FED to Buy Municipal Bonds to Keep them Afloat

A great point on this video is that the FEDs attempt at surprising interest rates (printing) in the mortgage market has done exactly the opposite and are going up. This is a sign that the dollar is in serious trouble.

Your Hard Earned Dollars at Work

Nobody Watching the FED

This video just shows a complete lack of oversight of the Federal Reserve with OUR (taxpayers) money. You have to wonder why we employ this institution to watch the FED, we could probably save billions by eliminating these kind of institutions that do nothing but cost the taxpayers hard earned money.

Weekly Updated Unofficial Problem Bank List

CalculatedRisk released their latest update of the Unofficial Problem Bank List with 919 institutions on the list declining by 1 from the previous weeks 920.  Total assets increased by $1.1 billion dollars to $411.4 billion.

Three additions to the list include Intervest National Bank, New York, NY; Great River Holding Company -- RiverWood Bank, Baxter, MN and RiverWood Bank, Bemidji, MN.

Removals include the two institutions that failed this week; Paramount Bank and Earthstar Bank as well as Millennium BCP Bank National Association, Newark, NJ (Voluntary Liquidation) and Oceanside Bank, Jacksonville, FL (acquired by The Jacksonville Bank).

Weekly King World News Update

This week KWN (King World News) interviews Jim Rickards ( Part II ), Bill Fleckenstein, James Turk, Jean-Marie Eveillard and Art Cashin.  This week KWN discusses Gold's play as a currency, cracks showing up in Gold and Silver delivery and the FED.  I'll include the link to Jim Rickards Part I in case you missed it.

Jim Rickards ( Part I ) - Discusses how the futures exchange works for Gold and Silver and how if the exchange get massive calls to take delivery to obtain gold or silver, the exchange will declare a timeout and when it is settled, they will cut you a check on the difference (not really gonna get your gold). Jim also says that QE2 isn't really $600 billion it will really be more like $1.2 trillion (mainly cause their is no real end date assigned to it) and that it will not really impact the economy.

Jim Rickards ( Part II ) - Discusses failure of banks whom are holding gold for storage purposes to deliver the recipients/holders gold when asked (in some cases taking months) furthering speculation that banks loaned out gold they did not own (fraud) and now have to re-coup that gold to deliver to the actual owner.  Jim further discusses a new currency in the U.S. which would be gold backed/based in the future being an inevitability.

Bill Fleckenstein - Discusses Robert Zoellicks (President of the World Bank) announcing that the dollar needs to be backed by Gold.  Bill also advises not to listen to economists and pundits that did not see the credit crisis coming in the first place, as they have no clue to what they are talking about.  Bill also says the reason to own gold is because the paper is no good.

James Turk - Discusses additional stories where delivery of metals from banking institutions are not getting delivered in the proper timeframe.  In certain cases persons that own the metal and are just paying for storage are waiting for months to get their silver or gold.  This raises questions of what the banks did with the gold that makes it unavailable for months.

Jean-Marie Eveillard - Discusses the FEDs actions and how they are widely inflationary in the United States and how it is affecting other countries.  Jean-Marie states that the country that holds the privilege of printing money needs to handle that responsibility responsibly.  Jean-Marie also mentions what he thinks the FED seeks to achieve, but there are risks.  He believes their will be a QE3 to follow on the heels of QE2.

Art Cashin - Discusses China's GDP and how that could be made up and the fact that China will most likely raise rates again.   Art also talks about how the stimulus that was introduced did not stimulate a thing as it was a huge wash, due to not being fully thought through.  Recent selloffs in bonds are starting to show issues for mortgage rates (causing them to increase), which will reduce lending.

Weekly M1 and M2 update

This week M1 expanded 8.4% YoY (Year over Year) and M2 expanded 3.23% Year over year.  I am posting the new chart which corrects last weeks as last weeks chart had an incorrect formula (copy paste issue).  As you can see the money supply is actually expanding again which definitely fly's it the face of Ben Bernanke's 60 minutes interview that money supply is decreasing.  

Having said this, money supply does contract when debt is paid down.  As our money supply is debt based, when a foreclosure occurs, credit cards are paid off, lands get paid and mortgages are written down, debt comes out of the system which contracts the money supply.  In an environment where all of this is occurring, it is telling that money supply is still expanding (due to money printing by the FED).  See Shadowstats chart at the bottom of the page for M3.

Weekly Bank Failures

This week we lost 2 more banks bringing the 2010 total to 152 banks failed.  This week we lost Paramount Bank in Farmington Hills, MI and Earthstar Bank in Southampton, PA.  I guess the positive sign is that the failures have slowed down in the past few weeks, but we have seen this before, so we need more weeks of zero or slowing failures to establish a trend.

Weekly FoodStamp Recipient Update

In the past 2 weeks the number of persons now on foodstamps increased by 521,423 people or 1.22%.  That is a large increase in the number of persons in a two week period with Illinois, California,Florida, North Carolina & Texas being the largest gainers (IL being the largest added 143,982).  West Virginia and Arizona actually showed an improvement by reducing the number of recipients by greater than 2k.  

NIA Interview with Bill Murphy

Tentative Outright Treasury Operation Schedule

The FED posted the tentative schedule for upcoming POMO (Permanent Open Market Operation) schedule which, on the low side, the FED would purchase $88.5 billion and on the high side $119.5 billion by January 11th 2011.  Taking a midrange view we can count on approx $104 billion to be printed.

FED POMO Purchase Update

The Fed performed another POMO (Permanent Open Market Operation) purchase of $8.309 billion dollars.  This brings the cumulative total since August 17th 2010 to $178.985 billion dollars and the cumulative total since November 3rd 2010 (when the FED announced printing $600 or really $900 billion by June 2011) to $114.525 billion dollars.

Operation 1 - RESULTS

Operation Date:	12/09/2010
Operation Type:	Outright Coupon Purchase
Release Time:	10:15 AM
Close Time:	11:00 AM
Settlement Date:	12/10/2010
Maturity/Call Date Range:	06/30/2016 - 11/30/2017
Total Par Amt Accepted (mlns) :	$8,309
Total Par Amt Submitted (mlns) :	$33,126

Who Benefits from Austerity

Weekly Initial Unemployment Claims

Last weeks Initial Claims were released today showing better than expected numbers.  Initial Unemployment Claims are the number of people that applied for unemployment insurance for the first time last week.  The forecast called for a number of 426k and the actual headline number came in at 421k beating last weeks revised number by 438K.  

 

 

Revisions in delta have stayed pretty steady with a variance of about 2k lately.  So it is a safe bet to take the headline number and add 2k to it to come up with a number closer to what Intial Claims really are.  If we do this then the number is around 423k which is still an improvement, but we are still in the Christmas spending season with temporary jobs which distort the picture.

Weekly Fund Flows

This weeks fund flows showed a continual outflow of money from Domestic stocks.  This week $1.801 billion dollars flowed out of domestic stocks with $1.848 billion dollars flowing into foreign stocks.  The municipal bond sell off continued, but at a lower intensity as $61 million left muni bonds this past week.

 

 

FED POMO Purchase Update

The FED executed another POMO (Permanent Open Market Operation) purchase in the amount of $1.630 billion dollars.  This brings the total since 17 August 2010 to $170.676 billion dollars and the total since 3 Nov 2010 (the time the FED announced printing 600 billion more) to $106.216 billion dollars.

Operation 1 - RESULTS

Operation Date:	12/08/2010
Operation Type:	Outright TIPS Purchase
Release Time:	10:15 AM
Close Time:	11:00 AM
Settlement Date:	12/09/2010
Maturity/Call Date Range:	07/15/2012 - 02/15/2040
Total Par Amt Accepted (mlns) :	$1,630
Total Par Amt Submitted (mlns) :	$6,149