Good points regarding yesterdays Bernanke show. Full video, http://watch.bnn.ca/#clip457419

“The Fed’s balance balance sheet is likely to stay inflated for a long period of time; he won’t be able to sell assets back to the market without a very significant write down if that were to happen in the near/mid term.  Consider that a an 8% write down on his $1 trillion in mortgage back securities would wipe out the Fed’s equity capital.  From a political perspective this would drive massive angst among a wide range of politicians and very much  put the Fed’s independence (something Bernanke holds dear) very much at risk”.   (Michael Purves, BGC Derivatives)

Vix closing on 4 year lows. The ex fear index (according to some people) is being hammared again. With debt ceiling being breached within a couple of days, people must be very confident selling the Vix so hard.

Inside scoop about Goldman. Great article by Vanity Fair about high finance from the No1 Firm, Goldman.

“What tripped up Goldman’s traders was a massive wrong-way bet on interest rates. “Credit spreads just blew out,” Paulson explains. In February 1994 the feds raised interest rates, and “it just completely fucked up the firm’s trading position,” recalls another Goldman partner. “The firm didn’t really know what the risks were.” By the following summer, as the trading losses mounted, Friedman was increasingly frazzled. Bob Hurst remembers seeing him in Jackson Hole, Wyoming, where Friedman had a home, and thinking that the senior partner was hurting. “ ‘Your job’s impossible,’ ” Hurst recalls telling Friedman. “ ‘I have no interest in it.’ I said it from a perspective of I thought he had a couple of years to go and not that he was quitting that fall.” Another partner puts it bluntly: “Steve hated his job as C.E.O. He hated it because he felt he had lost control of his life.” (Vanity Fair)

http://www.vanityfair.com/business/features/2011/05/goldman-sachs-201105?currentPage=5

Econstorie’s latest video. While watching HFT algos trade the no volume melt up SPX market, you might get some insight into the academics of  Keynes and Hayek in this video.

Silver pushing higher again. The ETF is breaking up to new highs while the Usd slowly but surely is dissapearing.

Excellent video on the issue of Us Debt and the Usd as a world currency.

“From a bookkeeping point of view, Standard & Poor’s is absolutely right. U.S. spending policies are out of control; they’re not showing any sign of being fixed in the near future. That said, the U.S. is a special case because it is a country that can manipulate the currency policy of the entire global system for its own benefit, and as we’ve seen in the past, the Federal Reserve really doesn’t have a problem doing that.”(Stratfor)

SPX this week, adjusted for the Usd decline, is actually small negative, despite all the bulls screaming about the great performance. Usd falling off the cliff is not good long term. Even export led companies in the Us are starting to complain about the collapsing Usd. (Black line SPX, red line DXY index).

What happened actually to Mr Weber? We’ll probably never get to know. Congratulations to Draghi, and Goldman Sachs. Beside Geithner & Co, all ex “Goldmaners”, it looks like we will get another “Goldmanite” ruling the European centralbank.

Full story below,

http://www.bloomberg.com/news/2011-04-27/spain-calls-draghi-excellent-choice-for-ecb-isolating-merkel.html

What if we didn’t have that QE2? GDP has now been plunging below alla estimates compared to some months ago. Will QE3 help the economy instead?

Silver has been enjoying a tremendous run. If this is a bubble forming or not, is yet too early to conclude. Judging by the volumes during the last trading days, we can definitely conclude people are getting involved, and HFT algos have a new great product to trade.