I have been talking for a time about the US Gov buying its own debt. I do not think they will stop with the QE. They cant. They cant because they will not be able to keep the lights on for one, but also because they cant allow a major financial institution to fail or we have global dominoes and a collapse of the financial system. What does that mean? Hyperinflation at some point. I sure hope you have taken measures to protect yourself. I have and sleep well at night. Hedge manager Sprott sees trouble when easing ends US government is new “dead man walking”, investor says By Alistair Barr, MarketWatch NEW YORK (MarketWatch) – When so-called quantitative easing by central banks ends, the world economy may slip back into trouble, Canadian hedge fund manager Eric Sprott ...

Billionaire investor George Soros said yesterday (Monday) that the U.S. recovery would be a slow one because of all the “basically bankrupt” financial companies impeding it.

U.S. Federal Reserve Chairman Ben S. Bernanke and Congress agreed Friday that the financial system – not the American taxpayer – should bear the costs of bank bailouts. Sheila Bair, head of the Federal Deposit Insurance Corp. (FDIC), wants the banks to ante up $45 billion – three years’ worth of deposit-insurance premiums – to bail out the fund that insures bank deposits.

When it comes to bank stocks, we all know that there were a number of Money Morning readers shrewd enough to buy Citigroup Inc. (NYSE: C) shares when the foundering giant’s stock price was below $1 a share.

If you’re one of those investors, good for you: With Citi’s shares now trading at nearly $4.70 a share,

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Banks are trying to recoup some of their massive losses on bad loans by increasing their rates on credit cards and collecting huge overdraft fees on people who use debit cards and pull too much out.  There is an interesting article in today’s New York Times on debit card overdrafts. However, what got my attention was the YouTube video below by a woman protesting the increase in credit card rates by Bank of America (BAC). Essentially she is telling the bank that she is going to ruthlessly default, unless they return her card rate to its previous level (not stated, from the new rate of over 30%). The YouTube clip can be seen here. While I found much of her rhetoric over the top, she is making a very good point. The costs of the colossal screw-up by the banks are being borne by ...

Here’s a small victory, worthy of breaking out some Andre Brut: The U.S. government budget deficit is more likely to ring in at $1.58 trillion this year, not the $1.84 trillion the Obama administration reported in May.

According to some purposefully leaked budget projections due out next week, roughly $250 billion that was set aside in the 2009 budget for bank bailouts will not be used by October, the end of the fiscal year.

Of course, we’ll end up with an annual budget deficit of 11.2% of GDP, the highest since 1945 and an all-time high in dollar terms. But hey (they must be thinking), now we’ll have a little extra for that $1 trillion health care reform!

Back in our grammar school, team sports days, we’d say a game ending in a tie is “like kissing

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Neil Barofsky, the U.S. special inspector general for the Troubled Asset Relief Program (TARP) plans to audit a federal guarantee granted last year to protect Citigroup Inc. (C) from potentially massive losses. The U.S. special inspector general is in charge of keeping a check on bank bailouts and will convene a team to audit the Citigroup guarantees. The appointed team will examine why the guarantees were given, how they were structured and whether the bank’s risk controls are adequate to prevent government losses. The Federal Reserve, the Treasury and Federal Deposit Insurance Corporation (FDIC) in November 2008 guaranteed a $306 billion pool of Citigroup mortgage assets aiming at preventing the collapse of the U.S. banking system amidst a global financial crisis. Citigroup’s guarantees came on top of $45 billion of bailout funds obtained last year through TARP. The audit is a result of the questions ...

Most investors’ eyes are on stocks right now. And for many stock optimists the credit crunch is ancient history. Not so, says global finance insider Simon Mellon, who heading up our new Bonner and Partners Family Office project.

According to Simon, we may be looking at another serious credit blow-up in a dark corner of the credit markets known as leveraged loans. So if you think the credit crisis is over, think again. The easy part of the clean-up is probably behind us. But the real dirty work hasn’t even begun. This from an email Simon sent through to Notes HQ yesterday.

The leveraged loan market was hugely lucrative during the boom. Similar to junk bonds, leveraged loads are secured loans to high-credit-risk companies – usually leveraged buy-outs by private equity firms.

Existing issues of these leveraged loans are now trading back at “trader’s par” – above 90% of face value. This

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by Edward Hugh: Barcelonabr /br /This post accompanies my recent piece on Sweden. I have been scratching my head and trying to see what could be learnt from making a comparison between Finland and Sweden. Some of the differences are obvious - one is in the euro, and the other isn't, once can adjust monetary policy and currency values, and the other can't. Others are less so. Finland's goods trade surplus has been declining steadily since joining EMU while Sweden's has remained relatively constant. And Swedish males live on average three years longer than their Finnish counterparts. So what is important here, and why? And if convergence theory has anything positive to be said for it, shouldn't we be able to observe so sort of convergence going on here.br /br /br /First, and just to remind ourselves, here is the chart from Claus Vistesen which shows what the relation ...

Idiocracy in action: Congress blocks bill to audit the Fed… No surprise: American loan defaults hit record… Surprise: Could Canadians be next? China takes another “World’s No. 1” from U.S. … Dan Denning, Byron King on recent triumph and tragedy in the oil patch…

Great news: The Federal Reserve will retain its right to operate in secrecy.

“Thank God for Rule 16!”

Late yesterday, the Senate majority put the kibosh on a last-hour provision in the 2010 spending bill that would audit the Fed. Not because it’s a bad idea… but because of the arcane Rule 16, which prohibits policy legislation from being added to spending bills. (The kind of “rule” that’s only evoked when the majority gets uncomfortable.)

“The Federal Reserve will create and disburse trillions of dollars in response to our current financial crisis,” said Sen. Jim DeMint, who spearheaded

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How does the current economic and financial downturn match up to past contractions?

In an attempt to present matters in historical context, Paul Swartz of the Council on Foreign Relations recently published a chart book showing that the current economic environment has been more severe than a typical recession. He specifically highlights the following four conclusions:

• Financial markets have dramatically improved, but from an extremely low base. Rather than pricing in disaster, they anticipate tough times ahead. For example, the charts on the spread for AAA and BAA bonds show the credit market moving from unprecedented panic to a level of fear that is merely in keeping with the worst experiences since 1945.

• Real economy indicators show signs of stabilization. See in particular the charts on manufacturing sentiment, non-farm payrolls, oil prices, and car sales. Nonetheless, many of these indicators remain worse than

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Asian markets were mixed Thursday as looming bankruptcy of General Motors and rising government bond yields threatened to hurt prospects of a global economic recovery.  At day's end Japan's benchmark Nikkei 225 stock average edged up 0.13% to 9,451.39 and South Korea's Kospi advanced 2.2% to close at 1,392.17.

Stock futures suggest a higher opening on the Wall Street.  Dow Jones industrial average futures rose 0.4% to 8,327. Standard & Poor's 500 index futures rose 0.3% to 895.30 and Nasdaq 100 index futures were up 0.4% to 1,409.00.

On Wednesday, U.S. stocks sank amid growing worries over the fate of General Motors (NYSE:GM) and rising yields on longer-term US government debt.  An encouraging housing report did little to contain the selloff as yields on the benchmark 10-year jumped to a 6-month high. Energy shares declined but financials were the leading laggards.  Shaking investor confidence yesterday were yields on 10-year

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