STOCK MARKET WATCH, Friday August 15

[ozymandius]

Source: du

STOCK MARKET WATCH, Friday August 15, 2008

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 159
DAYS SINCE DEMOCRACY DIED (12/12/00) 2763 DAYS
WHERE'S OSAMA BIN-LADEN? 2488 DAYS
DAYS SINCE ENRON COLLAPSE = 2779
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.
$1 USD = EUR 1.06678
$1 USD = JPY 116.6200

AT THE CLOSING BELL ON August 14, 2008

Dow... 11,615.93 +82.97 (+0.72%)
Nasdaq... 2,453.67 +25.05 (+1.03%)
S&P 500... 1,292.93 +7.10 (+0.55%)
Gold future... 814.50 -17.00 (-2.09%)
30-Year Bond 4.52% -0.06 (-1.25%)
10-Yr Bond... 3.89% -0.06 (-1.39%)






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

Implications of the Slowing Global Economy
BY MIKE SHEDLOCK

The global economy is slowing rapidly. Let's take a look at some striking examples.

Germany, France, Spain, Italy

Bloomberg is reporting German, French Economies Shrink as Spending, Investment Falter.

* Germany and France, the euro area's two largest economies, contracted in the second quarter as faltering sales undermined investment by companies and soaring costs eroded consumer spending power.
* German gross domestic product fell a seasonally adjusted 0.5 percent from the first quarter.
* French GDP declined 0.3 percent, reversing a 0.4 percent gain in the previous three-month period.
* Spain's economy grew at the slowest pace since a 1993 recession in the second quarter as the country's once-booming construction industry slumped.
* Italy's economy, the third-biggest in the euro region, unexpectedly shrank in the April-June period, edging closer to a fourth recession in a decade.
* An index measuring the economic climate in the euro region dropped to the lowest since 1993, the Munich-based Ifo institute said yesterday. Measures of both current conditions and expectations declined, according to institute's quarterly World Economic Survey.

...

From James Turk:

I use the term "ignited" the rally. I agree the dollar was oversold, and a rally can occur at any time. But usually a market doesn't rally unless there is some news event or some fundamental change that causes the market to reverse course.

The Fundamental Change

That is a reasonable statement from James Turk, even more so if one changes "But usually a market doesn't rally ..." to something like "But usually a market doesn't have a sustainable rally unless there is some news event or some fundamental change that causes the market to reverse course."

...

With a weakening global economy, default risk is rising everywhere. Unsurprisingly, the cost of raising capital is also rising. One implication is that junk bond yields and yields on preferred stock of even the highest grades are going to soar. And soaring corporate bond spreads are never good for the equity markets in general, at least over the long haul. A second implication is that treasury yields are poised to fall, not only in a flight to safety scenario, but also because the savings rate in the US can be expected to rise, and with that, internal demand for treasuries in the US will rise.

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

[ozymandius]

2. Today's Reports

08:30 NY Empire State Index Aug
Briefing.com NA
Consensus -5.0
Prior -4.9

09:00 Net Foreign Purchases Jun
Briefing.com NA
Consensus $57.5B
Prior $67.0B

09:15 Capacity Utilization Jul
Briefing.com 79.9%
Consensus 79.8%
Prior 79.9%

09:15 Industrial Production Jul
Briefing.com 0.0%
Consensus 0.0%
Prior 0.5%

10:00 Mich Sentiment-Prel. Aug
Briefing.com 63.0
Consensus 62.0
Prior 61.2

http://www.briefing.com/Investor/Public/Calendars/EconomicCalendar.htm

[UpInArms]

22. U.S. Aug. Empire state index rises to 2.8

03. U.S. Aug. Empire state index rises to 2.8
8:31 AM ET, Aug 15, 2008

since the market never fell in line with this report - I expect it RALLY really big in line with the rise in this report

[UpInArms]

23. about that report - err - the devil is in the details

http://www.reuters.com/article/bondsNews/idUSN1549907820080815

 Aug 15 (Reuters) - The New York Federal Reserve Bank said
on Friday its "Empire State" manufacturing activity index rose
in August to 2.77 from -4.92 in July.
 Following is a breakdown of the survey's components:
                      Aug    July    June     May   April
                     2008    2008    2008    2008    2008
General Business      -------- Diffusion Index -------------
Conditions           2.77   -4.92   -8.68   -3.23    0.63
Prices Paid            65.17   77.89   66.28   69.57   57.29
Prices Received        32.58   32.63   26.74   15.22   20.83
New Orders             -2.20    8.27   -5.48   -0.46    0.06
Shipments              -0.86   13.54   -6.54    4.55   17.49
Delivery Time          -3.37   -2.11   -6.98    0.00   -3.13
Inventories             5.62  -14.74   -2.33   -6.52   -4.17
Unfilled Orders        -8.99   -8.42  -10.47   -4.35   -6.25
Number of Employees    -4.49   -6.32    1.16    1.09    0.00
Average Workweek        1.12   -8.42   -2.33    1.09    0.00

                      Aug    July    June     May   April
                     2008    2008    2008    2008    2008
General Business      -------- Six months from -------------
Conditions          34.58   15.55   32.17   23.88   19.57
Prices Paid            69.66   74.74   73.26   64.13   61.46
Prices Received        52.81   47.37   47.67   30.43   34.38
New Orders             47.29   27.33   27.05   21.14   33.25
Shipments              45.37   29.17   28.22   21.64   26.37
Delivery Time          -8.99  -18.95   -8.14   -9.78   -7.29
Inventories             3.37   -4.21   -6.98   -4.35   -4.17
Unfilled Orders         7.79    5.54   -0.95    1.65    3.47
Number of Employees    14.71   10.62   16.96    7.49    4.08
Average Workweek        6.74    2.11   -3.49   -5.43    7.29
Capital Expenditures   14.61   11.58   22.09   13.04   11.46

Note: Diffusion indexes represent the percentage indicating
an increase minus the percentage indicating a decrease.

if you look at the diffusion index - while the prices paid decreased and the prices received increased (offsetting earlier prices paid increases- the new orders also decreased and the inventories built up (meaning sales slowed)

[Demeter]

73. I Admire Anyone Who Knows How to Read Those Tables of Numbers

and translate them to English narrative. My hat's off to you (do you accept midnight phone calls?)

[UpInArms]

26. U.S. industrial output down 0.1% in past year

04. U.S. industrial output down 0.1% in past year
9:15 AM ET, Aug 15, 2008

05. U.S. July capacity utilization rises to 79.9%
9:15 AM ET, Aug 15, 2008

06. U.S. July factory output up 0.4%, best in 10 months
9:15 AM ET, Aug 15, 2008

07. U.S. July industrial production up 0.2% as expected
9:15 AM ET, Aug 15, 2008

[UpInArms]

27. TABLE-US June net capital inflows $51.1 bln

http://www.reuters.com/article/marketsNews/idUSWAT00991720080815

 WASHINGTON, Aug 15 (Reuters) - Treasury Department
international capital (TIC) data release, in billions of
dollars except where noted. Figures are not seasonally
adjusted.
                      June      May    April
Monthly Net
TIC Flows              $ 51.1      12.3    65.8
  Private              $ 38.0      -1.4    36.7
  Official             $ 13.1      13.8    29.2
Net foreign buys of
long-term securities   $ 36.6      60.6   103.9
  Stock swaps, other   $-16.8     -22.6   -12.3
Long-term securities
  transactions         $ 53.4      83.2   116.1
Domestic Securities,
purchased net          $ 62.7     109.7   105.7
  Private              $ 47.8      93.2    64.4
  Official             $ 14.9      16.4    41.3

edited to correct the information

[UpInArms]

49. June's total inflows were insufficient to cover the month's trade deficit

http://www.reuters.com/article/bondsNews/idUSN1551364420080815

NEW YORK, Aug 15 (Reuters) - Net overall U.S. capital inflows rose in June, led by a surge in private investments, the Treasury Department said on Friday.

Net capital inflows totaled $51.1 billion in June, from a revised inflow of $12.3 billion in May. The Treasury Department last month had originally reported net outflows for May at $2.5 billion.

Net long-term capital inflows, meanwhile, fell to $53.4 billion, down from a revised $83.2 billion the previous month. The original figure was reported at $67.0 billion.

Private inflows climbed to $38.0 billion from a revised outflow of $1.4 billion.

June's total inflows, however, were not sufficient to cover the month's trade deficit of $56.8 billion.

...more...

[UpInArms]

48. U.S. Aug. UMich consumer sentiment 61.7 vs. 62 expected

03. U.S. Aug. UMich consumer sentiment 61.7 vs. 62 expected
9:58 AM ET, Aug 15, 2008

[UpInArms]

52. Gauge of future US economic growth at 5-year low - ECRI

http://www.reuters.com/article/bondsNews/idUSNAT00429020080815

NEW YORK, Aug 15 (Reuters) - A gauge of future U.S. economic growth fell to its lowest level in more than five years and its annualized growth rate hit a four-month low, indicating the business cycle is not expected to enter a recovery phase in the near term, a research group said Friday.

The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index fell to 126.4 in the week to Aug. 8 from 126.9 in the previous period, revised down from 127.5.

The index fell to its lowest since the week to July 4, 2003 due to weaker money supply growth and lower stock prices. The decline was partly offset by lower jobless claims, said Lakshman Achuthan, managing director at ECRI, in an instant message interview.

The index's annualized growth rate plunged to an 18-week low to negative 10.8 percent from minus 9.6 percent, revised down from minus 8.9 percent.

...more...

[ozymandius]

3. Oil drops below $114 on slowing economies

SINGAPORE - Oil prices dropped below $114 a barrel Friday in Asia as investors speculated slowing economic growth in the world's largest economies will continue to undermining global crude demand.

Light, sweet crude for September delivery fell $1.54 to $113.47 a barrel in electronic trading on the New York Mercantile Exchange by midafternoon in Singapore. The contract fell 99 cents overnight to settle at $115.01 a barrel.

...

Europe's biggest economies — Germany, France and Italy — all contracted in the second quarter. Japan said this week its gross domestic product also shrank in the April-June period.

The U.S. Energy Information Administration reported earlier this week a bigger-than-expected drop in gasoline supplies, but also said U.S. demand for refined fuel products continues to fall.

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

[UpInArms]

28. Winter Heating Bills Expected to Soar

http://money.cnn.com/2008/08/15/news/economy/home_heating/index.htm

NEW YORK (CNNMoney.com) -- Home heating bills are expected to soar this winter and Americans, already struggling with high gas and food prices, are bracing for more financial hardship.

On average, consumers are expected to pay $1,182 to heat their homes this year, up 20% from last year, according to recent estimates from the Energy Information Administration (EIA).

But the outlook for the Northeast, where 8 million households depend on heating oil, is even more worrisome. Homeowners in the region are expected to spend an average of $2,725 on heating oil this winter.

The looming spike in heating costs could pose an even more serious threat to household budgets than the high price of gas, according to Tancred Lidderdale, a senior EIA economist.

"When gas prices go up consumers have options," he said. They can drive less or use public transportation. But when it comes to home heating, "households have fewer options."

While consumers have some leeway in how they manage their heating bills and can take steps to make their homes more energy efficient, most experts say there is little they can do to escape higher energy prices.

...more...

[CatholicEdHead]

57. More than the Northeast will be hit hard

Also the Great lakes, Midwest, Upper Great Plains, and northern intermountain West will be hit. From Washington to North Dakota/Minnesota, to Michigan and Ohio will be very chilly this winter.

[Ghost Dog]

58. German solar companies glowing despite Spanish woes

Thu Aug 14, 2008 8:06am EDT
FRANKFURT (Reuters) - German solar power companies cast a sunny outlook for the second half of the year despite slower growth expectations for the key Spanish market, and some lifted their guidance.

Phoenix Solar AG (PS4G.DE: Quote, Profile, Research, Stock Buzz), which plans, builds and operates large photovoltaic plants, said it may exceed its current 2008 targets as it expects strong demand in Germany in the second half of 2008 and a weaker business in Spain.

"Owing to new legislation not yet passed in Spain on feed-in tariffs and compensation for photovoltaic electricity, the board of directors is expecting the market to slow in the Iberian peninsula," the company said.

Strong order intake in the first half of the year and solid earnings also supported its optimistic outlook.

SolarWorld (SWVG.DE: Quote, Profile, Research, Stock Buzz), which makes everything from solar-grade silicon to solar panels, said it expected to beat its full-year forecast after it almost doubled consolidated net income in the second quarter to 52.4 million euros ($78.12 million).

The world's largest solar cell maker, Q-Cells (QCEG.DE: Quote, Profile, Research, Stock Buzz), had raised its guidance on Wednesday on the back of strong order intake and solid raw material supply, sending its shares higher.

"The market expectation that a single country and its regulatory outlook is going to lead to a doomsday scenario may overstate the overall outlook," said Rupesh Madlani, analyst at Lehman Brothers.

"There are other countries that offer good prospects for the solar industry," he added.

These countries include the United States, Italy, Greece and France as well as Germany.

/more data... http://www.reuters.com/article/companyNews/idUKLE54931620080814?symbol=VWS.CO&sp=true

[ozymandius]

4. Consumer prices surge, job market remains strained

WASHINGTON - Inflation is running at the fastest pace in 17 years, the job market is under further strain and foreclosure filings are surging.

A raft of gloomy economic data on Thursday represented a setback for those hoping to see signs of better times ahead and it may keep the Federal Reserve jammed between rising inflation and slowing growth.

The Labor Department reported that consumer prices shot up by 0.8 percent in July, double the increase that economists had expected. The rise was only slightly lower than the 1.1 percent surge in June that had been the second-highest monthly increase in the last 26 years.

...

The biggest price pressures came in the energy and food sectors, just as they have all year. But the price gains spread to other areas, too — clothing costs jumped by the largest amount in a decade, airline fares rose sharply and the cost of hotel rooms and tobacco products also climbed.

http://news.yahoo.com/s/ap/20080814/ap_on_bi_go_ec_fi/economy

[radfringe]

12. then and now quotes

John McCain's Top 10 Class-Warfare Arguments Against Tax Cuts
http://www.humanevents.com/article.php?id=24421

1. “I don’t think the governor’s tax cut is too big—it’s just misplaced. Sixty percent of the benefits from his tax cuts go to the wealthiest 10% of Americans—and that’s not the kind of tax relief that Americans need. … Gov. Bush wants to spend the entire surplus on tax cuts. I don’t believe the wealthiest 10% of Americans should get 60% of the tax breaks. I think the lowest 10% should get the breaks. …

“I’m not giving tax cuts for the rich.”

—Discussion with media, reported in “Bush, McCain Snip Over
Tax Cut Plans,” Los Angeles Times, and “GOP Rivals Bicker on Taxes,”
Washington Post, Jan. 5, 2000


2. “I have never engaged in class warfare. I am very much in favor of tax cuts for middle-income and lower-income Americans. I’m deeply concerned about a kind of class warfare that’s going on right now. It’s unfortunate. There’s a growing gap between the haves and have-nots in America, and that gap is growing, and it’s unfortunately divided up along ethnic lines.

“I feel very strongly that we ought to have middle-income and lower-income tax cuts, and we’ll be getting into it, I’m sure, later on in this program. Mine are basically comparable to Gov. Bush’s, in some cases far better. But I’m not sure we need to give two-thirds of that tax cut, of that money, to the wealthiest 10% of America.”
—Michigan Republican Debate, Jan. 11, 2000.


5. “There’s one big difference between me and the others—I won’t take every last dime of the surplus and spend it on tax cuts that mostly benefit the wealthy. I’ll use the bulk of the surplus to secure Social Security far into the future to keep our promise to the greatest generation.”
—McCain campaign commercial, January 2000.

McCain on Social Security NOW: "Americans have got to understand that we are paying present-day retirees with the taxes paid by young workers in America today. And that's a disgrace. It's an absolute disgrace and it's got to be fixed." --on Social Security, Denver, Colorado, July 7, 2008
http://politicalhumor.about.com/od/johnmccain/a/mccainisms.htm

- “Without privatization, I don’t see how you can possibly, over time, make sure that young Americans are able to receive Social Security benefits.”

- “As part of Social Security reform, I believe that private savings accounts are a part of it — along the lines that President Bush proposed.”
http://thinkprogress.org/2008/06/13/mccain-denies-his-record-of-supporting-social-security-privatization/

[ozymandius]

5. Two Large Solar Plants Planned in California

Companies will build two solar power plants in California that together will put out more than 12 times as much electricity as the largest such plant today, the latest indication that solar energy is starting to achieve significant scale.

The plants will cover 12.5 square miles of central California with solar panels, and in the middle of a sunny day will generate about 800 megawatts of power, roughly equal to the size of a large coal-burning power plant or a small nuclear plant. A megawatt is enough power to run a large Wal-Mart store.

The power will be sold to Pacific Gas & Electric, which is under a state mandate to get 20 percent of its electricity from renewable sources by 2010. The utility said that it expected the new plants, which will use photovoltaic technology to turn sunlight directly into electricity, to be competitive with other renewable energy sources, including wind turbines and solar thermal plants, which use the sun’s heat to boil water.

http://www.nytimes.com/2008/08/15/business/15solar.html?ref=science

[ozymandius]

6. Greenspan: not a mensch (Krugman)

Be a mensch, my parents always told me — meaning, take responsibility for your actions.

The truly astonishing thing about Alan Greenspan’s performance since the bubble he insisted was “most unlikely” burst, inflicting the macroeconomic damage he said it wouldn’t, has been his lack of menschhood — his inability to own up to his mistakes.

And the hits keep coming. In 2006 Greenspan declared the worst over. Now, he says that he was only referring to the macroeconomic impact of the housing slump. But what he actually said was,

I suspect that we are coming to the end of this downtrend, as applications for new mortgages, the most important series, have flattened out.

Maybe he doesn’t realize how easy it is to check these things nowadays.

http://krugman.blogs.nytimes.com/2008/08/14/greenspan-not-a-mensch/

[ozymandius]

8. On Greenspan, What Krugman Says (see the chart)

This graph shows the MBA Purchase Index as of when Greenspan claimed this was flattening out. On a long term scale, I didn't see any significant "flattening out".

And how could Greenspan think this was "the most important series"? That was absurd and is probably why Greenspan was consistently wrong on housing.

http://calculatedrisk.blogspot.com/2008/08/on-greenspan-what-krugman-says.html

---

The thing is: look at the chart. It's not misleading in any way. Also, this is chart data that has been available to anyone for years. So Greenspan doesn't know what the hell he's talking about.

[4dsc]

46. Video of the day is great..

If you need a laugh today watch the video below the article..

[Demeter]

7. The "Enron Loophole" From Marketplace:

http://economistsview.typepad.com/economistsview/2008/06/the-enron-looph.html

THE BEST EXPLANATION OF THE TERM I'VE FOUND YET

Deflating the oil bubble, by Michael Greenberger: ...Host Kai Ryssdal talks with former commodity regulator Michael Greenberger about ways to keep tabs on speculation.

Kai Ryssdal: ...The in charge of regulating oil markets in this country and Congress has been after the agency to do something -- to do anything -- about oil and gas prices, what lawmakers perceive to be speculation, in particular.

Michael Greenberger used to run the ...

Ryssdal: Why is it so hard to figure out what's going on in commodities markets -- oil specifically?

Greenberger: Well, the reason it's hard to figure out is about 30 percent of our crude oil energy futures are traded in what is called a dark market -- that is a market that was deregulated in December of 2000 at the behest of Enron. Prior to that legislation..., all energy futures traded in the United States or affecting the United States in a significant fashion were regulated ... under a very careful regime that had been perfected over about 78 years and many observers believe that because those markets are not being policed, malpractices are being committed and traders are able to boost the price virtually at their will.

Ryssdal: You're not really telling me that seven years on, we're still paying the price for Enron, are you?

Greenberger: Well, this has been called the "Enron Loophole" and there are many legislators working very hard to close that loophole ... bring the speculation under the kind of time-tested controls that were used until Enron had its way and amended the law...

Ryssdal: So what's Congress going to do?...

Greenberger: Well, there are several proposals..., but the bottom line is the speculators will, in the end, be policed. We will know who they are, what they're doing, what their controls are, what effect they're having on the market. Maybe we'll find out that there's nothing there.

Ryssdal: So just to be clear, you do think that we're in a bubble, then?

Greenberger: I believe it and I'm certainly not alone in my belief. If you talk to anybody who trades in these markets on a regular basis, they will tell you that the markets are completely dysfunctional and out of control because of speculative activity.

Ryssdal: How long is it going to take then if we are, as you say, in a bubble, for it to work its way through and us to get back to something more realistic for the price of a barrel of oil, whether its 50 bucks or 80 bucks?

Greenberger: From my own experience as a commodity regulator, I believe that if the Bush Administration were serious about its regulation, we could begin seeing prices drop within a month. If we don't get the kind of regulation that has been done for decades and the market proceeds along the pace its proceeding, we will have to go through a very, very serious recession. The question is do you want to deflate the bubble by that kind of suffering or do you want to deflate the bubble by applying tight U.S. regulatory controls? ...

[ozymandius]

11. Bush will decide on the side of suffering because that's just his nature.

As more people suffer from economic hardship, the more they want to change the system. As more of their money goes to basic expenses, there's less to contribute to their favorite progressive candidate, political organization, etc.

So it's all about the suffering. The more people suffer, the more isolated and disenfranchised they feel. Isolation decreases their ability to effect change.

[Demeter]

15. And a Cheerful Good Morning to You Too, Ozy

What goes around will come around. First, it must be living hell to be George W Bush. Second, he ain't seen nothing yet--he will be front and center on the suffering in short order--this I believe.

It's Friday--try to enjoy it!

[ozymandius]

17. Good morning. I'm just trying to be a ray of sunshine.

:eyes:

Have a wonderful day. I'll check back when my schedule allows.

:hi:

[Hugin]

31. Good find, Demeter.

:thumbsup:

[AnneD]

65. Morning Marketeers.....

:donut: and lurkers. Since the bars aren't open, it's :donut: for everyone.

Ozy, you made the statement "The more people suffer, the more isolated and disenfranchised they feel. Isolation decreases their ability to effect change."

I don't know how the folks are in your neck of the woods, but down here we tend to be a bit scrappy. GWB may claim to be a Texan, but he is a wannabe and a sad one at that. I seriously doubt he could ever open a can of whop ass. He is a bully, and they are usually mentally weak and cowardly-using bluster for strength.

Now the folks down here have been patient. But patience is starting to run thin. While they might feel isolated, and disenfranchised-do not mistake that they cannot effect change. Isolated and disenfranchised folks get angry. And when they get angry, they tend to take matters into their own hands. Change can come peacefully or forcefully.

FDR was aware of the changes that might come-which is why he did what he did. I think it did more to keep us from becoming a more socialistic government. But should we face another calamity like the great depression-all bets are off.

Happy hunting and watch out for the bears.

[Demeter]

9. What if we'd been on the gold standard?

http://www.econbrowser.com/archives/2008/05/what_if_wed_bee.html

If the U.S. had decided to go back on the gold standard in 2006, where would we be today? That's a question my friend Randy Parker recently asked me. Here's how we both would answer.

Many things might have been different had the U.S. decided to promise to exchange dollars for gold at the 2006 price of $600 per ounce of gold. But let's start with some of the things that wouldn't have changed. I contend that we'd be no less worried today about geopolitical events in places like Nigeria, Iraq and Iran. The phenomenal growth of the Asian economies would presumably have continued. The bad mortgage loans made prior to that time would still be on the books and still be problematic, with attendant worries about the financial soundness of many institutions. All of this would have meant an increase in the demand for gold. Equilibrium would then require an increase in the relative price of gold compared to what it had been in 2006. That is, the number of umbrellas, or cars, or chairs that people would be willing to surrender in order to obtain an ounce of gold would have gone up relative to what it had been in 2006.

Now, if the number of dollars you have to surrender to obtain an ounce of gold is fixed by the government's commitment to a gold standard, and the number of umbrellas, or cars, or chairs you'd be willing to surrender for an ounce of gold has gone up, the only way that can be is if the dollar price of umbrellas, cars, and chairs have all fallen. Maintaining a gold standard while the relative price of gold increases requires deflation in the dollar prices of all other goods.

The only way the Fed could engender that deflation is with a monetary tightening. Suppose the Fed had been dutifully implementing that procedure in August 2007, when there was a sudden increase in doubts about the soundness of key financial players. A savvy speculator would then reason as follows.

The U.S. has promised that it will continue to convert dollars to gold at $600 per ounce. But that will require them to raise interest rates at a time of potential financial panic, and I don't believe they have the stomach for that. I'm going to ask for my dollars in gold right now, in the guess that they'll abandon this policy shortly. When they give up the standard, my gold will have appreciated, and I'll have a handsome profit.

And how could the U.S. respond to such a speculative attack? We'd have two choices. One would be to say to the speculators, you're right, this idea of driving interest rates up at a time of financial crisis was a dumb one. Dollars are no longer convertible to gold at the old fixed rate.

Or the other option would be to say, no, we really mean it this time, honest, we're serious about this whole gold standard thing. So, we drive interest rates higher and watch the deflation mount. Outstanding debt that is denominated in dollars becomes more and more costly for people to repay, and we'd see a really impressive level of bankruptcies and business failures. The cycle would continue until the politicians who promised to stay on the gold standard are driven out of office and the deflation spiral could finally be ended by the new leaders choosing option 1 after all.

Now, I know that the gold-standard bugs are howling at this point, "but that's not how a gold standard would actually work, because..." But what I just described was not a hypothetical scenario. Instead, in my opinion it's a pretty accurate description of what happened in the United States during the Great Depression of 1929-33.

In 1929, the U.S. was on a gold standard, with the exchange rate fixed at $20.67 per ounce of gold. Geopolitical insecurity and financial worries warranted an increase in the relative price of gold, which, with the dollar price of gold fixed, required a decline in the dollar price of most everything else. Speculators bet (correctly) that Britain would abandon the standard in 1931, but the U.S. fought against the speculation, with the Federal Reserve Bank of New York raising its discount rate from 1.5% to 3.5% in October 1931. This sharp increase in interest rates at a time of great financial turmoil succeeded in defending the parity with gold, but produced an economic disaster.

SEE LINK FOR GRAPHS



A 1991 research paper by Ben Bernanke and Harold James noted the very strong correlation between when a country abandoned the gold standard and when it began to recover from the Great Depression. The top panel above shows their calculations of the average annual growth of industrial production for the 14 countries that decided to abandon their currencies' gold parity in 1931-- they experienced positive growth in every year from 1932 on. Countries that stayed on gold, by contrast, experienced an average output decline of 15% in 1932. The U.S. abandoned gold in 1933, after which its dramatic recovery immediately began. The same happened after Italy dropped the gold standard in 1934, and for Belgium when it went off in 1935. On the other hand, the three countries that stuck with gold through 1936 (France, Netherlands, and Poland) saw a 6% drop in industrial production in 1935, while the rest of the world was experiencing solid growth.

As I pointed out in an article published in 1988, gold-standard advocates think in terms of an institution whose continued operation, once adopted, would never again be doubted. But the problem is, if you can go on a gold standard, then you can go off a gold standard. And uncertainty about if and when the latter will occur can make the system itself a very destabilizing force.

[Demeter]

10. FDIC warns four US banks over liquidity / Published: August 1 2008

http://www.ft.com/cms/s/0/f52c86b4-6018-11dd-805e-000077b07658.html

By Sarah Mishkin in New York

I DON'T KNOW HOW WE MISSED IT, BUT

The Federal Deposit Insurance Corporation revealed on Friday that it had issued warnings to four small US banks that lacked sufficient reserves to cover potential loan losses.

The cease-and-desist orders issued in June said the four banks needed to raise more capital, expand their loss allowances and better oversee and diversify their loan portfolios. A fifth bank was cited for violating consumer protection laws...The banks receiving cease-and-desist orders in June were MetroPacific Bank in Irvine, California; Bank Haven in Haven, Kansas; Clarkston State Bank in Clarkston, Michigan; and Hastings State Bank in Hastings, Nebraska.

Non-performing loans in Clarkston State’s portfolio nearly doubled to 4.6 per cent between the close of 2007 and the end of the first quarter of 2008, according to first-quarter earnings report released in April. Clarkston State’s chief executive, J. Grant Smith, said in a statement accompanying first quarter earnings that ”business conditions remain weak and commercial loan demand is anemic.”

The FDIC instructed the banks to reevaluate their allowances for potential losses. MetroPacific in California was also told to stop issuing credit “for speculative construction and land development purposes.”

The fifth bank – Columbus Bank and Trust in Columbus, Georgia – received a cease-and-desist order because its credit card program violated consumer protection laws.

[Demeter]

13. Canny buyer in the debt market

http://www.ft.com/cms/s/0/6253b938-5f1f-11dd-91c0-000077b07658.html


It is the middle of July and trading volumes are down, but Boaz Weinstein is hardly in a summer holiday frame of mind. By 6am, Mr Weinstein, the co-head of global trading for Deutsche Bank, is already parked in front of his Bloomberg terminal.

Many investors have closed their positions and headed to the beach – and, after a year of great volatility, they can be forgiven for feeling the need for respite. Yet, at a time of anxiety and uncertainty in the debt markets, Mr Weinstein – one of the youngest people in the history of Deutsche Bank to be named a managing director at 27 – has strong views.

He is convinced that “high-yield bonds are too cheap relative to other asset classes and that they are already discounting a severe recession.”

On this July morning, his preoccupation is to find ways of expressing that view by buying debt that has been most oversold and will retain value.

These days, Mr Weinstein and Deutsche Bank have a lot of credibility with investors. In mid-July last year, when the company held its annual summer conference for its clients in Barcelona, the bank delivered some very good advice: sell residential mortgage-backed securities, even the safest, most highly rated slices of mortgage debt. Even those slices could easily drop in value to 50 cents on the dollar, it warned. At the time, it seemed hard to imagine. But that view has proved prescient.

A year on, Mr Weinstein thinks the pessimism is overdone on corporate credit and the selling has gone too far.

The market is pricing high-yield bonds and the high-yield bond index as if there will be widespread defaults. The spread between the actual default rate and where the index trades is at record levels, and many think that the gap will widen further because they expect more defaults.

But Mr Weinstein says that even if there are sharp increases in defaults in the total universe of thousands of high-yield firms, the largest 100 companies that make up the high-yield index is a much smaller – and much stronger – sector.

Moreover, while in the past few years, corporate executives have sought to please their shareholders by buying back stock, these days their actions are more debt-friendly. They are strengthening their balance sheets, selling assets and raising equity capital.




Until recently, the debt side of the banks never paid much attention to the equity side. Ten years ago, the two divisions sat on separate floors or even in separate buildings. Now, with the development of the credit derivatives market and many debt indices, investors can express bearish views on debt in a way they never could before. A big part of what Mr Weinstein and his team do is try to anticipate the impact on one market of a move in the other.

Mr Weinstein’s own history parallels that of the market: He was a pioneer in developing what became known as capital structure aribtrage.

He joined the fledgling credit derivatives desk at Deutsche when he was 24 in 1998. At the time, a day with two trades was a busy day, but now that desk easily trades $40bn in a single index through hundreds of trades daily. Recently, as market players have grown nervous about dealing with weak investment banks as counterparties, Deutsche Bank has picked up market share in trading credit.

Mr Weinstein’s trading skills have been sharpened over the years both by his reading and his passions: he has been playing chess since he was five, becoming a master-level player as a teenager. He also plays poker and blackjack. (When Anshu Jain, head of Deutsche’s Global markets, entered Mr Weinstein in a poker tournament in 2005, Mr Weinstein won a Maserati.) These games require skills similar to those required for managing a big trading book, calculating losses and gains in response to changing information...

“For the big ideas, you need big assymetries where the risk of potential loss is far less than the potential upside,” says Mr Lippmann. “With subprime, if we were right, we’d gain 95 points, but if we were wrong, we could only lose 5 points. The market is not usually that wrong. We don’t have such big positions on all the time. You have to wait until the mispricing is massive.”

[Demeter]

14. The New Imperialist: China to Buy Agricultural Land Abroad

http://www.nakedcapitalism.com/2008/05/new-imperialist-china-to-buy.html




The great imperial struggles of the 1800s were over control of strategic or otherwise prized resources, and the hostilities they generated helped stoke World Wars I and II. Many believe the Iraq war was all about oil.

China is considering adopting a contemporary variant of the colonial model. A Ministry of Agriculture proposal suggests that rather than conquer territory to secure needed farmland, it could simply buy it up. But this path proves likes to engender resistance from the locals in countries with (conquered occupied) investee sites. This might work if done quietly, with local players acting as fronts. But this program will have to be very large scale to achieve its desired aims, which is improving food security, which makes keeping a low profile well nigh impossible.

And does China really think it can export food from large tracts of land abroad if the natives are hungry? There are major risks, such as governments asserting eminent domain to repatriate property and sabotage of transport.

China is concentrating its efforts on Africa and South America. In many areas, the control of the central government is weak. Will China wind up employing local mercenaries to secure its interests? It will be interesting to watch this initiative play out.

From the Financial Times:


Chinese companies will be encouraged to buy farmland abroad, particularly in Africa and South America, to help guarantee food security under a plan being considered by Beijing.

A proposal drafted by the Ministry of Agriculture would make supporting offshore land acquisition by domestic agricultural companies a central government policy. Beijing already has similar policies to boost offshore investment by state-owned banks, manufacturers and oil companies, but offshore agricultural investment has so far been limited to a few small projects.

If approved, the plan could face intense opposition abroad given surging global food prices and deforestation fears. However an official close to the deliberations said it was likely to be adopted.....

The move comes as oil-rich but food-poor countries in the Middle East and north Africa explore similar options....

China has about 40 per cent of the world’s farmers but just 9 per cent of the world’s arable land....China is still a net exporter of agricultural commodities but is increasingly reliant on soybean imports and is about to become a net buyer of corn.....

Some countries would find it particularly problematic if Beijing supported Chinese firms to use Chinese labour on land bought or rented abroad – common practice for most companies operating overseas.

[Ghost Dog]

61. Right. Suddenly the age-old market system is unacceptable,

if the money is Chinese.

This is so unreasonable my already hurt (Georgia) head will likely fall off. Those dastardly Chinese! How dare they not just grab the land like the rest of us did? Instead they are offering to buy it at a mutually-agreed price from those with title willing to sell. Whatever next? A rational market regulator?

:irony:

[ozymandius]

16. Stock, Bond Market Disconnect on Mortgages, Financials

Here we go again. Even though equities are theoretically forward-looking (Barry Ritholtz has pointed out that that ain't as true as most people believe), bonds are more often the canary in the mineshaft, typically going into a funk before stocks do. Even though the credit markets started getting the heebie jeebies in early June and went into panic mode last August, the S&P 500 reached its peak for this cycle in October 2007. We've taken note of the equity-credit market disconnect before (see http://www.nakedcapitalism.com/2008/02/on-continuing-equitycredit-market.html|here] and here), and on those occasions, stocks have come to share the downbeat view of debt investors.

Thursday, for instance, equities, and in particular financials, rallied because a trade industry group relaxed rules on that may have the effect of lowering interest rates on larger mortgage loans, such as jumbos from Fannie and Freddie.

But the credit market behavior on the whole was far from pretty. Most worrisome was a spike in agency spreads to 215 basis points, not far from the 22 year high level of 238 basis points reached in February that set in motion the acute phase of the crunch that culminated in the Bear bailout. And remember, that spike in agency spreads occurred BEFORE the creation of the TSLF and the PDCF, both of which were to help reverse the spike in agency spreads. And now we have the government standing behind Fannie and Freddie while trying to pretend that the commitment is limited and won't cost much (yes, Virginia, there is a Santa Claus; it's only a majority of economists surveyed by the Wall Street Journal who believe that the Feds will have to bail out the GSEs).

http://www.nakedcapitalism.com/2008/08/stock-bond-market-disconnect-on.html

[Tandalayo_Scheisskopf]

18. Good Morning, Financial Blood Sport Fans!

I am gonna wait to start posting raw info, as my regular source seems to be lagging behind other sources of info I have. Suffice to say, Crude Oil is showing at 113.04 right now, and was down below 113 a few short minutes ago.

I think that it should be considerably less, considering the ongoing demand destruction, but then again, I also think that a Guillotine, setup at the Bull on Wall Street, and used when necessary, would be a nice stylistic touch. Perhaps painted in the most current color scheme. Failing that, setup outside of the Today Show windows.

Refiners are cutting output like the madmen they are. Some are predicting price rises in energy next week. Brazen Manipulation. Prices in electricity markets are downside trending. Of course, do we see that in our bills? Not under this administration, we don't. Perhaps if we started dragging those bastards around town with oxen teams, with the traders tied to said teams by either their tongues or their genitalia? Just a passing and pleasing fantasy, apropos of nothing.

[Hugin]

30. Thanks for the update, Tandalayo_Scheisskopf .

There's some buzz this morning about an inquiry into the bogus "There is no speculation in the oil market" report and
also an indication there has been another major oil speculating player identified who had 'no legitimate reason to
be speculating in the oil market'. But, that's all I know.

Maybe you know more?

Edited for redundant redundancy.

[UpInArms]

34. Chicago corn, wheat plunge on weak oil

http://www.reuters.com/article/hotStocksNews/idUSDIS53938520080815?sp=true

TOKYO (Reuters) - Chicago corn and wheat futures fell more than 2 percent on Friday as weakness in oil prices and other commodities spurred investors to lock in profits after robust gains the previous day.

Investment funds, taking their cue from the sell-off in commodities in Friday morning trade, were heavy sellers of grains, traders said.

"Technical selling drove down grain prices in the after-hours session, mostly a reflection of the downward trend for oil prices and a strong dollar," said Kenji Kobayashi, grains analyst at Kanetsu Asset Management.

"Grains are still in a technical downward phase. Weak data for soybeans yesterday weighed on soybeans prices and the bearish mood is spreading to other commodities."

As of 5:54 a.m. EDT, September corn futures were trading at $5.44 per bushel in electronic trading, down 2.6 percent or 14-1/2 cents from Thursday's Chicago close.

Chicago Board of Trade corn jumped more than 3 percent on Thursday, but failed to make further gains in the wake of a crop report by the U.S. Agriculture Department earlier in the week that came in higher than expected.

The USDA projected this year's corn crop at 12.3 billion bushels, up from its July forecast of 11.7 billion.

...more...

[JNelson6563]

35. Well stated.

It makes me think of this current situation as a sort of smash-n-grab, like you see during a riot where they need to get in and get out (with as much as they can carry) asap. Soon the WH won't be occupied by oil men and their best friends in Congress will be in a substantial minority. The writing's on the wall, hence this brazen manipulation. No time to be subtle!

Julie

[Name removed]

64. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Demeter]

76. Cold, Hungry, Unemployed Americans Don't Give a Shit About It

The subject isn't going to swing like a weather vane wherever the Hot Air blowhards of the GOP want it to, not this time.

[Ghost Dog]

84. We'll see, I guess, Demeter. But you offer me, perversely,

a ray of hope.

[Demeter]

91. That's Me, Perverse All Over

Just ask my kids. Or my ex. Or my father, or sister, or....

Gee, maybe this is the only place I am accepted! :hide:

[Ghost Dog]

63. Hmm.

[UpInArms]

19. dollar watch

http://quotes.ino.com/chart/?s=NYBOT_DX&v=i

Last trade 77.038 Change +0.315 (+0.41%)

Euro Touches 1.4700, As Pound Falls To 2-Year Low

http://www.dailyfx.com/story/dailyfx_reports/daily_brief/Euro_Touches_1_4700__As_Pound_1218793167409.html

Despite a barren economic calendar, the Euro fell to nearly a six month low when it touched the 1.4700 handle. Dollar bulls got a boost from U.S. inflation rising to 5.6% and a report from Goldman Sachs that proclaimed the dollar had bottomed. The Sterling pound also saw continued weakness due to the same factors falling to a two-year low as it broke below 1.8550. The greenback’s gains may continue as there is no reason for dollar bulls to abandon their position with Europe heading for a recession and the outlook for interest rates is heading lower for both the ECB and BOE.

The dollar also continues to be the beneficiary of falling commodity prices as gold dropped under $800 for the first time since December and oil was below $113 per barrel. The greenback’s strength and lower crude has spurred risk appetite which has pushed the USDJPY above the 110.50 price level for the first time since January 2.

New Zealand was the only country reporting significant economic data during the overnight session as its retail sales report crossed the wires. June sales rose 0.9% led by automobile and fuel purchases. However, the quarterly report stripped of inflation showed consumption falling to a 13 year low which would add further weakness to the New Zealand dollar and send the pair below 0.6950.

The University of Michigan’s consumer confidence survey, industrial production and empire manufacturing are due for release today. Considering inflation has risen above 5.6% and the job market continues to weaken with jobless claims maintaining above 400,000 for a fourth week, the expected improvement in consumer sentiment could add to the current bullish dollar story. Meanwhile manufacturing is expected to remain flat as global demand slows and a strengthening dollar curbs demand for U.S. goods. However, a drop in manufacturing and weakening consumer confidence could lead to the beginning of the end of the current dollar rally.

...more...

An Uptick In Consumer Confidence Coincides With EURUSD Technicals

http://www.dailyfx.com/story/special_report/special_reports/An_Uptick_In_Consumer_Confidence_1218786581035.html

Consumer confidence is expected to improve as Americans are fresh off of receiving their rebate checks and gas prices have started to ease. The University of Michigan consumer confidence survey is predicted to rise to 62.0 from 61.2 which would be consecutive month’s of improvement.

Fundamental Outlook

Consumer confidence is expected to improve as Americans are fresh off of receiving their rebate checks and gas prices have started to ease. The University of Michigan consumer confidence survey is predicted to rise to 62.0 from 61.2 which would be consecutive month’s of improvement. Last month saw a surprise revision higher in the final number, which could set this month’s reading up for a better than expected print. The technical outlook is calling for one more bullish dollar push before giving way to a longer EURUSD move higher. Fundamentals and technicals don’t always agree, but in this instance they appeared to be aligned as a small improvement in confidence will provide bearish price action for the pair. However, giving another week of 400,000 jobless claims and inflation rising to 5.6% confidence could easily sink, accelerating the anticipated dollar bearish sentiment.

...more...

[UpInArms]

20. Wachovia subsidiary asks for protection: report

http://www.marketwatch.com/news/story/wachovia-subsidiary-asks-protection-report/story.aspx?guid=%7B9E213570%2D75EF%2D423D%2D973B%2DCA3C6677770D%7D&dist=hplatest

BOSTON (MarketWatch) -- BluePoint Re Ltd., a unit of banking giant Wachovia Corp. (WB: 15.81, +1.00, +6.8%) , is being liquidated in Bermuda and is seeking protection from a U.S. court to protect its assets, The Wall Street Journal reported Friday. BluePoint was hit by higher defaults on mortgage securities and ratings downgrades, according to the story. Wachovia shares were up 3% in premarket action Friday morning.

[UpInArms]

59. SEC: Wachovia to buy back about $8.8B in auction rate debt

01. Wachovia to offer loans to strapped ARS clients
11:41 AM ET, Aug 15, 2008

02. Wachovia 'neither admits nor denies' wrongdoing
11:40 AM ET, Aug 15, 2008

03. Wachovia to pay $50 mln to settle auction-rate deal: report
11:22 AM ET, Aug 15, 2008

04. SEC: Wachovia misrepresented auction rate debt risk
11:09 AM ET, Aug 15, 2008

05. SEC: Wachovia faces possible financial penalty
11:07 AM ET, Aug 15, 2008

06. SEC: Wachovia to buy back about $8.8B in auction rate debt
11:06 AM ET, Aug 15, 2008

[UpInArms]

21. Merrill Lynch freezes hiring until year end: memo

http://www.reuters.com/article/ousiv/idUSN1449719720080814?sp=true

WASHINGTON (Reuters) - Merrill Lynch & Co Inc, reeling from billions of dollars of writedowns, has frozen hiring until year end, according to a memo sent to employees.

The company said it will not replace employees that have left, nor will it hire for positions that were previously budgeted for. The freeze does not apply to retail brokers, who numbered 16,690 at the end of the second quarter.

Merrill Lynch cut 4,200 jobs in the first half of the year, and had a total of 60,000 employees at the end of June, excluding brokers.

Merrill Lynch has recorded more than $45 billion of writedowns since the credit crunch began last year, but Chief Executive John Thain said earlier this month that the company should return to profitability soon.

According to the firm-wide memo sent out on Wednesday, requests for exceptions to the hiring freeze must be sent in writing to the management committee.

<snip>

Earlier this month, Thomas Montag began working at the firm as head of sales and trading. Merrill granted him stock and options valued at about $40 million, on top of a nearly $40 million bonus it previously agreed to pay him.

...more...

[UpInArms]

24. Merrill to avoid UK tax after $29 bln loss-FT

http://www.reuters.com/article/bondsNews/idUSLF4237120080815

LONDON, Aug 15 (Reuters) - Merrill Lynch & Co (MER.N: Quote, Profile, Research, Stock Buzz) may avoid paying corporation tax in Britain for several decades after it charged $29 billion of losses to its London-based subsidiary, the Financial Times reported, citing a company filing.

Almost all of Merrill's global activity in the market for repackaged debt, known as collateralised debt obligations, was channelled through Merrill Lynch International, its UK-based subsidiary, the paper said.

Repackaged debt tumbled in value following the U.S. subprime crisis and Merrill sold $30.6 billion of these securities to buyout firm Lone Star Funds last month for just $6.7 billion.

Merrill can carry forward its UK operating losses indefinitely for tax purposes, the paper said. At the current corporation tax rate of 28 per cent, it will be able to lower its UK tax bill by as much as $8 billion, it said.

...more...

[UpInArms]

25. Capital One auto loan delinquencies rise in July

http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSWEN752420080815

NEW YORK, Aug 15 (Reuters) - Capital One Financial Corp (COF.N: Quote, Profile, Research, Stock Buzz), one of the largest issuers of MasterCard and Visa credit cards, said on Friday more borrowers are falling behind on their auto loans, while credit metrics in its U.S. credit card portfolio were more stable.

In a regulatory filing, the McLean, Virginia-based company said the annual net charge-off rate in auto finance rose for a third straight month, increasing to 4.67 percent in July from 4.26 percent in June. Net charge-offs reflect loans that a lender does not expect to be repaid.

The rate of auto loans at least 30 days late rose for a fifth straight month, to 8.33 percent in July from 7.62 percent in June.

Capital One said in U.S. credit cards, the charge-off rate fell to 6.08 percent in July from 6.42 percent in June, while the delinquency rate rose to 3.96 percent from 3.85 percent.

...more...

[UpInArms]

29. Home prices down 7.6%

http://money.cnn.com/2008/08/14/real_estate/quarter_three_home_prices/index.htm

NEW YORK (CNNMoney.com) -- Real estate prices continued to post steep year-over-year declines during the three months ended June 30, according to a new report from the National Association of Realtors (NAR).

Nationwide, the median existing single family home price plunged 7.6% to $206,500 in the second quarter, down from $223,500 in the same period of 2007. The median price represents the point at which half of all homes sold for more and half sold for less.

A record number of foreclosures helped drive down prices, according to NAR. In fact, foreclosures and short sales accounted for about one third of all existing homes sales.

"Banks price homes to sell," said Patrick Newport, real estate economist with Global Insight, a forecasting firm. "When demand for homes drops, ordinary sellers will take their homes off the market, let them sit or reduce their prices in small increments. But banks will slash prices to where the homes will sell quickly."

Poor economic conditions are also hurting the housing market, according to Nicholas Retsinas, Director of Harvard University's Joint Center for Housing Studies, and may continue to take a toll.

During the boom, many housing markets thrived despite tough economies. At the height of the frenzy in the Spring of 2005, Stockton, Calif. saw home prices climb by double-digits, even though the unemployment rate there hit 9.4%.

...more...

[Buttercup McToots]

32. More Dennniger..."Where's The Kaboom?"

I like reading this person...lots of info translated into English...

http://market-ticker.denninger.net/archives/542-Wheres-The-Kaboom.html

Take your pick last night. Right after the market closed, the dollar started strengthening again. A lot.

Then, suddenly, the floor dropped out of Gold, and the S&P 500 Futures spiked HARD, with over 2,000 contracts bought at the market.

A few hours later, it happened again. And at 4:30, once more!


What in the Sam Hell is going on?

Simple, really. See, there are what - 8,000 hedge funds? Well, for 7,999 of them (up until the last few days anyway) they have all been in one trade, more or less - short dollar, long energy, short financials.

Nice, if and when it works.

But now that trade has been unraveling at a frightening rate. As the dollar has gotten stronger it has squeezed people. Hard. See, these guys are not just investing the money they get from rich folks all over the world - they are taking that money and borrowing, then investing that.

So when these bets go bad - oil falls, the dollar goes higher, or any of the "parameters" they've been working get the rug pulled out from under them, they have a huge problem, all at once, and they have a very bad hair day.

That's happening. In spades.

This is where the "recovery" has come from in the stock market the last month or so - you kick the shorts in the nuts and they cover, then the lemmings rushing in, once again listening to the idiotic calls of "the bottom is in" from media outlets like CNBC that will shove a microphone under the snout of anyone who toes that line.

This trade started unwinding slowly, but in the last week or two it has gotten very disorderly and so have the markets.

As credit has continued to deteriorate the weaker hands get flushed and forced out. This causes them to have to buy back their short dollar trade, which spikes the DX. THAT in turn spooks someone else, who then covers a big futures short, which in turn freaks out someone in the gold market, and they dump a big long.

Rinse, repeat, and continue until the dead bodies are all piled on the floor and only the cockroaches are left scurrying around.

Oh, and those very same Hedgies are some of the guys "guaranteeing" the credit in these default swaps, which means as they go down, credit continues to blow wide, never mind the actual deterioration which is far worse than claimed because these so-called "guarantors" can't actually pay.

What you need to understand is that there is nothing that can be done to stop this. Not by the government, not Bernanke, not The Fed, nobody. The overly-geared will die, one by one, until there is nobody left who has too much gearing on for the trade and credit risk they took.

What's worse is that some of our "big institutions", sensing this - that credit quality is deteriorating very, very rapidly, are looking for someone, anyone, to offload the bag to. Over the last few months they've found a few people they can try to throw the bag at - maybe those with poor risk controls, with automated trading systems that aren't actually verifying anything, and perhaps there's a bit of a pollyanna view at a few of them too?

If you can't find those folks because there aren't any of that sort buying the debt you're desperate to unload (since you know its going to go "boom!") then the next move is to "sell" that debt to some private equity guy but carry back the financing (in some cases on a non-recourse basis!), as several folks have done recently, which makes it look like you got 20 cents on the dollar when in fact you only got 5. For the Hedgie or P/E guy who makes the bet, its not a bad deal - they have a defined risk trade, like a CALL option. For you, the writeoff is real but its 75% less than it should have been, with the rest sitting out in limbo pending the truth being discovered in the fullness of time (when the deal blows up and your "non-recourse" deal comes back at you like a boomerang.)

How many of those folks will die, and what impact will it have on the credit markets in general? I can't quantify it accurately - I don't think anyone can. But what is obvious from the magnitude of these "little tremors", and the rapidly increasing rate at which they are coming, is that:

Its very bad.
Its getting worse, at an increasing rate.
A number of supposed "liquidity providers" have either been gamed (and this has not been recognized and reported to the public) or they're "buying" this debt with carried-back loans, making their actual risk of loss tiny compared to the nominal "value" transferred. In other words and to put it in terms "Joe Q Public" can understand, everyone is still lying!
There is a "supercritical" point where all asset values will get hit at once, unless the process runs to exhaustion first, and I don't think there is a snowball's chance in Hell that it will.
I may be wrong about the impending supercriticality, but if I'm not, well, it would be a good idea to be sure you are in safe places with your money.

Equities and debt other than treasuries would be in the "not" column on the list of safe instruments, and note carefully the very specific constraint on exactly what sort of debt is safe - all other, and I do mean all, is not.

Comport yourself accordingly.

[Hugin]

37. Yeah, thanks for pointing Denninger out, Buttercup.

Some interesting reading there.

[DemReadingDU]

53. Comport yourself accordingly

I had to look up that word in the dictionary!


I like to read Denninger too, he has interesting essay almost every day.
http://market-ticker.denninger.net/

[TalkingDog]

60. unraveling doesn't kaboom.....

[DU GrovelBot]

33. ## PLEASE DONATE TO DEMOCRATIC UNDERGROUND! ##

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[Hugin]

36. My Magic-Eight-Ball sez...

"Outlook Not Good"

[Pale Blue Dot]

45. The last two fundraisers have not gone as well

Some say that it's because of the divisive primary season, but I think it's because of the economy.

[Hugin]

47. I think you may be correct...

However, my Magic-Eight-Ball may have been addressing Grovelbot's quest for Brains.

Luckily, tho... Grovelbot is a denizen of DU. So, he may find some sustenance.

[Dr.Phool]

55. Grovel-bot should lead by example.

There's no star next to his (or her) name.

[TalkingDog]

62. Nice catch. Fair cop. n/t

[Buttercup McToots]

38. Set Up?

Set-up complete: Georgia the new Vietnam
By Larry Chin
Online Journal Associate Editor

http://onlinejournal.com/artman/publ...cle_3619.shtml
Aug 14, 2008, 00:21




Emerging evidence is already exposing the Bush/Cheney administration’s bloody fingerprints all over the conflict in Georgia:

(If you go to soruce link, you can click on links below :)

US complicit in Georgia’s invasion of South Ossetia

NATO encouraged Georgia

Hypocrisy over war in Georgia

Georgia war a neocon election ploy

Using Georgia to target Russia

Russia responded by finishing the South Ossetia fighting quickly, clearly establishing its dominance for the moment. But what will be Washington’s response now?

Georgia/Ossetia is a perfect set-up. It is even better than a false flag operation. The Russian Threat will be the only issue, bar none, and Washington has only just begun pumping it up. It will be “it,” no matter which faction ultimately sits in the White House, and could well decide which faction manages to be installed.

The Cold War is back, and it may not be cold for very long: Toward a Broader Russia-US military confrontation?

Both neocons and neolibs now have a unified enemy again, and a propaganda cause behind which to mobilize.

Note that neoliberal hawk Zbigniew Brzezinski, a chief architect behind imperial plans targeted against Russian and Chinese geostrategic agendas, has influence behind both US presidential aspirants, Barack Obama and John McCain. His ruthless colleague and neocon counterpart, Henry Kissinger is in McCain’s camp.

Washington functionaries and 90 percent of the media are marching uniformly with propaganda pushing the idea that it was a Russian attack on “sovereign” Georgia, not an armed response to an aggressive provocation by Georgia armed with US troops, covert operatives and US firepower.

The western media is trumpeting that “something has to be done to show the Russians that they can’t just run roughshod over the continent,” while the actions of US covert operations, unacknowledged American fatalities (dead intelligence assets, soldiers lying dead in the streets of Ossetia) get silence. Note how the massive propaganda apparatus, a save-Georgia public relations machine (identical to the save-Iraqi-babies campaign launched before the Gulf War) was in place, seemingly before the fighting even started.

There is a good reason why Kissinger and the Bush family appeared so relaxed at the Beijing Olympic Games. The top echelons of the Anglo-American empire have already set up the “chessboard,” with multiple contingencies. It’s all been taken care of.

Barring miraculous developments, Georgia has become the new Vietnam, complete with fear of commies, oil supplies threatened (genuinely as well as fictionally), and real world war. The perfect planetary conflagration.

Rank and file Americans, the entire world, may be sick of war and deception, but fear of a mightily-armed Russia -- a true, living superpower adversary that actually dropped bombs and rolled in tanks -- could do the trick in a way that 9/11 and phantom terrorists did not.

Watch Bush/Cheney. They are not done.

[Buttercup McToots]

39. Travels around the world...Who are the West trying to kid?

From The Independant...

Mary Dejevsky: Russia the bad guys? Who are the West trying to kid?

Friday, 15 August 2008


As Russian forces started to hand over control of the Georgian town of Gori yesterday, you could detect a note of surprise, even disappointment, in many media reports. So the all-out Russian invasion of plucky little democratic Georgia might not be going to happen after all. Could it be that the bear was drawing in his claws?


Well, Russia did not have long to worry about losing its reputation as backyard bully. Within hours, the United States envoy to Georgia was spinning a whole new myth to the BBC about how it was only decisive US intervention – by which he presumably meant the warplanes laden with humanitarian aid by then ostentatiously parked at Tbilisi airport – that the mighty erstwhile Red Army had been turned back.


The many Georgians who had counted on more timely and robust assistance from their US protector surely laughed a bitter laugh. But there were signs, with the arrival of the US Secretary of State in Georgia, that this version was gaining hold. The story of this war, it seems, will be that the US faced down a snarling, expansionist Russia, and forced it to limp back to its lair.


This is a travesty. But it is only the latest and most glaring in a series of Western misrepresentations and misreadings of Russian intentions throughout this sorry episode. They began with the repeated references to Russian "aggression" and "invasion", continued through charges of intended "regime change", and culminated in alarmist reports about Russian efforts to bomb the east-west energy pipeline. None of this, not one bit of it, is true.



Take "aggression" and "invasion". Georgia declared itself to be in a state of war with Russia. War, regrettably, is war, and a basic objective is to reduce, or destroy, the enemy's military capability. This is what Russia was doing until it accepted the ceasefire. The positions it took up inside Georgia proper can be seen as defensive, not offensive. Gori houses the Georgian garrison on South Ossetia's border.


And anyway, how did hostilities begin? Georgia sent troops into South Ossetia. The status of that region – which declared unilateral independence – is anomalous. It is inside Georgia's borders, but outside its control. But one reason why the dispute has not been solved is that the "fudge" over independence brought with it a degree of stability. Georgia's action upset that stability. But did anyone describe it as "aggression"? Trying to explain Russian "aggression", many reports went further, observing a "new" mood of Russian aggressive nationalism. Today's Russia, they reasoned, was uniquely liable to lash out, because energy wealth had fuelled new national ambitions. Where, though, is the evidence that Russian national pride is automatically malign?


If you exclude Chechnya, which Russians have always regarded as part of Russia, then neither Putin, nor Medvedev, had sent troops outside Russian borders before this point. As for the idea that Putin wants to restore the Soviet Union – derived from his remark about the Soviet collapse being "among the greatest catastrophes" of the 20th century – nothing could be further from what he did. Far from hankering after a lost empire, Putin used his years as president systematically to fix Russia's post-Soviet borders, signing treaties with every neighbouring country that would agree – including, last month, China. Of course, Russia does not like the idea of another Nato member on its borders. But this is not the same as wanting to restore "ex-Soviet space". It reflects Russia's view of its legitimate security interests.


Perhaps the most pernicious assumption over the past week, however, is that Russia wanted to effect "regime-change". Russian officials categorically denied this, insisting that they had no business overthrowing an elected leader. You might scoff, but Russia has done nothing that would contradict this. The Kremlin would probably be delighted if Georgians eventually punished their President for his misguided enterprise, but Russia seems to accept that Georgians decide what happens in Georgia.


Why was it so difficult for outsiders to believe that Moscow wanted precisely what its leaders said they wanted: a return to the situation that had pertained before Georgia's incursion into South Ossetia – and does it matter that its intentions were so appallingly misread? Yes it does. If outsiders impute to Moscow motives and objectives it does not have, they alienate Russia even further, and make a long-term solution of many international problems that more difficult. It is high time we treated Russia's post-Soviet leaders as responsible adults representing a legitimate national interest, rather than assuming the stereotypical worst.
[e-mail]

[Buttercup McToots]

43. Media war against Russia...Fake photos abound...

In the modern world you can't wage a war just with your tanks and planes.

You have to use media. In Germany during WWII they would say "Truth is not what happened, truth is what we tell people".
Yesterday Russian military aircrafts bombed several Georgian military bases. It worth mentioning that military men are located in the a five-storied buildings which look exactly alike residential. The reason for this is simple, they were built in the Soviet Union times and there was not much diversity in architecture.

This morning (its 7 a.m. Moscow time right now) one can read on the BBC news site.

Russia deaf to Western voices, Reuters agency posts a horrible pictures of Russian bombardments of allegedly civilian residential buildings. But what if you take a closer look?

...Really look at them...

Warning: the pictures contain scenes with alleged blood and allegedly injured people.


http://russia-insider.livejournal.com/25329.html

[Ghost Dog]

72. Media. Reminds me of smallpox-spiked Blankets.

I've been no-TV for decades, gave up doing more than scanning the Spanish Press recently (were it not that my compañera is still a reader, I'd not do more than pick it up in a bar, over an orange-juice, occasionally), and gave up regularly reading The Guardian and The Economist months ago.

Next step will be to ignore all "News"-related stuff on the Internet.

I'm going to ground, raising earthworks and dropping out, again. Act Locally, absolutely; Think Globally? What for?

:(

This is not for economic reasons. It's because I see the brainwashing has gone so far, where it counts, (I guess I mean "The West"), even here in DU (SMW and other honorable exceptions) as to appear to me to render the entire cultural situation utterly irredeemable, now.

A.

[Ghost Dog]

83. This, as far as I have been able to see, is the absolute truth,

that most people in the West have been actively prevented from hearing.

[Pale Blue Dot]

40. Layoffs 8/15

Good morning everyone. My vacation is almost over. :-(In layoff news, the repercussions of Gannett's announcement that they will be cutting 1,000 jobs are being felt across the country. I have decided to not include specific layoffs at Gannett-run newspapers.

Hutchinson - Livingston, TN - 480 jobs lost

LIVINGSTON, Tenn. -- Dozens of workers at a middle Tennessee factory will work their last day on Friday.

The Hutchinson plant in Livingston is expected to lay off at least 40 of its full-time workers and more over the coming months after a French company purchased the business a few years ago.

Hutchinson manufactures air conditioner parts for motor vehicles. No one at the company would comment on Thursday about the pending layoffs.

At least 80 of Hutchinson's nearly 200 employees are expected to be let go between now and October. They're already being replaced by temporary workers who won't receive benefits.
http://www.wsmv.com/news/17194019/detail.html#-

Ariel Investments - Chicago, IL - 19 jobs lost

riel Investments LLC is laying off about 20% of its staff after recent poor returns forced a retrenchment at the Chicago mutual fund manager founded by John W. Rogers Jr.

Mr. Rogers said 19 employees are being let go — the first such cutback in the firm’s 25-year history. The most senior casualty is Controller Yvonne Towers, he said. Most of the layoff victims were hired within the last two to three years.

“It’s a sad day for all of us,” he said. “The hugs and tears were unimaginable.”

Staff members were told Thursday.

High energy prices have pummeled many consumer stocks that Ariel holds in its portfolio. Although the recent drop in energy prices has proved beneficial to Ariel’s returns, its largest fund, with $2.4 billion in assets, is down 15.7% this year, compared with a decline of 11.3% for the Standard & Poor's 500 index.
http://www.chicagobusiness.com/cgi-bin/news.pl?id=30611

Ford - Hamburg, NY - 100 jobs "temporarily" lost

About 50 workers at Ford's stamping plant in Hamburg are on temporary layoff for two weeks as the automaker adjusts its production to match demand in the marketplace, said Angela Kozleski, a Ford spokeswoman.

The workers are scheduled to return to work the week of Aug. 25, she said.

The adjustments also affect about 50 temporary part-time employees at the plant. They would be called back on an as-needed basis, depending on demand, Kozleski said.

The Hamhttp://www.democraticunderground.com/discuss/duboard.php?az=post&forum=102&topic_id=3440019&mesg_id=3440019
Democratic Underground - Post a messageburg plant makes stamped parts for vehicles including the Edge and Flex crossovers, which are assembled in Ontario.
http://www.buffalonews.com/258/story/414536.html

GBC Commercial Products Corp. - Pleasant Prairie, WI - 75 jobs lost

GBC, Commercial Products Group, the former General Binding Corp., has informed state officials that it intends to permanently cut 75 more jobs from its plant in Pleasant Prairie beginning this fall.

The layoffs from the plant, at 10303 80th Ave., will begin in October and continue over the next seven months, the firm said in a Worker Adjustment and Retraining Notification letter received this week by the Wisconsin Department of Workforce Development.

State law requires 60 days notice of a mass layoff. GBC informed the state in June that it planned to lay off 21 employees from the Pleasant Prairie plastic products plant.

GBC, Commercial Products Group is a Northbrook, Ill.-based division of ACCO Brands Corp. (NYSE: ABD), an office products manufacturer based in Lincolnshire, Ill.
http://www.bizjournals.com/milwaukee/stories/2008/08/11/daily29.html

Alaska Distributors - Kent, WA - 600 jobs lost

Alaska Distributors, the Kent-based alcohol distributor, could lay off more than 600 workers on Oct. 3, according to notice it gave the state Employment Security Department on Wednesday.

Company CEO Steve Loeb did not return a phone call late this afternoon.

The company plans to sell part of its business to CoHo Distributing of Portland, which is being created from the merger of Columbia Distributing, Mt. Hood Beverage and Gold River Distributing, CoHo said in a July press release. The deal is expected to close in early October.
http://seattletimes.nwsource.com/html/businesstechnology/2008114656_bdigalaska15.html

[Pale Blue Dot]

41. Leisure, hospitality join in Mass. job cuts

The state’s economy is showing more signs of developing cracks on the job front.

Massachusetts employers cut about 2,900 jobs from payrolls last month, according to a new survey. The state’s Executive Office of Labor and Workforce Development reported yesterday that the vast majority of those jobs were in the hospitality and leisure sectors - industries that have previously shown strength in recent months.

Elliot Winer, chief economist for the state, cautioned that summer seasonal jobs are usually volatile and the July numbers could be misleading. But he acknowledged that there is “some softening” in the sectors.

Some experts attributed the decline to the high cost of fuels, which have limited travel by out-of-state tourists.

Cape Cod also has been hit with fewer seasonal visas issued to foreign workers, which may have driven payroll numbers down.

http://www.bostonherald.com/business/general/view/2008_08_15_Leisure__hospitality_join_in_Mass__job_cuts/

[Pale Blue Dot]

42. Bay Area CEOs Planning Layoffs in Next Six Months

SAN FRANCISCO, Aug 15, 2008 (BUSINESS WIRE) -- Marking a significant turn in the economy, for the first time in five years, more CEOs are planning Bay Area layoffs than those planning workforce increases, the Bay Area Council announced today in the release of its quarterly Business Confidence Survey. Indeed, 26 percent are planning layoffs in the next six months - the highest percentage ever recorded by the Survey, which began capturing data in 2001. Twenty percent of executives are planning to increase their workforce, while 51 percent plan to hold steady.

Overall business confidence of the 505 CEOs and top executives in the nine Bay Area counties surveyed between July 21 and July 30, 2008, was near the bottom recorded to date. The business confidence index - the number that distills the survey findings - registered at 39 out of 100, down two points from the last evaluation. A reading over 50 signals positive economic times and below 50 is negative.

Prospects for recovery appear far over the horizon. The averaged survey respondent's prediction for the beginning of California economic recovery is slightly more than 12 months. Forty-five percent expect economic recovery in nine months to a year, 26 percent say one and a half to two years, and six percent think it will take more than two years. On the more optimistic side, 20 percent of the Bay Area CEOs polled think recovery will commence in three to six months and four percent believe it is already in recovery. National predictions were similar, if slightly less positive. The averaged prediction on the beginning of national economic recovery was just over 13 months.

"Considering the pain in other parts of the country, the Bay Area has weathered the current recession well, but with the planned layoffs - especially among our largest employers - we may yet suffer collateral damage," said Jim Wunderman, President and CEO of the Bay Area Council. "Despite the general pessimism, we are very pleased to see that Silicon Valley and smaller companies throughout the region are still strong and even hiring."

http://www.marketwatch.com/news/story/bay-area-ceos-planning-layoffs/story.aspx?guid=%7BCA55CC86-5A0C-4B0A-9DB9-D5E40BE524EF%7D&dist=hppr

[Pale Blue Dot]

44. Some good news for once: Ford cancels 230 layoffs at Kentucky Truck Plant

Well, good news for Kentucky, anyway:

Ford Motor Co. has reversed plans to cut 230 line workers in the body and paint departments at the Kentucky Truck Plant, company spokeswoman Angie Kozleski said yesterday.
Advertisement

Rather, Ford is keeping all three shifts of body and paint workers employed as it prepares to move production of the Lincoln Navigator and Ford Expedition large sport utility vehicles from Michigan to the Chamberlain Lane plant later this year, Kozleski said.

"We are working through the plans to bring the Expedition and Navigator to Kentucky Truck," she said.

The Kentucky Truck Plant is still operating well below capacity. Three shifts worth of body and paint crews produce the F-Series Super Duty trucks in four, 10-hour days. As such, workers labor one week on, two weeks off, until further notice, according to a plant bulletin.

http://www.courier-journal.com/apps/pbcs.dll/article?AID=/20080815/NEWS01/808150463

[Pale Blue Dot]

66. Layoffs, complaints plague SeedAmerica (I find this one disgusting)

Doing good, in SeedAmerica’s case, means taking donations of vacant industrial buildings, renting them to small businesses and using some of the proceeds to start a Christian-based business school.

In 2007, SeedAmerica CFO Wayne Norris, CEO Joseph Johnson and vice president Steve Shelby (from left to right) posed for a photograph outside their Alpharetta office. Johnson is the only one still with the company.

Companies that give their buildings to the Alpharetta-based non-profit can take a tax deduction that, in theory at least, is worth more than a sale.

Now, just three years after acquiring its first property, SeedAmerica is staggering. The company recently laid off the bulk of its workforce — about 50 people — after having little success leasing space and seeing its credit dry up.

“You’re getting buildings that have been sitting empty for years that other people couldn’t sell or lease,” said former SeedAmerica employee Dane Becker. None of the properties is in Georgia.

Becker and other ex-employees due thousands of dollars in back pay, and a development official in Illinois, are questioning SeedAmerica’s sincerity.

“I feel like we got bamboozled,” said Tracey McDaneld, economic director in Salem, Ill., a town of 9,000.

http://www.ajc.com/business/content/business/stories/2008/08/15/seedamerica_layoffs_complaints.html

[Pale Blue Dot]

75. Swift Galey - Marion, NC - 260 jobs lost

The Swift Galey textile plant in Marion will shut down in 60 days, putting 280 people out of work, company officials said.

The closing is another blow for McDowell County's economy. Last week, Cobia Boats announced that it would suspend production at its Marion facility on Aug. 29, leaving 68 people jobless.

McDowell County has an unemployment rate of 7.2 percent, above the state average.

Last January, Swift Galey announced it would downsize local operations from a seven-day/four-shift week to a five-day/three shift week and layoff 150 workers. Company officials blamed foreign competition.

http://www.mcdowellnews.com/servlet/Satellite?pagename=MMN/MGArticle/MMN_BasicArticle&c=MGArticle&cid=1173356065687

[UpInArms]

50. Derivatives Signal TAF Expansion Fails to Loosen Money Markets

http://www.bloomberg.com/apps/news?pid=20601087&sid=aT6ua_lCwyEQ&refer=home

Aug. 15 (Bloomberg) -- Interest-rate derivatives are signaling that the availability of funds has declined in the three days since the Federal Reserve made longer-term financing available to banks under its emerging lending program.

The difference, or spread, between the three-month dollar London interbank offered rate and the overnight index swap rate on contracts trading in the forwards market to December widened to 88 basis points from 84 basis points yesterday, according to Tullett Prebon Plc. The spread is an indirect measure of the availability of funds and banks' willingness to lend. For immediate delivery, the Libor-OIS spread has held steady at a three-month high of about 77 basis points this week.

The central bank auctioned $25 billion of 84-day loans to commercial banks on Aug. 11 under the Term Auction Facility, in addition to the sales of $935 billion in 28-day loans that have occurred since the program began in December. Banks and financial institutions have raised $352 billion of capital, while writing down $503 billion in losses related to the U.S. subprime mortgage crisis and the ensuing credit crunch since the start of 2007, according to data compiled by Bloomberg.

``A further narrowing of the three-month Libor-OIS spreads is contingent on continued capital raising by the banks,'' said Nick Parsons, head of markets strategy in London at NabCapital, a unit of National Australia Bank Ltd, the country's largest bank. ``The underlying issue here is that it is not the responsibility of the authorities to be providing permanent additions of longer-term liquidity. It's the job of the banking system to raise capital.''

...more...

[antigop]

51. Look what made today's WSJ: McCain's Son sat on troubled bank's board

I know this is not news here. I just found it interesting that the WSJ reported on it.

http://online.wsj.com/article/SB121876461747243159.html

Sen. John McCain's son served until last month on the board audit committee of a Nevada bank that is struggling to survive amid mounting losses and regulatory scrutiny.

Andrew K. McCain, 46, was on the board of Silver State Bancorp for five months before he resigned on July 25 for unspecified "personal reasons," according to a news release issued by the bank at the time.

A week after Mr. McCain's departure, the Henderson, Nev., company reported a loss of $62.7 million in the second quarter and said its capital -- the bank's cushion to absorb losses -- had eroded significantly. At the same time, Silver State announced the resignations of its chief executive and chairman.

[Tandalayo_Scheisskopf]

54. Hooooolllleee Merde!

Crude is now trading on the NYMEX at 112.02 and has been as low, today, as 111.71.

More to come, in more detail, as the figure out what is wrong with my regular source.

Check that: Now 111.56. Below 110 today? Seems the chocks are out.

[Ghost Dog]

85. Corn, Soybeans Decline as Rising Dollar Cuts Commodity Allure

Aug. 15 (Bloomberg) -- Corn fell the most in almost two weeks as the dollar approached a seven-month high, reducing the appeal of commodities as an investment hedge against inflation. Soybeans also dropped.

The dollar rose as much as 0.8 percent against a basket of currencies including the euro and yen, heading for its fifth straight weekly gain, on signs that an economic slowdown may reduce demand for raw materials. Investors and speculators have cut their agricultural holdings, as the number of open corn contracts on the Chicago Board of Trade dropped 21 percent since late February and soybean contracts slumped 36 percent.

``It is about unwinding all these trades,'' said Thomas Uhlmann, a floor broker for Penson GHCO in Chicago. ``Open interest is plummeting'' because the surge in China's economic growth that boosted raw-material demand before the Olympics is now over, he said.

/... http://www.bloomberg.com/apps/news?pid=20601012&sid=aJlE6vn7kzNQ&refer=commodities

[Ghost Dog]

86. Cotton Falls as Dollar Gain, Slowing Economy May Reduce Demand

Aug. 15 (Bloomberg) -- Cotton futures fell to the lowest price since May on speculation that a weaker economy will slow demand for textiles and clothing as a stronger dollar makes the commodity more expensive for buyers using other currencies.

/... http://www.bloomberg.com/apps/news?pid=20601012&sid=ayAjMH9b8Lk0&refer=commodities

[Ghost Dog]

87. Oil falls to $111 level on stronger US dollar

Oil prices fell to the $111 level Friday, reaching their lowest point in more than three months after the dollar muscled higher and OPEC predicted world demand for energy will keep falling.

Light, sweet crude for September delivery fell $3.26 to $111.75 a barrel on the New York Mercantile Exchange, after earlier falling to $111.34, its lowest since May 2 and more than $35 - or 24 percent - below oil's July 11 trading record above $147.

As high energy costs force countries around the globe to cut back on consumption, crude prices have plummeted and are now within striking distance of $100 a barrel, a level first reached Feb. 19.

/... http://www.forbes.com/markets/commodities/feeds/ap/2008/08/15/ap5328688.html

[Ghost Dog]

88. Slower economy saps climate action; oil a prop

By Alister Doyle, Environment Correspondent

OSLO (Reuters) - An economic slowdown is sapping enthusiasm for a costly drive to fight climate change but persistently high oil prices are a lifeline for a "green revolution" of renewable energy technology, experts say.

U.N. talks on a new climate treaty to be agreed in Copenhagen at the end of 2009 resume in Ghana from Aug. 21-27 -- overshadowed by worries about flagging growth and in an atmosphere soured by the collapse of world trade talks.

Weaker growth "will probably reduce the intensity of the negotiations," said Cameron Hepburn, an Australian environmental economist at Oxford University.

"But ought it to? The answer is a fairly clear 'No'."

Many climate experts say the cost of measures to curb greenhouse gas emissions from burning fossil fuels would be far less than the long-term damage of inaction -- more heatwaves, rising sea levels, disruptions to food output from droughts in some areas and floods in others.

"The green revolution is going to come anyway," said Denmark's Climate and Energy Minister Connie Hedegaard, the host of the planned U.N. meeting in December 2009 to agree a new U.N. pact, when asked about the impact of the economic slowdown.

And a drive to diversify away from oil unites everyone from left-wing green activists to the United States, alone among industrial nations in opposing the U.N.'s Kyoto Protocol capping greenhouse gas emissions in a first phase to 2012.

"We want to lessen our dependence on oil," said Paula Dobriansky, the U.S. Under Secretary of State who leads Washington's climate negotiations, when asked if economic woes would affect U.S. willingness to fight climate change.

DOUBLE ADVANTAGE

Investments in renewable energies give a "double advantage" -- easing dependence on oil and curbing greenhouse gases, she told Reuters. "It's going to be a challenging, complex process."

/... http://in.reuters.com/article/businessNews/idINIndia-35023620080815?rpc=401&=undefined&sp=true

[Buttercup McToots]

56. Catherine Austin Fitts was an insider in the first Bush administration.

Must read

Catherine Austin Fitts was an insider in the first Bush administration.

http://news.goldseek.com/GoldSeek/1218694140.php



An Analysis by Catherine Austin Fitts

If there is to be any blessing in this housing bill, perhaps it will be to so offend, so disgust those of us who are awake that the process of withdrawing from the old and reinvesting in the new models will accelerate. And maybe the smartest and most creative among us will be willing to invest the time and energy it takes to reinvent a model that incorporates what we like to think are traditional American values. These are the values that are enduring and make us proud to be Americans still. There is no hint of these values in the housing bill. There is, however, an abundance of them in the hearts and minds of the people.
—Excerpt from Part IX
This article originally appeared as a nine-part series on the Catherine Austin Fitts Blog.

[AnneD]

67. Payout Funds Offer No Guarantees for Retirees

UP UNTIL RECENTLY, aging workers who've done a good job saving up for their golden years had just a few ho-hum planning options for funding retirement: Buy an annuity, gradually draw down assets, or try to live off of dividend and interest income.

Each approach had disadvantages. Annuities, while guaranteeing income for life, tend to be loaded with fees. Drawing down assets is risky since you may outlive them. That leaves nothing for the grandkids, and you may end up at the mercy of offspring or Uncle Sam for financial support. Setting up a dividend and interest portfolio is complicated, and usually requires the services — and service charges — of a financial planner.

Thanks to all the money that's to be made off of the boomer generation, more products are coming on the market. Among the latest are Vanguard's new "managed payout" mutual funds, which launched this spring.

The basic gist is to offer ordinary folks an endowment-like retirement account that will both produce monthly income and preserve or grow principal. The funds can always be accessed for unexpected costs and be bequeathed to heirs, unlike annuities, which lock up your money. Generally, you'd need to pay a financial planner to build such a portfolio. Now, Vanguard has conveniently packaged the strategy into a single-step purchase of a mutual fund. The catch? It's risky business for people who don't have cushioning elsewhere.

more....

http://www.smartmoney.com/ticked-off/index.cfm?story=20080731-payout-funds

The boomers will be screwed and our children pawned (pun intended).

[AnneD]

68. A slice of Steffy for lunch.......

Attorney generals' group acts as shadow regulator

Forbes' Dan Fisher has an excellent piece on the finances of the National Association of Attorneys General, which goes by the wonderful acronym NAAG. It's a little-known group whose members, as the name implies, are the attorneys general from each state.

Thanks to the $260 billion settlement with tobacco companies in 1998, the NAAG's coffers are fat these days -- about $140 million. It uses the money, in part, to help the state AG's look for antitrust and consumer fraud violations, coordinate legal efforts and provide advice.

"This is a de facto regulatory agency, they just don't call it that," says Michael S. Greve of the conservative American Enterprise Institute. "It corresponds to nothing we know about the constitutional landscape."

The targets of multistate actions include Microsoft, which still operates under an intricate set of rules devised by lawyers working for the states and the Department of Justice; Bristol-Myers Squibb, which paid the states $58 million to settle antitrust claims over its Taxol cancer drug in 2003; and Household International and Ameriquest, which paid $809 million to settle predatory-lending cases. More recent targets include MySpace (online safety for minors), Guidant ($16.8 million for selling allegedly defective defibrillators) and AOL (consumer complaints).

more.....

http://blogs.chron.com/lorensteffy/

[AnneD]

69. From the "Can't Win for Losing " file...

The cost of living, led by the soaring cost of gasoline and food, is rising at the fastest rate since the recession of the early 1990s, the government said on Thursday, handing a de facto pay cut to the American worker.

The report, from the Labor Department, offered quantitative proof of what Americans have been feeling for months: almost everything costs more, even as they have less money to pay for it.

Prices of a wide range of common products in the Consumer Price Index were 5.6 percent higher last month than they were in July 2007, the sharpest annual increase since January 1991.

<snip>

In July, rank-and-file workers — those in production or nonsupervisory roles — earned 3.1 percent less than they did a year ago, after adjusting for the rising cost of living.

<snip>

The Federal Reserve can try to choke off inflation by raising its benchmark interest rate. But such a move would also make it harder for businesses, banks and households to obtain loans, which could cause a further slowdown in the economy. Investors now expect the Fed to hold rates steady until at least the end of the year.

http://www.nytimes.com/2008/08/15/business/economy/15econ.html?_r=1&ref=business&oref=slogin



And this loss of buying power lately is ON TOP OF the flat wages most folks have had since the late 70's (adjusted for inflation). It's like Alice in Wonderland-the faster you run the further behind you get. :crazy:

[AnneD]

70. The case against retirement

Christine Fahlund, a senior financial planner at investment manager T. Rowe Price, stopped by and shared a cool chart showing how much more money you get in retirement if you keep working for even just a few more years. It wasn't the first time she's had this conversation, but I still thought it was interesting—perhaps even useful?—enough to post. First I'll give you the chart, and then after the break I'll talk a little more about it (just click on "Read full entry").


There are a few other assumptions explained elsewhere in the report that this chart comes from. The person we're crunching these numbers for makes a salary of $100,000, has $500,000 in tax-deferred savings at age 62, lives in a universe with 3% inflation, and has an asset allocation of 40% stocks, 40% bonds and 20% short-term bonds and cash.

So let's put some numbers to it. If this person retires at age 62, he'll get about $37,000 a year—from Social Security and withdrawing 4% of his $500,000 nest egg. (Four percent is what Fahlund recommends.) If, though, he waits five more years, until age 67, he'll collect between 38% and 50% more, depending on how much he continues to save. If during those last five years of working, he saves 25% of his salary, he'll wind up collecting more than $55,000 a year in retirement. If he keeps working and saves at a rate of 15%, he'll get more than $53,000 annually.

But here's the ringer. By working five more years and not saving any of that additional money, he'll still see his annual take-home during retirement jump to more than $50,000. In other words, it's not about saving more; it's about preserving your existing retirement funds longer and putting off collecting Social Security (which, in the end, gets you more).

more....


http://time-blog.com/curious_capitalist/2008/08/the_case_against_retirement.html

Read the comments on this one. Really takes some of the air out of this argument. Useful when they try to sell us this bull, and you know it's coming.

[llmart]

90. Here's my take on this....

I am 59, my husband is 60. We are both college graduates and white collar professionals. Life is a crap shoot and in reality people have very little control over much of anything. They do not control how long they'll live. You can plan until you're blue in the face - do everything they preach you do, but if you've lived long enough and through many different economic cycles, you will, if you have any common sense, realize that you'd be better off not reading or listening to any of this propaganda and just use common sense. Telling people they should work until they are 67 or 70 is ludicrous! Yeah, like there are so many places out there that are just screaming for a 67-year old employee when there are millions of younger people out of work. And what about health issues? I took very good care of my health my adult life but developed a back problem, while not life threatening, limits the kind of work I can do. I can't sit for long periods of time and I have bad feet, so can't stand for long periods of time. I don't care how healthy you are, bodies age and break down.

So, let's get real here. I intend to collect my social security at 62. If I don't need it, I'll bank it, but I'm going to get it while I can. And my children can make their own way and if there's money left when we die, they'll get it. If not, they'll survive.

There's a reason they target us baby boomers with all this financial planning crap. We're the largest generational group ever!

[AnneD]

71. Survey Finds Nearly Three-Fourths of Americans Want Federal Regulation of the Credit Card Industry

AUSTIN, Texas--(BUSINESS WIRE)--CreditCards.com’s Second Annual Taking Charge survey revealed today that 73 percent of Americans want the government to regulate the credit card industry more closely; and 58 percent of Americans expressed a distrust of credit card companies. Most consumers (78 percent), however, acknowledge that many people make little attempt to understand the credit card information they have and do not read the terms of their credit card offers.

The national poll is an annual snapshot of America’s relationship with credit cards and was conducted by GfK Roper Public Affairs & Media for CreditCards.com, the leading online credit card marketplace that helps consumers make smart credit card choices. (Read the complete article at www.creditcards.com/regulate.)

“The Taking Charge results illustrate the public’s hostility towards the credit card industry,” said Ben Woolsey, Director of Marketing and Consumer Research for CreditCards.com. “Amidst the hostility, however, 82 percent of Americans still say credit cards provide a valuable service and are essential to have today.”

According to Woolsey, the negative effects of recent years’ underwriting standards have cast a spotlight on the responsibilities that credit lenders have to their borrowers. Though legislation like the Credit Cardholder’s Bill of Rights continues to advance in Congress, Woolsey urges consumers to do their part to learn more about credit card issues in order to better understand their current rights and obligations as card holders.

more...

http://www.businesswire.com/portal/site/topix/index.jsp?ndmViewId=news_view&newsId=20080813006153&newsLang=en&ndmConfigId=1000639&vnsId=41

I think a growing number of folks are opting out entirely....

[depakid]

74. The Dems could have made a lot of populist hat over consumers issues like this

Instead, they chose to be complicit over the past 20 years- and lose elections in the process..

[Dr.Phool]

78. You mean all those Blue Dogs and "New Democrats" who demanded

Hastert hurry up and bring the bankruptcy bill up, so they could vote for it?

Or the Shoomer's who think hedge fund operators are over taxed?

[AnneD]

80. Those are some of our more....

shameful DEMs. I could see those DEMs in Delaware and Connecticut and those states that are centers for the credit card industry because that is their constituency and a very large employer...but the rest that voted for it....shame shame.

[AnneD]

81. And they sit around scratching their collective asses....

wondering why their approval rating is lower that Bush's. We all know Bush is an idiot, they however should know better. They represent us!

[Demeter]

77. I Opted Out 10 Years Ago

Haven't missed the plastic and the fees and the incomprehensible boilerplate, either.

[depakid]

79. Some of the new applications they send out are over the top

Reading the fine print, there are hidden and not so hidden fees for everything from raising the credit limit, to minimum finance charges on each transaction.

I imagine some poor suckers are still snapping these up "to improve their credit scores" or for the "prestige" of whipping out a "Platinum" card.

[AnneD]

82. I read them all the time now...

even the fine print. They are funnier than the comics. I love the ones where they will give you a 200 credit limit and charge you $50 annual fee. Oh and all this for 19%. How about I save 200 and keep 1/4 myself and get 3% while it's sitting there until I have an emergency. Oh, and by the way, I have more than $200 in my emergency fund. Thanks but no thanks, I'd rather play the lottery if I'm throwing money around. At least I have a chance to win something.

[Ghost Dog]

89. On the economy of the dead, By John Berger

From Left Curve: No. 31. Berger’s most recent work of fiction, From A to X, is out this month from Verso. His “Portrait of a Masked Man” appeared in the April issue of Harper’s Magazine.

1. The dead surround the living. The living are the core of the dead. In this core are the dimensions of time and space. What surrounds the core is timelessness.

2. Between the core and its surroundings there are exchanges, which are not usually clear. All religions have been concerned with making them clearer. The credibility of religion depends upon the clarity of certain unusual exchanges. The mystifications of religion are the result of trying to produce such exchanges systematically.

3. The rarity of clear exchange is due to the rarity of what can cross intact the frontier between timelessness and time.

4. To see the dead as the individuals they once were tends to obscure their nature. Try to consider the living as we might assume the dead to do: collectively. The collective would accrue not only across space but also throughout time. It would include all those who had ever lived. And so we would also be thinking of the dead. The living reduce the dead to those who have lived, yet the dead already include the living in their own great collective.

5. The dead inhabit a timeless moment of construction continually rebegun. The construction is the state of the universe at any instant.

...

12. How do the living lie with the dead? Until the dehumanization of society by capitalism, all the living awaited the experience of the dead. It was their ultimate future. By themselves the living were incomplete. Thus living and dead were interdependent. Always. Only a uniquely modern form of egotism has broken this interdependence. With disastrous results for the living, who now think of the dead as eliminated.

/... http://harpers.org/archive/2008/09/0082164

--> More here, Left Curve 31: http://www.leftcurve.org/lc31webpages/John%20Berger.Poems.html

( See Left Curve 31 contents here: http://www.leftcurve.org/lc31webpages/lc31toc.html )

[Demeter]

92. If We Are Discussing Fiction Authors, One of My Favorites Died This Spring

I only found out by accident that Robert Asprin succumbed to a heart attack May 22nd of this year.

He wrote the inventive "Myth" series and some others. He mostly explored economic models and business practices in science-fictional contexts, but doesn't promote any particular point of view (unless it's every man for himself).

His writing is very entertaining and readable. I especially like the Myth series for the atrocious puns and reworkings of many a great comedy. It's designed on the Bob Hope and Bing Crosby Road movie schtick with lots of other familiar tricks thrown in. His female characters lack character, perhaps, but that's par for a male writer since the Victorian age died.

If you have some time and a sense of humor, they are great beach books.

[ozymandius]

93. end of the day stuff

Mostly winners again today. Mischief managed.

Dow 11,659.90 Up 43.97 (0.38%)
Nasdaq 2,452.52 Down 1.15 (0.05%)
S&P 500 1,298.20 Up 5.27 (0.41%)
10-Yr Bond 3.8520% Down 0.0400
NYSE Volume 4,101,856,500
Nasdaq Volume 1,797,293,250

4:15 pm : The week's final trading session concluded in mixed fashion as results were mixed across the major indices. The Dow and the S&P 500 closed the session up 0.4%, yet the Nasdaq posted a modest decline of 0.1%. For the week, the Dow closed 0.6% lower and the S&P 500 finished 0.1% higher, while the Nasdaq posted a healthy gain of 1.6%.

Participants initially pushed the major indices higher as several retailers provided better-than-expected earnings per share results and a strong dollar helped undercut commodity prices further. Yet the sense of bullishness during the early going waned in afternoon trade as retailers lacked the strength to help the broader market and no market-moving leader emerged.

Kohl's (KSS 51.79, +3.52), Nordstrom (JWN 31.54, +1.32), JCPenney (JCP 39.94, +3.11), and Abercrombie & Fitch (ANF 52.59, +0.02) each announced earnings per share results that exceeded analysts' dour estimates. The upside surprise is indicative that the consumer has not rolled over. However, the retailers did issue cautious guidance, indicating a lack of confidence in the coming quarters. In the end, retailers finished the session 1.8% higher, besting the major indices again.

Helping improve investors' outlook for retailers was another drop in oil prices, thanks largely to a stronger dollar. The dollar index climbed nearly 0.7% as crude shed more than 1% to settle below $114 per barrel. Strength in the greenback also helped push the CRB Commodity Index roughly 1.8% lower. Crude prices are still up more than 18% year-to-date and the CRB is up 6.6% year-to-date.

The weakness in commodities pushed the energy sector 1.8% lower and materials 0.4% lower.

The financial sector was unable to sustain hefty gains from early in the session. Though settling 1.1% higher, the sector was touting a 2.6% advance shortly after opening bell. Financials have been mired somewhat during recent sessions by uncertainty surrounding auction rate securities settlements. Allegations have been made against several major Wall Street firms that clients were duped into purchasing what were marketed as safe investment vehicles, but they later proved to be risky and illiquid.

Participants looked past a batch of economic data that indicated manufacturing activity is holding up better than anticipated. Industrial production climbed 0.2% during July, which follows a 0.4% increase in June. Economists expected the latest reading to be flat.

Additionally, the Empire State Manufacturing Index, a regional survey of manufacturers conducted by the New York Fed, came in at 2.8. It was expected to come in at -4.2. DJ30 +43.97 NASDAQ -1.15 NQ100 -0.4% R2K -0.1% SP400 -0.1% SP500 +5.27 NASDAQ Adv/Vol/Dec 1347/1.77 bln/1463 NYSE Adv/Vol/Dec 1639/1.17 bln/1455