Friday morning links

EU Steers Greece to IMF, Pledges Loans as Last Resort - Bloomberg
Obama To Order Lenders To Cut mortgage Payments For Unemployed - HuffPo
JPMorgan, Lehman, UBS Named as Conspirators in Muni Bid-Rigging - Bloomberg
Whistleblower Speaks Out On Silver Market Manipulation, Reports to CFTC - Jesse's Cafe
Government Authorities are Looking Out for Themselves, As Should Everyone - Aucontrarian
Lower Home Prices Can Fix What Government Can’t - Baum, Bloomberg
Economics focus: Tricky Dick and the dollar - Economist
The US default-risk meme - Salmon, Reuters

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MARKETS/INVESTING
Oil Rises on Weaker Dollar, Asia Demand - Bloomberg
Gold rises as euro bounces; physicals active - Reuters
Thursday's session amounted to a 'key reversal day' - MarketWatch
Christian: CFTC Position Limits For Metals A ‘Bad Idea' - Hard Assets Investor
The Value of Gold Is as Artificial as Paper Money - Alternet
The history of commodity booms and busts - VoxEU

ECONOMY
GDP Up Less Than Thought as Corporate Profits Dip - CNBC
What computer science can teach economics - MIT News
130,000 in Calif. due to lose jobless benefits - O.C. Register
Don’t Be Shocked by Jobs Boom Next Week - WSJ
Not a textbook rebound - EconBrowser

INTERNATIONAL
Currency controls and Gresham's law - Economist
Europe agrees IMF-EU rescue for Greece - Telegraph
China CEOs Join Obama in Supporting Yuan Appreciation - Bloomberg
Greece is likely to need far more financial aid than seems to be on offer - Economist
Europe puts the loaded gun on the table but no bailout - Credit Writedowns
Japan consumer-price data show deflation continues - MarketWatch
Chinese Yuan Will Quadruple Over Time: Rogers - CNBC
Crisis, What Crisis? - Economist

REAL ESTATE
More Foreclosures, Please . . . - The Big Picture
Gov. signs new homebuyer tax credit - O.C. Register
Declining Mortgage Performance in Q409 Means More Foreclosures Ahead - Housing Wire
Cash Dwindling For No-Money Down Home Loan Program - WSJ
Half of U.S. Home Loan Modifications Default Again - Bloomberg

FED/TREASURY/BANKING
Countdown: Fed MBS Purchase Program - Calculated Risk
Bernanke: Fed Likely to Sell Some of Its Mortgages Eventually - WSJ
Alan Greenspan's Financial History for Lobotomy Victims - HuffPo
Fed's balance sheet rises to record in latest week - Reuters

INTERESTING
Bank of China executive salaries halved - MarketWatch
Bono And Prince's Financial Woes Revealed - Stop the Presses!
DNA identifies new ancient human dubbed 'X-woman' - BBC
Docs Remove Boy's 11 Extra Toes And Fingers - Sky News

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Peter Schiff on Alan Greenspan

Left sitting in my draft folder for a few days are these thoughts from Peter Schiff about the former Fed chairman following his 48-page defense of monetary policy last week. Now seemed like a good time to hoist it up to the main page.

Peter starts off by noting, "He's not just the worst Fed chairman we've ever had, he's the worst American we've ever had" and then works himself up into a little bit of a lather from there on such subjects as the impact of long-term vs. short-term rates during the housing bubble and other topics.

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Alan Greenspan on Social Security

Toward the end of this New York Times story about the Social Security "trust fund" experiencing net withdrawals this year for the first time are a few words from former Fed chairman Alan Greenspan about the system that he helped "fix" back in the early 1980s.

Although Social Security is often said to have a “trust fund,” the term really serves as an accounting device, to track the pay-as-you-go program’s revenue and outlays over time. Its so-called balance is, in fact, a history of its vast cash flows: the sum of all of its revenue in the past, minus all of its outlays. The balance is currently about $2.5 trillion because after the early 1980s the program had surplus revenue, year after year.
...
Mr. Greenspan recalled in an interview that the sour economy of the late 1970s had taken the program close to insolvency when the commission he led set to work in 1982. It had no contingency reserve then, and the group had to work quickly. He said there were only three choices: raise taxes, lower benefits or bail out the program by tapping general revenue.

The easiest choice, politically, would have been “solving the problem with the stroke of a pen, by printing the money,” Mr. Greenspan said. But one member of the commission, Claude Pepper, then a House representative, blocked that approach because he feared it would undermine Social Security, changing it from a respected, self-sustaining old-age program into welfare.

Recall that payroll taxes were raised back in 1983 and the Federal Government has been spending the Social Security surplus every year since that time, in the process making the government's annual budget look a lot better than it actually is. This no doubt helped to make the former Fed chairman quite popular with elected officials, that is, until the whole financial system melted down a couple years ago.

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Potential shadow inventory now at 18 million?

Stan Humphries, the chief economist at Zillow.com talked to Aaron Task of Tech Ticker and inadvertently ended up generating the somewhat sensational headline that now accompanies the related story at Yahoo! Finance, a headline that has been embellished a bit above as detailed below. (Hopefully it's not too late already, but that Tech Ticker story begins playing the video automatically, something that I, for one, find quite annoying).

With the likely exception of real estate agents who are now working with hesitant buyers, no one really disputes the fact that there are a ton of houses that are likely to come on to the market over the next year or two both from distressed sales and from sellers who think the market has recovered enough that they'll get a decent price.

But, in the interview, Humphries was referring to the second category only and the 10 million figure came from a simple calculation that, based on a recent survey, eight percent of homeowners are very likely to sell their property if market conditions improve.

Take that potential 10 million and add it to the potential 8 million homeowners who are likely to lose their home through the foreclosure process as detailed in a number of recent reports on the "foreclosure pipeline" and you get a whopping 18 million for the shadow inventory.

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Californians to get $18,000 to buy a house

More evidence of how wacky things have become in today's real estate market comes via the overlap of the expiring Federal homebuyer tax credit of $8,000 with local versions of the same, in particular the one in California where another $10,000 in government money is being offered as detailed in this item at the WSJ real estate blog.

The $200 million program, split between first-time buyers of existing homes and new units, should keep the Golden State’s sales moving along post spring-selling season.

But, it might not get off to a peaceful start on May 1: Get ready for a stampede early on as some buyers rush to overlap with the federal tax credit that’s dangling as much as $8,000 to buyers. (Yes, that’s up to $18,000 for buying a house.)

For the federal incentive, contracts must be inked by April 30, while closings have to happen by June 30. The California credit covers closings on existing or new homes on or after May 1, leaving a short window for double dipping.

Since there is a dollar limit rather than a time limit for the California tax credits, don't be surprised if the same kind of mania develops as was seen last summer for the "Cash for Clunkers" program. Dangling not just $8,000 but a whopping $18,000 in front of someone who might be sitting on the fence is sure to have an extreme mood-altering affect.

Of course, unless either or both of the tax credit programs are extended, look for sales (and prices) to plummet after all the free money has run out.

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The CFTC, metals trading, and prophylactics

The CFTC (Commodities Futures Trading Commission) is meeting today to discuss the trading of futures and options in metals markets and the possible use of prophylactics, but not the kind of prophylactics that you were probably thinking of as a simple search on "CFTC prophylactics" reveals this term is used frequently to describe action that the group might take to protect market participants from one thing or another.

You can watch or listen to the proceedings here and the two charts below showing the volume of gold and silver trading on exchanges around the world are from first panel that just included two CFTC officials. The second panel is now underway.
As shown above, most of the gold futures trading is done in London via the LBMA (London Bullion Market Association), the world's leading gold market for centuries.

In contrast, more than half of the silver futures trading occurs at the COMEX in New York as shown below where JP Morgan traders have a big presence.
It's possible that things could get interesting this afternoon as GATA Chairman Bill Murphy will be part of a panel discussion and, according to this BNN report from late yesterday, he may have a surprise or two in store in the form of someone who has come forward to reveal some sort of untoward market activity that might be aimed at suppressing prices.

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Thursday morning links

TOP STORIES
Merkel Sets Greek Terms, Calls IMF-EU Aid Last Resort - Bloomberg
European Central Bank Blasts Merkel on Greece - Spiegel Online
US CFTC faces naysayers on metals trade limit idea - Reuters
Behind Consumer Agency Idea, a Tireless Advocate - NY Times
California’s Tax Credit: Will Home Buyers Stampede for $18,000? - WSJ
Bank of America sued for not modifying mortgages - Reuters
Brown's Bottom Is an Enormous Issue In the UK - Jesse's Cafe
Why this is a rich man's recovery - MSN

Have these these links delivered to your inbox every weekday.

MARKETS/INVESTING
Oil inches up to near $81 as US crude stocks rise - AP
Gold firms as euro steadies; EU summit eyed - Reuters
Treasury Five-Year Notes Fall Most Since August After Auction - BusinessWeek
Business Booms and Depressions Since 1775 - The Big Picture
The Yen Collapse Has Only Just Started - Zero Hedge
Treasuries Rise as Surge in Yield Presents Buying Opportunity - Bloomberg0

ECONOMY
New Jobless Claims Fall as Employment Picture Improves - CNBC
Social Security to See Payout Exceed Pay-In This Year - NY Times
New home sales stumble 2.2% in February to hit fresh low - LA Times
Study: Retired couple will need $250,000 for health care - AP
Is Inflation Coming Back? - Time

INTERNATIONAL
Germany: Any Greek bailout must bring in IMF - AP
Sale of residential land temporarily halted - China Daily
Dubai Offers Dubai World $9.5 Billion in New Funds - Bloomberg
Merkel May Emerge Victorious in EU Battle over Greece - Spiegel Online
Misconceptions on China's role in financing the U.S. deficit - MarketWatch
Toyota to realign Japan manufacturing ops: report - Reuters
Budget 2010: Failure to tackle deficit will be Labour's legacy - Telegraph
Budget 2010: The painful truth that Alistair Darling failed to mention - Telegraph
Geithner: China letting Fed set yuan's path - CNN/Money

REAL ESTATE
More Markets Head Into Double Dip - ZillowBlog
How Bank of America’s Mortgage Write-Down Program Works - WSJ
Housing's Big "Shadow": Up to 10M More Homes Could Be for Sale - Tech Ticker
BofA to Reduce Principal in HAMP Mortgage Modifications - Housing Wire
Will Treasury Adopt a Mortgage Plan Like BofA's? - Olick, CNBC

FED/TREASURY/BANKING
Kohn: Research needed on combating bubbles - AP
The Fed as a Confidence Game: What They Were Saying in 2007 - Mises
Fed exit fraught with dangers, monetary experts say - Reuters
Fed’s Hoenig Endorses Volcker Rule, Leverage Limits - Bloomberg

INTERESTING
New York bar to set menu prices like stocks - Reuters
Octomom gets foreclosure reprieve - O.C. Register
Clusterstock Editor John Carney Fired by Business Insider - Village Voice
An Open Letter to Dr. Laura Schlesinger - Naked Capitalism
Light Bends Matter, Surprising Scientists - LiveScience

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