Long Wave Theory Blog

This shouldn’t come as a surprise to anyone.  Let’s see how the market reacts.  I’ve been completely baffled why the Market has shrugged off the bad news for the past 5-6 weeks.  Perhaps people are tired of the stream of bad news.  If so, they’re not ready to handle what’s still to come.

Foreclosure filings jump 24% in first quarter over last year – Apr. 16, 2009 .

This is a fantastic article linking the CDS implosion to the same behavior that caused the 1907 financial panic.

FT.com / Comment / Opinion – We modernised ourselves into this ice age.

Denninger sums it up quite well:  We need a miracle and fast, or this economic crisis will make the GD look like a day at the beach.

Three Month Wrap-Up (1Q 2009) – The Market Ticker.

There’s really nothing to say here, except wow!  We’ve committed $10 Trillion to fixing our economy–mostly financial services catastrophes mind you–and we are not any closer to getting out of this mess.  That’s almost a year’s GDP.  Wake up people.  The situation is dire.

Who is getting the bank bailout money – CNNMoney.com.

More insanity coming from our Treasury Dept.  Why have no charges been brought against AIG?

naked capitalism: Wiliam Black Savages Treasurys Conduct on AIG.

So, yes the FDIC has been in this position before.  But this time it is worse.  It’s deeper, there’s no end in sight to the carnage.  Very scary indeed.  If people think there’s no gov’t security on their depository accounts, we’re in for a major period of social upheaval.  The news every day grows bleaker and bleaker.

FDIC warns US bank deposit insurance fund could tank.

This is a ticking time bomb for companies that are relatively stable.  The state pension funds, like New York State Teachers Retirement Fund, CalPers, and others are in even worse shape.  And people really think we’re going to have a recovery any time soon?

Caterpillar News | Chicago Business News, Analysis & Articles | Pension bombs going off | Crain’s .

If you’ve been following along with the situation in Eastern Europe, you know what’s at stake.  While this isn’t really much of a surprise, it does not bode well for the stability of the EU.

Merkel rejects bailout plan for eastern EU nations.

Barry Ritholtz offers a great analysis of the UST’s woefully mistaken move to invest more in Citigroup.  Here’s what Ritholtz says about our initial 7.8% investment back in October:

That $45 billion dollar stake now has a market value of just over a billion.

Why hasn’t Citi gone FDIC mandated chapter 11?  My guess is Geithner and Summers are afraid that because Citi is so huge, has so many tentacles around the world and has so much sovereign wealth ownership, they’re worried they can’t get a proper work out, so they’re willing to throw as much money as needed into the company.

Unfortunately for the American taxpayer, all it will do is put us deeper in the hole.  You can’t sew a silk purse from a sow’s ear.

Citigroup: World’s Worst Investment to Get Even Worse | The Big Picture.

This article speaks for itself.  Mish Shedlock is, again, right on target.  A great open letter to the President that lays bare the inconsistencies and failures of the administration to truly grasp our problem.

Mish’s Global Economic Trend Analysis: Dear Mr. President, With All Due Respect …..

Here are some of the better excerpts, but I urge you to read the whole article. On the twisted logic of getting the banks to lend:

With all due respect Mr. President, you and Congress want to force banks to lend when banks (by not lending) are acting responsibly for the first time in a decade. Mr, President can you please tell us who banks are supposed to lend to? Do we need any more Home Depots? Pizza Huts? Strip malls? Nail salons? Auto dealerships? What Mr. President? What? And why should banks be lending when unemployment is rising and lending risks right along with it?

And on our military budget:

With all due respect Mr. President, The United States spends more on its military budget than the next 45 highest spending countries in the world combined; The United States accounts for 48 percent of the world’s total military spending; The United States spends on its military 5.8 times more than China, 10.2 times more than Russia, and 98.6 times more than Iran. Isn’t that enough Mr. President?

And the one observation I think is most critical, because it gets to the root of the problem with the Obama administration:

With all due respect Mr. President, Tim Geithner and Ben Bernanke are offering the same policies as President Bush and Secretary Paulson. Those policies are to bail out banks regardless of cost to taxpayers. Mr. President, it’s hard enough to overlook Geithner’s tax indiscretions. Mr. President, it is harder still. if not impossible, to ignore the fact that neither Geithner nor Bernanke saw this coming. Yet amazingly they are both cock sure of the solution. Even more amazing is the fact that solution changes every day.