Good thoughts from from Nicholas White on the unintended cost of government manipulation for political gain. Can Retailers Compete With Government’s “Crown Corporations”?

China Stakes has an article which argues China’s expectations for inflation are building, yet it is experiencing deflation presently. China Inflation Expectations Building

Th recent North American “Summit” from a Canadian’s perspective. Mixed Messages from Mexico

Newt Gingrich and Emily Renwick argue for repealing the capital gains tax. Capital Gains Tax: An Argument for Repeal

John Mauldin gives us a summary of Gary Shilling’s recent thoughts.  Slow Long-Term Growth, And Government’s Response

The National Inflation Association suggests what might be next: Cash for Clunkers Could Lead to Government Bulldozing Homes

Today’s theme – there’s a slow simmer going on and people are beginning to get ticked off.  The economic problems have their roots in political problems.  Maybe we need to stop and fix our political problems before addressing our economic one – namely getting our elected officials to do the right thing.  Read and get mad.

 Corporately Owned Congress Blocking The Way For Meaningful Reform
–American Chronicle

 Financial Sector Regulation: The Good, the Bad, the Ugly
–Dissident Voice

 Too big to fail
–FInancial Times

 Risk of Major Social Upheaval Likely if Bank Bonanza Continues
–Gather, Inc.

 Bernanke Worried About HR 1207 Destablizing the Dollar
–Lew Rockwell, CA

 Fed Documents Fuel Concerns About Expanding Central Bank’s Role
–Wall Street Journal

 Goldman Sachs Principal Transactions Update: Back With A Vengeance — this is beginning to smell … bad …
–Zero Hedge

For More Headlines

And we thought the Chinese were just laughing at Timmy.  So … tin foil hat in place … do you think the Chinese will declare financial war on us?  Have they already done so by being responsible for the $134 billion of bearer bonds?  Just asking …

 Nouriel Roubini responds to Bloomberg report Dollar Drops as China Repeats Call for New Reserve Currency here The Chinese Proposal for a New Global Super Currency.

Sooner or later the yahoos in Washington and New York are going to start endangering our ultimate national security — our economy.

Oooops … I guess they already have.

Today’s sub trend/lesson is … drum roll … not all Republicans/conservatives are arses and not all Democrats/Liberals are naïve fools.  Moral – don’t judge a potential ally by his clothing.  We’re going to need all the friends we can get to stop the turkeys to the left and the sharks on the right from really screwing up our country.

Accountability, transparency, responsibility, moral hazard are in the greater good — Ron Paul’s Bill Would Put Fed on the Hot Seat
–AFP

When the FEDury finally does slow down its spending what happens? — The temporary problem: Rolfe Winkler — Spending Money is easy … stopping is a whole lot harder
–Alibaba.com

Voices are beginning to say Whoa Nellie — Robert Scheer: Obama Is more of the same
–Appeal Democrat

Duh!  Hello Congress … the power of the FEDury is a scary thing.  Personally I don’t believe in benevolent rulers or the Easter Bunny — Bernanke Grilling May Weaken Case for Fed as Risk Regulator
–Bloomberg

Not everybody things banks are too big to fail — Bank of England: no bank ‘too big to fail’
–Business Week

Bill Bonner is always good to read — The Public Still Has Faith in Economists – But Why?
–Daily Reckoning

Euphemism Alert!  I believe the evidently politically incorrect term is socialism — Is the Obama Administration’s Financial System Overhaul Pushing Us Toward State Capitalism?
–Money Morning

Don’t discount this liberal she could be a valuable ally in the effort to prevent what’s going on in Washington while folks quake in their boots — Arianna Huffington: We’ve Gone From Saving Wall Street in Order to Save Main Street to Just Saving Wall Street
–TheUnion.com

Well … gee … you mean bankers just make good money vs. ridiculous bags full? — Plain-Vanilla Financing Could Melt Bank Profits
–Wall Street Journal

For More Headlines

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NYT: The Economy is still at the brink - Two voices ask if the emperor is as naked as he appears to be

FT: GM shows gravity of pension challenge – the new GM could be bankrupt again in a very few years

TPC: The state of the consumer – While the U.S. government was dumping trilllions of dollars into bank coffers consumers were neglected

SA: Bond market to Obama: Oh no you can’t… -This avalanche of supply, competing with a surge in equity issuance and other private sector capital demand, is clearly one key issue driving higher yields

Bloomberg: Citigroup May Gain Geithner Swap Backing as Pandit Bucks Bair - Sheila Bair is being put in her placeand the real power remains with the big banks

FT: China stuck in ‘dollar trap’ – China is still buying record amounts of US government bonds, in spite of Beijing’s increasingly vocal fear of a dollar collapse…

Bloomberg: Housing Hitting Bottom by June Means Fewest Starts Since 1945 - “There are very few V-shaped recoveries in the history of real estate, and this one is likely to be even slower because of the size of the bubble,” said Robert Shiller…

Bloomberg: JPMorgan $29 Billion WaMu Windfall Turned Bad Loans Into Income – more funny money…

Bloomberg: Lowest Libor Hides ‘Exceptionally Wide’ Bank Spreads – all is not what it seems…

AP: Saudi oil minister: OPEC to hold output steady- new leg down?

WSJ: Obama Administration Sparks Battery Gold Rush – a gold rush to power new environmentally friendly cars…somebody usually gets frozen to death in gold rushes…

CNBC: Home Prices Tumble by Record 19.1% – housing bottom?



NYT Cargo Ships Treading Water Off Singapore, Waiting for Work The root of the problem lies in an unusually steep slump in global trade, confirmed by trade statistics announced on Tuesday.

WSJ Goldman Takes Heat for Conflicts at Whitehall Goldman is in an especially tricky position when acting as both a borrower and lender to itself, critics say.

WSJ US Median Home Price Declines 14% …first-time home buyers accounted for half of all purchases in the quarter, and many of them zeroed in on foreclosed homes.

FT Willem Buiter Inflection Popints and turning points – since you asked President Trichet’s statement that the cycle is at an inflection point is therefore quite consistent with the IMF’s forecast that real economic activity in the Euro Area will continue to decline for this year and much of the next.

FT US Foreclosure Program may be insufficient …the growth in problem loans is now migrating to prime borrowers and ordin­ary loans with 30-year terms and fixed interest rates.

WSJ Can China’s Consumers Replace the U.S.’s? …bad news not only for the trade balance, but also more specifically for export-dependent U.S. companies.

FT Credit insurance hampers GM restructuring Hedge funds and other investors stand to make billions of dollars on credit insurance contracts if GM de­clares bankruptcy.

WSJ Ford to Sell New Shares in Show of Strength Ford believes raising the cash is worthwhile despite any backlash from current stockholders who fear their shares will be diluted.

Bloomberg Paul Krugman Says Rapid Economic Recovery ‘Extremely Unlikely’ “It looks to me now as if the markets are now pricing in a rapid recovery, that they’re pricing in a V-shaped recession, which I consider extremely unlikely”

NYT G.M. Says Bondholders Have its Final Offer on Debt Exchange G.M. plans to give 89 percent of the company to the Treasury and to a new retiree health care fund for the United Automobile Workers union, 10 percent to bondholders and 1 percent to existing shareholders.

WSJ Was It a Sucker’s Rally? You can have a jobless recovery but not a profitless one.

CNBC Employers Cut 539,000 Jobs in April, Jobless  Rate at 8.9% – “smaller than expected” and “the smallest amount since October”

CNBC  Charts: This Rally Has Bull Characteristics - S&P 500 is giving strong technical signals it has entered a bull market

Pension Pulse What about stress testing pensions? – Investing public money on the basis of political considerations, rather than merit, heightens the risk of waste and loss

Seeking Alpha Ed Yardeni Likes Emerging Markets, High Yield Bonds: Believes Europe’s in for Trouble - IndexUniverse.com’s Murray Coleman interviews the market-oriented economist and investment analyst.

Monsters Inc. by James Surowiecki at the The New Yorker – How the banks got so big and why they need to be smaller…

GM Bankruptcy Probable as Obama Favors UAW Against Bondholders by Jeff Green and Caroline Salas at Bloomberg – lowering the importance of the rule of law to favor the unions

New York Fed Chairman’s ties to Goldman raises questions by  Kate Kelly and Jon Hilsenrath at WSJ – New York Fed Chair appears to be just like the old one, Tim Geithner… owned by GS.

Wall St confidence grows over stress tests by Kiran Stacey at FT – We’ve been saying the government is managing the release of stress tests results to produce an anticlimax…