Market News

Mish Comment: For Christ's sake. What the Hell is "The Plan"?

BusinessWeek: "The plan is designed to make financial markets less secretive and improve supervision, which in theory would help prevent a repeat of the current financial debacles."

Mish Comment: The "plan" is the biggest kept secret in whole world.

FakeBen says: "The G7 ministers agreed to fix yesterday's problems and leave the real problem unaddressed (which is how do you ensure a responsible Fed that does not constantly try to inflate growth, ignores asset bubbles, and disregards total credit growth relative to GDP). They also increased moral hazard, by providing more backstops. Get ready for hyperinflation!"

April 11 (Bloomberg) -- China's foreign-exchange reserves, the world's largest, surged to $1.68 trillion at the end of March, adding pressure on the government to prevent money inflows from fueling inflation already at an 11-year high.

Currency holdings expanded 40 percent from a year earlier, the People's Bank of China said today on its Web site. The assets grew a record $153.9 billion from the end of December, after a $94.6 billion increase in the fourth quarter.

FakeBen says: "Will we take our own advice and let bad companies fail?"

The U.S. is doing most of what it told Asia not to. It counseled higher interest rates, stronger currencies, fiscal belt-tightening, avoiding fresh asset bubbles and limits on bailing out investors. These days, the U.S. is reminding the world it's better at giving economic advice than taking it...

DETROIT, April 10 (Reuters) - Several hundred million dollars of loans to Chrysler LLC have been sold off by one of its underwriters at a deep discount, reflecting the mounting pressure on both the struggling automaker and its bankers since a $7.4-billion deal to take it private last year.

The sale of Chrysler by Daimler AG (DAIGn.DE: Quote, Profile, Research) to Cerberus Capital Management was funded in part by a $7-billion term loan that was led by J.P. Morgan, Bear Stearns, Goldman Sachs, Citi and Morgan Stanley...

FakeBen says: "It's hard to imagine a stronger dollar without the trade deficit coming down. This is horrible news. The Fed should not be lowering rates and encouraging more spending and less spending. They seem intent on sinking the dollar."

WASHINGTON (AP) -- The U.S. trade deficit unexpectedly rose for a second straight month in February as a big jump in imports of foreign-made cars offset the first decline in oil imports in a year.

April 10 (Bloomberg) -- Iceland's central bank raised its benchmark interest rate for the second time in three weeks, pushing it to the highest in Europe to shore up the krona and damp inflation that is running at three times the target.

The key rate was raised by a half point to 15.5 percent, the Reykjavik-based central bank said on its Web site today. Five of nine economists surveyed by Bloomberg had expected rates to be left on hold, while four forecast an increase.

April 10 (Bloomberg) -- Just when you thought it was safe to head back into the financial water, another market threatens to go sour, potentially leaving investors holding the bag for more than $9 billion of tarnished European bank debt.

Once again, the landmine is in a sleepy corner of the global debt markets. Once again, things that never happen are happening. And, once again, those lovely mathematical models used to measure risk may turn out to be as useful as chocolate teapots.

FakeBen says: "I keep wondering where the politicians think the money is going to come from for all these new bailouts schemes. And then there is universal health care."

In Fiscal Year 2006, the U. S. Government spent $406 Billion of your money on interest payments* to the holders of the National Debt. Compare that to NASA at $15 Billion, Education at $61 Billion, and Department of Transportation at $56 Billion.

http://www.federalbudget.com/

Ponzi Financing At Citigroup
by Michael Shedlock

Citigroup is cash strapped. To raise cash it has agreed to sell $12 billion worth of leveraged loans it was holding at a reported 90 cents on the dollar. Earlier today in Less Than Meets The Eye at Citigroup, Goldman I noted that in order for Citigroup to get a price of $12 billion for the loan portfolio it sold, it had to agree to indemnify the buyers of the first 20% of losses. Tonight more details are emerging.

Reuters is reporting Citi financing its $12 bln sale of loans: