Rice Closes Limit Up
by Zero Hedge - January 31st, 2011 4:15 pm
Courtesy of Tyler Durden
Stocks closed nicely up, and why not: the investing public which is now bored with any revolution longer than 15 minutes did not see things burning, people getting shot or buildings getting blown up (and there was that whole Flip That Bond thing earlier) so it makes all the sense in the world. Yet a far more notable move was that of Rice, which traded more or less as expected earlier in the day. As can be seen on the chart below, RRH jumped by 50 cents, the maximum allowed before a limit up lock, to close $15.51 on the CBOT, which is 5.5 cents away from the one year high. We are fairly confident that tomorrow we will see a new 52 week high, as evil, evil speculators decide to go for the ultimate PBOC put. But before that happens, if we are correct that the world’s spec crowd will test the inflationary equivalent of the global Bernanke put, it will go far higher. And when Al Jazeera starts sending riot pictures not from Egypt, but from the heart of Asia (consumption data here), we are 100% confident it will get very messy, very quick.
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DiggFlorida Judge Declares Entire Healthcare Law Void
by Zero Hedge - January 31st, 2011 3:35 pm
Courtesy of Tyler Durden
After a month and a half ago, a Virginia Judge found a key provision of the healthcare law unconstitutional, today Roger Vinson, Judge in a federal district court in Florida has found the entire healthcare law void.
From TPM:
A federal district court judge in Florida ruled today that a key provision in the new health care law is unconstitutional, and that the entire law must be voided.
Roger Vinson, a Ronald Reagan appointee, agreed with the 26 state-government plaintiffs that Congress exceeded its authority by passing a law penalizing individuals who do not have health insurance.
“I must reluctantly conclude that Congress exceeded the bounds of its authority in passing the Act with the individual mandate,” Vinson writes. “Because the individual mandate is unconstitutional and not severable, the entire Act must be declared void.”
And some more from Bloomberg:
President Barack Obama’s health care law, assailed as an abuse of federal power in a 26-state lawsuit, was ruled unconstitutional by a U.S. judge who said Congress overstepped its authority to regulate commerce.
U.S. District Judge Roger Vinson in Pensacola, Florida, declared the entire law unconstitutional today in a 78-page opinion. He said the law’s provision requiring Americans over 18 to obtain insurance coverage exceeded Congress’ powers under the commerce clause of the U.S Constitution.
Florida filed suit on behalf of 13 states on March 23, the same day Obama signed into law the legislation intended to provide the U.S. with almost universal health-care coverage. Seven states joined the suit last year, and six this year. Virginia sued separately on March 23 and Oklahoma filed its own suit on Jan. 21.
“Regardless of how laudable its attempts may have been to accomplish these goals in passing the act, Congress must operate within the bounds established by the Constitution,” the judge wrote. “This case is not about whether the act is wise or unwise legislation. It is about the constitutional role of the federal government.”
The ruling by Vinson, who was named to the federal bench by President Ronald Reagan, a Republican, in 1983, may be appealed to the U.S. Court of Appeals in Atlanta. An appeals court in Richmond, Virginia, is already slated in May to hear challenges to two conflicting lower-court rulings in that
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Metals sending a sign?
by Chart School - January 31st, 2011 3:27 pm
Courtesy of Chris Kimble
CLICK ON CHART TO ENLARGE
Copper and Tin ETF’s continue to press higher. In the past industrial metals moving higher has suggested some better times are ahead for the economy. This time the message different?
Disconnected From the Internet, Egypt Goes 1994
by ilene - January 31st, 2011 3:24 pm
Courtesy of Jr. Deputy Accountant
I will never forget the first time I cranked up a 1200 bps modem and logged onto Prodigy: that skreeeeeeeeee-chik-chik-chik sound, the anxious anticipation, the unbelievable availability of a world I hadn’t yet experienced. Sure there were books in libraries before there was a WWW but the Internet offered places and people previously out of my reach and though it took an excruciatingly long time to get to things sometimes, it was all there and somewhat reasonable at $2.99 an hour. I can’t believe that was almost 20 years ago, my how time flies when you’re streaming endless amounts of porninformation via the precious tubes.
I couldn’t imagine being in the middle of total societal breakdown without the Internets. Thankfully Egyptians are a clever lot and don’t have to imagine such a thing either.
At least 30 different dial-up services are being offered to the Egyptian people to circumvent the shutdown, according to Paris-based French Data Network, a group founded in 1992 to make data accessible. The group opened up one such “small window” on the Internet network to help Egyptians access the Web.
“This is definitely an open attack from a state against the Internet,” the group said in a statement on its Web site. “FDN has decided to open a small window on the network.”
Internet traffic volumes in Egypt slumped in a “coordinated fashion” shortly after midnight on Jan. 28 after demonstrators took to the streets demanding the ouster of President Hosni Mubarak, according to Internet security firm Arbor Networks. More than 90 percent of Egypt’s Internet networks are currently down, the Geneva-based nonprofit Internet Society said today.
I remind dear reader that "They" have been trying to take over the Internet here at home for years. Each time the legislation seems to sputter and each time a new crop of Congressional asshats pops up with a new bill looking to install an Internet kill switch or otherwise regulate the wild world wide web. That’s like trying to regulate stars in the sky but don’t tell them that, they need something to do.
The latest is the Cyber Security and American Cyber Competitiveness Act (S. 21), sponsored by Senate Majority Leader Harry Reid (D-Nev.) and chairs of seven committees with jurisdiction over cybersecurity: Sens. Joe Lieberman (I-Conn.), Jay Rockefeller (D-W.V.), Carl Levin (D-Mich.), Patrick Leahy (D-Vt.), Dianne Feinstein (D-Calif.), John Kerry…
The Earth Shifts
by ilene - January 31st, 2011 3:20 pm
Courtesy of James Howard Kunstler
Those Panglossians around the USA awaiting something like an election in Egypt are going to be disappointed. What’s going on in the streets of Cairo right now is an Egyptian election – minus the American-style trappings of corporate grift, scripted "debates," and polling places that make our elections so satisfying.
Many here in the dreamland of Happy Motoring and Cheez Wiz are asking themselves why President Obama is waffling about the obvious tides of "change" now lapping over the ancient Kingdom on the Nile. How can he not believe in it? Why isn’t Mr. O out there in front with a bloody bandage around his head, cheerleading for the street fighters? If you lay aside the subtleties, the answer is simple: nothing beyond the status quo of recent years is good news for America.
For one thing, only people paid to flap their gums on Larry Kudlow’s nightly CNBC show, and children under nine years old, believe that anything like "democracy and freedom" will arise out of a street revolt in this region of the world. Sure, the opening acts of an historic event like this bring on mass intoxication that the Shining City or the Kingdom of Heaven or some other ideal disposition of things is at hand. There may even be an intermezzo of civil factional interplay, as we saw in Iran thirty years ago, with figures like Shapour Bakhtiar, Mehdi Bazargan, and Abolhassan Banisadr revolving through the turnstile of politics. It doesn’t take long for the turnstile to turn into a meat grinder, and it doesn’t take much vision to see all the things that can go wrong when that happens in that part of the world.
Before I go any further, I don’t want to be misunderstood by eager misunderstanders. In my view, President Mubarak has about as much chance of sticking around his presidential palace another fortnight as a bluebottle fly has of conducting the next Easter mass at the Vatican. Mubarak’s resistance to that message prompts one to wonder: what is it with these old despots that they can’t manage some sort of orderly timely transition – even if they handpick the successor dude.? There must be a few capable younger replacement despots in a country that large (around 80 million). Why does it always have to come to this?…
Treasury Sees $194 Billion Drop In Borrowing Needs Due To SFP Program Roll Off, Over Half A Trillion In Financing Needs For Jan-Mar Quarter
by Zero Hedge - January 31st, 2011 3:19 pm
Courtesy of Tyler Durden
Today, the Treasury issued its revised merkatble borrowing estimate. And while the last time the Treasury issued this forecast, it had expected a $431 billion need of marketable borrowing financings (while expecting a $454 billion total Financing need), this number has now plunged by $194 billion to $243 billion. But don’t be fooled that this is due to an expectation that treasury revenues are suddenly going to pick up. Oh no. In fact, total Financing Needs have increased by $49 billion to $503 billion for one quarter! The only reason why the marketable borrowing estimate has plunged is due to the roll off of the SFP program, which will bring down EOQ cash from a previous estimate of $270 billion to $65 billion, a $205 billion decline in cash. In other words, the Treasury now sees adding $237 billion in marketable debt to the total December 31 debt which means that the US will be close to breaching the debt ceiling by the end of March even with the SFP program roll off. What is amusing is that the Treasury now expects financing needs in Q2 to plunge from $503 billion to $258 billion, which in turn will need $299 billion in marketable debt to be issued over the April-June time period. We are willing to write naked CDS, and sell the TVIX against this number being revised by at least 20% at the next forecast revision, some time in late April.
Table summarizing this adjustment:
Full press release:
Washington, D.C. — The U.S. Department of the Treasury today announced its current estimates of net marketable borrowing for the January – March 2011 and the April – June 2011 quarters:
* During the January – March 2011 quarter, Treasury expects to issue $237 billion in net marketable debt, assuming an end-of-March cash balance of $65 billion, which includes $5 billion for the Supplementary Financing Program (SFP). This borrowing estimate is $194 billion lower than announced in November 2010. The decrease in borrowing relates primarily to a lower SFP balance.
* During the April – June 2011 quarter, Treasury expects to issue $299 billion in net marketable debt, assuming an end-of-June cash balance of $95 billion, which includes $5 billion for the SFP.During the October – December 2010 quarter, Treasury issued $363 billion
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Inflationary Holocaust Survival Guide
by Zero Hedge - January 31st, 2011 3:15 pm
Courtesy of Phoenix Capital Research
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The following is an excerpt from our FREE report detailing how to prepare one’s portfolio for the coming Inflationary Holocaust.
Are you ready for the Inflationary Holocaust?
As I’m sure you’re aware, starting in July 2007, the financial markets entered one of the most severe crises in history. And as the Crisis unfolded, the Feds (the Federal Reserve, Treasury Department, and the Federal Government) tried to prop up the financial system with numerous interventions. A brief recap of their moves are as follows:
- The Federal Reserve cutting interest rates from 5.25-0.25% (Sept ’07-today)
- The Bear Stearns deal/ Fed taking on $30 billion in junk mortgages (March ’08)
- The Fed opens up various lending windows to investment banks (March ’08)
- The SEC proposes banning short-selling on financial stocks (July ’08)
- Hank Paulson gets a blank check for Fannie/Freddie but promises not to use it (July ’08)
- Hank Paulson uses the blank check with Fannie/ Freddie spending $400 billion in the process (Sept ’08).
- The Fed takes over insurance company AIG (Sept ’08) for $85 billion.
- The Fed doles out $25 billion for the auto makers (Sept ’08)
- The Feds kick off the $700 billion Troubled Assets Relief Program (TARP) with the Government taking stakes in private banks (Oct ’08)
- The Fed offers to buy commercial paper (non-bank debt) from non-financial firms (Oct ’08)
- The Fed offers $540 billion to backstop money market funds (Oct ’08)
- The Feds agree to back up to $280 billion of Citigroup’s liabilities (Oct ’08).
- $40 billion more to AIG (Nov ’08)
- Feds agree to back up $140 billion of Bank of America’s liabilities
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Another Whitewash for Wall Street
by ilene - January 31st, 2011 3:05 pm
Courtesy of MIKE WHITNEY, writing at CounterPunch
Maybe "whitewash" is too bland of a term to apply to the Financial Crisis Inquiry Commission’s (FCIC) report, but it certainly doesn’t break any new ground. Nor does it achieve its real purpose, which is to figure out what triggered the financial meltdown and (hopefully) restore confidence in the system. It fails on both counts, and it’s not hard to see why. The investigative panel was clearly instructed to point out the dangers of insufficient regulation rather than focus on the massive incidents of fraud that were perpetrated by the bankers and other financial kingpins. It’s a clever way of blaming the system instead of the people who were responsible.
Here’s an excerpt from the report that’s been widely circulated in the media. It exposes the FCIC’s real agenda and shows that the commission is little more than a cover up.
"We conclude this financial crisis was avoidable. The crisis was the result of human action and inaction, not of Mother Nature or computer models gone haywire. The captains of finance and the public stewards of our financial system ignored warnings and failed to question, understand, and manage evolving risks within a system essential to the well-being of the American public. Theirs was a big miss, not a stumble. While the business cycle cannot be repealed, a crisis of this magnitude need not have occurred. To paraphrase Shakespeare, the fault lies not in the stars, but in us."
While this seems like an admission that crimes were committed, it’s really just the opposite. The authors are saying "We’re all to blame", which is pure baloney. The "captains of finance" didn’t simply "ignore warnings" or "fail to question, understand, and manage evolving risks". They deliberately stole a great deal of money from a great many people. Period. That’s a crime and they need to be held accountable. Unfortunately, the Commission uses the report to obfuscate the facts and confuse the public about what really needs to be done.
There’s a very good summary of the Commission’s approach via e mail on the naked capitalism website. It was written by Matt Stoller. Here’s an excerpt:
"I was on a conference call today with Phil Angelides and Brooksley Born, two commissioners of the Financial Crisis Inquiry Commission. During their unveiling of the FCIC report, they used words like deregulation, leverage, imprudent
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Paging Jim O’Neill: It Is Time To Revise The N-11
by Zero Hedge - January 31st, 2011 2:48 pm
Courtesy of Tyler Durden
About half a year ago, after it became painfully clear that the BRIC concept was dead (which has since become quite obvious with surging inflation and liquidity tightening across the board, and markets in China, India and Brazil reacting appropriately), the man who was subsequewntly sent to exlie to manage Goldman’s cloaca division, the GSAM which carries about the same clout on Wall Street as Bank of Lynch, penned the term “N-11.” Supposedly, these were the countries that were expected to carry the world to the next massive leverage induced consumption boom. As a reminder: here are the countries: Bangladesh, Vietnam, Egypt, Iran, Pakistan, Indonesia, Nigeria, Philippines, Mexico, Turkey, Korea. Well… make that N-10 now… And soon to be N-0, as the policies of Jim’s drinking buddy, Gen(ocide) Ben, become fully transparent to the developing world. That said, the N-11 list (RIP) is a great indicator of where speculator should be bidding all CDS to the limit up hilt (we jest… obviously CDS has no limit up locks… Unlike rice – which just hit one).
For those who enjoy an after martini lunch laugh, here is our then take on Jim’s most original contraption.
Now That Jim O’Neill’s BRICs Are A Dud, Here Comes Goldman’s Next Straw Man: The N-11
Earlier we reported that Jim O’Neill has finally capitulated on his China uberalles prediction. Not a few hours pass, and Goldman is already back to spinning the great illusory strawman of the next growth “dynamo” – enter the N-11, or the “the ‘next 11’ emerging economies that—after the BRICs—have the potential to rival the G7 as a source of global demand and sustained growth.” Because Goldman knows all too well that two wrongs make a much bigger right. As to which bottom dwellers are supposed to pull America and the insolvent developed world, prepare to be regaled with the following brilliant selection of N-11 participants: Bangladesh, Vietnam, Egypt, Iran, Pakistan, Indonesia, Nigeria, Philippines, Mexico, Turkey, Korea. Good luck with that Jim: we cant wait for the Non-Ch 11 200 next, or all the countries in the world that don’t have a debt/GDP ratio of over 100%. We are sure that the entire world, ex the developed and BRIC countries, will pretty soon serve as the economic dynamo to push the world forward, and beyond the bankruptcy of your heretofore favorites. We promise…
The FCIC Report: Sound and fury, signifying nothing
by ilene - January 31st, 2011 2:34 pm
Courtesy of Steve Keen, of Steve Keen’s Debtwatch
I’ve just wasted a perfectly good day reading the report of the Financial Crisis Inquiry Commission–the body appointed by Congress allegedly to inquire into what caused the Financial Crisis.
What it has delivered reads more like an unedited thesis by a journalism student (who is about to receive a “C” grade). There are plenty of quotes, lots of detail, some nice section headings and a few pretty graphs, but absolutely no analysis worthy of the name.
And I thought the WEF report on credit was bad… At least that report actually considered the level of credit and the role of credit in a market economy. It had simplistic assumptions and reached simplistic conclusions, but at least it engaged with the topic, and its attempt to devise metrics for measuring the degree of credit stress deserved some praise.
But this FCIC report was simply a waste of time. All I got out of the entire tome was one good analogy about why the ratings agencies (Moody’s and the like) got the probabilities of defaults by mortgagors so badly wrong:
In rating both synthetic and cash CDOs, Moody’s faced two key challenges: first, estimating the probability of default for the mortgage-backed securities purchased by the CDO (or its synthetic equivalent) and, second, gauging the correlation between those defaults—that is, the likelihood that the securities would default at the same time.
Imagine flipping a coin to see how many times it comes up heads. Each flip is unrelated to the others; that is, the flips are uncorrelated. Now, imagine a loaf of sliced bread. When there is one moldy slice, there are likely other moldy slices. The freshness of each slice is highly correlated with that of the other slices. As investors now understand, the mortgage-backed securities in CDOs were less like coins than like slices of bread. (p. 145)
But that’s about it: otherwise there’s lots of detail, and almost no insights worth even commenting upon. To my surprise, I found myself siding with the dissenting members of the Commission–not because their analysis was much better, but because they had the honesty to describe the majority report as simply useless. As one of the several dissenting reports put it:
The majority’s almost 550-page report is more an account of bad events than a
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
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