Stimulus payments result in record May deficit

From the AP:

http://biz.yahoo.com/ap/080611/federal_budget.html?.v=2

Economic stimulus payments push May budget deficit to an all-time high of $165.9 billion

This is why government subsidies, bailouts, free tickets and the such are a rediculous prospect when the government has NO FING money. If you want to know why oil is at $135 a barrell and the US$ is tanking, look no further than the national debt. The ever-growing, all encompassing, monster national debt. That number for May is just ludicrous and that doesnn't even take into consider proper GAAP accounting for liabilities. Based on legitimate estimates, the country is now looking at over $100 TRILLION in national debt if you include legitimate liabilities like social security, medicare, medicaid, pensions, etc..., etc... There is absolutely no foundation for the US to have AAA rating on its debt, as the only legitimate way it can pay for it's debt is by creating more debt. Isn't that the beauty of a fiat currency? It is the ultimate check kiter's dream. An endless bank account that you can continue to draw against forever (or in the case of all other fiat empires before us...the currency and economy collapses). Which do you think is going to happen? I think you can already tell what is happening.

Merrill cuts Lehman rating a week after upgrade

Whooocoooodanode???

http://www.reuters.com/article/hotStocksNews/idUSN1135424920080611

Why the fuck do they pay these worthless bags of flesh that pass for financial analysts? Anyone with half a brain and a heartbeat could analyze these companies and see how much trouble they are in. The curtain has been pulled back on the wizards, but they keep hyping regardless of what everyone sees. Just amazing to me.

People...listen up. The financial firms are fucked. Pure and simple. Don't listen to the hype and please don't try and catch falling knives. These are stocks to stay aways from. Bernanke is clueless, spineless and is in his own little academic world that looks nothing like the real world.

We're getting awfully close to another Bear Sterns type implosion. Lehman and Merrill Lynch are two that look prime. Lehman is really looking like it might go down quickly. The fed has put up a big backstop, but the losses are mounting in rapid fashion. Only half way there as well. Hang on to your nipples, it's gonna get wild.

Knowns vs. Unknowns

What scares me now about the economic predicament we are in is that everything that has happened so far is what I consider a "known". All of this has been very predictable to anyone who took the time to research and analyze the wealth of good information that is available. You just have to peel the layers and ignore the main media and government statistical lies. In fact, the upcoming shoes to drop which will continue the spiral are also knowns. This WILL get much worse before it levels off.

The unknowns are what scare me. Terrorist attacks, Iran, Russia and China power plays, famine driven instabilities, hurricanes, earthquakes. None of these things can be anticipated easily. As bad as things are now and will continue to get, if you add one of the "unknowns" to the equation you could see things explode. It's a scary thought that we are teetering on the brink of an economic collapse and not one external unknown has provided much of an impact...yet.

Sunday morning walk of shame

The markets and investors are finally waking up and it's not pretty what they're in bed with. The final realization that the Fed cannot win this battle is slowly settling in and the prospects for the economy are a no win situation. Inflationary pressures have put the kibash on rate cuts, so the fed will have to back-off on bailing out the banks any further or risk a dollar crisis and commodity explosion. If the Fed raises rates though, the markets will collapse and the dominos will lead to an implosion in the financial industry. You're seeing the effects of the realization in markets worldwide both in equities and bonds. The US is really in a bad situation right now. All hope has been placed in the fed and they know, as well as anybody else who has a sense of what is occuring, that they can't fix this.

The fed's allegiance is to the banks, so I find it hard to believe they will capitulate to the inflationary pressures. Any rate hike would be minimal at best and probably followed by a quick reversal. I anticipate the fed will try and sit on their hands, pump up the alphabet soup crutches and minimize the dollar crisis through strong-arm tactics. This will continue to feed the fall in the dollar and surge in commodities.

We truly are in a rock and a hard place right now. Look for turbulent times in the market as investors whipsaw from one position to another. It will be a rocky road until the ultimate fate is sealed one way or another.

I'll be working on a strategy that hedges on both scenarios. I'll write it up later down the road.

Na na na naaa, na na na naaa, hey hey hey, good-bye

Lehman posts $2.8 billion loss

Arivaderche, sayonara, adios, asta la vista, stick a fork in them. It's over baby. The fat lady is singing and she's sitting in front of an all you can eat buffet. Atleast they'll go out with a bang.

Lehman posted it's first losing quarter (yes QUARTER) ever, but boy was it a doozie. More than $5 per share in losses is quite a turnaround from profitability. This company will be lucky to be in existence within the next 6 months. It's guaranteed they are toast by 2010. The most likely outcome is they prop themselves up like Weekend at Bernies until they can manage a firesale to another sinking ship. Worst case scenario is we see another Bear Sterns attack on their liquidity forcing another "bailout". That would happen within 6 months if it does, maybe sooner.

How a company can buy back their own shares at the end of last week and then turnaround with 5 days and go cap and hand to the public with another offering is beyond me. That is plain and simple balance sheet suicide. Historians will note the similarities betwen this move and what financial institutions did during the Great Depression. It wasn't uncommon for banks to buy back their own shares to prop up share value. This was praised initially until people realized it was harikari by slower means. Not a good sign then and certainly not a good sign now. Companies are pulling out the same playbook as in 1929 and it didn't work then.

Bloomberg goes Gloomberg

This article is almost more pessimistic then I am. It touches on a frequent topic of mine, the decline wealth and standard of living in America.

Wealth Evaporates as Gas Prices Clobber McMansions

Choo...choo!!!

I ranted yesterday about the rediculous runup in the market on a mirage of an employment report. Looks like that light at the end of the tunnel was a high speed train and not a freight.

Anybody else short the false rally late yesterday?