wednesday brainstorming

1. Sorry my post yesterday looked a bit confusing as I was quite busy and did not edit it at all and the words have jumped around a bit.

The market made a brief pause as some were expecting something to ignite the market from the Bernanke speech and Apple did not do the trick on Monday to help the bulls case as now new gadgets were presented. First of all let me say Steve Jobs looked very sick to me and I hope he gets better after all. Despite the fact that no new hardware gadgets were presented the impact of the software will be huge going forward to secure a growing demand for Apple products. It will not effect the immediate bottom line earnings though. They will be ready with their next generation Phone for the holiday season but are behind the curve when it comes to pure hardware parameters as double cores are already implemented in Android competition and starting August quadcore chips will be the new standard to compete with. Still the software options could make some people wait for the next Iphone and the Ipad is anyway rocking the boat in the meantime. The problem is rather that all competitors on the Ipad come with the same price tag which does not present any value edge. Except for the fact that the Flash option is one I enjoy a lot as plenty of the TV shows on the internet run on that standard which does not run at the Ipad.

Back to the real economy the real estate depression keeps marching and is the biggest threat for the financial system still as the 1 quadrillion of unregulated derivatives is somehow linked to it in the last consequence simply by counterpart risk. Hence banks are in big trouble and Obama and his incompetent team have not solved any of the problems – just covered them up. That is after throwing trillions of Dollars at banks still counting as the zero interest rate policy only helps big corps and banks to make easy money but does not help the broad economy – rather the opposite as the savers earn negative interest rates now for a few years while their buying power deteriorates. The politics of DC and the FED rather helps to rob the Mainstreet and weakens their economic fundamentals.

The stockmarket without the POMO stockmarket manipulation starts to recognize the situation and began to discount the situation slowly. The next weeks will be turbulent for stockmarkets with plenty of volatility and more downside. Greece bailout 2 will not be smooth either and could/will spoil the bull market manipulation. The other big problem looming is the debt ceiling which is the biggest battle field in preparation for the next elections.


Republican mainstream flirts with brief default

By Tim Reid and Steven C. Johnson

WASHINGTON/NEW YORK | Tue Jun 7, 2011 11:01pm EDT

(Reuters) – An idea once confined to the fringe of the Republican party is seeping into its mainstream — that a brief default might be an acceptable price to pay if it forces the White House to deal with runaway spending.

An increasing number of Republicans do not believe the Obama administration’s dire predictions of economic “catastrophe” if the debt limit is not increased. They argue a period of technical default can be managed without plunging markets into chaos.

Establishment Republicans including Tim Pawlenty, the former Minnesota governor who announced his presidential candidacy last month, are backing a short-term default if it leads to deep, immediate spending cuts.

Jeff Sessions and Paul Ryan, the top Republicans on the Senate and House Budget Committees, have also said failure to raise the debt limit would not trigger immediate catastrophe.

Republican Senator Pat Toomey has even introduced legislation directing the Treasury to prioritize debt service over other payments if the debt limit is not raised. It has 22 Republican co-sponsors in the Senate and 98 in the House of Representatives, although no members of the Republican leadership have backed it.

David Frum, a former speechwriter for President George W. Bush and a Republican advocate for raising the debt limit, said he holds regular question-and-answer sessions with Republican congressman over a beer.

“I have yet to meet one Republican who actually says a failure to raise the debt limit scares them,” Frum said. “It is deeply, deeply troubling the number of Republicans I now talk to — and I include the mainstream — who think a technical default is manageable.

Many on Wall Street disagree. They fear even the briefest default would cause a steep climb in interest rates worldwide and a tumbling dollar, which would tip a fragile economy back into recession and cause financial market upheaval on a scale not seen since the collapse of Lehman Bros.


~ by behindthematrix on June 8, 2011.

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