Lack of trust

Sometimes its hard not to think that we got our leaders from remainders and overstocks.  And I think that is fast becoming the problem.  They don’t trust each other we don’t trust any of them. Not one of them inspires confidence.  How can they possibly hope to lead anyone anywhere.  I wouldn’t follow them out of a burning building.  I’d find my own way.

We need leaders we can believe in. And that requires one thing not one of them is constitutionally capable of – honesty.  It’s not just our currency which has been devalued.

We are adrift with charlatans and I don’t like how it feels.

Today particularly there are bad vibes about.  Vibes of drift.

Today was a POMO day – when the Fed buys back bonds with newly printed dollars in floods the market with money. It has been a pattern for weeks that POMO days are up days.  Satan couldn’t successfully short on a POMO day. AND YET today’s 7 billion dollar injection of uncut juice went in and the market is diving.  The Dow is down a hundred points.

The initial fall seemed to be simply because the POMO sale got cancelled and shifted a half hour later.  Maybe someone got panicky?  Anyway, when the auction did open it didn’t recover.  The Dow closed down 90.  That is NOT in the Fed’s script.

Also not in the script was yesterday’ U,S, debt sale.  The Fed had a nasty day finding how few buyers there are all of a sudden for 30 yr US debt.  The bid to cover ration was 2.1 which is not healthy.  If buyers stay that scarce then rates will start to edge up which is part of the not-very-hopeful scenario I was describing in The American Century.  In fact the 10 yr did edge up.

Then today ZeroHedge reports that Capital Growth Management sold virtually all its holdings in Apple.  CGM was the 100th largest owner of Apple.  That comes just after the markets got shaken up by Cisco reporting poor earnings.  There have been rumblings about a tech bubble.  It is true Apple, Cisco, Google and Netflix are all riding unnaturally high.

Meanwhile in Europe Ireland is like a man with the runs. Looks like a corpse, keeps ducking behind bushes only to re-emerge looking even worse but saying everything is just fine.

CDS costs of insuring debt for Ireland, Greece, Portugal and Spain are all at record highs.

And then there is the thing which started my day off on the wrong foot,  a note from Jacques Cailloux at RBS.  He sounded that note of hectoring, panic we have come to recognize from bankers who are bankrupt and frightened but still irredeemably arrogant.

M. Cailloux begins with “Let us recall that there are 2 Trillion Euros of debt securities issued by Spain, Portugal, Ireland and Greece in the hands of financial institutions resident outside those countries.” Three of these countries have lost access to funding he notes.  “If that is not enough to worry about financial contagion what is?” he trills.  The feeling a little threat is called for he “wonders if the ECB is fulfilling its financial stability mandate?”

By which he of course means why hasn’t the ECB bailed everyone out yet?  Elsewhere another city prick noted that the debts were now no longer bank debts but sovereign debts.  Failing to stop to mention that a large part of the  reason the debts are now sovereign is because those countries bailed out their banks – like Ireland.

So here we are yet again with the walking dead urging more ‘responsibility’ from governments, by which they mean further impoverish your people to save our putrid palaces.

I have the feeling RBS is quick to the megaphone because they are hanging by a more slender thread than others.  280 billion in the UK asset protection scheme. How much originated from ABN Ambro purchases of toxic CDO’s in 2007 when everything was already bust and how much is perhaps RBS’s own home grown nightmare oozing our from RBS Greenwich Capital, its US operation?

These are pure speculation. I have no figures. I just have a bad, bad feeling that we are going to be sold and used again.