STOCK MARKET WATCH, Tuesday January 29

[ozymandius]

Source: du

STOCK MARKET WATCH, Tuesday January 29, 2008

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 356 LONG DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2566 DAYS
WHERE'S OSAMA BIN-LADEN? 2290 DAYS
DAYS SINCE ENRON COLLAPSE = 2251
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 10
Enron execs conveniently deceased = 3
Other Arrests of Execs = 54

---

U.S. FUTURES & MARKETS INDICATORS
NASDAQ FUTURES-----------------------------S&P FUTURES

---

AT THE CLOSING BELL WHEN BUSH TOOK OFFICE on January 22, 2001
Dow - 10,578.24
Nasdaq - 2,757.91
S&P 500 - 1,342.90
Oil - $27.69/bbl
Gold - $266.70/oz.

AT THE CLOSING BELL ON January 28, 2008

Dow... 12,383.89 +176.72 (+1.45%)
Nasdaq... 2,349.91 +23.71 (+1.02%)
S&P 500... 1,353.96 +23.35 (+1.75%)
Gold future... 927.10 +16.40 (+1.80%)
30-Year Bond 4.28% UNCH (UNCH)
10-Yr Bond... 3.59% +0.00 (+0.06%)






GOLD, EURO, YEN, Loonie and Silver

---

PIEHOLE ALERT

Heads Up!
Preliminary info on appearances by Bush & Co. throughout the country. Details & links are added as they become available so check back. And if you know more, are organizing something, or would like to, contact [e-mail]

For information on protests and other actions Citizens For Legitimate Government

---

Read more: du

[ozymandius]

1. Market WrapUp: Stuff That Doesn't Add Up

BY ROB KIRBY

Last week global capital markets gyrated in a fashion I’ve never seen before. Intra-day business-cycle-in-a-day movements in equity markets included disparaging collapses as well as stunning “flagpole” rallies.

It made for some gripping, televised, real-time, fantasy-land, main steam financial reporting.
.....

By Thursday of last week, the mainstream financial press had “more or less” arrived at the conclusion that the wild-ride-proceedings we experienced earlier in the week was all the work of a “lone trader” - a junior employee working for French banking giant – Société Générale:

Société Générale - The Lone Trader Theory

After a rogue trader cost the French bank €5 billion, many are left to wonder about the lucrative but risky equity-derivatives business. Is this all a clever cover story for 'les SIVs de merde,' or did a lone bank trader, not even a central banker, wielding his Mannlicher-Carcano trading platform, almost take out the entire world's financial system without a proper bonus, a golden parachute, or even a corner office?

After a rogue trader cost the French bank €5 billion (equivalent 7.1 billion americanos), many are left to wonder about the lucrative but risky equity-derivatives trade. One of the biggest frauds in financial-services history apparently was carried out by a 31-year-old trader in Société Générale's Paris headquarters, whom multiple news sources have identified as Jerome Kerviel. The trader "had taken massive fraudulent directional positions"—bets on future movements of European stock indexes—without his supervisors' knowledge, the bank said. Because he had previously worked in the trading unit's back office, he had "in-depth knowledge of the control procedures" and evaded them by creating fictitious transactions to conceal his activity.

Bad mortgage investments hobbling a financial behemoth? Has a familiar (truthful, perhaps?) ring to it, ehhh?

http://www.financialsense.com/Market/wrapup.htm

[TalkingDog]

11. Convienient Whipping Boy (IMHO)

It's kinda like the general public's simplified understanding of the mess the banks are in. To them it's the "subprime mortagages" that caused the problem, not the wonky, incomprehensible investment vehicles created by the banks.

Mortgages are something they understand. Resectioned debt and bundled bonds not so much.

A lone, intelligent, disgruntled mid-level employee who was snubbed because of his banal educational pedigree...that, they get. It's the seed of every overly obvious working-man revenge plot on TV.

A complex series of shortsighted missteps, fueled by greed, taken by the professionals who make a living dealing with these types of transactions their whole lives... Let me tell you, denial is a hell of a lot better than thinking our economic lives hinge on something as downright idiotic as this.

Today's Theme Song:


I been run down, I been lied to,
I don't know why I let that mean woman make me a fool.
She took all my money, wrecked my new car.
Now she's with one of my goodtime buddies,
Drinkin' in some crosstown bar.

Sometimes I feel, sometimes I feel,
Like I been tied to the whipping post,
Tied to the whippin' post,
Tied to the whippin' post,
Oh lord, I feel like I'm dyin.

My friends tell me, that I've been such a fool,
And I have to stand by and take it baby, all for lovin you.
Drown myself in sorrow, and I look at what you've done.
But nothin' seems to change, the bad times stay the same,
And I can't run.

Sometimes I feel, sometimes I feel,
Like I been tied to the whipping post
Tied to the whippin' post,
Tied to the whippin' post,
Good lord, I feel like I'm dyin.

Sometimes I feel, sometimes I feel,
Like I been tied to the whippin' post
Tied to the whippin' post,
Tied to the whippin' post,
Oh lord, I feel like I'm dyin'.


My Favorite Master Artist: Karen Parker GhostWoman Studios

[Ghost Dog]

34. Asian Stocks Gain on U.S. Interest Rate Speculation, Earnings

Jan. 29 (Bloomberg) -- Asian stocks rebounded on speculation the Federal Reserve will cut U.S. interest rates to bolster growth and after brokerages raised their ratings on Toyota Motor Corp. and Isuzu Motors Ltd.

PetroChina Co. and Macarthur Coal Ltd. climbed on higher oil and coal prices. Fanuc Ltd., the world's largest maker of industrial robots, and Samsung Engineering Co. rose after posting higher profits. The MSCI Asia Pacific Index added 1.4 percent, still set for its worst month since September 2001.

``There will be companies in Asia that will surprise by being able to deliver growth that markets have not expected,'' said Kathryn Matthews, chief investment officer for Asia at Fidelity Investments, which has about $1.5 trillion in global assets.

HSBC Holdings Plc and Sun Hung Kai Properties Ltd. paced gains in Hong Kong, where interest rates track those of the U.S. The city's Hang Seng Index climbed 1 percent. Japan's Nikkei 225 Stock Average added 3 percent to 13,478.86.

MSCI's Asia Pacific index rose to 143.53 as of 7:32 p.m. in Tokyo, with all 10 of its industry groups gaining. National Australia Bank Ltd. led declines in Australia after business confidence dropped to a two-year low. Other markets in the region advanced except New Zealand and India.

/... http://www.bloomberg.com/apps/news?pid=20601080&sid=aJzO2ua4od9w&refer=asia

[Ghost Dog]

36. European stocks gain on rate hopes; SocGen bounces

PARIS, Jan 29 (Reuters) - European stocks ended higher on Tuesday, helped by expectations of a U.S. interest rate cut while strong durable goods orders data soothed worries over the health of the world's biggest economy.

Shares in French bank Societe Generale (SOGN.PA: Quote, Profile, Research), which last week unveiled a massive loss it blamed on a rogue trader, soared 10.4 percent, sparked by market talk that rival bank BNP Paribas (BNPP.PA: Quote, Profile, Research) could launch a takeover bid for it.

Mining stocks were among the biggest gainers, buoyed by rising base metal prices. Anglo American (AAL.L: Quote, Profile, Research) gained 5.8 percent, Rio Tinto (RIO.L: Quote, Profile, Research) added 2.7 percent and BHP Billiton (BLT.L: Quote, Profile, Research) rose 4 percent.

The FTSEurofirst 300 index of top European shares closed 1.6 percent higher at 1,338.28 points.

But despite Tuesday's rise, the index is down 11.2 percent in January, on track to record its worst monthly performance since Sept. 2002, as equity markets around the world got hammered by fears over the prospect of a U.S. economic downturn.

...

Around Europe, Germany's DAX index .GDAXI gained 1.1 percent, UK's FTSE 100 index .FTSE rose 1.7 percent and France's CAC 40 .FCHI added 1.9 percent.

Banks, pummelled over the past six months on concerns over their exposure to the troubled U.S. subprime mortgage market, rose on Tuesday, with the DJ Stoxx bank index rising 2.2 percent. UBS (UBSN.VX: Quote, Profile, Research) added 2.9 percent and Royal Bank of Scotland (RBS.L: Quote, Profile, Research) gained 4.7 percent.

Commerzbank (CBKG.DE: Quote, Profile, Research) soared 5.9 percent, with several traders citing market talk of a takeover bid for the German bank.

/... http://www.reuters.com/article/marketsNews/idCAL2979315320080129?rpc=611

[Ghost Dog]

37. Euro= USD 1.478, GBP 0.743 and CHF 1.610 at this time

[ozymandius]

2. Today's Reports

8:30 AM Durable Orders Dec
Briefing Forecast 5.0%
Market Expects 1.5%
Prior -0.1%

10:00 AM Consumer Confidence Jan
Briefing Forecast 86.0
Market Expects 87.0
Prior 88.6

http://biz.yahoo.com/c/e.html

[Roland99]

10. Durable orders surge 5.2% in December

Durable orders surge 5.2% in December
Big-ticket items, aircraft and defense goods, power the advance
http://www.marketwatch.com/news/story/durable-goods-orders-surge-52-december/story.aspx?guid=%7B15959CCB%2DC3D9%2D4564%2DBA4C%2D77738717ABCF%7D

Orders for durable goods rose 5.2% in December, led by aircraft and defense capital goods, the Commerce Department reported Tuesday.

...

Excluding the 11.3% growth in transportation goods, December orders rose 2.6%, the first gain since September and the biggest since July.

The December increase far exceeded economists' expectations of a 2.2% gain. See Economic Calendar. Another sign of strength was the upward revision to November orders, which rose 0.5%, much stronger than the previous estimate of a 0.1% gain.

...

In addition, there was a rush in December for new defense good orders. For instance, orders for defense aircraft rose 138%.

So, without the permanent war, where would we be, really? In DEEP doo-doo!

[Ghost Dog]

50. Going bankrupt: The US's greatest threat

DISPATCHES FROM AMERICA
Going bankrupt: The US's greatest threat
By Chalmers Johnson

The military adventurers of the George W Bush administration have much in common with the corporate leaders of the defunct energy company Enron. Both groups of men thought that they were the "smartest guys in the room", the title of Alex Gibney's prize-winning film on what went wrong at Enron. The neo-conservatives in the White House and the Pentagon outsmarted themselves. They failed even to address the problem of how to finance their schemes of imperialist wars and global domination.

As a result, going into 2008, the United States finds itself in the anomalous position of being unable to pay for its own elevated living standards or its wasteful, overly large military establishment. Its government no longer even attempts to reduce the ruinous expenses of maintaining huge standing armies, replacing the equipment that seven years of wars have destroyed or worn out, or preparing for a war in outer space against unknown adversaries.

/continues... http://www.atimes.com/atimes/Middle_East/JA24Ak04.html

[UpInArms]

12. U.S. Dec. durable-goods orders ex-defense fall 2.9%

54. U.S. Dec durable-goods inventories rise 1.1%
8:30 AM ET, Jan 29, 2008 - 1 hour ago

55. U.S. Dec durable-goods shipments fall 0.1%
8:30 AM ET, Jan 29, 2008 - 1 hour ago

56. U.S. Dec core durable goods up 4.4%, biggest since March
8:30 AM ET, Jan 29, 2008 - 1 hour ago

57. U.S. Dec. durable-goods orders ex-defense fall 2.9%
8:30 AM ET, Jan 29, 2008 - 1 hour ago

58. U.S. Dec. durable-goods orders ex-transportation rise 2.6%
8:30 AM ET, Jan 29, 2008 - 1 hour ago

59. U.S. Nov. durable-goods orders up revised 0.5% vs 0.1% prev.
8:30 AM ET, Jan 29, 2008 - 1 hour ago

60. U.S. Dec durable-goods orders highest since July
8:30 AM ET, Jan 29, 2008 - 1 hour ago

61. U.S. Dec durable-goods orders rise 5.2% vs 2.2% expected
8:30 AM ET, Jan 29, 2008 - 1 hour ago

[Roland99]

15. mmmm...war....tasty.

[UpInArms]

20. U.S. Jan. consumer confidence 87.9 vs. 90.6 in Dec.

06. U.S. Jan. consumer confidence above 87.5 expected
10:01 AM ET, Jan 29, 2008 - 40 minutes ago

07. U.S. Jan. consumer confidence 87.9 vs. 90.6 in Dec.
10:01 AM ET, Jan 29, 2008 - 40 minutes ago

[ozymandius]

3. Oil near $91 ahead of Fed meeting

SINGAPORE - Oil prices drifted lower Tuesday as traders waited further cues on whether the U.S. Federal Reserve will cut interest rates again this week to bolster a sagging economy.

The Federal Reserve — scheduled to open a meeting later Tuesday to plot its next move — is widely expected to lower its key rate, now at 3.5 percent, by as much as one-half percentage point to 3 percent when policymakers wrap up the meeting on Wednesday.

Light, sweet crude for March delivery dropped 10 cents to $90.89 a barrel in Asian electronic trading on the New York Mercantile Exchange by late afternoon in Singapore.

Lately, any hope of aggressive action from the Fed or quick action from U.S. authorities to stave off a recession has been able to lift oil prices as well as stocks. Oil investors fear a U.S. recession would dampen crude demand, while stock investors fear a downturn there would hurt economies and companies dependent on exports to the world's largest economy.

Stocks in Japan and Hong Kong surged Tuesday after Wall Street rallied overnight. The Dow Jones industrials rose 1.5 percent as investors took a dismal new home sales report as a further sign the Fed will lower interest rates when its policy body meets this week.

http://news.yahoo.com/s/ap/oil_prices

[Roland99]

4. Stock futures - *yawn*...where's the coffee?

DJIA INDEX 12,391.00 +14.00 05:47am
S&P 500 1,357.30 +2.70 05:47am
NASDAQ 100 1,810.25 0.00 05:47am

[Roland99]

9. Well, someone delivered the caffeine. All up at least 0.5%

[Demeter]

5. The Profile of a Third World Country: How Bush Destroyed the Dollar

http://www.informationclearinghouse.info/article19188.htm

By Paul Craig Roberts

26/01/08 "ICH" -- - --It is difficult to know where Bush has accomplished the most destruction, the Iraqi economy or the US economy.

In the current issue of Manufacturing & Technology News, Washington economist Charles McMillion observes that seven years of Bush has seen the federal debt increase by two-thirds while US household debt doubled.

This massive Keynesian stimulus produced pitiful economic results. Median real income has declined. The labor force participation rate has declined. Job growth has been pathetic, with 28% of the new jobs being in the government sector. All the new private sector jobs are accounted for by private education and health care bureaucracies, bars and restaurants. Three and a quarter million manufacturing jobs and a half million supervisory jobs were lost. The number of manufacturing jobs has fallen to the level of 65 years ago.

This is the profile of a third world economy.

The "new economy" has been running a trade deficit in advanced technology products since 2002. The US trade deficit in manufactured goods dwarfs the US trade deficit in oil. The US does not earn enough to pay its import bill, and it doesn't save enough to finance the government's budget deficit.

To finance its deficits, America looks to the kindness of foreigners to continue to accept the outpouring of dollars and dollar-denominated debt.

The dollars are accepted, because the dollar is the world's reserve currency.

At the meeting of the World Economic Forum at Davos, Switzerland, this week, billionaire currency trader George Soros warned that the dollar's reserve currency role was drawing to an end: "The current crisis is not only the bust that follows the housing boom, it's basically the end of a 60-year period of continuing credit expansion based on the dollar as the reserve currency. Now the rest of the world is increasingly unwilling to accumulate dollars."

If the world is unwilling to continue to accumulate dollars, the US will not be able to finance its trade deficit or its budget deficit. As both are seriously out of balance, the implication is for yet more decline in the dollar's exchange value and a sharp rise in prices.

Economists have romanticized globalism, taking delight in the myriad of foreign components in US brand name products. This is fine for a country whose trade is in balance or whose currency has the reserve currency role. It is a terrible dependency for a country such as the US that has been busy at work offshoring its economy while destroying the exchange value of its currency.

As the dollar sheds value and loses its privileged position as reserve currency, US living standards will take a serious knock.

If the US government cannot balance its budget by cutting its spending or by raising taxes, the day when it can no longer borrow will see the government paying its bills by printing money like a third world banana republic. Inflation and more exchange rate depreciation will be the order of the day.



Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration. He was Associate Editor of the Wall Street Journal editorial page and Contributing Editor of National Review. He is coauthor of The Tyranny of Good Intentions.He can be reached at: [e-mail]

[NMDemDist2]

6. As the dollar sheds value.......US living standards will take a serious knock.

well, that's a gentle way to say we'll all be in bread lines, isn't it?

:cry:

[Kip Humphrey]

7. "...paying its bills by printing money..." What's the 2 trillian printed in the last 7 years???

Wake up! This is ancient history. Like unemployment, we have been in this train wreck for some time now. I think George Soros is protecting his positions by forecasting what has already been occurring. Look at the dollar decline vis-a-vis the Euro already (-40%). At what point does this begin to resemble a banana republic? Try 2003.

[TalkingDog]

13. Banana Republic? According to George Will...

That was the 2nd Inaugural Parade.

Only the 2nd time I've ever agreed with Mr. Will, although I believe him to be an intelligent man.

I was at the computer with the TV on in the background. The Presidential Limousine was running the parade gauntlet, with the Secret Service multi-tasking by getting their morning run in at the same time.

They were showing the car making it's way through the route and the talking heads were blathering on about the parade and the route and all the military flash and I guess George didn't know his mic was live or thought they were on break. But suddenly he pops up and in his most disdainful tone says: "It looks like a Banana Republic."

The air silent except for one cameraman, far in the background, laughing his ass off.

They quickly cut to commercial.


My Favorite Master Artist: Karen Parker GhostWoman Studios

[Tansy_Gold]

14. "At what point. . . . ?" Yep!

I read your next-to-last line and my first thought was, "Oh, about the time boooosh invaded Iraq."

I could be wrong, but ----

The major corporate scandals were breaking and occupying a lot of air-time and newsprint, as well as bandwidth by late 2002, early 2003. The excesses of Bernie Ebbers and Dennis Kozlowski, not to mention Ken Lay, Jeff Skilling, Andy Fastow, were all making headlines. Enron collapsed in 2001, Kozlowski stepped down and was charged with tax evasion in 2002, and so on. But as the march to March 2003 proceeded and the news was nothing but war and fear of war, no one bothered to look at what was happening to the economy. What was REALLY happening to the economy, and why the scandals were a stark and unmistakable symptom of the disease.

I've said it before and I'll say it again -- too many people watched their televisions in horror and sympathy when all those Enron employees and retirees bemoaned the loss of their fat 401k accounts, and NO ONE mentioned that those fat accounts were nothing but stock bubbles.

"Here, Andy, I've got an idea. We're gonna start a company and we're gonna issue some stock. We'll authorize ten billion shares, but we'll only actually sell 1 billion. That'll raise the money we need to start the business. We'll make all kinds of wild claims about what our business is doing so everyone will want to buy into it. Then we'll start selling some of our stock to each other, jacking the price up all the time. With the stock we hold at that high price, we can borrow some real money to keep the business going and make it look like it's even more profitable than it really is. We can buy real estate and set up offices and make it look really real. And we'll give ourselves options on a bunch of that stock, so we only have to pay a really low price for it, but when it hits the top of the market, just about when we'd have to show the whole thing is a fraud, then we'll dump our stock and get REAL MONEY out of it."

That's how it worked, wasn't it? Whether they sold the worthless stock and got real money for it, or used the inflated stock price to buy other real companies (http://www.pbs.org/newshour/bb/business/jan-june02/worldcom_5-01.html) or they had the company buy their personal assets -- a form of converting worthless stock into real money -- they were looting the real wealth of real people.

The focus was on the off-balance-sheet partnerships when it should have been on what's real and what's fraud.

By 2003, all those symptoms were being treated, but not the underlying disease. We had trials and hearings, but the noise of war war war Saddam Saddam Saddam was the anaesthetic distracting the patient from the pain.

None of the rest has mattered. boooooosh and cheeeeeeney and the rest of them DON'T GIVE A FAT RAT'S ASS about 'the economy.' For them it is indeed humming merrily along. The workers keep working -- when they can find work -- and the capitalists keep raking in the capital.

Do they think a $150bn tax rebate will help the economy? They probably haven't even thought about whether it will or not, and if they HAVE thought about it, they've probably determined it WON'T help and that's exactly what they want.

They WANT a banana republic -- no insult intended to bananas. They want a nice little monarchy, a semi-royal dictatorship, an oligarchy, a plutocracy. Now, in the waning months of his 'presidency,' booooosh is able to drop some of the facade, some of what for his father was the infamous "Message: I care" pretense. They don't give a fuck about us, about the economy, about the country, about the planet. They only care about themselves.

Tansy Gold

[Ghost Dog]

38. Mogambo: An Indication the Economy is Lagging

As is usual for me, I was dismayed by the report from Bloomberg.com concerning the Conference Board's latest release of their famous Leading, Coincident and Lagging Indicators. The Leading Indicator, they say, "points to the direction of the economy over the next three to six months."

They do not, as I do, say that it is also an indicator of future profits. Either way, "the index of U.S. leading economic indicators fell more than forecast in December, highlighting the risk of recession", as the index fell 0.2%. It was, even more ominously - as you can tell from the background soundtrack, which is the sound of ravenous wolves howling and people screaming as they are being eaten alive by their debts - the third decline in a row. The third straight decline in future profits!

This fall in the Leading Indicator seems intuitively obvious when Bloomberg explains, "The collapse in home construction, less hiring and a slowdown in consumer spending may spell the end of the expansion that started in 2001." I say, "Well, duh!"

Gratuitous snotty remark aside, the future looks dim, according to this indicator, but you feel compelled to say, "Hmmm! This is the perfect spot to say that you, Big Doofus Mogambo (BDM), like most people, underestimate the government's response to any and all economic crises!", and then point to Tuesday's "emergency rate cut" by the Federal Reserve, where they slashed the Fed Funds rate by a gargantuan 0.75%, taking the rate down 18%, dropping it to 3.5% from 4.25%! Wow! Talk about desperate!

Well, if interest rate cuts are all that is needed to cause problems and then solve them, then this brings up the philosophy of Homer Simpson, who famously said that, "Alcohol the cause of, and solution to, all of life's problems."

On the ho-hum side, the Conference Board's Coincident Indicator, a gauge of current economic activity, rose 0.1% in December, which is almost nothing. The coincident index "tracks payrolls, incomes, sales and production." Remember, this is current activity, and it isn't doing so hot, either.

The Bad, Bad News (BBN), as far as I am concerned, is the Conference Board's Lagging Indicator, which contains costs and inventory burdens, and thus can be thought of as an index of future inflation. So (substituting) inflation "increased 0.4 percent after rising 0.2 percent the prior month."

And, worse, the Lagging Indicator has been outdistancing both the Leading and Coincident indicators for months and months, too, indicating that costs are going up. And they were. And they are. And they will continue to do so.

/... http://www.dailyreckoning.com/Writers/Mogambo/DREssays/MG012908.html

[AnneD]

41. Morning Marketeers.....

:donut: and lurkers. As I listened to the State of the Union speech last night-a warm feeling of hope and satisfaction began to spring from within and gradually flowed through me until I was warmed through and through. I thought it was the realization that this was that bastard's last State of the Union speech, my husband thinks it was the Bush drinking game. There were a few places there where I couldn't keep up.:spray:

And speaking of hope- I came to another realization as to why I have trouble backing Obama or Hillary. It's not a race or gender thing-it's a been there, done that thing. Obama message of hope plays well if you haven't been here before. If you are a new voter-the message sounds great, and it get you all fired up. I got fired up for Bobby Kennedy (I like Jack but was very young at the time) but we know how that ended.

Those of us that have been around the political block a time or two have already been sold the message of hope. We realize that hope means nothing if you can't deliver and offering hope without being able to deliver is cruel and just another way to keep the people mollified and subservient. I think most of the Dems in Congress are spineless and Obama doesn't have many by the short hairs (or they owe him favours and he can collect). The GOP have managed to block even the simplest of Dem legislation. So, unless he can exert force on the Dem's-0ba ma can't deliver on his promise of hope.

Hillary has some balls and might be able to deliver a few things-but my sense is that she will play safe. I look back at the smack down she and Bill got on Health Care reform. Things became polarized and she kept a lower profile after wards and has played safe. I think she can handle some of the intricacies and dealings that you have to do in politics, but I am a bit unsure of where her heart truly lies and if she can be prepare to roll up her sleeves and get down and dirty. It will be hard for her to accomplish what needs to be done.

I back Edwards because I am a realist (considering his numbers now-that sounds like a contradiction in terms). What he says is exactly what needs to be done and he is trying to do it in such a way as to keep himself from being beholding to the interest groups. We need a populist president to reset not only the economic scales, but the social scales as well. I think that neutrality can help him cut a deal when he needs to and grab some folks by the short hairs when he has to. I guess that is my LBJ Texas political school of thought peeking through. I am old enough to know we won't get everything we want, but smart enough to know that we can be tough and make shrewed deals to get most of what we need.

Government AND the Democratic party need needs a cleaning-from the inside out. I have a laundry list of current DEM's that have forgotten who put them in office and were all to happy to go along with Bush and the status quo instead of leading the loyal opposition and I have hope that we can start cleaning-if we can get a president that can get down to some serious business. I'll vote for a Dem...but my patience is wearing thin. The promise of hope just doesn't do it for me anymore.

But of all the numbers, sound bites and BS that has hit the airwaves lately, the one thing that DOES fill me with hope is the fact that, after a 30 year decline in Union membership-this year marks the first time that the numbers have gone up. It was not a grand number-but it was an important number. It has been ignored by business and most talking heads-but this growth has come from the midwest and western states-not the traditional strong holds of labour. Folks are finally taking things into their own hands-and it will only be a matter of time. Edwards is ahead of the curve on this one-but the time is coming.


Happy hunting and watch out for the bears.

[Hugin]

48. Hello AnneD...

:hangover:

I'm doing something I've never done... Endorsing a candidate in the Primaries.

Never had, but, this election is different. It's a once every 75 years election! In previous elections
I remained fairly non-partisan until the GE and I've backed whomever was nominated by the primary process.

This time, however, I do have a preference... John Edwards.

I was happy to vote for him in 2004 and I'll be even happier to vote for him in 2008!

It would be difficult to come up with a slate of candidates which more represent America than
what we are presented with in this Primary Season and I'll back which ever candidate eventually
emerges, but, I hope it's Edwards.

John Edwards for President in 2008!

[AnneD]

57. Prag....

We chat all the time on this thread about economics, and the one common denominator in all our discussions is the decline of the middle class and the damage it is doing to the vibrancy of our society and country. We need a real populist President, not just a wealthy person that will throw some crumbs to the middle class. The wealthy may not have liked Roosevelt (thinking him a traitor to his class), but had he not made the reforms he did and reallocated resources-we could have become destabilized as a nation and we may never have pulled out of the Depression like we did. I don't know if we would have slid into socialism or not, but the great ideas, great businesses, hot inventions, spring from the middle class-not the wealthy. The wealthy are nothing more than investors in ideas not creators of ideas. The only wealth they have been able to create is to repackage debt and sell it as investments. Nothing more than shuffling paper about. A well educated middle class creates the businesses and therefore creates and generates the money. They are what make society pleasant. They want roads, sewage, and infrastructure for everyone. They want mandatory education, and health care (at least immunizations) and that helps everyone. 'For the betterment of mankind' means some totally different from 'noblesse oblige'.

[MilesColtrane]

8. Fed May Cut Rate Below Inflation, Risking Bubbles

By Craig Torres and Simon Kennedy

Jan. 29 (Bloomberg) -- The Federal Reserve may push interest rates below the pace of inflation this year to avert the first simultaneous decline in U.S. household wealth and income since 1974.

-snip-

So-called negative real interest rates represent an emergency strategy by Chairman Ben S. Bernanke and are fraught with risks. The central bank would be skewing incentives toward spending, away from saving, typically leading to asset booms and busts that have to be dealt with later.

Negative real rates are ``a substantial danger zone to be in,'' said Marvin Goodfriend, a former senior policy adviser at the Richmond Fed bank. ``The Fed's mistakes have been erring too much on the side of ease, creating circumstances where you had either excessive inflation, or a situation where there is an excessive boom that goes on too long.''

http://www.bloomberg.com/apps/news?pid=20601087&sid=a1GULY2Uydeo&refer=home

_________________________________________

Chopper just keeps those plates spinning.

Entertaining until they come crashing down.

[Tansy_Gold]

16. "Negative real rates"

Does this mean what I think it means?

Like "negative amortization" means you're really not paying anything on principal and in fact are adding to principal, does "negative real rates" mean you're not only not paying interest you're, well, YOU'RE BEING PAID TO BORROW MONEY???????????


Tansy Gold, who is sure she has stepped through the looking glass into bizarro world

[ret5hd]

18. When an interest rate is lower than the inflation rate, then yes, in a sense,

you are being paid to borrow money. Ever gotten a 0% credit card offer? Then they offered to pay you to borrow.

[Tansy_Gold]

22. But I've never had a NEGATIVE interest rate credit card

Indeed, if I pay off my balance every month, I incur no interest charges. Same thing as 0%

And knowing that a credit card company/bank is going to charge the vendor from whom I buy something using the card, I know that the credit card company/bank isn't losing money on the deal.

That is not the same thing as them paying me to borrow.

"Here, lady! Here's ten bucks! Now, take a hundred more and you can keep the ten! Just pay me back in a week or so, but if you don't, well, I'll give you another ten to keep!"

Absurd.

[ret5hd]

27. Negative real rate doesn't mean negative rate...

it means that the interest rate is less than inflation. I guess i COULD mean a negative rate (like if the inflation rate was 0% and a loan rate was -5%), but usually it just means that the interest rate is less than inflation.

[ramapo]

30. More punishment for the savers

Then to add insult to injury you get to pay taxes on your earned interest. I must be stupid to actually not spend all my money.

[kineneb]

39. ...or at least to keep money in a "savings" account

at least no taxes on it if it is buried in the backyard...

[MilesColtrane]

23. This is the Feds attempt to get everyone to Shop so it won't Drop.

Bernake is throwing more coal into the boiler.

Meanwhile the pressure's rising, rivets are about to pop, and the whole damned thing's about to explode.

[Ghost Dog]

54. Bernanke's big reflation gamble may work too well

(FT comment by Martin Wolf) ...

Will these actions work? We need to decide what "working" would mean. The obvious definition is the Fed's own, namely, elimination of any risk of a collapse into Japanese-style deflation. Alternatively, one might take the bipartisan political objectives - a rapid return to robust growth - as the definition of success.

The answer to this question is that the policy will work if pursued with sufficient ruthlessness. Those who see the parallels between the US predicament of high domestic debt, declining asset prices and a crisis-hit financial sector and that of Japan in the 1990s might doubt this.

But, despite the disturbing parallels, Japan's initial predicament was worse: its assets were more overvalued and its companies more indebted. Japan's response was also longer delayed. Provided inflation does not become a huge concern, monetary and fiscal expansion will reflate the US economy. If the worst comes to the worst, a central bank can finance the fiscal deficit almost without limit.

True, pessimists argue that the combination of declining asset prices (particularly house prices) with household overindebtedness and a fragile banking system means that monetary policy is, in the celebrated words of John Maynard Keynes, like "pushing on a string".

It may not be quite that bad. But, on its own, monetary policy will not act swiftly unless employed on a dramatic scale. The case for fiscal action looks strong.

Yet, in current US circumstances, monetary loosening should have some expansionary effects: it will encourage refinancing of home mortgages; it will weaken the exchange rate, thereby improving net exports; it will, above all, strengthen the health of banking institutions, by giving them cheap government loans.

This brings us to the biggest question: what are the risks? Unfortunately, they are large. One is indefinite continuation of an excessively low rate of US national saving. Others are a loss of confidence in the US currency and much higher inflation.Yet another is a further round of the very asset bubbles and credit expansion that created the present crisis. After all, the financial fragility used to justify current Fed actions is, in large part, the direct result of past Fed efforts at the risk management Mr Mishkin extols.

Moreover, the risks are not just domestic. If the US authorities succeed in reigniting domestic demand, this is likely to reverse the decline in the current account deficit. It will surely reduce the pressure on other countries to change the exchange rate, fiscal, monetary and structural policies that have forced the US to absorb most of the rest of the world's huge surplus savings.

The US seems to be getting away with its gamble, at least so far. One indicator is the decline in long-term interest rates and the steadiness of inflation expectations, as shown by the gap between conventional and inflation-proof Treasury bonds. Another is recent steadiness of the dollar.

Finally, there has been no upsurge in core inflation, though the same cannot be said of the headline variety. (See charts.)

It is conceivable, then, that the emerging Washington policy consensus offers the right macroeconomic response to the present crisis. But it is risky. Moreover, if the International Monetary Fund's modest downgrading of growth prospects is correct, the action could even prove overdone.

Above all, it would be far better if demand were expanded in the rest of the world, as Dominique Strauss-Kahn, managing director of the IMF, argues on this page. This would facilitate the adjustment in the massive external imbalances that, as I argued last week, (comment page, January 22) lie at the root of US credit growth, debt accumulation and consequent financial fragility.

I find it impossible to look at what the US is now trying to do without feeling severely torn. If it succeeds it will renew and, at worst, exacerbate the fragility, both domestic and international, that triggered the turmoil. If it fails, the US and, perhaps, much of the rest of the world could well suffer a prolonged period of economic weakness. This is hardly a pleasant choice. But that it is indeed the choice shows how weakened the world economy and particularly the financial system has become.

/... http://news.yahoo.com/s/ft/20080129/bs_ft/fto012920081513365530;_ylt=ArUlzmte3tJULix4tTt9aYX2ULEF

[Roland99]

56. "the financial fragility used to justify current Fed actions is... the...result of past Fed efforts"

"the financial fragility used to justify current Fed actions is, in large part, the direct result of past Fed efforts"


I have to harp back on that uber free-marketer, Ludwig von Mises who said something along the lines of:

Intervening in a situation that itself was the result of a prior intervention often results in the opposite desired effect.

[Roland99]

17. 10:37am - Durables...not so durable.

Dow 12,427.22 43.33
Nasdaq 2,346.74 -3.17
S&P 500 1,357.87 3.91
10 YR 3.66% 0.08
Oil $90.50 $-0.49
Gold $927.40 $-5.40

[Lasher]

19. Boy the S&P 500 is bouncing around a lot.

Looks like Zorro is drawing the chart today.

[antigop]

21. Oh, good grief! Warning: article by David Brooks

Two Cheers for Wall St.

http://www.nytimes.com/2008/01/25/opinion/25brooks.html?_r=1&oref=slogin

If you have high blood pressure, you may not want to read this....

There is roughly a 100 percent chance that we’re going to spend much of this year talking about the subprime mortgage crisis, the financial markets and the worsening economy. The only question is which narrative is going to prevail, the Greed Narrative or the Ecology Narrative.

The Greed Narrative goes something like this: The financial markets are dominated by absurdly overpaid zillionaires. They invent complex financial instruments, like globally securitized subprime mortgages that few really understand. They dump these things onto the unsuspecting, sending destabilizing waves of money sloshing around the globe. Economies melt down. Regular people lose jobs and savings. Meanwhile, the financial insiders still get their obscene bonuses, rain or shine.

The morality of the Greed Narrative is straightforward. A small number of predators destabilize the economy and reap big bonuses. The financial system is fundamentally broken. Government should step in and control the malefactors of great wealth.

The Ecology Narrative is different. It starts with the premise that investors and borrowers cooperate and compete in a complex ecosystem. Everyone seeks wealth while minimizing risk. As Jim Manzi, a software entrepreneur who specializes in applied artificial intelligence, has noted, the chief tension in this ecosystem is between innovation and uncertainty. We could live in a safer world, but we’d have to forswear creativity.

See how this plays out? We just let the "market" do its thing.

:banghead:

[Kolesar]

25. Ohio Atty General Marc Dann is investigating fraud in selling &packaging these mortgage securities

A little cuffing, a little prosecuting.

[Roland99]

26. Today's economic news brought to you by Fly-By-Night Industries...

A Bushco subsidiary.

[Kolesar]

24. What was the "ethics" story with Fidelity Investments having to seat a new board of directors?

Can anybody help me with this story? I have a thread in the finance forum.
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=327&topic_id=679&mesg_id=679

[MilesColtrane]

28. On a positive note...

Once we're in the middle of a Great Recession, and the dollar is cheap cheap, perhaps India will start outsourcing jobs to America.

Man Builds Himself a Billion Dollar Home
At 27 Stories, Mukesh Ambani's Home Will Have a Helipad, a Health Club and 600 Servants

By KAREN RUSSO
MUMBAI, India, Jan. 29, 2008

Up a winding, tree-lined street away from the constant chaos of India's financial capital lies the construction site for what is believed to be the most expensive home in the world.

The house -- more like a tower, really -- is estimated to cost $1 billion, and its future resident, Mukesh Ambani, is India's richest man.

-snip-

Publications ranging from Portfolio to the The Guardian have run features on the skyscraper home, citing various amenities, which include, of course, a swimming pool, multiple "safe" rooms and 600 servants. Along with a health club, the abode will reportedly have a home theater and a helipad, and the tower will include six floors for 168 car parking spaces.

http://abcnews.go.com/Business/GadgetGuide/story?id=4150486&page=1

All this home for only 6 people...

The kicker: The family's current house is only 14 stories high.

[Warpy]

43. Well, he's got to be able to look down on everybody else

if he's that important.

Stories like this one make me wonder how soon Everest will be leveled off and turned into sealed, oxygenated penthouses so they can look down on the whole planet.

[Roland99]

29. How's this for spin?? IMF sees severe U.S. slowdown, but no recession

:eyes:

[TrogL]

31. Loonie Watch

Highlights

Current:



30-day and 90-day vs.greenback:



30-day vs. Euro, Yen, UK Pound and Swiss Franc




Currency Comparison: http://members.shaw.ca/trogl/looniewatch.html

Detailed analysis: http://quotes.ino.com/exchanges/?r=CME_CD

Up-to-the-minute graph: http://quotes.ino.com/chart/?s=CME_CD.Y%24%24&v=s&w=5&t=l&a=1

Historical values http://www.x-rates.com/d/USD/CAD/data30.html

2007-12-18 Tuesday, December 18 0.989609 USD
2007-12-19 Wednesday, December 19 0.994431 USD
2007-12-20 Thursday, December 20 1.0017 USD
2007-12-21 Friday, December 21 1.00573 USD
2007-12-24 Monday, December 24 1.01307 USD
2007-12-25 Tuesday, December 25 1.01307 USD
2007-12-26 Wednesday, December 26 1.01688 USD
2007-12-27 Thursday, December 27 1.01958 USD
2007-12-28 Friday, December 28 1.02208 USD
2007-12-31 Monday, December 31 1.01204 USD
2008-01-01 Tuesday, January 1 1.01204 USD
2008-01-02 Wednesday, January 2 1.00786 USD
2008-01-03 Thursday, January 3 1.00959 USD
2008-01-04 Friday, January 4 1.0012 USD
2008-01-07 Monday, January 7 0.995025 USD
2008-01-08 Tuesday, January 8 1.0015 USD
2008-01-09 Wednesday, January 9 0.991768 USD
2008-01-10 Thursday, January 10 0.986291 USD
2008-01-11 Friday, January 11 0.980584 USD
2008-01-14 Monday, January 14 0.979432 USD
2008-01-15 Tuesday, January 15 0.983574 USD
2008-01-16 Wednesday, January 16 0.976753 USD
2008-01-17 Thursday, January 17 0.971817 USD
2008-01-18 Friday, January 18 0.97144 USD
2008-01-21 Monday, January 21 0.97144 USD
2008-01-22 Tuesday, January 22 0.9758 USD
2008-01-23 Wednesday, January 23 0.972573 USD
2008-01-24 Thursday, January 24 0.99295 USD
2008-01-25 Friday, January 25 0.995619 USD
2008-01-28 Monday, January 28 0.995818 USD

Current values

http://quotes.ino.com/exchanges/?r=CME_CD)

Market            Open   High    Low   Last  Change    Pct 
CD.Y$$ Cash     1.0009 1.0042 1.0009 1.0023 +0.0065 +0.65% 
CD.H08 Mar 2008 1.0004 1.0046 1.0003 1.0015 +0.0069 +0.68% 
CD.M08 Jun 2008 1.0005 1.0005 0.9995 0.9995 +0.0067 +0.66% 
CD.U08 Sep 2008 0.9785 0.9785 0.9780 0.9910 +0.0014 +0.14% 
CD.Z08 Dec 2008 0.9750 0.9750 0.9750 0.9892 +0.0015 +0.15% 
CD.H09 Mar 2009 0.9810 0.9825        0.9879 +0.0012 +0.12% 
CD.M09 Jun 2009 0.9995 0.9995        0.9866 +0.0009 +0.09% 
 

Other combinations: (http://quotes.ino.com/exchanges/?c=currencies)

Market              Open    High     Low    Last   Change     Pct 
AUSTRALIAN $/CANADIAN $ (NYBOT:AS)
ACD.H08 Mar 2008  0.8882  0.8882  0.8882  0.8882  +0.0068  +0.79%  
AUSTRALIAN $/US$ (NYBOT:AU)
AU.H08 Mar 2008           0.88310 0.88310 0.88310 +0.00815 +0.93%  
CANADIAN $/JAPANESE YEN (NYBOT:HY)
HY.H08 Mar 2008   101.83  101.83  101.83  105.84  -0.06    -0.05%  
EURO/AUSTRALIAN $ (NYBOT:RA)
RA.H08 Mar 2008   1.6642   1.6642 1.6642  1.6642  -0.0070  -0.42%  
EURO/BRITISH POUND (NYBOT:GB)
GB.H08 Mar 2008   0.7438  0.7441  0.7438  0.7454  -0.0005  -0.07%   
EURO/CANADIAN $ (NYBOT:EP)
EP.H08 Mar 2008   1.4812                  1.4837  +0.0083  +0.57%  
EURO/JAPANESE YEN (NYBOT:EJ)
EJ.H08 Mar 2008   156.53  157.34  156.53  157.15  +0.13    +0.08%   
EURO/US$ (SMALL) (NYBOT:EO)
EO.H08 Mar 2008   1.47440 1.47440 1.47440 1.47450 -0.00135 -0.09%  

Blather (from http://quotes.ino.com/exchanges/?r=CME_CD)

The March Canadian Dollar was higher overnight as it extends last week's rally above the 20-day moving average crossing at 98.96. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near-term. If March extends the rally off last week's low, the reaction high crossing at 101.67 is the next upside target. Closes below the 10-day moving average crossing at 98.27 would signal that a short-term top has been posted. First resistance is the overnight high crossing at 100.17. Second resistance is reaction high crossing at 101.67. First support is the 20- day moving average crossing at 98.96. Second support is the 10-day moving average crossing at 98.27.

Analysis

OK, we crossed through par but momentum seems to have slacked off a bit. Wild guess - something to do with the STOU. On a side note, the Ozzie's doing nicely today.

[DemReadingDU]

32. In America, land of the bubbles, the next pop will be the biggest

1/28/08 A mind-blowing machine by Paul Farrell

Three cheers! Wall Street's got a new rally song: "I'm dreaming dreams, I'm scheming schemes, I'm building castles high."

Actually it's the 1919 tune that launched the roaring run-up to the '29 crash and the Great Depression. Remember the lyrics: "I'm forever blowing bubbles. Pretty bubbles in the air. They fly so high, nearly reach the sky. Then like my dreams they fade and die."

And it still fits today! Listen to venture capitalist Eric Janszen's scary new paradigm in "The Next Bubble," a Harper's Magazine report: "That the Internet and the housing hyperinflations transpired within a period of 10 years, each creating trillions of fake wealth, is, I believe, only the beginning."

Translation: The next bubble is already expanding. Now listen very closely as Janszen makes the single most dangerous prediction of 2008: "There will and must be many more such booms, for without them the United States can no longer function. The bubble cycle has replaced the business cycle."
.
.
.
There's a higher truth: The best (not worst) strategy would be to let the "bubble-blowing machine" implode, live with the absence of a new bubble for a while, then quietly step back and reassess our unsustainable "growth-at-all-costs" economic policies that are secretly designed to benefit the self-interests of Wall Street's insiders who profit by endlessly blowing bubble after bubble ... after bubble ... after ....

more...
http://www.marketwatch.com/news/story/america-land-bubbles-next-pop/story.aspx?guid=%7B60CE4669%2D6814%2D4A48%2DA555%2DBE998EC6FC58%7D&dist=TNMostRead

http://tinyurl.com/2sdr6v

[Roland99]

49. Kinda fits in with my own gut instincts. But, perhaps this time, I'll selfishly indulge...

and make a few bucks and setup a cash-egg for my retirement. ;)

[Hugin]

51. Bubbles!

:tinybubbles:

:)

[DemReadingDU]

52. Here ya go

http://www.hawaiian-music.com/real2/bubbles.html



:)

[Hugin]

53. Backatcha!

:bounce:

Tiny Bubbles

Tiny bubbles in the wine,
make me happy, make me feel fine,
tiny bubbles make me warm all over
with a feeling that I'm gonna love you 'til the end of time.

So here's to the golden moon,
and here's to the silver sea,
and mostly here's a toast to you and me

Tiny bubbles in the wine,
make me happy, make me feel fine,
tiny bubbles make me warm all over
with a feeling that I'm gonna love you 'til the end of time.

Tiny bubbles in the wine,
make me happy, make me feel fine,
tiny bubbles make me warm all over
with a feeling that I'm gonna love you 'til the end of time.

With a feeling that I'm gonna love you 'til the end of time.

From: http://www.ziplo.com/bubbles.html (In WAV format)

[Robbien]

33. Hedge traders work/manipulate the markets

They don’t act on the basis of what seems to them the real economic situation, but on what’s in it for them.

Just as a tiny example, years ago a close friend, now deceased, was a trader in London for a big financial house. As he told it, one day I.B.M. came out with stellar numbers. The boss of the trading floor said, “O.K., the guy who’s getting the prize is the one who can make us money selling I.B.M. short.”

So the traders grabbed for their phones and started to put out any bad thoughts they could dream up about I.B.M. They called journalists, retailers, anyone. They sold huge amounts of I.B.M. short. Soon, they had I.B.M. on the run, made money on their shorts and went to Langan’s to drink champers.

As I see it, this is what traders do all day long — and especially what they’ve been doing since the subprime mess burst upon the scene. They have seized upon a fairly bad situation: a stunning number of defaults and foreclosures in the subprime arena, although just a small part of the total financial picture of the United States. They have then tried — with the collaboration of their advance guards in the press — to make it seem like a total catastrophe so they could make money on their short sales. They sense an opportunity to trick other traders and poor retail slobs like you and me, and they generate data and rumor to support their positions, and to make money.

MORE than that, they trade to support the way they want the market to go. If they are huge traders like some of the major hedge funds, they can sell massively and move the market downward, then suck in other traders who go short, and create a vacuum of fear that sucks down whatever they are selling.

Note what is happening here: They are not figuring out which way the market will go. They are making the market go the direction they want.

http://www.nytimes.com/2008/01/27/business/27every.html?_r=1&oref=slogin&pagewanted=print

Which explains a lot.

[Robbien]

35. Regulators let hedge funds off the hook for credit crisis

Paul Atkins, one of the five commissioners at US regulator the Securities and Exchange Commission, said he expects hedge funds to help solve the market turmoil surrounding sub-prime US mortgage loans.

Atkins told French business school Edhec that, as far as he was able to see, hedge funds could not be blamed for the sub-prime problems. Moreover, he said: "Most importantly, we must remember that hedge funds are likely to be an important part of the solution to the sub-prime crisis."

He added that some hedge funds had been among the victims of the sub-prime troubles

http://www.financialnews-us.com/?page=ushome&contentid=2349676855

The SEC appears to be in a sick lovefest with the most unregulated industry in town. Or at least this one SEC commissioner is.

[Tansy_Gold]

42. Is this guy nucking futs??????????? Or am I?

Hedge funds are just gambles, aren't they? I mean, they don't really employ people to make things, do they? They don't add to the GDP, do they?

If not, then how the billy hell can they "help" the economy?

:grr:

Oh, sweet heaven, I need to stop reading SMW and cut some chrysocolla.



Tansy Gold

[Doctor_J]

40. Financial gurus - is there any way for homeowner me to take advantage of

of the current situation? I am probably am at the edge of negative equity, due to price drop. I have a 6.5% fixed 30 yr conforming, P+I mtg. I have enough money to pay off my mortgage if I needed to. I like where I live and don't want to move. How do I make lemonade from the home market lemon?

[Paulie]

44. You could re-finance

Rates are less than 6 now. Run the numbers, and see. Or since you're not going anywhere, stop worrying about it. :)

But do not pay off that mortgage. Please read this: http://www.ricedelman.com/cs/education/article?articleId=232

10 Great Reasons to Carry a Big, Long Mortgage

Never own your home outright. Instead, get a big 30-year mortgage, and never pay it off — regardless of your age and income.
Now, I know that you don’t want a mortgage. What you want is a house, but to get it, you must obtain a mortgage. If you’re like most folks, you hate your mortgage, and you’d love to get rid of it as soon as possible. You grimace at every monthly payment, and you know that, over 30 years, you’ll pay more in interest than you paid to buy the house in the first place.

That’s why you put down as much money as possible — to keep the mortgage as small as you could. You might have taken out a 15-year loan to get the loan paid off in half the time, and might even be making extra payments, or perhaps signed up for one of those biweekly loan programs, all to enable you to get rid of the mortgage just as quickly as possible.

You do all of these things, of course, for a very basic and deep-rooted reason: because your parents taught you that you should never a have mortgage, and the key to the American Dream is to own your home outright.

Yet, a Big 30-Year Mortgage Is Best

http://www.ricedelman.com/cs/education/article?articleId=232

[Barrett808]

47. Great post, thanks! n/t

[dmallind]

70. PMI does not exist in the writer's world apparently

I'm all for keeping money in liquid investments and carrying a 30 year fixed, but not paying 20% down when you can just means you have to pay to cover insurance against somebody else's loss nine times out of ten. I am doing this right now as I'm buying a home before I sell the one in my old state. I'll be putting exactly 20% down and then keeping the money from the equity in the old house once it sells in T bills and money markets - but damned if I'll pay PMI.

[Warpy]

45. Lots of questions to ask yourself

You say you like the house and neighborhood. How stable is that neighborhood? Remember, if your neighbors all bought within the last 10 years and you're talking about an area that saw a bubble in that time, they're all vulnerable to foreclosure. Your neighborhood can change radically if even a third of the houses are empty and untended, drawing vagrants and vermin.

How long have you been paying that mortgage? If it's a new one, you're paying mostly interest right now and will not be paying off the principal for many years to come. If that's a new mortgage, it might be the right time to sell short and get out, depending on what rent in your area is doing. Obviously, if rents are much higher than your PITI, staying put makes more sense.

There is going to be no way to make lemonade out of this lemon, I'm afraid. It will take a complete turnaround in government fiscal policy to get us out of this one, something I don't see on the horizon from either party.

[DemReadingDU]

46. My house was paid for about 5 years ago

It's a good feeling to have no outstanding bills (no mortgage, no car loan, no credit card debt, etc.)

We've lived in this same house 20 years. It is a nice area of homes that are about 20 - 25 years old, very low crime, good neighbors who keep up their houses. It has the usual 2 or 3 houses for-sale, but I don't see anything in my neighborhood that looks like it has been hit with the sub-prime mess. Well, not yet anyway.

I realize we don't have a mortgage to itemize the taxes, but I'm saving thousands of dollars in interest to the bank. Kids are grown and we just take the standard deduction nowadays.

Check out the other responses. There are reasons to have a mortgage, but I'm glad we paid off our mortgage.

edit: the neighborhood probably has 55-60 houses, many are still the original owners, or long-time 2nd owners.

[Roland99]

55. Yesterday it was CNBC's on-air Director. Today it's Dave Ramsey: Recession is media induced.

:eyes:


Yeah, the media concocted millions of ARMs that came due for adjustments in the last 12-18 months with millions more to follow.



moran.

[AnneD]

59. As you know...

I am a big Dave Ramsey fan but I do disagree on some things he says. I can see what he is saying and cut him slack on this one because...

1)he preaches against ARM's and has for years. Pay off your mortgage ASAP and save all that interest you would pay for yourself.
2)he preaches against credit cards (hates them with a passion) and helps folks deal with them,
3)he spoke out strongly against the Bankruptcy Bill-railed against it more than any 10 Dem's I could name.
4)helps people manage their money and bring peace to their lives because money problems affect all areas of you life.

I agree with him that the media is really hyping the recession right now (and they are 6mos late), but as usual they are the cat watching the wrong mouse hole.

This is where I disagree with him: the media has neglected doing actual shoe leather and uncover the graft and corruption of these high rollers that will suck a lot of capital out of our entire system. When the storm hits-folks that follow his advice will be better prepared to weather the storm, and they should do ok-but they will still take a hit. Money will be worth less and investments will evaporate to much less than what they cost. His advice will take you far (he deals with personal finance after all), but there are areas he does not cover nor seems to care to cover-and world economics is one. I am no expert by any stretch of the imagination, but I have some good common sense and I know there is some swindling going on in a lot of economies and multinational corporations. It will affect all of us.

[Paulie]

60. The paying off the mortgage thing bothers me

See my previous post today for the Financial Advisor Ric
Edelman's arguments for keeping a big long mortgage and never
pay it off.  

[AnneD]

61. Paulie....

I have to say I totally disagree on that one any there are many many reasons. I have read Ric and I disagree with him too.

Most of the mortgage is interest-which is money out of YOUR pocket. The sooner you pay off, the less interest (your money)they get. That little tax break is very little compared to the interest you pay out over the life of the loan and less than the interest you can get on investment you can make... once your cash flow is not tied up in a house note. I'd rather have the peace of mind in owning my own home free and clear and just pay taxes. Debt is risk no matter how you cut it-the less risk in my life, the better.

[ret5hd]

62. I agree with you 100%

[AnneD]

64. Hi ret..

:hi: your sig line cracked me up:spray:

[Paulie]

68. I hear ya

I'm sold on the concept of the difference of compounding today at 5.75% being better than paying off a 5.75% loan. I still have to live somewhere, be it rent or a mortgage, so I'm going to be handing someone a check. And I'd much rather have that cash in hand, so I can make those payments when I'm laid off in the next few months (unless I can find a place to jump to first... IT outsourcing is such fun...).

If we were making extra principle payments though, we'd be in big trouble in the near term as the only way to get that money back out of the lender's hand is to refinance, which ya can't do when you don't have the income. So that would leave credit cards to pay the mortgage, heat and property taxes. Eek, been there, done that, got the penalty rate. :)

As long as I make those monthly payments, the bank can't call the loan, even in a depression. The risk is all theirs, as I don't pay PMI. :D

[AnneD]

69. It really boils down to...

your comfort level. If there was one debt that is reasonable (even in Dave Ramsey's eyes), it's a mortgage. I have a deep dislike of debt and truly believe that the borrower is slave to the lender-but that is maybe just me.

I view any debt as risk so I like to limit my exposure to any unnecessary risk. I might take on risk in the form of investments-but not in the form of debt.

[Wednesdays]

63. Agreed--Dave Ramsey has good advice, but...

But any personal financial plan--even Dave Ramsey's--will eventually fail if a person bleeds red ink for a sustained period of time, even after cutting back to the bare essentials. And a deep recession or depression will do just that for everybody.

[AnneD]

66. That is true...

which is why I said what I did. Folks that are financially prepared can weather a storm, but a deep recession or depression is like a hurricane...everyone WILL be affected, no matter how well you are prepared. The folks that are prepared have more choices. I think a global economic depression will be-as Warren Buffet says-like the tide going out-we will see who is swimming naked.

[RUMMYisFROSTED]

58. Puppies, kittens, bunnies and panda bears.

[UpInArms]

65. end of the day - doing the rate cut boogie blather

Dow 12,480.30 96.41 (0.78%)
Nasdaq 2,358.06 8.15 (0.35%)
S&P 500 1,362.30 8.33 (0.62%)
10-Yr Bond 3.658% 0.072

NYSE Volume 4,235,699,000
Nasdaq Volume 2,240,734,250

On Monday the stock market rallied reportedly because an ugly new home sales report increased the chances the Fed would cut by 50 basis points at this week's FOMC meeting. If logic holds, then, the stock market should have suffered a good-sized sell-off on Tuesday since the December Durable Orders report was much stronger than expected and reduced the probability of a 50 basis point cut.

That logic, however, didn't hold. In fact, what should have happened, happened. The stock market rallied on the encouraging economic release that suggested the economy is not entering a recession.

Specifically, durable orders were up 5.2% (consensus +1.6%). Nondefense capital goods orders excluding transportation, which is considered a proxy for business investment, rose 4.4%.

The Conference Board's Consumer Confidence report did slip to 87.9 (consensus 87.0) from 90.6 in December, but confidence figures are a poor barometer when it comes to actual economic activity. Hence, while the indices suffered a knee-jerk dip following the report, they quickly rebounded, riding the support provided by some generally good earnings news from the likes of 3M (MMM 78.02, +0.58), Eli Lilly (LLY 52.31, +0.91), and Burlington Northern (BNI 84.65, +1.51), and continued strength in the financial sector.

Once again, the financial sector, up 1.4%, provided influential leadership for the market, overcoming a cautious 2008 outlook from American Express (AXP 47.80, +0.40), chatter that the ratings agencies are poised to downgrade the bond insurers, and a Wall Street Journal report that the FBI has opened criminal inquiries on 14 companies in its subprime mortgage probe.

The homebuilders, in turn, continued to attract bottom-fishing interest. The S&P homebuilding group jumped 3.8% and is now up a whopping 50% from its low on January 15.

Strikingly, the tech sector continued to trail the broader market, ending Tuesday's session roughly flat as further losses in Google (GOOG 550.52, -5.46), Microsoft (MSFT 32.60, -0.12), Oracle (ORCL 20.07, -0.19) and Cisco (CSCO 24.06, -0.04) acted as a restraining factor.

On Wednesday, the advanced reading on fourth quarter GDP will preoccupy the market in early trading. Economists expect to see growth of 1.2%, down from 4.9% in the third quarter. The FOMC meeting, however, will remain the center of attention.

A monetary policy decision is expected around 14:15 ET. Following the Durable Orders report, the probability of a 50 basis point rate cut was reduced in the fed funds futures market to 72.0% from 86.0%. A cut of at least 25 basis points to 3.25% is fully expected. DJ30 +96.41 NASDAQ +8.15 NQ100 +0.1% R2K +0.4% SP400 +0.7% SP500 +8.33 NASDAQ Dec/Adv/Vol 1273/1686/2.19 bln NYSE Dec/Adv/Vol 1031/2100/1.55 bln

[JNelson6563]

67. Futures lookin' pretty crazy tonight.

I guess I'll know more when I get up and look at about 6 tomorrow morning but dan! Some interesting chart action!

Julie