KIT

Friday FX View: You’re All Mad!

U.S. growth, or more accurately a contraction in growth, came in about half as bad again for the second quarter. Joblessness continues to soar - in the Eurozone the rate of unemployment reached 8.9% in April, while 6.27 million Americans continue to claim benefits this week. One of the big three automakers filed for Chapter 11 bankruptcy. And so the stock market put in its best month for nine years, while the euro is marginally higher. Dropping in from another planet, you’d be forgiven for thinking that the world has gone mad.

It has gone mad and in the end investors in this mess will get hurt. The real stress test is not the B***S*** bank fantasy test but the BALANCE SHEETS and CASH FLOW of businesses that cant hide their garbage. It's only been 6 months from the crash only one quarter reported this year. It will take 3 quarters before the damage shows up on real balance sheets.

Watch LIBOR its down to 1% banks can get money for less than that from the govt ... the banks still dont trust each other enough to lend to themselves.

People are behaving like the government has fixed the problem by handing a new credit card to someone who is near bankrupt.