Thursday, November 26, 2009

McAlvany Weekly Commentary, Nov 25, 2009

The Yellow Brick Road: Relating Oz to a Zero Interest Rate Policy and 6,932 Years

November 25th, 2009

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Frontline video expose of the credit card industry

As credit card companies face rising public anger, new regulation from Washington and staggering new rates of default and bankruptcy, FRONTLINE correspondent Lowell Bergman

investigates the future of the massive consumer loan industry and its impact on a fragile national economy.

In The Card Game, a follow-up to the Secret History of the Credit Card and a joint project with The New York Times, Bergman and the Times talk to industry insiders, lobbyists, politicians and consumer advocates as they square off over attempts to reform the way the industry has done business for decades. (more)

Click here to watch the video

Bankruptcies Jump, Hitting Highest Level in Four Years

U.S. bankruptcy filings rose 33 percent in the third quarter to the highest number since 2005, government data show, as rising unemployment and tight credit made it more difficult for consumers and businesses to stay current on their debts.

"With unemployment surpassing 10 percent and credit to businesses remaining tight, consumers and businesses are increasingly turning to the financial relief of bankruptcy," said Samuel Gerdano, executive director of the nonpartisan American Bankruptcy Institute, in a statement.

There were 388,485 filings in the July-to-September period, up from 292,291 a year earlier and up 2 percent from the second quarter's 381,073, according to data released Wednesday by the Administrative Office of the U.S. Courts.

Consumer filings rose 33 percent to 373,308 from 280,787 a year earlier, while business filings increased 32 percent to 15,177 from 11,504. (more)

11-24-2009 Gerald Celente on the John and Ken Show - Part 1/2

Soros: Major Bloodletting Ahead

Billionaire George Soros believes a “bloodletting” may be in the offing for leveraged buyout firms (LBOs) and commercial real estate investors amid the worst economy in seven decades.

“In commercial real estate and leveraged buyouts, the bloodletting is yet to come,” Soros said in a speech in Europe, reported by Bloomberg News.

“These factors will continue to weigh on the American economy, and the American consumer will no longer be able to serve as the motor for the world economy.”

Bankers across the globe have accounted for $1.66 trillion of write downs and write-offs on bad loans since the start of the credit crisis in 2007. (more)

Prechter: Leverage 200 Percent, Go Short

One of the leading financial newsletter publishers in the U.S., Mark Hulbert of The Hulbert Financial Digest, is reporting that now may be the time for investors to leverage their portfolios “200 percent” and short the stock market.

Writing in his column for MarketWatch, Hulbert, notes that Robert Prechter, the famous follower of the Elliott Wave theory, is now totally bearish on the U.S. stock market.

“That's because he has been playing the equity market from the short side for quite some time now,” writes Hulbert.

“But what is news is that, earlier this week, he became even more aggressively bearish than usual: He is now recommending that traders allocate 200 percent of their stock trading portfolios to shorting the stock market.” (more)

The Dollar Bubble

Yields on Short Term Treasuries

While the stock market continues its “recovery rally,” there’s something strange going on in the bland world of bonds. Check it out:

True, there’s hardly a difference to the everyday investor between a 0.3% and a 0.04% yield. After fees and inflation, you’ll end up losing money either way.

But it’s worth noting that short-term Treasuries are at their highest demand since it hit the fan this time last year. In fact, the Treasury auctioned off $31 billion in 6-month bills yesterday at 0.14%, the lowest level ever. Ditto with their auction of 2-year notes later in the day.

In other words, the majority of the market can’t find anything better to do with cash than stuff it away at a near-negative yield for a few months… not the best sign for stocks. With the holiday lull and tax-selling season right around the corner, it’s hard to blame them.