STOCK MARKET WATCH, Monday June 22

[ozymandius]

Source: du

STOCK MARKET WATCH, Monday June 22, 2009

Bush Administration Officials Under Indictment = 2
Financial Sector Officials Under Indictment = 0
Financial Sector Officials In Prison = 2

AT THE CLOSING BELL ON June 19, 2009

Dow... 8,539.73 -15.87 (-0.19%)
Nasdaq... 3,219.77 +19.49 (+0.61%)
S&P 500... 921.23 +2.86 (+0.31%)
Gold future... 936.20 +1.60 (+0.17%)
10-Yr Bond... 3.78 -0.05 (-1.20%)
30-Year Bond 4.51 -0.09 (-2.04%)

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

Market Conditions During Trading Hours

GOLD, EURO, YEN, Loonie and Silver

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This thread contains opinions and observations. Individuals may post their experiences, inferences and opinions on this thread. However, it should not be construed as advice. It is unethical (and probably illegal) for financial recommendations to be given here.

Read more: du

[ozymandius]

1. Did anyone else have trouble connecting to DU?

It took more than forty minutes for me to access the Latest Threads page.

[DemReadingDU]

3. not this morning, but last evening

DU was down a couple hours from about 8:30 to 10:30. something like that.

[snot]

7. Yes; seems better now. Question:

I'm admittedly out of my depth here, though I find everyone's contributions here v. helpful (thank you!)

One aspect of the sitch that I haven't seen much discussed anywhere is the need for international diplomacy re- re-regulation.

I.e., it seems clear that Glass-Steagall etc. needs to be not only restored but expanded, updated; but an important part of the reason it got repealed was concern that if we don't offer the same financial instruments/opportunities here, the business will simply move elsewhere.

At this point, the entire world is suffering enough that there might be some possibility of getting an international consensus that all countries shd re-regulate to avoid facing a repeat melt-down.

What do you all think? Are any efforts in this direction being made?

[ozymandius]

8. Canada has emerged as an international exception. Britain is wrestling with this issue.

Canada's banking system has suffered very little from the global meltdown. They kept the partitions in place between investment and commercial banking. They also have leveraging rules that do not allow the stoopid extents to which American banks can over-leverage their assets while gambling.

Debates in Britain over banking policy are being conducted in public. RBS and Northern Rock are bitter reminders of how much the system is broken. The debate is similar to the one we have here: there is a faction that wants to keep things largely as they are with minor tweaks; then there is another that wants to break up the huge conglomerates into little pieces.

Edit to include: The system needs to be redone, totally, with no institution left standing with the label "too big to fail". If your entire economy relies on the survival of an institution, or a handful of them, then the system is seriously flawed. The domino effect applies here, in which the failure of one can lead to the failure of another, and another, in quick succession. For America - that would be tantamount to the government failing.

The largest institutions should be broken into small enterprises. Leveraging rules need to be rewritten that will forbid the wild speculation that we saw with Bear Stearns (nearly a ratio of 30-to-1) and others of their corporate size. There also needs to be a cap on how large an institution can grow in relation to the amount of deposits in the United States. When one-third of all consumer bank deposits reside in one bank (BoA) then that is too much concentration of our nation's wealth in one bank.

[ozymandius]

18. Ritholtz weighs in.

Too Big to Fail: Special NYT edition

If they are too big to fail, make them smaller.”

-Nixon Treasury Secretary George Shultz about Fannie Mae and Freddie Mac

This Sunday NYT seems to be all about one of our favorite crisis whipping boys: The concept of TBTF — “Too Big to Fail.” There are numerous articles, stories, blog posts on this pernicious policy, including our own “Too Big to Succeed” meme (aka chapter 18: Too Big to Succeed? in Bailout Nation).

....

When companies get to be that large, their vast wealth buys influence and power and corrupts the political system. Despite the crisis caused by the banks, just look at how successful their lobbying effort was. Their enormous pushback effectively neutered any true regulation of the finacial sector.

[Joanne98]

48. I have. Last night especially.

[ozymandius]

2. Market Observation by Tim W. Wood

Warning II!
Counter-Trend Moves Continue to Spark False Hopes

Warning! Woodiness ahead.

[ozymandius]

4. no goobermental reports today

They will return tomorrow.

[ozymandius]

5. Oil falls to near $69 as optimism on economy wanes

SINGAPORE – Oil prices fell to near $69 a barrel Monday in Asia on investor concerns over a weak U.S. economy.

Benchmark crude for July delivery fell 22 cents to $69.33 a barrel by late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. On Friday, it dropped $1.82 to settle at $69.55

....

Crude rose to an eight-month intraday high of $73.23 a barrel earlier this month on investor optimism that the U.S. economy, suffering through its worst recession in decades, may grow by the end of the year.

However, recent economic data has been mixed and reflects an economy still struggling to right itself. The Dow Jones industrial average fell 3 percent last week.

....

In other Nymex trading, gasoline for July delivery was steady at $1.92 a gallon and heating oil held at $1.78. Natural gas for July delivery was steady at $4.03 per 1,000 cubic feet.

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

[ozymandius]

11. Crude Oil Declines as World Bank Predicts a Deeper Recession

June 22 (Bloomberg) -- Crude oil fell for a second day after the World Bank said the global recession will be deeper than expected, stoking concerns that fuel demand will remain depressed.

....

Last week’s increase in U.S. gasoline inventories to 205 million barrels was the biggest jump since January. Motor fuel demand averaged 9.26 million barrels a day for the four weeks ended June 12, the Energy Department said. That’s down 0.3 percent from the previous year.

....

Total daily fuel demand in the four weeks ended June 12 was down 6 percent from a year earlier, the department said.

....

Speculative long positions, or bets prices will rise, outnumbered short positions by 26,430 contracts on the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Net-long positions fell by 21,453 contracts, or 45 percent, from a week earlier.

http://www.bloomberg.com/apps/news?pid=20601091&sid=ahDGnkDn6.SI

---

Edit to add: Gasoline prices for the week ending June 12, 2008 were at $4.10/gal as a national average.

[Demeter]

15. Yesterday I Paid $2.60

Still nearly a buck above February...or whenever the last bottom was.

[ozymandius]

6. World stocks slip

LONDON (Reuters) – World stocks slipped on Monday while government bonds and the dollar rose as a decline in oil prices below $70 a barrel and caution ahead of this week's data and Federal Reserve meeting weighed on risky assets.

A closely-watched German Ifo survey showed investor morale improved in June, with its business climate index rising to 85.9 from an upwardly revised 84.3 in the previous month. Investors are focused on this week's euro zone purchasing managers' surveys and data on the U.S. housing sector -- key for consumer spending -- to see if an economic recovery is strong enough to justify recent gains in equities.

....

MSCI world equity index (.MIWD00000PUS) fell 0.3 percent, after posting its first weekly loss since mid-May last week.

The FTSEurofirst 300 index (.FTEU3) fell 0.8 percent. Mining stocks rose after Xstrata (XTA.L) said it wanted talks with Anglo American (AAL.L) about a proposed merger of equals worth about $68 billion.

http://news.yahoo.com/s/nm/20090622/bs_nm/us_markets_global_4

[ozymandius]

9. Housing Eludes Recovery as Job Losses, Foreclosures Climb

June 22 (Bloomberg) -- Unemployment and consumer debt are putting home ownership beyond the reach of would-be buyers even as U.S. home prices reset to 2003 levels, according to a report today by Harvard University’s Joint Center for Housing Studies.

“Clear signs of a recovery have yet to emerge, and job losses and the steady stream of foreclosures are keeping many markets under pressure,” researchers for the Cambridge, Massachusetts-based center wrote. “Sales of both new and existing homes continued to struggle to find a bottom.”

Tight residential real estate markets and low mortgage rates fueled a five-year property boom as the number of U.S. households paying more than half their incomes for housing jumped from 13.8 million in 2001 to 17.9 million in 2007, the researchers said.

The federal government is now trying to stabilize the market by offering incentives for lenders to modify the terms of delinquent mortgages and the Federal Reserve has pledged to buy as much as $1.25 trillion in mortgage-backed securities to free up funding for new home loans.

http://www.bloomberg.com/apps/news?pid=20601103&sid=aw.NN1SqL7xk

---

Just think how this situation would have been different if our Congress, wholly owned subsidiary of Bank, Inc., had passed the cram down legislation.

[Tansy_Gold]

16. People who don't have jobs are not gonna rush out and buy houses

on the strength of a $250 government hand-out.

It keeps comin' right back around to the same old thing: People gotta have jobs, steady jobs, reasonably secure jobs. Until that happens, NOTHIN' is gonna turn around, least of all the housing market.

Which reminds me of another question I was gonna ask a long time ago: Has it always been true that housing drove the economy? Did everything always rise and fall on the basis of the housing market? Just askin'.



TG

[Hugin]

30. I believe this FIRE reliance is pretty recent.

The economy of the US has gone through many fad focuses... Agriculture, Transportation (as in Railways), Raw Materials Processing... etc. Manufacturing has long been a constant, however, with it's reliance on a large localized labor force. In fact, there's the key... A large labor force which is fairly consistent in where the work is located.

Housing doesn't provide this consistency... Once a house or building is constructed the jobs in doing so in that area vanish. It's not a sustainable model. This urban sprawl leaves a bunch of pre-abandoned towns. To be viable there must be constant supply of work to be done in the area to encourage people to settle there.

[AnneD]

61. Back in the olden days....

of responsible businesses-people with good pensions could also factored in as helping keep some goods and services afloat. They helped generate jobs-hell that is big business in Florida, Arizona and the Rio Grande Valley.

[Demeter]

38. Near As I Can Reckon, It Always Turned on Jobs

Practicing my old-timer speech....

[AnneD]

60. Morning Marketeers.....

:donut: and lurkers. Well, the second round of layoffs happened at Hubby's place. They waited to tell you AFTER your shift, which I thought was stinky. Hubby has a job offer at a place he likes so he and I decided that he would go ahead and bank the 6 months and he would start working right away. We then looked at each other and started laughing. We decided that he wouldn't get layed off off because we wanted it too much. And sure enough-he didn't get laid off yet. Sadly, one of our friends, a new guy, had just bought a house and is now laid off. He is older and doesn't stand much of a chance getting another job that pays as much. My heart really goes out to them. I don't want to be in debt for a new car much less a house if the prospect of unemployment is hanging over my head or Hubby's. That is ruinous to your finances.

On a happy note-We will be having our CD release party tomorrow at one of our fav underground venues. It will be a blast. Hubby will play, we'll have some nosh, we'll schmooze, and maybe we'll sell a few CD's. Even in this economy, we are doing well. We are doing well enough that we will soon have our first appointment with our CPA to set up our taxes and figure out what we want to do when we grow up. We don't have grand expectations, we just want it to pay for itself, provide a place for our students, something for Hubby to do in retirement, and if we make a few bucks off it-great.

Happy hunting and watch out for the bears.

[tclambert]

79. And repeat that story millions of times and you pretty well describe this economy.

Your husband hasn't been laid off, but just the threat of it affects your purchasing behavior. And there go car sales plunging to 20-year lows. And you are being prudent. As are millions of others. Did Tansy say it was all about jobs? Well, it is.

[AnneD]

80. It has always been about jobs...

good paying jobs. But frankly, those in charge of economics are ivory tower experts. Few have ever held real jobs.

[tclambert]

77. Okay, how 'bout if we outlaw robots?

They bin takin' 'r jobs for decades!

[tclambert]

81. Seriously, how is the robot thing supposed to work?

Won't robots eventually do ALL the work? If so, then no humans need bother with working. But how would those future people (or us present people) survive? Would the owners of the robots own everything and control everything? Or would we need universal welfare, somehow paid for by robot workers?

If that is the future when robots do everything, shouldn't we have a partial system in place now, since robots do a large part of the manufacturing, agricultural, banking, and online sales work?

[Demeter]

96. I Rather Think Chairman Mao Was Onto Something

When he sent his elite back to the rice paddies for re-education.

All we have to do is send anyone who never made a real thing with the sweat of his brow out to rusticate with a bunch of dull old implements, 4 acres and one animal of his choice. And all his extended family. See who survives, and if the masses want to film it as reality TV, so be it.

[ozymandius]

10. Insiders Exit Shares at the Fastest Pace in Two Years (caveat emptor)

June 22 (Bloomberg) -- Executives at U.S. companies are taking advantage of the biggest stock-market rally in 71 years to sell their shares at the fastest pace since credit markets started to seize up two years ago.

Insiders of Standard & Poor’s 500 Index companies were net sellers for 14 straight weeks as the gauge rose 36 percent, data compiled by InsiderScore.com show. Amgen Inc. Chairman and Chief Executive Officer Kevin Sharer and five other officials sold $8.2 million of stock. Christopher Donahue, the CEO of Federated Investors Inc., and his brother, Chief Financial Officer Thomas Donahue, offered the most in three years.

Sales by CEOs, directors and senior officers have accelerated to the highest level since June 2007, two months before credit markets froze, as the S&P 500 rebounded from its 12-year low in March. The increase is making investors more skittish because executives presumably have the best information about their companies’ prospects.

.....

The last time there were more U.S. corporations with executives reducing their holdings than adding to them was during the week ended June 19, 2007, the data show. The next month, two Bear Stearns Cos. hedge funds filed for bankruptcy protection as securities linked to subprime mortgages fell apart, helping trigger almost $1.5 trillion in losses and writedowns at the world’s biggest financial companies and the 57 percent drop in the S&P 500 from Oct. 9, 2007, to March 9, 2009.

http://www.bloomberg.com/apps/news?pid=20601103&sid=aflROe0Pe0QM

[Tansy_Gold]

13. What I wanta know is. . . .

Who are they selling to?

Seriously, who is buying?? Who is fuelling the non-crash of the stock markets? Has it all become blind speculation on the part of people/institutions who have nothing better to do with their money?

And especially buying the stock of these outfits that are clearly in trouble?

I don't get it. I just don't get it.


Tansy Gold

[Demeter]

17. Pension Funds, Probably

They already disillusioned China. I bet China doesn't buy another stock for decades.

The way the pension vehicles are structured, they have no choice. They can only buy stocks and bonds.

[DemReadingDU]

24. Pensions, and 401(k), and IRAs

Everyone seems to be in mutual funds nowadays. Don't people understand that many mutual funds are comprised of toxic investments, and when the financial bubble goes BOOM, those mutual funds will be worthless

[ozymandius]

20. Tansy, companies will often buy their own stocks.

This boosts the share price. Dumb buying algorithms will throw themselves into the sucker's queue too. It makes no sense for a supposedly intelligent person to buy stocks that insiders are throwing away. But they do anyway. There's a name for them: unsophisticated.

[Hugin]

32. The discussion threads over at Google Finance are just loaded with those of whom you speak.

They see themselves as Investors... But, in reality they are small time, very short term speculators one hit away from a personal disaster. Oh, and Goldman Sachs is there too. Feeding off of them, having survived the first crisis with a back door bailout via AIG and Unca Henry.

[Tansy_Gold]

33. But either way, it's not sustainable, is it?

I mean, the companies can ultimately buy back all their own stock. Then what?

Or the pension funds -- which can't be a growth industry these days anyway -- can buy what's left.

Or the small-time speculators can go bust, which is what most of 'em will do.

Ultimately, if the companies have no value in and of themselves, who's gonna buy the stock?

I think what I'm getting at is that unless and until The Economy -- meaning, sustainable manufacturing jobs and their service/support infrastructure -- becomes viable again, these stocks have nowhere to go but down. Or am I missing something?



TG

[ozymandius]

35. It is sustainable, IMO, as long as a rally will support the valuations they want.

They, being the company, wants stock values that will immunize them against a run on their stock. We have seen how rogue traders, hedge funds and investment banks can team up to drive down a company's stock price. This makes a company vulnerable to a hostile takeover. It can also put them out of business.

If a stock is mostly privately held, but traded publicly in select quantities, the price per share can be engineered. This is not a foolproof plan - but it can work for awhile. It can even defy the fundamentals when a company is unhealthy. For example: why is no publicly traded bank, as a recipient of public funds to stay afloat, not trading for one cent per share? Or worthless?

My opinion weighs heaviest on the thought that trading averages frequently mock the actual economic performance of key companies as they relate directly to the real economy. P/E ratios and 10k reports show a clearer picture of any individual company. Not the stock price.

[Tansy_Gold]

36. so what you're saying, then, is that the stock market numbers

could very well be one great big huge lie in terms of what they say about the actual functioning economy.

And if so, the fact that we -- or rather "the government" and "the media" -- use those numbers as a kind of reverse fever thermometer is essentially undermining any possible real "recovery." These numbers, unlike the unemployment numbers and housing foreclosure numbers, etc., paint a much more rosy picture of "the economy," because in fact they are completely divorced from "the economy."

Right?


TG

[ozymandius]

37. "because in fact they are completely divorced from "the economy."

That's it. There are literally two economies: "ours" and "theirs". Ours is one in which we are denied judicial relief for unaffordable mortgages, student loans for higher education are withdrawn, the price of short-term debt for small businesses is unaffordable and frequently unavailable and the return on savings is punitive given the rate of inflation.

"Theirs" is one in which discount window loans are available at fire sale rates with flexible repayment terms, bank executives (the so-called "brightest and the best") keep their jobs despite no evidence to support the moniker and laws are rewritten, ex-post facto, to accommodate business deals.

We know that our government intervenes in the stock markets to support valuations. So I do not labor under the notion that we are participants in a "free" economy. We have been enticed to buy a bill of goods with all this "green shoots" nonsense. OH! And don't forget "hope". That has been a fundamental and worthless part of marketing the green shoots psychology.

[Tansy_Gold]

39. "And don't forget 'hope'."

Yeah, it gives a whole new meaning to that other word, "audacity."

How dare we. . .. .







Tansy Gold, who in spite of all her pessimism DARES to

[ozymandius]

65. I would say so.

If I were to see a reason, some substance, for hope then count me in. As trite as it may seem - I'm hoping for a reason to hope.

[AnneD]

63. The market is divorced from the economy....

and divorced from reality.

And the crulest trick of all was to give us hope that we could change this fiasco, then place it in the hands of those that caused the mess in the first place. More power to the treasury my socialist ass.

[tclambert]

85. I believe, sir, you are saying that Skynet has already taken over,

just without sending Terminators or launching nukes. The computers and the robots have realized they can squeeze us out one job at a time by replacing human workers with cybernetic workers.

Well, primates were probably always an evolutionary dead end.

[ozymandius]

94. We primates have ben insanely lucky to make it this far.

By all rights, we should have died out a millennium ago.

[Demeter]

41. I'm Operating on the Assumption That Every Public Utterance Is a Lie, These Days

and that goes for all corporations and politicians and most special interest groups.

[hamerfan]

76. Demeter shoots,

and SCORES!
This is the only realistic way to think.
"Operate on the assumption that every public utterance is a lie, from corporations, politicians (but I repeat myself) and most special-interest groups!"
Thank you Demeter.

[tclambert]

86. History proves that effective lying is profitable.

Consider, for instance, religions. We will exempt, of course, the religion you believe in, which is obviously the one and only True Religion. All those other religions must be, MUST BE, nothing more than scams. And yet many of them have turned a really big profit for a really long time.

Businesspeople have known for centuries that lying makes money, or saves money. Getting caught can cost. So skillful lying therefore becomes a useful tool of normal business. And skillful denial of lying, and skillful dodging of accountability for lying are also useful tools. This is why we have standard weights and measures, enforced by government inspectors who can levy serious fines. Even in medieval times, butchers would put their thumbs on the scales, and milliners would use short yardsticks, and bankers would loan money they didn't really have.

[Demeter]

40. There Was a Wonderful Broadway Musical Called "How Now, Dow Jones?"

The basic plot was that guy wouldn't marry girl until the Dow hit 1000 (going up, mind you. This was produced in 1967)

So she, Kate, was the Voice of the Dow and announced the "state of the bustling US Economy" on the hour, or something, and decided to announce the DOW hit 1000, because she was pregnant(not by her fiance, by the way).

And her introductory song went something like this:


Broker (into first phone): You're planing to sell US Steel? Great Idea!

(into second phone): You're planning to buy US Steel? Great Idea!

Kate: "He thinks it's a great Idea whether you buy or sell? Why? C is for Commissions!"

"A Simple Little Business, It's A-B-C!"

There were some very clever lyrics--which can't be found online, and the best known song was:

"Will everyone here kindly step to the rear, and let a winner lead the way"

which I believe was used for an automobile commercial at one point.

[Joanne98]

50. Yepper. They're running from something. But who knows, it could just be

Sell in May and go away!

[ozymandius]

12. Big Japan Firms Less Pessimistic

TOKYO -- Large Japanese firms grew less pessimistic about the economy in the April-June quarter as a slight pickup in global demand boosted sentiment among manufacturers, a government survey showed Monday.

The large company business sentiment index of the quarterly corporate sentiment survey, jointly conducted by the Ministry of Finance and Cabinet Office, stood at minus 22.4 in the second quarter.

The negative reading is still a clear improvement from the record-low of minus 51.3 registered in the previous quarter and suggests that most companies have become less downbeat about business conditions. It also reinforces the view among analysts and government officials that the economy likely touched bottom in the first quarter.

....

The survey's employment index worsened to minus 11.7 from minus 11.2 for large firms, meaning most big companies reported more workers than they need.

In a sign that the recession's pain has spread from the manufacturing to the service industries, non-manufacturers led that deterioration, with their index falling to minus 4.0 from plus 1.2.

http://online.wsj.com/article/SB124565242234036433.html

[Demeter]

14. Good Morning Marketeers!

I was dumped off the site myself last night, and so didn't get the last posts into the WE thread. So I'll add them below. We did a lot , and it's all here:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=103x457572

[Demeter]

19. Dilbert Applies to Our So-Called Economic Policy, Too

http://dilbert.com/dyn_file/str_strip/58812/gif/strip.print/

[Festivito]

21. Debt: 06/18/2009 11,399,258,796,766.10 (DOWN 3,511,431,307.88) (Debt down.)

(Debt moves down almost 6 billion dollars on a Friday dump. Imagine that. This is good news. They're supposed to hide the bad news, not the good news.)

= Held by the Public + Intragovernmental(FICA)
= 7,127,626,496,714.92 + 4,271,632,300,051.18
DOWN 5,859,665,194.24 + UP 2,348,233,886.36

Source: Debt to the penny:
http://www.treasurydirect.gov/NP/BPDLogin?application=np

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 307-Million person America.
If every American, man, woman and child puts in $3.26 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.78, ABOUT TEN BUCKS for a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is the federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)

PERSONALIZED DEBT:
Every 12 seconds we net gain a another American, so at the end of the workday of the report, there should be 306,681,542 people in America.
http://www.census.gov/population/www/popclockus.html ON 05/25/2009 01:14 -> 306,504,012
Currently, each of these Americans owe $37,169.69.
A family of three owes $111,509.08. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 22 reports in the last 30 to 31 days.
The average for the last 22 reports is 5,121,158,223.41.
The average for the last 30 days would be 3,755,516,030.50.
The average for the last 31 days would be 3,634,370,352.10.
There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 75 reports in 112 days of GWB's part of FY2009 averaging 8.03B$ per report, 5.38B$/day.
There were 102 reports in 149 days of Obama's part of FY2009 averaging -0.26B$ per report, -0.11B$/day so far.
There were 177 reports in 261 days of FY2009 averaging 7.77B$ per report, 5.27B$/day.

PROJECTION:
There are 1,312 days remaining in this Obama 1st term.
By that time the debt could be between 13.2 and 18.3T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
06/18/2009 11,399,258,796,766.10 BHO (UP 772,381,747,853.02 so far since Obama took office.)

Fiscal Year ends: Sep 30
Borrowed in FY1993: (Maybe later.)
Borrowed in FY1994: 281,261,026,873.94
Borrowed in FY1995: 281,232,990,696.07
Borrowed in FY1996: 250,828,038,426.34
Borrowed in FY1997: 188,335,072,261.61
Borrowed in FY1998: 113,046,997,500.28
Borrowed in FY1999: 130,077,892,735.81
Borrowed in FY2000: _17,907,308,253.43 Bill alone
Borrowed in FY2001: 133,285,202,313.20 Bill and George
Borrowed in FY2002: 420,772,553,397.10 All George
Borrowed in FY2003: 554,995,097,146.46
Borrowed in FY2004: 595,821,633,586.70
Borrowed in FY2005: 553,656,965,393.18
Borrowed in FY2006: 574,264,237,491.73
Borrowed in FY2007: 500,679,473,047.25
Borrowed in FY2008: 1,017,071,524,650.01
Borrowed in FY2009: 1,374,533,899,853.70 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
05/29/2009 +019,434,324,960.50 ------------**********
06/01/2009 +078,540,152,146.76 ------------********** Mon
06/02/2009 +000,543,288,286.72 ------------********
06/03/2009 -000,003,266,733.82 -----
06/04/2009 +011,755,789,483.75 ------------**********
06/05/2009 -000,226,149,345.97 ---
06/08/2009 +000,015,040,049.19 ------------******* Mon
06/09/2009 +000,025,670,087.48 ------------*******
06/10/2009 +000,124,232,779.18 ------------********
06/11/2009 +000,484,710,305.16 ------------********
06/12/2009 +000,342,814,514.03 ------------********
06/15/2009 +022,279,783,785.91 ------------********** Mon
06/16/2009 +000,300,303,919.12 ------------********
06/17/2009 -000,017,732,893.60 ----
06/18/2009 -005,859,665,194.24 --

127,739,296,150.17 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,734,626,993,507.03 in last 273 days.
That's 1,735B$ in 273 days.
More than any year ever, including last year, and it's 171% of that highest year ever only in 273 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 273 DAYS NOT 365.

For a prettier and more explanatory view of our nation's debt:
http://www.brillig.com/debt_clock

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3930091&mesg_id=3930238

[Festivito]

92. Debt: 06/19/2009 11,397,711,606,020.00 (DOWN 1,547,190,746.10) (Little down.)

(Debt down nearly a third of a billion with the FICA part down just over a billion.)

= Held by the Public + Intragovernmental(FICA)
= 7,127,310,135,039.52 + 4,270,401,470,980.48
DOWN 316,361,675.40 + DOWN 1,230,829,070.70

Source: Debt to the penny:
http://www.treasurydirect.gov/NP/BPDLogin?application=np

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 307-Million person America.
If every American, man, woman and child puts in $3.26 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.78, ABOUT TEN BUCKS for a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is the federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)

PERSONALIZED DEBT:
Every 12 seconds we net gain a another American, so at the end of the workday of the report, there should be 306,688,742 people in America.
http://www.census.gov/population/www/popclockus.html ON 05/25/2009 01:14 -> 306,504,012
Currently, each of these Americans owe $37,163.78.
A family of three owes $111,491.33. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 22 reports in the last 30 to 31 days.
The average for the last 22 reports is 4,743,454,307.34.
The average for the last 30 days would be 3,478,533,158.72.
The average for the last 31 days would be 3,366,322,411.66.
There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 75 reports in 112 days of GWB's part of FY2009 averaging 8.03B$ per report, 5.38B$/day.
There were 103 reports in 150 days of Obama's part of FY2009 averaging -0.32B$ per report, -0.14B$/day so far.
There were 178 reports in 262 days of FY2009 averaging 7.71B$ per report, 5.24B$/day.

PROJECTION:
There are 1,311 days remaining in this Obama 1st term.
By that time the debt could be between 13.2 and 18.3T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
06/19/2009 11,397,711,606,020.00 BHO (UP 770,834,557,106.92 so far since Obama took office.)

Fiscal Year ends: Sep 30
Borrowed in FY1993: (Maybe later.)
Borrowed in FY1994: 281,261,026,873.94
Borrowed in FY1995: 281,232,990,696.07
Borrowed in FY1996: 250,828,038,426.34
Borrowed in FY1997: 188,335,072,261.61
Borrowed in FY1998: 113,046,997,500.28
Borrowed in FY1999: 130,077,892,735.81
Borrowed in FY2000: _17,907,308,253.43 Bill alone
Borrowed in FY2001: 133,285,202,313.20 Bill and George
Borrowed in FY2002: 420,772,553,397.10 All George
Borrowed in FY2003: 554,995,097,146.46
Borrowed in FY2004: 595,821,633,586.70
Borrowed in FY2005: 553,656,965,393.18
Borrowed in FY2006: 574,264,237,491.73
Borrowed in FY2007: 500,679,473,047.25
Borrowed in FY2008: 1,017,071,524,650.01
Borrowed in FY2009: 1,372,986,709,107.60 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
06/01/2009 +078,540,152,146.76 ------------********** Mon
06/02/2009 +000,543,288,286.72 ------------********
06/03/2009 -000,003,266,733.82 -----
06/04/2009 +011,755,789,483.75 ------------**********
06/05/2009 -000,226,149,345.97 ---
06/08/2009 +000,015,040,049.19 ------------******* Mon
06/09/2009 +000,025,670,087.48 ------------*******
06/10/2009 +000,124,232,779.18 ------------********
06/11/2009 +000,484,710,305.16 ------------********
06/12/2009 +000,342,814,514.03 ------------********
06/15/2009 +022,279,783,785.91 ------------********** Mon
06/16/2009 +000,300,303,919.12 ------------********
06/17/2009 -000,017,732,893.60 ----
06/18/2009 -005,859,665,194.24 --
06/19/2009 -000,316,361,675.40 ---

107,988,609,514.27 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,733,079,802,760.93 in last 274 days.
That's 1,733B$ in 274 days.
More than any year ever, including last year, and it's 170% of that highest year ever only in 274 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 274 DAYS NOT 365.

For a prettier and more explanatory view of our nation's debt:
http://www.brillig.com/debt_clock

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3933466&mesg_id=3933518

[UpInArms]

22. dollar watch

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

Last trade 80.835 Change +0.449 (+0.58%)

Falling U.K. Home Prices May Postpone A BoE QE Exit Strategy

http://www.dailyfx.com/story/dailyfx_reports/top_fx_market_movers/Falling_U_K__Home_Prices_May_1245670836107.html

EURUSD – The German IFO business climate reading in June rose for a third month to 85.9 from 84.3 signaling that the economy may haven bottomed. Economists forecasted an improvement to 85.0, but a jump in expectations to 89.5 from 85.9 help offset a slight decline in the current assessment to 82.4 from 82.5. However, the deterioration in the present environment underlines the troubles that he rejoin is facing. ECB member Nowotny stated that he expects the central bank to keep rates unchanged until 2010 erasing previous speculation of a possible rate hike.

GBPUSD – Rightmove LLC reported a 0.4% drop in home prices for June which was the first decline in five months. The sector has been stabilizing on the back of record low interest rates and thawing credit markets. However, signs that the global economy is improving has put upward pressure on the cost of credit which may limit future demand and force sellers to continue lowering prices. Falling home values could weigh on the economy and make it difficult for the BoE to consider raising interest rates or initiate an exit strategy for their quantitative easing program.



...more...

US Dollar Consolidation Continues - Watch for Breakouts This Week

http://www.dailyfx.com/story/currency/eur_fundamentals/US_Dollar_Consolidation_Continues___1245450092542.html

The US dollar ended week up against most of the majors, with the exception of the British pound and Japanese yen, but for what it’s worth, the currency really did little but consolidate. Looking to the DXY index, we see that the greenback’s decline on Friday was ultimately supported by a rising trendline near 80 connecting the June 3 and June 11 lows. With resistance looming just above at 81.35, this period of tight range-bound trade leaves the currency susceptible to breakouts this coming week, especially since there will be quite a bit of event risk on hand from the US.

On Tuesday, the National Association of Realtors (NAR) is anticipated to report that existing home sales rose for the second straight month at a rate of 2.6 percent in May to an annual pace of 4.80 million from 4.68 million. While not always a reliable leading indicator, there are encouraging signs that existing home sales could improve in line with expectations, as the Commerce Department reported on June 16 that housing starts and building permits rebounded from record lows.

On Wednesday morning, the release of US durable goods orders is projected to show a 0.8 percent decline in May following a 1.9 percent jump in April, and excluding transportation the index is forecasted to fall 0.5 percent, all of which would signal broad declines in domestic demand. Also on Wednesday at 14:15 ET, the Federal Open Market Committee (FOMC) is widely expected to leave the fed funds target range at 0.0 percent - 0.25 percent, and this should remain the case throughout much of the year. In fact, the FOMC started saying in January that they continue “to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time,” and they went on to say something similar in March and April. Furthermore, the last statement highlighted that the Committee's policy focus is to support the functioning of financial markets via quantitative easing (QE) and other measures that are likely to keep the size of the Federal Reserve's balance sheet at a high level. As long as we see these sorts of statements continue to be published, the news shouldn’t be too market-moving.

On Thursday, the third and final round of US Q1 GDP estimates are due to hit the wires, and the results could be market-moving if they miss expectations. At the time of writing, a Bloomberg News poll of economists reflected consensus forecasts for GDP is forecasted to go unrevised at -5.7 percent, which marks an improvement when compared to the Q4 2008 result of -6.3 percent. However, if Q1 GDP is revised higher, the news would likely provide a huge boost to risk appetite as it make the US economy appear to be in a better position to stage a recovery later in the year. On the other hand, downward revisions would have the potential to take FX carry trades and equities lower.

Finally, on Friday, personal income and personal spending results for the month of May are anticipated to yield improvements, but traders should be skeptical of the income result: past increases have been purely the result of rising transfer payments, which include retirement, disability, and employment insurance, while wage and salary compensation has either fallen or stagnated since September 2008.



...more...

[UpInArms]

25. Dollar gains on euro, but slips against yen

http://www.marketwatch.com/story/dollar-gains-on-euro-slips-against-yen

LONDON (MarketWatch) -- The European single currency lost ground versus the U.S. dollar and the British pound Monday, sinking ahead of the U.S. Federal Reserve's policy meeting later this week and the kick-off of the European Central Bank's one-year financing operation.

The euro traded at $1.3855 versus the dollar, down from $1.3952 in North American trading late Friday. The euro slipped 0.4% to 84.11 pence versus the British pound.

A stronger-than-expected rise in the Ifo Institute's monthly business climate index had little lasting impact on the single currency.

The Ifo business climate index rose to 85.9 in June from a revised reading of 84.3 in May. Economists surveyed by Dow Jones Newswires had forecast a more modest rise to 85.3. See full story.

"A mildly euro-supportive survey, in theory," wrote strategists at Brown Brothers Harriman. "In practice, the market will be in a wait-and-see mood ahead of the meeting and ECB's one-year refinancing operation, both due on Wednesday."

The euro had lost ground against the U.S. dollar in Asian trading Monday, pressured by a report that Germany is expecting a budget shortfall.

Weaker tax revenue, soaring welfare bills and new spending for bank bailouts and fiscal-stimulus measures could increase Germany's debt by more than 100 billion euros next year, The Wall Street Journal reported on its Web site Monday.

The report "was used as a good excuse to take euro/U.S.dollar down ... below $1.39, dragging everything down with it," said Sue Trinh, senior currency strategist at RBC Capital Markets.

The Fed is widely expected to leave its Fed funds rate target in a range of 0% to 0.25%, but investors will be watching to see whether the central bank unveils any changes to its asset purchase program to further boost liquidity.

...more...

so since they expect the fed to "hold" - why the anticipation? oh, that's right! the "markets" (a dead and lifeless euphemism for bullshit) consider this a "mover"

[UpInArms]

23. Fed plans repo markets revamp

http://www.ft.com/cms/s/0/d1c74b5c-5e99-11de-91ad-00144feabdc0.html

The US Federal Reserve is considering dramatic changes to the giant repurchase – or repo – markets where banks around the world raise overnight dollar loans.

The plans include creating a utility to replace the Wall Street banks that handle transactions, people familiar with the matter say.

The Fed’s deliberations are partly motivated by concerns that the structure of the US overnight repurchase market may have exacerbated the financial turmoil that accompanied the failure of Lehman Brothers in September last year.

Fed officials plan to meet next month with market participants to discuss reforms.

People familiar with the Fed’s thinking say it is looking into the creation of a mechanism to replace the clearing banks – the biggest of which are JPMorgan Chase and Bank of New York Mellon – that serve as intermediaries between borrowers and lenders.

“The Fed is raising questions about whether the system really protects the interests of all participants,” says one person familiar with the Fed’s thinking.

<snip>

“The clearing banks fear the positions of the investment banks are so large that a default would be difficult for them to manage,” the person familiar with the Fed’s thinking said.

...more...

break up the "too big to fail" banks!

[DemReadingDU]

26. Martin Weiss: California Collapsing

6/22/09 California Collapsing by Martin Weiss

Washington and Wall Street seem to be treating California as if it were a sideshow in the financial circus of these turbulent times.

It’s not.

California is home to the largest manufacturing belt in the United States and to Silicon Valley, the nation’s largest high-tech center.

California is America’s most populous state with 38 million people. Its GDP of $1.8 trillion is the largest in the U.S. Its economy is bigger than those of Russia, Brazil, Canada, or India.

And it’s collapsing.

Major California counties are ground zero in the continuing mortgage meltdown:

Los Angeles County with 5.32 percent of mortgages 90 days past due … Monterrey County, 8.02 percent … Imperial, 8.13 … San Bernadino, 8.66 … Madeira, 9.21 … San Joaquin, 9.53 … Riverside, 10.2 … Merced, 10.57 … and more!

California’s inventory of foreclosed homes is skyrocketing. Home prices are plunging. And the impact of surging unemployment is just beginning to show up in the data …

Worst Unemployment in 64 Years

The state’s unemployment rate has surged to 11.5 percent, the worst since World War II.

Last month, California lost 68,900 jobs. And since July 2007, it has lost 859,000 jobs, including 739,500 just in the past 12 months.

Even if the economy recovers, an unlikely scenario in my view, economists agree that California will continue to be slammed by layoffs, at least through the end of this year and probably well into 2010.

And even assuming a national recovery, UCLA’s Anderson Forecast projects an average unemployment rate of 12.1 percent from this fall through next spring.

What about without a national recovery? California’s jobless could go beyond 15 percent.

Worse, if you include part-time workers seeking full-time work plus workers who have given up looking entirely, it could reach 25 percent, exceeding the worst national unemployment levels of the Great Depression.
.
.
.
In my view, there is a very HIGH probability that California will default.

It’s obvious its debt merits a junk bond rating from every Wall Street rating agency.

And it’s equally obvious that the ratings agencies are artificially inflating the rating, stalling downgrades, and grossly understating the risk to investors.

My recommendations:

1. If you wait for Moody’s or S&P to act, it could be too late. Even if you can’t get what you might consider a good price, sell all California paper now!

2. Seriously consider dumping all tax-exempt bonds. I know the income is better than equivalent Treasuries. But if California defaults, it could set off a chain reaction of bond price plunges and defaults throughout the municipal bond market.

3. Don’t underestimate the impact California’s depression is having — and will continue to have — on the rest of the U.S. economy. At $1.8 trillion, the state’s GDP is so large, any further deterioration could wipe out every so-called “green shoot” in the national economy seen to date.

4. Stay safe, with a big portion of your nest egg in cash, tucked away in short-term Treasury bills … and with a very modest portion in gold, as an insurance policy against a dollar decline.

more...
http://www.moneyandmarkets.com/california-collapsing-34271

[mrdmk]

68. Well that was cheerful reading...

In the mean time, California has its collective political thumb up its ass and Wall Street has the nerve to say things are not moving fast enough.

[tclambert]

87. If we all jump up and down at the same time, maybe the San Andreas will give way.

Nah, that won't work. Maybe rhythmic jumping, setting up a harmonic resonance.

[UpInArms]

27. Treasurys up on World Bank outlook, Fed buyback

http://www.marketwatch.com/story/treasurys-up-on-world-bank-outlook-fed-buyback

NEW YORK (MarketWatch) -- Treasury prices advanced Monday, pushing yields lower, after the World Bank said the global economy will shrink 2.9% this year, a deeper fall than the 1.7% contraction it predicted in March. Ten-year note yields (UST10Y 3.78, -0.05, -1.20%) fell 6 basis points to 3.72%.

U.S. debt was also supported as the Federal Reserve is expected to buy Treasurys maturing between 2026 and 2039 later in the session. Gains may be limited amid reticence before the central bank's two-day policy meeting ends Wednesday and $104 billion in notes are sold by the government this week.

[UpInArms]

28. Employers cutting back 401(k) plans

http://www.reuters.com/article/newsOne/idUSTRE55L0AZ20090622

NEW YORK (Reuters) - A quarter of U.S. employers have eliminated matching contributions to employee 401(k) retirement plans since September to save money amid the economy's downturn, according to research released on Monday.

A quarter of U.S. employers also have instituted limited enrollment rather than open the savings plans to all employees, according to the study conducted for Charles Schwab Corp. by CFO Research Services.

Although the study showed 23 percent of companies have eliminated 401(k) matching contributions, most see the move as temporary, said Steve Anderson, who heads Retirement Plan Services at Charles Schwab, a financial services provider.

"Most view that as a temporary step. They don't see that as a long-term approach," he said.

Workers with 401(k) plans have seen their savings hit hard in the recession. A 401(k) account allows workers to defer taxes on some income and typically put the money in a mix of stock and bond mutual funds and other investments.

Companies often match all or part of employee contributions.

Asked to identify the most important feature of their company's 401(k) plans, 87 percent of those polled said it was the company's match, the Schwab study said.

...more...

[UpInArms]

29. Citi urges governments to pull bank foreclosure trigger

http://www.reuters.com/article/newsOne/idUSTRE55L1VP20090622

LONDON (Reuters) - Toxic real estate mortgages are holding the global economy to ransom and the banking sector will not return to health without a purge of its distressed property assets, the CEO of Citigroup Property Investors said.

The burgeoning economic rally could fizzle out by the end of the year unless governments take more affirmative action to protect it, by forcing bailed-out banks to sell off distressed property, Roger Orf told the Reuters Global Real Estate Summit.

"Any time that you have got clouds on the horizon, it means there is not clear sailing ahead. And these are thunderclouds, maybe even a cyclone," Orf said.

"I personally feel the best way to do that is through creative destruction as opposed to a malaise where you let the air out of the tire over a number of few years," he said.

"Regrettably, governments are not forcing banks to sell assets and that's one of the fundamental things needed to restore equilibrium to property markets," Orf said.

Orf said he did not expect fully functioning property lending markets to return before 2011, by when he hoped banks will have completed repair of their capital bases through a wave of real estate sales.

Until then, any talk of a sustainable economic recovery was at best optimistic, and at worst naive.

"I don't think there are any greenshoots. These greenshoots are weeds," Orf said.

...more...



shitibank fouled their nest and now blames the world for its own stink

[Tansy_Gold]

34. .

.











(i'm speechless)

[Demeter]

54. I Think the Headline Grossly Misrepresents Citi's Message

I doubt that they are urging bank foreclosures...housing foreclosures, yes, but...

[Tansy_Gold]

74. That's why I was, er, speechless

EXCUSE ME? they're urging foreclosures on mortgages to clean up the toxic loans THAT THEY FUCKING MADE????? Homeowners can be jettisoned, but banks have to be rescued --- BY THE VERY SAME HOMEOWNERS/TAXPAYERS WHO ARE KICKED TO THE CURB?


I
DON'T
FUCKING
THINK

SO!


I think I'd better go back to being speechless.

[Hugin]

31. Obama defends Fed as overseer on systemic risk (Reuters)

WASHINGTON (Reuters) - President Barack Obama in an interview aired on Monday defended his administration's plan to give the Federal Reserve new powers to oversee systemic risks in the economy.

Obama, in an interview shown on the CBS Early Show, said the administration wants an overseer that "is accountable and clear when it comes to these large systemic firms that could potentially bring down the entire financial system. The Fed has the expertise and the credibility I think to do it."

Asked whether lapses by the Fed contributed to last year's crisis, Obama said, "It wasn't the Fed where regulations broke down here."

(Washington World Desk)

______________________________________________________________________________

No comment.

[Demeter]

42. Now THAT'S Audacity!

[Tansy_Gold]

75. No.

That's fucking bull shit.

[Demeter]

97. Well, Yes, Most Audacity Is.

The rest is defiance. And we have seen which way Obama plays it already. Defiance of evil isn't his style...

[Hawkowl]

98. The audacity of bullshit

This will come back to destroy the Obama presidency. He either has no clue whatsoever, or he is hip deep in the corruption. He keeps this up he will go down in history as the Democrats' Hoover. All the people right now who are gleeful at the disarray of the Rethuglican party should always remember Jimmy Carter. Another brilliant man who was an ineffective president. A president who failed to drive a stake through the heart of the rethuglican party who then got his ass kicked by a ridiculous B movie actor leading a party recovering from Watergate and the Vietnam war.

I think there is a real possibility of Ron Paul being the next president in 2012. And yes, it scares the crap out of me.

[Demeter]

43. Onion's Sunday Magazine Cover

[ozymandius]

95. The Onion: ever relevant with gallows humor

Thank you, Demeter. The Onion is always good for a laugh.

[Demeter]

44. HERE'S HOW IT'S DONE: Beijing orders stock transfer

http://www.ft.com/cms/s/0/5b37d4dc-5e8c-11de-91ad-00144feabdc0.html

Every state-owned company that has listed in China since 2005 must transfer stock equal to 10 per cent of the shares offered to the National Social Security Fund, according to a weekend government edict.

A similar requirement already covers listings of Chinese state-owned companies in Hong Kong and has made the state fund the largest institutional investor in the city’s stocks.

The fund had lobbied for years to have the policy extended to companies listing on exchanges in Shanghai and Shenzhen to shore up fund assets as the share of the population over retirement age grows due to the government’s one child” policy.

The new edict, which will also apply to future listings, is also aimed at securing stability in the stock market as domestic initial public offerings start again this month after a nine-month suspension. Shares transferred to the fund will be covered by a three-year lock-up on top of any pre-existing lock-ups, to “strengthen investor confidence and benefit the long-term, stable and healthy development of China’s securities markets”, according to the State Council, China’s cabinet.

A total of 826 state-owned institutions are to transfer 8.394bn shares in 131 companies to the fund under the new policy, the government said. The shares are estimated to have a market value of Rmb63.9bn ($9.3bn).

The edict was announced in a joint statement by the fund, the Ministry of Finance, the State-owned Assets Supervision and Administration Commission and the China Securities Regulatory Commission.

Beijing last week approved an application by Guilin Sanjin Pharmaceutical to raise up to Rmb600m in an IPO, the first such approval since the suspension of new listings in September following a steep drop in the Shanghai Composite Index. The relatively small size of the planned IPO already signalled a cautious approach towards the lifting of the suspension.

The lock-up periods for a large amount of non-tradable state enterprise shares will expire this year, which could put supply pressures on the market. Analysts estimate the amount of tradable shares in the Shanghai and Shenzhen markets could expand by up to 50 per cent this year as a result.

The State Council order for the share transfer to the social security fund follows plans announced in January for a Rmb850bn reform of the country’s patchy health system, including a pledge to grant medical insurance to every citizen.

China has many pension schemes which are severely underfunded.

[Demeter]

45. Bankers’ pay soars in attempt to halt exodus

http://www.ft.com/cms/s/0/1d532086-5e9b-11de-91ad-00144feabdc0.html

Wall Street names that have been among the most buffeted in recent months – Merrill Lynch, UBS and Citigroup – are hiking pay for their top investment bankers in an attempt to stop an exodus of talent.

Rivals report that poaching the best people from troubled banks has become far trickier. “Since the middle of May it has got far more difficult to get the people we want,” said one senior banker.

Between late 2008 and May, expansionist banks such as Barclays Capital, Credit Suisse and Deutsche Bank had plundered hundreds of senior bankers from those groups that were laid low by the financial crisis, in particular Merrill and UBS.

“I would say UBS and Merrill have each lost 25 per cent of their best people,” said Patrick Field, chairman of London-based financial headhunter Hanover Search.

In spite of the troubled environment, market rates for bankers have been running close to the boom-time highs of two years ago. “In some cases we’ve been paying up to 80 per cent of 2007,” admitted one senior executive at an expanding bank.

But the environment changed four or five weeks ago, bankers say. Partly driven by a need to hold on to good staff – and partly to offset the threat of bonus taxes or caps in the US – UBS, Merrill and Morgan Stanley have all increased their basic pay substantially. Citi now plans to do the same.

According to insiders and rivals, market salary rates for managing directors have jumped from about $250,000 (€180,000) only a few months ago, to closer to $400,000.

As well as base salary hikes, banks are once more offering guaranteed bonuses to staff approached with lucrative offers by rivals. Bank of America, for example, has seen off attempts to poach top Merrill bankers by matching or bettering offers.

Regulators will be concerned – increasing basic pay and guaranteeing bonuses run directly counter to their efforts to push banks towards pay that better reflects long-term performance.

JEEZE, WHY DON'T THE BANKS DO WHAT THE ENGINEERING FIRMS DO--HIRE ALIENS ON H1-B VISAS, PROMOTE UNQUALIFIED, UNTRAINED TECHNICIANS TO ENGINEERING JOBS, OR GO INTO HIGH FINANCE AND GET OUT OF THE DIRTY BUSINESS OF MANUFACTURING...

OH WAIT, I GUESS THEY ALREADY DID THAT.

[mrdmk]

83. Move to what? Retirement!

I have a job for them with new suits. The suits will be orange and the job will be busting rocks.

This is a red herring justification of CEO's need for a big paycheck, with a big year end thata' boy, and let's not forget the golden parachute. Not to mention ten or so well payed minions to cover their ass and to find some nobody to fall on their sword.

[Demeter]

46. Big names eye Lehman’s debt

http://www.ft.com/cms/s/0/3aa71240-5ea1-11de-91ad-00144feabdc0.html

The hedge funds that have been buying Lehman debt at a discount include some of the industry’s best-known operators – such as Elliott Associates, John Paulson’s Paulson & Co, King Street and Centerbridge Partners .

However, in spite of all the interest, buying Lehman debt is not an investment for the faint of heart. Sorting out the claims in the case could take years, and that means investors will have to pay big legal fees while waiting patiently for courts to rule.

“You can’t analyse Lehman by looking at its assets and liabilities or assessing the business model. Lehman is like betting on red 27 on the roulette table,” said the co-founder of a leading credit hedge fund who has decided against buying Lehman debt. “It isn’t about investing; it is all about probabilities you can’t quantify.”

Elliott said in a recent letter to its investors that it expected “to spend more time in the months ahead” looking into foreign affiliates of Lehman that it believes “owe tens of billions of dollars back to the Lehman holding company”.

Court documents say Elliott, King Street and Paulson together control $12.5bn in claims. In its letter, Elliott said: “In the March quarter, we continued to build the position in the Lehman Brothers claims.”

[Demeter]

47. Fiat shake-up at Chrysler hits top gear

http://www.ft.com/cms/s/0/00757d82-5e83-11de-91ad-00144feabdc0.html

Fiat is moving aggressively to put its stamp on Chrysler’s assembly plants even before they restart production following a two-month shutdown.

Rick Laporte, president of a Canadian Auto Workers union branch at Chrysler’s minivan plant in Windsor, Ontario, told members last week that Fiat, which now owns 20 per cent of Chrysler, was following the previous management in implementing a Toyota-style “world-class manufacturing system”.

The difference, according to Mr Laporte, “is the intensity in which Fiat is launching it . . . You will see it and feel it the first day back to work”.

Chrysler closed its plants during its court-supervised restructuring to bring down inventories and adjust to the departure of thousands of workers in the latest round of buy-outs.

Seven assembly plants are due to restart production next week, although they will shut again in July for the industry’s normal two-week summer break.

Sergio Marchionne, Fiat’s chief executive, who also took the reins at Chrysler as soon as the Detroit carmaker emerged from a court-supervised restructuring this month, has made a mantra of “world-class manufacturing”.

He has described the system, under which plants compete against one another, as “probably one of the highest examples of integrity that I can find . . .  Not only do I support it, but I want it. In no unmistakable terms, I want it.”

Underlining Mr Marchionne’s sense of urgency, Mr Laporte said: “Fiat has stressed with us that they will remove the barriers in their way, including members of management who do not change their old ways”.

He added that “Fiat management stressed (at a recent meeting with the union) they have removed 100% of management in some facilities”.

Leon Rideout, president of a CAW branch at a Chrysler car plant near Toronto, said changes included enlarging assembly-line teams from six to 10 workers. One Chrysler manager described Fiat’s approach as “very data-driven”.

A group of Chrysler managers has already visited Fiat plants abroad, returning to Detroit with instructions to train their colleagues in Fiat production processes. Chrysler named a head of “world class manufacturing” on Friday as part of the second management shake-up under Fiat.

Mr Marchionne told the Financial Times in an interview last month: “The problem is never with the blue collar – with the people running the business day to day. It’s the people at the top of the structure.”


...Chrysler’s unions have agreed not to strike until at least 2015 as part of the conditions of the bail-out provided by the US and Canadian governments.

MARCHIONNE SOUNDS LIKE A MAN WITH A PLAN, AND SOME HARD FACTS TO WORK WITH

[Ghost Dog]

71. That highlighted paragraph describes essence of what makes Mr. Marchione

an exceptionally good manager.

[Demeter]

49. Swiss bankers at crossroads on secrecy (LIGHT DAWNS ON MATTERHORN)

http://www.ft.com/cms/s/0/2835a3aa-5e93-11de-91ad-00144feabdc0.html

Switzerland’s private bankers are close to accepting their traditional business model of managing the undeclared wealth of foreigners cannot be sustained in a world of greater transparency.

Leading members of the Swiss Private Bankers Association have recognised they may have to raise tax compliance with clients and, if necessary, encourage them to declare previously hidden assets.

The change in attitude has come after international pressure this year forced Switzerland to dilute its almost impenetrable bank secrecy following a bruising US legal battle against UBS, the world’s biggest wealth manager.

Private bankers stress they cannot force clients to come clean. But many say they would encourage tax compliance should sanctions imposed by domestic tax jurisdictions be deemed fair and acceptable.

SWISS BANKERS MAY HAVE TO RESORT TO HANDING OUT PREMIUM SWISS CHOCOLATE, INSTEAD!

[Demeter]

51. Too Big to be Restructured

http://economistsview.typepad.com/economistsview/2009/06/too-big-to-be-restructured.html

America's socialism for the rich: Corporate welfarism, by Joseph E. Stiglitz, Commentary, Project Syndicate: ...America's banks are pushing back on efforts to regulate them ... The old system worked well for the banks (if not for their shareholders), so why should they embrace change? ...

It has long been recognized that those America's banks that are too big to fail are also too big to be managed. That is one reason that the performance of several of them has been so dismal. ...

The Obama administration has, however, introduced a new concept: "too big to be financially restructured". The administration argues that all hell would break loose if we tried to play by the usual rules with these big banks. ..."

I think this judgment is wrong. I think the Obama administration has succumbed to political pressure and scare-mongering by the big banks. As a result, the administration has confused bailing out the bankers and their shareholders with bailing out the banks.

Restructuring gives banks a chance for a new start: new potential investors ... will have more confidence, other banks will be more willing to lend to them, and they will be more willing to lend to others. The bondholders will gain from an orderly restructuring, and if the value of the assets is truly greater than the market (and outside analysts) believe, they will eventually reap the gains. ...

Rewriting the rules of the market economy - in a way that has benefited those that have caused so much pain to the entire global economy - is worse than financially costly. Most Americans view it as grossly unjust...

By contrast, the United States has provided little help for the millions of Americans who are losing their homes. Workers who lose their jobs receive only 39 weeks of limited unemployment benefits, and are then left on their own. And, when they lose their jobs, most lose their health insurance, too.

America has expanded its corporate safety net in unprecedented ways, from commercial banks to ... automobiles, with no end in sight. In truth,... this is an extension of long standing corporate welfarism. The rich and powerful turn to the government to help them whenever they can, while needy individuals get little social protection.

We need to break up the too-big-to-fail banks; there is no evidence that these behemoths deliver societal benefits that are commensurate with the costs they have imposed on others. And, if we don't break them up, then we have to severely limit what they do. They can't be allowed to do what they did in the past - gamble at others' expenses.

This raises another problem with America's too-big-to-fail, too-big-to-be-restructured banks: they are too politically powerful. Their lobbying efforts worked well, first to deregulate, and then to have taxpayers pay for the cleanup. Their hope is that it will work once again to keep them free to do as they please, regardless of the risks for taxpayers and the economy. We cannot afford to let that happen.

MORE STIGLITZ AT

http://www.thejakartapost.com/news/2009/06/09/america039s-socialism-rich-corporate-welfarism.html

[Demeter]

52. Waving Goodbye to the TARP

http://dealbook.blogs.nytimes.com/2009/06/09/waving-good-bye-to-the-tarp/

Never have the nation’s top bankers been so happy to part with $68 billion...

[Demeter]

53. ‘It’s time to enshrine Hank Paulson as national hero’ WTF?

http://trueslant.com/matttaibbi/2009/06/08/mean-street-it%E2%80%99s-time-to-enshrine-hank-paulson-as-national-hero-deal-journal-wsj/

By Evan Newmark:

Hank Paulson is a national hero.

I said it last October and I’m sticking by it. And now, there’s actual evidence to back me up. The TARP bailout worked. The Wall Street crisis is over.

via Mean Street: It’s Time to Enshrine Hank Paulson as National Hero - Deal Journal - WSJ.

So here’s the letter I wrote to the Wall Street Journal after reading Evan Newmark’s paean to Hank Paulson last week:

Dear WSJ,

Just out of curiosity — did Evan Newmark ever work for Goldman, Sachs? And if the answer to the question is yes, don’t you think that might have been a good fact to disclose before he fellated Hank Paulson in his “Mean Street” column?

Sincerely,
Matt Taibbi

I didn’t get an answer, which I guess is not surprising. But in the interim I found out that Newmark did, indeed, work for Goldman. I find it funny that a business journalist has to disclose if he’s invested in this or that stock, or short this or that security, before a newspaper will allow him to have an opinion about anything even distantly related to that company — but you don’t need to disclose anything if all you’re doing is kissing your former boss’s ass.

Can you imagine what a craven, bumlicking ass-goblin you’d have to be to get a job working for the Wall Street Journal, not mention up front that you used to be a Goldman, Sachs managing director, and then write a lengthy article calling your former boss a “national hero” — in the middle of a sweeping financial crisis, one in which half the world is in a panic and the unemployment rate just hit a 25-year high? Behavior like this, you usually don’t see it outside prison trusties who spend their evenings shining the guards’ boots. I can’t even think of a political press secretary who would sink that low. Hank Paulson, a hero? Are you fucking kidding us?

Exactly what part of Paulson’s record is heroic, Evan? The part where he called up SEC director William Donaldson in 2004 and quietly arranged to get the state to drop capital requirements for the country’s top five investment banks? You remember that business, right, Evan? Your hero Paulson met with Donaldson and got the rules changed so that Goldman and four other banks no longer had to abide by the old restrictions that forced banks to actually have a dollar or two on hand for every ten or so they lent out. After that, it was party time! Bear Stearns in just a few years had a debt-to-equity ration of 33-1! Lehman’s went to 32-1. By an amazing coincidence, both of these companies exploded just a few years after that meeting, and all of the rest of us, Evan, ended up footing the bill, thanks to a state-sponsored rescue of Bear and a much larger massive bailout of Wall Street in general, necessitated in large part by the damage caused by the chaos surrounding Lehman’s collapse.

Meanwhile your own Goldman, Sachs ended up with a 22:1 debt-to-equity ratio a few years following that meeting, a number that would have been much higher if one didn’t count the hedges Goldman bought through a company called AIG. Thanks in large part to Paulson’s leadership in his last years as head of Goldman, the company was so massively over-leveraged that it would have gone under if AIG — which owed Goldman billions when it went into its death spiral last September — had been allowed to collapse. But thanks to Hank Paulson, who heroically stepped in and gave AIG $80 billion the same weekend he allowed one of Goldman’s last key competitors, Lehman, to collapse, Goldman didn’t have to go without that money; $13 billion of the AIG bailout went straight to Goldman. So I guess we have Paulson to thank for the fact that he used about $13 billion of our taxpayer money to essentially bail out his own fuckups. I mean, that’s heroism if I’ve ever seen it. Audie Murphy has nothing on that. Sit your asses back down, Harriet Tubman, Thomas More, Gandhi and Jesus Christ. Hank Paulson is in the house!

Or maybe it was Paulson’s foresight in heading off the crisis before it happened that inspired you? Maybe it was the way Paulson pronounced the subprime fallout “contained” in 2007 and called the economy the “strongest in decades?” Or maybe it was the way he remained calm last July, saying that it was a “very manageable situation” and “our regulators are on top of it?” Remember how he said all that shit, Evan, just about six weeks before the world exploded? Remember that Henry Paulson was actually in charge of regulating the financial environment during the last years of the crisis and did nothing as his buddies on Wall Street built one gigantic mountain of leverage after another, gashing underwriting standards across the board, saddling the country with a generation of toxic assets that all of the rest of us will be paying for in taxes (instead of, for instance, a health care program, which we can now no longer afford) for the next fifty fucking years? Do you remember that part?

Or was it his non-intervention last summer when gas prices hit $4.50 a gallon thanks again to his old buddies at Goldman and Morgan Stanley, who juiced the commodities market with so much speculative cash that oil prices soared despite the fact that supply was up and demand was down all year? Do you remember that part? How about the way food prices soared thanks to the same commodities speculators? According to the World Food Program at the UN, about 100 million people joined the ranks of the hungry last year during the commodities spike.

Or maybe it was the way the Treasury Department refused to tell the Congress really anything at all about how it chose whom to give TARP money to; how when the Congressional Oversight Panel asked Paulson what criteria he was using to decide who gets bailout money and who doesn’t, he sent Congress back a copy of a TARP application form. Maybe it was that. Or maybe it was the way Paulson got a $200 million tax deferral thanks to an obscure rule that allows executives who join the government to defer taxes on their holdings. That means that not only did Paulson use billions of our money to bail out his own mistakes, he managed to use a loophole to get out of paying his fair share of that same bailout.

Even if it weren’t about five years too early to make any kind of judgment at all about whether or not TARP helped, the notion that Henry Paulson is a hero is complete and utter madness because TARP would never have been necessary if someone, anyone who wasn’t a greed-addled incompetent like Paulson had actually been regulating the economy in the last years of the Bush adminstration. If anyone besides Paulson had been running Goldman Sachs earlier in this decade — if a person with a serious brain injury had been in his place, for instance, or a horse, or a head of lettuce — we’d all be better off today, because there wouldn’t be so many toxic Goldman-underwritten mortgage-backed CDOs on the market. We, all of us, are paying the freight for assholes like Paulson, and like you, for that matter. And while we’re getting over it, slowly, you’re really not helping when you open your mouth and pat yourself on the back for all the good deeds you’ve done. Spare, us, okay? Just give it up.


AND THAT'S THE GOSPEL FOR THE DAY, FOLKS. EXCELLENT RANT, MR. TAIBBI!

[AnneD]

64. And I am not so old that I can remember when Congress.....

would have conferred sainthood on Greenspan. They would have made him Treasurer for Life. Old Papa Doc Greenscum.x(

[ozymandius]

66. And once upon a time, Wall Street Execs, preaching deregulation, went to prison

for rampant criminality. Scum like Richard Whitney.

[Demeter]

69. The Good Old Days

http://www.youtube.com/watch?v=gsMu0rZuNGY&eurl=http%3A%2F%2Fwww.allmusicals.com%2Flyrics%2Fjosephandtheamazingtechnicolordreamcoat%2Fthosecanaandays.htm&feature=player_embedded

Simeon

Do you remember the good years in Canaan?
The summers were endlessly gold
The fields were a patchwork of clover
The winters were never too cold
We'd stroll down the boulevards together
And everything round us was fine

Jacob

Now the fields are dead and bare
No joie de vivre anywhere
Et maintenant we drink a bitter wine

Brothers

Those Canaan days we used to know
Where have they gone, where did they go?
Eh bien, raise your berets
To those Canaan days

Simeon

Do you remember those wonderful parties?
The splendour of Canaan's cuisine
Our extravagant, elegant soirees
The gayest the Bible has seen
It's funny but since we lost Joseph
We've gone to the other extreme
No-one comes to dinner now
We only eat them anyhow
I even find I'm missing Joseph's dreams

Brothers

Those Canaan days we used to know
Where have they gone, where did they go?
Eh bien, raise your berets
To those Canaan days

Simeon

It's funny but since we lost Joseph
We've gone to the other extreme
Perhaps we all misjudged the lad
Perhaps he wasn't quite that bad
And how we miss his entertaining dreams
Brothers

Those Canaan days we used to know
Where have they gone, where did they go?
Eh bien, raise your berets
Simeon

To those Canaan days
Brothers

Eh bien, raise your berets
To those Canaan days

[AnneD]

72. This weekend I re watched All the President's Men...

and watched Network for the first time. After seeing them.....I just cried. We have lost so much. I hate to think the apex of America Democracy happened in my lifetime.

[Demeter]

70. More Bile from Matt Taibbi

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=103&topic_id=458142&mesg_id=458142

[Demeter]

55. MISSIVE FROM CHINA: Stimulus – at what cost?

http://mpettis.com/2009/06/stimulus-%E2%80%93-at-what-cost/

Today is the second day of the dreaded gaokao, the national college entrance exam that more than half of all Chinese kids in their age cohort will sit to determine whether or not they will go to university (just over 60% of the test takers will start college next September) and, much more importantly, which one they will attend. Throughout Beijing anxious parents are standing glumly in the heavy (but cleansing) June rain waiting for their kids to emerge from the exams so that they can pepper them with worried questions. It is a scary time for a lot of people.

In the previous six years the number of students taking the exam has jumped every year, from 5.3 million in 2002 to 10.5 million in 2008. This year, for the first time, the number of students sitting the exam has actually declined to 10.2 million.

The official position is that the decline reflects a drop in the number of 18-year-olds in China, but there has been widespread discussion in the press that the decline was too large to be explained just by the smaller number of high-school graduates, and that in part it reflects fears of rising unemployment among college graduates. College is becoming a less attractive option to some Chinese.

6.1 million college students will graduate this month and, according to the Ministry of Human Resources and Social Security, about 1 million have been unable to find jobs so far. Over the past three years the number of college graduates finding jobs has stagnated even as the number of graduates has surged, even during the boom years of 2006 and 2007. Part of this was caused by the surge in college enrollment, but at least part of the employment difficulties facing college graduates has been blamed on the very poor quality of university education, especially in the new or newly expanded schools, and its failure to prepare students for the kinds of jobs that the market wants.

Over recent months the government has made finding position for graduates, including in the army and as rural high school teachers, a top priority. The front page of today’s People’s Daily has an article citing a speech by Premier Wen Jiabao in Xi’an (in Shaanxi province) encouraging graduates to widen their job search:

Chinese Premier Wen Jiabao has urged the country’s college students to find grassroots jobs in less developed regions as the economic downturn increases pressures in employment market. Visiting Xi’an, capital of central Shaanxi Province, from Friday to Sunday, Wen said employment was one of the government’s priorities for the sake of the country’s economy and for the future of individuals.

“College students, laid-off workers and migrant workers waiting for jobs are my biggest concern,” Wen told job hunters at an employment center. He encouraged graduates from universities and colleges to find work in grassroots regions, and called on employers to create more jobs.

Since the second half of last year, the government has implemented a series of policies to create jobs. The State Council, or Cabinet, also decided to give living allowances to graduates who went to the central and western regions for internships.

Besides exhorting college grads to take the kinds of jobs they usually shun, the government is also still working on boosting growth. The Ministry of Finance recently raised the rebate of export taxes by around 15%, according to another article in today’s People’s Daily. This is part of the move to increase China’s export competitiveness, but I am not sure these kinds of measures are likely to have much positive global impact beyond crowding out export competitors and worsening the global trade environment.

As badly as Chinese exports have been hurt, and exports were down 22.6% year on year in April, Chinese exporters have still done much better than other exporting countries in Asia and elsewhere, suggesting that they have managed to avoid much of the brunt in the contraction in global imports, led by the contraction in the US. This, as I argued in last week’s entry, has as much to do with credit and interest rate policies as it does with any inherent competitive advantage.

Not surprisingly, given these moves, expectations of a rise in the value of the RMB are declining. For the fifth day in a row, according to an article in today’s Bloomberg, the 12 month RMB forward declined, trading currently at 6.714, implying a 1.8% appreciation over the year (because these forward markets cannot easily be arbitraged, they do not price according to interest differentials, as forwards normally do, and so may contain more expectational content that a lot of other forward markets).

Meanwhile an interesting article in always-hard-hitting Caijing worries about the flood of bank credit, and whether borrowers are earning nearly enough to cover interest costs:

Chinese bank lending increased to more than 5 trillion yuan between January and April, nearly three times the credit level reported during the same period last year. Even if new loans average only 500 billion yuan during each of the remaining eight months of 2009, the year’s total would be more than 9 trillion yuan – more than all loans issued over the previous two years combined.

The industrial sector’s recent performance provides solid grounds for concern over this rapid credit growth. A National Statistics Bureau survey of 22 regions found industrial profits totaled only 323 billion yuan during the first quarter, down 32 percent from a year earlier. That means annual profits for all industries will amount to only about 1.6 trillion yuan this year.

Outstanding loans currently stand at 35 trillion yuan. Assuming companies have kept a moderate debt ratio averaging less than 50 percent, their capital investments now exceed 35 trillion yuan. And profits of 1.6 trillion yuan versus 35 trillion in capital investment means an annual return rate of only 4.57 percent, below the weighted loan interest rate of 4.76 percent we saw in March. In this sense, companies seem to be in a rather weak position to finance debt with earnings.

Although the writer of the piece, economist Lu Lei, thinks that continued expansion in the banking system creates enormous risks, he doubts that the PBoC will put the brakes on bank lending for a number of reasons, the most important being that commercial bank lending is at the heart (and lungs and nearly every other organ I can think of) of the fiscal stimulus program, and without it, there is no stimulus.

Looking at tax revenues, local governments nationwide were unable to collect as much in the first quarter as in the same period 2008. In fact, tax receipts fell 1.4 percent, in sharp contrast to the 34.7 percent increase posted a year earlier. Cursed with double pressure from a directive to invest and shrinking revenue, local governments have had every incentive to use banks as financing proxies.

Now we’re faced with the possibility of undesirable negative GDP growth. Banks, concerned about defaults, may grant only 300 billion yuan in new loans every month for the rest of the year. So we’re stuck with a painful choice between two losing scenarios: a more moderate monetary policy that would cripple fiscal policy, leading to an outright “hard-landing;” or continuing a loose monetary policy backed by fiscal spending, which risks future loan losses and a weaker market. To get around the problem, the central bank may be forced to fill holes at banks by pumping in money, in effect imposing an inflation tax on all consumers

Lu lei’s “painful choice” is exactly right, and what an inevitable worrier like me has been worrying about since last summer. In January I wrote about this “all but the kitchen sink” policy, of throwing everything they can into stimulating the economy, and said that although this would certainly result in higher than expected growth this year, it would come at a real cost. I wrote:

This strategy may be politically necessary but ultimately represents a gamble on the duration of the global slowdown. If the duration is short and the slowdown light, it will have been a winning gamble, and once the world takes off again China can get serious about resolving the internal imbalances.

Of course if the global slowdown is long and deep, the gamble will have failed. That means, dear readers, that if Chinese GDP growth in 2009 is higher than I projected – say 8% – I will not whip out the party hats and favors. Instead I will immediately begin whining about the state of the banking system.

To make matters worse there is a story that appeared a few weeks ago in an article in Australian newspaper The Age, warning about something that has been much discussed over the past year, that the fiscal stimulus package, or more precisely, the way it is being financed, could lead to rising contingent debt at the provincial and municipal level.

Beijing will have to jam on the economic brakes to save cities from bankrupting themselves, says a top Chinese adviser. He Fan, an assistant director at the Chinese Academy of Social Sciences who frequently advises top leaders, says as much as two-thirds of Beijing’s 4 trillion yuan ($A773 billion) stimulus program will be spent by local governments, financed mainly by state-owned banks.

“Some local governments will virtually go bankrupt,” Professor He told BusinessDay. “Previously, local governments got all their money from selling land. This is not sustainable. Some areas have already sold quotas from the next 30 years.” A number of large cities are thought to be at risk, including Kunming and Hangzhou, with their funding problems exacerbated by a slump in real estate sales.

Professor He goes on to worry that easy money has poured into asset markets as well as questionable projects that were previously rejected by the NDRC.

“Banks have strong incentives to lend to NDRC-approved projects because if they end up as a fiasco, there is no political risk,” he said. “They can say ‘it is not my fault, the NDRC told us to lend’.”

When banks are encouraged to lend huge amounts, and with an implicit guarantee against any losses, it is pretty hard to imagine their not embarking on a wild lending spree. On a related but very different subject, I have been corresponding with Steve Keen, a professor at the University of Western Sydney and someone whose blog I often read and whose unconventional insights I find very valuable and persuasive (the fact that he is an expert in and admirer of the works of Hyman Minsky doesn’t hurt either).

I wrote to him to ask his thoughts on the implications on monetary policy and debt structures of China’s rising savings rate. It seems to me that as savings rise as a share of GDP, this must have dampened the impact of the very loose monetary conditions in China over the past several year. If this is the case, and if savings rates do indeed decline in the next few years, there could be important consequences for monetary policy. I plan to think about this a little more and, if I come up with anything interesting to say, I will write about it. Maybe some of the readers of this blog might have some interesting ideas. Steve Keen’s initial response included the following:

Now that the American private sector has stopped borrowing, but both American and Chinese governments are pumping base money into the system, and American consumers and businesses are desperately trying to delever, the dynamics alter considerably. But I expect the overall result will be a relative fall in the Chinese “savings rate” and a rise in the American one.

Obviously I think looking at this from the point of view of savings rather than debt is why we haven’t worked this out to date. A lower consumption rate is definitely part of it, but the debt flows themselves-which generate the monetary flows that then accumulate in accounts depending on consumption rates–are the driving part of the story, not the consumption rates themselves.

[Demeter]

56. GM shows gravity of pension challenge By Tony Jackson

http://www.ft.com/cms/s/0/88d06214-5375-11de-be08-00144feabdc0.html

Published: June 7 2009 16:51 | Last updated: June 7 2009 16:51

In the thunderous collapse of General Motors last week, one detail seems to have gone almost unnoticed. The old GM’s US pension fund, with its near-$100bn (£63bn) of liabilities, is being transferred lock, stock and barrel to the new entity. As a direct result, the new GM could be bankrupt again in a very few years.

From a UK perspective, this insouciance seems curious. But the US is somewhat behind the game in grasping the scale of the corporate pensions crisis.

The key moves which flush that crisis into the open – the marking of deficits to market, their inclusion on balance sheets, and the official requirement that they should be made good – are all now in place in the US. But they still have the force of novelty.
.............

GM’s US fund is, of course, in deficit, but the company has made no contributions since 2003. Back then, it put in $18.5bn, which it raised through a bond issue. Since this counted as a pre-payment, GM is not obliged to pay any more for the next year or two. However, it will then have to start plugging the gap, under the new rules set down by the Pension Protection Act of 2006. This, Mr Ralfe calculates, would involve diverting $1bn to $2bn annually from operating cash flows. If GM cannot do that, bang it goes again.

At that point, the fund would be taken over by the official Pension Benefit Guarantee Corporation (PBGC). Why did that not happen this time round?

Because, Mr Ralfe suggests, of the legal terms under which the PBGC operates.

Its maximum annual payment is $54,000 for a 65-year-old, but only $20,000 for a 50-year-old. And in Detroit, it is commonplace for car workers to retire on full pension at 50.

The PBGC has calculated that if it took over all the auto industry’s pensions, members would lose 40 per cent on average.

A 50-year-old GM pensioner with a $54,000 annual entitlement, Mr Ralfe reckons, would lose 60 per cent. Add that all up, and GM’s annual $9bn pension bill would be cut by $3.5bn.

And so, in an exercise which has inflicted various degrees of loss on GM’s shareholders and bondholders, the 670,000 members of the pension fund are protected. Anything else, it seems, would be politically impossible.

The snag is, of course, that if new GM goes bust a few years from now, the bill to the PBGC will have gone up to the tune of the $3.5bn a year that would otherwise have been saved. When we put that in the context of a GM fund with assets of $91bn at the last count, it is not trivial.

Nor is it trivial in the context of the PBGC, which – as I have written in this column before – is seriously underfunded, and has just reported a deficit of $33.5bn for the year to March. The whole problem, in short, has not been addressed, just kicked down the road.

The nagging question that remains is whether the whole system or corporate pensions can be rescued. Increasingly, the external risks and volatility of these schemes cannot be afforded by the companies themselves. And the official rescue schemes set up in both the US and UK are nowhere near big enough to shoulder the burden.

..........

The conclusion is depressing but unavoidable. Some countries are only now confronting the pensions crisis, while those who did so earlier have yet to solve it. Where are those innovative investment bankers when you need them?

[Demeter]

57. Bill Gross: “Staying Rich in the New Normal”

http://www.nakedcapitalism.com/2009/06/guest-post-bill-gross-staying-rich-in.html

PIMCO’s founder Bill Gross is out with his latest monthly missive. It makes for interesting reading, especially in regards to the captains of finance and their desire to stay rich using other people’s money.

I remember as a child my parents telling me, perhaps resentfully, that only a doctor, airline pilot, or a car dealer could afford to join a country club. My how things have changed. Now, as I write this overlooking the 16th hole on the Vintage Club near Palm Springs, the only golfers who shank seven irons into the lake are real estate developers, investment bankers, or heads of investment management companies. The rich are different, not only in the manner intoned by F. Scott Fitzgerald, but also in who they are and what they do for a living. Whether some or all of them are filthy is a judgment for society and history to make. Of one thing you can be sure however: over the next several decades, the ability to make a fortune by using other people’s money will be a lot harder. Deleveraging, reregulation, increased taxation, and compensation limits will allow only the most skillful – or the shadiest – into the Balzac or Forbes 400.

Gross goes on to reflect that the U.S. is not keeping pace with the rest of the world in terms of producing Forbes 400 wealth, the obvious takeaways being that the U.S. is declining relative to the rest of the world and this spells trouble for the megarich as much as it does for the average American. Obviously, this has great significance for the fortunes of the U.S. government and its ability to stimulate the economy with deficit spending. Gross was on record saying the sell-off in U.S. government paper was a direct result of doubts regarding the U.S. government’s solvency, something Willem Buiter is also analysing regarding the U.K. government. Gross has this to say about the fortunes of the U.S. government (emphasis his):

To zero in on the U.S. of A., its annual deficit of nearly $1.5 trillion is 10% of GDP alone, a number never approached since the 1930s Depression. While policymakers, including the President and Treasury Secretary Geithner, assure voters and financial markets alike that such a path is unsustainable and that a return to fiscal conservatism is just around the recovery’s corner, it is hard to comprehend exactly how that more balanced rabbit can be pulled out of Washington’s hat. Private sector deleveraging, reregulation and reduced consumption all argue for a real growth rate in the U.S. that requires a government checkbook for years to come just to keep its head above the 1% required to stabilize unemployment. Five more years of those 10% of GDP deficits will quickly raise America’s debt to GDP level to over 100%, a level that the rating services – and more importantly the markets – recognize as a point of no return. At 100% debt to GDP, the interest on the debt might amount to 5% or 6% of annual output alone, and it quickly compounds as the interest upon interest becomes as heavy as those “sixteen tons” in Tennessee Ernie Ford’s famous song of a West Virginia coal miner. “You load sixteen tons and whattaya get? Another day older and deeper in debt.” Pretty soon you need 17, 18, 19 tons just to stay even and that describes the potential fate of the United States as the deficits string out into the Obama and other future Administrations.

Later in this same piece, he opines that moving to a more balanced budget is certainly the way to end the increase in treasury yields and the prospect of enormous interest payments compounding annually to new breathtaking proportions.

The obvious solution to both dollar weakness and higher yields is to move quickly towards a more balanced budget once a sustained recovery is assured, but don’t count on the former or the latter. It is probable that trillion-dollar deficits are here to stay because any recovery is likely to reflect “new normal” GDP growth rates of 1%-2% not 3%+ as we used to have.

But, as he suggests, trillion-dollar deficits ARE the new normal indeed. Moving to eliminate these deficits too early as Tim Geithner suggests the Obama Administration wants to do risks a 1937 outcome. See my post “Beware of deficit hawks” to see why Japan in the 1990s and the U.S. in the 1930s suffered prolonged depressions because of deficit hawkishness.

In the end, one can only conclude that the U.S. is indeed likely to deficit spend for a considerable period and that this is going to have negative effects on its credit rating and relative standing in the global economy. A diminished future for America is an inevitability of having lived beyond its means for far too long. Accepting this fact is likely to provide a better outcome than resisting it as the U.K. did when its tenure as king of the hill came to an end.

P.S. – you should notice I put this post under the categories "Banana republic’ and ‘Credit markets’

[Joanne98]

58. Does anybody have a link for support and resistance numbers?

I used to have one but I can't find it.

[ozymandius]

67. Are you looking for a definitions page?

There's this one from Investopedia.

[Demeter]

59. Looting and How It Came to Pass

http://www.nakedcapitalism.com/2009/06/looting-and-how-it-came-to-pass.html


One of the things that has intrigued me about the financial crisis is that it is pretty clear that looting took place at the high end of the financial services industry, yet few have called it by that name, in part because it has been difficult to identify the mechanisms by which it occurred.

Looting, as described by George Akerlof and Paul Romer, occurs when business owners go broke at society's expense (loot) rather than go broke as the unfortunate result of having gambled on success and lost. And looking at Wall Street, the fact set strongly suggests that looting took place, In the old days of private partnerships, firms might blow themselves up on an individual basis, and you'd occasionally see serious industry downdrafts thinning the herd (the back office crisis of the late 1960s, the one-two punch of the end of fixed equity commissions plus the down leg of the 1970s bear market). But having the industry run off the cliff en masse was previously limited to commercial banking.

Now when William Black, a senior bank regulator during the S&L crisis, has talked about this phenomenon, he frames it as control fraud, meaning orchestrated in a deliberate fashion at the top level of a firm. While that probably contributed, particularly if an organization was desperate, but I suspect more complicated mechanisms played a big role.

To give a very simple example: back in the ages of stone knives and bearskins, when I was young, Citibank engaged in double and sometimes triple counting to encourage different groups internally to play nicely together. Thus if a deal yielded $1 million in profit center earnings, each operation that worked on it booked $1 million in profits.

The problem that then resulted was that individual units met their targets, but at higher levels, where the double/triple counting was netted out, the band didn't.

My suspicion is we have had a massive version of an analogous version of the same problem, in which the internal (and probably even the reported) accounting did not accurately reflect the true economics of the business. And the way this turned out to be looting (as opposed to mere stupidity of the sort practiced traditionally by commercial banks) is that on Wall Street, a very big percentage of revenues is paid out as comp. So exaggerated earnings translate very directly into bigger pay packages.

Bruce Krasting, via Institutional Risk Analytics, sets forth one example:

Simplistic example. You are a bank. You have two customers. Southwest Airlines (NYSE:LUV) and Chevron (NYSE:CVX). SW calls and says, "Lets do a deal. Every 6 months for five years we will swap money based on 1 mm barrels of oil at $60. If the then cash price is less than $60 I pay you. If it is more than $60 you pay me."

You say "fine" and then call Chevron. You enter into the exact opposite of the first swap trade. You make money doing this. You have a matched book. As a result of your purchases and sales you will have $50,000 in profit every six months for the next five years or a total locked in gain of $500,000.

At the end of the day your boss asks, "How did you do today?" You answer, "we made $500,000". He says, "Great. Here is your bonus". If you went to three market makers who did exactly the same as you did on that day the profit and loss results might be significantly different. For example:

- One could report a gain of $500,000. That would be justified. But would overstate the economic results

- Another might just record a gain of $100K (the current year portion that is "locked in"). The balance of the income is realized annually for five years. This would understate income. No one likes that.

- Yet another might book just $400K of gains currently. This would represent the NPV of the $500k over the five-year period based on an internal capital rate set by the banks management. This is close to economic reality and is the form that most banks use to value this type of business. While it is the most appropriate and reasonable approach, it too is badly flawed.

The next day your bank announces quarterly earnings and says, "We made $400K. We are paying a dividend based on that and we are paying bonuses based on that. Net-net, retained earnings will go up by $250,000. It was a good quarter"

In this very simple example there is no cash from this profit. The cash will come to you over five years. So you have to borrow to pay the dividend and the bonus and all the other current expenses relating to this profit.

What you have done is 'borrow' retained earnings from future cash flow. You look like you have retained earnings to support your tier one capital ratios. But when there is a real 'cash call' on your equity (2008) you do not have the cash equity to survive. So you have a TARP party.

The OTC reform proposal plan does not give the banks the ability to do this. And that is why they do not like it. This same income recognition issue exists in the OTC swap market for currencies with maturities greater than one year.


Since the big financial intermediaries claim to run netted CDS books (and we found at least one big stuffee, AIG, who was eating a ton of risk), CDS alone could have played a major role in future profits being accelerated and treated to a large degree as cash flow earnings.

Do readers have any sense of how prevalent this was? I would assume it was close to universal for CDS. And what other products would have been subject to it besides CDS?

[Robbien]

62. While California budget woes are making the news; Illinois is silently going through the same issues

and I expect many other states as well.

From Dkos
"No one asked us...."
http://www.dailykos.com/story/2009/6/21/745361/-No-one-asked-us....

Today I came home from work with another headache, jaw sore from clenching my teeth, drained emotionally and physically. I spent the whole day with people who's lives are being ripped apart. Hours spent trying to answer questions that had no answers, offer encouragement where none was merited, and ultimately knowing I failed on every level.

* KibbutzAmiad's diary :: ::
*

I work for a not-for-profit that provides support for disabled adults. The majority of people I work with personally are mildly mentally retarded and have several major medical issues. They work, if they are able to find work, with the aid of a job coach and a lot of support. They run out of food stamps before the end of the month. They cannot drive, and rely on staff support to get them to appointments, count out and keep track of their medication, help them with grocery shopping and meal planning, remind them to do laundry, keep their apartments clean, and provide them with a means to take part in community activities.

Like many other social service agencies, the place I work at was informed that due to the inability of the Illinois General Assembly to pass a tax increase desired by the governor, deep cuts would have to be made and funding for many programs would be eliminated altogether or reduced so drastically as to be unworkable. These cuts mean that the 25 adults I work with as a direct support giver will be without any assistence beyond whatever the federal programs offer, such as social security disability.

Imagine being told that you will lose your means to get to work, your home, your means to grocery shop, and all the people that make up your daily life. Imagine being told this and being unable to read, unable to do your own banking, unable to take care of yourself in the ways most of us take for granted. You can't just move home with mom and dad - you are 40, 50, or 60 years old and your parents, if they are alive, are in no position to take care of you. You have questions, you have terrible fears, and none of the people you have relied on and trusted to help you have any answers.

So the past two weeks have been extremely difficult for all of us. Every single person I work with is facing the loss of all the structures and components that make up their life. They are all terrified. They all feel helpless, and angry. These are people who have spent a lifetime struggling to cope with a society that tells them daily that they are less than "normal", not worthy of much. Yet for the most part they remain polite, and friendly, and optimistic. But this has gutted them.

Today I went to visit one of them, a 43 year old man named Will. Will looks ten years younger than his actual age. Unlike many of the people I work with, he is in good shape - he is careful to work out regularly and eat as well as he can on his budget. He works at a discount store and does a good job, taking the train to work and back. He smiles a lot, and makes an effort to be friendly, even to strangers. This takes some extraordinary optimism on his part because strangers have not always been kind to Will. He does not look "disabled". But he cannot really read or write, and has an IQ in the low 60s. He cannot drive or pay his own bills or - most significantly for him right now - handle the complexities of his medical treatment for stage IV melanoma. All of those tasks are currently handled by the staff that supports him. All of those services will end July 1.

And Will does not understand why. When we spoke today, he told me that he felt it was not fair. He didn't want to lose the staff help. He didn't know what he would do without the help, how he would live (neither do I). He has tried to do the right thing, he said, followed the rules, worked hard, been nice to people. Why was this happening? His cancer, he understood, was just one of those things that was probably beyond anyone's control and no one's fault. But this - this was deliberate. The funding cuts were a decision quite within the control of those in power. And then he went silent for a bit. I stared out the window.

"No one asked us", he suddenly said, quite forcefully for him - he's very soft spoken normally. "No one asked us if it was okay to do this. No one asked us ANYTHING and we're the ones who are hurt by it. It's not right. No one asked us."

No, they sure as hell did not. In this nation, when changes in public policy are made, who gets asked? The rich and the powerful. Those least affected are carefully consulted and their best interests put front and center. But as Scarlett O'Hara succinctly put it, it's a sight easier to steal from the poor and weak than from the rich and strong.

A society that requires charity to care for the vulnerable is a sick society. Caring for those who cannot care for themselves should be a part of the social contract and a function of the collective - the government. Where are the pro-lifers when it comes to Will? Unfortunately for him, he had needs that extended for a period that exceeded the nine months of gestation.

The US has made many sick choices regarding our priorities. There are thousands of examples like Will's, examples of those with the least getting hit the hardest. But here's what I'm feeling right now: Any system that allows this - over and over again - is simply not worth preserving. We demand far too little and tolerate far too much. We will get nothing we don't take.

I don't know how long Will has to live. It's likely somewhere in the 9-18 month range, given his current medical status. Should he have to spend the last year of his life dealing with this? Is keeping our state taxes low worth that? Yes, says every Republican member of the General Assembly, it is. They have chosen sides. It's time we do the same - whatever the cost.

Then from an Illinois blogger
http://povertytoopportunity.blogspot.com/2009/06/budget-and-you.html

I want to tell you why the budget affects YOU. It doesn't matter who you are, you benefit directly or indirectly from the critical social services that will be cut dramatically (in some cases entirely). Some of these services include:

* child care centers
* foster parenting stipends
* in-home care for seniors
* domestic violence shelters
* violence prevention programs
* substance abuse recovery programs
* housing programs for persons with disabilities
* HIV prevention programs
* vaccination programs
* homelessness prevention programs
* supportive housing programs
* emergency aid programs
* psychiatric services

If any of you have children or elderly family members, you can see the direct impact cuts in these programs will have on you and your loved ones. But, you will suffer further both immediately and in the long term as well as both financially and socially.

Immediately on July 1st, the people of Illinois that need these programs will be left with less or nothing and with fewer or no resource to turn to. Homelessness, illness, abuse, and crime will increase. Because poverty and needs for services are everywhere, these negative consequences will happen near you. Even if you think you have no direct link to the program cuts, the quality of your day-to-day life will erode as you deal with the negative consequences due to the loss of social services in Illinois.

This reduction in quality of life will impact you as property values decrease, social networks fray, and community organizations go out of business. The State and non-profits will have fewer resources o deal with growing needs. The preventative infrastructure that promotes safe, decent, sustainable communities throughout Illinois will crumble. And, eventually, you will pay much more for the reactive programs that will be required to deal with our deteriorating standard of living.

In short, cutting these programs and avoiding revenue increases now, will result in even greater costs in the future. In the meantime, you will also pay socially and financially if Illinois fails to provide necessary services.

Then from an article originally published at ISN Security Watch
http://www.mexidata.info/id2279.html

Three months after 9/11, The New York Times ran a quiet story that highlighted a developing trend concerning a sudden increase in the number of police officers retiring from their jobs for careers with private security companies (PSCs). “The heightened hunger for private protection in the aftermath of history's worst terrorist attacks is fueling the potentially destabilizing exodus,” the story claimed.



The daily suspected that police officers were being lured by the lucrative salaries and benefits offered by the private sector, finding that within the New York Police Department, a “supervisor who plays matchmaker between retired officers and security firms asked to provide hundreds of names to industry executives.”



Indeed, the article identified what at the time was thought of as a marginal development, but is now almost commonplace:

<snip>

The phenomenon runs deeper than the normal shopping center or bank security guard. While in many cases private security personnel act more as city cleanup, organization or local ambassadors, some cities are pushing for armed private security personnel to patrol the streets, perform arrests and transport civilians. This is somewhat of a cause for concern, especially because of the more controversial issues surrounding the role of private military and security companies abroad in places like Iraq and Afghanistan.



Cities are turning to the private sector for a variety of reasons. Some local and state governments are under pressure from budget deficits and are often convinced that privatized industries are more cost-effective than state agencies and bureaucracies. Other cities have an already overstretched force that cannot respond to increases in crime, so private contractors are seen as a quick fix and an easy force multiplier.

From Oakland to New Orleans

<snip>



According to the daily Portland Mercury newspaper, Portland, Oregon’s downtown area is patrolled by armed personnel with arrest powers that are supplied by Portland Patrol, Inc, a company which, according to local media, has repeatedly evaded requests to appear before the city’s oversight committee.



Over 2,000 miles away, Chicago has turned to a company that currently operates in police-like automobiles marked “special patrol,” according to CBS News, and are expected to have their powers expanded as the city combats increased crime rates with an overstretched police force.



more. . .

There are 700,000 sworn policemen but there are over a million private security guys out there patrolling our streets

This country of ours is turning into a sad and scary place. Meanwhile tarp banks are organizing a larger than usual bonus program for their execs.

[Pale Blue Dot]

73. Opinion: Selling Organs for Cash Should be Option

When it comes to Apple and Steve Jobs, all the focus today will be on whether the company should have revealed the state of Jobs' health. That is unfortunate. This story should serve as another lesson in the evils of government intervention.

What do we know about organs that people need in order to survive? There aren’t enough of them. Want more? Pay for them. Give people a financial incentive to give up their liver when they die. Supply will sky rocket.

Are you aghast? I’m going to infuriate you even more with this one: Let living people sell a kidney.

One argument against paying the deceased's family for organs is the fear that those relatives will be more likely to let the donor die at crucial decision making points. Well, under that logic, you’d have to outlaw all inheritances.

Another argument you will hear: If you let people sell a kidney, you are exploiting the poor as they are the only one’s who will be desperate enough to do so.

Yes, the poor will be the suppliers, but I think it is paternalistic to tell them what they can or cannot do with their bodies. In addition, they could be making a very rationale choice.

http://www.cnbc.com/id/31489599

[Tansy_Gold]

78. .

.

[Pale Blue Dot]

82. Yep.

:wow:

[zogofzorkon]

84. Why not just convict them of a crime,

being poor will do, sentence them to death and harvest their organs? Do the sheep profit from the sale of lamb chops?

[tclambert]

89. But you can't execute them by poison gas or lethal injection.

That could leave toxins in the organs you want to harvest. You need a method of execution that causes quick brain death but does no harm to the other major organs. Luckily, a doctor invented such a device. His name was Dr. Guillotin.

[Pale Blue Dot]

88. So, are we finally at the beginning of the end?

Is the Bear Bounce over? Are people waking up?

[Tansy_Gold]

90. z-z-z-z-z-z-z-z-z-z-z-z

:snore:

[DemReadingDU]

93. What are green shoots?

Seriously, one of my sisters today didn't have a clue what that means.

:crazy:

[tclambert]

91. Okay, I couldn't find the Sam Waterston SNL clip. Copyright issues. But here is a re-enactment,

badly acted: http://www.youtube.com/watch?v=KYTJuP34WYc&feature=related

"And when they grab you with those metal claws, you can't break free . . . because they're made of metal, and robots are strong."

"Make a choice. Old Glory insurance. For when the metal ones decide to come for you. And they will."