Obama Doing Sex To China – SNL

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Dick Bove Says, Banks Don’t Want Your Business – May Cancel Your Account and Give Customers the Boot

Not happy with your bank? The feeling is likely mutual.Don’t be surprised if your bank soon decides they don’t want your business anymore, says Rochdale Securities bank analyst Dick Bove.Why?Bank regulators and Congress are looking at ways at making the system more safe and sound in order to avoid another meltdown. What on the surface seems like a wise and prudent decision, however may have unintended consequences, most notably higher fees for bounced checks, credit card balances and the like.”The way a bank discourages a customer from doing business with it is to make the cost of doing business so high the customer gets upset and leaves,” Bove says. “I think that’s the methodology,” although some unprofitable accounts will be closed by the banks, as American Express has been doing. (AmEx canceled 3.3 million cards globally in the second and third quarters, TheStreet.com reports.)Update: In another example, HSBC “has decided retail customers aren’t profitable enough and is demanding those clients remove their gold to make room for more lucrative institutional customers,” The WSJ reports.Bove says as much as 30% of U.S. households could find themselves being forced out of their banks since they’re not deemed profitable.The shift will create investment opportunities as depositors look to other companies to provide banking services. In this scenario, Bove thinks consumer finance firms, payment system companies, pay-day loan companies and pawn shops will pick up the slack.As the government moves to make the cost of banking higher for the banks, they’re going to have to pass on those costs to the consumer,” Bove says. “If the consumer doesn’t like it, the consumer is going to have to rely on these less-established methodologies of getting finance and moving money.” ———————–The FDIC fund that insures bank deposits is $8.2 billion in the hole.The Federal Deposit Insurance Corp. released its latest set of grim banking data moments ago. The FDIC had to set aside $21.7 billion for expected losses on future bank failures as the total number of “problem” banks rose to 552 from 416.There were glimmers of hope. While bad loans continue to beat up bank balance sheets, revenues are returning to the banking sector. Overall, the banking sector was profitable after a $4.3 billion loss in the second quarter and saw just $879 million in earnings last year.

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Barry Ritholtz says, A Bad Economy Could Spell Good News on Wall Street for Years to Come

The economic recovery isn’t as strong as first thought. Revised GDP figures released this morning show the economy grew at a 2.8% annualized pace in the third quarter, less than the 3.5% initially reported. The revision was in-line with expectations but shows the economy didn’t have as much momentum heading into the fourth quarter as previously believed.Unlike Wall Street traders, consumers seem to know the recovery is “anemic,” as Barry Ritholtz, CEO of Fusion IQ, describes it. The Conference Board’s latest confident survey shows Americans feel worse about the current economic situation than they did in March, when the stock market was making new lows. (Thanks to Dan Greenhaus of Miller Tabak for pointing this out this last fact.)Yet, stocks are still near their highs of the year. Going into the final hours of trading Tuesday, stocks were in the red but well off the lows of the day. What’s driving the disconnect between Wall Street and Main Street?Ritholtz says it’s a classic example of bad news being good news on Wall Street. “We’re in a cycle that’s not based on profitability, not based on expanding economy but based on all sorts of government supports,” he says. “Bad news is going to be good news for the next couple of quarters probably.”That’s because low interest rates and liquidity provided by the Federal Reserve, coupled with government stimulus are enticing traders to buy into the market. “Cash is trash,” says Rithotlz, who remains bullish on stocks.Ritholtz is confident that eventually fundamentals will prevail and thinks the market will take a hit once the economy shows signs of improvement, meaning the “extraordinary” stimuli can be removed. But predicting the timing is anyone’s guess. “You could have this disconnect that goes on for not days, weeks or months but years and years,” he says. So, in the meantime, Ritholtz – who correctly predicted the 2008 crash and told Tech Ticker’s audience “the mother of all bear market rallies,” was upon us in March – is still long stocks and likes commodities (thanks to a weak dollar) and emerging markets.

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Peter Boockvar Says, We have an “Illusion of Prosperity” – U.S. Economy to Lag Rest of the World

“It’s dangerous to be short this market,” says Peter Boockvar, equity strategist at Miller Tabak.Despite a penchant for bearishness, Boockvar says the rally can continue as long as the Fed keeps rates at zero.”When you cut rates to nothing you’re encouraging people to take risk,” Boockvar says. “As long as asset inflation is [the Fed's] goal, the market could go higher but there are obvious consequences,” including inflation, as discussed here.The Fed is trying to create “the illusion of prosperity” by fueling asset price appreciation, Boockvar says, staying true to his reputation as a deficit hawk. Even if the U.S. stock market keeps rallying, “non-dollar assets” like commodities and emerging markets will continue to outperform, he says.Unlike the U.S., emerging markets are “not weighed down by enormous debt levels” and local consumers are “much better off” than their American counterparts, the strategist says, expressing a strong preference for China.”If you want exposure to global growth, it’s going to be outside of the U.S.,” he says, recommending the following: * Follow the Money: Buy China-specific and Asian ETFs or mutual funds. * Go for Gold: A longtime gold bull, Boockvar says a correction could be coming because “the trade has gotten crowded” and Ben Bernnake’s recent comments about the dollar could spur a reversal. But “buy on any sharp pullback,” he recommends, suggesting gold is very likely to revisit its inflation-adjust high of $2300 “in the next few years.” * Reject Domesticity: Avoid U.S. retailers, REITs and consumer-focused financials, Boockvar says, suggesting the U.S. economy and consumers will be under pressure for the foreseeable future. “If you want to invest in US, invest in companies with big exposures overseas,” he says. “The growth is not going to be there in the U.S. “

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James Galbraith Says, “A Truly Extraordinary Slump” – No Recovery

Disappointing reports this week on housing starts and foreclosures, as well as the index of leading economic indicators, have cast a bit of a pall on the “robust recovery” story, putting a crimp in the stock market’s ascent in the process.University of Texas professor James Galbraith was never a believer in the V-shaped recovery and says it’s going to take a very long time for the U.S. to recover from a “truly extraordinary slump.”What the optimists are missing is the impact the housing bust is having on both American’s ability to borrow and banks willingness to lend. The resulting credit contraction will prevent this recovery from following the path of those following prior post-war recessions, he says.”There’s no question the U.S. economy has stabilized but [it] remains very weak and will likely continue to be weak,” Galbraith says. “There’s very little sign the benefits that are being felt on Wall Street will be felt in the broader country anytime soon.”Galbraith predicts the unemployment rate will continue to rise into 2010 and decline “very slowly” thereafter. The U.S. economy needs “substantially greater policy intervention,” he says, focused on the following: * Housing Woes: As of Sept. 30, over 14% of American homeowners with a mortgage are either behind on payments or in foreclosure, the Mortgage Bankers Association said Thursday. Those figures suggest the real inventory of homes for sale is much bigger than the “official” 8-month supply, as The WSJ reports. The government must do more to prevent foreclosures, Galbraith says. * Smart Jobs: Beyond merely putting people to work, Galbraith seeks policies that would both “create employment and set a strategic direction for the economy,” most notably in the area of renewable energy. * Boomer Blues: With millions of Baby Boomers at or near retirement age, Galbraith advocates aid for new retirees, “so the demographic transition goes more smoothly than it otherwise would. “In sum, Galbraith still says we need a second stimulus package, as we’ll discuss in more detail in a forthcoming segment.

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Are We On The Verge Of Total Global Economic Collapse?

Are we on the verge of total economic collapse?Don’t laugh. The french firm Societe Generale thinks so.The brokerage firm has put the fear of God in clients recently by predicting that developed economies and markets are going to collapse under a monster debt load and that gold is going to soar to $6,000 an ounce.Fortunately, not everyone feels that way. Many on Wall Street, in fact, have suddenly gotten quite bullish after missing a lot of the extraordinary 65% rally we’ve had since the lows of March. Hopefully, these folks–the “V-shaped recovery” crowd–are right, and the bad news of the last couple of years will soon be a distant memory.Aaron and I are skeptical, though. The aftermath of debt-fueled financial crises like the one we went through usually lasts for many years, if not decades. Japan has been struggling to right its ship since its own bubble burst in 1990, and the country still isn’t growing strongly again. (Japan’s stock market, meanwhile, trades at a fifth of its 1989 high).With luck, we won’t end up like Japan–or the SocGen scenario. We doubt, however, that the economy and markets will just shrug off the last year as if nothing serious happened.If you’re curious, you can see highlights of the SocGen report here:SocGen: Prepare Yourself For the Worst Case Scenario

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A Big Crisis is Coming with America’s Weak Dollar Policy

The Dollar Index hit yet another 14-month low early Monday after a Chinese central bank official urged the PRC to diversify its reserves into more euro and yen. A stronger-than-expected GDP report in South Korea also put pressure on the greenback as traders expect other central banks to follow Australia’s lead and raise rates while the Fed stands pat.”The dollar is a significant concern,” says Leo Tilman, president of L.M. Tilman & Co. and author of Financial Darwinism.” You can envision all sorts of crises scenarios where rest of the world stops buying U.S. assets because of the dollar [and] you have higher interest rates and all sorts of recessionary pressures.”With the U.S. Treasury set to auction a record $123 billion of notes this week and the Fed’s $300 billion Treasury purchase program set to expire, those risks should not be taken lightly. Of course, such concerns have been circulating for a while and have not come to fruition, to date.It’s “very difficult to say” when foreigners stop talking about diversifying away from the dollar and take more concerted action, Tilman admits. But “it’s hard to imagine a lot of foreign buyers are going to tolerate further declines in the dollar. “Tilman, whose firm advises institutions on strategic risk management, says the day of reckoning is likely to come within the next year.”A lot depends on how sustainable the recovery in the U.S. is: If the Fed has an ability to start hiking IR, that will mitigate some of the pressures on the dollar,” he says. “But if we see rest of the world starts hiking rates and the Fed lagging behind because the U.S. economy is so fragile, that will be the breaking point. We’re taking the second or third quarter of next year.”

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Sheila Bair Delivers Special Video Message Commemorating 100 Bank Failures

According to the FDIC, your money is safe.

Niall Ferguson says, U.S. Empire in Decline and on Collision Course with China

The U.S. is an empire in decline, according to Niall Ferguson, Harvard professor and author of The Ascent of Money.”People have predicted the end of America in the past and been wrong,” Ferguson concedes. “But let’s face it: If you’re trying to borrow $9 trillion to save your financial system…and already half your public debt held by foreigners, it’s not really the conduct of rising empires, is it?”Given its massive deficits and overseas military adventures, America today is similar to the Spanish Empire in the 17th century and Britain’s in the 20th, he says. “Excessive debt is usually a predictor of subsequent trouble.”Putting a finer point on it, Ferguson says America today is comparable to Britain circa 1900: a dominant empire underestimating the rise of a new power. In Britain’s case back then it was Germany; in America’s case today, it’s China.”When China’s economy is equal in size to that of the U.S., which could come as early as 2027…it means China becomes not only a major economic competitor – it’s that already, it then becomes a diplomatic competitor and a military competitor,” the history professor declares.The most obvious sign of this is China’s major naval construction program, featuring next generation submarines and up to three aircraft carriers, Ferguson says. “There’s no other way of interpreting this than as a challenge to the hegemony of the U.S. in the Asia-Pacific region.”As to analysts like Stratfor’s George Friedman, who downplay China’s naval ambitions, Ferguson notes British experts – including Winston Churchill – were similarly complacent about Germany at the dawn of the 20th century.”I’m not predicting World War III but we have to recognize…China is becoming more assertive, a rival not a partner,” he says, adding that China’s navy doesn’t have to be as large as America’s to pose a problem. “They don’t have to have an equally large navy, just big enough to pose a strategic threat [and] cause trouble” for the U.S. Navy.

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The Days of “Buy and Hold” Are Over, says John Mauldin

The economy is still the pits yet stocks are on a tear. What’s an investor to do in these confusing times?John Mauldin, president of Millennium Wave Advisors, admits the average investor doesn’t “have as many good choices” as in the past.Contrary to what “experts” have told the public for years, now is not the time for buy and hold, Mauldin says. “You can be a trader. You can ride the wave, I’ve got no problem with that but I don’t think you want to buy something and hold it for five years.”That’s because he thinks another correction is coming in the not so distant future.Mauldin, who writes the Thoughts from the Frontline e-letter, does think there’s money to be made in real estate. With prices so depressed in many markets, he says buying property on the cheap and renting it “is a prescription for making money.”

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