Obama thought GM was too big to fail because he needed union support. Now he dumps them.

Obama thought GM was too big to fail because he needed union support. Now he dumps them to avoid blame for the coming failure.

Obama should not have bothered to bail out the GM union bosses. GM has distorted and lied and is losing money when you remove the accounting gimmicks and use the real costs of running the business instead of their costs less government bail-out. Obama only monitized their enormous debt burdens. The union operating cost overburden still exists. Obama now sees he is a one-term president. The filthy rich union bosses have decided to dump him as well. The American taxpayers were forced to cover the union pension plans with age 50 retirement and now Obama wants to cut GM loose before it fails so GM's failure can be blamed on someone else. But don't worry about the unions yet because their corrupt union leaders still have time to steal all the union money Obama set aside. Worry now about the uniformed investors who Obama hopes to saddle with the proposed private buy-out (IPO). We predict GM will be bankrupt before the next recession begins. It is so debt and cost laden that once interest rates rise the red ink will cover their books. GM's new green cars cost over $40K and look like carnival go-carts and circus clown cars.

Inflation looms in the future and will make short term interest rates rise and short term debtors insolvent. They will be the big losers. Bondholders will be big losers in the end and there will be bursts of money leaving bonds for stocks. Commodities will be the big gainers again. Homeowners will be the big winners as fixed long-term rates are depressed.

As predicted, the cash infusion from corporations is beginning to let loose a bull market and a fresh cash influx for acquisitions and expansion of the economy. But that only occurs because they believe the recovery is real. Corporations have cash and are beginning to warm to acquisitions especially with stocks a bargain now.


World Markets:
Hedge funds may have begun buying to cover their shorts. But fund negativity is always self-defeating for the funds. All it does is discourage investors. $30billion was taken out of the market so far this year by investors who do not like the funds betting against them. For that is what it amounts to. We have had Goldman-sucks and now Hedgefund-sucks. Why should Americans invest in the market when the big hedge funds are betting against them?

German exports also surged to pre-recession levels. German second quarter growth just hit 2.3% and rising.

Economic Calendar
We are seeing manipulated obama government statistics again with wide data scatter and correction as big as the reported changes.

This week
NY Fed - Empire Manufacturing Index Aug rose to 7.1 from 5.1 a 20% improvement.
Net long-term TIC Flows May rose to 44.4 from 35.4 a 30% improvement
NAHB Housing Market Index Aug declined to 13 from 14 as Obama continues to ignore the democrat-socialist corrupt and dysfunctional Fannie and Freddie government organizations that insured loans that were impossible to repay so that the private mortgage derivatives were corrupted with Barney Frank's bogus mortgages and collapsed causing the democrat-socialist crisis that which Obama then exacerbated by declaring it to be a Great Depression.
Housing Starts Jul up to 546K from 537K Capacity needs to be removed.
Building Permits Jul at 556K down from 583K. Capacity needs to be removed.
PPI Jul up to 0.2% after being down 0.5% is no longer deflationary. That’s good.
Core PPI Jul up to 0.3% from 0.1% is not deflationary. That’s good
Industrial Production Jul up 0.1% after Obama manipulated it lower (-0.1%) last month. That’s good.
Capacity Utilization Jul at 74.8% up from 74.1%, which implies some capacity, is being reduced.

Yesterday
Crude Inventories 08/14 increased slightly. Summer is coming to an end and USA consumption of gasoline will decrease and then heating oil consumption will increase.

Today:
Aug 19 8:30 AM Initial Claims 08/14
Aug 19 8:30 AM Continuing Claims 08/07
Aug 19 10:00 AM Leading Indicators Jul
Aug 19 10:00 AM Philadelphia Fed Aug

Market Outlook Aug 19, 2010
What is technically wrong with this market is that it still needs to break again above the 20-day and 100 day moving averages. The May meltdown frightened a lot of people. It was not caused by a fat finger mistake. The automatic market system is flawed and unstable. It could happen again because like the Japanese car auto-acceleration problem, the SEC has no clue as to what actually caused the instability.

Volume has been extremely low on the recent Hedge Fund declines indicating that the Hedge fund short sellers are running out of cash. That could be because people do not like Hedge funds betting against them. It sounds unethical to investors so investors took $30billion out of the market so far this year. But they made a bigger mistake and bet on deflation and bought bonds.

We expect a bigger rally to follow if the corrupt socialists are voted out of office in November. Then obama socialism can be stopped in its tracks. The imperatives are no new taxes, no new federal programs like obamacare, and cut state and federal do-nothing jobs. State and federal government job cuts are needed and no new taxes.

World Markets
Asian markets were up last night. Shanghai up 0.8%, Hong Kong up 0.3%, India up 1.1%, and Japan up 1.3%.

European markets are up in a range of about 0.1% to 0.5% this morning about half way through their day.

US pre-market futures are up 0.4% this morning at 8 Am.

Now both China and Germany growth indicates the Obama-Barney Frank-Christopher Dodd worldwide recession is ending. Corporations are rushing to make acquisitions with stocks at bargain prices. Investors abandoned and punished unethical funds that bet against them. Now the funds are covering shorts before the investors go elsewhere and the unethical hedge funds go broke.