LOLFED

You were hoping for nasty, brutish and short? Allen Sinai says expect long, wide and deep:

From Bloomberg: The U.S. economy shrank at the end of 2007 and grew less than forecast in this year’s second quarter, signaling that the country is in worse shape than investors had anticipated.

“We’re in a recession,” Allen Sinai, chief economist at Decision Economics Inc. in New York, said in a Bloomberg Television interview. “It’s going to widen, it’s going to deepen.”

The last time the economy contracted was in 2001. It may weaken further as the temporary boost from tax rebates, which aided a pick-up in gross domestic product last quarter from the previous three months, fades. Stocks dropped, Treasuries rallied and traders reduced bets that the Federal Reserve will raise interest rates this year.

Stolen but we loved it. Thanks Jess! Click for fullsize.

If you’re wondering how Bernanke has been spending the part of his time where he isn’t on TV, I was sent this image by Jim Swift - Benny’s got pretty good Nats tickets there:

This reminds me, Benny has been taking a lot of heat from one particular baseball player lately. From iStockAnalyst:

Former major league pitcher, hall of famer, and current US Senator Jim Bunning (KY) threw a high hard one under the chin of Fed chariman Bernanke on Capitol Hill today. I don’t expect the media to cover this verbal brush back pitch, but they should. You know the drill when it comes to the media, they only focus on things they want you to know instead of the things you should know.

Bunning blasted Bernanke’s monetary easing, and blamed him for the decline of the dollar, rising oil prices and rising inflation.

Bunning’s statement today to the Senate Banking Committee re: the FOMC report is a good read. Bunning is not a fan of expanded Fed power.

PASADENA, California (Reuters) - Hundreds of worried IndyMac Bancorp Inc customers descended on the company’s branches on Monday to withdraw their money, after regulators seized what was once one of the largest mortgage lenders in the United States. At a branch at IndyMac’s headquarters, customers began arriving at 4 a.m., five hours before the doors opened.

Some wags have blamed Charles Schumer’s less than reassuring comments for the trickle of funds out of IndyMac in the days prior to its demise. Of course, it takes a good Northern Rock-style FAIL to bring ‘em out in droves.

IndyMac Bancorp Inc., a prolific mortgage specialist that helped fuel the housing boom, was seized Friday by federal regulators in one of the largest bank failures in U.S. history.

The Pasadena, Calif. thrift was one of the largest savings and loans in the country with about $32 billion in assets. It now joins an infamous list of collapsed banks, topped by Continental Illinois National Bank and Trust Co., which failed in 1984 with $40 billion of assets.

Alt-A takedown.

Always room for one more on the failboat…

From WSJ:

WASHINGTON—The Treasury Department is “not talking about nationalizing” struggling mortgage giants Fannie Mae and Freddie Mac, according to a person familiar with the administration’s thinking.

In an unusual move, Treasury Secretary Henry Paulson issued a written statement Friday saying that the Bush administration’s “primary focus is supporting Fannie Mae and Freddie Mac in their current form.”

The person familiar with the matter said the statement was intended to discount reports suggesting that the administration is considering a plan to place one or both companies in a “conservatorship”—in effect, taking them over—if their problems worsen.

(thx to Philippe for the pic suggestion)

Such harsh verbiage from Hammerin’ Hank has been part of what brought TEH PAIN into the market today; we’ve visited territory below 11000. The bonds are less of a visit to the craps table than the stocks if you think there will be a bailout anyway. I don’t think the gold traders believe his hype one bit.

Serious traders with a day job are probably scrambling for their DVR remote right about now, as CNBC has made the decision to cancel the 8pm EST rerun of Fast Money (the only show on the network where you might get info worth trading on) and replace it with a nightly installment of Suze Orman’s preachy middle-class-debtor financial advice on expelling your financial demons or whatever the hell.

Last night’s episode of Suze was on while I was at the gym and I peeked over just long enough to see a ‘case study’ where someone had a $20K car loan (but respectable other income and assets) and wanted to buy a $2K tag heuer watch. I would’ve said pay off the depreciating asset sitting in your driveway, but Suze gave the watch the nod, maybe because the economy needs her to encourage a little spending right about now.

Ben Bernanke spoke this morning about the importance of Fed power, and what a darn shame it is that the US Fed usually has to rely on “moral suasion” while other Feds have more explicit regulatory power over financial firms, and wouldn’t it be nice if he had that kind of authority too. I think it would be quite nice if we gave him a magic wand:

Full text of Bernanke speech here. Futures are still down, but they seemed to like this speech okay. Bernanke reiterated the importance of rescuing Bear Stearns a few times, and talked about how he’d like to reduce the number of times intervention is necessitated, but that, of course, means he is still happy to intervene in future cases.

A two-day gathering of tied hands! Bring your cameras!

CNBC is dancing around this morning, talking about inflation and Dow Chemical’s extensive price increases, then talking about increased unemployment, and food prices… if it wasn’t 8AM I’d make this into a drinking game and be waiting for someone to use the word “stagflation” to take a shot.  Futures look a little “meh” this morning for everything except (surprise!) oil.

YRC swears that they are moving things about the country, but FedEx, not so much. A dismal report from FDX this morning combined with some fresh dilution and dividend-chopping from Fifth Third Bank (FITB) is making it look like another fine day to have sold LAST May and gone away.