Monday morning links

TOP STORIES
U.S. plan to save Fannie and Freddie - CNN/Money
Government not expected to help more companies - AP
Lehman mulls strategic alliance, other options: report - Reuters
Banks at risk of failing almost double since 2006 - USAToday
Government as the Big Lender - NY Times

MARKETS
Invest in gold in June-July to get best returns - Commodity Online
Crude oil set to tumble below $100 next year, Lehman predicts - Telegraph UK
Brazil oil workers begin strike - BBC

ECONOMY
Oil Brings Americans Closer to OPEC Debtor Dependence - Bloomberg
As economy turns down, pawnshops' business looks up - LA Times

HOUSING
The importance of Freddie Mac and Fannie Mae - BBC
Discounted Mortgage Notes Can Stop Foreclosures - Bloomberg
Home equity lines frozen at IndyMac - LA Times

FED/TREASURY
Credit fallout is just beginning - MSN Money
Bernanke Embrace May Turn as Fed Seeks More Powers - Bloomberg

INTERNATIONAL
China's Currency Reserves Rise 36% to $1.81 Trillion - Bloomberg
European Industrial Output Drops the Most Since 1992 - Bloomberg
World stocks mixed on US mortgage plan - AP
N.Z. Economy Faces Stagflation as Recession Looms - Bloomberg
Underwriters brace for heavy impact in crunch fundraising week for UK lenders - Guardian
Further signs of rising inflation - BBC

INTERESTING
Homeowners who use heating oil seek alternatives - AP
7 surefire ways to stay poor - MSN Money

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Who's going to rescue the U.S. government?

Well, another rescue is now in process and the institutions in distress are getting bigger and bigger. Last week it was Indymac, now it's Fannie, Freddie, and their $5.2 trillion of mortgage debt. Who's going to rescue the U.S. government when the time comes?
Sorry about the confusion in last Friday's poll - there should have been a selection for the weekend or for Sunday. I figured the rescue would come late on Sunday and mine was the first vote for Monday, July 14th, so the other 100 people who agreed with me all get credit for having the correct answer.
Hey, it's my poll and I make the rules.

Here are the write-in votes which means there are another 10 respondents who also get credit for the correct answer.
More importantly, shouldn't this count as an "implosion" at the Implode-O-Meter?

So far, The Meter is stuck at 266.

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Guilty, until proven innocent

There's a new website available for those who prefer to "shoot first and ask questions later" when it comes to speculation in crude oil futures markets. Like many other complex issues of the day, simplistic Bill O'Reilly solutions seem to be the most popular.
As is the case for many others who desperately want to "ban the speculators" so we can all go back to life as we once knew it, which consisted of an endless supply of cheap energy, the organizers of this website exhibit a fundamental lack of understanding about how commodity markets work:

Speculators in these markets are increasingly buying and selling commodities such as oil to sell again, rather than to use. As largely unregulated speculators pocket billions of dollars at your expense, the price of commodities has increased out of proportion to marketplace demands.
...
As speculators continue to dominate the market, the volume of oil traded “on paper” has been as high as 22 times greater than the volume of oil consumed.
...
Today, as many as 90 percent of all commodities trades occur outside of the traditional marketplace exchanges. In these so-called “Swaps trades”, parties secretly buy and sell commodities with absolutely no one watching. This means speculators can manipulate oil prices and corner the market without anyone knowing.

If only it were that simple.

Hopefully, saner heads will prevail and perhaps some enterprising young economist will follow in the footsteps of the popular book Freakonomics to expose the extraordinarily high correlation between IQ and the zeal with which individuals want to ban speculators from oil markets.

See this Wall Street Journal story($) for a more balanced reaction.

ooo

This week's cartoon from The Economist:

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Sunday morning links

TOP STORIES
Long Protected by Washington, Fannie and Freddie Ballooned - NY Times
The fall of IndyMac - CNN/Money
Many Retirees Face Prospect of Outliving Savings, Study Says - Washington Post
The Silence of the Lenders - NY Times
Small towns get creative as fuel costs bite - AP
Freddie Mac's Next Hurdle: Raise Cash - Washington Post

MARKETS
Demand-supply fundamentals will drive gold - CommodityOnline
Investors set for another tough earnings season - AP
Crude oil, the star commodity - CommodityOnline

ECONOMY
Retail Sales Probably Rose on Tax Rebates: U.S. Economy Preview - Bloomberg
Obama says `little doubt' country in recession - AP
What if the Candidates Pandered to Economists? - NY Times

HOUSING
Housing Bubble Update: Fasten your seat belts, here comes the jobs crash - iTulip
The Fannie and Freddie Fallout - NY Times
Ripple Effects From Fannie And Freddie - Washington Post

FED/TREASURY
Paulson cool to shield Fannie/Freddie investors: report - AP
Bernanke to Testify on State of Economy - Washington Post
Officials check on Freddie Mac securities sale - Reuters

INTERNATIONAL
Rising FDI reflects inflow of hot money - CHINADaily
Japan Must Cut Energy Use to Cope With Oil Price, Ota Says - Bloomberg

INTERESTING
Watching That Balance Grow . . . and Grow - NY Times
Bankers Use Secret Clinics, Nurses to Beat Breakdowns - Bloomberg

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Gold ETF "tonnes in the trust" increases by 46 tonnes

Earlier today, the "tonnes in the trust" for the SPDR Gold Shares ETF (NYSEArca:GLD) increased by an astonishing 46 tonnes, in what might be termed an "adverse reaction" to the many and varied government assurances that everything is hunky dory at mortgage giants Fannie Mae and Freddie Mac.Yes, a scale change was required for the chart above.

This dwarfs anything other than the second day of trading for the ETF back in November of 2004 which saw 50 tonnes added.

The only thing that comes close are two 19 tonne additions, 20 days apart, back in January of 2006, an 18 tonne addition in November of last year, and 52 tonnes added over a period of five days last September, just as the credit crisis was piking up steam.

This brings the total "tonnes in the trust" to 702, also a new record high.
This is a pretty astonishing increase, particularly after the buying over the last month or so. A total of 100 tonnes have been added in the last twenty days of trading and this brings the year-over-year increase to more than 200 tonnes.

Full Disclosure: Long GLD at time of writing.

To learn more about investing in natural resources using commonly traded ETFs, stocks, and mutual funds, see this description at Iacono Research. Or, sign up for a free trial.

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GSE Rescue Countdown Survey

By popular demand... to appear in the right side bar after it scrolls down a bit.


Free Online Surveys
Some Bloomberg reports to help with your deliberations:

• Fannie, Freddie May Need to Lose $77 Billion First
• Paulson Backs Fannie, Freddie in Their `Current Form'
• U.S. Stocks Tumble on Concern Fannie, Freddie May Need Rescue

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Consumer sentiment improves!

Never let it be said that there isn't the occasional positive spin to be found here at this blog though, admittedly, the positive spin usually has a mocking tone.

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