$106 Billion Helicopter Drop, Earnings Disappointments & Rebates In Your Tank
The latest casualty of the housing market, central bank debauch & $135 oil...touring the great 48 in a motor home.
The Naybob tanked up yesterday, 10 gallons of 89 octane for $42... and muttered, can't wait till its $85...
On the way home, stopped to chat with a neighbor washing his 40 ft Monaco diesel pusher... its been idly parked of late..
But he's going to Iowa next week and spending his tax rebate...
At 8 miles per gallon of diesel at $5.50 per gallon, that 4000 mile round trip will cost him around $3000...
MSN's Markman nails the gasoline "tax"; why July earnings will disappoint and also explains how the Fed's TAF (Term Auction Facility)...
AKA "the worlds largest pawn shop" nattered about here, here, here, here, and here.
is better than a helicopter drop by "liquefying the ill liquid" in Why the Tax Rebates Won't Work
On Oil... Crude oil has reached $135 a barrel, making our oil habit cost around $2.83 billion a day.
New research suggests that most of the money originally expected to go to the likes of Wal-Mart Stores...to ward off a recession
will go straight to Saudi Arabia, Canada and Nigeria as consumers see an ever-larger share of their wallets sucked into their vehicles' gas tanks.
And, as the tax rebate bonanza disappears into an acrid cloud of carbon vapor, more than likely so, too,
will the recent rally in stocks as corporate earnings fail to materially rebound...
On earnings... on Jan. 1, analysts estimated that first-quarter earnings growth for S&P 500 Index companies would clock in at 5.7%.
By April 1, their estimates for the first quarter had fallen to a negative 11%. Yet it turned out that was still too optimistic, as first-quarter earnings fell 17.5%.
the second quarter is already deteriorating for U.S. businesses a great deal faster than anyone had imagined.
And investment analysts are having a hard time keeping up with the decline, adding to the risk of dangerous downside surprises in July.
estimated "growth" for the second quarter now stands at a negative 7%. Just two months ago, the expectation was for a 2% contraction.
So figure expectations for contraction will likely fall to the 10% range by July 1 and then sink from there to as low as 20% as fuel and raw material costs
snag a larger and larger portion of the amount of money that individuals and companies had once planned to spend on goods and services.
$106 Billion Helicopter Drop...
the Fed has delivered $75 billion to U.S. institutions, $25 billion to European banks through an extraordinary "swap" system and $6 billion directly to Swiss banks.
That's all on loan at 2% at a time when inflation is north of 2.5%, so it's essentially free.
Not only can banks and brokers put up their skeeviest mortgage assets as collateral, in the Term Auction Facility...
but the TAF lets them keep the money for 28 days instead of overnight, and they can roll over the loans at the end of that span.
This creates money from thin air because those assets are mostly not generating cash flow and cannot be sold anywhere else.
It's as if you dumped all the junk in your house into a Magic Money Machine and out came bundles of $100 bills you could keep indefinitely.
Conservative commercial banks want it closed as soon as Sept. 1 because they resent the competition for funds from risk-taking brokerages,
while brokers are begging to keep it going.
The Naybob tanked up yesterday, 10 gallons of 89 octane for $42... and muttered, can't wait till its $85...
On the way home, stopped to chat with a neighbor washing his 40 ft Monaco diesel pusher... its been idly parked of late..
But he's going to Iowa next week and spending his tax rebate...
At 8 miles per gallon of diesel at $5.50 per gallon, that 4000 mile round trip will cost him around $3000...
MSN's Markman nails the gasoline "tax"; why July earnings will disappoint and also explains how the Fed's TAF (Term Auction Facility)...
AKA "the worlds largest pawn shop" nattered about here, here, here, here, and here.
is better than a helicopter drop by "liquefying the ill liquid" in Why the Tax Rebates Won't Work
On Oil... Crude oil has reached $135 a barrel, making our oil habit cost around $2.83 billion a day.
New research suggests that most of the money originally expected to go to the likes of Wal-Mart Stores...to ward off a recession
will go straight to Saudi Arabia, Canada and Nigeria as consumers see an ever-larger share of their wallets sucked into their vehicles' gas tanks.
And, as the tax rebate bonanza disappears into an acrid cloud of carbon vapor, more than likely so, too,
will the recent rally in stocks as corporate earnings fail to materially rebound...
On earnings... on Jan. 1, analysts estimated that first-quarter earnings growth for S&P 500 Index companies would clock in at 5.7%.
By April 1, their estimates for the first quarter had fallen to a negative 11%. Yet it turned out that was still too optimistic, as first-quarter earnings fell 17.5%.
the second quarter is already deteriorating for U.S. businesses a great deal faster than anyone had imagined.
And investment analysts are having a hard time keeping up with the decline, adding to the risk of dangerous downside surprises in July.
estimated "growth" for the second quarter now stands at a negative 7%. Just two months ago, the expectation was for a 2% contraction.
So figure expectations for contraction will likely fall to the 10% range by July 1 and then sink from there to as low as 20% as fuel and raw material costs
snag a larger and larger portion of the amount of money that individuals and companies had once planned to spend on goods and services.
$106 Billion Helicopter Drop...
the Fed has delivered $75 billion to U.S. institutions, $25 billion to European banks through an extraordinary "swap" system and $6 billion directly to Swiss banks.
That's all on loan at 2% at a time when inflation is north of 2.5%, so it's essentially free.
Not only can banks and brokers put up their skeeviest mortgage assets as collateral, in the Term Auction Facility...
but the TAF lets them keep the money for 28 days instead of overnight, and they can roll over the loans at the end of that span.
This creates money from thin air because those assets are mostly not generating cash flow and cannot be sold anywhere else.
It's as if you dumped all the junk in your house into a Magic Money Machine and out came bundles of $100 bills you could keep indefinitely.
Conservative commercial banks want it closed as soon as Sept. 1 because they resent the competition for funds from risk-taking brokerages,
while brokers are begging to keep it going.
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