As we mentioned last week, the city of Bell California's protest has finally gained momentum and taken to the streets. The LA Times is reporting:

"BELL, Calif. (AP) - Several hundred angry residents from a modest blue-collar Los Angeles suburb marched Sunday to call for the resignation of the mayor and some City Council members in a protest sparked by the sky-high salaries of three recently departed administrators.

The residents of the city of Bell marched to Oscar's Korner Market and Carniceria, owned by Mayor Oscar Hernandez, then to his home, demanding that he reduce his own six-figure compensation or quit.

They then did the same with some members of the City Council, with many marchers wearing T-shirts that read "My city is more corrupt than your city."

By Levente Mady

The bond market was off slightly last week as a surging stock market knocked yields3-6 basis points higher for the week. The bond futures traded up to new 18 month highs on Wednesday before settling back a couple of points during the last two trading sessions before the weekend. While stocks and commodities finished a positive week, the bond market continues to scream double dip and deflation. With the 2 year yield just a snick north of one half percent the bond market is starting to tell us that the Fed is increasingly likely to stick with its Zero Interest Rate Policy for the foreseeable future. Until the next wave of credit concerns hits the market, bonds will continue to have a positive fundamental backdrop.

Michigan Capital Confidential is reporting that Ann Arbor is taking a budget haircut and cutting firefighters yet purchasing over an $850,000 water sculpture to be placed in front of the court and police building. The same article is reporting that they are eliminating the position that oversees trash pick up in favor of a new art coordinator.

"Ann Arbor City Council member Stephen Kunselman, a Democrat, opposed the art deal."

""I think it is incredibly insensitive," Kunselman said. "It is insensitive to the staff and their morale. It is insensitive to the community. There are people out there struggling financially, and here we are spending a large amount of money on a piece of art.""

In an extraordinary interview with Bloomberg, Matt Simmons calls the latest oil a diversion from the real problem. The real problem is that the the leak is spewing "120,000 per day minimum of toxic poison has now covered the bottom of the Gulf of Mexico. So what they are talking about is the biggest environmental cover up ever and they knew that riser would finally deplete and they could say it's over. Unfortunately, we have now killed the Gulf of Mexico."

What was tragic has now become down right scary. As Matt states in the interview, in case of a hurricane, the entire Gulf region will have to be evacuated. But for us, the scary thought is what if we don't? Will the feds not order an evacuation to prevent panic? To save face? To win an election?

The Wall Street Journal is reporting that the credit rating agencies (Moody's, Fitch, and Standard & Poors) are refusing to let their ratings be used at new bond auctions for fear of being sued. Under the new law, the credit ratings can be held liable if the bond does not perform as expected (all relative, no?). Previously under the law, these firms were handled similar to a newspaper or an internet blog-opinion not defined legally as an "expert" that would hold them liable. From the article:

"Once the bill is signed into law, advice by the services will be considered "expert" if used in formal documents filed with the Securities and Exchange Commission. That definition would make them legally liable for their work, meaning that it will be easier to sue an firm if a bond doesn't perform up to the stated rating.

Breitbart (via the AP) is reporting that BP used photo shop to alter photos of their command center in the gulf. Hahahaha. I am sorry, but I can't even make this kind of stuff up.

"BP acknowledges it posted on its website an altered photo that exaggerates the activity at its Gulf oil spill command center in Houston."

"The picture posted over the weekend showed workers monitoring a bank of 10 giant video screens displaying underwater images."

"Spokesman Scott Dean says Tuesday that two screens were blank in the original picture and a staff photographer used Photoshop software to add images."

"Dean says the company put the unaltered picture up Monday after a blogger wrote about telltale discrepancies."

And my favorite quote:

"He says the photographer was showing off his Photoshop skills, and there was no ill intent."

Bloomberg is reporting of protests during a city hall meeting In Bell California when it was reported that the city manager makes a staggering $800,000 per year in salary.

"An overflow crowd packed a City Council meeting in Bell, a mostly Hispanic city of 38,000 about 10 miles (16 kilometers) southeast of Los Angeles, to call for the resignation of Mayor Oscar Hernandez and other city officials. Residents left standing outside the chamber banged on the doors and shouted “fuera,” or “get out” in Spanish."

It gets even better:

A few months ago Business Insider ran a great story on the worthlessness of municipal bond ratings given by the three rating agencies, Moody's, S&P, and Fitch.

From the article:

"Agencies such as Fitch and Moody's are planning to make their municipal bond rating system easier, and hike muni bond ratings, in order to bring their muni ratings system into line with their corporate bond system."

"Politicians had pressured ratings agencies to create an easier rating system for municipal bonds, in the hopes that higher ratings would reduce the perceived risk of muni bonds and thus allow local governments to pay lower interest costs."

James Kunstler's latest blog is a must read. For the record, I have not never met Matt Simmons; however, throughout my career I have done business with many Matt's colleagues. All of these people have the highest regard for Matt.

If the Matt is right, the coastal towns around the gulf need to be evacuated immediately.

Interesting enough, the Huffinton Post is posting a local news t.v. report on the toxic water in the Gulf. Swimmers beware.

The truth shall set your free. It is now confirmed that there is a third oil leak in the gulf.

"BP has confirmed that there is an oil leak on the sea floor several miles away from the Deepwater Horizon's damaged blowout preventer. The undisclosed specific location of the sub- sea leak is reported to be billowing oil and deadly methane gas."

"While the live BP video feed has been focused on the BOP, some oil industry experts have suggested that the leak being reported today has been played down, despite a report from Florida Senator Bill Nelson last month."

This has all of the makings of a cover up.

CNBC is now reporting that there is seepage around the capped well.

"Engineers monitoring BP's damaged well in the Gulf of Mexico detected seepage on the ocean floor that could mean problems with the cap that has stopped oil from gushing into the water, the U.S. government's top oil spill official said on Sunday."

This is consistent to what Matt Simmons has been talking about for the past six to eight weeks. Matt discusses that the whole idea of one hole is completely absurd.. If this is indeed true (and we have ever reason to believe it is, BP has been lying to the public since day one), there needs to be congressional hearings ASAP to hold BP and whoever else is involved accountable. We also need to evacuate the gulf.

Originally first reported on Drudge, Oceanographer John Kessler's most recent research is reporting that the Gulf has anywhere from 10,000 to a million times normal methane gas. If this is the case, it will not only destroy the gulf forever (our lifetime at least), but it will also be of grave danger to all of those involved in the clean up and the surrounding population centers.

"Ramifications are multifold, Kessler said. He called the site a natural laboratory in which to better assess the effect of methane on global climate change. Naturally occurring methane seeps have been linked to rapid climate change. For instance, an event occurring 55 million years ago may have caused one of these spikes, scientists believe. So the Deepwater Horizon environmental disaster may, at least, help scientists better understand and perhaps predict methane effects on global temperatures."

The WSJ is reporting that cities are cutting their entire staff and hiring contractors to replace them (that is, if there is any replacement):

"Faced with a $118 million budget deficit, the city of San Jose, Calif., recently decided it could no longer afford its own janitors. So the city's budget called for dropping its custodial staff and hiring outside contractors to clean its city hall and airport, saving about $4 million.

To keep all its swimming pools open and staffed, the city is replacing some city workers with contractors.

"These are cases where the question is being asked, 'Is this a core service at the city level?' " said Michelle McGurk, senior policy adviser to the San Jose mayor."

The dollar continues to drop like a rock, while total foreign holdings of U.S. treasuries continue to inch up.

Foreign investment is a great contary indicator, no?

Kevin Williamson of the National Review writes a fantastic article (click here) on Build America Bonds (BABS).

The cliff notes:

States are funding their pensions with debt. Hello! We wrote the other day that Illinois is funding their liabilities with payday loans.

Every taxpayer in the US will ultimately be responsible for Illinois.

When does anything from the federal government (BABS) work? What was the last good idea they came up with?

The Financial Times is reporting that states are looking to overseas investors to fund their problems. These investors come from anywhere from Europe to the Middle East. It just shows how much investors are throwing caution to the wind for yield.

Such a development should givee even more caution. International investors are usually the last ones to the party, at least that has always been the case with equities, real estate, and treasury's. Muni's are becoming no different.

From the article:

The AP (via the Huffington Post) is reporting that three days of rioting has broken out in Belfast. WARNING GRAPHIC PHOTOS IF YOU CLICK ON THE LINK.

To my armchair analysis, it looks like this has nothing to do with religion, but rather recreation. From the story:

"The Rev. Gary Donegan said violence that continued until 2 a.m. Wednesday in Ardoyne featured rioters aged 8 to 18 - backed by crowds of girls capturing the mayhem on their cell phones for posting on social networking Web sites.

"Recreational rioting is the term," the 46-year-old priest said. "It was like a Disney theme park for rioting. It was ludicrous.""

What is also crazy is that former IRA members were trying to subdue the mob:

The Financial Times is reporting that Illinois has lowered the yields on their "Build America" 900 million debt issue. In other words, the risk is cut to hold this states insolvent paper.

"State officials and Citigroup, the underwriter, were able to convince investors, many specializing in sovereign debt, that Illinois, despite its widely publicized budget and pension trouble, was a safer bet than the current market levels reflected."

So the poor bastards that bought this stuff have more or less been sold on the idea that the Federal government will bail them out if things get bad (and they will be bailed out, we fully expect it). Also, it looks like bond holders get paid before anyone else (and they should!).

CNNMoney.com is reporting that Illinois is our very own Greece. How very true. But perhaps a better title would be "Illinois Turns to Payday Loans to Pay Da Bills." You know, the loans that charge over 500% to get you through to the next pay day. Read from the article below:

"On Wednesday, it plans to raise $900 million through Build America Bonds to fund its first capital program in more than a decade. The money will be used to improve roads, bridges and schools."

And this debt issuance is only the beginning. The state plans to raise $1.3 billion in short-term notes next week and $1.4 billion in debt related to tobacco settlement funds in November."