The End is Near!!

For the the treasury market that is.

Perhaps its time to change the name of my blog to "The Treasury Time Bomb" since the housing time bomb already went off?

Folks, what happened in the short end of the treasury market on Friday was flat out frightening. Lets take a look at how treasuries moved yesterday:

3 Month 0.16% +0.03 (23.08%)
6 Month 0.32% +0.05 (18.52%)
2 Year 1.31% +0.19 (16.96%)
5 Year 2.84% +0.10 (3.65%)
10 Year 3.83% +0.02 (0.52%)
30 Year 4.62% 0.00 (0.00)

Here is Bloomberg's take on the bond action on Friday. I respectfully disagree with most of this article. The "yields are rising as the economy recovers" argument is a bunch of hogwash IMO but feel free to take a look. Its always nice to hear the other side of the argument.

My Take:

Yikes!

As you can see, we saw about a 20% jump in yields in the short end of the treasury market on Friday. This is NOT good folks. The FCB's are already running away from the long end. If they begin to run away from the short end does it mean they have lost total confidence in US Treasuries altogether?

The one area of the bond market that was still showing strength was the short end because the risk is much lower for the FCB's since the bonds mature much faster.

We have already seen huge moves in the 10 and 30 year bonds as a result of our spend happy Fed. The FCB's are running away from the long end of the curve because the increased spending by our government has created a huge inflation risk which would be devastating to anyone holding the long end of the yield curve(10's and 30's)

As a result, China and others have recently been piling into the shorter end of the bond curve despite the fact that they are getting 1/3 of 1% return which is basically nothing! The bid to cover's in the short end have been around 3.5-1 which can be interpreted as healthy demand. A 2-1 bid to cover or higher is considered to be a successful bond auction.

Is the World "Walking Away" From Our Bonds?

After reading the article below from the well respected Financial Times, you gotta wonder:

"China is “actively considering” buying up to $50bn of International Monetary Fund bonds, the country’s State Administration of Foreign Exchange has said.

John Lipsky, IMF first deputy managing director, confirmed the Chinese proposal, which follows one by Russia to buy $10bn (€7.1bn, £6.2bn) in IMF bonds

Friday’s statement by China said any investment would be made according to its usual criteria of “safety and reasonable returns”, but made no mention of Beijing’s wish for more power in IMF decision-making, in return for financial support.

Safe, which controls almost $2,000bn of China’s foreign exchange reserves, added it was ready to help the IMF explore more ways to raise finance.

Mr Lipsky said the Chinese and Russian proposals were part of a commitment made during the London G20 summit in April to augment IMF resources by $500bn, and that the IMF “absolutely welcomes” the commitments.

The IMF expects to submit a proposal in the next few weeks that would allow it to raise money through issuing notes or bonds."

My Take:

Ouch!

Scary stuff folks. I think the Times did a great job breaking this all down. Both China and Russia are obviously extremely nervous about their treasury holdings as a result of the Fed's reckless spending behaviour.

The world wants a viable alternative to our bonds. It looks like the IMF is the perfect alternative. This is also a "power play" by Russia and China in terms of having a bigger say in the IMF. "Money talks", and these two have a bunch of reserves to invest.

The USA currently has zero reserves to spend as we continue to drown in debt. As a result, if I was the IMF, I would keep the door wide open for both the Russian's and the Chinese. What's interesting here is the USA has the most power and influence on the IMF because we are the world's largest economy.

Let's see how this all plays out. My guess is the ROW's concern around our solvency combined with with the huge reserves of Russia and China could render the USA powerless when it comes to us preventing the creation of IMF bonds.

If the IMF plays ball with China and Russia and successfully creates this bond alternative we are...ummmm....I really know how else to say this: Fucked!

Bottom Line:

We could have a "come to Jesus" moment in the bond market this week when the long term treasury auctions are held.

Did Timmy perhaps make a deal last week with the Chinese in terms of getting them to agree to continue to buy long bonds in the near term? Perhaps, but if he did, it means the Fed is going to either start raising rates or stop spending. I can't see the Chinese agreeing to buy more of this treasury garbage unless the Fed agreed to play ball by stopping all of the spending nonsense.

Either way, both of these options will be devastating for equities because it means that the bailout "tap" will have to be shut off.

The Fed can't win in this predicament. We either stop spending or the bond market blows up as the world runs away from our debt. The IMF story is a huge one folks. The HEAT IS ON the Fed and their spending.

It's possible that we could see a failed auction this week in the long end which would possibly result in a bond dislocation. If this happens, 10% interest rates will be right around the corner. This would then implode our economy and the financial system as we know it.

Its Judgement Week!

Time has run out on the Fed. Could they keep the game going for a little while longer with some successful long bond auctions? Yes, but it will come with consequences. You will have your answer if equities collapse next week which then forces investor's to come over and "save" the bond market.

They can play this liquidity game back and forth between stocks and bonds or awhile.

However, it can't last long because each time they pull this trick, investor's on the wrong side of the trade will take huge losses. This results in massive losses of liquidity in the stock market. Folks, when there is no liquidity, there is nothing to support stock or bond prices!

You can thank the Fed and their trillions for this recent 40% rise on the S&P. This huge bounce is basically the result of the Fed using its liquidity to pump up the stock market via the banks. The problem with this game is the Fed and its liquidity is about to be cutoff by the bond market.

Lets see how this all plays out next week. I expect a lot of fireworks.

Stay Tuned!

Stick to the Facts!

Just a quick note.

The "green shoots" talk continues, but the numbers don't lie.

Fact:

The Unemployment rate soared to 9.4%. The U6 rate rose to a whopping 16.4%. That's right folks, almost 1 in 5 Americans either don't have a job, have given up looking, or are working part time. Depression anyone?

Fact:

Consumer spending collapsed $15.7 billion which was more than twice the estimates in April:

"WASHINGTON (AP) -- Borrowing by consumers fell by $15.7 billion in April as U.S. households continued to trim spending and put away their credit cards amid a severe recession.

The Federal Reserve said Friday the April decline was the second largest ever in dollar terms following March's drop of $16.6 billion. March's decline originally was reported as $11.1 billion, which had been the most on records dating to 1943.

The April decline was more than double the $6 billion drop that economists had expected. Analysts believe consumers will remain cautious as long as the unemployment rate keeps rising, which it did again in May."

Fact:

Mortgage rates are rapidly rising as the bond market continues to throw a temper tantrum.

Bottom Line:

How in the hell is the economy going to grow when no one has a job, the consumer has put the credit card away, and the home buyer can no longer afford to buy a house as a result of rising rates?

Answer: It's not!

70% of our economy is dependant on the consumer and as you can see above, the consumer has had a heart attack.

Plug your ears and let the moronic talking heads on CNBC blab away about all of their "green shoots". The only shoots you will see if this continues are "lead shoots" as fellow Americans arm up and do what they have to do in order to feed their families.

Stocks cannot continue to "climb the wall of worry" when the wall is taller than the Empire State Building.

THE FUNDAMENTALS OF THIS ECONOMY ARE A DISASTER!

Stick with the facts and stay the hell away from this 40% rally.

Argentina Survived and We Will Too!

Good Afternoon Folks!

A little housekeeping. I am on a business trip until the end of the week so I won't be back on until this weekend. I may tweet and make a few comments over the next few days on here via my Blackberry.

Good luck with your investments!

I wanted to put up this excellent video from Vanguard today. This was a follow up to their "Lost Vegas" video which I shared with you a few weeks ago. The reporting in this video is superb.

Although a lot of it is pretty grim, the end of it gave me some hope. I think we could all use some of this as we sit here and suffer as a result of this historic downturn.

In this episode, Vanguard flies to Argentina in this piece and discusses their 2001 collapse with the people who suffered through it. Argentina saw 20% unemployment and 50% of their citizens ended up living below the poverty line as a result of their crushing 2001 economic collapse.

What was striking to me here was the distrust that the people have even today in the countries banking system. Many still refuse to put cash in the banks. Stuffing money under the mattress is the norm after watching their life savings in 2001 get devalued to nothing after the government converted all of their bank holding's into Peso's.

I must admit, this part of the video made me seriously think about heading to the bank and taking out some funds.

The take home message here is Argentina found ways to survive and recover despite being abused by their corrupt government. I am sure Americans will learn to do the same(that is if they can turn off American Idol!).

Enjoy this excellent piece of reporting!

Reality Sucks!

Good Afternoon Folks!

I wanted to share a few articles followed by a few comments today.

It appears reality slapped Ben right in the face after hearing his comments today during his meeting in front of Congress. Perhaps the Chinese whispered a little warning to Geithner during his trip to Beijing?:

"June 3 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke said large U.S. budget deficits threaten financial stability and the government can’t continue indefinitely to borrow at the current rate to finance the shortfall.

“Unless we demonstrate a strong commitment to fiscal sustainability in the longer term, we will have neither financial stability nor healthy economic growth,” Bernanke said in testimony to lawmakers today. “Maintaining the confidence of the financial markets requires that we, as a nation, begin planning now for the restoration of fiscal balance.”

“Either cuts in spending or increases in taxes will be necessary to stabilize the fiscal situation,” Bernanke said in response to a question. “The Federal Reserve will not monetize the debt.”

Quick Take:

The nerve of this guy eh? What on earth gives him the right to talk about fiscal discipline? This clown just blatantly lied today in front of Congress by saying the Fed will not monetize the debt. What in the hell is quantitative easing Ben? I'll tell you what it is: Its monetizing debt! What in the hell else can you call it when you print money to buy your own treasuries that finance your debt?

The fact that this clown gets away with this stuff is unbelievable to me. How does this guy have nerve to come out and say such things after spending nearly $2 trillion? Unbelievable!

This all being said, if he begins to follow through on this plan its a good thing. I think this is why you saw a little treasury rally today.

Citigroup

This is going to leave a mark:

"June 3 (Bloomberg) -- Citigroup Inc., the third-largest U.S. bank by assets, will seek authorization from investors to increase its outstanding common shares to as much as 60 billion, from a current limit of 15 billion.

The new amount was disclosed today by the New York-based company in a filing with the Securities and Exchange Commission. Citigroup said in March it would seek an authorization of between 40 billion and 60 billion shares.

The bank needs investors to approve the share-count increase to convert as much as $58 billion of preferred stock into common, part of Chief Executive Officer Vikram Pandit’s effort to bolster equity following the Federal Reserve’s “stress tests” last month.

Shares outstanding, at 5.39 billion now, would increase to as much as 22.8 billion under the conversion plan."

Quick Take:

Ummmm.....A 4 fold increase in outstanding shares? Dilution anyone? This is absolutely ugly. Whats crazy here is C is actually trading higher after hours after this news was released. Citigroup will probably jump into double digits the way this goofy market has been trading.

The reality here is this should be a crushing blow to Citigroup. How it trades is another story.

Fed's Hoenig: We must raise interest rates!

"June 3 (Bloomberg) -- Federal Reserve Bank of Kansas City President Thomas Hoenig said policy makers should lift the benchmark U.S. interest rate before “inflation forces our hand,” resisting public pressure to keep it low.

“If we fail to bring policy into balance, we will have significant inflationary pressure,” Hoenig said in a speech today in Sheridan, Wyoming. Policy makers also need to heed rising Treasury yields, which are signaling the market’s concern that prices will rise, he said.

“Market participants realize that a period of high deficits and accommodative monetary policy are an invitation to increased inflation pressure,” Hoenig said during a luncheon hosted by the bank. “I suspect we are experiencing the first signs of the markets’ concerns in the rising rates and increased volatility in longer-term Treasury markets.”

“Starting from where we are today, it is clear that interest rates must rise,” Hoenig said. The trick will be to remove monetary accommodation before actual signs of inflation appear, even as the job market continues to struggle, he said."

Quick Take:

Hoenig gets it. The cheap money days are over folks. I have been saying this for months now. If we don't take the appropriate actions needed in order to control inflation then we are in deep deep trouble. He knows the gig is up unless we start acting more fiscally responsible.

Bottom Line:

Is the Fed having a serious reality check? I sure hope so. All these are just words for now so I will believe when I see it. I have this feeling that China told Geithner to get his house in order or else.

Its too coincidental that we heard all of this obloviating around fiscal responsibility today from multiple sources.

Of course if the Fed is serious, it means they will be forced to pull liquidity out of the economy and cut back the bailouts as they cutback spending. The fallout of this will be catastrophic for both the economy and the stock market. The Fed's balance sheet is the only thing that's giving the economy a pulse right now folks.

If they rip it away, all of these floundering companies will be left naked laying on the side of a highway.

The Fed's hand is basically being forced here. They realize the inflationary risks in continuing this asinine spending are simply too high. Inflation can destroy an economy and take down a government. The fat cats have no desire to see this happen.

I think the earthquake we had in the bond market with rising rates last week really spooked a lot of people in DC and on Wall St. What we are now seeing now is the aftershocks of such events.

Word is the primary dealers are absolutely overwhelmed with the amount of treasuries they need to sell.

They are used to selling $5 to $10 billion in treasuries a week. Today they are being asked to sell close to $100 billion a week! The primary dealers are failing to see where in the hell the money is going to come from in order to satisfy this enormous demand.

Some(including myself) believe there is only one way to get this supply sold: Crash the stock market and scare investor's into the bond market. The Fed can pretty easily do this by pulling its liquidity from the economy.

Remember, the politicians are all about staying in office. The only way this country can run right now is through selling treasuries. If they must step on the stock market's throat in order to fund the country they won't hesitate to do so.

What's scary to me is even if they do take down stocks, I still don't believe there will be enough demand for the trillions in treasuries we must sell. If this turns out to be true we could see a 1932 event where both treasuries and bonds both sell off at once.

If this happens it will be time to fill the mattress.

Reality sucks folks!

Stay Tuned!

Are We Being Gamed?

Stocks ended the day mixed as the market took a breather after soaring past the 200 day MA yesterday.

Many(including myself) have been amazed by the size and scope of this rally. I realized long ago that our current market is basically a casino right now that's based on ZERO fundamentals. However, the fact that I know this doesn't make the tape any easier to trade.

I have seen more frustration and anger on the trading sites that I frequent over the past few weeks than I have at any other time since our economic collapse began.

I picked up a chart that may help explain why the tape has been so difficult and thus frustrating to trade:

My Take:

As you can see above, we(the retail investor) are becoming less and less relevant to the stock market as a whole.

You need to ask yourself a very humbling question after seeing this chart: Do you as a retail investor even matter anymore?

Many of us continue to hop on various websites searching for someone that has the answer as to why the market is doing what it is doing.

I finally now have the answer. If you aren't in "the know" you have no chance. The market is no longer a discounting mechanism that uses fundamentals and P/E ratio's to come up with fair values for stocks.

In fact:

THE NYSE IS NO LONGER A MARKET!

ITS A CASINO THAT'S BEING GAMED BY THE HEDGE FUNDS, THE FED, AND OTHER LARGE INSTITUTIONAL INVESTORS!

Unless you are one of the lucky owners of one of the Goldman/JP Morgan Crackberries that's on the receiving end of hearing what the Fed's next move is, you are screwed because the "lowlife" retail investor doesn't get the information until the pigmen have already already placed their bets. The money has been made long before you "the retailer" hears the news on Bubblevision.

The stock market is officially a sham. The rally from the bottom all got started with the "Big 3" banks all coming out at the same time and announcing that business was much better during Feb.

This got the market rolling and the pigmen never looked back. The banks proceeded to go on a stock market buying spree which took many by complete surprise including even some of the quants. In doing so, the banks were able to manipulate their stock values up to levels that allowed them to do stock offerings and raise capital at much higher prices which resulted in much less dilution.

The lies and manipulation kept on rolling after this one: "Green Shoots" started popping up all over the place. All of the sudden signs of the "great recovery" were everywhere! Stocks began to cheer when they saw home sales rise 3% in March.

3%? Are you kidding me? After a 30% drop? Big dipty doo! Is this is a green shoot or a minor blip on the radar as we roll right towards The Greatest Depression?

The more I reflect on our current great recovery the more I see how blatantly Wall St manipulated all of us. The rising market share of the institutional investor is absolutely frightening to me.

Why? Because you don't know what they plan on doing next! They know there is no real recovery. The whole thing is a total sham.

As a result, you need to ask yourself a question:

What if one day they decide to push the sell button and start selling to the clueless retail investor's that think the rally is real after a 30% move to the upside?

Hell, Goldman and the rest of the boys won't even hesitate to go short while they are in the process of selling you their holdings after a nice rally. The market will then roll over and once again the little guy gets screwed while the banks make another mint on the short side.

If the big trading desks don't burn you in this manipulated market the Fed certainly will. If the Fed decides its going to pull liquidity from the market, I am sure the boys will get a "heads up". They will then once again reach for the sell button and start dumping shares. Who are they selling to? YOU OF COURSE! God forbid they get left holding the bag.

Either way you are playing a game that's stacked against you. The only thing I can compare it to is a casino. You are betting against "the house" anytime you make a trade right now. What's different about investing in this cesspool today is "The House" never held all of the cards like it does now. The retail investor has shrunk from 80% in the early 1980's down to 30% today.

Gee, do you think it's coincidental that we saw the greatest bull market in history as the retail investor shrunk in influence and power?

Bottom Line:

You never want to invest in a market where the fundamentals don't matter. If the markets being gamed and you aren't in the loop stay away!

My advice? Try and trade in markets like the bond market where there is at least some transparency. Can you still get gamed here by the Fed and QE? Yes, but its a lot larger market which makes it more difficult to manipulate.

The traders in Chicago are much more sophisticated and transparent. I am involved much more in the credit markets than I am in equities at this point. I am short treasuries as many of you well know. The bond vigilantes appear to be out fighting the Fed which is an excellent sign. The credit markets are the ONLY guys that can stop the endless spending by the Fed.

It appears they are ready to do battle despite a slight pullback today. The dollar continues to vanish and commodities continue to soar as a result.

The bulls are trying to spin this by saying commodities are up because the economy is recovering! Yeah Right! Not! Its a sign that our dollar is collapsing as a result of our obsessive spending. All of this will eventually force the Fed to stop the music. If they don't I hope you enjoy that $20 loaf of bread at your grocery store.

Remember, the Fed is killing our dollar everytime they QE. They are monetizing debt or "printing" everytime they do this. The more the Fed QE's, the more pressure you will see on the greenback.

As for stocks? Need I say anymore? When the pigmen control 70% of the game "No thanks I'll pass".

The problem the banksters have here is EVENTUALLY the fundamentals always matter. You can only fix this game so long before you run out of money.

Wall St will eventually run out of cash because the economy sucks. The only reason we have any liquidity in this market is because the Fed is stuffing everyone with cash. The bond market is about to end this game so buyer beware.

Once the liquidity runs dry in the markets it's going to be an absolute bloodbath. It's impossible to know when this turn date will be but my guess is it's sooner rather than later.

If you dabble long "stay nimble". The recovery is nothing but a marketing ploy for Wall St. Once they have sucked everything that they can out of this rally, the boys will get out by selling to you!

Don't be the fool that's left holding the bag of stocks.

Option Arm Tsunami!

Before I begin:

A big hat tip to Mish for the charts, and please check out his excellent post on the mortgage meltdown.

I wanted to dig a little deeper into one area of the research report from T2 partners that Mish discusses in his post.

I will get to the bipolar markets in my Bottom Line section that I always finish with. However, I thought it was critical that I begin with the oncoming Option Arm Tsunami that we are all about to face.

T2's research report was absolutely phenomenal. As you all know, the subprime reset fiasco is just about over. Most of these life long renters are now back where they belong: In their apartments. Lets be honest, just about all of the subprime buyers had no business buying a house in the first place. They would have gotten a 30 year loan if they actually had the ability to pay it back.

Shame on Wall St for creating fraudulent faulty lending products like subprime that allowed unqualified buyers to get into these houses in the first place.

I asked everyone earlier this week: Is Prime the new Subprime?

The answer is an overwhelming yes, and the data out of T2 overwhelmingly supports this thesis. As the housing bubble turned into a speculative mania, Alt-A/Option Arms soared in popularity as they became a very convenient way for Wall St to keep the bubble going. Many of these were "liar loans" where no income verification was done. The bankers at the peak of this mania were basically handing out $1 million Alt-A loans like candy. $2.4 trillion dollars of Option ARMS were done overall, and $750 billion of them were done at the peak from 2005-2007.

These loans were created by Wall St for one reason only: They were a way keep the game going at the end when NO ONE could afford to buy a house.

The banksters didn't care if the borrower could ever pay the loan back because they passed on all the risk by securitizing the loans, and then proceeded sell them to the first sucker they could find in the form of an "AAA" shit sandwhich.

Well guess what folks. Now that the game is over: Its time to pay the piper. As you can see below, the Option Arm resets just got started and doesn't peak until 2013:

As I explained before, these loans were mainly given to higher income buyers and speculator's that couldn't afford to qualify for a 30 year mortgage. As you can see below(especially during the peak), people were using these loans because they obviously couldn't afford the house. If they could it would have made much more sense to go with a conventional mortgage because the rates were much lower:

So what happens when you lend to people using practically no lending standards and don't even bother to verify their income? THEY DON'T PAY YOU BACK. As you can see below, the delinquency rates on these loans are soaring:

My Take:

30+% delinquencies! Yikes! What a damn fiasco! Does everyone still think the banks are now well capitalized after their puny $60-70 billion in capital raising's? Over the next 5 years they are about to be slammed by a $2.4 trillion Tsunami of Option Loans that will once again bring them to their knees. Ummm...Something tells me they are going to need just a bit more money. Anyone got a few trillion they can borrow?

The scary thing here is this crisis hasn't even started yet. The period over which these loans reset ins much longer than subprime. Another thing to point out here is this was the speculator's favorite loan because he didn't have to have his income verified. These greedy specs just went to the bank, bought 10 houses on a $100,000 a year salary, and then screamed "Let's Flip Some Houses and Get Rich!".

These loans were often used by the prime buyers as well. As I have explained before. The prime and the subprime buyers both made the exact same mistake: They bought houses they couldn't afford.

How Will This Effect The Housing Market?

T2 nailed it in their report. Let me echo their sentiments. the $500,000 and up market is TOTALLY SCREWED. We already have 40 MONTHS of inventory here and its growing by the day.

The low end of the housing market has been moving strongly as home buyers gobble up foreclosures in the bubble areas. These foreclosures are nothing to write home about. Many of them are small and below McMansion standards, but buyers jumped all over them because they were affordable! I mean you feel like you gotta steal if you were able to buy a $350k house for $180-200k!

The problem here is as the prime borrower's and speculator's begin to roll over in the $500k-750k "mid to upper end" part of the housing market, its going to result in an explosion of new foreclosures.

The massive glut of new inventory combined with much tighter lending standards will force the prices of these homes to crash which in turn will then push them from the "mid to upper end" of the housing market down to the "lower end" of the market.

This will deal a crushing blow to the current suckers that picked off the first big wave of foreclosures. Why? Because new buyers will be able to pick up a 500-700k McMansion at around the same price level as the first round of foreclosures which aren't nearly as nice.

This will push the values of the "Round 1" foreclosures down because they won't be able to compete with the new flood of higher quality inventory.

Anyone that jumped in early on the first set of foreclosures will then end up taking another beatdown as the housing crisis continues to snowball. The 180k "steals" that home buyers gobbled up in droves after the first wave of foreclosures may only be worth 100k once the Alt A McMansions get down into their price range.

This will deal another very painful blow to the psychology and sentiment in the housing market. I still believe that no one will want to own a home when this all is said and done.

Anyone remember how burned you felt after buying Amazon at $300/share at the peak of the tech bubble? Home buyers will eventually feel the same way. The housing bubble may end up being the grandest of them all.

Bottom Line:

Patience is a virtue. This next Tsunami will take several years to play out. Do not be in a rush to buy a home. The next round of foreclosures will be much nicer than the first round that was basically comprised of below standard subprime crap boxes.

Could a McMansion sell for 200k or less 5 years from now? Wouldn't surprise me in the least.

As for the markets:

Bonds collapsed as money went back into stocks. This game can't go on forever folks. There simply isn't enough money to prop up both. Expect to see mortgage rates and gas soar as everyone begins to price in the economic recovery thats never going to happen this year.

This rally has speculation written all over it. I am still short treasuries, long metals, and short the S&P. The dollar continues to get trashed as we spend ourselves into oblivion.

I found it funny when it was reported today that the government spent $30 billion on GM to save 40,000 jobs. This equates to spending $1.25 million per worker. And you wonder why the bond market is nervous? I have no words to desribe how ridiculous this is.

If I was a GM worker, I would have asked Obama if I could dump my job and take the $1.25 million in the form of a severance package.

The insanity continues! Stay tuned!

Craig T Nelson "Coach": Tax Revolt?

All is quiet on the news front.

Awesome stuff here from the Coach. Maybe not paying your taxes is something we all need to think about. Its time to stop the insanity!

Some great points here from Craig: