Clusterstock:House Price Crash Finally Beginning To Ease

Clusterstock:

Good news! The rate of the price decline in the housing crash has finally begun to ease.

Bad news! Prices are still falling 18% year over year.

Specifically, in April, according to the Case Shiller index, the rate of decline in nationwide house prices eased slightly in April--to 18% from 19% in March. The rate of decline has hovered around 19%-20% for the last several months. And prices have now declined a staggering 33%-34% from the peak.

The Don Coxe weekly comment. june 26

click here to for Don Coxe

Whoops what happened to inflation?

These charts illustrate the problem facing the central bank in a sharp correction in the economy. no matter how much money they inject into the market if no one wants to spend the money ( refusal of velocity to increase) then growth won't be inflationary.
charts courtesy of Bloomberg and Bank Credit Anayst.

Glover Wins Open!!

Congartulations to Lucas Glover for standing up to tremendous pressure to win the open. With Michelson on his tail and the shocking story of Duval being competitive again Glover maintained the poise he showed all week for only his second PGA win. The only thing I know about him is one of the announcers, Miller maybe, said he is the best driver on tour and probably the best since Norman if he can keep it up for another ten years or so.

Obama Power Player Chicago Style

Chicago politics should make Louisiana jealous and now our new President brings the same brand of clout politics to Washington. The national media sold out to Obamamania during the election that they are too embarrassed to do their job as the watch dog of government. After all they risk not being invited to the next celebrity party if they challenge Obama or Rahm Emmanuel. John Kass gives the details in the Tribune:

It's amusing to watch the Washington political establishment feign shock, now that President Barack Obama's reform administration has used a clay foot to vigorously kick one inspector general and boot another out the door.

One inspector general foolishly investigated a friend of the president. Another inspector general audited those juicy bonuses given to AIG executives as part of $700 billion federal bailout of the financial industry.

read it all.

June 19 Donald Coxe Webcast

Donald Coxe's Weekly Webcast

Mike Shedlock and Martin Weiss show evidence of Deflation

A very good article on the size deflating credit and a strong answer to the inflationist fear of imminent inflation. I do not know Mike Shedlock though I have read his blog for quite a while and he has been very good. I do know Martin Weiss for over 30 years and his work is exemplary and thorough. So I commend this article wholeheartedly.

Flow of Funds Report Offers Hard Evidence of Deflation

It’s all in the Fed’s Flow of Funds Report for the first quarter of 2009, which I’ve posted on our website with the key numbers in a red box for all those who would like to see the evidence.

First and foremost, the Fed’s numbers demonstrate, beyond a shadow of a doubt, that the credit market meltdown, which struck with full force after the Lehman Brothers failure last September, actually got a lot worse in the first quarter of this year.

The treasury and the Fed are trying to reflate as fast as possible and that is the correct approach if one has the stomach to pull that money back when positive results are achieved. Unfortunately the Pelosi crafted stimulus bill does not focus on productive infrastructure rebuilding of the electrical grid, bridge and highway repair, or repair and update of the rapidly aging water and sewer systems of our major cities. All of those projects are huge and necessary and would create jobs that will payoff for the economy over long time periods. Instead they are using the money to payoff political supporters and buy votes from the least productive portions of our society.

Pimco: Paul McCulley's Lattest

Global Central Bank Focus

Paul McCulley | June 2009

The Exit Strategy: It’s About Hiking the Fed Funds Rate, Not Necessarily Soaking Up Excess Reserves

$134 BILLION IN SUITCASE

William Pesek with a great and possibly scary story out of Bloomberg: a must read.

June 17 (Bloomberg) -- It’s a plot better suited for a John Le Carre novel.

Two Japanese men are detained in Italy after allegedly attempting to take $134 billion worth of U.S. bonds over the border into Switzerland. Details are maddeningly sketchy, so naturally the global rumor mill is kicking into high gear.

Are these would-be smugglers agents of Kim Jong Il stashing North Korea’s cash in a Swiss vault? Bagmen for Nigerian Internet scammers? Was the money meant for terrorists looking to buy nuclear warheads? Is Japan dumping its dollars secretly? Are the bonds real or counterfeit?

The implications of the securities being legitimate would be bigger than investors may realize. At a minimum, it would suggest that the U.S. risks losing control over its monetary supply on a massive scale.

This is a very important story with real potential for currency chaos go read it all.

update: A Treasury official reports the securities are counterfeit. They exceed the amount of bearer bonds even issued.

Donald Coxe and his June 09 Basic Points

basic points for June 09

Obama Aministration Starts New Power Grab

Bloomberg:

Obama Administration to Seek New Power for SEC on Executive Pay

June 10 (Bloomberg) -- The Obama administration will seek
new powers for the Securities and Exchange Commission to force
firms to let shareholders vote on executive pay and make
directors who set compensation more independent, an
administration official said.

Today’s proposal, subject to congressional approval, would
cover all public companies. President Barack Obama has long
supported giving shareholders nonbinding votes on bonuses,
salaries and severance packages. The administration also will
name a “special master” to monitor compensation plans for
firms receiving exceptional assistance in the financial rescue.

Shareholders already have the right to influence public company management policies but they don't because institutional portfolio managers who direct most of the votes pay no attention to corporate policy. They don't want to spend the money to pay attention to real management because it would dilute their profits from the management fees. As a consequence corporate executives in place effectively have no opposition and can loot the shareholders at will. The answer is not to empower socialist leaning government bureaucrats to be given a say in corporate pay. This is bad, very bad.

bond yields rising

Bloomberg:

U.S. Stocks Fall on Concern Over Bond Yields, Rising Fuel Costs

Don Coxe conference call

Mr. Coxe call here jun5

Bloomberg: Obama Tells American Businesses to Drop Dead: Kevin Hassett

Kevin Hassett on Bloomberg lays it out today and he is dead right.
I give you the first bit but click here for the entire article.

June 8 (Bloomberg) -- I’ve finally figured out the Obama
economic strategy. President Barack Obama and his team have been
having so much fun wielding dictatorial power while rescuing
“failed” firms, that they have developed a scheme to gain the
same power over every business. The plan is to enact policies
that are so anticompetitive that every firm needs a bailout.

Read the rest because he is dead on and it is dangerous.

Smart Car- The New Look Options

Take a look at these:
http://mymbonline.com/forum/viewtopic.php?p=425818

Iowahawk Unveils The 2012 Pelosi GTxi SS/RT Sport Edition

Here it is the Pelosi mobile

Update: I forgot to link to Iowahawk so here it is.

Donald Coxe conference call from 5/28/09

conference call link

Mr. Coxe on the big treasury break.

Obama Sends The Message That Investors Are Not Wanted

Bloomberg: click on Bloomberg to read it all
This article by David Reilly is the best I have seen on the truly dangerous direction the Obama administration taking the Federal Government. This is Chicago style pay to play politics and a quantam leap in the growing corruptibility of Washington.

No Bond Safe From Obama’s ‘Shared-Sacrifice’ Plan:

Bondholders have a new risk to
contend with -- the Obama administration’s policy of “shared
sacrifice.”

The government’s approach to the bankruptcies of General
Motors Corp. and Chrysler LLC illustrates how this new, unstated
policy works: Bondholders are told to give up legal rights, and
cash, as part of a government-mandated tradeoff that favors a
politically connected special-interest group.

and,

As Singer lamented, when that happens, capital tends to
find a new home. That would be worrisome, given that the U.S.
needs to raise trillions of dollars to fund all the Obama
administration’s bailout and stimulus plans.

In the meantime, debt investors will have to consider new
risk factors when weighing an investment. These include the size
of a company’s workforce; the proportion that is unionized;
whether or not the company, or a sizeable part of the unionized
workforce, is in a political swing state; and whether it has
operations in the home district or state of an important
congressional committee chairman.

The GM case showed that these issues, not usually
considerations for investors, can be just as important as a
bond’s yield-to-maturity or covenants.

and, bondholders who were owed $27 billion while the Unions health trust was owed $20 billion yet look at the settlement results:

The deal certainly didn’t represent, as Obama said during a
Monday press conference, an “equitable outcome” for
bondholders.

Bondholders were given a 10 percent stake in the new GM and
warrants to purchase additional shares down the road. The
employee trust fund, meanwhile, received a 17.5 percent equity
stake, as well as $6.5 billion in new preferred stock. This
preferred stock pays a 9 percent dividend. So the trust will
receive $585 million each year, while bondholders stew.

No Fair Shake

Much of the ultimate recovery for bondholders and the trust
depends on the value ascribed to GM’s new stock, years into the
future. No matter how you cut it, though, bondholders don’t get
a fair shake.

“The UAW gets a recovery of five times the bondholders’
under reasonably upbeat scenarios,” CreditSights Inc. analyst
Glenn Reynolds wrote in a research note. “This is just the
fact.”

This is a deal worthy of Rod Blagoievich. The message is Barack Obama doesn't care what the law is, he cares only about buying votes. The protection of indiviual rights and the rule of law in the United States have fostered the greatest improvement in the quality of life in the history of the world and our President and his minions have rejected that philosophy in favor of policy actions that will lead to a Vladimir Putin and eventually to a Saddam Hussein. Whe the rights of the individual to protection from the majority are lost then one is simply a slave to the whims of the government.

Rupee gains on Yuan

Bloomberg

The CHART OF THE DAY shows the trade balances of the
world’s two most-populous nations and the exchange rate of their
currencies. The rupee climbed 6.2 percent against the yuan in
May, the biggest monthly gain in at least a decade, as India’s
trade deficit narrowed by 49 percent since November, while
China’s surplus fell by 67 percent. Exports are equivalent to 15
percent of the Indian economy, compared with more than 60
percent in China.

.

As Dondald Coxe remarked in his commetary a few weeks ago, the Indian election was a watershed for freemarket reform in India.
The country should enjoy very strong capital inflows going forward and the lack of dependence upon export trade should partially
insulate India from the global economic turmoil.