Two More Bailouts and More!

by Larry Levin


There are a few different issues to discuss today so I'll be covering them in bullet form.

Fannie Mae is insolvent - a zombie banking institution - but it is being bailed out again. It recently asked for, and will surely receive, another $15 billion.

Due to bailout fatigue and the righteous anger of US taxpayers, the White House is now funding bailouts inside of other bills that Congress passes. President Obama just signed a $45 billion plan to expand a tax credit for first-time homebuyers and extend jobless benefits...again. Surely you heard this on the news. What the lame-stream media failed to tell you however, is that the bill also provides MASSIVE tax refunds to money-losing companies. The majority of this money, $33 billion, is a BAILOUT disguised as a tax credit for the very homebuilders that helped fuel the nonsensical housing bubble in the first place. But since it wasn't heralded as a bailout, the lame-stream media have ignored the very reason this bill was written. The lame-stream media have instead focused its attention on the extension of unemployment benefits, which amounts to just $2.4 billion of the $45 billion fleecing of the US taxpayer.

Unemployment is bad and not improving. Friday's data was worse than expected with 190,000 more folks receiving pink slips marking the 22nd consecutive month of job losses.

The official unemployment rate spiked from 9.8% to 10.2%.

The unofficial unemployment rate, which is more accurate, now stands at 17.5%.

The numbers are actually worse; the Bureau of Labor and Statistics (BLS) claims via its "black box guessing model" that new businesses have miraculously opened for NINE consecutive months, thus birthing massive employment for NINE consecutive months. Of course, this allows the BLS to reduce the overall horrendously bad news coming from the real employment picture in the US. It's safe to say that the BLS is full of BS.

The Federal Reserve is considering reverse-repo's with the major banks to reduce its massive extra liquidity in the system. The banks essentially said "no problem, as long as you reduce our Tier 1 capital requirements." It has been reported that the Fed will say yes. In other words, the banks want to RE-LEVERAGE their assets like they did over the last several years. Umm, how'd that work out again? Said yet another way - the very banks that are already insolvent want to become even more insolvent. And why not roll the dice they're thinking; they own the clown-posse in Congress. They'll get another bailout whenever they want.

Five more banks were "put down" Friday by the FDIC.

One of the newly shuttered banks was San Francisco's United Commercial Bank. A year ago the federal government invested $299 million in bailout funds in the bank in exchange for preferred stock, which was made worthless by the failure. "Aaaand it's gone." Moreover, the FDIC said the collapse would cost the federal deposit insurance fund an estimated $1.4 billion. "Aaaand it's GONE!"



Previous Day's Trading Room Results:

Trade Date: 11/6/09

E-Mini S&P Trades*
(before fees and commissions):


1) 80% sell @ 9:55am at 1062.25 = b/e (1 lot)

2) OTF buy @ 12:04pm at 1064.25 = b/e & +2.00 (2 lot)

3) Algorithm positions (2)

4) "Reading the Tape" positions (8) ...combined Secret's, Algo, & "Reading the Tape" total...-2.50



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