We The Sheeplez- The Coming Economic Collapse.."A Nation Of Sheep Ruled By Wolves" Thomas Jefferson

As Bank Of America Implodes, Is MBIA A Volkswagen-Like Short Squeeze Candidate?

When it comes to playing the endspiel for Bank of America, there are two binary outcomes: A) either the stock goes to zero in a slow, painful bleed, accompanied by periodic mega squeezes on headlines such as Buffett taking another bath; or B) the stock surges following some substantial government bail out and a quick and painless resolution of the mortgage putback litigation, the robosigning debacle, and somehow the bank finds a way to make money in an environment in which the 2s10s is about to tumble to record lows following the "Torque." As is well known, our personal belief is that all signs point to A) however with limited upside (one can only double their money by shorting) and a constant threat of short squeezes (hence unlimited downside), especially with the stock as depressed as it is and in this massively rigged and centrally planned market, puts a perpetual damper for those who wish to short the name to death. Which brings up an interest tangent: is there a way to profit from the collapse in Bank of America in a mirror image situation, i.e., with unlimited upside and limited downside? The answer is yes, and it very well may be in the form of MBIA, where as we indicate below, the upside may not only unlimited semantically, but practically as well, courtesy of shades of that most epic moves of 2008: that of the short squeeze in Volkswagen stock. Is there a chance that MBIA, with its 27 million short interest, and its 98% long institutional ownership could be the next Volkswagen? Perhaps. Read on.

The Complete And Uncut Chart Porn Collection

We are once again delighted to bring to our readers The Punch Line: the consumate compendium of economic chart porn available, put together by Abe Gulkowitz, this time titled "The Big Swerve" for obvious reasons. As Abe comments: "There's a growing concern among even the most optimistic investors, companies and households that the United States has either entered a new recession, or never really emerged fully whole from the last great downturn. There is also a worse scenario and fear – that growth going forward could be seriously constrained because of a myriad of overwhelming issues with no quick fix. Even though many of the risks are long-term in scope, enough risks have been elevated in the near term. These concerns are centered on the weakness evident in many key indicators here in the U.S. and also overseas. And they are aggravated by the gauntlet of hurdles facing the euro area this month alone. What’s most disconcerting about the euro stress nightmare is that numerous announcements have already heralded the end of the crisis. Where was all the analysis and the review? Has no one reviewed the reality on the ground in Greece and in the other peripheral European countries at risk? And how deep are the exposures across the major banks? Weakness in a sector such as banking is different than weakness in advertising, for example. Rising vulnerabilities in banking and finance could jeopardize the entire financial system and world economy." What has made the usually cheery Gulkowitz so morose? The 18 pages of charts, headlines and factoids below explain it all.

What Exactly Happened Today?

Dave in Denver at The Golden Truth - 1 hour ago

I don't have time to explain the details, but essentially over the past few days the Fed, ECB, Swiss National Bank and Bank of England have been working in concert in order to make liquidity available to prevent the European banking system from collapsing - similar to what happened here in the autumn of 2008. To simplify things, what has happened is that European banks have dollar liabilities (shorter term loan funding of various sorts denominated in dollars) that are being used to finance non-dollar income-producing assets (mostly denominated in euros). Greek and Italian sovereign... more »

Everything's Okay - Western Central Banks find Dollars to feed stressed European Banks

Trader Dan at Trader Dan's Market Views - 1 hour ago

Pity some of the poor banks of Europe - it seems that they are having difficulty finding others to loan them Dollars at a "reasonable" rate of interest. If I did not know better, I would say that they are being unfairly discriminated against merely because they have laughably pathetic balance sheets. Oh and did I mention that they have boatloads of Greek bonds hiding in there somewhere as well? No worries however - the posse is right around the corner, riding to their rescue to save them from the usurious money lenders who would do them wrong. Yep, once again the Central Banks come ... more »

Boehner Retorts To Obama, Presents Republicn Position On Jobs Plan

By now we have repeatedly seen and heard Obama's vision of the American Jobs Plan, which as has been discussed previously is dead on arrival, specifically due to Republican opposition. As to what the republican oppose specifically, watch below as Boehner gives the first public appearance presenting the republican talking points on the AJA.

David Rosenberg On Market Capitulation And How This Short Covering Squeeze Will Play Out

In light of continuing deterioration in macroeconomic data (we don't remember when the last time was that we had a materially better "than expected" data point) many are left wondering how it is possible, that when seeing broad signs of capitulation even among the permabullish contingent, the market has resumed its ceaseless levitation. Simple - as David Rosenberg recaps our post from two days ago, "Short interest on the NYSE and Nasdaq surged nearly 4% in the second half of August; these positions are now being squeezed, which is the "buying" support" the market has been experiencing in the low-volume rally of the past few sessions." Indeed, as long as the weakest hands who piled on the shorts into the latest market plunge are not cleared out, the current episode of no-volume levitation will continue. Sprinkle one or two favorable headlines which sends the robots into a frenzied bullish bias churn, and one can see why it may be time to whip out Birinyi's ruler.

An Odd Spike In General Collateral

By now most are used with rates for General Collateral and the OTR 10 Year particularly to trade at quite depressed levels. After all, with continued problems in European funding markets, there is little place for traditional capital to go than good old safe US repo markets. One need to just read the latest from collateral expert Joseph Abate of Barclays to find what the consensus on the matter is. To wit: "Higher bank funding rates, however, are unlikely to attract much demand from money market funds. Instead – and as they have done all summer – we expect prime funds to shorten their average WAM (from 39d currently) and to shift their asset allocations further toward repo, bills, and agencies, which already account for 30% of their holdings. We also expect prime funds to increase their already extremely high (46%) 7d liquidity buffer. In addition, money fund investors are likely to make some adjustments of their own – shifting balances out of prime funds into government-only balances. Some of the more risk averse money is likely to flow into non-interest-bearing demand deposits, which have unlimited FDIC insurance coverage through the end of 2012." On top of this there are technical considerations for even lower repo rates: "More immediately, dealers are preparing for quarter end. The normal end of quarter balance sheet repositioning (and shrinkage) is expected to further pressure overnight repo with collateral rates expected to stay pinned below 5bp through month end. Demand for term repo will also pick up as investors seek to pick up a few extra basis points." The same is just as true for the 10 Year OTR which "has traded deeply special given its limited supply – both in the market (as the first issuance) as well as in the Fed’s SOMA lending program. In recent days the issue has traded at a 250bp or more premium to GC." Yet something interesting happened in the actual General Collateral rate as of yesterday: it soared, despite both fundamentals and technicals, to the highest level since fears of an imminent US bankruptcy brought it to year highs in the first week of August.

This Intervention REEKS of Desperation

Posted by : Phoenix Capital...

Post date: 09/15/2011 - 12:24

The primary problem is that the world Central Banks continue to intervene to prop the markets up. We had a global intervention earlier today… forcing the US Dollar to collapse while the Euro...

WSJ Video Interview: Asia & China

Admin at Jim Rogers Blog - 42 minutes ago

*Jim Rogers is an author, financial commentator and successful international investor. He has been frequently featured in Time, The New York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The Financial Times and is a regular guest on Bloomberg and CNBC.*

ECB to provide banks with dollar loans

Eric De Groot at Eric De Groot - 43 minutes ago

Here we go again, QE(n) to infinity on a global scale. Since the problem is not liquidity but rather (failing) debt, capital will continue flow out of Europe into various safe havens. As long as return of capital takes precedence over return on capital, gold will be one of many safe haven destinations. Headline: ECB to provide banks with dollar loans FRANKFURT, Germany (AP) -- The European... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]

China to 'liquidate' US Treasuries, not dollars

Eric De Groot at Eric De Groot - 1 hour ago

The Chinese certainly can their marginal purchases of US Treasuries, but partial or complete liquidation could prove difficult in the real world. For starters, to whom do they plan to sell? Also, how could they execute large sales without alerting the market of their intentions? The market is very efficient at front-running liquidation efforts. Headline: China to 'liquidate' US Treasuries,... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]

The Real World Is Becoming Expensive For Most Americans

Eric De Groot at Eric De Groot - 4 hours ago

The real world, hampered by the inability to eat iPads or other small electronic devices, is growing more expensive each day. CRBFoodstuffs And Year-over-Year (YOY) Change Headline: Consumers, restaurateurs feel pinch of rising food prices Sue Lednicky has been a wary observer of grocery prices' recent steep climb. "It's getting ridiculous to buy food," she said. "It's painful. I was just... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]