STOCK MARKET WATCH, Friday August 29

[ozymandius]

Source: du

STOCK MARKET WATCH, Friday August 29, 2008

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 145
DAYS SINCE DEMOCRACY DIED (12/12/00) 2777 DAYS
WHERE'S OSAMA BIN-LADEN? 2502 DAYS
DAYS SINCE ENRON COLLAPSE = 2793
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 28, 2008

Dow... 11,715.15 +212.64 (+1.85%)
Nasdaq... 2,411.64 +29.18 (+1.22%)
S&P 500... 1,300.68 +19.02 (+1.48%)
Gold future... 837.20 +3.20 (+0.38%)
30-Year Bond 4.39% +0.01 (+0.14%)
10-Yr Bond... 3.80% +0.02 (+0.61%)






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. Broken Systems & Dysfunctional Mechanisms

by Jim Willie, CB. Editor, Hat Trick Letter | August 28, 2008

The highest functions of the financial system have finally broken to the point where smart and connected people are openly making comments. Shortages are acute, to the point where low prices for gold & silver, for instance, render supply as inadequate to meet huge growing demand that wants to exploit the artificially low prices. Even the USTreasury Bonds are enjoying artificially high prices, undoubtedly an extension of the colossal usage of US Federal Reserve lending swap facilities. They print new USTBonds and exchange new third world (US) government debt securities for acidic US mortgage bonds, some hastily cobbled into securities by ailing lending institutions from cratered mortgage loans portfolios. It seems the US Federal Reserve and the Euro Central Bank might accept bonds from English, German, and possibly Swiss sources soon. That seems fair, since they contributed to making vacant US mortgage bonds look attractive.

The market systems are broken, and dysfunctional mechanisms are limping along, as corrupt paper instruments have flooded the financial system to the point of wrecking the commodity markets entirely. If such words seem prone to hyperbole or silly exaggeration, consider that some specific markets are depleted of supply and cannot honor current prices. Those prices have been recently established by force, by the future contracts, all under the watchful eyes of regulators who are totally asleep, corrupt, in the pocket of Wall Street, and whose desks are occupied by means of revolving doors and chairs with Wall Street firms. Just try to imagine the Mafia crime syndicates regulated by agencies whose officials are retired Mafia dons. Let’s examine some mechanisms and a couple weak links to the phony price structure that provides intricate linkage among the USDollar, gold, crude oil, and USTreasury Bonds.

.....

BROKEN SYSTEMS – SEE BANKS

A good preface can be told regarding the short rule restriction applied to the bank stocks. They faced annihilation, so they appealed the change the rules. Refer back to a favorite quip of mine, that when billionaires are soon to be ruined, they make a phone call and change the rules. The short rule restriction triggered a short squeeze rally that killed off some hedge funds. As they reacted, they were forced to sell other positions. They tended to liquidate their crude oil contracts that were puffed up recently. One thing led to another. The USDollar benefited from not only the bank stock dead-cat rally and crude oil selloff, but the absurdly corrupted economic growth report about Q2 Gross Domestic Product. The claimed Q2 GDP rise of 1.9% was revised up to a 3.3% silly story. The key element to expose the ridiculous US growth story claim is that the GDP Deflator series was revised from 1.11% to 1.33% in a way that should cause raucous laughter. Price inflation in the second quarter, when the CPI was rising enough to cause alarm, when energy prices were hitting record highs, was so perilously close to zero??? Methinks not! The lie is 4% even within the corrupted USGovt statistics, if consistency is desired with the faulty Consumer Price Inflation index. The 3.3% GDP revised from strong exports should be minus 1%. The same report cited a PCE price index of 4.2% for Q2 (close to recent 5% CPI figures). So the USGovt provides clues of their own doctored numbers, and expects you will do nothing in pursuit.

.....

Let us not forget the don of Manhattan Made Men Robert Rubin. Looking a bit nervous and frazzled, he publicly announced the need for banks no longer to mark their assets to market. Nice try, what gall, Bob! He urges the creation of a new government sponsored Garbage Can, or as he described it, a clearinghouse for credit derivatives. Surely a maneuver from the sublime to the ridiculous, and now to build a giant pink elephant to sit in the Wall Street board rooms, but without the voting privilege. Apparently, the Garbage Can managed by JPMorgan is not big enough, or broad enough, or deep enough. They want one with official USGovt sponsorship and moniker. That might be because the JPMorgan monstrosity is attracting too much attention. One way to relieve pressure to address the corruption caused by JPMorgan on currencies, Treasuries, crude oil, gold & silver with outrageous uneconomic paper futures contract positions is to put much of that corrupt duty under the aegis of the largest criminal enterprise foundation on the planet, the USGovt.

http://www.financialsense.com/fsu/editorials/willie/2008/0828.html

[ozymandius]

8. So Why Does It Feel Like a Recession?

The preliminary GDP release yesterday provided a number of surprises. The first surprise was not that GDP was higher than the advance release (given the June trade figures reported earlier this month), but rather that at 3.3% it exceeded the 2.8% (SAAR) of the consensus (0). The second surprise is that the reduction in imports comprises an even larger proportion of the overall growth.

Let's turn first to the surprise. The change in the contribution due to net exports was anticipated, given the release of the monthly trade figures for June, which were unavailable at the time of the advance release. However, one big change was in the contribution of inventories. Apparently, they decreased by a smaller amount (-1.44 ppts vs. originally estimated -1.92 ppts). While this increases GDP in 08Q2, this might suggest a bigger reduction in output in the current quarter, as pro.ducers seek to match inventory stocks to anticipated output.

.....

It's clear that the amount that we're expending on (from consumers, businesses, and government) is barely growing; given q/q annualized growth of 0.3 ppts (log terms), it's essentially zero. So the factories may be humming, but that's because exports are up, thereby illustrating how much continued growth in GDP depends upon the trends in the rest of the world.

Figure 4 illustrates why -- as noted earlier -- the GDP deflator does not jibe with what we as consumers see. It's because the prices for what we produce have diverged in a significant way from the prices for what we consume.

http://seekingalpha.com/article/93180-so-why-does-it-feel-like-a-recession

[Demeter]

11. He's In a Snit, Isn't He?

It's nice not to feel alone, and to have someone closer to the inside start spilling some of the facts and analysis....

This blog confirms all my tinhat fears.

[ozymandius]

14. He calls it like he sees it.

I like Jim Willie. Sometimes it takes a firebrand full of vitriol to demonstrate the "new math" used to calculate GDP defies the basic numerical concept of absolute value. In this case - the absolute value of 1 is no longer 1. These clown hat economists are just making shit up as usual.

[Ghost Dog]

20. "the largest criminal enterprise foundation on the planet, the USGovt." is good. n/t

[Hugin]

44. Lately, I've been thinking they need to add a negative value to the GDP calculation...

Like maybe something to cover write-offs and inflation.

Right now the equation looks something like this...

Y = C + I + E + G

where

Y = GDP

C = Consumer Spending

I = Investment made by industry

E = Excess of Exports over Imports

G = Government Spending

As you can plainly see, in it's current state this is a gadfly equation... Always non-negative.

So, a proper and realistic equation would be along the lines of the following...

Y = C + I + E + G - V - COI

where

Y = GDP

C = Consumer Spending

I = Investment made by industry

E = Excess of Exports over Imports

G = Government Spending

V = Vapor money... Write-offs, Questionable loans, Money created for Bailouts, War Funding... etc.

COI = The inherent Cost-Of-Inflation.

But, it'll never happen.

http://www.mindtools.net/GlobCourse/formula.shtml

[DemReadingDU]

46. Karl Denninger: Economic Numbers - Can Any Be Trusted?

8/28/08
So Revised 2Q GDP comes out and results in a big spike in the S&P 500 futures, followed by the second half of two-day rally.

Now I (and many others) have always expected that the "deflater", that is, the inflation index (which must be taken off GDP because you're interested in real growth, adjusted for inflation) will be understated.

But what nobody expected was that we would see outright, blatant lies.


Do you actually expect me to believe that profits of financial corporations increased by $24.7 billion (or that they did so in the first quarter either)?

Am I smoking something or did not the financial sector report decreasing profits in the second quarter, and in fact, many reported absolutely stunning losses?

An increase on-balance? You expect me to believe that?

You must be joking.

Denninger then explains the numbers...
http://market-ticker.denninger.net/archives/2008/08/28.html

[UpInArms]

35. Copper market deficit 155,000 T in Jan-May-ICSG

http://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSN2929792420080829

 NEW YORK, Aug 29 (Reuters) - World refined copper consumption exceeded
production by 155,000 tonnes between January and May his year, versus a
deficit of 238,000 tonnes in the same year-ago period, the International
Copper Study Group (ICSG) said in its latest monthly bulletin.

 The Lisbon-based ICSG said world refined copper output in January to
May was 7.553 million tonnes, while consumption totaled 7.708 million
tonnes.

 World refined copper consumption and supply trends, 2007-2008, in
thousands of tonnes:
                               Jan-May 08    Jan-May 07
 World mine production              6,187         6,387
 World mine capacity                7,536         7,320
 Mine capacity utilization (pct)     82.1          87.2
 Primary refined production         6,415         6,318
 Secondary refined production       1,137         1,135
 Refined production                 7,553         7,453
 (secondary+primary)
 World refinery capacity            9,201         8,817
 Refinery capacity utilization (pct) 82.1          84.5
 World refined consumption          7,708         7,691
 Refined stocks (end of period) (1)   837           924
 Period stock change                 -156          -169
 Refined surplus/deficit (2)         -155          -238
 Refined surplus/deficit               31           -79
 (seasonally adjusted) (3)

 (1) = Refined stocks include those held in the exchanges, producers,
consumers, merchants and governments.

 (2) = Surplus or deficit is calculated using total refined production
minus refined consumption.

 (3) = Surplus or deficit is calculated using seasonally adjusted
refined production minus seasonally adjusted refined usage.

[ozymandius]

2. Today's Reports

08:30 Personal Income Jul
Briefing.com -0.5%
Consensus -0.2%
Prior 0.1%

08:30 Personal Spending Jul
Briefing.com 0.3%
Consensus 0.2%
Prior 0.6%

09:45 Chicago PMI Aug
Briefing.com 50.5
Consensus 50.0
Prior 50.8

10:00 Mich Sentiment-Rev. Aug
Briefing.com 63.0
Consensus 62.0
Prior 61.7

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

[UpInArms]

34. personal income down 0.7% -real consumer spending down 0.4%-inflation yr-on-yr up largest since 9/06

01. U.S. July PCE core inflation yr-on-yr up largest since 9/06
8:30 AM ET, Aug 29, 2008

02. U.S. July PCE core inflation up 2.4%, yr-on-yr
8:30 AM ET, Aug 29, 2008

03. U.S. July PCE core inflation up 0.3% as expected
8:30 AM ET, Aug 29, 2008

04. U.S. July real consumer spending drop biggest since 6/04
8:30 AM ET, Aug 29, 2008

05. U.S. July real consumer spending down 0.4%
8:30 AM ET, Aug 29, 2008

06. U.S. July personal income biggest drop since Aug. '05
8:30 AM ET, Aug 29, 2008

07. U.S. July personal income down 0.7% vs. 0.4% expected
8:30 AM ET, Aug 29, 2008

[UpInArms]

36. July consumer spending slows, inflation jumps

http://www.reuters.com/article/ousiv/idUSN2834686220080829

WASHINGTON (Reuters) - Personal income tumbled unexpectedly in July and spending slowed as the effects of government stimulus wore off and an inflation measure was at a 17-year high, a government report released on Friday showed.

Personal income fell 0.7 percent in the month, the sharpest decline since a 2.3 percent plunge in August 2005 after Hurricane Katrina, the Commerce Department said. Analysts were expecting July income to stay flat.

Consumer spending, which accounts for about two-thirds of national economic activity, rose 0.2 percent, as expected, the slimmest gain since February, after gaining 0.6 percent in June. However, inflation-adjusted spending dropped by 0.4 percent, the sharpest slide in four years.

Inflation, as measured by the year-over-year rise in the personal consumption expenditures index, rose 4.5 percent, the steepest since February 1991, the government said. When volatile food and energy costs were stripped out, the core PCE rose 2.4 percent, the biggest since February 2007.

...a bit more...

[UpInArms]

37. inflation "rose 4.5 percent, the steepest since February 1991"

errr... let's think about that one - who was in office in February 1991?

oh yeah!

that't the ticket!

it was Dimson's Poppy!

[UpInArms]

42. yippee! UMich is at 63! We're so freakin' happy!

01. U.S. Aug. UMich consumer sentiment 63 vs. 62 expected:report
9:57 AM ET, Aug 29, 2008

03. CORRECT U.S. Aug. Chicago PMI 57.9% vs 50.8% in July
9:49 AM ET, Aug 29, 2008

[UpInArms]

45. Milwaukee's August business activity slips for the sixth month

http://www.reuters.com/article/economicNews/idUSCHB00052220080829

CHICAGO, Aug 29 (Reuters) - Business activity in the Milwaukee, Wisconsin region contracted in August for a sixth consecutive month, hit by a drop in new orders, a report showed on Friday.

The Institute for Supply Management-Milwaukee's business barometer slipped to a seasonally adjusted 43 from 44.

A reading below 50 shows contraction in Milwaukee's manufacturing-heavy regional economy. A year ago the index was at 63.

New orders fell to 40 points from 44, while production rose to 37 points from 34. Order backlogs were down a point at 47 while supplier lead times jumped to 45 from 38.

Capital equipment spending dropped three points to a still-robust 63.

The index measuring the region's blue-collar employment dropped to 42 from 52, while white-collar employment fell to 48 from 52.

...more...

[Hugin]

52. *tsk* I guess they need to get with the program and start exporting refined petroleum products.

Make that GDP grow! :eyes:

[54anickel]

54. From the sounds out my windows, Harley and the area dealers, bars and club will be doing well for

this weekend at least....sort of the last hurrah. Been like this all day everyday this week.





Now Harley's betting on women bikers to save the day.....seems women rule 2008 in more ways than just presidential politics

Didn't they just cut 700 jobs this year?

http://www.wisn.com/entertainment/17326529/detail.html
Harley Will Bank On Female Riders During Rough Economy

snip>

Ziemer sees a goldmine in female riders.

“Ten years ago, about 2 percent of our customers were females, and now it's about 12 percent,” Ziemer said.

Harley is making some bikes smaller and making women more confident with education.

For Michele Klimke, the dream of owning a hog has always been there, she just thought it would come true when pigs fly.

Klimke waited 30 years to save enough cash to buy the bike she calls “George.”

“I always liked the sound of a Harley, the look of the Harley, and so I knew that's what I wanted,” Klimke said.

That desire is what Harley Davidson in banking on for the future. They are confident that someday the brand will break through the ceiling.

Harley Davidson told 12 News its long-term goal is to increase its female market share to 25 percent.

The company is also pouring money into engineering and marketing to try and boost sales.

[54anickel]

55. Oh yeah, and I'd be remissed if I didn't mention Knucklefest just down the road from here

http://vids.myspace.com/index.cfm?fuseaction=vids.individual&VideoID=28733252

http://www.knucklefest.com/index.html



Wonder if I'll be posting bail for the beloved nephews again this year. :hippie:

[AnneD]

63. My Bradah....

Has been catering at Sturgis for years. It gets wild out there. Told my daughter she could work it with him but she had to be 18.

[54anickel]

65. We don't get quite as wild as Sturgis - but this is only the 3rd year. Locals have a

love/hate relationship with the sponsoring bar. The owner is a nice guy and gives part of the proceeds from this and his Rallies to the Park & Rec department - talk about your fine PR. The first year the local authorities were out with freaking decibel meters handing out noise ordinance tickets - they've backed off considerably now. Found it was political suicide to run off visitors with $$$ in a small, dying town.

[ozymandius]

3. Oil rises in Asia on fears Gustav will hit Gulf

SINGAPORE - Oil prices rose above $117 a barrel Friday on expectations tropical storm Gustav will soon enter the Gulf of Mexico area, home to a quarter of U.S. crude supplies and 40 percent of its refining capacity.

Light, sweet crude for October delivery was up $1.44 at $117.03 a barrel in electronic trading on the New York Mercantile Exchange by midafternoon in Singapore. The contract fell $2.56 overnight to settle at $115.59 a barrel.

Early Friday, the storm was centered on Jamaica's southwest coast, about 60 miles (95 kilometers) west of Kingston, Jamaica after Gustav triggered floods, mudslides and falling trees that killed 59 people in Haiti and eight more in the Dominican Republic. Forecasters said it could strengthen into a hurricane before slamming into Grand Cayman on Friday.

....

In other Nymex trading, heating oil futures rose 3.04 cents to $3.213 a gallon, while gasoline prices gained 2.80 cents to $3.049 a gallon. Natural gas for October delivery rose 9.1 cents to $8.141 per 1,000 cubic feet.

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

[ozymandius]

4. Spring's economic rebound unlikely to last

WASHINGTON - The economy pulled out of a dangerous rough patch in the spring, thanks largely to strong exports, but the rebound isn't expected to last. Economic slowdowns overseas could make exports tail off just as Americans are hunkering down after the bracing impact of rebate checks wanes, plunging the country into another rut later this year.

....

Gross domestic product, or GDP, grew at a 3.3 percent annual rate :rofl: in the April-June quarter, its fastest pace in nearly a year, the Commerce Department reported Thursday. The revised reading was much better than the government's initial estimate of a 1.9 percent pace and exceeded economists' expectations for a 2.7 percent growth rate.

The rebound followed two dismal quarters. The economy actually shrank in the final three months of 2007 and barely budged in the first quarter at a minuscule 0.9 percent pace. The 3.3 percent growth in the spring was the best performance since the third quarter of last year, when the economy was chugging along at a brisk 4.8 percent pace.

....

Federal Reserve Chairman Ben Bernanke has warned the economy will be weak through the rest of 2008. Economists believe growth will slow in the July-September quarter to a pace of around 1.5 percent, and will turn even weaker in the fourth quarter. Some, including Regalia, think the economy might jolt into reverse yet again.

http://news.yahoo.com/s/ap/20080828/ap_on_bi_go_ec_fi/economy

[ozymandius]

5. Sears' 2Q profit drops 62 percent

CHICAGO - Beleaguered retailer Sears Holdings Corp. reported a hefty drop in second-quarter profit as sales slumped, despite a restructuring aimed at drawing back shoppers who've taken their checkbooks elsewhere.

The company led by financier Edward Lampert also delivered a downbeat outlook, predicting sales and gross profit margins will feel continued pressure from the sluggish economy.

.....

Sears said Thursday that it earned $65 million, or 50 cents per share, in the three months ended Aug. 2. That's down 62 percent from a year-ago profit of $173 million, or $1.15 per share. Excluding the effect of the reversal of a $62 million reserve item, earnings per share were 21 cents for the second quarter.

Revenue fell to $11.76 billion from $12.26 billion a year earlier. Same-store sales, or sales at stores opened at least a year, dropped 6.2 percent in the U.S. Same-store sales are considered a key indicator of a retailer's health.

http://news.yahoo.com/s/ap/20080828/ap_on_bi_ge/earns_sears_holdings

[ozymandius]

6. Lehman looking at cutting some 1,200 jobs: source

NEW YORK (Reuters) - Lehman Brothers Holdings Inc (LEH.N) is looking at cutting some 1,200 jobs in its latest round of cost cutting, a person familiar with the matter said, as weak financial markets spur layoffs across Wall Street.

The job cuts would amount to roughly 5 percent of the work force of the fourth-largest U.S. investment bank, which has already announced three other rounds of cuts totaling about 4,000 positions this year.

The precise number of staff to be laid off in this most recent round is still being determined, the person familiar with the matter said. Lehman declined to comment.

....

Investors fear that write-downs of its commercial and residential mortgage assets could be large enough to dramatically reduce the company's net worth, which stood at about $26.3 billion at the end of May.

http://news.yahoo.com/s/nm/20080828/bs_nm/lehman_jobs_dc

[ozymandius]

7. Delphi liquidation looms large: report

(Reuters) - Chances of bankrupt U.S. auto parts maker Delphi Corp (DPHIQ.PK) being liquidated are increasing, with some U.S. plants being taken over by its former parent General Motors Corp (GM.N), the Wall Street Journal said, citing people involved in the bankruptcy process.

Even if that doesn't happen, GM's financial obligation could grow by billions of dollars, the paper said.

....

Delphi, which filed for bankruptcy protection in October 2005, was about to exit bankruptcy protection in April when hedge fund Appaloosa Management LP and other investors pulled out of a plan that would have provided up to $2.55 billion to support Delphi's reorganization.

That left Delphi scrambling for alternatives...

http://news.yahoo.com/s/nm/20080829/bs_nm/delphi_dc

[UpInArms]

24. GM says automakers deserve $50 billion in federal loans: report

http://news.yahoo.com/s/nm/20080829/bs_nm/generalmotors_dc

(Reuters) - Automakers deserve as much as $50 billion in government-backed loans so that they can build more fuel-efficient cars, according to a top General Motors (GM.N) executive, the New York Times reported.

This is double the amount being currently sought by the big three Detroit-based automakers as they struggle to ride out a steep downturn in U.S. auto sales.

The automakers have already made considerable progress in transforming themselves and the government should help them proceed faster, GM Vice Chairman Robert Lutz said.

"The American auto industry is deserving of government loan guarantees," Lutz said.

The automakers also want more money given the sudden jump in consumer demand for fuel efficiency and they are urging Congress to act by the end of September so that the money can be available next year.

[54anickel]

47. "As GM goes, so goes the Nation"....so who will we be shaking the tin cup at?

I'm beginning to see this one in an entirely new light.....

[UpInArms]

53. tin cup or tin can? GM recalls 857,735 vehicles for electrical problems

http://www.reuters.com/article/ousiv/idUSN2942792520080829

DETROIT (Reuters) - General Motors Corp is recalling 857,735 vehicles equipped with a heated windshield wiper fluid system for a potential short-circuit problem, according to federal safety regulators.

A short-circuit in the system may cause other electrical features to malfunction, create an odor or cause smoke, increasing the risk of a fire, the National Highway Traffic Safety Administration said on its website.

The recall involves the 2007-2008 model year Chevrolet Silverado, Tahoe, Avalanche and Suburban, Cadillac Escalade, Escalade ESV and Escalade EXT, GMC Acadia, Sierra, Yukon, Yukon XL and Saturn Outlook; 2006-2008 Hummer H2, Cadillac DTS and Buick Lucerne; and the 2008 Buick Enclave.

GM plans to install a wire harness with an in-line fuse free of charge to fix the problem, NHTSA said.

Separately, GM is also recalling 88,809 2008-model year Buick Enclave, and 2007-2008 model year GMC Acadia and Saturn Outlook SUVs in 28 states and Washington, D.C..

...more...

[54anickel]

57. GM ups used car warranty, cites quality gains (because I can't pass up the irony)

http://www.reuters.com/article/domesticNews/idUSN1931402220080819

snip>

U.S. automakers, including GM, have long argued that improvements in the quality of their vehicles have not been fully recognized by American consumers.

In response, all three Detroit-based automakers have rolled out more generous warranties over the past several years in a bid to raise consumer confidence.

GM's sales of new cars and trucks have dropped 18 percent so far this year, pushing its dealers to rely more heavily on sales of used cars, which typically carry higher margins.

"This is a clear indication of the confidence in the quality and value of our cars and trucks," Brian McVeigh, GM's manager of fleet and commercial operations, said in a statement about the revamped warranty offer.

GM has seen a drop of 40 percent in warranty-funded repairs over the past two years and a decline of 14 percent this year alone, Jamie Hresko, the automaker's vice president of quality, told reporters and analysts.

snip>

Auto brands with higher resale values are able to command higher prices on new car sales, a key advantage in profitability for Japanese automakers like Honda Motor Co and Toyota Motor Corp in the U.S. market.

more...

[UpInArms]

48. GM offers early retirement to 9,000 salaried workers: report

07. GM offers early retirement to 9,000 salaried workers: report
10:50 AM ET, Aug 29, 2008

[ozymandius]

9. Bank of China Reduces Fannie, Freddie Investments

From the Financial Times: Bank of China flees Fannie-Freddie

Bank of China has cut its portfolio of securities issued or guaranteed by troubled US mortgage financiers Fannie Mae and Freddie Mac by a quarter since the end of June.

The sale by China’s fourth largest commercial bank, which reduced its holdings of so-called agency debt by $4.6bn is a sign of nervousness among foreign buyers of Fannie and Freddie’s bonds and guaranteed securities.

This selling is probably why the spread between Fannie and Freddie debt yields and Treasury debt is so high. From the WSJ last week: Deflating Mortgage Rates

from Calculated Risk

[UpInArms]

49. Foreign cenbanks reduce agency holdings for sixth week

http://www.reuters.com/article/bondsNews/idUSN2943164820080829

NEW YORK, Aug 28 (Reuters) - Foreign central banks reduced their agency security holdings at the Federal Reserve by $3.96 billion this week, according to data from the central bank, possibly adding to recent evidence that overseas investors are worried about the troubled mortgage giants.

The drop marked a sixth straight week of declines in offshore central bank holdings of bonds issued or guaranteed by government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac, which have recently taken center stage in the U.S. housing crisis.

It brought the total five-week decline to about $17.6 billion.

Overall, overseas institutions' total holdings of U.S. debt, including Treasury notes and bonds as well as agency securities, rose $13.57 billion on the week to $2.409 trillion.

The overall rise came because foreign central banks bought government debt rather than agency securities, adding $17.53 billion to Treasury holdings on the week for a total of $1.441 trillion.

...more...

[Demeter]

73. Again the Question: Who Is China Selling Them TO?

Is Helicopter Ben buying China out?

[ozymandius]

10. Oh my.

FDIC Prepares for More Bank Failures

From Bloomberg: FDIC Adds Office Space in Dallas, Ready for More Bank Failures

The Federal Deposit Insurance Corp. is preparing to sign a five-year lease to add five floors of space at its Dallas regional office as the agency prepares to increase scrutiny of failing and troubled U.S. banks.

The federal agency ... will add 125,000 square feet to the 185,000 square feet it rented last year ... That agency will add about 300 staff at the building, including some of the 69 retirees it is bringing back to help handle the increased workload, said spokesman Andrew Gray.
...
Dallas is the headquarters of the agency's Division of Resolution and Receivership, the unit that handles failed banks.

http://calculatedrisk.blogspot.com/2008/08/fdic-prepares-for-more-bank-failures.html

[Demeter]

13. Second Wave of Staffing Up

Gonna be an annual event, then?

[DemReadingDU]

32. Chris Whalen: FDIC needs a backstop of half a trillion dollars

Reposting from late yesterday

8/27/08
The Federal Deposit Insurance Corp.'s (FDIC) list of troubled banks has increased by 30 percent this quarter, and this jump is causing the FDIC and the banking community to prepare for tomorrow’s problems today.

The FDIC may have to borrow money from the Treasury Department to handle an expected wave of bank failures coming down the road, according to the Wall Street Journal.

It would not be surprising if this were to occur, according to Chris Whalen, managing director of Institutional Risk Analytics. In an interview with CNBC, Whalen said the FDIC needs a backstop. (To listen to the full interview, watch the video.)

"They need about a half a trillion dollars in borrowing authority, and they need a vehicle to own these banks while we triage them and sell them."

Whalen added that he expects big bank failures might be on the way.

more...
http://www.cnbc.com/id/26421989

So the FDIC is renting 5 additional floors for 300 more workers, and FDIC needs half trillion dollars from the Treasury to bailout banks. This is scary.

[54anickel]

51. Wall Street's Big Sell-Off - Is an S&L-style bailout in the offing?

http://www.businessweek.com/magazine/content/08_36/b4098000116802.htm

snip>
The fear is that if banks can't sell off enough assets, more firms will go the way of the late Bear Stearns and IndyMac. On Aug. 27 the Federal Deposit Insurance Corp., the regulator that oversees banks, reported the number of institutions on its so-called problem list spiked 30%, to 117, in the past quarter. "It's really an ugly time, and it's only going to get worse," says Christopher Whalen of Institutional Risk Analytics, a research and consulting firm.

The situation may well pressure the federal government to step in with a broad-based solution, one with an almost retro feel. Banking experts are starting to talk about the need for an updated version of the Resolution Trust Corp., the vehicle Congress created in 1989 to gather up assets from failed savings and loans and sell them off in an orderly fashion. The RTC was a reincarnation of the Great Depression's Reconstruction Finance Corp.

Hard Sell
Third-quarter financials, which firms deliver in the coming weeks, could set off the avalanche of sales. Credit analysts at J.P. Morgan Securities (JPM) estimate that banks worldwide will experience an additional $200 billion in losses and writedowns this period, on top of the $500 billion they've already taken. When the whole credit crisis is said and done, the full count could top $2 trillion by some gloomy estimates.

Until now, banks have replaced most of that lost capital with money from outside investors. But those funds are drying up. For one, it's getting harder to issue the type of special securities that sovereign wealth funds and others have found appealing when giving big cash infusions to Citigroup (C), Merrill Lynch (MER), and other struggling companies. Plus, many of those early movers may have buyer's remorse, considering that the value of their investments has eroded dramatically.

Without a white knight, banks will likely resort to dumping assets to maintain satisfactory capital levels for regulators and creditors. How much stuff could be up for sale? Generally speaking, commercial banks try to hold $1 of capital for every $10 of assets they own; for investment banks it rises to about $20. That means if banks and other financial firms lose the predicted $200 billion in the current period, there could be roughly $2 trillion of assets on the block, including prized possessions.

more...

[AnneD]

64. OK....

who ordered 10 large meat lovers, 10 large supremes, 5 large cheese pizzas and 5 large veggie pizzas?

Someone's going down.

[Dr.Phool]

67. Those Bastards!

They didn't call me. And I coulda gave them a discount!

[UpInArms]

70. Georgia regulators close Integrity Bank, 10th bank to fail

http://www.marketwatch.com/news/story/georgia-regulators-close-integrity-bank/story.aspx?guid={9C2568FB-FFA6-4CBF-8218-CD914102F252}&dist=msr_1

SAN FRANCISCO (MarketWatch) -- Integrity Bank of Alpharetta, Ga., with $1.1 billion in assets and $974 million in deposits, was closed Friday by the Georgia Department of Banking and Finance and the Federal Deposit Insurance Corp. was named receiver. This marks the 10th U.S. bank failure so far this year. All deposit accounts have been transferred to Regions Bank of Birmingham, Ala. and depositors of Integrity Bank will automatically become depositors of Regions Bank for the full amount of their deposits. Regions Bank will pay a total premium of 1.012% for the failed bank's deposits and will purchase about $34.4 million of Integrity Bank's assets.

[AnneD]

76. Sorry but...

we don't have deep fried pizza.

[ozymandius]

12. Mon Dieu! U.S. Bond Insurers Sink French Banks

...
More U.S.-led pain came in the form of Q2 earnings at major French banks on Thursday, with Credit Agricole SA, France’s third-largest bank, revealing that second-quarter profit dropped 94 percent on writedowns tied to U.S. bond insurers. Bloomberg News reported that the bank has so far announced 6.5 billion euros of write-downs.

Not to be outdone, Natixis SA, another French bank, reported a net loss of 1.02 billion euros ($1.5 billion) for the second quarter on 1.51 billion euros ($2.22 billion) of markdowns on debt backed by bond insurers and subprime-linked securities. The bank said it is focused on raising 3.7 billion euros ($5.5 billion) in new capital, according to a separate Bloomberg story, making it the latest bank to turn to investors as U.S.-led losses mount.

....

U.S. bond insurers like MBIA Inc. (MBI: 16.15 0.00%) and Ambac Financial Group, Inc. (ABK: 7.42 0.00%) provided the top-rated portions of private-party RMBS and related CDO deals with a guarantee that essentially was designed to serve as a proxy for the government guarantee that exists on Fannie/Freddie/Ginnie mortgage bond issues. But the strength of that guarantee is only as good as the rating of the firm that provides it — especially for banks, who now must account for counterparty downgrades in their estimates of exposure to such toxic financial instruments as collateralized debt obligations.

http://www.housingwire.com/2008/08/28/mon-dieu-us-bond-insurers-sink-french-banks/

[ozymandius]

15. Have a wonderful day watching the Puppet Casino.

:donut: :donut: :donut:

I'll be back when it's all said-n-done.

:hi:

[Demeter]

16. Good Luck and TGIF!

[Hugin]

39. Choice pick of inspirational photo there, Ozy!

:thumbsup:

[Buttercup McToots]

17. Fannie/Freddie Chatter...Something Big Is Brewing...

http://mrmortgage.ml-implode.com/2008/08/28/fanniefreddie-bailout-chatter-something-big-is-brewing/

Fannie/Freddie Chatter - Something Big is Brewing
Posted on August 28th, 2008 in Daily Stock Market / Economic News - The Real Story, Mr Mortgage's Personal Opinions/Research

I am hearing chatter something is about to go down soon. Who knows if this will be a bailout, but rest assured the tax payer will likely beon the hook for something.

The options market is confirming something is brewing with the XLF put-call ratio out of control. There have been approx 500k at or near the money front-month calls and 250k for next month. Put volume is a paltry 110k front month and about 45k next month. Several other indicators of ‘news pending’ are flashing.

Being the contrarian I am, I would view this action as bearish for financials. We will see soon. -Best, Mr Mortgage

[Buttercup McToots]

18. Smartmoney: 5 Sneaky Overdraft Traps

Smartmoney: 5 Sneaky Overdraft Traps

Deal of the Day

5 Sneaky Overdraft Traps
By Kelli B. Grant |Kelli B. Grant Archive |Published: August 18, 2008

Active Discussions on SmartMoney
Stories Comments

5 Sneaky Overdraft Traps 25


INCURRING A SMALL fortune in overdraft fees no longer requires a poorly-balanced checkbook.

To boost revenue, many banks have jacked up fees and reworked policies to maximize the potential for overdrafts, putting even the most diligent account holders at risk, says Jean Ann Fox, director of financial services for the Consumer Federation of America. "You can get in the hole for hundreds of dollars before you even know it," she warns.

Indeed, financial institutions collected more than $17.5 billion in overdraft fees last year, reports the Center for Responsible Lending, a nonprofit policy group.

At the heart of the revenue stream: so-called courtesy overdraft policies, which allow banks to pay charges that would otherwise bounce. Instead of incurring an insufficient funds fee, account holders must pay an overdraft fee and reimburse the bank for the borrowed funds. Even worse: Most banks use software to single out and pay overdrawn funds without regard to the account holder's ability to pay back the overdraft and its associated fees. "It's the only form of credit that can be involuntarily imposed on you," says Chi Chi Wu, staff attorney at the National Consumer Law Center. "They've laid this tripwire, and there's no point to it except to generate fees."

Here are five ways a bank might try to trip you up with pricey overdrafts, plus advice on how to avoid them:


1) Debit and ATM Cushions
Contrary to popular belief, using a debit card won't prevent you from overdrawing your account. Debit card use triggers 46% of all overdrafts, according to the Center for Responsible Lending. "They allow the debits to go through, instead of rejecting them," says Ed Mierzwinski, consumer program director for the U.S. Public Interest Research Group. "It's disgraceful."


Solution: Ask the bank to set the debit overdraw amount on your account to zero. That way, any transactions that would put the account in the red will be rejected.


2) Reordered Debits and Deposits
Banks often change the order in which debits and deposits clear your account, making it tough to determine whether you're close to overdrawing. Bank of America (BAC: 29.54, +0.52, +1.79%), Chase (JPM: 36.87, +0.26, +0.71%), Citibank (C: 18.09, +0.25, +1.40%), PNC (PNC: 70.05, +0.64, +0.92%) and Wachovia (WB: 14.35, +0.36, +2.57%) pay daily transactions in order from highest to lowest, according to a 2008 Consumer Federation of America survey. SunTrust (STI: 39.79, +0.66, +1.68%), U.S. Bank (USB: 30.77, +0.30, +0.98%) and Washington Mutual (WM: 3.51, -0.08, -2.22%) use any processing order they choose.

Banks justify the practice as a way to ensure the most important debits get processed first (say, so a mortgage payment doesn't bounce). But according to Sharon Reuss, spokeswoman for the Center for Responsible Lending, it's really a way to maximize overdrafts. Say you start the day with $100 in your account. You buy a latte ($5), fill up on gas ($50), buy groceries ($35), swing by the drugstore ($8) and then the dry cleaner's ($25). Processed chronologically, only the last transaction triggers an overdraft. Reordered from high to low, however, three purchases do.

Solution: Buffer your account with an extra $100 or so that you don't intend to spend, advises Reuss. Also, don't count on deposited funds until they show up as part of the available balance.


3) Extended Overdraft Fees
Fail to promptly pay back a bank's courtesy overdraft, and they'll sock you with even more fees. SunTrust tacks on $35 after seven days. After three days, U.S. Bank charges $8 a day until the funds are repaid in full.

Solution: Set up real overdraft protection in the form of an attached line of credit, or automatic transfers from your savings account. It's much cheaper than the average $34.65 overdraft fee, says Wu. Citibank, for example, charges $5 annually for a line of credit. (Balances carry a 17.5% APR, however, so only use these accounts for temporary protection.)


4) High Daily Maximums
Only 30% of major banks set a daily maximum for the number of overdraft transactions you can conduct, reports the CFA. Unfortunately, most of those limits are high, says Fox. Bank of America allows seven fees per day ($245 total), while U.S. Bank permits six ($199). Adding to the problem, many banks use a tiered overdraft system that escalates charges for subsequent overdrafts. Chase, for example, charges $25 for the first offense, and $32 to $35 apiece for subsequent charges — with no maximum.

Solution: Ask the bank to waive the fee(s). Also, point out that all of the fees stemmed from one incident, and, if true, that it's a rare misstep, says Fox.


5) Funds on Hold
Swipe your card at the gas pump and the merchant enacts a temporary hold for, say, $75 worth of gas, before the actual transaction begins. (Hotels and car rental agencies use similar procedures.) That hold lingers on your account for a day or more, even if the purchase turns out to be much less, warns Fox. Meanwhile, banks consider that hold money unavailable, thus lowering your available balance.

Solution: Use a credit card for purchases that put holds on accounts. While it still counts against your available credit, it's more likely that account can withstand a tighter balance for the 24 hours or so it takes for the hold to clear.

[Buttercup McToots]

19. Foreign spigot off for US consumers

http://www.atimes.com/atimes/Global_Economy/JH28Dj02.html

Aug 28, 2008



Foreign spigot off for US consumers
By Max Fraad Wolff

As US public attention shifts from the Olympics to running mates and the celebrity "news" de jour, the infrastructure beneath your house is termite-infested. Just beneath the nicely painted exterior and behind all the new appliances, doubt is boring through the beams, gnawing at the studs.

Alongside falling prices, rising mortgage rates, stricter credit conditions and general malaise, the structure that supports American home ownership is being condemned by market valuation. Fannie Mae and Freddie Mac have nose dived and been downgraded toward a smaller future - and these are more important names for your future than Joe, Sam, Kathy, Mitt, Meg ...

Fannie Mae was created in the depths of the Great Depression to



decrease foreclosure and increase home ownership. In 1968, it was re-chartered as a public company, removed from within official government agency status. Freddie Mac, since its inception in 1970, has financed 50 million homes.

Fannie and Freddie mission statements make clear, they exist to facilitate, ease and cheapen home ownership. They do this by acting as liaisons between international capital markets and mortgage seekers. They borrow at preferential rates - based on the implicit/explicit - assurance of the US government. Borrowed funds are used to buy mortgages and bundles of mortgages. They provide credit guidelines and purchase mortgage issued by banks. This reduces banks' risk and provides banks with more cash, more quickly to make more loans at lower costs. These firms, then, exist to facilitate, ease and accelerate bank lending for home purchase.

Fannie and Freddie form a central hub between lenders and investors. After they buy American mortgages, they bundle sell and guarantee repayment. This transforms mortgages into investments for banks, corporations and governments all over the world. Your home mortgage, bundled with many other folks' mortgages, is sold, repackaged and assured by Fannie and Freddie. This reduces risk and assures global savings flow in to support American purchases of homes. International investment is the foundation on which our home ownership was built.

Well over US$1 trillion of our mortgages have been sold to foreign investors this way in the recent past. As you sit down and read this, your mortgage may well be "owned" by a firm, individual or central bank thousands of miles away. This relationship is neither healthy nor sustainable in its present form. Rising defaults, falling dollars and the sheer size of past borrowing are turning people off to American mortgages. The foundation below our houses is shifting.

What we are witnessing is the breakdown of the link between middle-class America and the global financial markets it has over-tapped across the last several decades. Fannie and Freddie were the support infrastructure connecting houses to capital market access. They have been caught with weak financials, swollen balance sheets and escalating default, just like the home owners they assist. The size of their retained mortgage portfolios is truly gigantic.

The extent of the firms' guarantee commitments is global in scope. Sixty-six global central banks buy loans bundled and or backed with Freddie Mac and Fannie Mae involvement. As of June 30, 2007 foreign entities and individuals held over $1.4 trillion in securities of US agencies such as Freddie and Fannie.

Fannie Mae's June 2008 statement declares a gross mortgage portfolio of $750 billion and guarantees of mortgage backed securities and loans of $2.6 trillion. Freddie Mac's June statement details a retained portfolio balance of $792 billion and a total mortgage portfolio balance of $2.2 trillion. These two giants have retained interest in over $1.5 trillion and guaranteed over $4.5 trillion in mortgages, mortgage backed securities and loans. There are $11 trillion in outstanding mortgage liabilities in the US.

The US housing market continues to melt down with dire consequence. In the seven years from 2001 through late 2007, household real estate value increased by $8.873 trillion to $22.495 trillion. It has since fallen by $426 billion. Many claim we are at or a near a bottom. These claims should be viewed with extreme weariness. The housing downturn is not over and it will take a while after it is over to judge the damage.

The search for parallels with today yields little. The closest one finds is the interesting decline in home ownership across the period 1905-1920 followed by a surging rise across the '20s and then collapse across the 1930s. Fannie was born of this collapse, the ideology of The New Deal and sense that government-driven market interventions could broaden home ownership in America. This was a success. Home ownership did grow spectacularly across the period from 1938-2007. It is falling now as Fannie and Freddie flounder.

In 1940, US home ownership stood just below 44%. At the start of 2008 68% of Americans owned their home. Over the decades, Fannie and Freddie changed, middle-class America changed and the global financial realm underwent several revolutions. The last and most transformative revolution involved the rise of securitization and integration of global financial markets.

Securitization involves transforming assets and promises of future payment into financial products for sale to investors. International financial integration tears down the walls between national banking systems and allows savings, loans and payments to be gathered and transferred across international boundaries.

A world of wealth poured into US real estate through securitization and deregulation. This flow was channeled and molded by the actions of Fannie Mae and Freddie Mac. The decline of these firms will have dramatic and long-lasting implications for home mortgage finance. This will impact the price of American homes, the cost and ease of borrowing for home ownership.

Housing prices have further to fall and global savings will likely never be lent to American consumers at recent percentage levels. Across the past few years America has been borrowing over 50% of the world's internationally available savings. The diminishing role of Fannie and Freddie will impact more people, for far longer than presidential running-mate selections. Policy makers and managements in Fannie and Freddie are stuck. Today's consumer strength, their missions and international financial realities no longer align.

We face a housing finance future different from the recent past. Fannie and Freddie will not be able to function in the same way, or to the same extent. The debates about and plans for these firms will touch millions of families through housing prices, finance terms and cost. Fannie and Freddie are much more important than Joe, Sam, Kathy, Mitt, Meg ...

Max Fraad Wolff is a doctoral candidate in economics at the University of Massachusetts, Amherst, and editor of the website GlobalMacroScope.

[UpInArms]

21. dollar watch

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

Last trade 76.986 Change -0.166 (-0.22%)

US GDP Jumps On Exports, But Second Half Still A Concern

http://www.dailyfx.com/story/special_report/special_reports/US_GDP_Jumps_On_Exports__1219930588343.html

Growth in the world's largest economy was surprisingly strong in the period from April through June, owing largely to a substantial improvement to the trade account figures. Despite this number though, concerns for the second half were clearly showing through in price action as the dollar actually sold off against most of its counterparts shortly after the release.

Growth in the world's largest economy was surprisingly strong in the period from April through June, owing largely to a substantial improvement to the trade account figures. According to the Commerce Department's second measure of Gross domestic Product, annualized expansion accelerated to a 3.3 percent clip through the period following the 0.9 percent pace of growth through the first quarter. For the market, this number was still very surprising despite it being a second reading on the data as the advanced reading (taken much of the data has not been accounted for) put economic activity at 1.9 percent.

From the breakdown in the report, there were clear drivers for this headline improvement; which temper expectations for the second half somewhat. By far, the biggest contribution to the strong revision was the improvement in trade figures through the three month period. With the still holding near historical lows and Americans' demand for foreign goods cooling with a general contraction in consumption trends, the trade deficit shrank to its lowest level in 8 years. In fact, the government's data shows exports (which jumped 13.2 percent on the quarter) contributed 3.1 percentage points to overall growth. Therefore, excluding this rebound, expansion would have only ran at 0.2 percent. Elsewhere, personal consumption (accounting for 2/3rds of growth) ticked higher from a 1.5 percent to 1.7 percent clip. Other improvements were less influential; but for the two aforementioned areas of growth, their outlook doesn't look like it will sustain such a strong rebound through the second half of the year. Many economists and market participants expect consumption trends to eventually weigh on growth going forward as income growth cools and unemployment rises. Even trade may be tempered as the US dollar rebounds and global economic activity slows. The concerns for the second half were clearly showing through in price action as the dollar actually sold off against most of its counterparts shortly after the release.

...more...

Euro Open: When Will the ECB Cut Interest Rates?

http://www.dailyfx.com/story/special_report/special_reports/Euro_Open__When_Will_the_1219985355113.html

Forex traders were hit with a wealth of Japanese data overnight. The headline Consumer Price Index figure printed at 2.3%, the highest in 11 years. More notably however, the metric comes to just 0.2% after excluding food and energy costs. This suggests the figure is being overstated by commodity prices and is likely to moderate in the second half of the year as lower global resource prices filter through the broad economy. For their part, the Bank of Japan is unlikely to raise interest rates in the near term. Japan’s economy shrank in the second quarter and is on track to post another negative GDP growth reading in the third, formally putting the world’s second-largest market in recession. Bank officials have repeatedly said that their focus is to support economic growth because higher headline prices have not produced the dreaded “second-round” effects (such as wage inflation) and are expected to moderate as the global economy slows down. Bond yields reveal the market is pricing in no change in Japanese borrowing costs until at least the fourth quarter of next year.

A softening labor market has been indicative of the dire state of the Japanese economy. While the Jobless Rate printed little-changed at 4.0% in July (versus 4.1% last time), the Job-To-Applicant Ratio fell for the sixth consecutive month to the lowest since 2004, printing at 0.89 in July versus 0.91 in the preceding month. A falling ratio means there are fewer jobs for every applicant, suggesting disposable incomes will grow at a sluggish pace and deter consumption. Indeed, Household Spending fell again in July, shrinking for the fifth consecutive month to register at an annualized -0.5%.

The effects of higher commodity prices also made a strong showing in July’s Retail Trade figure. The metric rose for the 12th consecutive month, printing at an annualized 1.9% versus 1.3% expected and 0.3% in June. Food and fuel receipts drove the headline figure, with the former rising 3% while the latter jumped 3.6%.

Preliminary estimates of July’s Industrial Production saw a sharp improvement, with the annualized figure printing at 2.0% versus expectations of 0.6% and a flat result in the previous month. Overseas demand drove the metric higher as Japanese firms ramped up production to meet demand China and other emerging Asian economies. A favorable result was to be expected: last week’s Merchandise Trade Balance report saw exports surge 8.1% in July. As we noted then, “The top question going forward will be whether Japan can sustain such favorable trade results as the world economy decelerates. Slowing global demand will not leave China unscathed, and it remains to be seen if their hunger for Japanese goods will remain as robust after the Olympic Games are over.”

...more...

[UpInArms]

38. US RATE FUTURES-Ideas of Fed hike slip on July PCE

http://www.reuters.com/article/marketsNews/idUSCHB00052120080829

CHICAGO, Aug 29 (Reuters) - U.S. short-term interest rate futures inched higher on Friday, trimming the implied chances for Federal Reserve rate increases in 2009 after news that U.S. personal income fell unexpectedly in July.

Perceived chances for a rate increase by year-end slipped to 28 percent from 30 and prospects for a Fed hike during the first quarter of 2009 dipped to 78 percent from 90.

U.S. personal income fell by 0.7 percent in July after being forecast to be unchanged.

[Ghost Dog]

22. GLOBAL MARKETS Asia stocks rise after rough August; oil up

HONG KONG, Aug 29 (Reuters) - Asian stocks climbed on Friday, led by industrial companies and exporters, after a big upward revision to second-quarter U.S. economic growth boosted the outlook for demand, but shares posted their fourth consecutive monthly decline.

...

Data overnight underscored the extent to which the U.S. economy -- the origin of the credit crisis plaguing the global financial system -- has outperformed Europe and Japan since March. This supported the U.S. dollar in August, setting it on track for its largest monthly rise against the euro since January 1997.

"Worries about the credit crunch still exist and sentiment remains weak, but much of the concern has probably already been reflected in the losses we've seen this month," said Kim Seong-bong, a market analyst at Samsung Securities in Seoul.

Japan's Nikkei share average .N225 finished 2.4 percent higher, lifted by Honda Motor Co (7267.T: Quote, Profile, Research, Stock Buzz) and Canon Inc (7751.T: Quote, Profile, Research, Stock Buzz).

Outside Japan, stocks in Asia-Pacific .MIAPJ0000PUS were up 1 percent, according to an MSCI index, which has remained in a very narrow trading range for the last two weeks because of a summer lull in trading volume.

The index was down about 6.4 percent in August, having risen for only two out of the last 10 months.

South Korea's KOSPI index underperformed the region, rising 0.4 percent, with shares of the world's fourth-largest steelmaker POSCO (005490.KS: Quote, Profile, Research, Stock Buzz) providing the biggest boost.

Analysts said weakness in Korea's won, the poorest performing Asian currency so far in 2008, has weighed on the share market in recent weeks.

The won has weakened 7 percent against the U.S. dollar in August. This is arguably good for exporters but increases import costs for local industries such as steelmaking and shipbuilding, which make up a significant share of the country's equity market.

CHINA DIALS DOWN RISK

Hong Kong's Hang Seng index .HSI climbed 1.9 percent, but was still struggling to move up from a 1-year low hit last week.

China's Shanghai composite index .SSEC rallied 2.9 percent but was still down 13 percent in August.

Fund managers in China have become unwilling to allow risk into their portfolios, with the Shanghai market the worst performing major equity market in the world so far this year.

Chinese mutual funds have sharply raised their recommended allocations for fixed income and cut allocations to equities because of a slowing economy, the latest monthly Reuters poll of fund managers showed.

/... http://www.reuters.com/article/marketsNews/idINSP9664720080829?rpc=44&sp=true

[Ghost Dog]

23. Japan unveils economic plan as inflation hits decade high

TOKYO (AFP) - Japan's government announced an economic stimulus package worth more than 100 billion dollars Friday to tackle the fastest inflation in a decade and the looming threat of a recession.

The plan includes measures to help consumers, companies and farmers cope with high fuel costs and a credit crunch.

With lending-related measures accounting for much of the 11.7-trillion-yen (107-billion-dollar) package, the boost to government spending is expected to be about 2.0 trillion yen. The government will also consider income tax cuts.

"This package is not a one-off," Economic and Fiscal Policy Minister Kaoru Yosano told a press conference. "It is aimed at continuously supporting the Japanese economy as well as people's lives."

The announcement came hours after official figures showed that Japan's core inflation rate surged to an annualised pace of 2.4 percent in July from 1.9 percent the previous month on the back of soaring energy and material costs.

/... http://www.afp.com/english/news/stories/newsmlmmd.5835d0c7df19faeefa1b9e70203a2abd.621.html

[Ghost Dog]

25. Eurozone inflation pulls back from record high

BRUSSELS (AFP) - Inflation in the 15 countries sharing the euro pulled back in August from a record high, offering an increasingly rare ray of light as the threat of recession looms, official EU data showed on Friday.

Annual inflation in the euro countries fell to 3.8 percent from a record 4.0 percent in July amid cooling oil prices, according to a first estimate from the Eurostat data agency.

The rate was slightly lower than economists' expectations for inflation to fall to only 3.9 percent, as polled by Dow Jones Newswires.

...

"We are confident that the peak in euro-area inflation took place in June-July at 4.0 percent," Lehman Brothers economist Laurent Bilke said.

...

Separately, a European Commission survey found that confidence in the eurozone economy fell in August to the lowest level in over five years, although consumers' outlook improved marginally.

Following in the path of other recent weak data, the European Commission's eurozone economic sentiment indicator eased in August to 88.8 points from 89.5 points in July.

Eurostat said in mid August that the eurozone economy contracted for the first time since the bloc was formed in the second quarter, with output falling 0.2 percent.

...

Economists said that if inflation keeps falling then the ECB, which strives to keep annual eurozone inflation at or close to 2.0 percent, would eventually become more inclined to cut interest rates in order to give the economy a boost although not until at least next year.

/... http://www.afp.com/english/news/stories/newsmlmmd.5835d0c7df19faeefa1b9e70203a2abd.5a1.html

[Ghost Dog]

30. European shares rise as strong banks offset techs

LONDON, Aug 29 (Reuters) - European shares rose by midday on Friday, with gains in banks and miners offsetting losses in techs and autos, while a reassuring update boosted French retailer Carrefour (CARR.PA: Quote, Profile, Research, Stock Buzz).

At 1034 GMT, the FTSEurofirst 300 index of top European shares was up 0.25 percent at 1,193.84 points, taking its gains for August to 1.3 percent and raising the prospect of the index recording only its second month of gains in the last 10.

Banks rose, with UBS (UBSN.VX: Quote, Profile, Research, Stock Buzz), Credit Suisse (CSGN.VX: Quote, Profile, Research, Stock Buzz), Dexia (DEXI.BR: Quote, Profile, Research, Stock Buzz) and Natixis (CNAT.PA: Quote, Profile, Research, Stock Buzz) up 1.3 to 4.2 percent, though Commerzbank (CBKG.DE: Quote, Profile, Research, Stock Buzz) fell 2.5 percent on reports that it was set to buy Allianz's (ALVG.DE: Quote, Profile, Research, Stock Buzz) Dresdner unit.

Defensive drug stocks were higher, led by Novartis (NOVN.VX: Quote, Profile, Research, Stock Buzz), which rose 1.2 percent.

Carrefour jumped 6.7 percent to top European gainers after it posted a rise in first-half operating profit and reiterated its 2008 targets.

Global equities rose sharply after news on Thursday that the U.S. economy grew at a surprisingly robust clip in the second quarter.

"The Q2 GDP numbers were driven by net exports, and of course were good but we need to see how and when housing markets stabilise," said Tuomas Komulainen, Helsinki-based strategist at Danske Market Securities.

...

"The European equity markets continue to trade in the vortex of macroeconomic risks and slight improvements in the intermarket environment," UniCredit said in a note.

"The concomitant lethargic share performance of recent weeks should, however, end soon given the quarterly reports pending from the U.S. investment banks from mid-September and the return of many investors from the summer break."

Miners rose along with gold prices, with Xstrata (XTA.L: Quote, Profile, Research, Stock Buzz) up 1.1 percent and Rio Tinto (RIO.L: Quote, Profile, Research, Stock Buzz) up 1.2 percent.

Across Europe, Britain's FTSE 100 .FTSE was up 0.4 percent, while Germany's DAX .GDAXI was flat and France's CAC .FCHI rose 0.5 percent.

...

Auto stocks were hit by a rise in the euro <EUR=>, with Daimler (DAIGn.DE: Quote, Profile, Research, Stock Buzz), Volkswagen (VOWG.DE: Quote, Profile, Research, Stock Buzz), Peugeot (PEUP.PA: Quote, Profile, Research, Stock Buzz) and Renault (RENA.PA: Quote, Profile, Research, Stock Buzz) falling 1 to 2.8 percent.

...

The ECB is due to announce its next rate decision on Sept 4.

/... http://www.reuters.com/article/marketsNews/idCALT38243120080829?rpc=44&sp=true

[Ghost Dog]

31. Spain May Suffer From ECB Loan Curbs as Economy Cools

Aug. 28 (Bloomberg) -- Spain's economy, brought to the brink of a recession by surging global credit costs, may find money even harder to come by when the European Central Bank tightens its lending practices.

Spain's banks have stored up 89 billion euros of their own asset-backed securities, more than any euro-region country, because the ECB accepts them as collateral in auctions, according to UniCredit SpA. Now the central bank wants to change the rules, ECB council member Yves Mersch said in an interview on Aug. 23, a move that may leave Spain holding the bag.

...

Spain's banks have relied on cheap money from the ECB to help provide credit to consumers and companies even as the economy is buffeted by a real-estate downturn. Without the ECB, the country would be more dependent on foreign investors, who are demanding higher returns before committing funds.

ECB officials have agreed to adjust collateral rules in response to some banks' attempts at ``gaming the system,'' Mersch told Bloomberg News at the Federal Reserve's annual retreat in Jackson Hole, Wyoming. Axel Weber, another council member, said in an interview published yesterday in Frankfurt that the ECB must ensure its rules are ``not abused.''

Fitch Warning

The share of asset-backed bonds in the collateral deposited with the ECB jumped by a third last year. What's more, the quality of the assets underlying those bonds has deteriorated, Fitch Ratings said in a report in May. Spanish banks are pooling ``higher risk'' mortgages and consumer loans to back the bonds, Fitch said.

``We see bonds being issued just to forward them directly to the ECB,'' said Kornelius Purps, a fixed-income strategist in Munich at UniCredit, Europe's fourth-largest bank.

Holders of asset-backed securities can get money 39 percent cheaper at central-bank auctions than through investors. A Spanish mortgage-backed bond rated at the highest credit rating trades with a spread of about 2.8 percentage points to the euro interbank offered rate, or Euribor. The resulting rate of 7.76 percent compares with an average rate of 4.74 percent at yesterday's ECB auction for three-month money.

Since the credit squeeze began a year ago, Spanish institutions raised their monthly borrowing from the ECB by 31 billion euros to a record 49.4 billion euros, according to data compiled by Bloomberg based on central-bank figures. The increase is three times the size of Prime Minister Jose Luis Rodriguez Zapatero's fiscal stimulus package aimed at averting a recession.

...

Spain's economy doubled in size over the past decade as the decline in borrowing costs brought by euro membership spurred construction and consumer spending. That spree saw Spain run up the world's second-biggest current-account deficit after the U.S., leaving businesses and consumers reliant on foreign lenders.

With household debt reaching 130 percent of incomes, consumption was already slowing when the global credit crunch began. The turbulence triggered a collapse in the housing market as investors became more reluctant to provide financing to Spanish lenders. Home sales fell by 30 percent in June from a year earlier and mortgage lending slumped 37 percent, the National Statistics Institute in Madrid said today.

/... http://www.bloomberg.com/apps/news?pid=20601109&sid=azae4HCCn2z4&refer=exclusive

[Ghost Dog]

33. «The heart of global capitalism has been hit»

It is vital to «continue making every effort at EU level to encourage growth in the European economy», stressed France’s President Nicolas Sarkozy, after observing that «the heart of global capitalism has been hit» by the financial crisis sparked by the «subprime scandal». Speaking on 27 August in Paris at the Conference of Ambassadors of France, he denounced the «serious misconduct – as yet unpunished – of ratings agencies» and «the excesses of a financial capitalism that has seen scandalous abuse». «According to the IMF, the cost of these bad practices for the international banking system will ultimately reach some 1,000 billion dollars», but will be «much higher» for the «real economy», he warned.

«Restoring confidence will require the consolidation of the European financial sector and determined action to improve the transparency, responsibility and supervision of operators,» added Sarkozy. «We cannot let a handful of speculators endanger world growth,» he stressed.

/.. http://www.europolitics.info/xg/europolitique/Economiemonnaie/politique/231770?isPortalAccessed=true

[UpInArms]

26. Ranieri quits as Franklin Bank CEO, stays chairman

http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSWNAB868520080828

NEW YORK, Aug 28 (Reuters) - Mortgage bond pioneer Lewis Ranieri said he is resigning as interim chief executive of Franklin Bank Corp (FBTX.O: Quote, Profile, Research, Stock Buzz) but will remain chairman, allowing him to focus on raising operating capital for the struggling Texas bank.

Alan Master, who had been Franklin's president since May, was named chief executive. Master has been a director of Houston-based Franklin and its banking unit since April 2002. He has also been chief executive of The Master Group, a financial services consultant, since 1991.

Ranieri is a former Salomon Brothers Inc vice chairman.

In May, Franklin disclosed a U.S. Securities and Exchange Commission inquiry into its lending practices. A previous internal probe found the company failed to properly account for some loan modification programs, charge off uncollectable home equity loans, write down some properties in foreclosure, and record write-downs on loans in its investment portfolio.

...more...

[UpInArms]

27. Raining on Ranieri

http://norris.blogs.nytimes.com/2008/05/20/raining-on-ranieri/

There are strange things happening down in Texas, at Franklin Bank, the lender that was started by Lew Ranieri, the man who is credited with starting the mortgage securitization business. It seems that the bank has been, well, ignoring, a lot of losses.

In a news release last night, the bank said its audit committee concluded that the bank had failed to record, or write down, real estate that it owned after foreclosure, had failed to take losses for loan modifications, and did not charge off uncollectable second-mortgages.

The chief executive has been replaced by Mr. Ranieri, who was chairman, but the old C.E.O. will stay around as a board member and part of the bank’s executive committee.

Now a question is just how far the rot goes. The news release says the Audit Committee investigation “was limited to a review of specified areas of Franklin’s single family residential business.”

But that business is not Franklin’s only business, or, perhaps, its most risky one. Consider the following excerpt from the 2006 10-K. (The 2007 report has not been filed)

“Builder lines increased $529.7 million, to $1.2 billion at December 31, 2006, from $671.1 million at December 31, 2005. This increase is due to the growth from our offices in Arizona, Florida, Michigan, Pennsylvania, Colorado, California, Washington D.C. and Texas. Builder line fundings totaled $1.8 billion and principal repayments were $1.2 billion during the year ended December 31, 2006.”

A small Texas bank funding homebuilders thousands of miles from home? In some of the areas hardest hit by the collapse in housing prices? The audit committee has been too busy to look into whether the bank did a better job of reporting losses in that area, but you can bet the S.E.C. or the banking regulators will be checking.

...more...

[UpInArms]

28. The Sad Tale of Lewis Ranieri and Franklin Bancorp

http://www.rgemonitor.com/financemarkets-monitor/252676/the_sad_tale_of_lewis_ranieri_and_franklin_bancorp

It is a matter of faith among the risk management community that Lewis Ranieri is God - or at least knows God. But at the moment Ranieri, who is best known as one of the founders of structured finance, is not having a lot of fun.

The cause of the angst is Franklin Bancorp (NASDAQ:FBTX), the $5 billion asset TX state chartered bank which Ranieri and some of his cohorts started after the successful Bank United buy and build effort. News reports suggest that a combination of internal controls problems and asset quality issues are dragging the bank down.

The stock is trading

FBTX has this distinction of being the largest unitary bank with the name "Franklin" in its title but also the worst performance. The bank has reported below peer asset returns for the past five years, at times significantly below peer. During 2007, FBTX almost returned to peer performance based on ROA, but then fell off the edge of the proverbial table and into loss in Q4 and thereby for all of 2007.

FBTX reported 23bp of default in 2007 with a Loss Given Default of nearly 100%. In Q1 2008, FBTX reported 22bp of default for an annualized run rate of 88bp. The bank reported a WAM of 4.84 years at the end of 2007, more than a standard deviation above peer, and a very low Exposure at Default of 23.3%, as calculated by The IRA Bank Monitor. At 707 basis points, the gross loan yield of FBTX is slightly below peer.

In terms of risk profile, the Economic Capital ("EC") model in The IRA Bank Monitor assigns a ratio of EC to Tier One Risk Based Capital of 1.2:1. At the end of 2007, we calculated a RAROC for FBTX of 12.3%, which is actually low for institutions of this size. Based upon the IRA EC model, the preponderance of risk within FBTX appears to be in the bank's investment book.

Given the above profile, it seems clear that Ranieri and his management team at FBTX were aware of the bank's poor financial performance going back years. It appears that in the beginning of 2006, FBTX made a deliberate decision to extend duration by increasing the WAM of the bank's portfolio, which now is 2x the 2.35 year WAM for the peer group.

...more...

[UpInArms]

29. Hanmi Financial suspends quarterly dividend

http://www.reuters.com/article/bondsNews/idUSBNG16072420080829

Aug 29 (Reuters) - Hanmi Financial Corp (HAFC.O: Quote, Profile, Research, Stock Buzz), the holding company of Hanmi Bank, suspended its quarterly cash dividend to conserve cash.

Regulatory requirements related to goodwill charges led to net losses in first half of 2008, forcing the company to suspend dividend, the company said in a statement.

Hanmi Financial paid its latest dividend of 3 cents a share in July.

Hurt by the ongoing credit crisis, a host of U.S. banks have cut or suspended their quarterly dividend and issued stock to better their capital reserves.

In late July, Hanmi posted a net loss of $105.5 million or $2.30 per share, which included a non-cash goodwill impairment charge of $107.4 million related to the acquisition of Pacific Union Bank.

Brokerages like FTN Midwest and Friedman, Billings, Ramsey & Co had said Hanmi would have to raise capital immediately to prevent "potential negative events for the stock."

...more...

[Robbien]

62. About time they start cutting dividends

Dividends are supposed to be payouts of net income. There hasn't been much income lately, so what have these financial institutions been doing? Why of course, borrowing money to make dividend payouts.

Can't disappoint the shareholders you know.

[antigop]

40. Regulators may ease rules restricting PE investment in banks

http://financialweek.com/apps/pbcs.dll/article?AID=/20080828/REG/860739998/1036

With U.S. banks struggling to raise new capital and a cutback in lending threatening to deepen the economic downturn, chances are increasing that regulators will relax rules that have deterred private equity from investing in banks and thrifts.

A major break from the past is not likely, but buyout firms expect regulators to bring more clarity to existing rules and feel they may be able to push the envelope on the current system. That could lead to more private equity stakes in banks and thrifts, and even prompt takeovers, said a lawyer who has spoken with regulators on the matter.

The U.S. Federal Reserve could clarify rules governing minority investments of less than 25% as early as next month, said the lawyer, who did not want to be identified because of the sensitive nature of discussions with regulators. The Fed declined to comment.

Private equity firms have been eyeing troubled banks and thrifts as investment opportunities as the credit crisis has taken a toll on share prices.

Randal Quarles, managing director at Carlyle Group, one of the world’s largest buyout firms with $83 billion under management, forecasts that many of the investments will be minority stakes—which can be accomplished without dramatic changes in the Fed’s rules.

[UpInArms]

50. US regulators, industry spar over meaning of "swap"

http://www.reuters.com/article/bondsNews/idUSN2942559920080829?sp=true

WASHINGTON (Reuters) - As Alabama's Jefferson County teeters closer to bankruptcy, U.S. regulators and the securities industry are locked in a struggle about the oversight and very nature of the derivatives that helped bring the county to this pivotal point.

Jefferson County entered the interest rate swaps hoping to lower the cost of its sewer bonds. Instead, it was so overwhelmed paying the obligations that it may have to file for bankruptcy as early as Friday.

The county's outstanding sewer debt stands at $3.2 billion.

In a swap, two parties exchange interest rate payments, with one paying a fixed rate and the other a floating rate usually linked to an index. If the index drops, the party paying a fixed rate faces a deficit.

The Securities and Exchange Commission has sued Larry Langford, former president of the county's commission and currently the mayor of Birmingham, for alleged fraud connected to the swaps. It also charged Alabama investment bank Blount Parrish, its chairman, William Blount, and lobbyist Albert LaPierre with paying Langford more than $156,000 to involve Blount Parrish in all of the county's swap agreements in 2003 and 2004.

In filing those charges, which the defendants have asked be dismissed, the SEC has taken on the bond sector's lobbying group, the Securities Industry and Financial Markets Association.

...more...

[54anickel]

58. Carlyle and friends have sure been making the news lately. Getting ready to

take over public infrastructure, telecom, banks, steel plants (oh wait, they sold that to Russia)...so many deals, so little time - Carlyle.

Isn't Louie retiring next month? Wonder what his parachute looks like for 5 years of PR service.

[antigop]

59. Will Darth Cheney then take over after Lou's retirement? n/t

[54anickel]

61. Never thought of that possibility. Personally I think he'll be high tailing it outta the country.

Just to play it safe. Maybe that bill was actually created to keep better tabs on the bastard?

http://www.cbsnews.com/stories/2008/06/07/politics/politico/thecrypt/main4161731.shtml

snip>

The bill (H.R. 5938) was introduced by House Judiciary Committee Chairman John Conyers (D-Mich.) and Rep. Lamar Smith (R-Texas), ranking member of the committee. Reps. Bobby Scott (D-Va.) and Louie Gohmert (R-Texas), the chairman and ranking member of the Crime, Terrorism, and Homeland Security subcommittee, are also co-sponsors of the bill.

The legislation would require the Secret Service to protect the vice president and his or her spouse -- as well as any children 16 or under -- for six months after leaving office. Cheney would be the first vice president covered by the new bill, but it would also apply to future holders of the office.

Once the six-month deadline is reached, the secretary of Homeland Security is authorized "to direct the Secret Service to provide temporary protection for any of these individuals at any time thereafter" if a senior DHS official " determines that information or conditions warrant such protection."

more...

[Tandalayo_Scheisskopf]

41. Kasino Kutups at it full-bore.

CLV08.NYM Crude Oil Oct 08 117.91 8:58am ET Up 2.32 (2.01%)
HOU08.NYM Heating Oil Sep 08 3.236 8:57am ET Up 0.0534 (1.68%)
NGV08.NYM Natural Gas Oct 08 8.195 8:58am ET Up 0.145 (1.80%)
PNU08.NYM Propane Gas Sep 08 1.71 8:35am ET 0.00 (0.00%)
RBU08.NYM RBOB Gasoline Sep 08 3.0609 8:56am ET Up 0.0395 (1.31%)

I hope these guys lost their shirts on this bubble action.

[antigop]

43. Biden selection could be bad news for credit-card issuers

http://financialweek.com/apps/pbcs.dll/article?AID=/20080829/REG/808299995/1036

Credit card industry analysts are wary of the sector’s regulatory outlook if Barack Obama, a harsh critic of their business, becomes U.S. president with their longtime ally Joe Biden as vice president.

Sen. Biden represents Delaware, where many credit card companies are based because of the state’s liberal interest laws and low taxes. Democrats formally nominated Mr. Obama and Mr. Biden in Denver this week.

After the Nov. 4 elections, some Senate Democrats are expected to resume a push to limit credit card fees, and possibly to reform consumer bankruptcy law.

In June, Mr. Obama said at a roundtable discussion on credit cards: “For too long, credit card companies have been using unfair and deceptive practices to trick Americans into signing agreements they can’t afford.”

Jaret Seiberg, a financial services policy analyst at the investment firm Stanford Group., said: “Credit card issuers were going to face an uphill battle if Obama won regardless of the vice presidential choice.”

“Our point is that Biden is unlikely to moderate Obama’s approach to credit card legislation as vice president, whereas he could have been a moderating influence on credit card legislation if he had remained in the Senate,” Mr. Seiberg said.

[UpInArms]

56. Prime Foreclosure Starts Surge Past Subprime in July

http://www.housingwire.com/2008/08/28/prime-foreclosure-starts-surge-past-subprime-in-july/

There can be no remaining doubt that the nation’s mortgage crisis has become a problem for prime credit borrowers: data released by the HOPE NOW coalition on Wednesday finds that prime foreclosure starts have finally moved ahead of subprime foreclosure starts, for the first time since the industry coalition began collecting data in July of last year — and likely for the first time in a much longer timeframe, as well, sources suggested to HousingWire Thursday afternoon.

It’s a point that was missed in many media reports touting HOPE NOW’s success in preventing more than 2 million foreclosures during the past year; but it’s a critical shift that should be garnering more public policy focus than it currently is.

HOPE NOW’s monthly data shows that during July, foreclosures were initiated on 105,000 prime borrowers and 92,000 subprime borrowers. Prime foreclosure starts in July were well more than double the 51,000 recorded one year earlier, and up almost 10 percent from June; in comparison, subprime foreclosure starts in July were up 22 percent from one ago, and up 10 percent month-over-month as well.

“It’s easy for lawmakers to paint a picture of poor borrowers taken advantage of by big, bad lenders,” said one source, a bank executive that asked not to be named. “But that story falls apart when you start to see even those higher up the credit ladder struggle.”

For both prime and subprime borrowers, July’s foreclosure start totals were the highest since HOPE NOW began collecting data last year; while such a jump likely reflects seasonal trends, seeing the trend towards increased foreclosures emerge a month or two earlier than most experts would usually expect is a telling signal that current market turmoil has yet to run its course.

And for prime borrowers, in particular, it appears that things will get much worse before they get better.

Why this is likely to be the case lies in surging use of repayment plans by servicers dealing with prime borrowers — HOPE NOW’s data shows that 57,822 troubled prime borrowers received a repayment plan in July, equal to 72.3 percent of all workouts completed during the month. In comparison, just 48 percent of troubled subprime borrowers were placed into similar repayment plans, with servicers favoring loan modifications instead.

...more...

[Robbien]

60. Woodside suddenly bankrupt

Woodside Homes, Utah's second-largest homebuilder in terms of volume this year, will not protest an action by its creditors to force it into bankruptcy, according to documents filed in U.S. Bankruptcy Court in California.
. . .

Noteholders involved in the bankruptcy include John Hancock Life Insurance Co., AXA Equitable Life Insurance Co., Metropolitan Life Insurance Co., New York Life Insurance Co. and Security Life of Denver Insurance Co., which as a group filed to force Woodside into bankruptcy on Aug. 20, saying it defaulted on more than $400 million in debt. New York-based JPMorgan joined the request that day, saying it was agent for a group of banks owed another $330 million on a defaulted loan.
Woodside continues to build and sell homes and pay employees and subcontractors, said Jennifer Mercer, a crisis management professional hired by the company to serve as its spokeswoman.

She said the company had no statement as to "why it's in the position it's in."

. . .


Woodside reorganized its corporate structure and triggered tax losses that benefited Woodside's equity holders, mainly Ezra Nilson and his family, without informing creditors during debt restructuring talks, the noteholders said in their filing.
"The noteholders formed the view that a restructuring with the current equity holders and the current senior management team is not possible," according to the filing. Mercer said she doesn't know what will happen to Woodside's current management team, but said no changes have yet been made.

. . .
The company can complete existing home sales, write new sale contracts and refund homebuyers' deposits. Woodside can't sell assets, make large investments or transfers to nonbankrupt affiliates, or buy large land parcels without court permission.
The announcement - and the magnitude of the dispute between Woodside and its creditors - surprised many in Utah's home building industry this week.


http://www.sltrib.com/ci_10335114

[Robbien]

66. Merrill's Mortgage Gamblers Lose One-Quarter Of Money Firm Made In Last 36 Years

How much of a toll has the credit crisis and subprime meltdown taken on Wall Street? Here's one example: In the past 18 months, Merrill Lynch (MER) has lost a quarter of the money it made between 1971 and 2006:

FT: Merrill Lynch’s losses in the past 18 months amount to about a quarter of the profits it has made in its 36 years as a listed company, according to Financial Times research that highlights the extent of the global banking crisis.

Since the onset of the credit crunch last year, Merrill has suffered after-tax losses of more than $14bn as its balance sheet has been savaged by almost $52bn in writedowns and credit-related losses.

Merrill’s total inflation-adjusted profits between its 1971 listing and 2006 were about $56bn, according to figures from Thomson Reuters Fundamentals and an FT analysis of reported earnings.

The $14bn in losses for 2007 and the first two quarters of 2008 equal half of Merrill’s profits since the beginning of the ­decade.

http://www.businesssheet.com/2008/8/merrill-mortgage-gamblers-lost-one-quarter-of-money-firm-made-in-last-36-years

[54anickel]

68. Palin=Drill! Drill! Drill! There's her purpose. They don't care if they win or loose, the campaign

is now officially a PR campaign for domestic drilling.

Check out the long version of the interview titled Palin on VP Starts out talking about drilling (3rd down).

http://www.cnbc.com/id/26455570/site/14081545/?site=14081545

[Dr.Phool]

69. Boeing machinists union recommends strike

Boeing machinists union recommends strike
Union covers more than 27,000 Boeing workers in three states

updated 14 minutes ago

Boeing largest labor union said on Friday it would advise its members to reject the company’s final contract proposal, a move that could set the stage for a crippling labor strike next week.

“We are voting to reject and recommending ’yes’ to strike,” Connie Kelliher, spokeswoman for the International Association of Machinists, told Reuters.

IAM members are due to vote on the contract on September 3, when the current three-year deal expires. Without a new pact, the union could vote to strike as early as September 4.

A strike by the 27,000 IAM-represented employees could cost Boeing $3 billion a month.

The company can avert the job action by getting more than 34 percent of union members to ratify the offer, because a two-thirds majority of “no” votes is needed to start a strike.

Boeing said, however, that there would be no more negotiation on the contract.

(snip)

http://www.msnbc.msn.com/id/26460218/

[ozymandius]

71. I spent two days this week teaching about dictatorships.

Dictatorships demand three things: absolute power and the wealth that accompanies it, secrecy and meticulous records.

The Bush administration has shown that it embraces the practices of Soviet ideology. Too often have we seen how the Bush administration has sought to redefine reality and frame opinion inside their world view. That is pure Soviet.

Today in class, we covered part of the horrific reign of Josef Stalin. Collective farming and lightning-rapid industrialization aimed for unattainable quotas. Since missing a quota could land someone in prison, the gulag or worse - bookkeepers often lied about production levels. Better to be caught later for lying about production than to miss quota today. Which made me think about official government numbers.

While we have no gulags and prisons for misreporting the official word, I feel ideology trumps all.

[Demeter]

74. For Some Reason, I Don't Think BushCo Is Keeping Meticulous Records

What with the on-site shredding and the fire in Cheney's office....

[ozymandius]

72. Quittin time. Volume shows how many stayed home.

Dow 11,543.55 Down 171.63 (1.47%)
Nasdaq 2,367.52 Down 44.12 (1.83%)
S&P 500 1,282.83 Down 17.85 (1.37%)
10-Yr Bond 3.813% Up 0.018
NYSE Volume 3,314,188,000
Nasdaq Volume 1,611,633,500

4:35 pm : Losses were steep and widespread Friday as all ten of the economic sectors finished lower. The downturn was most apparent in the technology sector, which faltered after a key player issued a disappointing announcement. Government data did little to spur buying in another low volume session.

Stocks struggled from the start of the session as Dell (DELL 21.73, -3.48) announced earnings per share results that missed the consensus estimate, then compounded matters by warning of a slowdown in IT spending. That outlook cast a shadow over fellow large-cap tech stocks, like Microsoft (MSFT 27.29, -0.35). Microsoft was pushed out of favor, despite picking up a German price comparison and shopping site to add to its online portfolio. It is paying $486 million for the site's parent. The Nasdaq 100 closed with a 2.2% loss.

Fellow tech player Marvell Technology (MRVL 14.11, -0.65) also finished lower despite announcing better-than-expected earnings per share and solid revenue growth. The general sense of pessimism pervading trade proved too much for the firm's upside surprise. The tech sector, the largest in the S&P 500, finished 2.5% lower, more than any other sector. Its loss was felt in the broader market.

Economic data did little to motivate buyers. July personal income fell 0.7%, due largely to the lower amount of fiscal stimulus checks compared with June and May. Excluding the impact from the stimulus, real disposable personal income was up 0.5% in July, which is more than June and May. Personal consumption expenditures (PCE) for July increased 0.2%, as expected. The PCE deflator was up 0.6%, reflecting higher gas prices. Core PCE was up 0.3% for the second month in a row and also in-line with expectations.

Oil prices climbed as much as 2.7% during the session, but retreated to finish virtually unchanged near $115.65 per barrel. Oil concluded the week 0.9% higher. The recent fluctuation in oil remains hinged up concern Hurricane Gustav will pinch oil production capacity in the Gulf of Mexico.

Even the retreat in oil failed to induce buyers to enter the ring ahead of the long weekend. Volume on the NYSE has been trending at its lowest level of the entire year during recent sessions. Shares exchanged failed to break 1 billion for the 10th straight session.

At their best levels, the Dow traded just below the unchanged mark, while the Nasdaq was showing a loss of 0.8% at its session high. The S&P 500 was showing a loss of 0.2% at its best level, but finished at a session low.DJ30 -171.22 NASDAQ -44.12 NQ100 -2.2% R2K -1.1% SP400 -1.1% SP500 -17.85 NASDAQ Adv/Vol/Dec 1034/1.58 bln/1789 NYSE Adv/Vol/Dec 1140/959 mln/1932

[Demeter]

75. Ending The Week Below 11,600?

A sign of the End Times?