Bill Cara’s Blog for June 11, 2010 [See post-close report]

Thought I might share one of the more detailed comments I was able to locate on the implications of the 10 year high TRIN spike on June 7. FWIW I don't have a view - just a student here - but I liked the historical approach.

http://www.scribd.com/doc/32661148/June-7-2010

Top "Losers" if BP is nationalized. They've already experienced a loss of over 42% since 3/31/10. That's in excess of $4 Billion. Ouch. There will be some large hits to income statements/investment assets this quarter. I expect an increase in State Farm insurance rates too.

Top Shareholders
WELLINGTON MANAGEMENT COMPANY, LLP
BARROW, HANLEY MEWHINNEY & STRAUSS, INC.
BANK OF AMERICA CORPORATION
STATE FARM MUTUAL AUTOMOBILE INSURANCE CO
PRICE (T.ROWE) ASSOCIATES INC
MORGAN STANLEY
FMR LLC
WELLS FARGO & COMPANY
Tradewinds Global Investors, LLC
GATES (BILL & MELINDA) FOUNDATION

Top Mutual Fund Shareholders
VANGUARD/WINDSOR II
VANGUARD SPECIALIZED-ENERGY FUND
VANGUARD/WELLINGTON FUND INC.
FIDELITY DIVERSIFIED INTERNATIONAL FUND
PRICE (T.ROWE) EQUITY INCOME FUND
VANGUARD/WELLESLEY INCOME FUND
American Beacon Large Cap Value Fd
FMI LARGE CAP FD
PRICE (T.ROWE) NEW ERA FUND
PUTNAM EQUITY INCOME FUND

WASHINGTON (MarketWatch) - U.S. retail sales declined for the first time in eight months in May, tumbling a surprising 1.2%, the Commerce Department estimated Friday. Sales were mixed across sectors, dominated by large declines at hardware stores, auto dealers, gas stations, department stores and clothing stores. Modest gains were found in most other types of stores. Economists surveyed by MarketWatch were forecasting a 0.2% gain. It was the first decline in sales since September 2009. The big surprise in May was auto sales, which fell 1.7% by dollar value, according to the government estimates. Automakers had reported a modest increase in unit sales. Excluding autos, retail sales fell 1.1%, the largest decline since March 2009

You're absolutely right Bill. The $4B USD represents the top 10 holders only. Look at the total picture:

BP closing price 3/31/10 57.07
BP closing price 6/10/10 32.78
$Loss/share 24.29
Percentage loss 42.6%

Total shares outstanding(billions) 3.13
Mkt cap 3/31/10 $178.63
Mkt cap 6/10/10 $102.60
Loss $76.03

Wealth evaporation. I've always wondered where the money disappears to when share prices drop so sharply.

Advair is Glaxo's biggest seller with turnover of just under £5bn in 2009.

LONDON (MarketWatch) -- Barclays on Friday raised its rating on U.K. drug giant GlaxoSmithKline (UK:GSK 1,182, +18.00, +1.55%) (GSK 34.48, +0.20, +0.58%) to overweight from equal-weight, saying it believes investor concerns around diabetes-drug Avandia and asthma-treatment Advair are overdone. The broker told clients that Avandia is unlikely to be taken off the market and noted that the company has already set aside 2 billion pounds ($2.94 billion) for legal settlements. As for Advair, Barclays said the new label has more bark than bite.

Note published by Glaxo's house broker RBS.

June 10 (Reuters) - Generic companies hoping to market a cheap copy of GlaxoSmithKline's (GSK.L) best-selling inhaled lung drug Advair might have wait until 2012 before winning a green light from regulators in Europe.

That, at least, is the view of analysts at Glaxo's broker Royal Bank of Scotland (RBS), following recent changes in filings by generic companies in Finland, the only country in Europe to publish the details of such applications.

Advair, which made up 18 percent of Glaxo group sales in 2009, with worldwide revenue of 5 billion pounds ($7.3 billion), is vital to the drugmaker's growth in the next few years, but its future is clouded by uncertainty over generics.

In Finland, both Teva Pharmaceuticals (TEVA.O) and Sandoz, the generics unit of Novartis (NOVN.VX), filed for approval of a metered dose inhaler (MDI) form of the drug at the end of 2008.

But the latest information on the country's National Agency for Medicines website (www.nam.fi) no longer shows either of the applications, while Sandoz submitted a fresh file in April 2010.

RBS said in a note that the original MDI filings of 2008 appeared to have been withdrawn, and Sandoz had decided to go in preference for a dry powder inhaler (DPI) device.

No details on the DPI filing were given on the website, but industry experts said it could well be the generic product VR315 that Vectura (VEC.L) is developing with Sandoz.

Concerns about generic Advair, which is also known as Seretide and Viani, were heightened last month when a German court ruled a key patent on the medicine was not valid, sparking speculation that generics might arrive in some European countries as early as the end of 2010.

But RBS said the fact Sandoz had only just filed for a new device in Finland suggested that generics were unlikely to appear before 2012, since it can take up to two years for a respiratory drug to be approved.

Ha!

I spoke with my online broker just to go over the rules for myself. She then tried to upsell me on other products and asked what my strategy was?

My answer puzzled her. "Make profits when i buy, and protect capital when I sell."

chart in CLH, a BP spill play

Most of what i am learning, and the trajectory of my learning is from you Bill.

Your blog has helped me more than my $100k NYU- Stern finance education.

B.S doesn't stand for Bachelors in Science.

"US Consumer Sentiment Higher Than Expected in June, Best Since January 2008 (story developing)"

This makes a lot of sense. No point in putting it into my own words when it is said so eloquently.

“With household balance sheets still over-leveraged, the key determinant of consumer spending growth going forward will be the pace of the recovery in the labour market and hence the path of wage and salary income,” said Joshua Shapiro, chief US economist at MFR.

NEW YORK (MarketWatch) -- The euro will fall versus the American currency over the next year as fiscal tightening in many euro-zone countries weighs on growth and keeps the European Central Bank from raising interest rates, according to RBC Capital. The euro (CUR_EURUSD 1.2043, -0.0055, -0.4543%) will fall to buy $1.10 over 12 months, from $1.2066 in Friday trading. The conditionality of recent bailout packages will "repeatedly come back to bite the euro as fiscal tightening in the periphery further damages growth prospects and pushes out the turn in the ECB rate cycle," RBC analysts wrote in a note Friday. As investors become more willing to buy assets considered riskier, low euro rates will raise the prospect of the euro becoming a funding currency for carry trades, where an investor borrows in a low-yielding currency to fund purchases of higher-yielding assets, RBC said. Also, the euro's "diminishing status as a reserve currency may have only just begun to play out."

Presstv.com is at it again.

http://presstv.com/detail.aspx?id=129961&sectionid...

Though BP operated the well, it owned only a 65% interest in it. Anadarko Petroleum Company owned 25% and Mitsui Oil Exploration owned 10%.

http://money.cnn.com/2010/06/11/news/companies/Par...

It's been moving sideways for the last 6 hours or so.
Anyone have any insight as to a break up or down from
this range around .9650 ?

My all time favourite "Pelosi-ism" was her statement in August, 2008, that America needed to use more natural gas as a clean, cheap, alternative to fossil fuels.
http://www.youtube.com/watch?v=8At2Lch-m5c

that is being rolled out today thru next week?

Wanted to see if anyone expect this to do more harm than good?

1. How will the circuit breakers distinguish between automatically snowballing computer algo's panicking vs real people really wanting to sell their shares to get out? Vice versa, is there a circuit breaker for stocks that go up too fast?

2. Can something like this really put a floor on prices?

3. Wont metering the decline/capping it, only cause large dislocation the second the cap is removed, in forms of gap down?

4. How about inverse etf? If you own QID and the market soars one morning, will the SEC also protect "Evil ETFs?"

Just trying to learn the new rules of this old casino.

Anyone else thinking move into TLT is auguring a low close today?

I think this is new rule. and in effect most of the day. Claims to be in both directions.Can't wait to see the unintended side effects.

if the price of certain stocks goes up or down more than 10 percent within five minutes, then trading in that stock will be stopped for five minutes.

http://bit.ly/9iYJO1

Since it was the strongest index. Some folks keep telling me volume doesnt matter. Not sure how volume doesnt matter in order to sustain or reverse a trend.

Anyway. Good bounce today. I'll cover my tza and vxx if Nasdaq can claw its way up to the 20 then 50 EMA. which might be monday.

But you have to go back to end of 2009 to find this lack luster volume on $Compx.

Its interesting that RBC sees the euro falling further against the dollar. Perhaps they feel that runaway deficit spending along with money printing is a better recipe for currency strength than fiscal prudence.

Its a strange world we live in.

FD: still long euro. I'm guessing RBC is net short euro.

http://finance.yahoo.com/retirement/article/109759...

"Claiming the stock market is merely correcting looks like an error.

The sort of market that dare not speak its name -- bear -- is being mentioned increasingly in polite company.

It's been a few weeks since this column asserted the trend had turned lower. If anything, even though stocks snapped a 3-week losing streak on Friday and the Dow is out of correction territory for now, the tide still is moving in that direction.

While the major stock averages aren't down the requisite 20% that conventionally defines a bear market, the odds of the current decline stopping short of that mark aren't great.

According to Bespoke Investment Group, there have been 58 "corrections" of 10% or more in the Standard & Poor's 500 since 1927. In 33 cases, the corrections stopped short of the 20% bear market threshold and the market went on to higher highs, while 25 times they grew into a full-grown grizzly.

But in the 32 instances when the market has dropped as much as this one has the outcome has been heavily weighted to the losing side. Only seven times drops of that size stopped short of the 20% bear mark. In the 25 other times the decline extended to 20%, the average bear market decline was 35.5%.

As pointed out in that aforementioned column from last month, Dow Theory Letters' Richard Russell was unequivocal in urging his subscribers to get out of stocks. And in his latest Remarks, the dean of market technicians is even more adamant. After listing a litany of bearish technical indicators, he concludes;

"So all in all, I'm convinced through many of my studies that the top has been put in and the primary bear trend is again in force. Remember, the 14-month counter-trend advance served to hold back the bear forces, even though the bear pressure had been building up. For this reason, I'm afraid of what might occur in the weeks and months ahead. This, even though I believe a tame period is overdue."
"

Reference Bernanke Speech Nov 21, 2002

Basis: The fed will take whatever means necessary to prevent significant deflation.

1. Fed will commit to holding overnight rate at zero.
2. Fed will cap yields on up to 2 year maturities w/active purchases.
3. Fed will cap yields on 3-6 year maturities w/active purchases.
4. Fed will influence yields on privately issued securities.
5. Fed will offer fixed-term loans to banks at low or zero interest with a wide range of private assets deemed eligible as collateral.
6. Fed will buy foreign and domestic debt.
7. US government will offer a broad based tax cut.
8. US government will increase spending on current goods and services, which will be monetized by the Fed.
9. US government will acquire real of financial assets, which will be monetized by the Fed.

So far is looks like every deflation preventing tool in the Bernanke playbook has been utilized. I'm not sure whether or not it has been successful. Of course, whether or not it is, has been or will be successful is a matter of personal perspective. It seems the cumulative effect of these actions certainly has tainted and skewed the free market.

Also it seems the infusion of money has tended to aggregate as opposed to disperse among the general population. Whether or not this is an unintended consequence remains to be seen.

U.S. companies are holding more cash in the bank than at any point on record, underscoring persistent worries about financial markets and about the sustainability of the economic recovery.

The Federal Reserve reported Thursday that nonfinancial companies had socked away $1.84 trillion in cash and other liquid assets as of the end of March, up 26% from a year earlier and the largest-ever increase in records going back to 1952. Cash made up about 7% of all company assets, including factories and financial investments, the highest level since 1963.

While at the ATM with my son I noticed a receipt on the floor someone had dropped and when I picked it up I noticed a balance of 38.00, I made the comment this was probably the average amount on deposit for alot of the bank accounts, While I was busy using the ATM he was looking thru the trash can next to me and checking at at least 20 discared slips...average deposits were less than 100.00 one hundred dollars. Quite a differance between big Business and the average working person!

Not a blacklist as far as I perceive. I been on it and then off. Does not matter as long as you maintain a minimum in your account. Just a silly rule.

loannetter - all your efforts sound fantastic to me. Add self-generated power and you'll be all set.

However if the rest of the people are to avoid starvation while they come up to speed with you (surely you aren't in favor of starving children?) we need to have enough nationally generated oil to cover the transition. Thats in your interest as well; those rows of corn you hoe will become perhaps overly popular if everyone around you that is used to a fast food diet suddenly have nothing to eat.

To me its really a question of a relatively orderly transition, vs a less orderly one.

http://ronsen.blogspot.com/2010/06/saturday-mornin...

Have a great weekend.

Analyst65, Bert, Skylane,

Since I am not often a short term trader, I am more focused on the economy/markets relationship. If pressed I would have to admit I am a long term bear and have been since the 1970s. This does not mean I have been out of the market, just very conservative (of my assets).

I have a copy of Bernanke's 2002 speech which I refer to often.

With his clearly stated approach having been followed since 2007's plunge two questions vex me.

1. If the run-up from 3-9-09 to the recent high is due to the "whatever means necessary" strategy, is there any reason to think he will not push to continue these methods?

2. If this is continued can it be made to work without cooperation by the US consumer?

If most people are too fearful (individuals) or not needing (businesses) to borrow can he re-flate enough by debasing the dollar? I don't know that he can with most major nations trying to do the same thing.

We have too many people and too few well paying jobs. The housing market has not been honestly confronted — so too many houses at low prices. Too much foreign cheap labor. And now the huge hit to jobs across many categories in the Gulf area. The health care bill adding to the drag on business hiring.

Have the American people come to realize the emperors are all without clothes?

Obama's talk has had a decreasing effect. On the campaign trail those he's backed have mostly lost. Bernanke and others keep cheerleading the market with a fading effect.

I am a firm believer that reality will overcome pretense, but am not convinced we are to that point, yet.

I welcome any longer term ideas.

Thanks

FD: I'm only long one stock (ETP gas transmission) for the yield, 50% cash and the balance in Treasury (WHOSX) and GNMA (VFIIX) mutuals.

Hi Dave,

"We could have a very impressive market rally in the face of a bad economy, simply because of money printing."

I realize this is what Ben has promised and truly believes is the way to avoid a 1930s situation, but...

Can they get the flood of cash into the system if people don't borrow?

They can they pass out Zimbabwe style currency directly to people, yet if prices rise correspondingly — nothing in reality is any different.

This, on a much smaller scale, is what we've had for a year+ with house tax credits, but companies have closed stores (improving retail blather), cars have been sold but factories closed, and real unemployment has risen (forget gov. hype).

The media report the stock gains compared to last year, last month or the last day — equating stocks and economics, but People are no better off and they know it. This is one of the main Tea Party points.

Getting a flood of cash into the system is no problem at all. All it takes is for the government or the Fed to buy real assets, and that does the trick nicely. Likewise, they also can provide money directly to people, such as social security and medicare payments in excess of contributions, unemployment checks, welfare checks, and the like. Also the gimmicks you refer to as well - bribes to buy houses, cars, solar panels, and other subsidies in the form of low interest rates, etc. Perhaps "government credit cards" with low rates encouraging folks to spend - with no balance transfers allowed? Who knows how creative they will be. At the heart is the Fed monetizing all the new government debt.

Supporting housing might be in the cards also. One way might be for the government to own housing, say through Fannie and Freddie, and retain and rent foreclosed units to their old owners, or to simply avoid foreclosing to keep them off the market, making housing artificially more scarce and subsidizing ex-homeowners at the same time. That's happening now, kind of. Making explicit policy "keeping homeowners in their homes" might just happen.

I am absolutely not suggesting this will bring true prosperity. Rather, it will bring asset and stock market appreciation and real inflation - along with US dollar depreciation (and resulting commodity price increases). This is why I'm saying I'm only a near term stock market bear, and since this is a trading blog, the market's reaction to all of this is very much at the forefront of my analysis.

I'm still quite bearish on the US economic picture in real terms. Near term peak oil assures me that real economic growth (which is only accomplished by increasing per capita net energy available to society - mostly via oil) is simply not going to happen. Net energy available to society will decrease, thus leading to real economic decline, and a reduction in per capita living standards that are focused solely on consumption.

How this all plays out in nominal terms - well I'm guessing the endgame is inflation, simply because the three choices to solve our "debt problem" are austerity, growth, or inflation, and we've shown ourselves to be terrible at austerity, and with near term peak oil restricting our growth, all that's left is inflation. "Whenever you eliminate the impossible, whatever remains, however improbable, must be the truth." Historically only the British Empire during the 1800s successfully did austerity + growth to get out of debt. Everyone else chose various combinations of growth + inflation.

How long it takes us and what path we end up taking before we get to the inflation situation is another matter entirely. Perhaps Mr Market in all its perversity will show us deflation long enough to shake out the weak hands, and then inflation will appear surprising everyone. Currently 98% are dollar bulls and 98% are euro bears, right? "The crowd is right during the trends, but wrong at both ends."

One assumption is that population growth rates remain intact. If something changes there, well then, decreasing the number of forks eating the pie makes everyone's slice larger even if the pie itself shrinks, doesn't it?

Another assumption is we don't discover a new energy source that's easy to produce and as energy dense as oil. If we do that, then the growth game is back on again. I don't rate this as a likely event. Nothing shows up on my radar screen in this "technology will save us" scenario.

This kind of cheery analysis is why Les calls me a perma bear. :)

As for actual health and happiness - we might be better off as a people if we walked more and drove less, ate home grown food (with all the effort that implies) instead of McDonalds. Notice that only if you cling to the SUV and fight change will you end up suffering! How you experience the coming changes is completely up to you. "Turns out I really LIKE gardening...who knew?"

davefairtex,

Fannie Freddie and portfolio lenders are foreclosing at a furious rate. So what happens when the Fed shuts down these institutions? Our government wouldn't be planning to hand over these massive numbers of homes to their friends in central banks or anything ...would they? Could they be planning to make us a nation of indentured servants working for our board? The dumbing down of our education system has been going on for decades -- today most US citizens have never read our Bill of Rights. The timing to befuddle a depressed and unaware populace is impeccable. Hungry demoralized people don't put up much of a fight.

http://www.youtube.com/watch?v=z4sKdiWlLR8&feature...

Think you're a bad investor? Bono (to my surprise) is worse.

http://tinyurl.com/ydbapcj

So you're in bad company.

Barry thank you; that was among the best and most usefull nutritional video I have ever seen. I am circulating the link among my friends and relatives.

...and knifecatcher thanks for the direct link.

Obesity in the young is probably a function of availability and indulgence. Couple that with heredity and the tendancy of northern peoples to have larger body masses and this might explain some of it. It is a complex question.

Using national statistics for obesity is like believing your 'honest' government statistics on the economy. They may be factually correct but unadjusted give the wrong impression. I am one of the pigs going through the python, a baby boomer. As we age, most of us become heavier. I suggest you adjust obesity with demographics.

As a personal example, my daughter had been grossly overweight since her college days. She is now a raw foods only disciple and in the past year has lost 60 lbs. I think she's nuts but it works for her and I give her support and multiple kudos........

I have alway s believed that it is calories in, work calories out. Kinda like Dicken's Mr. Macawber lamenting his annual budget.

There are many roads to reach ones goals. Each of us decides. My road involves Angus ribeyes. Lots of em! Asparagus and some form of potato side dishes are always welcome...ooh lest I forget, a slab of melted Cabots sharp cheddar on a piece of hot apple pie. Three fingers of single malt Scotch and a Cohiba and well;

Good night.

P.S. I await Bill's Junior goldies report with lust in my heart!

Barry Ritholtz posted some great charts and an article suggesting that the US anger at BP was a little hypocritical - a little like the drug user angry at the violence unleashed by the drug gangs that supply him his daily fix.

Viewing the chart, it is easy to see that the US uses (per capita) twice the oil of europe, and four times the oil per capita in Hong Kong and China.

http://www.ritholtz.com/blog/wp-content/uploads/20...

Who is the cause of the problem here? BP, or the US consumer? It is always easier to blame someone else, than look in the mirror and realize its YOU that is causing all those sea birds to die. (Well except for loannetter, who doesn't drive her car anymore).

Ok, that's a little hyperbole, but you know what I mean.

How about a gas tax that lowers oil use? Then I'd start to believe all those tears shed for the sea life in the gulf might actually be real - people sacrificing their oil use so there is less pressure to find and pump oil from the ground. But that's not gonna happen. Let's pillory BP instead, and keep on driving!

ALOHA!!

Two monetary ties to the "high fructose invasion" in the US diet.

One is linked to RICHARD NIXON who was looking to the issue of cheap food for political reasons. So while NIXON destroyed the global monetary system by defaulting on the gold standard he began food politics and the further destruction of the average American's health, which benefited certain processed food and soft drink corporations as well as the health care industry.

The other monetary tie to the fructose invasion is that it is a very subtle way to reduce life expectancy or at least keep life expectancy from rising which would lessen the fiscal burden on social programs like Social Security and Medicare if indeed Americans began to have shorter lives. Kind of like a dietary engineered global ebola virus. If you can cut life expectancy then the government gets to write less checks to senior citizens. Like keeping CPI low to avoid paying out higher Social Security checks based on COLA.

Those are the thoughts I had from a political and monetary angle. I am glad that Dr. Lustig brought up the politics of food. Any time you have a government this large and this intrusive there is always the monetary component that drives the politics. Not that it was only NIXON, but if it were not NIXON then it would have been the next politician in line. I mean NIXON was just one man so one man does not make policy for the entire World, but instead many like minded politicians with similar political agendas had to support NIXON for these changes to occur in our monetary system and diet. Add in the fact that NIXON was not a dictator so he was "voted" into power in a democracy. Once again the US Voter needs to look in the mirror if they need to blame someone for the current disappointing state of affairs in America. As Dr Lustig points out that these issues have been known since 1972 so why hasn't there been any changes? There have been only two political parties in charge of America's politics and money since 1972.

Believe me obesity is alive and well here in Hawaii ...

This brings me to the conclusion yet again that Americans suffer from Stockholm Syndrome, whereby we constantly vote our captors into power even though they have left a dismal record of failures over the decades. Most of us here on this blog as well as our children have been educated in government owned schools. Would you ever expect such schools to teach "less government"? We have all been brainwashed into believing that having a big government take care of us from cradle to grave is the best answer. The US Constitution was not written with the vision of a big government, in fact the less the better. Of course how will we ever know whether life can be better with much less government unless we stop voting for political monopolies. When we constantly repeat the same mistakes at the voting booth. How will we know? I have total confidence that the REPS will gain more power in November, yet that has never solved any thing in the past. In fact it was the Republican party that got us into War in the Middle East and ran up huge debts. Thanks to this two party monopoly we will now "reward" the Republicans who got us into War and huge debt with more power again in November. And Rush Limbaugh pays Elton John $1MIL to sing at his wedding ... Rush you are such the "common man" ... just another "average American"! Yeah, I was stuck with Rod Stewart singing at my wedding, ah, Bob Dylan was booked up singing at weddings in Hilo!

Oopps ... Fantasy off ... Reality on ... right ...

Now according to Dr. Lustig we can add our current diet to the list of government failures as well as the multitude of diseases and costly medical procedures such diets produce. So the very two party government that endorsed the fructose invasion now wants to dictate total healthcare. As I have said in the past I view the nationalization of healthcare in America as a default on Medicare. It may not seem so on the surface but allow a few years to pass and see what happens. Everything that we now consider detrimental or as intervention started with the government getting their "foot in the door". It started with what was perceived as a small loss of personal freedom for the greater good. Look how well the USDA has worked out ... I can tell you of many other USDA and Hawaii Ag failures in Hawaii that have nothing to do with diet. The again look at the marvelous success of the SEC ...

Thanks for the video ...

Dave,

I knew I'd get some good feed back. All interesting points — trouble is, I can believe it may be tried.

They could also force spending by issuing Social Security, welfare payments, etc. as debit cards with an expiration date. I don't remember where I read it (possibly Peter Schiff).

If this comes about, the Tea Parties may become more like the European and Asian protests turning tea into a party with teeth!

I will be using the info Bill provided this past week from Seth Klarman and balancing my treasuries with way out-of-the money puts.

If your view of oil is accurate perhaps we will be forced to do what we should have in the 1970s and go to mass transportation, ration gasoline or even limit it too emergency vehicles. Gee, kids may have to walk to school — what a concept! We're raising a society of lard a_ _es. I've spent forty plus years growing shade trees in what was a corn field. Now I may need them for fuel and then have enough sun to grow veggies.

My biggest investment problem has always been seeing the situation rather clearly and expecting it to happen much sooner. Timing is everything — or more accurately insuring the inevitable while you wait.

Thanks (?) for the input.

Good article.

I would add that simple exercise as Loannetter advocates is a great weight reducer. Although not overweight by government standards, when I retired and was no longer wedded to my computers 10 to 15 hours a day, I began riding my bike daily (stationary one in winter). Now, in addition to my morning ride I make it a habit to ride it to the hardware and grocery stores for smaller purchases.

I lost 26 pounds the first summer without needing to change the already good diet my wife provides.

Except for a few minor age related health annoyances, I feel a whole lot better than I did ten years ago.

You know the guy who speaks out publicly about the blatant fraud that he knew from experience in his position during the S&L crisis?

Sheila Blair's shock horror suggestion that the American dream should be abandoned:

http://www.nytimes.com/2010/06/12/business/12nocer...

led me to the Office of the Comptroller of the Currency, which regulates the banks:

http://en.wikipedia.org/wiki/Office_of_the_Comptro...

whose former employees, employed at the time of Bill Black, have been since 2008 working out how they can profit from this fire sale of assets:

http://www.nytimes.com/2008/12/29/us/29bank.html?p...

even as Sheila Blair suggests that it was this govt. office that blocked attempts to reign in the shoddy lending practices.

The ramifications of this conflict of interest between govt. and its former staff becomes more concerning when reading the latest Mauldin letter.

Jonathan Tepper of Variant Perception, who guest wrote Mauldin's latest e-letter suggest 3 structural changes important to investment - one being increased volatility in the business cycle (trend growth close to zero and frequent recessions)

http://www.frontlinethoughts.com/pdf/mwo061110.pdf

What is the thesis for investment in America when the economy is perhaps destined to produce little economic growth, value is being snapped up by private interests with ties to power, regulation is going off the deep end, structural unemployment is destined to remain high, whole regions of economic activity is hampered by environmental disaster etc etc.

Beginning to wonder how far the $POG can really go before real economic wealth creation returns to occidental economies.

http://tinyurl.com/39l6rld

"loss of integrity in the well itself may explain why BP is drilling its relief wells more than ten thousand feet beneath the leaking pipes on the seafloor (and see this).

Yesterday, recently-retired Shell Oil President John Hofmeister said that the well casing below the sea floor may have been compromised:

[Question] What are the chances that the well casing below the sea floor has been compromised, and that gas and oil are coming up the outside of the well casing, eroding the surrounding soft rock. Could this lead to a catastrophic geological failure, unstoppable even by the relief wells?

John Hofmeister: This is what some people fear has occurred. It is also why the “top kill” process was halted. If the casing is compromised the well is that much more difficult to shut down, including the risk that the relief wells may not be enough. If the relief wells do not result in stopping the flow, the next and drastic step is to implode the well on top of itself, which carries other risks as well."

"Oil industry expert Rob Cavner believes that the casing might be damaged beneath the sea floor, noting:

The real doomsday scenario here… is if that casing gives up, and it does come through the other strings of pipe. Remember, it is concentric pipe that holds this well together. If it comes into the formation, basically, you‘ve got uncontrolled [oil] flow to the sea floor. And that is the doomsday scenario.

Cavner also said BP must “keep the well flowing to minimize oil and gas going out into the formation on the side'"

My comment:
For several decades the US government in concert with the oil and auto industries have misguided this nation to pursue a path of unsustainable consumption of oil. Apparently no risk has been too great in the quest for more oil. Excessive hubris and greed has blinded the decision makers to what should have been clearly foreseeable perils. They embroiled the US in an unending anti-insurgency war in Iraq for control of Iraq's oil. They caused the US permitting agency to suspend the Environmental Impact Review process in relation to permits to drill for oil under the Gulf of Mexico. Its nothing short of blinkered optimism to think that environmental impacts would not occur just because the environmental permit process review was avoided. Or, perhaps all the wells in the Gulf of Mexico are leaking oil and gas and the government does not want the public to know about it. Perhaps BP's gusher is the black (pun) swan event for the anti-environmentalists.

Lessmore,

I haven't heard anything as bad as what you point out here, but have had similar thoughts. (Imagination is a frightful thing.)

Just what is the absolute worst case? Does anyone really know?

From a purely short term, mercenary point of view what companies are benefiting from this terrible "black (pun) swan" disaster containment/cleanup?

Anyone?

Grym,
I apologize for interjecting my thoughts into the thread between Dave and yourself. In your post #64426 I latched onto mention of “Bernanke's 2002 speech” and it made me recall Bernanke’s remarks (not likely in that speech) that he would not let the banks fail, just before or about the time of the big market advance from 666. I could kick myself for not taking him at his word, but then again, there have been so many words. Later in Dave’s post #64426 he stated “I'm just saying this so we don't get a stock market crash locked into our brains too closely.” And in Dave’s post #64430 Dave wrote “How this all plays out in nominal terms - well I'm guessing the endgame is inflation, simply because the three choices to solve our "debt problem" are austerity, growth, or inflation, and we've shown ourselves to be terrible at austerity, and with near term peak oil restricting our growth, all that's left is inflation. "Whenever you eliminate the impossible, whatever remains, however improbable, must be the truth." Historically only the British Empire during the 1800s successfully did austerity + growth to get out of debt. Everyone else chose various combinations of growth + inflation.”

That sent me off on my verbal romp, as I expect growth and I expect China to be the driver. Of course the other possibilities and combinations you and Dave mentioned are possible as well, such as “growth + inflation.”

A tired horse is “…Treasury pursuing…Beijing to allow the renminbi to appreciate”. Once again, members of congress are threatening legislation (I haven’t watched this mornings talk shows.) aka trade barriers.

So “everyone” wants global domination. China like Iran is using the “slowly cooking a frog to death approach” to waste away time, treasure and energy until they achieve their desires. So far, the U.S. continues vacuous jaw boning and it plays well to the sheeple.

Nations are to be expected to play their hands as far as they can, as Kaimu says “It all works until it doesn’t”. My expectation is for China to increase it’s importation of goods and services to the degree necessary; else legislated trade barriers will be forthcoming (congress implied so, and it must be true?) I hope this is accomplished without driving the S&P to sub 666 in order to enlighten and provide cover for our elected overlords to get in front of the citizen’s parade for a time, instead of the bankers, unions and conglomerates they have enabled and helped so abundantly at the citizen’s expense.

The worst case scenario is what I went on about before, reneging on fiat promises. Like Bill has taught us, the waves build then recede. My hope and expectation is that we have increased trade, increasing economic and job growth, but it would be foolish to dismiss the possibility of ultimate chaos and its permutations.

A recent post included a link to comments by George Soros “…we have just entered Act II” of the crisis as Europe’s fiscal woes worsen and governments are pressured to curb budget deficits that may push the global economy back into recession. “The collapse of the financial system as we know it is real, and the crisis is far from over,” “...the current situation in the world economy is “eerily” reminiscent of the 1930s with governments under pressure to narrow their budget deficits at a time when the economic recovery is weak.”
http://tinyurl.com/2fsoh59

Excellent link, thanks. I would also add:

http://mpettis.com/

" Anatoly Sagalevich of Russia's Shirshov Institute of Oceanology warns that the Gulf of Mexico sea floor has been fractured “beyond all repair” and our World should begin preparing for an ecological disaster “beyond comprehension” unless “extraordinary measures” are undertaken to stop the massive flow of oil into our Planet’s eleventh largest body of water.Most important to note about Sagalevich’s warning is that he and his fellow scientists from the Russian Academy of Sciences are the only human beings to have actually been to the Gulf of Mexico oil leak site after their being called to the disaster scene by British oil giant BP shortly after the April 22nd sinking of the Deepwater Horizon oil platform.BP’s calling on Sagalevich after this catastrophe began is due to his expertise with Russia’s two Deep Submergence Vehicles MIR 1 and MIR 2 [photo 2nd left] which are able to take their crews to the depth of 6,000 meters (19,685 ft).According to Sagalevich’s report, the oil leaking into the Gulf of Mexico is not just coming from the 22 inch well bore site being shown on American television, but from at least 18 other sites on the “fractured seafloor” with the largest being nearly 11 kilometers (7 miles) from where the Deepwater Horizon sank and is spewing into these precious waters an estimated 2 million gallons of oil a day." from whatdoesitmean.com

Sen Nelson of Florida and Matt Simmons have also mentioned this possibility, probably being privy to the above info.

Apparently the Russians are experienced in using small nukes to cap out of control wells and such tactics may need
to be employed in the Gulf. Obviously it is in the financial interest of BP to redrill to get control and harvest the oil
rather than using a bomb to collapse and seal the field. Unless there is some policy change, looks like we will have to
endure the leak until sometime in Aug. to see if the current remedy works or not.

Barry,

Thanks for posting Dr. Ludwig's video treatise on US Obesity. The HF&D (Humongous Food and Drug) makers are doing what they can to keep these statistics suppressed. I used to create advertising for THE cola drink in my Atlanta days--another huge fructose proponent -- and learned later that their secret recipe is linked to asthma. Anyone with lung or bronchial issues should absolutly not drink the stuff. Mothers were taught to put that same cola in a baby's formula to stop colic. Imagine. How early the addictions are taught.

We have to do our own homework to stay alive in more ways than one when presented with so many accepted packaged, promoted, sanctioned options. A noted nutritionist suggested 'walk through the vegetable department with an open mind and feel which foods are specificially needed by your body'. Apparently very young children will choose foods that are healthy for them when given a choice. Who chooses a fizzy drink that burns your throat and nose when you first drink it? The first rush is followed by the sugar low. We become numb to these effects with a desire to blend in with our peers eating their happy meals at our first birthday parties. Children raised on these standards take their children to the same feeding grounds and the inculcation is complete.

I know the readjustment to real food will take some time. However the benefits will be immediate for those willing to learn how to eat to live.

In hope to add some ray of light in the conversation,

http://photography.realitytrader.com/2010/06/tulip...

Grym... I had mentioned CLH 4 weeks ago, po'ed that I didn't grab at $ 54+.. at the same time, I mentioned ' pesi '. Although primarily nuclear waste oriented, they also handle oil contamination... several Florida locations... I contacted their PR and they have " offered their services " ... been counting coup since mention, but move, if any, will come in next 7 days... MoKat, perhaps this is why Bill mentioned a very large buy of BP Jan. 20 puts by an Institution last week....

I wasted a good one hour and thirty minutes listening to the well meaning Dr. Lustig.

Aside from the biochemistry which was excellent (his math was off at one point) his message was this;

Sucrose and fructose as derived from corn are the SAME.
Both are bad.

Glucose is less bad.

Ethanol is bad unless it is Marker's Mark. Kidding!

People are consuming more calories in their diets mainly in the form of sugars. People are becoming obese BECAUSE they are consuming more sugars. DUH!! I learned this in high school.

I think Pliny the elder made similar observations.

To his credit, he did not really attempt to refute the first law of thermodynamics. He simply offered that if you eat more (sugars-whatever) and do not 'work off' those calories that you will gain weight. I still maintain that obesity is a function of opportunity and indulgence. Substitute poi for sugar in caloric terms and the result would be the same. Okay I forget the magic feedback loop that tells you not to continue eating. If that is the 'cause' then we have been reduced to biological urges only. We lack logic and control. We are all victims cause 'da devil made me do's it!'

Prof. Lustig sees a conspiracy lurking behind every hot dog bun and chocolate nutty bar. I do not disparage him for his opinion. I share it! But what rational person would not. Freakin old news. Chalk it up to 'whowoodathunk.' For sad I predict a hugomongous increase in conspiracy theories during this cycle of malaise. 'IT MUST BE SOMEBODYS FAULT' Or the world just went stupid for 30 years.

As to ethanol...My gripe against fructose corn syrup is that it has depressed the price of white sugar. The kids today are taking shortcuts and making bootleg from it. Everyone knows that sourmash corn makes the tastiest corn licker...A little iodine for color and hair tonic for aging and voila! At least $8 a quart.

"it pointed out that the number of investors betting on a 20 per cent fall in the FTSE 100 index, based on their purchase of options connected to such a scenario, had risen from below 5 per cent to about 13 per cent in the past month alone.
Although this is below the 25 per cent level around the time of the Lehman implosion, the rate of increase is similar."

http://www.telegraph.co.uk/finance/comment/edmundc...

Thank goodness!

All this time I thought we were simply protecting the heroine dealers. I guess that was just poppycock after all.

With oil from Iran and minerals from Afghanistan it makes more sense...

But wouldn't be easier and cheaper to just buy their stuff?

Seriously though, now instead of a one crop ag economy they could join the rest of the world if they develop this.