U.S. Trade Gap Widens on Oil Imports

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>   
>   On Tue, May 12, 2009 at 9:20 AM, wrote:
>   As you predicted….
>   

You mean as I feared!

Higher oil = dollars easier to get overseas = weak dollar all else equal (which it never is, of course)

Higher crude = higher headline CPI = higher government and private CPI adjusted payments

And I suspect higher fuel prices will mean higher government transfers to ‘help Americans afford to heat their homes etc.’ which is not a ‘bad thing’ but does serve to drive up prices that much further.

Creating more spending power does not create more fuel (at least in the medium term) – only higher prices.

The world’s newly forming higher income individuals are back to outbidding our lower income individuals for fuel. With food following close behind as biofuels continue to link the two.

WSJ NEWS ALERT: U.S. Trade Gap Widens to $27.58 Billion on Oil Imports

by Jeff Bater

May 12 (WSJ) — The U.S. trade deficit widened for the first time in eight months during March, as the price and use of imported oil both climbed. The U.S. deficit in international trade of goods and services increased to $27.58 billion from February’s revised $26.13 billion, the Commerce Department said Tuesday. Originally, the February deficit was estimated at $25.97 billion.

U.S. exports in March slipped by 2.4% to $123.62 billion from $126.63 billion as trading partners bought fewer consumer goods and cars from the U.S. Imports fell at a lower rate, dropping 1% to $151.20 billion from February’s $152.76 billion.


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Fed Disclosure of Member Bank Borrowings

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>   
>   On Tue, May 12, 2009 at 10:35 AM, wrote:
>   
>   We are talking trillions of dollars from our pocket…
>   

The Fed is lending to its member banks. That is the same as the banks taking in deposits insured by the FDIC. Banks specific loans are only seen by regulators as a matter of public purpose.

Do you want every loan by every bank revealed? If so, lobby congress, as the majority in congress doesn’t want that.

Your beef is with congress, not the Fed.

Also, loans to member banks are not ‘dollars from our pocket’ unless they aren’t repayable, and the regulators monitor banks for capital compliance and they’ve done an ok job so far in that regard. Relatively few FDIC losses given the magnitude of the slowdown.

>   
>   Where is accountability for keeping the dead alive?
>   

Funding banks is not keeping the dead alive. All banks are always publicly funded via FDIC insured deposits. So happens the Fed is offering funds cheaper and for longer term than the FDIC, so it’s getting the business.


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China’s Reserve Strategy

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>   
>   On Tue, May 12, 2009 at 11:22 AM, J A Kregel wrote:
>   
>   And you can add to this the undeclared policy (confirmed to me last week) that
>   Chinese reserve diversification to hedge dollar exposure will be primarily in
>   stockpiling natural resources, not currency diversification
>   


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2009-05-12 USER

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ICSC UBS Store Sales YoY (May 12)

Survey n/a
Actual 0.5%
Prior -0.8%
Revised n/a

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ICSC UBS Store Sales WoW (May 12)

Survey n/a
Actual 0.3%
Prior 0.7%
Revised n/a

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Redbook Store Sales Weekly YoY (May 12)

Survey n/a
Actual 0.3%
Prior 0.3%
Revised n/a

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Redbook Store Sales MoM (May 12)

Survey n/a
Actual 0.1%
Prior 1.5%
Revised n/a

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ICSC UBS Redbook Comparison TABLE (May 12)

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Trade Balance (Mar)

Survey -$29.0B
Actual -$27.6B
Prior -$26.0B
Revised -$26.1B

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Exports MoM (Mar)

Survey n/a
Actual -2.4%
Prior 1.5%
Revised n/a

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Imports MoM (Mar)

Survey n/a
Actual -1.0%
Prior -5.1%
Revised n/a

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Exports YoY (Mar)

Survey n/a
Actual -17.0%
Prior -17.4%
Revised n/a

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Imports YoY (Mar)

Survey n/a
Actual -27.0%
Prior -28.7%
Revised n/a

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Trade Balance ALLX (Mar)

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IBD TIPP Economic Optimism (May)

Survey 51.0
Actual 48.6
Prior 49.1
Revised n/a

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Monthly Budget Statement (-)

Survey –
Actual –
Prior –
Revised –

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Monthly Budget Statement ALLX (-)


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Eurozone Stress Tests

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The eurozone has decided to keep its banks running via government insured liabilities without regard to capital levels. The new ‘tests’ are most likely for show only.

All governments with non convertible currency and floating FX policy have this option, which allows banks to continue indefinitely with or without capital, however defined.

The only reason to shut a bank down due to capital concerns is to protect ‘taxpayer money.’

Moral hazard is less of an issue as all bank assets are regulated and supervised in any case.

Japan’s recovery was not dampened by its banking system which was there to make loans and service deposits with our without bank capital.

It was dampened by a lack of aggregate demand due to insufficient deficit spending- taxes too high or spending too low.

Every time the economy started recovering they slapped on a consumption tax, in the name of fiscal responsibility.

Taken at its word, the Obama administration seems intent on doing much the same.

EU To stress test banking system

by Jan Strupczewski

May 12 (Reuters) — The European Union will stress test its banking system to determine its resilience to the economic downturn and find out if it is adequately capitalised by September, EU sources said on Tuesday.

The stress tests will be conducted by national supervisors according to common guidelines and methodology issued by the Committee of European Banking Supervisors (CEBS), the sources
said.

“The decision was taken by the EU finance ministers. They decided to ask the Committee of European Banking Supervisors to organise a stress test,” one source familiar with the ministers’ deliberations said.

“But it is not a stress test of individual institutions like the Americans are doing. It is more a highly aggregated stress test, which should show the degree of resilience of the overall EU banking sector,” the source said.

“It would show if there are additional capital requirements or if banks are adequately capitalised for the present situation,” the source said.

A second source close to the EU finance ministers’ deliberations confirmed the stress test of the EU banking system was to be ready by September.


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Obama Serious About Balancing the Budget

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Yes, it’s early, but seems he’s serious about his campaign promise to balance the budget.

The economy won’t see the drop in demand until it actually happens.

But valuations can adjust to rising tax rates long before GDP does.

Obama Proposes New Taxes on Dealers, Life Insurance

by Ryan J. Donmoyer

May 11 (Bloomberg) — President Barack Obama proposed raising money to pay for his health-care overhaul by imposing $58 billion in new taxes on securities dealers, life insurance products and Americans with valuable estates.

The eight new proposals, outlined in budget documents released today, are in addition to more than $1 trillion in tax increases over the next decade the president wants to impose beginning in 2011. Those would include higher rates for top earners and restrictions on tax-avoidance techniques commonly used by U.S.-based multinational corporations.


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Obama on Energy and Food

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This will drive up prices of food and energy longer term.

Still no plan to quickly bring down crude demand to offset declines in supply side incentives.

>   
>   Obama doesn’t buy the idea that US tax credits encourage oil and
>   gas production. His FY-2010 budget would delete eight such tax
>   breaks – start importing Brazilian ethanol.
>   


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It’s not just Chrysler

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Thanks!

Another example of politicians using the TARP card to influence the bankruptcy process. Banks may think twice before they provide their next DIP. If nothing else, the cost of this financing will increase. Which I believe is counter to what said politicians would like to see happening.

Hartmarx- A Harbinger of Things to Come

by Rodney Johnson

May 9 (HS Dent) — Hartmarx, the clothier who’s recent fame is making suits warn by President Obama, filed for bankruptcy protection in late January. Wells Fargo supplied Debtor in Possession Financing (DIP) while the company reorganized. Three bidders have emerged: two of the bidders are interested in keeping the operation going, the third would liquidate the company. When employees got wind of the third bid, they rallied against Wells Fargo, assailing the bank and calling congressmen, as reported by Progress Illinois:

This news of a potential liquidiation caused workers, union leaders, and members of Congress to spring into action to aid the company, which employs 3,000 people nationwide, including 1,000 in Illinois. Rep. Phil Hare, who spent 13 years as a Hartmarx employee, described himself as “livid” at the bank, which accepted $25 billion in federal bailout funds. He went on to enlist the help of Rep. Barney Frank (D-MA) and Sen. Chuck Schumer (D-NY). Rep. Jan Schakowsky, whose great-aunt found a job with Hartmarx after emigrating from Russia, called Wells Fargo CEO John Strumpf and urged him to keep the company running. Illinois Treasurer Alexi Giannoulias, meanwhile, sent a letter to Strumpf threatening to sever the state’s business with the bank if Hartmarx was ultimately liquidated.

This is not isolated. This is not about Chrysler, GM, and tens of thousands of workers and the ability of the United State to mass produce heavy vehicles as a point of national security and safety. This is a company that makes clothing, who through the power of employees, not owners, is bringing pressure on a bank through political paths because of TARP funding. A year ago this would have been seen as a bizarre episode. Today it is an indication of where we are headed, as the recently silenced critics of the Chrysler deal know all too well.


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Re: Globe & Mail – Canadian Propaganda

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Yes, thanks.

I just saw a replay of the Obama comedy routine of a few days ago.

It wasn’t at all clever or funny, but sarcastic, mean spirited, cheap shots and arrogant self glorification, etc. and delivered as such. The shots against Clinton, Summers, and Biden- who I criticize perhaps more than anyone- were particularly cruel and tasteless, and unthinkable that their ‘boss’ would publicly humiliate them like that unless he intended to fire them. And the hostile undertone was similar to that of his attacks on the Chrysler secured lenders and corporations with legal untaxed offshore earnings.

The progression is getting worse. Wouldn’t surprise me if he starts losing support from some of the more intellectual Democrats before the end of the year.

>   
>   More on the theme of who could have predicted that a mainstream Canadian
>   newspaper could be on this side of the debate ?
>   

Amid the rhetoric, a profound threat to capitalism

by Avner Mandelman

May 9 (Globe and Mail) —


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