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June 15, 2010

Tuesday Financial Briefing

First, the good news.

The young ladies of New Jersey Girl Scout Troop 40-289 are doing their part to stimulate the economy. The free-market flame still burns!

The Rosebush Presbyterian Church held a rummage sale over the weekend that reportedly did quite well.

I couldn't find a link to the story online, but Tyrone "Big Stink" Pitts -- who operates a small sole-proprietorship adult entertainment business near the check-cashing joints downtown and has a number of entrepreneurial young ladies in his employ -- has announced a "Half Off Hoes" program. This program, which has proven quite popular among his customers, consists of a 50% discount on the service as long as the customer commits to using the service at least twice a week. "I had what you call a brain-storm," Mr. Pitts said. "Bitches still complain, but that's all they do anyways. You oughta have my job, man; listen to those crazy bitches cry about this and that all the damn day. Soon's the economy gets right, I'm out this God Damn business once and for all."

So much for the good news. Now for the doom.


Greek debt gets cut to junk; the equities markets dive in late-day trading. (Full story on Greek debt further down.) Tell me again how the stock market is "forward looking". Equities markets right now are tied to the news cycle, not to the "real" economy (which, for all the happy recovery-talk coming out of Bernanke's cake-hole, still sucks). The "buy and hold" mentality is completely absent from this market. We have a market composed of nothing but day-traders who buy and sell based on whatever is coming across the CNBC news-crawl at that particular moment in time.

Via Kratos (in last night's "let's all dump on soccer" thread) comes news that the German government may be near collapse in disagreements over German fiscal policy in the wake of the Euro crisis, unpopular austerity measures, and churn in senior governmental positions. My conspiracy theory is looking better all the time: the Germans are trying to find a way to exit the Euro and go back to the DM without cratering the entire European economy.

Remember the government's red-headed step-children, Fred and Fan? Apparently their financial woes may be a wee bit more extreme than first assumed. Low-ball estimate is $160 billion; a more realistic estimate might be as high as $1 trillion. Pull quote:

“Republicans and Democrats love putting Americans in houses, and there’s no getting around that,” Holtz-Eakin said.
Actually paying for all those houses, on the other hand, appears to be quite beyond anyone's capacity.

BP's share price sank nearly 10% on Monday. The company announced plans to increase the capture-rate of oil from 15,000 barrels a day now to 40,000 - 53,000 barrels by the end of the month. (Black-hearted cynics like myself wonder why they didn't do this from the very beginning.) BP has lost approximately 40% of its market value since the explosion on the Deepwater Horizon rig in April. Via Lady in Black comes this story that, if true, means the worst part of the spill may be yet to come.

Belgium may split up between Flemish and Walloon constituencies. Belgium has a lot of similarities to Pakistan, oddly enough -- it is a country that has no point and no real reason to exist.

The real national debt? $130 Trillion. Give or take a few bucks.

Rumors are swirling that the ECB and IMF are preparing a bailout for Spain. "Lies! Perfidy!" cry representatives of the ECB and Spain.

Who would have thought that Afghanistan, the butt-crack of the world, had so much mineral wealth? Historically speaking, this isn't particularly good news for the people of an already war-torn region. The chances of the average Afghan seeing a dime of profit from this mineral windfall is very low, and the chances of decades of grinding warfare over the mineral rights is very high.

The Euro crisis: a slow burn rather than a wildfire.

England is thoroughly rogered, old chap. (That's "boned" to you Yanks.)

The magic Won booster!

Samuelson on "America's Crisis of Confidence".

The Muni debt racket. Another state fiscal time-bomb ticking down to zero. (And a good object lesson in why cities have no business spending public money on professional sports stadiums.) Investors are ignoring the warning signs in the Muni markets.

The stock market may drift sideways over the summer. I'm not sure I agree with this -- investor nervousness is at a very high level, and bad news out of Europe (is there any other kind these days?) tends to sink the market like a stone.

Another funding squeeze for European banks.

Federal Reserve and Treasury sleight of hand has -- for the moment -- kept the "bond vigilantes" off of Ben Bernanke's back. It won't last.

Old Greeks to Young 'Uns: "You have no initiative!" Young 'Uns to Old Greeks: "You screwed everything up!" Lots of these kids are over-educated and under-skilled for their job-market as well -- another similarity to America. Pull quote:

Olga Stefou is 20. She speaks passable English and studies political science. These days she goes into the streets to shout slogans against the government and the International Monetary Fund.
Political science? Seems to me that Olga would have been better off learning to be an electrician or carpenter or plumber rather than a shrieky leftist quiff. It's a basic supply and demand thing: Greece already has a surfeit of dipshit leftist do-nothings. But hey, it beats working for a living. American yoots have known this for years.

And speaking of Greek debt, we knew this day was coming, and Lo! it has come: Moody's downgrades Greek debt to junk. Now that S&P and Moody's have degraded the debt to "junk" status, it can no longer be held by many pension funds or "stability" investment portfolios. What it means, basically, is that no one but the ECB is going to buy Greek debt for a long, long time -- unless they offer a ruinous interest rate to attract buyers.

The Euro: dollar parity in 2011, if it survives that long.

We've got until autumn to top off our pirate-hoards and stockpile food, water, ammo, and zombie-repellent.

The end is nigh for Greek banks.

Remember that Social Security deficit that wasn't supposed to appear for five years or so? Well, it arrived at the party early, and is already getting drunk and loud.

M. C. Escher is apparently now running the New York State pension fund.

1980 - 2008: "You gold bugs are such hysterics!" Now: "You gold bugs might just be on to something."

Gee, Wall Street analysts might be tempted to praise stocks in hopes of drumming up business? The hell you say!

[UPDATE: How could I have forgotten my favorite whipping-post, California?]
Is California still boned, you ask? Yes indeed.

Today's briefing brought to you by the financial analysts at Hee Haw.

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posted by Monty at 06:55 AM

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