Saturday, April 24, 2010

april 24.2010 commentary.

Good morning to you all:
 
First of all, I would like to report that there were 7 bank failures last night costing the FDIC a cool 800 million dollars, and these dollars they do not have.
 
The report on the FDIC for the last quarter will be filed in May.  This agency is continually spewing red blood.
 
Lincoln Park Savings Bank Chicago IL 30600
Citizens Bank and Trust Company of Chicago Chicago IL 34658
Amcore Bank, National Association Rockford IL 3735
Broadway Bank Chicago IL 22853
Wheatland Bank Naperville IL 58429
New Century Bank Chicago IL 34821
Peotone Bank and Trust Company Peotone IL 10888
 
Lets start with yesterdays action in the physical gold and silver arena;
 
Gold closed up by $11.80 to 1153.10. Silver rose by 19 cents to 18.19.  The banking cartel tried desperately to keep gold below 1140 and silver
below 18.00 but failed.  News that the IMF have been called in to help rescue Greece certainly caused our bankers to cover some of their shorts.
 
Here is the Bloomberg account on the IMF rescue plan:
 

Greek Bailout May Fail to Ease Investor Fiscal Crisis Angst

By Matthew Brown and Bryan Keogh

April 24 (Bloomberg) -- Greece's request for a $60 billion bailout led by the European Union may fail to ease investor concerns about the nation's ability to end its fiscal crisis.

A rebound in Greek bonds after the government's request for a rescue yesterday, fizzled out as investors kept their focus on a budget deficit that will still be around 10 percent of gross domestic product this year even after austerity measures. The yield on the Greek two-year note rose to 10.23 percent, after falling to 9.63 percent.

"We are not buying Greek debt while so many problems remain unsolved," said Ralf Ahrens, who holds Greek bonds as part of the about $20 billion he manages as head of fixed-income at Frankfurt Trust. "Asking for the package will not calm down the market."

European policy makers have only spelled out the aid that Greece would receive over the next year, sparking concerns about how the country will finance itself beyond 2011. While Greece has pledged to lower its budget deficit below the EU's 3 percent limit by 2012, Goldman Sachs Group Inc. says the country's challenge is so great the nation may cut or delay payments to bond investors.

The extra yield that investors demand to hold Greek 10-year debt over German bunds has surged more than 200 basis points since the start of last week.

Clarity

"We wouldn't touch Greece at the moment," said Rod Davidson, head of fixed income at Alliance Trust Plc in Dundee, Scotland. "The market needs some clarity on whether or not there will be some kind of restructuring of Greek bonds. There's too much uncertainty and volatility."

Canadian Finance Minister Jim Flaherty called the Greek turmoil a "source of concern" at a meeting of finance ministers and central bankers from the Group of 20 in Washington yesterday.

U.K. Chancellor of the Exchequer Alistair Darling said the euro area "has to get on with" helping Greece because failure to resolve the crisis would "simply delay confidence coming back to the world economy." EU Economic and Monetary Affairs Commissioner Olli Rehn said work should be completed on a program by early May.

European Central Bank Governing Council member Ewald Nowotny rejected as "totally unfounded" speculation that Greece's troubles will now spread to other high-deficit countries such as Portugal and Spain.

Swaps Rise

His French colleague, Christian Noyer, agreed and said the euro remains an "extremely strong" currency.

Credit-default swaps on Greek sovereign bonds fell 15 basis points to 619, after falling to as low as 584, according to CMA DataVision prices. Contracts were at 287 basis points on March 17. A basis point on a swap insuring $10 million of debt for five years is equivalent to $1,000 a year.

Greece's national debt is almost 300 billion euros and investors are demanding more than double what they charge Germany for its 10-year bonds. The crisis is threatening to spread to Spain and Portugal, forcing the EU to set up a standby aid facility.

Greek Prime Minister George Papandreou's appeal yesterday came after he described the country's borrowing costs as unsustainable.

Turning over economic policy to EU and IMF oversight was "a new Odyssey for Greece," Papandreou said. "But we know the road to Ithaca and have charted the waters," referring to the return of mythological hero Ulysses to his island home.

The EU has said it's prepared to lend Greece three-year funds in 2010 at about 5 percent and declined to say what will be dispersed next year.

Officials from the EU and the IMF are meeting their Greek counterparts in Athens to discuss terms of the loans as workers strike in protest against further austerity measures.

Avoiding Greece

"There must be a better way to make money than investing in Greek bonds at the moment," said John Stopford, co-head of fixed income at Investec Asset Management Ltd. in London, which oversees about $65 billion in assets. "Despite the aid package, we are not convinced by the risk and return of the bonds. We are not comfortable with things that are driven by politics rather than fundamentals."

The premium that investors want to hold Greek two-year notes over 10-year bonds widened to 164 basis points after falling to as low as 121 basis points when Papandreou said he would activate the aid package.

Short-term yields rising above longer term ones, creating a so-called inverted yield curve, indicate that investors are concerned they may be forced to accept delayed or reduced payments.

The EU, which will finance the rescue with the IMF, said the terms of the aid package may be agreed "in a matter of days."

German Chancellor Angela Merkel, who has stressed her reluctance to put her taxpayers' money at risk since the crisis started, said that any Greek aid is contingent on its deficit- cutting commitments.

Germany and France will contribute more than half of the bailout funds, Germany putting in 8.4 billion euros and France providing 6.3 billion euros, according to an EU document obtained by Bloomberg News. They are followed by Italy and Spain.

"The request for the bailout has put a temporary respite on spreads widening, but the market still wants to know the specifics of how much will be given, at what cost and for how long," said Marc Ostwald, a fixed-income strategist at Monument Securities Ltd. in London.

To contact the reporters on this story: Bryan Keogh in London atbkeogh4@bloomberg.net; Matthew Brown in London atmbrown42@bloomberg.net.

Last Updated: April 23, 2010 21:16 EDT
 
 
end.
 
 
I would like to offer a few important details on the economy of Greece.
 
First of all its total federal debt is about 300 billion dollars.  Its GDP is only about 240 to 250 billion dollars.  Thus its debt to GDP is approaching 120%.
 
Greece has approximately 150 billion euros worth of bonds due this year and next or basically 67% of their entire debt.
 
As you can see in the above article interest on currently trading bonds are yielding 9% on 2 yr paper; over 10% on 10 yr bonds and much higher yields on the 30 yr paper.
Nobody wishes to buy Greek paper.
 
Thus for the first time, we are witnessing that the origins of a financial crisis has spawned a sovereign crisis which in turn will cause a further spiralling out of control financial crisis.
 
A global financial cris will probably ensue.
 
 
Please look at the following article written by Eric Sprott who is bang on.  As I have highlighted to you on many occasions, the Greek citizens do not want to keep any of their
Euros in the Greek banks.
 
What is their concern? 
 
1. a return to drachmas at a hugely devalued level
2 contracts written in Euros which will be difficult to honour.
 
3. If Greek banks are having diffculty in obtaining cash, how in earth can they guarantee all of those Greek citizen deposits?
 
4, Greece is not the only European nation in trouble..we have Spain, Portugal, Ireland, Italy all in the same boat. The threat of a global systemic collapse
    is inevitable.  These countries are in the same identical shape as Greece.
 
5. These countries have been asked to help bail out Greece.  How in earth can they supply funds, when they themselves are devoid of tax revenues?
 
 
Please read the following article by Eric Sprott and David Franklin thoroughly. It is well written:
 
 
 
 
 
 

Weakness Begets Weakness: from Banks to Sovereigns to Banks

By: Eric Sprott & David Franklin

The Greek debt situation has been an interesting case study for students of the sovereign bond markets. If there's a lesson to be learned from Greece's experience thus far it's that sovereign bailouts are far more complicated than bank bailouts. They require more sophisticated negotiations and proposals and involve an extra layer of diplomacy that makes them especially difficult to accomplish. As we write this, the European Union has recently announced new lending terms to support the Greek government, with great efforts made to assure the markets that these new terms do not constitute a 'bailout'. The problem with the Greek situation is that an actual bailout would involve an almost impossible coordination among all the major powers within the EU. It would require the unanimous pre-approval of all the EU heads of state. It would involve the European Commission, the European Central Bank and the International Monetary Fund (IMF) all visiting Greece to perform financial assessments.1 And finally, it would involve at least seven EU countries affirming support through parliamentary votes - all of this before a single euro is spent. A true bailout involves an almost impossible number of hurdles that essentially guarantee nothing will happen until all other avenues of rescue are exhausted. However, judging by the recent increase in yields on 10-year Greek bonds, Greece may soon need more than a loan package proposal to solve its fiscal problems.

One aspect of the Greek situation that has been obscured by all the recent political wrangling is the crisis' impact on the Greek banks. Although the banks were supposed to be rock solid after all the government-injected capital they received (not to mention zero-percent interest rates and generous lending terms from the European Central Bank), data shows that Greek bank deposits have fallen 8.4 billion euros, or 3.6 percent, in two months since December 2009.2 With no restraints on capital flows within the European Union, Greek savers are free to transfer their assets elsewhere. Given that bank deposit guarantees in Greece are the responsibility of the national government rather than the European Central Bank, we suspect Greek citizens are pulling money out of their banks because they question their government's ability to honour its domestic deposit guarantees. We envision Greek depositors asking themselves how a government that can't raise enough money to stay solvent can then turn around and guarantee their bank deposits? It's a fair question to ask.

The Greek bank stocks have been thoroughly punished throughout the crisis. Chart A plots an index consisting of the four largest Greek bank stocks and shows an average decline of 47% since November 2009. The deposit withdrawals from these banks have been so damaging to their respective balance sheets (remember bank leverage?) that the Greek banks have asked to borrow 17 billion euros left over from a 28 billion euro support program launched in 2008.3 You see the connection here? Greece experienced a financial crisis, followed by a sovereign crisis, followed by another financial crisis. There is no doubt that the Greek crisis has helped drive the gold spot price to its recent all time high in euros. Gold is a prudent asset to own in times of crisis, and it's possible that a portion of the Greek deposit withdrawals were reinvested into the precious metal. The fact remains, however, that if the Greek government cannot stem the outflows of deposits soon, the EU will have no other choice but to undertake a real sovereign bailout with all its bells, whistles and arduous protocols.

It's a vicious spiral from financial crisis to sovereign debt crisis to banking crisis, and there is no reason it can't spread to other European countries suffering from similar fiscal imbalances. With Spain and Portugal next in line with their own sovereign debt issues, we can expect depositors in these countries to make similar runs to the bank for their cash. "Guaranteed by Government" is truly beginning to lose its potency in this environment. The International Monetary Fund (IMF) seems to be preparing for such a scenario with its recent announcement of a tenfold increase in its emergency lending facility. The IMF's New Arrangements to Borrow (NAB) facility is designed to prevent the "impairment of the international monetary system or to deal with an exceptional situation that poses a threat to the stability of that system."4 The NAB facility has grown from US$50 billion to US$550 billion with the mere stroke of a pen. Does the IMF know something that the market doesn't? Is this a pre-emptive measure to repel an attack by bond vigilantes' on Europe's fiscally-weakened countries?

Sovereign Ratings

In our examination of the Greek situation this past month, we kept coming across various sovereign credit ratings. In an effort to better understand the Greek situation, we decided to look at how the ratings agencies generate their actual rankings and built our own model to determine a country's credit risk.5 We used common metrics such as GDP per Capita, Government Budget Deficits, Gross Government and Contingent Liabilities, the inflation rate and incorporated a simple debt sustainability metric in order to generate our own sovereign ratings. What we discovered in the process was quite puzzling.

It should first be noted that the rating agencies are in the business of offering their 'opinions' about the creditworthiness of bonds that have been issued by various kinds of entities: corporations, governments, and (most recently) the packagers of mortgages and other debt obligations. These opinions come in the form of 'ratings' which are expressed in a letter grade. The best-known scale is that used by Standard & Poor's ("S&P") which uses AAA for the highest rated debt, and AA, A, BBB, BB, for debt of descending credit quality.

In our opinion, as they relate to sovereign debt, the ratings provided by the agencies are highly suspect. While these agencies claim to provide ratings that consider the business credit cycle, there appears to be very little forward-looking information actually factored into their credit models. In some cases, the agency ratings end up looking absurdly optimistic. This of course should come as no surprise - we all remember the subprime mortgages that were rated AAA that are now worth pennies on the dollar.

While there were some similarities in our rankings (for example, our model ascribed AAA ratings to the local currency debt of Australia, Canada, Finland, Sweden, New Zealand which matched the ratings given by S&P), we found some glaring inconsistencies in the rating results for less fiscally prudent countries that left us scratching our heads. A good example is South Africa. The agencies currently rate South Africa an A+ entity, while our model calculated a 'BBB-' rating for its debt using our estimates. 'BBB-' is the lowest 'investment grade' rating for local currency sovereign debt - one level above junk. We arrived at this rating without having factored in South Africa's resource endowment. A significant contributor to South African GDP is derived from mining, particularly gold mining.6While South Africa has been the largest producer of gold until very recently, their below-ground reserves have not been revised since 2001 when the country held 36,000 tonnes of gold (or about 40% of the global total). Recent stats from the United States Geological Survey (USGS) estimate that South Africa now has only 6,000 tonnes worth of economic gold reserves remaining. Further review by Chris Hartnady, a former associate professor at the University of Cape Town, using similar techniques to those of M. King Hubbert (the Peak Oil theorist), suggests that South Africa could have only half of the gold reserves estimated by the USGS.7 If these new estimates are correct, South Africa could have 90% less gold than claimed – and it's not even factored into our BBB- rating! So what's South African debt really worth? An 'A+' from the ratings agencies seems far too generous based on our cursory review of the country's fundamentals.

The rating agencies' ranking of the United States is even more disconnected from reality. To believe that the US sets the benchmark for sovereign debt credit ratings is preposterous.While we have written ad nauseam about the excessive debt issuance by the United States, we found a recent update written by United States Government Accountability Office (GAO) to be particularly instructive. The update noted the US's budget deficit equivalent to 9.9% of GDP in 2009 - the largest since 1945 - and stated that without significant policy changes the US government would soon face an "unsustainable growth in debt". This was not news to us. It goes on to state, however, that using reasonable assumptions, "roughly 93 cents of every dollar of federal revenue will be spent on the major entitlement programs and net interest costs by 2020."8 This is news! In less than ten years, using reasonable assumptions, there will essentially be no money left to run the US government - 93% of all tax revenues the US government collects will go to pay social security, Medicare, Medicaid and the interest costs on their national debt. This implies no money left over for defense, homeland security, welfare, unemployment benefits, education or anything else we associate with the normal business of government. And the US government is rated AAA!?

The historian Niall Ferguson recently wrote that, "US government debt is a safe haven the way Pearl Harbor was a safe haven in 1941."9 It's hard not to agree given the foregoing statements by the GAO. The risk inherent to investors, of course, is what happens when the bond market begins to realize and react to this new level of risk. In a speech earlier this month, J├╝rgen Stark, who is a member of the board of the European Central Bank, stated, "We may already have entered into the next phase of the crisis: a sovereign debt crisis following on the financial and economic crisis."10 The activities of the IMF would confirm this statement. The question we must now ask ourselves is whether "backed by government" actually means anything anymore. In the depths of the 2008 crisis it was the governments that stepped in to provide a guarantee on financial assets. It was the governments that backed our savings accounts, money market funds, day-to-day business banking accounts, as well as debt issued by US banks. But what happens when confidence in the government guarantee begins to erode? We've seen what happened to Greece. Leverage inherent in the banking system elevated a bank run, equivalent to a mere 3.6 percent of deposits, into another full blown banking crisis. In our view it's time for investors to acknowledge sovereign risk. The ratings agencies can opine all they want, but it seems clear to us that the only true AAA asset to protect your wealth is gold.

 

and finally, this commentary from Zero Hedge on the Greek problems:

 

Greece asks for EU-IMF bailout 
CIGA Eric

What many fail to realize or acknowledge is that the US, with its controlling interests of the IMF, will be sharing the burden of the Greece bailout. The bailout of one weak EU nation implies that others will soon follow. As long as the State, or combination of States (EU/IMF) can issue debt, no one will be allowed to fail. Cascading State failures were common in early 1930's, but few are drawing these comparisons today.

Greek Prime Minister George Papandreou called for the activation of a joint eurozone-International Monetary Fund financial rescue to pull his country out of a major debt crisis.

Source: finance.yahoo.com

 

More…

 

OK lets go on:

 

The open interest on the gold comex fell a bit by 5000 contracts to 516325 and silver's OI lost a tiny 481 contracts to 127398:

 

The gold open interest fell 5007 contracts to 516,325. The silver open interest lost 481 contracts to 127,398.

 

The COT report released after the market closed is very strange indeed.  It may be garbage but that is the norm .

 

 

 

 

Here is golds COT report:

 

The gold COT report was a bit bizarre. It showed...

*The large specs reduced longs by 11,355 contracts and decreased shorts by 1,264. 
*The commercials increased longs by 4,492 contracts and reduced shorts by 1,596. 
*The small specs increased longs by 4,055 contracts and increased shorts by 52.


end.
 
In other words, the large specs getting scared of something (and this is before the Goldman announcement)
decided to liquidate a huge 11,355 contracts and also reduce their shorts by 1200 contracts.
 
Some of those contracts were picked up the commercials  (4492 contracts) who also reduced their shorts by 1500 contracts)
The smaller specs who have been out of the market for quite a while, came back and purchased 4055 contracts .
 
So the commercials where basically absent from this COT reporting period.
 
Silver is almost the same story except the commercials increased their shorts by a small margin.
 
To tell you the truth I do not buy the COT report this week.
 
Lets go to the silver and gold inventories:
 
COMEX Warehouse Stocks April 23, 2010

SILVER

ZERO ozs withdrawn from the dealer's (registered) inventory 
ZERO ozs withdrawn from the customer (eligible) inventory 
Total dealer inventory 50.79 Mozs 
Total customer inventory 64.54 Mozs 
Combined Total 115.33 Mozs

GOLD

ZERO ozs withdrawn from the dealers (registered) category 
301 ozs withdrawn from the customer (eligible) category 
Total dealer inventory 2.43 Mozs 
Total customer inventory 7.72 Mozs 
Combined Total 10.15 Mozs

 
 
Another strange day.  No silver was withdrawn from either dealer or customer inventory. Remember that we have almost 25 million oz of March silver contracts waiting for delivery.
The rules of the comex exchange stipulates that all metals delivered must first come from dealers inventory.
 
In other words I should see 25 million oz enter the dealer inventory and then out to  the customer inventory. The customer may then decided to remove this inventory from the eligible side of  inventory
(customer inventory)
This is done to prevent back room sheninigans.
 
Also please note, that we have no movements in the gold inventory which is also strange in that we are finishing of the delivery month of April in gold and yet no movement in or out of the comex.
 
 
Here is Adrian Douglas on this:
 
 

There were no movements of silver into or out of customer or dealer inventory. Doesn't it strike you as bizarre that such a thing could happen at the world's premier metals future exchange? No movement of silver at all! But that is not the end of the story…in gold the total movement was 301 ozs of gold withdrawn from the customer inventory. When one considers that there are outstanding delivery notices for 1.32 Million ounces of gold it strikes me as a little odd that they should be able to have such a quiet day!

 
 
 
 
end.
 
 
Lets see how deliveries are shaping up with respect to gold and silver:
 
 
Strange:  no movement:
 

There were no delivery notices issued in the APR gold contract. The APR gold contract total for the month is 13,186 notices or 1,318,600 ozs.

 
thus we still have the 1.318 million oz of gold served and waiting for the actual delivery of gold.
 
What is left?
 

The Open Interest in the APR gold contract is 317 or 0.03 Million ozs

 

Thus the total gold standing and waiting for actual metal is 1.318  plus .0317 million  plus .074 million from March options exercised equals   1.4237 million oz.

You can bet the farm that this total will be close to the final figure at April 30.2010.

 

How about silver:

 

There were no delivery notices issued in the APR silver contract. The total delivery notices for the month in silver stand at 469 or 2.34 Mozs.

 

no change...the same 2.34 million oz of silver exercised.  This total will be added to May as May is the official delivery month for silver.

 

What is the open interest for the front Silver comex month of May:

 

The open interest in silver for the MAY contract declined from 42,717 contracts to 38,233 contracts

With only two trading days left, the OI for silver comex remains remarkably high at 38233 or 191 million of silver.

 

The calls on gold at various prices above 1100 total in excess of 2000 and this must scare our bankers.

 

The chances of another raid on Monday and/or Tuesday is 100%.  Also the government will sell over 118 billion of new debt.

Another reason for the cartel mafia to raid the gold and silver comex and force the options value to be zero.

The raid will be vicious  as the price was come down a lot. 

Lets see if our friends of eastern persuasion are waiting in the wings and take on the crooks.

 

Many have asked me on the signifance of each trading day at the end of a delivery month.

I will try and give you a simplified version:

 

4 days prior to the end of a comex month two things happen:

 

a. the front month goes off the board

b. the options expire at 4 pm .

 

Thus on April 26.2010 which is 4 days prior to expiry of the silver front month of May, all options expire for silver and these long holders are given silver contracts.

In gold, all options exercised stand for gold itself.  Generally, these guys stand and wait for metal at the conclusion of the actual delivery month in the metal that they hold.

(In gold options these guys wait until June)

 

Even though the contract goes off the board, the front month can still trade as bankers try to goad the buyers of metal to roll or settle in cash so as to not supply the metal.

 

On the day prior to the end of the trading month, the long holders pluck their cash to pay for the entire amount of metal that they wish to purchase.

This is termed first day notice.  The shorts get to see how many physical oz they must delivery.

 

On the last day of the month, the comex bankers  issue delivery notices to the longs as long as they have verifiable bar numbers and exact weight of the bars, and thus starts the delivery process.

Deliveries then begin in earnest on the first day of the month.  The cartel bankers have until the end of the month to deliver all metals standing.

 

In days of past folklore  (3 years ago) most metals were served on the first few days as why would the sellers wish to pay insurance costs and storage fees

for the entire month?  Once a delivery slip/notice is issued, costs are transferred to the buyers. Now we see most of the delivery notices are given at the end of the month

and we are witnessing much sheninigans to deliver the said metal.

This is a brief understanding for the delivery process.  Print this out for future reference as I always refer to it.

 

Lets go on to other stories that hit our desks yesterday:

 

This bothered me greatly yesterday...with gold rising due to the Greek problem we see this:

 

 The GLD ETF registered the first change in ten business days, shedding 0.91327 tonnes to 1,140.2817 tonnes.

 

end.

 

Obviously, the cartel needed some gold to raid commencing Thursday night.  It failed and this physical was gobbled up.

The silver ETF SLV remained stationary in inventory.  However it has fallen from 305 million oz to 286 million oz in the last 6 weeks despite the

massive movement upwards in silver demand and price.

 

Here is another strange report:

 

"Japan imported 10.835 tonnes of gold in calendar 2009 and exported 71.868 tonnes, making it a net exporter of 61 tonnes, according to the Ministry of Finance."

See http://in.reuters.com/article/businessNews/idINIndia-47932120100423?sp=true

 

 

I can visualize the importing of 10.85 tonnes of gold to satisfy the hunger of Japanese citizens for gold,  They are very worried about the collapse of Japan as their debt to GDP levels

rise to over 200% ,

 

The exporting of 71.868 tonnes?   Japan is not a major fabricator of gold jewellry.   How do we account for 71.86 tonnes of gold exported? 

This story baffles me.

 

end.

 

Lets go to ordinary economic news of the day:

 

First durable goods:

U.S. durable goods orders drop in March on aircraft

WASHINGTON, April 23 (Reuters) - New orders for long-lasting U.S. manufactured goods unexpectedly dropped in March as civilian aircraft bookings plunged, but recorded their largest gain in more than two years excluding transportation, government data showed on Friday.

The Commerce Department said durable goods orders fell 1.3 percent, the biggest drop since August, following an upwardly revised 1.1 percent gain February.

Analysts polled by Reuters had forecast orders rising 0.3 percent last month from February's previously reported 0.9 percent increase.

New durable goods orders excluding transportation jumped 2.8 percent last month, the largest rise since December 2007, after increasing 1.7 percent in February. Analysts polled by Reuters had expected new orders excluding transportation to rise 0.7 percent.

-END-

 

This number fluctutes month to month so do not read anything into it.

 

Next housing:

 

U.S. new home sales jump 26.9 pct in March

WASHINGTON, April 23 (Reuters) - Sales of newly built U.S. single-family homes rebounded strongly in March to touch their highest level in eight months as buyers rushed into the market to take advantage of a homebuyer tax credit, a government report showed on Friday.

The Commerce Department said sales surged 26.9 percent, the largest advance since April 1963, to a 411,000 unit annual rate, breaking a four-month slide. February new home sales were revised up to a 324,000-unit pace from 308,000 units previously.

The rise last month could also reflect a snap back from adverse weather conditions in February. Analysts polled by Reuters had expected new home sales to increase to a 330,000-unit rate.

 

 

This number is big.  We have gone from 308,000 level to 411,000.  However the grants to first home buyers expire at the end of April.  So this is understandable.

 

From Dave Kranzler on the subject:

 

Dave from Denver noted…

That was a last minute rush by 1st time buyers who qualify for conventional financing (under $500k) to sign contracts before the home buyer tax credit expires in 7 days. It is not being extended. We saw the same bounce in home sales in late Oct/early Nov before that expiration was extended. Anectodotally, I likve in an area (Wash Park/Platte Park/Observatory Park) where there's a lot of $500k and under bungalow type homes. I am seeing a lot of "under contract" and "sold" signs. I am also seeing 2 new "for sale" signs for every "sold" sign and because I"m a renter and have been shopping for rentals, and have done so 2 other times in the last 3 years, I am seeing MANY more "for rent" signs right now.

 

end.

 

 

In a commentary written for Lemetropolecafe.com Adrian Douglas writes that Germany is imposing spending constraints on Greece. He opines who will impose spending constraints on the usa.

 

Here is Adrian Douglas;

 

Friday, April 23, 2010

If Germany Is Forcing Fiscal Restraint on Greece

Which Country Will Force Fiscal Restraint On The United States?

Germany's Prime Minister, Angela Merkel, was in the news today defining the conditions upon which Germany would provide financial assistance to Greece. Included in the list of requirements is a plan of action in which Greece would need to reduce its spending deficit and implement a viable savings plan. Here's the link: Conditions For Greece Bailout.

While I fully expect that ultimately Greece will be bailed out by a combination of the EU and the IMF (aka the U.S. Fed/Treasury/Taxapayer), it also appears that Germany is going to force Greece to implement a well-delineated plan of fiscal austerity, which will also require some material sacrifice from the Greek populace.

Having said that, I continue to be highly amused at the all the attention Greece is getting, which seems to be nothing more than a big Orwellian smoke screen designed to cover up the massive fiscal/financial timebomb called the United States. Greece contributes 3% to the overall EU GDP. It has about $400 billion in Government debt. On the other hand, California represents 13% of U.S. GDP, is the world's 7th largest economy, and with close $600 billion in State/Municipal debt, and not including the State Pension that is underfunded by $500 billion, and is so hopelessly insolvent and in fiscal distress that it makes the Greek problem look like little more than a global economic toothache. And that's just California.

So, my question is, if Germany has the leverage to force some financial/fiscal discipline on little Greece, which country out there can do the same to the U.S.? The problem here is that eventually the market will impose its will on our country - and that will yield results that will be exceedingly more painful than most people in this country understand....Got gold?

 

end.

 

 

The unemployment figures from John Williams has shown an uptick form the 22% level.  The governments own U6 is over 17%.

 

Please read this commentary on the hoplessness of those receiving unemployment benefits:

 

from  Jim Sinclair's commentary.

The story by CNN's Tami Luhby

 

Jim Sinclair's Commentary

A Jobless Recovery is world class MOPE and a total oxymoron. It is downright mean.

How long should we help the unemployed? 
By Tami Luhby, senior writerApril 23, 2010: 7:24 AM ET

NEW YORK (CNNMoney.com) — Two years of unemployment benefits just isn't enough for some jobless Americans.

Though Congress has extended unemployment insurance to an unprecedented 99 weeks, the safety net is not proving sufficient for hundreds of thousands of people who say they simply cannot find a job in this weak economy.

Up to a million people could find themselves with neither a paycheck nor an unemployment check by year's end, according to preliminary estimates by one advocacy group.

These folks are begging lawmakers to extend the duration of benefits into the triple digits. Scores have emailed CNNMoney.com, detailing their desperation. But there's no movement currently in Congress to add more weeks.

"People will endure extreme hardship," said Andrew Stettner, deputy director of the National Employment Law Project. "We can't just let everyone fall off of this cliff."

More…

 
I shall now say goodbye and I wish everyone a grand weekend.
 
I shall report to you on Monday.
Harvey

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