My A.M. News Break – June 15

BP Covering Up Wildlife Deaths Due to Spill?

from Countdown with Keith Olbermann

 

Visit msnbc.com for breaking news, world news, and news about the economy

Finance, Markets, Economy

• Markets Pricing in ‘Paradigm Change’ – El-Arian – CNBC
• Best Buy profits don’t meet target - CNBC
• Data and BP top market agenda - MarketWatch

Other Stuff

• Efforts to control gulf spill described as ‘chaotic’ - New York Times
• Setbacks cloud U.S. plan to exit Afghanistan – New York Times
• Banks Yielding on Volcker, Picking Other Fights – New York Times
• Kasich’s tax returns flip flop - Columbus Dispatch
• Editorial: Your tax dollars at work - Columbus Dispatch
• U.S. man arrested in Pakistan for Hunting bin-Laden – Agence France Presse
• More Alvin Greene - Washington Post

Madoff Gets 150 Years – News Roundup

Madoff Sentencing Emotional Affair – Swindler Gets Max

• Madoff Sentenced to 150 Years – CNBC
• “I don’t ask for any forgiveness” – Bloomberg
• Madoff victims scavenge for food, aluminum cans – Bloomberg
• Some victims applaud, others cry – CNN
• Madoff gets 150 years for huge Ponzi Scheme – New York Times
• Bernie Madoff to rot in jail – NY Post

Is An Unsettled Bond Market Telling Us Something About Prospects for Recovery?

A story out on the Associated Press wire today is the best explanation of all of the hullabaloo you hear from bond traders regarding big government programs and bailouts meant to stimulate the economy.

Most days for lunch I retire to the conference room and switch the TV on to CNBC.  During those segments when they go octobox and have eight people on at once discussing the generalia of the larger economy it always seems like it’s the bond guys and the commodoties gals who are fretting while the stock traders are pumping out the positives.

AP makes it a bit more clear:

To understand how this is all connected, you have to think like a bond trader. Inflation is their enemy because it means the purchasing power of the dollars they receive when bonds eventually are paid off will be diminished. The only question is by how much.

Yields on 10-year Treasury notes, a benchmark for home mortgages and other consumers loans, jumped from 2.5 percent in March around the time of the Fed announcement to as high as 3.7 percent in recent days as signs that efforts to stabilize the financial system and economy were starting to pay off. And 30-year mortgage rates jumped more than a quarter-point this week to 5.29 percent, the highest level since December, Freddie Mac reported.

“If the meltdown continues in the bond market, then mortgage yields will soon be at levels that choke off refinancing activity,” said economist Ed Yardeni, who runs his own investment firm. “Even worse, they could abort any necessary recovery in home sales and prices.”

Must Read: Wall Streeters Call for Reform & Say Federal Efforts to Combat Financial Crisis Inch Wide, Mile Deep

America and the world have found out the hard way how Wall Street’s fast and loose ways hurt regular folks more than the fatcats with Gulf Stream jets and golden parachutes.  It’s heartening to see at least two creatures of The Street find religion and evangelize the good news of reform.

Sandy B. Lewis and William D. Cohan do just that in an op-ed piece headlined, The Economy is Still at the Brink, in Saturday’s New York Times.  It’s a shame that the editors at the Times decided to run their important message in Saturday’s edition rather than Monday morning when it might have attracted more attention from the likes of CNBC or the day’s cable news cycle.  Cast against the constant stream of “Everything’s Fine,” from the Obama Administration to the likes of Jim Cramer, Lewis and Cohan’s message is succinct and important to the long run of the U.S. economy.

In short, the pair are telling us that the structural issues with American high finance are still there, Bush and Obama Administration efforts to staunch the bleeding are merely fingers in Wall Street’s dike, the current system is too heavily weighted in favor of ‘insiders’ and a program of real reform is needed to restore full confidence and ensure a system that works for all levels of the economy.

Here are some take aways from their piece:

• If nearly everyone agreed six months ago that our banking system was a sham, why is every government program or action directed at preserving the old order?  Lewis and Cohan say to start with compensating executives well for moving the ball, but create a system where their net worth is tied to their failures as well.
• The writers wonder why so many federal resources are going to propping up those at the top of the financial pyramid – the big banks and insurers – when recovery will come only when the bottom of the pyramid gets more confident.
• Rather than talk of the “imminent return” of the “good times” President Barack Obama should be messaging America with “living within our means.”
• For the “long term health of the market” shareholders and other investors in the big banks need to feel the “market’s wrath.”  No more rescues for the banks that created the mess.
• More market discipline and fewer government bailouts – where will the federal government draw the line?
• Fewer academics should be advising the president and he should make room for more folks saavy in trading and markets – not to have the fox guard the henhouse, but to design incentives that will work to revive the capital markets.
• More transparency in the entire system – from providing the same real-time market information to citizens that’s available to Goldman Sachs or Morgan Stanley – to replacing the marketing exercise known as financialstability.gov with real information.
• Go after the bigwigs who brought this pox upon us – either through truth commissions or the same way the FBI prosecutes the mafia.

There’s a lot more detail in what Cohan and Lewis wrote – go check it out.

Daily Graphic: GM Stock First Day on the Pink Sheets – GMGMQ Chart

Jim Cramer: Oil Above $60 Makes Him Less Bullish – Video

Daily Graphic: That Cup of Coffee May Be Getting More Expensive

Read this story at the Financial Times and weep — if you’re a coffee drinker.

Swine Flu Update: Monday P.M. April 27

• Travelers told to avoid Mexico – New York Times

International fears of a pandemic rose Monday as the number of people killed by the swine flu in Mexico climbed to 149. At least four other countries have confirmed cases and many others have stepped up testing as well as issuing advisories about traveling to Mexico and the United States.

By the afternoon, the World Health Organization had raised its threat level of a pandemic alert, and markets in Europe and Asia had been unnerved by the concerns.

In raising its threat level to 4 from 3, a decision likely to prompt more travel warnings, the W.H.O. emphasized that “a pandemic is not considered inevitable.” But it acknowledged that containment of swine flu now moot, and mitigation is its main concern. “The situation is fluid and will continue to evolve,” it said in a statement.

• NYC cases hit 28 – New York Post
• Mexico counts 149 dead from flu – Reuters
• First confirmed cases in Britain and Spain – Washington Post
• Swine Flu fears depress markets - Wall Street Journal