Greece, Spain, Illinois? What?

For the third day in a row, U.S. stocks began the trading day looking mighty sickly, and are in line to end the day looking… well, less sickly. As of this writing, the Dow is a bit below 12,900.
The “recovery” in each day’s activity appears to start with the close of the European stock markets at 11:30 a.m. EDT. Indeed, “Trading was much weaker when European bourses were open,” writes Fusion IQ chief Barry Ritholtz.
“There remains an underlying liquidity bid containing the downside so far,” he adds – and he hastens to point out he’s not saying that from the vantage point of a permabull; his own firm is down to 40-50% exposure to stocks. “I’d like to see lower prices,” he says, “to put some equity exposure back on.”
As with the previous two days this week, Europe is getting the blame for the “risk-off” trade.

• Spain is on the verge of nationalizing one of its big banks; yields on Spanish 10-year debt have crested 6%.
• The European Union and International Monetary Fund are making noises about not releasing the next round of bailout money for Greece as long as Greek politicians continue to make noises about rejecting the bailout terms
• Italy’s prime minister has issued a plea for European leaders “to go beyond the rigid focus on budget discipline demanded by Berlin,” as a Reuters dispatch put it

With today’s developments, Spain has crept back into the top 10 among the most likely default candidates, as judged by the credit default swap market…


Yes, Illinois is a higher risk than Spain; this is the first time we’ve seen a U.S. state back in the top 10 for months. The Prairie State still has $9 billion in unpaid bills, despite jacking up the state income tax last year by 66%.
http://5minforecast.agorafinancial.com/ditching-the-dollar/

Yes, Um, Your Gold Please...

From the Writers at Agora Financial...(with a twist of sarcasim)


There he goes again.

“A decent productive asset will kill an unproductive asset,” said Warren Buffett yesterday on CNBC.
The “unproductive asset,” as if you hadn’t guessed, is gold — which is once again in Buffett’s sights.
“When we took over Berkshire,” he prattled as Becky Quick looked on worshipfully, “Berkshire was selling at $15 a share and gold was selling at $20 an ounce. And gold is now $1,600 and Berkshire is $120,000.”
Ah, the old selective time frame trick. Almost makes us wonder if someone slipped the Oracle this piece of Addison’s from The Daily Reckoning — complete with the following chart…


Nor does the chart tell the whole story, for what would Berkshire be today without the $700 billion monstrosity known as TARP?
“Berkshire Hathaway firms in total received $95 billion in TARP money,” Addison writes in the most-recent Apogee Advisory. “Berkshire, you’ll recall, held stock in Wells Fargo, Bank of America, Goldman Sachs and American Express. Not only did these companies receive TARP funds… they also dipped into the FDIC’s treasury to back their debt. Total bailout: $130 billion. TARP-enabled companies accounted for 30% of the Oracle’s publicly disclosed stock portfolio.
“And to sharpen the sting, he even got a better deal to help ailing Goldman Sachs than our own government. Buffett got a 10% preferred dividend, while the Feds got all of 5%. He cleaned up with $500 million a year in dividends. Without the bailout, you can bet many of his stock holdings would have gone near-zero instead.”
“I think gold is a great thing to sew into your garments if you’re a Jewish family in Vienna in 1939,” added Buffett’s right-hand man Charlie Munger last week, “but I think civilized people don’t buy gold. They invest in productive businesses.”
That… or they suck on the taxpayer teat, while telling the rest of us to “suck it in.”
Recall it was Munger last fall who told a group of college students, “You should thank God” for bank bailouts, for the alternative was too horrible to contemplate. “Hit the economy with enough misery and enough disruption, destroy the currency, and God knows what happens.”
[Destroy the currency? Isn’t that why you keep gold? But we digress...]
“Now, if you talk about bailouts for everybody else,” Munger went on, “there comes a place where if you just start bailing out all the individuals instead of telling them to adapt, the culture dies.
“At a certain place, you’ve got to say to the people, ‘Suck it in and cope, buddy. Suck it in and cope.”
There, in a few outrageous sentences, you have the raw essence of what’s increasingly labeled the “extraction” culture.
“Washington’s empire extracts resources from the American people for the benefit of the few powerful interest groups that rule America,” writes economist Paul Craig Roberts. “The U.S. Constitution has been extracted in the interests of the Security State, and Americans’ incomes have been redirected to the pockets of the 1%.”
Addison delves further into this theme in the next issue of Apogee — examining perhaps the mother of all “extraction” schemes. If you have an IRA or 401(k), you don’t want to miss this issue, only days away.

http://5minforecast.agorafinancial.com/did-he-just-call-you-uncivilized/

5 minutes of class warfare.

From Agora Financial...

 

What’s Really Behind “Income Inequality”

Dave Gonigam – May 3, 2012

• Worth screaming about: How the Fed drove a famous painting to a record price
• “Super-wealthy money shufflers” load up on art, while American workers produce more and earn less: Lessons from a chart that’s gone viral, and the story the chart doesn’t show
• The wisdom of the crowd? Americans’ choice for “safest” investment two years in a row
• Comeuppance continues, new pain for Spain: Bolivia adds insult to Argentina’s injury
• Sarnoff on “the little exceptions that get you”… an update on Addison’s documentary project… a poignant account of “family businesses that led to strong work ethics”… and more!

“When you create monetary inflation,” says the one and only Marc Faber, “it doesn’t touch everything at the same time.
“At certain times,” he tells the Financial Sense Newshour, “it may go into wages or it could go into commodities or it can go into consumer prices or it can go into real estate or it can go into equities or commodities or it can go into precious metals or art prices and so forth and so on — but not at the same time.”
The part about art came to mind as a CNN breaking news alert flashed across this editor’s iPad last night: “Edvard Munch’s The Scream sells for a record $119,922,500 at Sotheby’s in New York.”
“The Fed basically since 2008,” Dr. Faber goes on, “has expanded its balance sheet with the intention to stabilize the housing market and boost housing prices, but that is precisely the asset that hasn’t gone up.”
There are exceptions, of course: “in Aspen and from Madison Avenue and Park Avenue and so forth,” he says. “In prestigious locations around the world, real estate has continued to go up in value.”
The world’s “super-wealthy money shufflers,” Faber wrote in a recent Gloom Boom & Doom Report “have been the prime beneficiaries of the asset inflation we have experienced since the early 1980s.”
The U.S. working class… not so much.

Read More...

http://5minforecast.agorafinancial.com/whats-really-behind-income-inequality/

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 Which brings us to this chart; it’s making the Internet rounds this May Day week…