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The BLS’s U-6 number, which is sometimes called the “real” unemployment rate, because it takes into discouraged workers who aren’t looking for work ticked up in April from 16.9% to 17.1%.
Here are some other internals;
* Persons unemployed 15 weeks or longer held steady at 5.8%.
* The average workweek increased .1 hours to 34.1 hours.
* Average hourly earnings increased by a single penny to $22.47.
* The Federal Government created 66,000 of the 290K jobs gained through the census.
* The birth/death adjustment (guess) added 188,000 jobs, which bears will seize on
* The Health Care industry created 20,000 new jobs.
* Manufacturing added 44,000 jobs (strong)
The plans of the ruling classes are not merely unjust. They are unworkable. Over the next three years, Greece will add $50 billion in deficits, stabilizing the debt at 150% of GDP. It will also need to come up with $70 billion to pay off debt that matures over the next two years. That is more than the amount offered in the bailout. Which means, Greece will have to borrow more money as early as next year, probably triggering another crisis. Plus, there are the other weak sisters and spendthrift brothers in the European family. Bailing them all out could cost as much as 1 trillion euros.
But the real problem is much deeper. It is philosophical as well as mathematical. Too much debt, like too much dying, is not a transitional state. It's a final state. And once the soul has left the body, there is no point in trying to keep the husk alive. Similarly, when a debt cannot be repaid, there's no use pretending. When you cannot keep up with the interest on a debt, it is added to the principle. The debt grows, becoming evermore unmanageable. It's better to admit the error as soon as possible and start organizing the details of your financial funeral.
And now for today's bombshell - lietarlly at the very end of Moody's 10-Q filed last night, we find this stunner:
On March 18, 2010, MIS received a “Wells Notice” from the Staff of the SEC stating that the Staff is considering recommending that the Commission institute administrative and cease-and-desist proceedings against MIS in connection with MIS’s initial June 2007 application on SEC Form NRSRO to register as a nationally recognized statistical rating organization under the Credit Rating Agency Reform Act of 2006.
Well at least it took Moody's under two months to report this massively material development, which while we are not positive on how to read the C&D action on the NRSRO registration, could mark the beginning of the end for the rating agency. If the firm is enjoined from providing additional rating research should the SEC action find fault and proceed with a lawsuit, it would mean game over for the business. Egan-Jones: it's IPO time.
We will be shocked, shocked we tell you, to find that Mr. Buffett has sold out his entire position in MCO when BRK's next 13-F is filed.
The Dow Jones Industrial Average posted its biggest intraday loss since the market crash of 1987, the euro slid to a 14-month low and yields on Greek, Spanish and Italian bonds surged on concern European leaders aren’t doing enough to stem the region’s debt crisis. U.S. Treasuries surged.
The New York Stock Exchange told CNBC that there were no system errors during the Dow’s plunge as speculation of bad trades swirled through the market. The Nasdaq OMX Group Inc. said it is working with other markets to review the plunge.
“It’s panic selling,” said Burt White, chief investment officer at LPL Financial in Boston, which oversees $379 billion. “There’s concern that the European situation might cool down global growth and freeze the credit markets.”
Bank Swaps Surge as Moody’s Raises Sovereign Contagion Alert
The cost of protecting European bank bonds from default surged to the highest level in 13 months as Moody’s Investors Service said lenders face “very real, common threats” from the region’s fiscal crisis.
Banking systems in Greece, Portugal, Italy, Spain, Ireland and the U.K. may come under pressure as the crisis worsens, Moody’s said in a report today. The ratings firm said yesterday it may downgrade the Portuguese government and its banks after Standard & Poor’s last week cut the sovereign debt of Greece, Portugal and Spain.
(Financial Times) Analysts said the euro’s breach of $1.30 against the dollar could have an impact on the behaviour of the world’s central bank reserve managers, which could drive the single currency lower still as they pondered its status as a reserve currency.
11:25a ET Saturday, May 8, 2010
Dear Friend of GATA and Gold (and Silver):
The New York Post tomorrow will report that the U.S. Justice Department has begun a criminal investigation of JPMorgan Chase & Co. in regard to trading in the precious metals markets and that the U.S. Commodity Futures Trading Commission has begun a civil investigation.
The forthcoming Post story was disclosed by its reporter, Michael Gray, at his Internet blog last night:
On April 11 Gray reported extensively on GATA's disclosure at the March 25 hearing of the U.S. Commodity Futures Trading Commission that a London silver trader had alerted the CFTC in advance to a silver market manipulation by Morgan Chase traders:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Call it Lehman 2.0, sovereign risk flare up, or plain old money run, the liquidity crunch from last week almost killed the US equity market, has generated an unprecedented swing in FX pairs, and is starting to move into key credit indicators and spreads. The "big bail out" from the weekend has come and gone (unless Trichet is preparing to release something at 5:59pm Eastern tomorrow), and if Goldman is correct will have no material impact on markets... Which means that the downward path of least resistance will continue. And with equity markets not only decoupling from the rest of the world, but from the credit market as well, as they migrate to a plane of existence of their own, replete with unicorns, rainbows and spittoons full of hopium, keeping an eye out on early stress indicator from the credit markets is critical - credit is and has always been a far better indicator of market health than the HFT controlled, rebate-driven trading action in the shares of C, FNM, FRE, AIG, and other bankrupt pennystocks which account for up to 40% of daily trading volume. Earlier today, we touched upon some of the key early warning indicators to watch for in determining if the European contagion is going airborne. Below, we share a presentation from Morgan Stanley's Jim Caron, Measuring Risk: Extracting Market Sentiment from the Interest Rate Markets, in which the credit strategist provides a much more detailed framework of what critical credit signals are and how to interpret them. We recommend that all those still trading, either with their own, or other people's money, familiarize themselves with this 28-page overview.
Originally posted by Hx3_1963
Go short everything Monday?...cash is king...
Criminal and civil probes under way into Morgan silver trading
11:25a ET Saturday, May 8, 2010
Dear Friend of GATA and Gold (and Silver):
Moody's (NYSE:MCO) revealed that it received a Wells Notice from the SEC in a filing Friday.
That's not all that unusual.
What's unusual is that it received the Wells Notice in March.
In July 2008, Moody's acknowledged that it had an error in the way it rated constant proportion debt obligations, or CPDOs, that would have lowered AAA ratings given to the 11 CPDOs to AA territory--or a reduction of one to three notches. But this didn't take into account "qualitative factors" that Moody's committees also consider in the firm's ratings.
Moody's found that some members of its CPDO monitoring committee in Europe considered factors other than credit--namely whether changing the rating would be embarrassing to Moody's or affect another market participant.
Ok, that looks material.
So why disclose it now, when the notice was received in March?
Well, let's see - does it take a couple of months to file a Form 8-K? I don't think so.
Does it take a while to read the Wells Notice and recognize that it's an official document? Again, I don't think so.
But what else do we know about Moody's - and Berkshire, to be specific?
Well, we know that Berkshire sold a bunch of Moody's stock - in March. $6.2 million worth, to be exact.
Now let's be clear, before someone goes nuts - Berkshire has been selling its stake in Moody's for a while, and for what I'd call good reason.
To cloud the issue further supposedly Berkshire is a "hands-off" investor in Moody's, yet McClatchy reported the following about the MBS blowup and their ratings on same:
McClatchy also has learned that during this time, as concerns grew about the ratings of complex mortgage-backed securities, two Moody's executives reached out to the company's largest shareholder, Buffett, to warn him of problems.
From this we can surmise that there is some communication between the firms - it's not a totally-passive, "we're just shareholders and we'll vote at the annual meeting" thing, right?
More recently, Wells Fargo reported that JPMorgan -- the second largest US bank -- has exposure to the PIIGS totaling 28% of its Tier-1 capital. For Morgan Stanley, that risk is a whopping 69% of Tier-1 capital.