STOCK MARKET WATCH, Wednesday October 21

[ozymandius]

Source: du

STOCK MARKET WATCH, Wednesday October 21, 2009

Bush Administration Officials Convicted = 1
Name(s): David Safavian

Financial Sector Officials Convicted = 6

AT THE CLOSING BELL ON October 20, 2009

Dow... 10,041.48 -50.71 (-0.50%)
Nasdaq... 2,163.47 -12.85 (-0.59%)
S&P 500... 1,091.06 -6.85 (-0.62%)
Gold future... 1,059 +0.50 (+0.05%)
10-Yr Bond... 3.34 -0.05 (-1.33%)
30-Year Bond 4.16 -0.03 (-0.81%)

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

Market Conditions During Trading Hours

GOLD, EURO, YEN, Loonie, Silver and US$

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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. Market Observation

Seventh Inning Stretch
BY FRANK BARBERA

With the major league baseball series now in the championship playoffs, and the World Series dead ahead, this week seemed like a good time for a stock market article with a baseball theme. Of course, baseball games can often last close to three hours, so fans of the sport have to be relatively patient in watching a game, as there is a reasonable investment in time. Just the other day, the Yankee/Angel game went into extra innings extending to 13 innings. What a marathon that was! No wonder the baseball league set up the tradition of the seventh inning stretch, where everyone in the ball park stands up and sings “Take Me Out to the Ball Game.” It is that late stage pause, where the audience has a break to come up for air, stretch out the arms and legs, before getting right back into the game. So it is in the stock market, where after a long advance, the market will normally consolidate and ‘catch its breath,’ just prior to the final rally leading into a more significant market top. Right now I believe that while the rally of the last few weeks has been terrific, it is now largely complete with a consolidation phase dead ahead.

The consolidation phase is the market's way of issuing a ‘seventh inning stretch.’ In my view, the chances are very high that the upcoming pause will last anywhere from three to five weeks, most likely encompassing most of the month of November. In fact if I had to guess, I would venture a strong guess that for the next four to five weeks the S&P straddles 1100 with a range of 20 to 25 points either side. Call it 1075 by 1125 with a 50 point spread centered around 1100. High to low, I doubt that market swings more than 4.5% at any time. Now, the reason for this is called ‘carry over’ upside momentum. In my work I look at a lot of different gauges, and at the moment most of them are at very high levels suggesting that the stock market is very overbought and therefore due for a rest. Yet it is in the degree of “overboughtness” that is very high which tells us that we are not yet at a final rally high. Markets do not peak on maximum overbought values, nor do they peak on maximum price momentum. While the market is not exactly on the ‘max’ values right now, in general, we are still in close proximity to what were very recently ultra high values, and that tells us that overall, a significant medium term top, possibly a very major top, is still a few more weeks down the road.

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

[ozymandius]

2. Today's Report

10:30 Crude Inventories 10/16
Briefing.com NA
Consensus NA
Prior 0.33M

14:00 Fed's Beige Book

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

[UpInArms]

44. Petroleum Inventories Report:

10:31a Distillate stockpiles fall 800,000 barrels

10:31a Gasoline inventories fall 2.3 million barrels: EIA

10:31a Distillate stockpiles fall 800,000 barrels

10:30a U.S. crude inventories rise 1.3 million barrel

[ozymandius]

3. Oil slips for second day, falls below $79

SINGAPORE – Oil prices fell for a second day Wednesday in Asia as investors eyed a bigger-than-expected U.S. crude inventory increase and weak economic data.
Benchmark crude for December delivery fell 29 cents to $78.83 a barrel by late afternoon Singapore time in electronic trading on the New York Mercantile Exchange.

.....
The November contract expired Tuesday, ending down 52 cents at $79.09.

.....
U.S. oil inventories rose last week, the American Petroleum Institute said late Tuesday. Crude stocks increased 3.8 million barrels while analysts had expected a rise of 2.2 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

The Energy Information Administration is scheduled to release its supply data later Wednesday.

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

[ozymandius]

4. Fewer home-building permits signal weakness ahead

WASHINGTON – Applications for home building permits, a key gauge of future construction, fell in September by the largest amount in five months — a discouraging sign for the housing industry. A rebound in housing is needed to support a broader economic recovery.

.....
Meanwhile, the Labor Department said wholesale prices fell 0.6 percent last month on a drop in energy costs. Outside food and energy, core inflation edged down 0.1 percent. In the 12 months ending in September, core wholesale prices rose a modest 1.8 percent.

The Commerce Department said construction of homes and apartments rose 0.5 percent last month to a seasonally adjusted annual rate of 590,000 units. That was a weaker showing than the 610,000 economists had expected.

The applications for building permits fell 1.2 percent, the second setback in the past three months and the biggest decline since a 2.5 percent drop in April.

http://news.yahoo.com/s/ap/20091020/ap_on_bi_ge/us_economy

[ozymandius]

5. IRS probing home-buyer tax credit claims: report

(Reuters) – The U.S. Internal Revenue Service is probing more than 100,000 doubtful claims of a tax credit meant for first-time home buyers, the Wall Street Journal reported on its website on Tuesday.
.....

Lawmakers have expressed concern that significant number of claims might turn out to be fraudulent, the paper said.

http://news.yahoo.com/s/nm/20091020/ts_nm/us_homebuyercredit

[ozymandius]

6. Sun Microsystems to Cut 3,000 Jobs

Sun Microsystems Inc. said it plans to lay off about 3,000 employees, or about 10% of its work force, because of delays in the closing of its purchase by Oracle Corp.

The hardware and software maker has been reducing its work force over the years because of declining revenues, and additional job cuts have been widely expected to happen after Oracle buys the company.

.....
Meanwhile, Sun's business is in limbo. Oracle Chief Executive Larry Ellison said recently that Sun was losing $100 million a month.

Sun, which disclosed plans for the reductions in a filing with the Securities and Exchange Commission, said the positions will be eliminated over the next 12 months. But a Sun spokeswoman said the cuts are already under way, and that the timing described in the filing is in part a result of local laws that require advance notice of terminations. She declined to say how many positions have already been eliminated.

http://online.wsj.com/article/SB10001424052748704500604574485702943694042.html?mod=WSJ_hpp_LEFTWhatsNewsCollection

[Festivito]

7. Debt: 10/19/2009 11,952,611,405,769.02 (UP 3,888,861,919.07) (Mon)

(Tuesday afternoon report of a Monday status. .. Still bugs me that I find 1.88T$ within FY2009 and the press finds 1.44T$. Did we really place 440 billion dollars somewhere else? Good morning all.)

= Held by the Public + Intragovernmental(FICA)
= 7,530,348,395,836.58 + 4,422,263,009,932.44
UP 169,101,777.19 + UP 3,719,760,141.88

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 308-Million person America.
If every American, man, woman and child puts in $3.25 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.75, ABOUT TEN BUCKS for a 1B$ 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 10 seconds we net gain a another American, so at the end of the workday of the report, there should be 307,751,901 people in America.
http://www.census.gov/population/www/popclockus.html ON 09/27/2009 07:13 -> 307,558,299
Currently, each of these Americans owe $38,838.46.
A family of three owes $116,515.39. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 21 reports in the last 30 to 31 days.
The average for the last 21 reports is 6,902,108,927.21.
The average for the last 30 days would be 4,831,476,249.05.
The average for the last 31 days would be 4,675,622,176.50.
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$/day.
There were 174 reports in 253 days of Obama's part of FY2009 averaging 7.33B$ per report, 5.07B$/day so far.
There were 249 reports in 365 days of FY2009 averaging 7.57B$ per report, 5.16B$/day.
There were 13 reports in 19 days of FY2010 averaging 3.29B$ per report, 2.25B$/day.
Above line should be okay

PROJECTION:
There are 1,189 days remaining in this Obama 1st term.
By that time the debt could be between 13.6 and 18.1T$.
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)
10/19/2009 11,952,611,405,769.02 BHO (UP 1,325,734,356,855.94 so far since Obama took office.)

FISCAL YEAR DEBT CHANGE, Sep 30 prior year to Sep 30 named year:
(One "* " for each 40B$ reached)
FY1994 +0,281,261,026,873.94 ------------* * * * * * * WJC
FY1995 +0,281,232,990,696.07 ------------* * * * * * * WJC
FY1996 +0,250,828,038,426.34 ------------* * * * * * WJC
FY1997 +0,188,335,072,261.61 ------------* * * * WJC
FY1998 +0,113,046,997,500.28 ------------* * WJC
FY1999 +0,130,077,892,735.81 ------------* * * WJC
FY2000 +0,017,907,308,253.43 ------------WJC
FY2001 +0,133,285,202,313.20 ------------* * * C&B
01-WJC +0,053,598,528,417.78 ------------* WJC 31% of FY, 40% of FY-Debt
01-GWB +0,079,686,673,895.42 ------------* GWB 69% of FY, 60% of FY-Debt
FY2002 +0,420,772,553,397.10 ------------* * * * * * * * * * GWB
FY2003 +0,554,995,097,146.46 ------------* * * * * * * * * * * * * GWB
FY2004 +0,595,821,633,586.70 ------------* * * * * * * * * * * * * * GWB
FY2005 +0,553,656,965,393.18 ------------* * * * * * * * * * * * * GWB
FY2006 +0,574,264,237,491.73 ------------* * * * * * * * * * * * * * GWB
FY2007 +0,500,679,473,047.25 ------------* * * * * * * * * * * * GWB
FY2008 +1,017,071,524,649.92 ------------* * * * * * * * * * * * * * * * * * * * * * * * * GWB
FY2009 +1,885,104,106,599.30 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * B&O
09GWB +0,602,152,152,000.60 ------------* * * * * * * * * * * * * * * GWB 31% of FY, 452% of FY-Debt
09-BHO +1,282,951,954,598.70 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * BHO 69% of FY, 963% of FY-Debt
FY2010 +0,042,782,402,257.30 ------------* BHO

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
09/28/2009 -000,773,265,151.59 --- Mon
09/29/2009 +000,473,982,417.68 ------------********
09/30/2009 +091,724,705,747.96 ------------**********
10/01/2009 -045,967,461,558.95 -
10/02/2009 +000,166,120,250.33 ------------********
10/05/2009 -000,035,707,866.46 ---- Mon
10/06/2009 +000,640,950,413.48 ------------********
10/07/2009 +000,015,260,219.44 ------------*******
10/08/2009 -027,497,592,311.52 -
10/09/2009 -000,014,303,257.45 ----
10/13/2009 +010,339,703,734.17 ------------********** Tue
10/14/2009 +000,250,135,805.15 ------------********
10/15/2009 +040,455,301,335.22 ------------**********
10/16/2009 -000,034,671,440.79 ----
10/19/2009 +000,169,101,777.19 ------------******** Mon

69,912,260,113.86 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008 while Bush was in power JUST BEFORE fiscal year end.
Bush admin borrowed $962,245,245,654.01 in those last 124 days in office crossing two fiscal years.
$360,093,093,653.42 in last 12 days of FY2008, and $602,152,152,000.59 in subsequent 112 days before leaving office.

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=4110867&mesg_id=4110910

[Festivito]

46. Debt: 10/20/2009 11,956,584,748,608.58 (UP 3,973,342,839.56) (Tue)

(Wednesday afternoon report of a Tuesday status. Usual stuff.)

= Held by the Public + Intragovernmental(FICA)
= 7,530,432,902,398.43 + 4,426,151,846,210.15
UP 84,506,561.85 + UP 3,888,836,277.71

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 308-Million person America.
If every American, man, woman and child puts in $3.25 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.75, ABOUT TEN BUCKS for a 1B$ 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 10 seconds we net gain a another American, so at the end of the workday of the report, there should be 307,760,541 people in America.
http://www.census.gov/population/www/popclockus.html ON 09/27/2009 07:13 -> 307,558,299
Currently, each of these Americans owe $38,850.29.
A family of three owes $116,550.86. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 22 reports in the last 30 to 32 days.
The average for the last 22 reports is 6,768,983,195.95.
The average for the last 30 days would be 4,963,921,010.36.
The average for the last 32 days would be 4,653,675,947.22.
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$/day.
There were 174 reports in 253 days of Obama's part of FY2009 averaging 7.33B$ per report, 5.07B$/day so far.
There were 249 reports in 365 days of FY2009 averaging 7.57B$ per report, 5.16B$/day.
There were 14 reports in 20 days of FY2010 averaging 3.34B$ per report, 2.34B$/day.
Above line should be okay

PROJECTION:
There are 1,188 days remaining in this Obama 1st term.
By that time the debt could be between 13.6 and 18.1T$.
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)
10/20/2009 11,956,584,748,608.58 BHO (UP 1,329,707,699,695.50 so far since Obama took office.)

FISCAL YEAR DEBT CHANGE, Sep 30 prior year to Sep 30 named year:
(One "* " for each 40B$ reached)
FY1994 +0,281,261,026,873.94 ------------* * * * * * * WJC
FY1995 +0,281,232,990,696.07 ------------* * * * * * * WJC
FY1996 +0,250,828,038,426.34 ------------* * * * * * WJC
FY1997 +0,188,335,072,261.61 ------------* * * * WJC
FY1998 +0,113,046,997,500.28 ------------* * WJC
FY1999 +0,130,077,892,735.81 ------------* * * WJC
FY2000 +0,017,907,308,253.43 ------------WJC
FY2001 +0,133,285,202,313.20 ------------* * * C&B
01-WJC +0,053,598,528,417.78 ------------* WJC 31% of FY, 40% of FY-Debt
01-GWB +0,079,686,673,895.42 ------------* GWB 69% of FY, 60% of FY-Debt
FY2002 +0,420,772,553,397.10 ------------* * * * * * * * * * GWB
FY2003 +0,554,995,097,146.46 ------------* * * * * * * * * * * * * GWB
FY2004 +0,595,821,633,586.70 ------------* * * * * * * * * * * * * * GWB
FY2005 +0,553,656,965,393.18 ------------* * * * * * * * * * * * * GWB
FY2006 +0,574,264,237,491.73 ------------* * * * * * * * * * * * * * GWB
FY2007 +0,500,679,473,047.25 ------------* * * * * * * * * * * * GWB
FY2008 +1,017,071,524,649.92 ------------* * * * * * * * * * * * * * * * * * * * * * * * * GWB
FY2009 +1,885,104,106,599.30 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * B&O
09GWB +0,602,152,152,000.60 ------------* * * * * * * * * * * * * * * GWB 31% of FY, 452% of FY-Debt
09-BHO +1,282,951,954,598.70 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * BHO 69% of FY, 963% of FY-Debt
FY2010 +0,046,755,745,096.80 ------------* BHO

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
09/29/2009 +000,473,982,417.68 ------------********
09/30/2009 +091,724,705,747.96 ------------**********
10/01/2009 -045,967,461,558.95 -
10/02/2009 +000,166,120,250.33 ------------********
10/05/2009 -000,035,707,866.46 ---- Mon
10/06/2009 +000,640,950,413.48 ------------********
10/07/2009 +000,015,260,219.44 ------------*******
10/08/2009 -027,497,592,311.52 -
10/09/2009 -000,014,303,257.45 ----
10/13/2009 +010,339,703,734.17 ------------********** Tue
10/14/2009 +000,250,135,805.15 ------------********
10/15/2009 +040,455,301,335.22 ------------**********
10/16/2009 -000,034,671,440.79 ----
10/19/2009 +000,169,101,777.19 ------------******** Mon
10/20/2009 +000,084,506,561.85 ------------*******

70,770,031,827.30 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008 while Bush was in power JUST BEFORE fiscal year end.
Bush admin borrowed $962,245,245,654.01 in those last 124 days in office crossing two fiscal years.
$360,093,093,653.42 in last 12 days of FY2008, and $602,152,152,000.59 in subsequent 112 days before leaving office.

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=4112445&mesg_id=4112463

[ozymandius]

8. Coca-Cola sales miss; shares slip

NEW YORK (Reuters) - Coca-Cola Co (KO.N) reported lower-than-expected quarterly revenue, hurt by the stronger U.S. dollar, and said a weak economy would keep consumers under pressure next year, sending shares down 2 percent.

The world's largest soft drink maker echoed comments made earlier this month by rival PepsiCo Inc (PEP.N), which also posted disappointing revenue and cautioned that it did not expect a major revival of spending in 2010.

.....
Coke's net income was $1.90 billion, or 81 cents per share, in the third quarter, up from $1.89 billion, or 81 cents per share, a year earlier.

.....
Net operating revenue fell 4 percent to $8.04 billion, hurt by a 6 percentage point hit from the stronger U.S. dollar, which reduces the value of overseas sales. That missed analysts' average estimate of $8.11 billion.

Overall sales by volume rose 2 percent, after rising 4 percent in the second quarter and 2 percent in the first.

http://www.reuters.com/article/hotStocksNews/idUSTRE59J2EN20091020

[UpInArms]

13. huh? hurt by the stronger U.S. dollar? where?

:nuke:

[Warpy]

38. The dollar was stronger last quarter than it is now

but not to worry, they'll soon be selling their sugary bubbles to starving people around the world again.

A weak dollar is good for exports. Too bad we don't produce much stuff any more. It also makes US labor look more competitive, but that's only if it stays weak. In the short term, it just means more inflation in the face of deflationary pressure from massive job loss.

[ozymandius]

48. It means that the $US last quarter was worth five acorns, whereas previously,

it was worth only four acorns.

The bank called me today. Apparently the cash I deposited in my account bounced.

[ozymandius]

9. State Street Bank Accused of Fraud by California

The California attorney general’s office has charged the State Street Corporation with fraud, accusing the company of cheating the state’s two largest pension funds of at least $56.6 million by overcharging them for a series of foreign exchange trades.

The lawsuit, unsealed on Tuesday by a Sacramento Superior Court judge, contends that State Street currency traders consistently overcharged the two state pension funds, Calpers and Calstrs, for the costs of managing their accounts since 2001, and then concealed the charges.

The California attorney general is seeking to recover $200 million in overcharges and penalties.

.....
The lawsuit is the latest in a string of recent legal headaches for State Street, a bank that has long flown under the radar of ordinary investors but plays a crucial role in the global financial system in booking trades, lending securities and providing other services to hedge funds, pension funds and investment firms. Federal regulators considered it one of 19 too-big-to-fail banks in the recent stress tests.

State Street has faced multiple regulatory investigations and shareholder lawsuits over whether it misled investors about the risk in certain bond fund, derivatives, and subprime mortgage-related investments. One lawsuit was filed in April on behalf of the Sisters of Charity of the Blessed Virgin Mary.

http://www.nytimes.com/2009/10/21/business/21street.html

[DemReadingDU]

41. California AG Goes Postal On Caruso-Cabrera

10/20/09 Jerry Brown, California AG Goes Postal On Caruso-Cabrera

After having been invited to appear on CNBC to discuss the litigation launched against State Street for what on the surface at least appears rather damaging allegations (and, in honesty, something that does not come as a surprise to anyone on Wall Street), the California Attorney General is greeted by this intellectual pearl from the woman who alleges bloggers tend to generically fall in the "idiot" camp. Michelle - while the blogosphere can not made any counterclaims yet, it is quite nice of you to open your mouth and do it for us:

"I don't dispute that $56 million is a lot of money, I don't dispute the merits of the suit but you had a big press conference, you're coming on C....N....B....C...., all this surrounding publicity over this $56 million, what do you say to people who look at this and say this is a perfect example of the demagoguery that attorney generals use when they want to run for governor."

The hilarity that ensuses has to be seen to be believed (at 3:20 into the clip). Also, for whatever, reason the recently cancelled Dennis Kneale chimes in.

click link for video...
http://www.zerohedge.com/article/california-ag-goes-postal-caruso-cabrera

[Demeter]

50. Too Bad the Only Cure For That Disease Is Death

[ozymandius]

10. Dark Pool Trade Limit Said to Be Cut 95% in SEC Plan

.....
The commission will propose lowering the amount of daily volume in a company’s shares that can be executed on the networks before prices must be made public to 0.25 percent from 5 percent tomorrow, said the people, who declined to be identified because the discussions weren’t public. John Nester, an SEC spokesman, declined to comment.

The rule change may curtail the number of transactions on dark pools, off-exchange platforms run by firms such as Goldman Sachs Group Inc. and Getco LLC that have drawn scrutiny from Democratic Senators Ted Kaufman of Delaware and Charles Schumer of New York. The systems usually shut down trading in a security when they approach the current 5 percent limit.

.....

Traders turn to dark pools instead of public markets such as the New York Stock Exchange to avoid revealing their identities and giving competitors clues about their strategies. Kaufman and Schumer say the platforms limit transparency in securities markets and put smaller investors at a disadvantage.

The SEC will exempt block trades, or orders exceeding a certain number of shares, from the new rule, according to one of the people. Firms specializing in blocks account for 8 percent of all dark-pool trading in the U.S., according to data compiled by Aite Group LLC, a Boston-based financial-services consultant.

http://www.bloomberg.com/apps/news?pid=20601087&sid=azDE7Q.4qkTo

[ozymandius]

11. Paul Volcker, Mervyn King, Glass Steagall, and the Real TBTF Problem

Great post from Yves Smith:

Paul Volcker wants to roll the clock back and restore Glass Steagall, the 1933 rule that separated commercial banking from investment banking, but Team Obama is politely ignoring him.

Mervyn King, the Governor of the Bank of England, is giving a more strident version of the same message, calling on the biggest financial firms to be broken up, arguing that he sees no reason not to implement a Glass-Steagall type split.

But there is an interesting failure of all parties to discuss some of the real issues.

First, a quick overview of the Volcker-Administration differences per the New York Times:

The aging Mr. Volcker (he is 82) has some advice, deeply felt…He wants the nation’s banks to be prohibited from owning and trading risky securities, the very practice that got the biggest ones into deep trouble in 2008. And the administration is saying no, it will not separate commercial banking from investment operations….

The Obama team, in contrast, would let the giants survive, but would regulate them extensively, so they could not get themselves and the nation into trouble again. While the administration’s proposal languishes, giants like Goldman Sachs have re-engaged in old trading practices, once again earning big profits and planning big bonuses.

Mr. Volcker argues that regulation by itself will not work. Sooner or later, the giants, in pursuit of profits, will get into trouble. The administration should accept this and shield commercial banking from Wall Street’s wild ways.

“The banks are there to serve the public,” Mr. Volcker said, “and that is what they should concentrate on. These other activities create conflicts of interest. They create risks, and if you try to control the risks with supervision, that just creates friction and difficulties” and ultimately fails.

I think Volcker is wrong, but not for reasons one might expect. I am not opposed to separating commercial banking and investment banking (although you could achieve the same result by aggressively firewalling the depositary operations and limiting the kind of risks it could take. Having the two activities under the same roof would become pointless, indeed cumbersome, and they would over time be split up, since someone in a position to earn a deal fee would persuade management that value could be created by separating the units).

The problem with Volcker’s logic isn’t that it lacks merit, but it is not close to being the solution he imagines it to be.

http://www.nakedcapitalism.com/2009/10/volcker-glass-steagall-and-the-real-tbtf-problem.html

[ozymandius]

12. G'bye all. Have a wonderful day

:donut: :donut: :donut:
Time for me to get ready for work.

:hi:

[UpInArms]

14. dollar watch

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

Last trade 75.582 Change +0.017 (+0.02%)

British Pound Advances on Bank of England Minutes, Euro Remains Weighed

http://www.dailyfx.com/forex/fundamental/daily_briefing/session_briefing/us_open/2009-10-21-1049-British_Pound_Advances_on_Bank.html

The British Pound remained bid overnight and surged higher following the Bank of England Minutes, and the GBP/USD may continue to retrace the sell-off from the previous month as it finds near-term support around the 100-Day SMA (1.6353). Nevertheless, market participants anticipate the U.K. economy to emerge from the recession in the third quarter, with economists forecasting GDP to expand 0.2% from the three-months through June, and long-term expectations for higher borrowing costs may continue to drive the exchange rate higher over the coming months as policy makers hold an improved outlook for future growth.

The BoE Minutes showed the MPC voted unanimously to hold the benchmark interest rate at 0.50% and to maintain its GBP 175B asset purchase program in an effort to support a sustainable recovery. The central bank said “recent developments were not sufficiently compelling to justify” a shift in policy, and stated that “the November inflation report would provide an opportunity to assess more fully how the medium- term outlook for activity and inflation had evolved since August.” Moreover, the board said that “there were differences of views” amongst board member on balancing the risks for growth and inflation, but all members saw that the stimulatory effects of the asset purchase program has been “substantial” and has helped to prop up asset prices, which should support private spending “only if sustained.” At the same time, the BoE anticipates price growth to be volatile over the short-term as the economy emerges from the recession, expects third-quarter GDP to be closely in-line with the August forecast.

The Euro weakened for the second day and slipped to an intraday low of 1.4887 against the greenback, and the lack of momentum to break above 1.5000 may lead the EUR/USD to retrace the advance from the previous month. The pullback from the 14-month high looks as though investors are scaling back their bullish sentiment towards the single-currency as European Central Bank President Jean-Claude Trichet warns of the adverse effects that will accompany “excessive volatility” in the currency market, and policy makers may look to temper the appreciation in the exchange rate as it hampers the prospects for a sustainable recovery.

U.S. dollar price action was mixed across the board during the overnight session, and the greenback is likely to face increased volatility during the North American trade as the Federal Reserve is scheduled to release its Beige Book at 18:00 GMT. The central bank is likely to hold an improved outlook for growth and inflation as policy makers see the economy emerging from the worst recession since the Great Depression however, dovish commentary may trigger a sell-off in the greenback as investors weigh the outlook for future policy. Nevertheless, as equity futures foreshadow a lower open for the U.S. market, the slump in risk appetite is likely to support the greenback going into the trading session as the reserve currency continues to benefit from safe-haven flows.

...more...

Oil, Metals May Correct Higher But Beige Book, Earnings Threaten Volatility

http://www.dailyfx.com/forex/fundamental/forecast/daily/2009-10-21-0624-Oil__Metals_May_Correct_Higher.html

Oil and precious metals prices may correct higher in European trading as equity index futures point to gains on the region's key exchanges but the release of the Fed's Beige Book and a long string of earnings reports create a strong possibility of volatility late into the session.

Commodities - Energy

Crude Validates Near-Term Bearish Outlook, Beige Book Now in Focus

Crude Oil (WTI)        $78.70        -$0.42       -0.53%

Crude prices behaved in line with yesterday’s technical forecast, breaking below support at the lower boundary of a bearish Rising Wedge formation to stall near $78 at the lower boundary of the rising channel that has guided prices higher since the beginning of the month after failing to build traction above the psychologically significant $80/barrel level. As expected, disappointing US construction sector data catalyzed the decline (the industry is the world’s largest consumer of crude). Tomorrow’s release of the Federal Reserve Beige Book, a survey of current conditions combined by the central bank’s regional branches, may further fuel downward pressure if traders see that the economic recovery is not as strong as seems to be priced given the breakneck pace of the rally in risky assets since March. Mortgage applications data is also due for release, but any weakness here may already be priced in after the housing data that has already crossed the wires this week. Finally, the Department of Energy is expected to report a jump in crude inventories, which points to ample supply and could weigh on prices. Continued bearish momentum from here will target just below the $76 handle.



Commodities - Metals

Metals May Correct Higher But Beige Book, Earnings Threaten Volatility

Gold       $1056.60       +$1.40       +0.13%

As we noted in yesterday’s forecast, gold prices put in a double below $1070 after showing a Bearish Engulfing candlestick formation, breaking below resistance-turned-support at the top of a minor rising channel pause just above the $1050 figure as PPI figures proved disappointing. As with oil, the Fed’s Beige Book will be important in setting the trajectory for risk appetite and the US Dollar, guiding gold trading by extension. A wealth of earnings reports is also on tap, with the triple threat of Morgan Stanley, Wells Fargo, and US Bancorp of note in particular after a disappointing result from Bank of America sunk capital markets earlier in the week. Continued bearish momentum will target near $1045. Equity index futures are pointing higher ahead of the opening bell in Europe so a bit of a bullish correction (at least) before Wall St comes online may be in the cards.

Silver $17.47 -$0.02 -0.10%
Silver behaved much the same as gold yesterday and the fundamental drivers are analogous to its more expensive counterpart going forward. Technically, the $17.15–24 region remains critical, with sustained break below that paving the way for a move below the $17 handle to challenge $16.75.



...more...

[UpInArms]

15. Fed's Yellen: No tightening in next several months

http://www.reuters.com/article/businessNews/idUSTRE59J6C720091021?feedType=RSS&feedName=businessNews&sp=true

SANTA BARBARA, California (Reuters) - The time for the U.S. Federal Reserve to start pulling back its extensive support for the economy is not close at hand and policymakers have time to decide what sequence of steps they will take, San Francisco Fed President Janet Yellen said on Tuesday.

"We have used the language of an extended period," Yellen, a voting member of the Federal Open Market Committee, told reporters after a Fed conference.

"This is not something I anticipate happening over the next several months. Certainly not."

Yellen's comments are in line with recent Fed statements, which have emphasized that while the U.S. economy may be emerging from recession, the recovery will be tepid and the central bank is in no hurry to raise interest rates, which have been virtually zero since December last year.

Reflecting a cautious mood among policymakers about the pace of the recovery, minutes of Fed meetings released on Tuesday showed Fed regional bank directors felt the economy was gaining strength in the second half of the year although the banking sector was still strained.

Financial markets have been impatient for a clear sign that the Fed is beginning to ratchet back its flood of cash and ultra-low interest rates amid rising stock markets and signs of economic recovery.

...more...

[UpInArms]

16. Madoff investors sue KPMG and major banks

http://www.reuters.com/article/businessNews/idUSTRE59J6F020091021?feedType=RSS&feedName=businessNews&sp=true

NEW YORK/LOS ANGELES (Reuters) - Some investors defrauded by epic swindler Bernard Madoff on Tuesday added accounting firm KPMG KPMG.UL, JPMorgan Chase (JPM.N) and Bank of New York Mellon (BK.N) to a civil lawsuit in a New York court, lawyer Joseph Cotchett said.

The lawyer, who also named Oppenheimer Acquisition Corp, Massachusetts Mutual Life Insurance MMLIC.UL, Tremont funds founder Sandra Manzke and former Tremont Chief Executive Robert Schulman in the amended lawsuit, said the complaint was based on his law firm's prison interview with Madoff in July, months of investigation and interviews with former employees.

Cotchett said "KPMG never blew the whistle on fraudulent conduct" at Madoff's British firm, Madoff Securities International Ltd, which the accounting firm audited.

The accounting firm also allegedly failed to catch "red flags" while auditing the feeder funds, including Tremont, that poured billions of dollars into Madoff's operations, the lawsuit read.

"The complaint alleges Bernard Madoff's fraud was not accomplished in isolation," the law firm said in a statement.

It "alleges JP Morgan and the Bank of New York as well as powerhouse accounting firm KPMG LLP and their international counterparts, KPMG UK and KPMG International, were primary players necessary to accomplish the fraud."

...more...

[UpInArms]

17. Goldman Sachs exec defends bonuses at ethics debate

http://www.reuters.com/article/businessNews/idUSTRE59J5XV20091020?feedType=RSS&feedName=businessNews

LONDON (Reuters) - Bumper payouts to bankers should be seen as part of a longer term investment in London's economy, the vice chairman of Goldman Sachs International told a debate on ethics at St Paul's Cathedral on Tuesday.

Defending lavish bonuses expected at the U.S. investment bank, Brian Griffiths said he was not "ashamed" of his bank's compensation package, which has inflamed the bonuses debate.

The British public should "tolerate the inequality as a way to achieve greater prosperity for all" Griffiths said at the public meeting examining what role morality should play in the marketplace.

Goldman last week reignited the row over excessive compensation after setting aside $5.4 billion for pay in the third quarter alone. It is on course to pay out $20 billion this year, infuriating critics so soon after repaying $10 billion in taxpayer bailout funds.

Griffiths said that if bonuses were capped the industry's highest fliers would leave London's financial services sector for other countries.

"I believe that we should be thinking about the medium term common good, not the short term common good... we should not, therefore, be ashamed of offering compensation in an internationally competitive market which ensures the bank businesses here and employs British people," he said.

He also said Goldman only rewarded those who showed a commitment to company values and not simply to whoever brings in the most profit.

...more...

[Tansy_Gold]

18. On another thread a few days ago. . . . .

A DUer asked something along the lines of "Is it fair for one person to have two meals while another starves?" and there was actually discussion following that included defense of the person with two meals. There was, of course, also condemnation.

But some of the discussion developed around the notion of the inevitability of poverty, which would have been right up Mr. Griffth's alley, should Mr. Griffith's ever allow his hallowed (by St. paul's Cathedral -- what a place for a discussion of ethics!) feet to touch the soil of a common alley.

I would change the original question to "Is it moral for one man to have a thousand meals, while the thousand people he has stolen them from starve?"

As has been observed elsewhere, the growth of the compensation packages paid to the Wall Street thieves exceeds the growth in "the economy" to the extent that the only explanation is that they are quite literally taking our money from us. They are forcing us, the ordinary "middle" class workers and taxpayers, to borrow money and give the money to them. Our debt increases so their income can increase.

I don't usually watch much tv at all, but I made it a point to watch FRONTLINE last night, about Brooksley Born's warnings on the derivative bubble and burst.

I also don't watch too any of the videos posted on DU, because I just don't have the time. But I watched the clip of Al Franken that's on the front page. I wish Franken would address these greedy fucking assholes of Wall Street and ask them what they contribute to the economy. How many productive jobs, productive in that they produce the goods and services that keep the economy going: toasters and pencils, wrenches and ironing boards, lamps and sneakers and tomatoes and aspirin and windows and jet engines and little red wagons.

It's clear they don't facilitate lending, since that's dried up and yet they're still going strong. They don't finance the economy since it's in the toilet. All they do is steal and steal and steal and steal and then laugh in our faces and paint themselves as "deserving" of their loot while the rest of us starve.

Fuck them. Fuck the bloated billious billionaires with their hoarded treasure. There isn't an atom of ethics in all their poisoned souls combined. Let them "fly" to other countries and destroy their economies. Their "commitment to company values" is a commitment to unmitigated greed. Someone needs to tell them that to their faces.


I know someone who would:




Tansy Gold

[mbperrin]

19. Inequality leads to greater prosperity for all.

Gosh, that sounds familiar, hmmm......(tapping forehead)....yeah, like, uh....


TRICKLE DOWN! Yes, that's it.

If I were the Brits, I'd say no, thanks. I've been trickled on enough since Rawnie Raygun, although apparently I'm about to get hosed again over here as well.

I mind, I hate it, I have even gotten to where my local congress critter has quit sending me even the polite form letters (you know, Dear Constituent, Thank you for writing, even though I will completely disregard your wishes during my voting period. Sincerely, Your Congress Person). He really just wishes I'd go away....

[bread_and_roses]

22. How about you "tolerate" some equality for a change, you MONSTROUS BLOATED VAMPIRE?

There is no circle in hell low enough for these putrid diseased boils destroying the public body. And I second every thing Tansy said above.

[ozymandius]

49. I suppose he used whoopee cushion sound effects for rhetorical emphasis.

Otherwise he's full of shit. His comments connote that GS has ethics.

[Demeter]

20. Rising Debt a Threat to Japanese Economy

stolen from POMPANO IN LBN

http://www.nytimes.com/2009/10/21/business/global/21yen.html?_r=1&partner=rss&emc=rss


How much debt can an industrialized country carry before the nation’s economy and its currency bow, then break? The question looms large in the United States, as a surging budget deficit pushes government debt to nearly 98 percent of the gross domestic product. But it looms even larger in Japan.

Here, years of stimulus spending on expensive dams and roads have inflated the country’s gross public debt to twice the size of its $5 trillion economy — by far the highest debt-to-G.D.P. ratio in recent memory.

Just paying the interest on its debt consumed a fifth of Japan’s budget for 2008, compared with debt payments that compose about a tenth of the United States budget Still, officials insist that Japan is better off than the United States by some measures.

One hugely important difference is that Japan is rich in personal savings and assets, and owes less than 10 percent of its debt to foreigners. By comparison, about 46 percent of America’s debt is held overseas by countries such as China and Japan.

For all the recent talk of a shift away from the dollar as the reserve currency of choice, it is the yen that is becoming increasingly irrelevant, analysts say. The yen made up 3.08 percent of foreign currency reserves in mid-2009, down from 3.29 percent the same time last year and down from 6.4 percent in 1999. In mid-2009, the dollar still accounted for almost 63 percent of global foreign reserves.

.

POMPANO ADDS:


Hadn't realized that Japan's public debt was twice the size of ours relative to the size of our economies. Guess it's a testament to their domestic savings habit that they owe 90% of their debt to themselves plus they hold 21% ($725 billion) of US' public debt second only to China at 23% ($800 billion). Even though Japan's government borrows at twice the rate ours does, there are enough domestic savings to fund 90% of that borrowing and 21% our ours as well.

Wonder why the Japanese don't just increase taxes? Their government borrows more than it takes in in taxes, but borrows 90% of it from its own people.

[Demeter]

21. Revised formula puts 1 in 6 Americans in poverty

http://news.yahoo.com/s/ap/20091020/ap_on_re_us/us_poverty

A revised formula for calculating medical costs and geographic variations show that approximately 47.4 million Americans last year lived in poverty, 7 million more than the government's official figure.

The disparity occurs because of differing formulas the Census Bureau and the National Academy of Science use for calculating the poverty rate. The NAS formula shows the poverty rate to be at 15.8 percent, or nearly 1 in 6 Americans, according to calculations released this week. That's higher than the 13.2 percent, or 39.8 million, figure made available recently under the original government formula.

That measure, created in 1955, does not factor in rising medical care, transportation, child care or geographical variations in living costs. Nor does it consider non-cash government aid when calculating income. As a result, official figures released last month by Census may have overlooked millions of poor people, many of them 65 and older.

According to the revised NAS formula:

_About 18.7 percent of Americans 65 and older, or nearly 7.1 million, are in poverty compared to 9.7 percent, or 3.7 million, under the traditional measure. That's due to out-of-pocket expenses from rising Medicare premiums, deductibles and a coverage gap in the prescription drug benefit.

_About 14.3 percent of people 18 to 64, or 27 million, are in poverty, compared to 11.7 percent under the traditional measure. Many of the additional poor are low-income, working people with transportation and child-care costs.

_Child poverty is lower, at about 17.9 percent, or roughly 13.3 million, compared to 19 percent under the traditional measure. That's because single mothers and their children disproportionately receive non-cash aid such as food stamps.

_Poverty rates were higher for non-Hispanic whites (11 percent), Asians (17 percent) and Hispanics (29 percent) when compared to the traditional measure. For blacks, poverty remained flat at 24.7 percent, due to the cushioning effect of non-cash aid.

_The Northeast and West saw bigger jumps in poverty, due largely to cities with higher costs of living such as New York, Boston, Los Angeles and San Francisco.

The Census Bureau said it expedited release of the alternative numbers for this month because of the interest expressed by lawmakers and the Obama administration in seeing a fuller range of numbers. Legislation pending in Congress would mandate a switch to the revised formula, although the White House could choose to act on its own.

Arloc Sherman, a senior researcher at the nonprofit Center on Budget and Policy Priorities, said that because the revised formula factors in non-cash government aid, the amount of increase in poverty from 2007 to 2008 was generally smaller compared to the current measure.

"Food stamp participation rose during the first year of recession and appears to have softened what could have been an even greater increase in financial hardship," he said.

Sherman said the revised formula could take on greater importance in measuring poverty for 2009 as more Americans take advantage of tax credits and food stamps under the federal stimulus program. Food stamp assistance currently is at an all-time high of about 36 million.

[Demeter]

29. Countries with the Biggest Gaps Between Rich and Poor

http://finance.yahoo.com/banking-budgeting/article/107980/countries-with-the-biggest-gaps-between-rich-and-poor

The U.N. Development Program recently came out with a report looking, among other things, at income inequality worldwide.

The UNDP ranked countries and regions based on a number of factors, including their Gini coefficient, named for Italian statistician Corrado Gini.

We have listed the world's most advanced economies based on their Gini score, with zero marking absolute equality and 100 absolute inequality. Scandinavian countries, Japan, and the Czech Republic have the least amount of inequality. The U.S. is among the most unequal, but it's not No. 1.

Top 11 Countries With the Biggest Gaps Between Rich and Poor

No. 1 Hong Kong

Gini score: 43.4
GDP 2007 (US$ billions): 207.2
Share of income or expenditure (%)
Poorest 10%: 2.0
Richest 10%: 34.9
Ratio of income or expenditure, share of top 10% to lowest 10%: 17.8

Renowned for its high concentration of Rolls-Royces, expensive real estate, and posh shops, the Chinese special administrative region has plenty of rich who enjoy showing off their wealth. However, Hong Kong also has one of the largest public housing sectors in the world, with about half the population living in government-supported or -subsidized housing estates. The city has no minimum wage—except for domestic helpers from the Philippines, Indonesia, and other countries.

No. 2 Singapore

Gini score: 42.5
GDP 2007 (US$ billions): 161.3
Share of income or expenditure (%)
Poorest 10%: 1.9
Richest 10%: 32.8
Ratio of income or expenditure, share of top 10% to lowest 10%: 17.7

Singapore is one of the world's most open economies, and it suffered badly following the bankruptcy of Lehman Brothers last year. Recently, though, the city-state's economy has rebounded, with GDP growing an annualized 14.9% rate in the third quarter compared with the previous quarter.

No. 3 U.S.

Gini score: 40.8
GDP 2007 (US$ billions): 13,751.4
Share of income or expenditure (%)
Poorest 10%: 1.9
Richest 10%: 29.9
Ratio of income or expenditure, share of top 10% to lowest 10%: 15.9

The share of income for the top percentile of Americans was 23.5% in 2007, the highest since 1928, according to Emmanuel Saez, a Berkeley economist who won the prestigious John Bates Clark Medal in April. Income for the top 0.01% hit a record-high 6.04%. And the recession may be exacerbating income inequality.

No. 4 Israel

Gini score: 39.2
GDP 2007 (US$ billions): 164.0
Share of income or expenditure (%)
Poorest 10%: 2.1
Richest 10%: 28.8
Ratio of income or expenditure, share of top 10% to lowest 10%: 13.4

Gone are the days when Israel was one of the world's most egalitarian societies. Early Labor Zionist pioneers built kibbutzim for Jewish immigrants, but those collectives have fallen on hard times. The growing number of haredim, or ultra-Orthodox Jews, with large families and men who study the Torah rather than work has worsened the inequality problem.

No. 5 Portugal

Gini score: 38.5
GDP 2007 (US$ billions): 222.8
Share of income or expenditure (%)
Poorest 10%: 2.0
Richest 10%: 29.8
Ratio of income or expenditure, share of top 10% to lowest 10%: 15.0

While Portugal emerged from recession in the second quarter, the unemployment rate tops 9%. The ruling Socialists retained power in elections last month but lost seats to parties on the far left.

No. 6 New Zealand

Gini score: 36.2
GDP 2007 (US$ billions): 135.7
Share of income or expenditure (%)
Poorest 10%: 2.2
Richest 10%: 27.8
Ratio of income or expenditure, share of top 10% to lowest 10%: 12.5

According to the OECD, New Zealand had the biggest rise in inequality among member nations in the two decades starting in the mid-1980s. The country's economy emerged from recession in the second quarter, but with growth of just 0.1%, the central bank is likely to keep interest rates low until well into 2010.

No. 7 (tie) Italy

Gini score: 36.0
GDP 2007 (US$ billions): 2,101.6
Share of income or expenditure (%)
Poorest 10%: 2.3
Richest 10%: 26.8
Ratio of income or expenditure, share of top 10% to lowest 10%: 11.6

Italians are focused now on the melodrama surrounding embattled Prime Minister Silvio Berlusconi. The political crisis comes at a time when the economy is still mired in recession even as countries like Germany and France are growing again.

No. 7 (tie) Britain

Gini score: 36.0
GDP 2007 (US$ billions): 2,772.0
Share of income or expenditure (%)
Poorest 10%: 2.1
Richest 10%: 28.5
Ratio of income or expenditure, share of top 10% to lowest 10%: 13.8

According to Britain's Institute of Fiscal Studies, a government-funded think tank, the average national income, adjusted for inflation, grew 0.5% between 2004 and 2008. In contrast, the same figure for the top 90% income bracket jumped 1.2% over the same period. That was predominantly driven by large salaries and bonuses from the financial services sector in the pre-credit crunch era.

No. 9 Australia

Gini score: 35.2
GDP 2007 (US$ billions): 821.0
Share of income or expenditure (%)
Poorest 10%: 2.0
Richest 10%: 25.4
Ratio of income or expenditure, share of top 10% to lowest 10%: 12.5

While developed economies elsewhere fell into recession, the Lucky Country's good fortune held out, with Australia continuing to grow thanks in part to strong demand from China for its resources. This month the central bank raised interest rates, making Australia a leader among countries moving away from monetary easing.

No. 10 (tie) Ireland

Gini score: 34.3
GDP 2007 (US$ billions): 259.0
Share of income or expenditure (%)
Poorest 10%: 2.9
Richest 10%: 27.2
Ratio of income or expenditure, share of top 10% to lowest 10%: 9.4

Put aside the old comparisons to Asia's tiger economies. Ireland's workers are suffering badly from the recession; the unemployment rate soared in August to 12.5%. That's the second-worst in the EU, behind only Spain.

No. 10 (tie) Greece

Gini score: 34.3
GDP 2007 (US$ billions): 313.4
Share of income or expenditure (%)
Poorest 10%: 2.5
Richest 10%: 26.0
Ratio of income or expenditure, share of top 10% to lowest 10%: 10.2

Newly elected Prime Minister George Papandreou's government faces potential disciplinary action from the European Union, which has reprimanded Greece for a budget deficit of 6% of GDP, twice the EU limit. The IMF projects the economy will shrink 0.8% this year.

[zogofzorkon]

31. I'm sure if we keep trying and work hard we can be number 1. nt

[Demeter]

34. With the Crowd in Power, We can Be Numbers 1,2, AND 3!

Especially if you do things like counting California and Florida as separate entities...

[Demeter]

23. Obama's EPA cracks down, orders more tests for BP refinery

IT'S NOT NICE TO MESS WITH THE PRESIDENT'S HOMIES!

http://www.chicagotribune.com/health/chi-bp-pollution-20-oct20,0,930177.story

The Obama administration is cracking down on BP as the oil company overhauls its massive refinery in northwest Indiana, one of the largest sources of air pollution in the Chicago area.

In response to a petition from environmental groups, the U.S. Environmental Protection Agency on Monday ordered Indiana regulators to revamp a new operating permit for the Midwest's biggest refinery. The groups, along with elected officials in Illinois, contend Indiana had allowed the oil giant to avoid stringent requirements under the federal Clean Air Act.

Tougher pollution limits could help relieve problems with lung-damaging soot and smog in the metropolitan area that stretches around the tip of Lake Michigan.

In a 24-page order, the agency directed Indiana to take a new look at several sources of air pollution at the Whiting refinery, 15 miles southeast of downtown Chicago. The results are due in 90 days.

The decision is a policy shift by the EPA. In the last months of the Bush administration, the agency signed off on the BP project and rejected the concerns raised in Monday's order by President Barack Obama's EPA.

Critics say the operating permit was typical of Indiana's lax approach to BP, which has embarked on a $3.8 billion upgrade and expansion of its Whiting plant to process heavy crude pulled from tar-soaked clay and sand in Canada. The state earlier had allowed BP to dump more water pollution into Lake Michigan, but the company backed off after Tribune stories prompted a storm of public protest.

"This refinery expansion is clearly going to dump additional pollution on the surrounding communities, and the law requires BP to control it," said Ann Alexander, a senior attorney for the Natural Resources Defense Council. "BP has been playing games with the numbers to try to duck that responsibility, but the jig is up."

One of the problems outlined in the EPA order involves a dozen flares that burn off pressurized gases from the refinery. The federal agency has accused BP of repeatedly violating pollution limits on its flares. But when the Indiana Department of Environmental Management awarded the company a new permit last year, it agreed with BP that the flares will emit virtually no toxic fumes when the expansion project is completed.

The EPA also directed Indiana to re-examine emissions from equipment that turns some of the heavy oil into petroleum coke. The state agency declared the emissions would be "negligible," a conclusion the federal EPA suggests is unrealistic given the amount of pollution coke production creates.

Company officials and Indiana regulators said they still are reviewing the EPA order. BP plans to proceed with the Whiting project under the terms of a separate construction permit, but it will not be allowed to operate the new equipment until the dispute is resolved.

"We're surprised, to say the least, considering that EPA signed off on the operating permit a little over a year ago," said Scott Dean, a BP spokesman.

The EPA's order could set a precedent for refinery projects in Illinois, Wisconsin, Michigan, Minnesota and Ohio.

BP and Indiana regulators say the Whiting project will cut the amount of air pollution the refinery emits. But even with various improvements in the last decade, the refinery is the sixth-largest source of industrial air pollution in the Chicago area, a Tribune review of federal records shows.

The 246 tons of airborne chemicals and heavy metals emitted by the refinery in 2007, the last year for which figures are available, included toxic benzene, ammonia and mercury.

"BP needs to come clean about what this expansion really will mean for clean air and public health," said Meleah Geertsma, a staff attorney for the Environmental Law and Policy Center, one of the groups that challenged the permit.

In the last two years, the EPA has cited BP several times for violating the Clean Air Act. The company has acknowledged that for the last six years it violated limits on benzene, a volatile chemical linked to leukemia and other health problems.

The agency rejected a plea in the environmental groups' petition to impose limits on greenhouse gases in BP's permit. According to BP, heat-trapping pollution from the refinery is expected to rise 40 percent when the expansion is done, an amount equivalent to adding 320,000 cars to the nation's highways.

The Obama administration is pushing Congress to enact the first limits on climate change pollution and vows to use the Clean Air Act to do so if it fails to act. But the EPA concluded the BP permit is not the proper forum to address the problem -- at this point, at least.

[Demeter]

24. Setback for US crackdown on oil speculation

http://www.ft.com/cms/s/0/a695ed2e-bdb4-11de-9f6a-00144feab49a.html

US plans for an aggressive crackdown on energy speculation are in danger of unravelling, with leaders at the US commodity regulator raising doubts about proposed reforms.

Two of the Commodity Futures Trading Commission’s five commissioners have voiced worries that proposals to cap investors’ holdings in oil and commodities futures could drive trading from US exchanges. WEASELS!

A third commissioner, who had been the most outspoken supporter of new limits, now says they should be set at generous levels, in effect softening any clampdown.

The concerns echo those raised by the exchange industry and banks this year when they warned about the risk of regulatory arbitrage – the move by traders to a more benign regime.

Gary Gensler, CFTC chairman, has made the reform a priority after lawmakers complained that speculators last year inflated the price of oil and other commodities. But advancing a plan requires a majority vote from commissioners, which looks elusive unless the push meets strict conditions.

“The process may not move forward until some of the concerns of individual commissioners are satisfied,” Jill Sommers, a Republican-appointed commissioner, said.

Lobbyists have focused attention on commissioner Michael Dunn, a Democratic appointee, like Mr Gensler.

Early this year Mr Dunn said the CFTC should consider new speculative limits, but he has recently voiced doubts.

“When a contract trades globally, it may be detrimental to US markets for the CFTC to act unilaterally on position limits while other countries with benchmark contracts chart different courses,” he told Futures Industry magazine. He speaks in Chicago on Wednesday on a panel titled “Regulating Markets, Constraining Institutions”.

Washington’s move has not received support from other important regulators. In London, commodities hub, the UK’s Financial Services Authority, believes price rises in oil and other commodities reflect supply and demand fundamentals, rather than money inflows. Mr Dunn “clearly has the role of a key swing vote on an issue like this,” said Tyson Slocum of advocacy group Public Citizen, who has testified in favour of strict limits.

The commission’s third Democratic appointee, Bart Chilton, has embraced new trading limits. But he said until Congress grants CFTC jurisdiction in over-the-counter markets, he would not approve harsh rules.

“With regard to limits, perhaps you want to err on the high side in order to not transport trades to OTC land or to foreign exchanges,” he said,

Setting a high bar for traders’ holdings may perpetuate the status quo. Ms Sommers said: ”You only have a couple of choices. You can set the limits so tightly that you’re going to drive people out of the market, or you’re going to set the limits so on a normal, day-to-day basis, nobody is going to hit them.”

Scott O’Malia, a new Republican appointee to the commission, has not taken a public stand on the issue. He could not be reached. A spokesman for Mr Gensler said any proposed rule would be introduced this autumn.

[Demeter]

25. Caterpillar plans for quick economic rebound

IS IT A TRICK OR A TREAT?


http://www.ft.com/cms/s/0/fd7b6b1e-bd78-11de-9f6a-00144feab49a.html

Caterpillar, the world’s biggest maker of earth-moving equipment and heavy-duty engines, gave an upbeat view of the global economy on Tuesday, saying conditions were improving throughout the world and revealing that it was now planning for a quick rebound, as it raised its outlook for this year and issued a bullish forecast for next year.

The manufacturer is widely seen as a bellwether of the US and global industrial economy. It was one of the first big US companies to warn, back in 2007, that the US was entering a serious economic downturn.

“While we are still navigating through a very difficult environment in 2009, we see signs of improving economic conditions throughout most of the world,” said Jim Owens, chief executive.

“While 2010 will still be a difficult year, we expect improvement in our top line from the lows of 2009, and it’s critical that we manage on the way up as well as we did in the face of declining volume. As a result, we’ve already started planning for an upturn. When it comes, it can come quickly, and we, our dealers and our suppliers will be prepared.”

The company said it now expected 2009 full-year profits of between $1.10 per share and $1.30 per share, compared with its previous forecast of 40 cents to $1.50 per share. For 2010, Caterpillar said it expected sales and revenues to increase 10 per cent to 25 per cent from the midpoint of 2009, as dealers stopped winding down their inventories, a trend that has hit sales this year.

Caterpillar improved its forecasts as it reported quarterly earnings well ahead of Wall Street’s expectations. The manufacturer made a profit of $404m, or 64 cents per share, in the three months to the end of September, down from $868m, or $1.39 per share, a year earlier but above analysts’ average forecasts of 6 cents per share. Sales in the quarter were $7.3bn, down from $13bn last year and slightly below average analysts’ forecasts.

Expectations about strong earnings pushed Caterpillar shares up sharply on Monday, prompted by Bank of America-Merrill Lynch raising its price target for the company and RBC Capital initiating coverage of Caterpillar with an “outperform” rating.

Caterpillar shares were up 6 per cent in pre-market trading on Tuesday at $61.30.

[Demeter]

26. Brazil imposes tax on foreign investments

THEY GOT THE OLYMPICS TO CUSHION THE TRANSITION--DON'T CRY FOR RIO DE JANIERO!

http://www.ft.com/cms/s/0/ffe6041c-bda1-11de-9f6a-00144feab49a.html

Brazil’s currency and stocks fell sharply on Tuesday after the government imposed a 2 per cent tax on foreign portfolio investments to stem the rapid rise of its exchange rate.

The move, announced shortly before local markets closed on Monday, followed steady gains in Brazil’s currency, the real, which has advanced 36 per cent against the US dollar this year, reducing the competitiveness of Brazilian exports.

Foreign direct investment is unaffected by the tax. The imposition of taxes on international financial flows has symbolic significance for emerging market investors. Malaysia, blaming foreign speculation for destabilising its economy, imposed capital controls to prevent a run on its currency in 1998 during the Asian financial crisis. Chile, one of the most successful Latin American economies, maintained controls on capital inflows for many years but has now suspended them.

The possibility of a permanent “Tobin tax” on foreign exchange or other financial transactions has gained more attention after the Group of 20 leading nations asked the International Monetary Fund to consider the idea.

Analysts expected the tax on foreign flows into equities and fixed income instruments to have little lasting impact on Brazil’s currency. “If this is aimed at the exchange rate they will have a very tough time,” said Alvise Marino of IDEAglobal, a New York research company. “They are fighting against the whole market. Everybody wants to be in Brazil now.”

The real fell to R$1.71 against the US dollar on Monday from its intra-day high of R$1.70 and dropped below R$1.74 on Tuesday during morning trading before rallying slightly. The main stock market index fell by 4.1 per cent.

Brazil emerged from a short recession in the second quarter. It is expected to post marginal economic growth this year and 5 per cent or more in 2010.

Edemir Pinto, chief executive of the BM&FBovespa, Brazil’s futures and equities exchange, said foreign investors might now prefer to buy Brazilian companies’ US-listed American Depositary Receipts, which would not be affected by the tax.

”A third of our volume is from foreign investors and they are quickly re-doing their sums. Various Brazilian blue chips have American Depository Receipts where they won’t pay anthing and where the rules are clear and lasting.

“The Brazilian market was one of the first to recover this year and was on a fantastic growth path,” he said.

“About 70 per cent of shares in IPOs are bought by foreigners. So we didn’t expect the government to take this drastic measure.”

The country has been shielded from the crisis by its relatively closed economy. Exports are worth less than 15 per cent of gross domestic product and little credit is sourced from overseas.

Years of low inflation, economic stability and cheap but effective income transfer programmes have brought millions into the consumer market for the first time. “Brazil has stronger fundamentals than anywhere else but China,” Mr Marino said.

Mr Marino said that rather than trying to reverse the real’s appreciation, the government’s main aim may be to reduce volatility. Restricting flows would avoid a sudden appreciation in the event that the central bank raises interest rates in the first half of next year.

[Demeter]

27. Italian police close in on ‘toxic’ shipwreck

http://www.ft.com/cms/s/0/aab01ac6-bda3-11de-9f6a-00144feab49a.html



A mission was launched on Tuesday off the Italian coast to investigate what anti-Mafia investigators have long suspected was a conspiracy between organised crime, industrialists and government agencies to dump nuclear and other toxic waste in the Mediterranean and off Africa.

An Italian marine survey ship under police protection started tests 12 miles off Calabria’s coast on the wreck of a cargo ship 500 metres below.

According to Francesco Fonti, a Mafia turncoat, the ship was scuttled in 1992 carrying 120 barrels of toxic materials – much of it possibly radioactive. The ship, identified by Mr Fonti as the Cunski, is one of three vessels carrying toxic cargoes he says he sank as a service provided by the ’Ndrangheta, the Calabrian Mafia.

Over two decades Italian prosecutors have looked into more than 30 such suspicious deep-water sinkings. They suspect that Italian and foreign industrialists have acted in league with the Mafia, and possibly government agencies, to use the Mediterranean as a dumping ground. Vessels sank in fair weather had suspicious cargo, sent no mayday or the crew vanished. None had been located, until now.

Fishermen and political leaders in Calabria, alarmed at the possible environmental disaster, are protesting. Local mayors rallied in Rome on Tuesday to press the government to act quickly. Brussels has also added its voice. A letter sent last month by Stavros Dimas, European environment commissioner, seeking clarification from Italy, has so far gone unanswered.

The discovery of nuclear waste on the Cunski or other ships could raise uncomfortable issues for Silvio Berlusconi’s centre-right government, which is relaunching Italy’s nuclear power industry after a 22-year moratorium.

Now, the marine survey ship Mare Oceano is to use sonars to map and hopefully identify the ship, and test for radioactivity, before efforts are made to salvage the barrels. An Italian coastguard vessel has also searched for another wreck of a ship that Mr Fonti claims was scuttled off the central port of Livorno with toxic waste on board.

The Mafia’s involvement in illegal waste disposal on land, working for industrialists and local officials, is well documented.

The Mafia informant’s claims about involvement in sea dumping first made headlines in 2005, but progress was slow in pursuing them. Last month an expedition located what appears to be the Cunski, using Mr Fonti’s directions.

Over the years, magistrates have been aided by lists of suspicious sinkings provided by Lloyd’s of London in connection with suspect insurance claims, as well as persistent probing by environmental groups.

Francesco Neri, a Calabrian prosecutor who began investigating the “poison ships” mystery in the 1990s, says Mr Fonti has confirmed his suspicions.

“It was like investigating a murder without having the corpse,” he says, referring to their failure to pinpoint the missing ships, starting with the Rigel, which a court ruled was scuttled in 1987. Mr Neri recalls years of digging, threats, lack of funding and the strange death of his main investigator – one of several deaths said to be linked to the affair.

In December 1995, the investigator, Natale de Grazia, a young coastguard captain, died suddenly on a mission to the port of La Spezia. The official cause of death was heart attack, but colleagues suspect that he was poisoned.

Following the apparent find of the Cunski, a new inquiry has been launched by Calabria’s anti-Mafia directorate. (The exact identity of the ship is unclear – some disputed records show a ship named Cunski was scrapped years later.)

Attention is also being refocused on the case of a ship called Rosso which ran aground in rough weather near Amantea in Calabria in 1990, after what officials claimed was a botched attempt to scuttle it. Its cargo was removed and disposed of on land. Years later, doctors spotted a high incidence of local cancers.

Toxic contaminants and traces of radioactive caesium 137 were found in a nearby quarry used as an illegal dump. Investigating magistrates suspect a link with the Rosso.

Massimo Scalia, professor of physics at Rome’s La Sapienza university who led a parliamentary commission on illegal dumping in the 1990s, thinks the oceans were a natural extension for the Mafia.

“I’m sure they disposed of toxic and radioactive waste by sinking these ships,” he said. “But so far it is a theory – a theory in which I believe strongly but couldn’t find proof. That’s what I have been asking all these years: let’s find a ship and see what it carried.”

The commission and investigators repeatedly appealed for more government funding, but earlier inquiries were stopped.

Claims by Mr Fonti of involvement of Italian and foreign intelligence agencies and government officials in the trade of toxic and radioactive products have fuelled suspicions that some institutions may not have wanted to shed light on what lies on the seabed.

Investigators and parliamentarians have raised worrying questions about the source of the suspected nuclear material and who ordered its disposal.

In 2005, Mr Fonti told L’Espresso magazine that the Cunski carried radioactive waste from Norway. Ships, he said, were also sunk off Kenya, Somalia and west Africa. He also spoke of disposing waste for Italian, German, Swiss and Russian chemical and pharmaceutical companies.

Italian authorities have rejected his claim to have disposed of 40 lorry loads of material delivered to him at the Rotondella facility run by Enea, Italy’s nuclear authority.

Four years ago, Nicola Maria Pace, a prosecutor, told parliamentarians of three accidents involving nuclear waste stored at Rotondella, the last in 1994. He spoke of Italy’s “total submission” to US control over nuclear materials at Rotondella from 1954 to the 1970s, and how Iraqi scientists trained at Rotondella to use Italy’s Cirene reactors, which Iraq had sought to acquire in the 1980s.

In 2007, eight former senior Enea officials were placed under investigation over the handling of nuclear material. Italian media reported that the case was recently dropped.

More broadly, the extent to which a foreign hand is suspected is hard to gauge. Several sessions of the parliamentary waste commission were held in private for reasons of secrecy. Its public conclusions noted “interferences and threats” against investigators, and were critical of Enea’s management of nuclear waste.

The commission’s 1995 report spoke of the “possible existence of national and international trafficking in radioactive waste, managed by business and criminal lobbies, which are believed to operate also with the approval of institutional subjects belonging to countries and governments of the and outside the EU”.

Prof Scalia is not alone in noting that Italy lacks a coherent nuclear waste policy and still has old waste held in “temporary” sites, some of it brought from the US decades ago.

The environment ministry and Enea did not respond to questions for this article. Statements by Stefania Prestigiacomo, the environment minister, have created confusion. First, the initial plans to use the ministry’s research vessel to survey the wreck was ditched. Then, parliament was told that a ship provided by Eni, the state-controlled energy group, was on its way from Cyprus.

Finally, the ministry said last Friday that the Mare Oceano, provided by Geolab, a Naples-based marine survey company, would do the work instead, directed by anti-Mafia investigators

[Demeter]

28. US treasury faces bonds lawsuit

http://english.aljazeera.net/news/americas/2009/10/20091019165736887890.html



The US federal government is facing a lawsuit over $16bn in unclaimed bonds going back as far as World War II, with six states arguing that the US treasury department should pay them out.

Thousands of families bought at least one bond from the federal government during the US campaign against the Axis powers between 1941 and 1945, in order to support the war effort.

Many of those bonds, which were sold after a public campaign saying the money would aid the war effort, were never cashed - due, in part, to them having a 40-year maturity period.

The federal government only stopped selling the Series E war bonds in 1980.

The state attorneys-general, which is suing the US treasury department, says that the federal government did not attempt to locate those who had not cashed in their bonds at the time of maturity.

"It's better for the millions of American who are the rightful owners to have it returned to the states, because the states will make a real effort to find them," David Bishop, a partner at Kirby McInerney who is representing the states in the suit, said.

"And if after searching for them they can't find them, the money can go to work in the communities where the bonds were purchased."

Payments due

The states would be obligated to pay bond holders no matter if it take decades for the bonds to be located.

But states could use the interest earned on such unclaimed money for schools or other purposes.

The treasury department has said that it tries to locate holders of unclaimed bonds, and that people can type their social security number into its web site to see if they have a bond.

"One of the misunderstandings out there is that there is a lot of cash sitting somewhere in a drawer. Money from savings bonds was used to run the daily operating expenses of the government," Joyce Harris, from the Bureau of the Public Debt, said.

"These are obligations of the federal government, not the states. There is no pot of gold out there just waiting for someone to grab it."

Unclaimed bonds

The treasury also points out that most of the unclaimed bonds are more recent than the original World War II-era certificates.

Harris said that many holders of the bonds often choose not to cash them in on maturity due to tax reasons or even a sense of patriotism from the war.

"Quite frankly, people are aware of the bonds," she said. "A majority, when you contact them, are aware of the bonds."

The complaint was first filed in Federal court in New Jersey in 2004 with New Jersey and North Carolina as the plaintiffs.

Montana, Kentucky, Oklahoma and Missouri later joined the case.

[Demeter]

30. The Second American Revolution The Worst Is Yet To Come

Video - Interview With Gerald Celente

There is No Economic Recovery-Its A Cover-up

SEE VIDEO AT LINK; ALSO PDF FILE OF PREDICTIONS

http://www.informationclearinghouse.info/article23767.htm

[MilesColtrane]

42. That guy is a right wing nutjob.

..a favorite of rense, Fox, and Glenn Beck, who is out to sell his newsletter and to jack up his gold futures.

Just google "Obamageddon".

[Demeter]

32. So Now We Know Why Lehman Went Under / YVES SMITH, nakedcapitalism

http://www.nakedcapitalism.com/2009/10/so-now-we-know-why-lehman-went-under.html


The New York Times published an edited extract from Andrew Ross Sorkin’s Too Big Too Fail (man, that book is so large, they can release a ton in advance and still have a book and a half of reading left over). This section is on some of Dick Fuld’s efforts to save Lehman:

The Japanese tell their children, “You should hear one thing and understand ten.” Sorkin’s snippet reveals quite a lot.

It was obvious to even outsiders in the late stages of the unravelling of Lehman was that Fuld missed possible deals because he set his price targets too high. One of the cardinal rules of dealmaking is everything can be solved by price. He probably could have unloaded Neuberger Berman and limped along for a while. He could have sold a stake to the Koreans. Would these moves in August have rescued the firm? As an independent player, no, but a sale of all or part of the firm still would have been a better outcome, and realistic conversations might have led to a sale of more operations, and saved more jobs. Bear’s employees did get something for their stock holdings, and a minority kept their jobs. Now Bear did get a government backstop, but that was after the investment bank was clearly terminal.

But three things are striking about the Sorkin-provided details:

First, Fuld (and presumably the underlying business) was desperate as of early July. Sorkin has Fuld arranging for contacts to be made to possible buyers like Bank of America on a Saturday. Huh? He was clearly flailing about, yet not offering a price or deal terms commensurate with his obviously panicked state.

Second, Paulson and Geithner were aware of Fuld’s desperation. The Wall Street Journal reported earlier that Fuld was calling Paulson almost daily (and suggested Paulson was somewhat puzzled). The Sorkin excerpt shows Fuld petitioning the Fed via Geithner to become a bank holding company:

Mr. Fuld’s outside lawyer, Rodgin Cohen, chairman of Sullivan & Cromwell, had recently suggested an idea to help stabilize the firm: to voluntarily turn itself into a bank holding company. The move, Mr. Cohen had explained, would make it easier for Lehman to borrow money from the Fed “just like Citigroup or JPMorgan.”

Mr. Cohen, a 64-year-old, mild-mannered mandarin from West Virginia, was one of the most influential and yet least well-known people on Wall Street. Pacing in his hotel room in Philadelphia before the wedding of his niece that night, he joined the call between Lehman and the New York Fed.

“We’re giving serious consideration to becoming a bank holding company,” Mr. Fuld started out by saying. “We think it would put us in a much better place.” He suggested that Lehman could use a small industrial bank it owned in Utah to take deposits to comply with the regulations.

Mr. Geithner, who was joined on the call by his general counsel, Tom Baxter, was apprehensive. “Have you considered all the implications?” he asked.

Mr. Baxter, who had cut short a trip to Martha’s Vineyard to participate, walked through some of the requirements, which would transform Lehman’s aggressive culture, minimizing risk and making it a more staid institution, in league with traditional banks.

Regardless of the technical issues, Mr. Geithner said, “I’m a little worried you could be seen as acting in desperation,” and the signal that Lehman would send to the markets with such a move.

Mr. Fuld ended his call deflated. Later that evening, Mr. Fuld called Mr. Cohen, finding his lawyer in the waiting room of a hospital, attending to a cousin who had become ill at the wedding.

Yves here. If Geithner and his colleagues didn’t get that Fuld was at the end of his rope, they were choosing to ignore an elephant in the room. Now they may have been completely unwilling to consider the petition and this was the easiest way to signal their opposition (taking Fuld through a long list of requirements, some of which presumably would have been pretty painful, was another message).

But this speaks to a question we have raised again and again: why was there no serious assessment of what a Lehman bankruptcy would mean? After Bear went down, everyone knew Lehman was next on the list, with Merrill and UBS also known to be wobbly. Why didn’t the Fed, Treasury, and SEC together demand certain types of information from all big US regulated capital markets players (including JP Morgan and Goldman, perceived to be the healthiest, so as not to be singling out the weaker members of the herd?). This is a massive oversight. Relying on luck, which is what assuming all would be well after the Bear debacle, is no substitute for having a strategy. There was clear urgency in July. Even a month of assessment and evaluation of options (it probably would have taken two weeks to orchestrate the information requests among the agencies) would have been better than nothing. But the Freddie/Fannie unwind was moving to front burner, that probably consumed a lot of available bandwidth.

And we have the third, and peculiarly most obvious point to anyone who has had some exposure to deals, but one that Sorkin does not bring forward: what the hell was Fuld doing trying to negotiate his own deals? This is a mistake CEOs make all the time, and it never ceases to amaze me.

Now why is it a bad idea for a CEO or for most principals to negotiate their own deals? Most people are terrible negotiators. And I have to tell you, most people in M&A are not as good as they think they are. They don’t really negotiate all that much. They structure deals, value them, sell, but a lot of the negotiating takes place through the lawyers (many of the key points are negotiated in the negotiations over reps and warranties and the details of the definitive agreement). Most M&A transactions do not have that much negotiating, relative to all the other stuff that goes on in a deal, for most professionals to get that much practice.

But CEOs on average are FAR less practiced at negotiating, and Fuld is by temperament and experience particularly poorly suited for that role. He comes out of commercial paper (which is a very simple “placement” business; negotiating was never a skill he had to develop), he was known for being hyper aggressive and surrounding himself with yes men; he’d have even less give and take on a daily basis than most top executives.

There are other reasons not to negotiate your own deal. Even if I were a good negotiator (and I’m not, but I am a good transaction tactician), I’m loath to negotiate on my own behalf, and many good negotiators I know try not to. You have too much at stake, you lose the detachment you need to be effective.

Another crucial reason is you have FAR more leeway going through a negotiator. They can explore ideas with the other side with far less of a sense of commitment than if principals deal directly.

The one exception to this rule is industries where people negotiate all day. I’ve have some clients in the media business (cable) and they are frighteningly good, since horse-trading is a much bigger part of the fabric of their business than in other fields.

Back to Fuld. I’m simply gobsmacked at how he carried on. For instance, why did Fuld speak to Geithner and Baxter? This was completely nuts, a display of ego and utter stupidity. Fuld has the best connected, most trusted (by the Fed, anyhow, which is what counts) BANK regulatory lawyer in the US in Rodg Cohen. I’m personally not a fan of the man (long story involving a client here, won’t bore you with details) but Cohen would be the guy to broker a deal like that. If anyone could have pulled it off, he could have. If Fuld felt he had to be on the call, he should have let Rodg lead and kept his bloody trap shut as much as possible. But instead he conducts the call with no Cohen, apparently not even any Cohen laying of the groundwork.

Now it may be that Sorkin has this wrong, that Cohen served up the idea only under duress and didn’t want to carry the message. That’s unlikely, since lawyers often are asked to serve up low-odds ideas. But given that Fuld made all the calls on all the deals Sorkin discusses here, it appears he insisted on making his own pitches.

And again, while Sorkin may have had to streamline to keep his very big book from tuning into a three volume saga, the number of proposals Fuld made in a short succession also suggests that Fuld was winging it, throwing out ideas to see what might stick. Yes, it’s a good idea to start with an elevator pitch, and then elaborate if you get an initial positive or at least neutral response, but there seems to have been NO thinking, no detail beyond the high concept. Again (and this is just common sense), there seems to have been little consideration of “what’s in it for the other side,” as in some concrete discussion of fit/synergies, at least an indication of an awareness of possible structural/organizational issues, etc. These all seemed to be seat of the pants with NO backup! Check this out:

Mr. Fuld decided to call his old friend John Mack, the chief executive at Morgan Stanley…Mr. Fuld asked candidly: “Can’t we try to do something together?” It was a bold question and Mr. Mack had suspected it was the reason for the call…

“We’ll come over to your offices,” Mr. Fuld, clearly anxious, said.

“No, no, that makes no sense. What if someone sees you coming into the building?” Mr. Mack asked. “We’re not going to do that. Come to my house, we’ll all meet at my house.”

…There was Walid Chammah and James Gorman, the firm’s co-presidents; Paul Taubman, the firm’s head of investment banking; and Mitch Petrick, head of corporate credit and principal investments.

Bart McDade, Mr. Fuld’s new No. 2, showed up next, dressed in a golf shirt and khakis. Skip McGee, the firm’s head of investment banking, was running late; his driver got lost.

As the group took their seats on sofas around a coffee table, an awkward silence followed; no one knew exactly how to begin.

Mr. Fuld looked at Mr. Mack as if to say, It’s your house, you start. Mr. Mack imperturbably glared back, You asked for the meeting. It’s your show.

“Well, I’ll kick it off,” Mr. Fuld finally said. “I’m not even sure why we’re here, but let’s give it a shot.”

“Maybe there’s nothing to do,” Mr. Mack said in frustration as he noticed the discomfort around the room.

“No, no, no,” Mr. Fuld hurriedly interjected. “We should talk.”

He began by discussing the possibility of selling Neuberger Berman, Lehman’s asset management business and one of its crown jewels. He also suggested that Morgan might buy Lehman’s headquarters on Seventh Avenue — the same building that had been Morgan Stanley’s until Philip Purcell, the firm’s former C.E.O., sold it to Lehman after 9/11. The irony would be rich.

“Well,” said Mr. Mack, not entirely sure what Mr. Fuld was proposing, “there are ways we can, you know, there are ways we can work together.” ….

But the meeting ended with no agreement and what seemed like no incentive to keep talking. “Was he offering to merge with us?” Mr. Mack asked after the Lehman executives departed.

“This is delusional,” Mr. Gorman told his Morgan Stanley colleagues.

Yves here. By virtue of having had Japanese clients, I have probably seen more offensively overpriced turkeys than the average person. But even with people peddling utter rubbish (which they no doubt knew to be utter rubbish), and the Japanese occasionally being so bold as to say so (Kansai Japanese do that) I cannot recall a meeting going every remotely as poorly as this one did. This is clumsy and embarrassing, and it is unfortunate that Sorkin either did not appreciate that, or that he felt that the narrative style he chose prevented him from saying so directly.

But it still makes for very voyeuristic reading.

http://www.nytimes.com/2009/10/20/business/economy/20sorkin.html?pagewanted=2&ref=business

[DemReadingDU]

36. NPR Fresh Air: Andrew Sorkin's 'Inside Story' On Financial Collapse

10/20/09 Andrew Sorkin's 'Inside Story' On Financial Collapse

Financial journalist Andrew Ross Sorkin talks with Fresh Air host Terry Gross about his investigation into what really happened one year ago, during the financial collapse and bailout. It's an epic tale that's he's documented in a new book: Too Big To Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System — and Themselves. Sorkin is the award-winning chief mergers and acquisitions reporter for The New York Times, where he also writes a column and serves as assistant editor of business and finance news. He founded and edits DealBook, the Times' multimedia financial journal.

http://www.npr.org/templates/story/story.php?storyId=113938903

[DemReadingDU]

33. Dylan Ratigan: Banks continuing to get bigger

Oct. 21: Morning Meeting’s Dylan Ratigan talks with TARP Inspector General Neil Barofsky about his report which predicts that banks which were “too big to fail” have gotten bigger and the cost to credibility is down in Washington.

http://video.msn.com/video.aspx?mkt=en-US&brand=msnbc&vid=8b005e4b-0302-4b06-bac5-74148381987d

[Demeter]

35. I Like This Guy

He pulls no punches.

[DemReadingDU]

37. Ratigan is much more opinionated on MSNBC than CNBC

and that's a good thing for us

[Demeter]

40. I Think I Hit My Overload Point on the Second Video

See you tomorrow!

[Demeter]

39. Wall Street Drops Dem Donations

http://www.nakedcapitalism.com/2009/10/wall-street-drops-dem-donations.html

Those who recall the early Clinton years may see some parallels to today, albeit in a watered-down form now.

Clinton came into office, as political scientist/economist Tom Ferguson put it, “chanting one word as a mantra: ‘change.” He then appointed:

an economic team that looked like Wall Street, a foreign policy team that resembled Jimmy Carter’s, and a raft of other appointments that looked, if not exactly like the Business Council (still a white male bastion), then perhaps the affluent clientele of some exclusive spa or ski resort.

Clinton announced policies apparently intended to please a lot of people that seemed to make no one happy: talk re balancing the budget, tax increases on the rich, a strong dollar policy. And Hillary pressed forward with the health care reform plan, which seemed to garner front page coverage almost every day during the first year in office. The economy languished and Clinton’s ratings fell.

Clinton had had a narrow base of business support, and it had included Wall Street. His initial bond-market friendly and strong dollar stance had stood him in good stead with them. But pretty much everyone in finance had taken levered bets on interest rates staying low or falling further. When Greenspan raised Fed fund rates in early 1994, the result was massive derivatives losses, a bigger wipeout than the 1987 crash. Clinton backed the widespread calls for investigations and more regulation. And he also, unexpectedly reversed the strong dollar policy, on the assumption that if the US drove the dollar low enough, it could force the Japanese to open their markets (the Plaza accord had shown that a weaker dollar curbed US imports of Japanese goods, but did little to increase US exports to Japan. The barriers were “structural,” meaning deeply-held consumer preferences plus a host of non-tariff trade restrictions. The idea was that this would spur jobs and donations from companies that were keen to penetrate the Japanese market.

The result? Donations from Wall Street collapsed. Some donors even rescinded six figure pledges. And the business that were though to benefit from a cheaper dollar were singularly uanppreciative and did wanted more goodies before they upped their donations.

The Democratic party had no concrete accomplishments to tout, a flagging economy, and a health care fiasco. The 1994 midterm rout focused the Clinton team’s mind. As dire as the Republican revolution appeared to be, its message did not resonate with voters. So a quick reversal, including a resumption of Wall Street friendly policies, was the new order of the day.

Now things are not that bad for the Democrats…..yet. But Afghanistan looks to be a tar baby no matter what Obama does. If the economy (and we mean the economy, not the markets) does not appear to be recovering by fall next year, the Democrats could be looking at a reversal of fortunes, not as dramatic as Clinton faced, but enough to undo their Congressional majorities (I will admit to not having looked at what seats are up for grabs, incumbency is a huge factor in these calculations). And the loss of financial backing is likely to have an impact.

Put it this way: if the banksters are pulling back even with Team Obama proposing largely cosmetic reforms, can we expect the Administration to live up to its tough talk if it starts feeling pressured on other fronts?

The way they kept this under control in Australia, BTW (at least when I was there) was that NO political ads were permitted on TV. Candidates that scored above a certain threshold were given a set amount of free air time (I forget how they pulled straws to determine who got which slot). And TV ads are the big ticket item; get rid of those, and we’d see considerably less corruption in America. But we’ll never figure out how to cut that Gordian knot in America.

From the New York Times:

The Wall Street giants that received a financial lifeline from Washington may have no compunction about paying big bonuses to their dealmakers and traders. But their willingness to deliver “thank you” gifts to President Obama and the Democrats is another question altogether.

Yves here. This is actually a pretty amazing lead in. Is the New York Times finally starting to officially take up the line that Team Obama has given a sweetheart deal to the industry, despite its pretenses otherwise? Back to the story:

Mr. Obama will fly to New York on Tuesday for a lavish Democratic Party fund-raising dinner…But from the financial giants like Goldman Sachs, JPMorgan Chase and Citigroup that received federal bailout money — and whose bankers raised millions of dollars for Mr. Obama’s election — only a half-dozen or fewer are expected to attend (estimated total contribution: $91,200).

Part of the reason, several Democratic fund-raisers and executives said, is a fear of getting caught in the public rage over the perception that Wall Street titans profiting from their government bailout may use their winnings to give back to Washington in return. And the timing of the event, as the industry lobbies against proposals for tighter regulations to address the underlying causes of last year’s meltdown on Wall Street, has only added to the worry over public appearances.

Yves here. Not sure I buy that. Was it Marcy Kaptur who pointed out that not a single Wall Street CEO came to Obama’s September speech in New York one year after the Lehman meltdown? It was a pointed show of lack of respect. The “oh we have to worry about propriety so we can’t bribe you right now” is spurious. It didn’t seem to stem donations when the TARP largesse and stress test head fake was on. Back to the story:

“There is some failure in the finance industry to appreciate the level of public antagonism toward whatever Wall Street symbolizes,” said Orin Kramer, a partner in an investment firm who is a Democratic fund-raiser and one of the event’s chairmen. “But in order to save the capitalist system, the administration has to be responsive to the public mood, and that is a nuance which can get lost on Wall Street.”

Yves here. Did you catch that? Someone who is sensitive to public anger thinks that the need of the government to serve the citizenry, as opposed to the moneybags, is “nuance.” To the article:

Dr. Daniel E. Fass, another chairman of the event who lives surrounded by financiers in Greenwich, Conn., said: “The investment community feels very put-upon. They feel there is no reason why they shouldn’t earn $1 million to $200 million a year, and they don’t want to be held responsible for the global financial meltdown.” Dr. Fass added, “How much that will be reflected in their support for the president remains to be seen.”

The story does suggest that some of the fall in contribution is due to the loss of Bear and Lehman. But this factoid is telling:

So far in the current election cycle, though, Wall Street accounts for less than half as much of the Democratic Party’s fund-raising as it did in 2008: 3 percent, or about $1.5 million out of a total $53.6 million in the eight-month period, compared with about 6 percent, or $15.3 million out of $260.1 million during the last election. (Republicans relied more heavily on their party to support their presidential candidate in 2008, and the party’s Wall Street fund-raising has fallen even further.)

Wall Street is arguably doing better than the rest of the economy, and is providing lower donations. In 1994, a more dramatic fall off in contributions lead to measures to appease the financiers. Will we see a repeat?

[DemReadingDU]

43. Twenty-Two Reasons Why this Recession is Different and Why it Will Endure

October 2009 Jim Rawles - Twenty-Two Reasons Why this Recession is Different and Why it Will Endure

I find it surprising that I'm now getting inquiries from readers, asking if "we've reached bottom" in the current economic recession, and asking if the time has come to start buying stocks or residential real estate. It seems that the talking heads of mainstream media are using some sort of voodoo. How can anyone think that we've hit bottom, and an economic recovery is in progress? To dispel the myths from the CNBC Cheering Section, please consider the following. (And note that I've provided references for each assertion, just so you know that I'm not talking out of my camouflage hat.):

#1 A broken global credit market that has not fully recovered. See: After Lehman, U.S. firms adjust to new face of credit

#2 Lack of transparency in Mortgage-Backed Securities and other re-packaged debt instruments. See: Geithner Blames Lack of Transparency for OTC Derivatives Hit on Market.

#3 The increasing Federal debt, which is growing at an unprecedented rate. See: The National Debt Clock.

#4 Mountains of consumer and corporate debt. See: Observations on the US Debt.

#5 The Federal budget deficit. See: Federal Deficit Hits All-Time High of $1.42 Trillion.

#6 Ever-expanding bailouts. (I call this The MOAB.) See: As More Companies Seek Aid, 'Where Do You Stop?'

#7 Monetization of the National Debt. See: Fed Could Expand MBS Purchases. (Can you spell Oroborus?):

#8 The destruction of the American consumer economy. (It had been artificially credit-driven). See: A Year After The Crisis, The Consumer Economy Is Dead.

#9 Chronic unemployment, possibly much higher than officially reported. See: Alternate Data at ShadowStats.

#10 More than $500 Billion USD in hedge funds that have borrowed short and lent long. See: Assets invested in hedge funds increase by $100bn

#11 A double wave of residential mortgage rate resets. See: this chart of scheduled mortgage interest rate resets.

#12 Continued down-ratcheting of house prices. See: Housing Prices Will Continue to Fall, Especially in California

#13 The under-reported "shadow inventory" of foreclosed houses. See: The "Shadow" Foreclosure Inventory

#14 The very likely collapse of commercial real estate ("the other shoe to drop".) See: Is a commercial real estate bust inevitable?

#15 A huge crisis lurking in over-the-counter derivatives. See my analysis published in 2006 and the dozens of articles on the Derivative Dribble Blog.

#16 Under-funded pensions. See: Almost half of top unions have under funded pension plans.

#17 A coming wave of municipal bond and municipal bond hedge fund failures. See: The Failure of Leveraged Municipal Bond Hedge Funds.

#18 Increasing numbers of bank failures. See: FDIC: Bank Failures to Cost Around $100 Billion.

#19 Insurance company collapses--some, like AIG, were foolish enough to insure more than a trillion dollars in derivative contracts. See: AIG: Is the Risk Systemic?

#20 Worsening state, county, and city budget crises. See: State prepares for shutdown as budget deadline looms, and this article from a liberal site: Predicting Worse Ahead from America's Economic Crisis.

#21 Loss of faith in the US Dollar, on the FOREX. See: Dollar's reserve currency status in focus as G-7 finance ministers meet.

#22 The coming mass currency inflation, following some asset deflation. See: Which is more likely in 2010: Deflation or inflation?


Click for additional links for each item, and a summary
http://www.survivalblog.com/2009/10/twentytwo_reasons_why_this_rec.html

[ozymandius]

47. Numbers 4, 8, 9, 11 and 14 will realize immediate ramifications.

The evidence is incontrovertible. Consumer economies that thrive on a swap of wage inflation for increased debt always end badly. I dare anyone to name me one nation that has not been crippled through this practice.

[MARALE]

45. R & K

[ozymandius]

51. Unbelievable.

I just got off a conference call with Arlen Specter where I asked him why the Democrats don’t talk about the wave of entrepreneurship that would be unleashed if people knew they could leave their jobs, start a business and still get affordable health coverage for themselves and their families.

He was surprised, said it hadn’t occurred to him and wants me to give him names of people who would start their own businesses if they knew they could get affordable insurance.

It just occurred to him? Really? This is one of the primary reasons you need a safety net. How are people supposed to take entrepreneurial risks and create this dynamic economy we all supposedly want if the risks are so huge that they aren't worth taking? Fergawdsake, aside from the "entrepreneurs" who would love to start a business there are also millions of people are trapped in jobs they hate because of health insurance. When even those who are insured are petrified to get sick because they could lose everything, your "dynamic" society grinds to a halt and everyone starts getting more and more reluctant to take any risks at all.

And our leaders need to keep in mind that one of the consequences of the Great Depression was that a whole generation became tremendously risk averse and it took a long time to get Americans back to their usual entrepreneurial selves. And while it would be really nice if some of the Masters of the Universe were so affected, it's not a great thing for average people to be so traumatized that they lose their sense that they can improve their lot and that of their children.

http://digbysblog.blogspot.com/2009/10/american-dreaming-by-digby-i-missed.html

[Demeter]

52. Not Really. you Can Tell by Congressional Priorities That PEOPLE Never Cross Their Minds

with the exception of those rare few: Grayson, Kucinich, and their fellow eccentrics.