In a braven attempt to crush the economies of the New York metropolitan area, President Obama continues to wage war on Wall Street firms. Despite a 44% drop in bonus payouts for 2008, the President is angry at the size of the payout, despite the fact that senior executives at most banks took no bonuses this year.

Just goes to show you boys, don’t tick off your big share holders. They can be a pain in the neck.

On the other hand, maybe Obama is all talk and no action.

Details of Geithner’s bailout plan for the banks still in business remains a mystery to date. It is coming soon, the President promised in his weekly radio address.

On a Geithner-related note, Health secretary-designate Tom Dasche had to pony up big bucks to settle back taxes on his chauffeured Cadillac.  Change has come to America!

Maybe this is why cable was so bid on Friday. China is taking a GBP 6 bln stake in the mining giant.

Well now we know. All we need is a little confidence and everything will be O.K.

No wonder Putin is trying to deflect heat, blaming U.S. for economic crisis.

EUR/USD heads into the weekend on a soft note, trading below the area where the ECB tried to draw a line in the sand late last week and early this week at roughly the 1.2850 level. We head into the close just shy of 1.2800.

Equities have given back great chunks of recent gains as the US stimulus package is being revealed to be a bloated mess and a bank bailout still seems some ways off.  There were some economic bright spots this week like a rise in existing home sales and a shallower-than-expected pullback in GDP, but there were also low-lights like climbing continuing jobless claims, massive fresh layoff announcements and  Chicago PMI figures that barely maintained a 30-handle. Hopes are not high for ISM on Monday with a dip to 32.9 the median forecast.

Rumored 1.2750 barriers will be in focus in Asia early Monday barring government action over the weekend to shore up the banks.

To start the weekend right, here is a philosophical look at thrills and spills that closely approximate the ebb and flow of trading

Canadian PM Harper protested yesterday that the “buy American” provisions in the Obama stimulus bill were illegal and his message appears to be having some resonance. The White House spokesman just all but admitted that is the case, and said the matter is under review.

Obama travels to Canada on his first foreign trip on February 19.

After a scolding from the President yesterday, Democratic Senator McCaskill of Missouri is planning on introducing legislation that would create a salary cap on employees of any company that takes TARP funds. The cap would be $400,000, the same salary Obama recieves. No word on whether Wall Street bigwigs will get 474s, fleets of helicopters and a 17-acre estate close to downtown as part of the deal.

Asked by a reporter about the President’s view on the dollar and the on calls from the Europeans to help stabilize exchange markets, Robert Gibbs, the White House press secretary didn’t even attempt an answer and punted straight over to Treasury. He refused to characterise the phone call between Obama and China’s Hu, which could have currency implications as well.

A report on CNBC that the idea of a “bad bank”  run by the government to aggregate toxic assets away from the banks’ balance sheets is losing favor has sent the stock market lower. The reason banks and the government cannot come to an aggrement is because no one can figure out how to price this junk.

That fact raises a fundamental question. Clearly, banks must still be carrying assets on their books at elevated prices if they are unwilling to sell to the government to clear their books. This is the dirty little secret everyone knows but few want to discuss: banks around the world are bust, but we’re just not willing to admit it.

The S&P has slipped back toward session lows, down about 2% on the day. EUR/USD has fallen back to 1.2805 and EUR/JPY is below 115.00.

EUR/USD has pushed back into the 1.2820s after dipping as low as 1.2780 late in Europe. A rebound in US equities is helping temper the trend toward risk aversion that dominated early in the day. Expect that relationship to be maintained for the balance of the session with most of the price action dicated by machines rather than traders on a quiet Friday afternoon.

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