The Economy Guy

Stocks boiled over today as the G20 meeting produced results and President Obama came out representing the US well.  (He only made a few mistakes – one of which was to bow to the King of Saudi Arabia – only Saudi’s are supposed to bow to that king.)  I’m surprised stocks didn’t stay well above 8000, but they fell back at the close to end just short of that mark.

Bonds lost ground as stocks surged.

The Dollar lost value today as emphasis was placed on other currencies.

Oil and gasoline jumped way up as the stimulus to be provided around the world (at our expense) will create demand for oil.

Gold fell unfortunately, $19.

In the news today…..

G20 has given the IMF and World Bank $1TRILLION.  Naturally, the details are missing.  How many of YOUR tax dollars were pledged to the IMF and the World Bank?  No one is saying – it must be too delicate a matter.

In addition, the G20 has agreed to regulate Hedge Funds internationally.  Was this the tip of the iceberg that I was talking about yesterday?  Is this the US giving up its sovereignty to the IMF?  Will the FED and Treasury have to take orders from the IMF?  Again, the details are missing.  Let’s hope not.  Let’s just hope that this means there will be “coordination” among the nations through the IMF, and the IMF will keep score on how well the nations are doing.

The “Mark-to-Market” rule has been modified today.  Rather than have to value an asset at the price it will get in today’s market – just like all YOUR assets are valued – the new rule says that assets can be valued at the what it would get in an “orderly” market.  What does “orderly” market mean?  It probably means that it’s in the eye of the beholder.  In the case of the big banks, like Citigroup, who hold a ton of toxic waste assets, it means the Citigroup can value their junk above the current market value, and the “stress test” that the government is performing will come out much better.  Does this sound like a trick to you?  It sure does to me.  

An “orderly” market doesn’t exist today.  An “orderly” market hasn’t existed for over six months, and counting.  The crisis we are in has kept any order from emerging.  Why would anyone with authority want to value assets higher than the current market value?  Because they are scared to death.  Simple as that.  If the assets of Citigroup were marked at their current value, they would be bankrupt.  What’s changed in reality – NOTHING.  Don’t let this change in rules pull any wool over your eyes.  Banks who own junk, still own the junk, and are in deep trouble.

Jobless Claims jumped to 669,000 claims last week – a 26 year HIGH.  This means that the unemployment rate will jump significantly when it is announced.  The number of people who have recently lost their job is getting bigger and bigger each week, and that’s not a very good trend – right?

Here are the last numbers for today:
Dow Jones 30 Industrial – 7978 (up 216 points)
10 Year Treasury Bond – 2.75% (up 0.09%)
Euro – $1.3457
Gold – $909 (down $19)
Oil – $52.64 (up $4.25)
Gasoline – $1.47 (up $0.10)