Tuesday, June 30, 2009

The Heat is On!

I will be fairly brief tonight because I am BEAT.

I had to turn off CNBC several times as I travelled today because I just couldn't take the "green shoots" talk anymore. Thank god my Sirius has so many other channels that I can switch too, although my selection was limited today because Howard Stern is on vacation.

Oh well.

The desperation that I see everyday as I watch our bubble economy fall apart is beyond what I could ever have imagined.

Its going to take at least one generation before people ever trust Wall St again. I believe we will see the first signs of anger from the public when this bear market rally fades.

I say this because I see a lot of people struggling all around me.

Everyone that I know in sales says they have never felt so much pressure. Everyone of my contacts on Wall St says that things are deader than a doornail. There are no credit markets anymore. Securitizations are non existent. Trust me when I say this because one of my sources worked in the credit markets until his company literally evaporated in a matter of weeks when the credit markets seized up in 2006.

The crap the press is slinging around these days is shameful. The old "grass roots" reporting that helped keep our politicians honest has now been replaced by "green shoots" reporting. The airwaves are filled with false hopes and blatant lies. Our markets are now manipulated by the crooks on the street who created this financial catastrophe.

With one day left in my poll above, the majority of you say you won't touch these markets again until they are cleaned up. The miniscule volume seen daily in the markets pretty seems to be right in line with how people are feeling here on THTB.

What's dangerous about everyone leaving the market and sitting in cash is it shrinks the stock market. This makes it much easier to manipulate on a daily basis.

Markets tend to crash when they run dry of liquidity. This is what happened in 1987. Folks, I don't think we could have any less liquidity versus where we are trading at then we have right now. We have seen a 30+% bounce based on absolutely NOTHING!

The Russell is up 45%. This makes absolutely ZERO sense as we watch the consumer tank as they lose their jobs. We saw more evidence of this in the consumer numbers today.

In other news, it was reported on CNBC that the PPIP may only take about $50 billion off of the banks balance sheets. I laughed hard when I heard that one. What a joke! That's like a fly on an elephants ass! There are trillions of losses in the banking system that must me MARKED TO MARKET before we can even think about a recovery.

The PPIP is turning out to be nothing more then just another piece of hype.

The ONLY thing propping this market up is the Fed's balance sheet.

Making matters worse:

We have less and less transparency everyday when it comes to our accounting rules. When you hide the losses and ignore all of the rules that were designed to keep the markets honest, you are asking for a total disaster. There are practically no regulations in our capital markets at this point. Its all about hiding the losses and kicking the can down the road!

The bubble analysts love to point out that "Our banks are now profitable".

I say so what? They have been allowed to hide their trillions in losses so whats your point?

Do any of you on here want to own a stock that makes millions per quarter that has billions in bad debt? I already know your answer and oh by the way: No thanks, I'll pass as well.

The reason we are seeing so little transparency is because its becoming increasingly more difficult for the Fed's to hide this godawful economic disaster.

The Fed's Hoenig said it best today as he trashed the Ben's approach towards fixing this mess:

"WASHINGTON (MarketWatch) -- Thomas Hoenig, the president of the Federal Reserve Bank of Kansas City, was critical of the government's "ad hoc" rescue efforts during the financial crisis, saying that the actions have institutionalized the concept of too-big-to fail in our economic system. Fed chief Ben Bernanke has argued that he, and others, acted like the emergency crew that saved a burning home before it destroys an entire neighborhood without asking whether the fire was started carelessly. In response, Hoenig asked "if the fire was started by a homeowner who ignored fire codes and smokes in bed, should the neighbors be required to rebuild the home at twice its original size at their expense?"

Bottom Line:

Here here Mr. Hoenig. Perhaps you can speak up and try and talk some sense into your counterparts at the next Fed meeting.

I don't know how this will all end folks. All I know is it's going to be very painful. We cannot hide the skeletons in our closet forever.

Plug your ears and ignore all of the recovery talk. Things are bad and getting worse.


CT-Hilltopper said...

Isn't it horrible to be on the road all day, see the horrible things that are happening out there with your own two eyes, and then come in to the sanctity of your own home where your ears are assailed by the nonsense of any of the government mouthpieces residing at CNBS, blatantly contradicting everything you have come across and contradicting all the people you have talked to during your day?

That's the most aggravating thing in the world, and it just exhausts you to the bone.

I often wonder if I'm existing on some alternate universe from these assholes, because no one could possibly pay me enough money to come on TV and lie this blatantly to the American people day after day with a smile on my face and a swing in my step. No wonder so many of these people have to take drugs to make it through the day. If I had to listen to myself say all the bullshit they say, I'd want to be under the influence of narcotics too, the stronger the better. Especially when I stopped to consider that what I was saying might be the words that might be suckering the next middle class high roller into wiping out his portfolio in a manipulated market.

Every day another layer of the onion gets removed...another round of job cuts at this plant, another round of hour cuts at this retailer. The economy is being destroyed around us even as we speak...the math is waiting for no one. People are waiting for the big implosion, but it's happening in increments, slowly.

Get some well needed and deserved rest, Jeff. I hope you sleep well.

Flipdippy said...

It will work until it doesn't. It sucks knowing you are in the right but it may take months or years.

I feel bad for all the white collar workers 50 and older. I don't know what the hell they are going to do - they are being shed from all companies and all sectors either to get rid of their higher salaries or just because of layoffs. Many will probably never work again. Those are probably sleeping poorly thinking about their lost home equity, cannabilized retirement accounts, reduced social security and the prospect of higher taxes and costlier healthcare.

I remember when I got out of college it seemed like everyone went to work in tech regardless of whether you were an engineer or whether you studied english lit. Then after the dot bomb it seemed like within a year everyone that had no business working in tech was a realtor or a loan processor or a mortgage broker. Now I see people who were lawyers and software engineers and realtors etc etc showing up as government contractors or govt sales or govt workers. The ones who still have jobs in the tech world seem to all be working on govt engagements or they are literally sweating each day will be their last.

I must not be smart enough to see why the powers that be see recovery in the works. Before I read your post I saw Google's CEO all but said recession over and let the good times roll.

We will see how the next year goes but it wouldn't suprise me if we are in the eye of the storm and the shit is evaporated on contact as it hits the fan.

Jeff said...

Thanks CT

I think I will tonight.

Jeff said...


Richard Russell said it best tonight when it comes to the market:

"the market always does what it is supposed to do, but never when it is supposed to do it"

If you want a great read everyday subscribe to him. The guy has been writing about the market for over 50 years.

What a great story teller he is.

theART said...

This is by far one of my most fav movies, watch these outtakes in order:

#1 http://www.youtube.com/watch?v=90ELleCQvew

#2 http://www.youtube.com/watch?v=MTN3s2iVKKI

#3 http://www.youtube.com/watch?v=RzSj1yNZdY8

Jeff said...

the ART

Great stuff and thanks for sharing.

The Fed may be toast when this is all said and done. Lets all hope so.

I am tired of bankers.

Toney said...

I've come to believe the administration's approach is guided by the following (false) premise:

Given sufficient time, the banks will "earn" their way out of their insolvency as housing recovers, toxic assets are no longer toxic, and the economy recovers.

Fed liquidity will remain in the system until it becomes obvious (probably due to escalating interest rates and/or a collapse of the dollar) the approach will not work. It's also dependent on the public buying into green shoot, Tooth Fairy economics.

Eventually, she goes down by the head.

Peter said...

I had a friend tell me that at least the Fed saved the banking system. It's amazing what people will believe.

I think Hoenig is on the right track, but to me it seems like the Fed intentionally burned down the entire block in order to save the house filled with people that set it on fire.

Jeff said...



I totally agree. Letting the banks earn their way out is their brilliant fix.

How did that work out in Japan?

All that does is guarantee us that this crisis will last a decade or longer.

ike you said, the bond market can put an end to this game in a heartbeat.

LAst I heard. there was no such thing as the Tooth fairy:)

Jeff said...


Its sickening isn't it? We throw all of the bailout money to the fraudsters that created this mess.

The Fed temporarily saved the banking system at our expense!

What comes around goes around and they will get theirs some day.

jeff said...

post up later

Jeff said...

Sorry Folks

Didn't have a chance to post tonight.

I will be back tomorrow. Pretty quiet day. I think 4th of July fever has hit the markets.

Tomorrow we have the big jobs report so the market should see a little more volume.

Let's see if the ADP report was accurate!