing costs comes as it is fighting to secure an $800bn-plus fiscal stimulus, and will probably need many hundreds of billions more to fund a banking sector clean-up.

Keep the government out.  Last night the Senate passed the so-called Economic Stimulus Package. What a farce. The U.S. gov’t can’t even manage a parking meter… so how about getting the huge, stupid idiot out of the way?  More about this in Traders Money Club 2.11.

And the beat goes on! RBC Capital Markets predicts 1,000 U.S.banks could fail in the next three to five years. TMC readers, be sure you have your money in a bank that has no participation in the bailout.  Best are small local banks who are hard-ass lenders; like if you want to borrow $100 you have to have $200 on deposit with them.

There are billions of dollars of losses embedded in the system, and the system has to flush them out. The people that are going to take the losses are the taxpayers (you), and bank stockholders, and if regulators say there won’t be much loss to taxpayers, they will be lying.

The Federal Deposit Insurance Corp. closed nine banks so far this year, and shuttered 25 in 2008, leaving another 966 victims. To put it in perspective, the U.S. seized 534 lenders in 1989, during the savings & loan crisis.

In a bid to prove he’s still utterly insane, the Venezuelan president recently claimed “not even a hair has been touched” by the recession. Which is funny, considering oil prices have collapsed.

Ninety-three percent of Venezuela’s export revenue comes from crude oil.
You may recall that in one issue of TMC, I told you that the price of oil was being manipulated by the Saudis in response to nudging by the U.S. in order to keep both Russia and Iran broke–to keep Iran from becoming the dominant Middle East power. Well, big Hugo is an incidental victim of the Saudi/US action, or is he?

The bailout is not working. Here’s one reason why.

Guaranteeing home loans issued to people with no proof of employment, bad credit scores, and almost no equity is what bankrupted Fannie Mae and Freddie Mac in the first place.

So of course, that’s the “new” strategy the government is taking by lowering standards for re-financing loans. Washington might as well take our tax money and throw it on a bonfire.

Amazing! Under the TARP program, the U.S. paid $254 billion for $176 billion worth of the assets of financial instituions. The government’s increased intervention in the economy is likely to slow down economic growth because history shows that every time the private sector shrinks to make way for the government sector, the economy suffers. The Obama administration will turn the U.S. into a second- or third-rate nation.

When I have visited 3rd world nations one way that women deal with poverty, is to enter the entertainment industry, especially if they are good looking. With staff jobs evaporating and former nine-to-fivers cobbling together incomes through scattered side projects, freelancing as a dominatrix—or “pro-domme,” as industry types prefer to call it—has become a plausible gig option.

Argentina’s peso slid to the lowest in more than six years as dollar inflows from cereal exporters dried up amid the country’s worst drought in half a century.

The peso dropped 0.2 percent to 3.4982 per dollar at 3:22 p.m. New York time, from 3.4903 yesterday. The currency touched 3.501, its weakest since Dec. 17, 2002. Were you short?

“There is plenty of demand for dollars, but the supply is down since this year’s grain harvest isn’t as good due to the drought,” said Gustavo Quintana, a currency trader with Lopez Leon Brokers in Buenos Aires.

…The Argentine peso has declined 13 percent against the dollar in the past six months, less than the 32.7 percent drop seen in Brazil’s currency the Real. That gap has led Argentine manufacturers to call for a weaker peso they say will help them compete with factories in neighboring Brazil. Is the U.S. dollar headed in the same direction>