The European Union has announced an agreement among heads of state to address the mounting sovereign debt crisis. Here ’s Commission President Barroso’s statement. The meat of the announcement is the following: First the Commission will present a concrete proposal for a European Stabilisation Mechanism to preserve financial stability in Europe

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European Stabilisation Mechanism Announced

Sell in May and Go Away ” is the oldest rule in stock market investment. This week has certainly provided further support for it: • The major Western stock markets are down c8% • The major emerging markets are down between 4% – 13% • Crude oil prices are down 13% This May panic may well also mark the markets move into their 3rd, and most destructive phase

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Markets approach the "drawn-out fundamental downtrend" phase

On Tuesday, I wrote : The Fed argues that an audit would interfere with its monetary policy decisions.

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The Fed Is Only Authorized to Conduct MONETARY Policy, But It Has Also "Become the Single Largest FISCAL Actor in the U.S. Economy"

Note: This earlier post has summaries of three major stories today: Europe, market glitch, and employment report. This is an unofficial list of Problem Banks compiled only from public sources. Here is the unofficial problem bank list for May 7, 2010

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Unofficial Problem Bank List May 7, 2010

Congressman Grayson’s office sent me the following announcement: Rep. Alan Grayson Applauds Upcoming Partial Victory in Senate “There is deep bipartisan support for a full audit of the Federal Reserve, in both the House and the Senate. The Sanders Amendment takes a significant step in that direction

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Congressman Grayson Now Backs Sanders Amendment

Intravenous cash Injections of capital Could not save this bank One thousand point drop Ten thousand banks may yet fail Is it time for gold? by Soylent Green is People From the FDIC: First Federal Bank of Florida, Lake City, Florida, Assumes All of the Deposits of The Bank of Bonifay, Bonifay, Florida Bank of Bonifay, Bonifay, Florida, was closed today by the Florida Office of Financial Regulation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver

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Bank Failures #65 & 66: Florida and Minnesota

Alan Greenspan previously said that the current credit crunch is “by far the greatest financial crisis, globally, ever” — including the 1930s Great Depression. As Bloomberg noted : Greenspan said that while the economy was in worse shape in the Great Depression, the recent financial crisis was potentially more harmful than that in the 1930s because “never had short-term credit literally withdrawn.” Today, Greenspan said : The evaporation of the supply of such credits on so global a scale within hours or days of the Lehman failure is, I believe, without historical precedent … The bankruptcy of Lehman Brothers in September 2008 precipitated what, in retrospect, is likely to be judged the most virulent global financial crisis ever…..

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Greenspan: "Most Virulent Global Financial Crisis Ever"

CNBC Squawk Box — Crisis Economics (Click for VIDEO [5:56])  

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Roubini on CNBC Squawk Box – Market Turmoil, Eurozone, and Crisis Economics

Even though a deal was supposedly reached yesterday for a watered-down version of a Fed audit, a source on the Hill tells me: Do not be deceived that this Senate ‘deal’ is done, though. The amendment has not passed, and I have heard rumors that Geithner and Bernanke are still fighting this compromise quietly behind the scenes. If it does pass, Fed transparency reformers will be in a very strong position going into the conference committee, which will merge the Senate and House bills.

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It’s NOT Too Late To Call Your Senator And Demand a Thorough Fed Audit

Paul A. Volcker, the former Federal Reserve chairman, has voiced some concerns about Senator Blanche Lincoln’s proposal to regulate the derivatives market much more tightly, saying that he is not in favor of forcing banks to spin off their derivatives operations.

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Volcker Says Derivatives Proposal Goes Too Far

As of 2007, the bottom 50% of the U.S. population owned only one-half of one percent of all stocks, bonds and mutual funds in the U.S.

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Should a Stock Market Decline Stop Us From Breaking Up the Giant Banks or Fully Auditing the Federal Reserve?

CNBC — Discussing the fate of the markets and the impact the Greek contagion is likely to have on the rest of the world, with Nouriel Roubini, roubini.com. (Click for Video [3:51])   CNBC — Investors need to be risk averse and say in cash, economist Nouriel Roubini told CNBC Thursday after riots broke out in Greece following the passage of an austerity program

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CNBC – Roubini on the Market Fall

Last week’s news, from our ChinaBlogTweets Twitter feed, has been filtered for some of the most relevant business news. Worries about China’s business environment (for foreign businesses) continue, and state secrets and indigenous innovation are fanning the flames. Some protectionist moves perhaps, but for FDI the message is that you must comply

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Briefly…Top Ten Tweets (From State Secrets & Indigenous Innovation, To Shanghai Expo & IP Innovatisation)

This afternoon, I’m scheduled to join a press call with Simon Johnson and two Senators discussing a proposed amendment to the financial reform bill. Simon and I have been in alignment since the day we “debated” the issue of nationalizing the then-insolvent banks. I was supposed to be against nationalizing banks, but I thought for some reason they were talking about solvent banks

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Some Notes on Financial Reform

They say that you learn more from your mistakes than your successes. In the blog’s case, it will never forget the mistake it made when it began to build a long position in early May, soon after arriving in Houston, Texas. It was expecting product to go tight as the US gasoline season began on Memorial Day, at the end of May.

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Gasoline stocks at all-time high ahead of US driving season

Preface: The story that Obama was the top recipient of political contributions from BP is going viral today. I thought I’d put the story in a little context

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Top Recipient of Political Cash from BP, Goldman Sachs, Defense Contractors AND Healthcare Giants: Barack Obama

While in the last few weeks it has become conventional wisdom to worry about the troubles of Greece and other PIIGS and to express concern about the future of the EMU, much of the recent market commentary sounds like Monday morning quarterbacking and worrying about a problem after it has emerged well into the daylight.

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Roubini Concerns About the Future of the EMU – World Economic Forum, Davos, 2006

US auto sales (black line) in April showed welcome improvement versus 2009, but were still a long way short of earlier demand levels. They were up 19% versus April 2009

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US auto market remains "very fragile"

As the New York Times reported Saturday, BP’s liability for is capped at $75 million: Under the law that established the reserve, called the Oil Spill Liability Trust Fund, the operators of the offshore rig face no more than $75 million in liability for the damages that might be claimed by individuals, companies or the government. The fund was set up by Congress in 1986 but not financed until after the Exxon Valdez ran aground in Alaska in 1989. In exchange for the limits on liability, the Oil Pollution Act of 1990 imposed a tax on oil companies, currently 8 cents for every barrel they produce in this country or import

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"BP Says It’ll Pay For This Mess. Baloney." BP Liability Currently Capped at Only $75 MILLION … Menendez Bill Would Raise Liability to…

From Telegraph.co.uk :   Here’s an exclusive extract from Nouriel Roubini’s new book, Crisis Economics . For the past half century, academic economists, Wall Street traders, and everyone in between have been led astray by fairy tales about the wonders of unregulated markets and the limitless benefits of financial innovation. The crisis dealt a body blow to that belief system, but nothing has replaced it

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Extract from Nouriel Roubini’s New Book "Crisis Economics" Published by Penguin, Out May 11th

The blog remains amazed, and worried, by the inability of many of those reponsible for the global financial system to provide the necesary leadership during the current Crisis. They seemingly failed to grasp in March 2008 that Bear Stearns’ bankruptcy was a clear sign that a major global financial crisis was around the corner. Equally, Greece’s credit rating was first downgraded back in January 2009 .

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The Greek carriage hits the buffers as the ‘slow motion train wreck’ continues

As I explained in detail yesterday, the oil spill may be carried by the “loop current” to Florida: How could the oil get all the way from Louisiana to Florida, where the Gulf Stream flows? As Discovery explains : Many ocean scientists are now raising concerns that a powerful current could spread the still-bubbling slick from the Florida Keys all the way to Cape Hatteras off North Carolina

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Oceanographer "Cannot Think Of Any Scenario Where The Oil Doesn’t Eventually Reach The Florida Keys"

From the Fed: The April 2010 Senior Loan Officer Opinion Survey on Bank Lending Practices The April survey indicated that most banks kept their lending standards unchanged in the first quarter , but that moderate net fractions of banks further tightened many terms on loans to businesses and households. … The survey also indicated that loan demand generally weakened further .

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Fed: Banks Keep Lending Standards Unchanged, Loan Demand Weakens Further

Dean Baker Truthout, May 3, 2010 See article on original website The financial reform bills being considered by Congress will lead to a better regulated financial system, most importantly by creating a consumer protection agency that will prevent some of the worst abuses of the last decade.

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Financial Reform: Will We Feel Better the Morning After?

I have provided a balanced overview of the oil spill . I have tried to diffuse partisan comparisons of the oil spill with Hurricane Katrina. But I just read something which is making me lose my composure a tad.

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The Government Official In Charge of Responding to the Oil Spill Was the Official In Charge of Responding to Hurricane Katrina