STOCK MARKET WATCH, Wednesday, June 15, 2011

[Pale Blue Dot]

Source: du

STOCK MARKET WATCH, Wednesday, June 15, 2011

AT THE CLOSING BELL ON June 14, 2011

Dow 12,076.10 123.14 (+1.03%)
Nasdaq 2,678.72 39.03 (+1.48%)
S&P 500 1,287.87 16.04 (+1.26%)
10-Yr Bond... 3.09 -0.01 (-0.32%)
30-Year Bond 4.30 -0.01 (-0.12%)

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Market Conditions During Trading Hours

Euro, Yen, Loonie, Silver and Gold

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Handy Links - Market Data and News:Economic Calendar    Marketwatch Data    Bloomberg Economic News    Yahoo! Finance    Google Finance    Bank Tracker    
Credit Union Tracker    Daily Job Cuts

Handy Links - Economic Blogs:
The Big Picture    Financial Sense    Calculated Risk    Naked Capitalism    Credit Writedowns
Brad DeLong      Bonddad    Atrios    goldmansachs666    The Stand-Up Economist

Handy Links - Government Issues:
LegitGov    Open Government    Earmark Database    USA spending.gov

Handy Links - Videos:
The Coming Collapse of the Middle Class    Charlie Rose talks with Roubini    Charlie Rose talks with Krugman
    William Black: This Economic Disaster    Bill Moyers with Kevin Drum and David Corn

Bush Administration Officials Convicted = 2
Names: David Safavian, James Fondren
Dishonorable Mention: former House majority leader, Tom DeLay

Bush Administration Officials Charged = 1
Name(s): Richard Lopez Razo

Financial Sector Officials Convicted since 1/20/09 = 12

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http://l.yimg.com/bt/api/res/1.2/7V8Y_oeUMeDbPqP9JdQOTA--/YXBwaWQ9eW5ld3M7Zmk9aW5zZXQ7aD0zNTg7cT04NTt3PTUwMA--/

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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

[Pale Blue Dot]

1. Tons 'o Reports today

Jun 15 07:00 MBA Mortgage Index 06/10 +13% NA NA -0.4%
Jun 15 08:30 CPI May 0.1% 0.1% 0.4%
Jun 15 08:30 Core CPI May 0.1% 0.1% 0.2%
Jun 15 08:30 Empire Manufacturing Jun 7.0 10.0 11.9
Jun 15 09:00 Net Long-Term TIC Flows Apr NA NA $27.2B
Jun 15 09:15 Industrial Production May 0.2% 0.2% 0.0%
Jun 15 09:15 Capacity Utilization May 77.0% 77.0% 76.9%
Jun 15 10:00 NAHB Housing Market Index Jun 16 16 16
Jun 15 10:30 Crude Inventories 06/11 NA NA -4.845K

Read more: http://www.briefing.com/investor/calendars/economic/2011/06/13-17/#ixzz1PLFHHskH

[Roland99]

57. June Empire State index slips below zero

http://www.marketwatch.com/story/june-empire-state-index-slips-below-zero-2011-06-15

Manufacturing activity deteriorated sharply in the New York region in June, according to the Empire State manufacturing survey released Wednesday by the New York Federal Reserve. The Empire State index fell below zero to -7.8 in June from 11.9 in May. This is the first time the index has been below zero since last November. The decline in June was unexpected. Economists polled by MarketWatch expected the index to rebound to 13.3 in June. The data is likely to raise concern that the slowdown seen in manufacturing in May could be more than a temporary soft-patch. The details of the report were weak. The index for the number of employees dropped 15 points. The new orders and shipments indexes also fell sharply into negative territory

[dixiegrrrrl]

109. and ow long will it take for these numbers to be "revised"?

They have revised almost every report for over 2 years now.
Of course the revisions are done very quietly, downward, hardly anyone hears of them.

[Demeter]

111. What time is it now?

[Pale Blue Dot]

2. Oil falls below $99 amid mixed US economic signals

SIGNAPORE – Oil prices fell below $99 a barrel Wednesday in Asia as traders eyed mixed signs about the strength of the U.S. economy and crude demand.

Benchmark oil for July delivery was down 52 cents to $98.85 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract gained $2.07 to settle at $99.37 on Tuesday.

In London, Brent crude for July delivery was down 97 cents to $118.38 a barrel on the ICE Futures exchange.

Crude has zigzagged near $100 since falling from $115 in early May as investors mull signs of a sluggish U.S. economy. Excluding car sales, U.S. retail sales rose 0.3 percent last month, better than analysts expected.

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

[Demeter]

89. Can the oil stabiliser work?

http://macrobusiness.com.au/2011/06/can-the-oil-stabiliser-work/

CAN'T READ THIS EITHER, BUT MY GUESS WOULD BE......NO.

[Pale Blue Dot]

3. U.S. Stock-Index Futures Slide After S&P 500 Index Rises Most Since April

U.S. stock futures fell, after the Standard & Poor’s 500 Index posted its biggest rally in almost two months, as investors awaited reports on manufacturing and the cost of living in the world’s biggest economy.

Scotts Miracle-Gro Co. (SMG) declined 2.8 percent in after-hours trading yesterday as the maker of lawn-care products cut its earnings forecast for 2011.

Futures on the S&P 500 expiring in September lost 0.5 percent to 1,277.8 at 10:04 a.m. in London. Dow Jones Industrial Average futures retreated 56 points, or 0.5 percent, to 11,962.

“Should economic data continue to surprise on the downside, the S&P 500 will be at risk,” wrote Claudia Panseri, a Paris-based equity strategist at Societe Generale SA, in a report today. “Macro weakness in the first part of the year has not been integrated in analysts’ profit forecasts. Investors may start to be concerned about 2012 as the U.S. long-term picture is still very foggy.”

http://www.bloomberg.com/news/2011-06-15/u-s-stock-index-futures-slide-after-s-p-500-index-rises-most-since-april.html

[Demeter]

4. First Rec!

Not that I've been lying in wait, or anything.

The old cat died peacefully yesterday. I'll be burying her today. I never got her to a vet---events conspiring to have her die naturally. I hope I did the right thing--whatever that is.

If there is any such thing as "the right thing" anymore. Look at how they abuse the economy and mistreat us people: this is a profoundly immoral country nowadays, which cares not if its policy is right or wrong. Profit is the only measure of value, and the more ill-gotten the gains, the bigger the victory parade, the greater the admiration. Why else would crooks walk freely, while their victims are dispossessed, jailed or killed? Tortured, even, just for kicks.

[rfranklin]

5. Sorry to hear about your loss,,,

Amazing how an animal can be so much a part of one's life.

[Demeter]

7. Thank you

[Fuddnik]

8. Sorry to hear about your loss.

:hug:

We know how it feels to lose a long-time beloved companion.

:grouphug:

[Demeter]

10. It's the helplessness

[westerebus]

39. sorry ...

[xchrom]

12. aw demeter -- sorry. nt

[Pale Blue Dot]

14. ...

:grouphug:

[Po_d Mainiac]

23. Putting pets down sucks...:sob: n/t

[DemReadingDU]

29. Sorry to hear about your cat

Pets become members of our family, and it's sad when they leave.
:hug:

[Tansy_Gold]

35. My condolences, dear friend

From me and all the pooches.

:grouphug:



TG

[jtuck004]

58. You did exactly the right thing. She passed away at home knowing

she was in a place where someone cared. We have lost animals over the years and it has made me realize that as a society we have never dealt well with death, and perhaps even more so with animals. That leaves us with feelings of helplessness that really aren't earned, it's just what takes the place of dealing well with the inevitability of death.

Thank you for being there for the kitty. You did well.

[Demeter]

66. That's what I concluded

I've been dealing with a lot of death and chronic illness lately, with the clientele I have and the circles I run in. And with my father, who doesn't really want to live any more, but wants you to sit there and watch him slowly kill himself by neglect while ignoring all medical advice...

[Roland99]

60. :-(

Been 3 years since I had to down my cat.

Rough times.

[wordpix]

69. sorry - I had to put my 15 y.o. cat down a couple yrs. ago

:cry: She stopped eating and drinking, and after a lot of $$$ spent re-hydrating her and finding out what was wrong, vet told me she had tumors. Putting her down was better than watching her starve, though. She just went to sleep and looked peaceful throughout.

Bottom line is, there is no "good way" to say goodbye to your pet---you just have to figure out what's best in the situation at hand.

[Warpy]

77. I'm so sorry, losing our four footed family members is so hard

My old gal is 18 and slowing down a lot, poor kitty, so I imagine I'll join you in sorrow sooner rather than later.

[TalkingDog]

94. Checking in to say sorry... been there... sympathize

be kind to yourself

[InkAddict]

99. Oh Demeter, I'm so sorry to hear about your kitteh

Can I take a portion of your loss on my shoulders. Our pets provide us such a sense of constant affection and gratitude. They may show discomfort w/our care at times but never fail to purrr their pleasures. They sense our insecurities and lick our booboos and are generally pleased to greet us. I really think, though, that we get far more from their presence than they get from ours, so we will miss there unique ministrations. Kitteh is in a good place now where disease and cruelty don't exist. Be cheered in your memories and photos.

[tclambert]

102. Sorry to hear about your cat.

We've lost 3 cats and a dog in recent years. The last two cats died of cancer, and I wonder if the Chinese melamine-tainted cat food did them in.

I miss the dog whenever we have pizza. When I got down to the crust, I used to just toss it over my shoulder. It never made it to the ground.

Most of all I miss our cat, Sam. He used to jump up on the counter in the bathroom and put his paw on the faucet to tell me to turn the water on a trickle for him. He liked it fresh from the tap. When he had his fill, he would jump down, then reach up and pat the doorknob. He knew that's what made the door work, he just couldn't turn it himself. So he trained me to do it for him. When we ate our dinner, he would jump up on a windowsill behind my wife and tap her on the shoulder to remind her to share a little with him, especially if we had tuna. If she was too slow for his pleasure, he would stick the claws out and poke her a little. Brilliant and demanding little guy.

[Demeter]

6. Greece pays a heavy price as eurozone strives to protect its reckless banks

http://www.guardian.co.uk/business/2011/jun/12/greece-could-pay-heavy-price-eurozone-reckless-banks


Further austerity by the Athens government will only serve to hide the catastrophic consequences of irresponsible lending...While Germany was locked in an embarrassing public spat with the European Central Bank last week over who should pay the price for a new Greek bailout, fresh evidence was emerging of the impact of the savage cuts Athens has already imposed on its increasingly restive citizens.

The number of people unemployed has shot up by 40% over the past 12 months; the jobless rate now stands above 16%. Among young people it's a devastating 42%, representing extraordinary human and social cost. Yet the government's latest plans envisage another four years of slash and burn, taking the deficit from 7.5% of GDP this year to 1% by 2015. It's extreme fiscal masochism, and it isn't going to work.

Growth is suffering: the economy expanded by a miserable 0.2% in the first quarter of 2011, official figures revealed. Over the past year, it has contracted by a total of 5.5%, and forecasters – including Greece's creditors, the IMF and the ECB – are expecting a further catastrophic decline of more than 3% over the coming 12 months. Yet while Greece is swallowing its medicine, it's become increasingly clear – as many economists and investors have argued for months – that it's not just caught in a short-term cash crunch, but a solvency crisis. With its economy shrinking, Greece simply cannot afford to pay its debts.

The past year of pain has had very little to do with putting Greece's finances on a sustainable footing, and everything to do with papering over the catastrophic losses of the eurozone banks that indulged in an irresponsible lending spree in the run-up to the credit crunch. As the venerable Leigh Skene of Lombard Street Research put it last week: "Writing assets down to fair value and then recapitalising banks should be the first priority in restoring economic growth after a banking crisis. Sadly, Europe went in the opposite direction and tried to ensure that no bank, regardless of how insolvent (it was), defaulted on its liabilities."...

[Demeter]

9. Iraq asks US congressman to leave over 'repay' remark

http://www.middle-east-online.com/english/?id=46636

Iraqi authorities asked for a US congressman to leave the country after he called for Baghdad to repay part of the money spent by Washington since the 2003 invasion, a spokesman said on Saturday...
"We called the US embassy yesterday and we told them to ask the congressmen to leave Iraq," government spokesman Ali al-Dabbagh said. "We don't want them here. What they said was inappropriate."...It was not immediately clear if Rohrabacher and the delegation were still in the country when the request was made.

"Once Iraq becomes a very rich and prosperous country... we would hope that some consideration be given to repaying the United States some of the mega-dollars that we have spent here in the last eight years," Rohrabacher told journalists at the US embassy on Monday.

Rohrabacher, a member of the Foreign Affairs Committee in the US House of Representatives, declined to give specifics on how much should be repaid, or over how long...Rohrabacher was leading a bipartisan US congressional delegation on a visit to Iraq, primarily to look into a raid by Iraqi security forces in April on the Ashraf camp housing thousands of exiled Iranians in which at least 35 camp residents died.

MORALITY AND TACT IS FOR SOME OTHER COUNTRY'S POLITICIANS...

[Fuddnik]

17. Any demolition firm would charge you to destroy your house.

The difference being, you'd normally have to ask them to do it first.

[Po_d Mainiac]

25. Demolition firms normally insure the place is empty first.

Banksters, on the other hand, prefer the 'shock and awe' of maximum destruction with little concern for loss of life.

[Fuddnik]

30. Oh yeah, that too.

[xchrom]

61. Eurozone finance ministers fail to agree on new aid for Greece

http://news.xinhuanet.com/english2010/business/2011-06/15/c_13929982.htm

BRUSSELS, June 15 (Xinhua) -- Finance ministers of eurozone countries failed to agree on a new financing plan for Greece at an emergency meeting Tuesday, fighting over the degree of private sector involvement in additional rescue for Athens.

"There has been no result," German Finance Minister Wolfgang Schaeuble told reporters after talks in Brussels which ended late Tuesday.

The emergency meeting of eurozone finance ministers had been called to build consensus on the degree of private sector involvement in the new rescue plan for debt-laden Greece.

Germany, Europe's paymaster, has insisted on significant involvement of private bondholders if further aid to Greece has to be delivered.

[Demeter]

11. Bank Bailouts Explained: Video THE BEARS ARE BACK

http://www.youtube.com/watch?feature=player_embedded&v=yipV_pK6HXw#at=72

[Hotler]

36. Well, that pissed me off first thing this morning. k&r n/t

[xchrom]

13. europe: UK unemployment falling at fastest pace in a decade

http://www.guardian.co.uk/business/2011/jun/15/uk-unemployment-fastest-fall-in-10-years

Unemployment is falling at its fastest pace in a decade, official figures reveal, in a boost for George Osborne as he prepares to deliver his Mansion House speech. The Office for National Statistics (ONS) said the number of people unemployed fell by 88,000 in the the three months to April, to 2.43 million — the largest drop since the summer of 2000. The unemployment rate was 7.7%, down from 8% three months earlier.

The positive jobs figures are good news for the chancellor, who has been forced to defend his economic policy in the face of flagging growth.

However, analysts warned that there were signs of weakness in the data, with the more timely claimant count measure of unemployment showing a much worse than expected rise of 19,600 in May to 1.49 million. That was the third consecutive increase in the claimant count.

Alan Clarke, of Scotia Capital, said the claimant count was an early sign that the labour market could deteriorate. "With GDP growth unlikely to stray very far above zero over the next 6 months, we should brace for further increases in unemployment."

[xchrom]

16. HMRC faces huge loss in tax debt after letting companies put off paying bills

http://www.guardian.co.uk/business/2011/jun/14/time-to-pay-hmrc-tax-arrangement-racks-up-tax-debt

The taxman could be facing a loss of up to £650m in tax debts it allowed to build up as part of arrangements to tide businesses over during the recession.

New figures show there is just under £1bn outstanding as part of the government's "Time to Pay" arrangements. The scheme enabled HM Revenue & Customs to strike deals with struggling businesses to give them longer than usual to pay their tax bills.

Of that £1bn, £650m has not been paid as initially agreed by HMRC with the businesses concerned. The figures were obtained by R3, the insolvency trade body. It is understood that some businesses have seen their HMRC debts effectively rolled over four times, R3 said.

Frances Coulson, R3's president, said: "Time to Pay has played a vital role in preventing the spike in corporate insolvency numbers that usually follow the end of a recession, but these figures give rise to serious concerns about the way the scheme is operating.

[xchrom]

18. FTSE falls as banks await Osborne speech

http://uk.reuters.com/article/2011/06/15/markets-britain-stocks-idUKLDE75E0UQ20110615

LONDON, June 15 (Reuters) - Banks led a minor retreat on Britain's FTSE 100 on Wednesday, hurt by uncertainty over the UK government's push for tighter regulation and Europe's debt crises.

Banks .FTNMX8350 fell ahead of a speech by British finance minister George Osborne later on Wednesday, when he is expected to argue for a ring fencing of banks' retail business from so-called casino banking activities in the biggest shake-up of the UK banking system since the 1930s.

Barclays (BARC.L) shed 1.2 percent.

Bruce Packard, analyst at Seymour Pierce, said: "The implications for shareholders remain unclear ... (But) if the idea works, it would make the whole sector more resilient in a crisis, and a more investable proposition for equity investors."

[xchrom]

44. Peripherals hit as Europe stock bounce peters out

http://uk.reuters.com/article/2011/06/15/markets-europe-stocks-idUKLDE75E14H20110615

PARIS, June 15 (Reuters) - European stocks were down around midday on Wednesday as the previous session's tentative rebound petered out, with peripheral stocks taking another beating on renewed concerns over Greece's debt crisis and contagion fears.

Euro zone banking stocks tumbled, with the Thomson Reuters Peripheral Eurozone Banks index .TRXFLDPIPUBANK losing 3.3 percent.

National Bank of Greece (NBGr.AT) dropped 5.4 percent, Banco de Valencia (BVA.MC) fell 3.9 percent and Intesa Sanpaolo (ISP.MI) shed 2.6 percent.

Euro zone finance ministers failed to agree how to make private creditors contribute to a second bailout for Greece, sending the euro EUR= down nearly 1 percent against the dollar.

[xchrom]

50. Euro Falls to Lowest This Month Versus Dollar on Greece Bailout Deadlock

http://www.bloomberg.com/news/2011-06-14/yen-weakens-as-global-share-rally-recovery-signs-curb-demand-for-safety.html

The euro dropped to its lowest level this month against the dollar as the European Union struggled to break a deadlock on a second Greek rescue.

Europe’s shared currency remained weaker after the cost of living in the U.S. rose more than forecast in May and a measure of manufacturing in the New York region unexpectedly shrank in June. Taiwan’s dollar was the best performer versus the euro on speculation its central bank will raise interest rates to contain inflation. Sterling fell versus the dollar after a report showed Britain’s jobless claims rose in May more than economists forecast.

“The fact that the data is very poor gives market participants more of an excuse to continue to unwind their euro long positions,” said Stephen Gallo, head of market analysis at Schneider Foreign Exchange in London. “There is contagion risk in Europe and it’s acting to weigh on the euro, or boost the dollar.” A long position is a bet that an asset will increase in value.

[xchrom]

59. Greece, Ireland Can’t Default Like Iceland

http://www.bloomberg.com/news/2011-06-15/greece-ireland-can-t-default-like-iceland.html

Iceland is warning Greece and Ireland not to copy its recovery model even though the Atlantic island managed a return to international debt markets less than three years after letting its banks default on $85 billion.

“People should be careful when it comes to drawing comparisons between Iceland on the one hand, and Greece, Portugal, Spain and Ireland on the other,” Finance Minister Steingrimur J. Sigfusson said in an interview in Reykjavik. “Iceland didn’t have the ability to save the banks. Trying to rewrite the events that led to that eventuality as some sort of an export product is irresponsible.”

Iceland’s success in rebuilding its economy has been contrasted with the plight of euro member Ireland by economists including Nobel laureate Paul Krugman. Ireland, where most bank debt has been protected by a state guarantee since 2008, would have been better off using Iceland’s “bankrupting yourself to recovery” model, Krugman argued in a Nov. 24 New York Times column. Sigfusson says the advice could be dangerous, as European leaders try to agree on how investors share the cost of a second Greek rescue.

“Iceland should be humble and avoid advising other countries, especially when it comes to banking,” Sigfusson said. “What happened was an emergency situation which couldn’t be avoided.”

[Demeter]

86. Well, I Don't Know Why Iceland Was Compelled to Say That

but it does sound like an outside compulsion, if you know what I mean.

Aside from the obvious differences between an independent krona and the magical, mystical euro, and the large armies of bankers in Europe with their armies of cash and influence...in the end, it's only money.

[xchrom]

100. greece probably won't do it --

but i do think they should tell germany and france to stick it.

and yes it does sound like outside compulsion.

[Pale Blue Dot]

15. ONE MORE DAY!

Vacation starts at 2:30 tomorrow! WOO HOO!!!

[xchrom]

19. ...

:applause:

[Fuddnik]

20. Get a job, hippie!

[tclambert]

103. Time for a pop quiz!

Show no mercy! They always remember their meanest teachers. Sometimes by egging their cars.

You don't actually have to grade that last quiz. Just make them think it counts.

[xchrom]

21. The wrong part of China in Manhattan

http://www.atimes.com/atimes/China_Business/MF16Cb01.html

SHANGHAI - In the midst of an economy seemingly on the verge of another contraction, American investors have found themselves hungry for a new investment trend they can tap into. Commodities have offered one such alternative, but another sector - Chinese companies listing in United States markets - has been receiving rapt attention.

When the likes of Warren Buffett speak publicly about their own Chinese holdings - his now well-known investment in Chinese automaker BYD Co Ltd has been repeatedly run up the flagpole - the casual investor can be forgiven for thinking that his own investments would benefit from some sort of Chinese exposure.

And, for many US investors, the opportunity to invest in Chinese companies through a listing on a US stock exchange is simply


too good an opportunity to pass up.

But 2011 has not been kind to investors who sought out China's US publicly listed companies. Already the disgrace of China Electric Motor, Longtop Financial Technologies, Puda Coal, China MediaExpress, Subaye and a handful of others has drawn attention to the risks American investors face when seeking to add a China position to their portfolio.

[Demeter]

22. A Beginners Guide to Shadow Banking, Financial Crisis and Repo By Mike Whitney

http://www.informationclearinghouse.info/article28309.htm

Bank run. The financial crisis was actually a run on the banking system. Only it wasn't a run in the usual sense of the word where jittery depositors line up on the street waiting to withdraw their savings, but a run on the shadow banking system where traditional banks get their funding via short-term loans in what's called the "repo market". (short for "repurchase agreement") The shadow banking system has become a critical part of the infrastructure of the modern financial system. It provides a way for banks to move credit risk off their balance sheets, thus reducing the amount of capital they need to support their operations. The banks argue that this new system has made credit cheaper for borrowers which, in turn, generates more activity and growth in the economy. But, of course, the risks are much greater too, as we can see from trillions of dollars that were lost following the meltdown of 2008. These risks cannot be contained as long as shadow banks remain unregulated.

So, when did the crisis actually begin? Well, most people would point to September 15, 2008, the day that Lehman Brothers defaulted and markets went into freefall. But that's not when the trouble actually started. The trouble began a full year earlier on August 9, 2007, as Pimco's Paul McCulley recalls in his comments at the 19th Annual Hyman Minsky Conference. Here's an excerpt from the speech:

"On August 9, 2007, game over. If you have to pick a day for the Minsky Moment, it was August 9. And, actually, it didn’t happen here in the United States. It happened in France, when Paribas Bank (BNP) said that it could not value the toxic mortgage assets in three of its off-balance sheet vehicles, and that, therefore, the liability holders, who thought they could get out at any time, were frozen. I remember the day like my son’s birthday. And that happens every year. Because the unraveling started on that day. In fact, it was later that month that I actually coined the term “Shadow Banking System” at the Fed’s annual symposium in Jackson Hole.

...while the run commenced on August 9th of 2007, it was pretty much an orderly run up until September 15, 2008. And it was orderly primarily because the Fed.... evoked Section 13-3 of the Federal Reserve Act in March of 2008 in order to facilitate the merger of under-a-run Bear Stearns into JPMorgan. Concurrently, the Fed opened its balance sheet to the biggest shadow banks of all, the investment banks that were primary dealers, including most important, the big five. It was called the Primary Dealer Credit Facility....

The Fed created a whole host of facilities to stop the run. In fact, they expanded the Primary Dealer Credit Facility to what are known as Schedule 2 assets, which meant that dealers could rediscount anything at the Fed that they could borrow against in the tri-party repo market.

Concurrently, the FDIC stepped up to the plate, doing two incredibly important things. Number one, they totally uncapped deposit insurance on transaction accounts, which meant that the notion of uninsured depositors in transaction accounts became an oxymoron. If you were in a transaction account, there was no reason to run. And then the FDIC effectively became a monoline insurer to nonbank financials with its Temporary Liquidity Guarantee Program (TGLP) allowing both banks and shadow banks to issue unsecured debt with the full faith and credit of Uncle Sam for a 75 basis points fee. No surprise some $300 billion was issued. So, bottom line, you had the Fed step up and provide its public good to the Shadow Banking System. You had the FDIC step up and do the same thing with its public good. And as Paul Volcker was noting this afternoon, you had the Treasury step up and provide a similar public good for the money market mutual funds, using the Foreign Exchange Stabilization Fund." ( After the Crisis: Planning a New Financial Structure, Paul McCulley, 19th Annual Hyman Minsky Conference, Zero Hedge)

This is a great description of what happened, but McCulley is a Managing Director at the country's biggest bond fund, so naturally his perspective is different than yours or mine. From a working man's point of view, this is what happened: The banks had been creating dodgy loans that they knew would never be repaid because the mortgage applicants weren't truly qualified to borrow as much money as they did. (Many of the applicants were called Ninjas...aka--"No income, no job, no assets") But the regulators and ratings agencies looked the other way because there was a lot of money involved and everyone was getting very rich. The dodgy loans were chopped up into securitized bonds (mainly Mortgage-Backed Securities) and sold to insurance companies, retirement funds and foreign investors. Then, on August 9, 2007, the Merry-go-round ground to a halt when Paribas Bank (BNP) stopped redemptions on assets that no one really knew how to value. (So, the crisis wasn't really a "panic" as much as it was a repricing event. The market had not yet repriced these toxic assets which were plunging in value on the ABX index.)

The problem was that the banks had been using these toxic assets to secure funding in the repo market. Now that their value was plunging, the banks were becoming increasingly less liquid and less inclined to deal with other banks that they knew were also in trouble. Keep in mind, that "according to Thomson Reuters, nearly $14 trillion worth of complex-securitized products were created," through this process which put the entire global financial system at risk. So, it wasn't just subprime mortgages (which only amounted to $1.5 trillion) that caused the meltdown, but the trillions of dollars in complex securitized bonds that had been traded through shadow intermediaries. As Anat R. Admati, Professor of Finance and Economics, Graduate School of Business at Stanford University said, "Housing policies alone, however, would not have led to the near insolvency of many banks and to the credit-market freeze. The key to these effects was the excessive leverage that pervaded, and continues to pervade, the financial industry." ("Fed scholars: A run on the repurchase market caused the financial crisis and will probably happen again", Repowatch)

........................................THE SLAUGHTER CONTINUES AT LINK

[Demeter]

24. AND THE LEVERAGE CONTINUES

...The essential problem with shadow banking is that it allows private industry (financial institutions) to generate as much credit as they want, thus, adding to the money supply, increasing economic activity, inflating gigantic asset-price bubbles, and setting the stage for a catastrophic meltdown. Economist James Hamilton explains how this works in a recent post titled "Follow The Money". Here's an excerpt:

"If you buy a mortgage-backed security (or collateralized debt obligation constructed from assorted MBS), you could then issue commercial paper against it to get most of your money back, essentially making the purchase self-financing. This was the idea behind the notorious off-balance sheet structured investment vehicles or conduits, which basically used money borrowed on the commercial paper market to buy various pieces of the mortgage securities created by the loan aggregators. The dollar value of outstanding asset-backed commercial paper nearly doubled between 2004 and 2007.

“Yale Professor Gary Gorton has also emphasized the importance of repo operations involving mortgage-related securities. If I buy a security, I can then pledge it as collateral to obtain a repo loan, again getting most of my money back and allowing the purchase to be mostly self-financing as long as I keep rolling over repos. Although I have not been able to find numbers on the volume of such transactions, it appears to have been quite substantial.

“The question of how the house price run-up was funded thus has a pretty clear answer: Other People's Money. Because of so much money pouring into house purchases, the price was driven up." ("Follow The Money", James Hamilton, Econbrowser)

This is how Wall Street pumped up leverage to ungodly levels and steered the financial system off the cliff. The debt-instruments and repo market were used to create a humongous debt pyramid balanced precariously atop a few crumbs of capital. Consider this, from an article titled “Liquidity Crises – Understanding sources and limiting consequences: A theoretical framework,” by Robert E. Lucas, Jr. and Nancy L. Stokey: "In August of 2008, the entire banking system held about $50 billion in actual cash reserves while clearing trades of $2,996 trillion per day. Yet every one of these trades involved an uncontingent promise to pay someone hard cash whenever he asked for it. If ever a system was “runnable,” this was it." (RepoWatch) Are you kidding me? "$2,996 trillion" in daily trading was propped up an a paltry $50 billion in cash reserves!?! No wonder the system crashed. Even the slightest trace of doubt in the quality of the collateral being exchanged in the repo market, would automatically set off alarms and trigger a panic. And it did!

So, what is the likelihood of that happening again? Are we still in danger?

Yes, we are. In fact, another crisis is probably unavoidable since Congress has done nothing to address the repo problem or to make the necessary changes in regulation...The only way to prevent another financial crisis is to fix repo, but Dodd-Frank doesn't do that.

[Po_d Mainiac]

27. Anyone catch "Frontline" last night? n/t

[Demeter]

28. No TV. What Happened?

[Fuddnik]

31. My idiot PBS station doesn't show it half the time.

This is one PBS station I wouldn't mind see going under. They're pathetic.

[Po_d Mainiac]

38. Repeat from 09..Link follows

on 'shadow banking' and the lack of disclosure in the derivatives markets.

It's worth watching again just to see Greenscum, Phat Summers and Rubin trashed.

http://www.pbs.org/wgbh/pages/frontline/warning/view/

[DemReadingDU]

32. August 9. 2007!

and we've been bailing out the banksters ever since

[Demeter]

26. Ron Paul Tells Crowd Inflation Will Hit 50 Percent By MARK HAYWARD

http://www.informationclearinghouse.info/article28305.htm

Texas congressman Ron Paul on Friday predicted that inflation will hit 50 percent in the next couple of years, thanks to the massive debt the country has accumulated. Paul, who spoke to admirers and Republican activists at a Manchester house party, said the inflation will act like default.

Social Security checks will still be cut and interest payments will still be made, but the inflated dollars will allow the government to repay borrowed dollars with devalued money, Paul said. “They cannot pay the debt,” he said. “I don't think that means you shouldn't try and work things out, but with the size of this debt it never gets paid.”

The national debt is about $14.3 trillion.

[hamerfan]

33. Excellent cartoon!

Thanks for that one, PBD.


Condolences on your loss, Demeter. :hug:

[Demeter]

34. How Bankers are using the Debt Crisis to Roll Back the Progressive Era By Michael Hudson

http://www.informationclearinghouse.info/article28319.htm

Financial strategists do not intend to let today’s debt crisis go to waste. Foreclosure time has arrived. That means revolution – or more accurately, a counter-revolution to roll back the 20th century’s gains made by social democracy: pensions and social security, public health care and other infrastructure providing essential services at subsidized prices or for free. The basic model follows the former Soviet Union’s post-1991 neoliberal reforms: privatization of public enterprises, a high flat tax on labor but only nominal taxes on real estate and finance, and deregulation of the economy’s prices, working conditions and credit terms.

What is to be reversed is the “modern” agenda. The aim a century ago was to mobilize the Industrial Revolution’s soaring productivity and technology to raise living standards and use progressive taxation, public regulation, central banking and financial reform to distribute wealth fairly and make societies more equal. Today’s financial aim is the opposite: to concentrate wealth at the top of the economic pyramid and lower labor’s returns. High finance loves low wages.

The political lever to achieve this program is financial. The European Union (EU) constitution prevents central banks from financing government deficits, leaving this role to commercial banks, paying interest to them for creating credit that central banks readily monetize for themselves in Britain and the United States. Governments are to go into debt to bail out banks for loans gone bad – as do more and more loans as finance impoverishes the economy, stifling its ability to pay. Yet as long as we live in democracies, voters must agree to pay. Governments are sovereign and debt is ultimately a creature of the law and courts...Fought in the name of free markets, this counter-revolution rejects the classical ideal of markets free of unearned income paid to special interests. The financial objective is to squeeze out a surplus by maximizing the margin of prices over costs. Opposing government enterprise and infrastructure as the road to serfdom, high finance is seeking to turn public infrastructure into rent-extracting tollbooths to extract economic rent (the “free lunch economy”), while replacing labor unions with non-union labor so as to work it more intensively.

This new road to neo-serfdom is an asset grab. But to achieve it, the financial sector needs a political grab to replace democracy with financial technocrats. Their job is to pretend that there is no revolution at all, merely an increase in “efficiency,” “creating wealth” by debt-leveraging the economy to the point where the entire surplus is paid out as interest to the financial managers who are emerging as Western civilization’s new central planners...This is what today’s financial warfare is about. At issue is the financial sector’s relationship to the “real” economy. From the latter’s perspective the proper role of credit – that is, debt – is to fund productive capital investment and spending, because it is out of the economic surplus that debts are paid. This requires a financial regulatory system and tax system to maximize growth. But that is precisely the fiscal policy that today’s financial sector is fighting against. It demands preferential tax-deductibility for interest to encourage debt financing rather than equity. It has disabled truth-in-lending laws and regulations to keeping interest rates and fees in line with costs of production. And it blocks governments from having central banks to freely finance their own operations and provide economies with money. And to cap matters it now demands that democratic society yield to centralized authoritarian financial rule.


MUCH, MUCH MORE AT LINK

[Demeter]

37. There's No Such Thing as a Temporary U.S. Default

http://www.theatlantic.com/business/archive/2011/06/theres-no-such-thing-as-a-temporary-us-default/240226/

SO WHAT WOULD HAPPEN? WOULD THE BANKSTERS BE HAPPY WITH A DEFAULT, OR WOULD THEY BE DRIVEN OUT OF POWER AND WEALTH?

THAT IS THE $14T QUESTION!

[Demeter]

40. Are We Entering an Economic "Ice Age"? By Mike Whitney

http://www.informationclearinghouse.info/article28317.htm

Stocks fell sharply on Friday losing 172 points on the Dow Jones capping a 6-week slide that wiped out more than $1 trillion from US equities markets. The winding down of the Fed's monetary easing program (QE2) and the increasingly gloomy economic data has roused Wall Street's bears and sent the bulls into full retreat. Market analysts continue to trim their estimates of growth for the second quarter (Q2) as signs of weakness in manufacturing, employment, housing, and consumer confidence cloud the long-term outlook and create more uncertainty about the strength of the recovery. Troubles in Japan, the eurozone and China have only added to the pessimism fueling a bond market rally that's pushed yields on the benchmark 10-year Treasury below 3 percent. Low yields on the 10-year are a blinking red light indicating distress in the broader economy and growing investor fear. It's a sign that the mood on Wall Street has darkened. This is from Barron's:

“From Asia to Europe to the U.S., all the important economic indicators are rolling over. Some blame the Japanese tragedy; others, the weather. It is more than that. It is the result of policy decisions. Economic growth could slow to a crawl well into early next year. The stock market isn't priced for that. Analysts will cut their earnings estimates. There is 20% downside risk from the market's intraday May high. Once the economic news turns decisively disappointing, the authorities will come to the rescue and try to stimulate again.” (Barron’s mid-year roundtable, Felix Zulauf in this week’s Barron’s mid-year roundtable, via Credit Writedowns)

Slower growth means less activity and poorer earnings. It means there will be more layoffs, more cutbacks, and more retrenching. WSJ journalists Liz Moyer and Brett Philbin have already dubbed the coming months as "Wall Street's Summer of Pain", a moniker that draws from the fact that the present downturn is already "the longest slump since 2002" and has seen the Dow drop below 12,000. Even Fed chairman Ben Bernanke has called the recovery "frustratingly slow", although his assessment appears to be vastly understated. The housing market is already double dipping and Yale's Robert Shiller figures the worst is yet to come. This is from the Financial Post: “My gut feeling is we might see a continuation of the decline” in home prices, Shiller said earlier Thursday at a Standard & Poor’s housing summit. He added that a 10% to 25% slump in real home prices “wouldn’t surprise me at all,” though he cautioned that was not a forecast. Shiller pointed to the glut of unsold homes on the market and the large amount of homeowners under water on their mortgages as pressuring prices. As for when home prices might bottom, Shiller told Insider that was unclear and it was possible prices could slide for 20 years.(!) “We’ve seen five years of decline already since the peak in 2006 and I don’t see evidence that we’re coming out of it,” he said." ("America at tipping point, warns Shiller", Financial Post)

SocGen's Albert Edwards is even bleaker than Shiller opining that "We have entered a long valuation bear market which should end in extreme levels of cheapness consistent with an S&P around 400." Edwards predicts an economic "Ice Age" which will crush equities markets and see bond yields dip below 2 percent. Here's a clip from an article by James Sunshine at the Huffington Post which sums up the public's reaction to the deluge of grim news: "Approximately 48 percent of Americans say they think that a Great Depression is either very or somewhat likely to occur within the year, according to a CNN Opinion Research Poll, the highest percentage of respondents that have stated that level of certainty since CNN first started asking the question in October 2008"....For working people, conditions have never been worse. The Fed's bond purchasing program (QE2) send food and gas prices soaring, while home equity has continued to decline for 4 years straight....

The Fed's Flow of Funds report, which was released last week, illustrates how tenuous our present situation really is. While the media has focused on the declining value of residential real estate (which fell $339 billion to $16.1 trillion in the first quarter) and on the rise in stock prices which were turbo-charged by Bernanke's bond-buying program, QE2. The real meat in the report is in "The Growth in Nonfinancial Debt" chart. The chart confirms that households are still deleveraging as they have been since early 2009. It also shows that the federal government's share of new debt is steadily shrinking as Obama's fiscal stimulus program (ARRA) winds down and Congress pushes for new belt tightening measures to trim the deficits. But what's interesting (and ominous) in the report is that business investment actually surged in the last quarter. (Business investment tends to be more volatile that personal consumption.) This suggests that business leaders were taken in by the uptick in manufacturing, employment and confidence that took place in late 2010 thinking that another expansion was underway. So, they doubled down and beefed up their investments. But now that the data has taken a turn for the worse and the 10-year has dropped below 3 percent, business investment will be severely slashed. When that happens, GDP will fall sharply (probably below 1 percent) and the failure of Obama's $800 billion fiscal stimulus program to spark a rebound will be clear to everyone. That will put the Democrats into panic-mode at the worst possible time, just before the 2012 elections. If the economy stumbles, there's a good chance that the GOP will take the White House and both Houses of congress...A GOP landslide in 2012 would be a disaster. Republican deficit hawks want to cut spending immediately which will inevitably lead to another excruciating slump...Even though Obama's stimulus (ARRA) was too small and poorly targeted to get the economy back on track, it does show that his advisors have a basic grasp of economics. The same cannot be said about the Republican plan. It is sheer madness. If the GOP takes the White House in 2012, there will be another Great Depression. There's no doubt about it.

Note: The moniker economic "Ice Age" is credited to SocGen's Albert Edwards - https://www.sgresearch.com/

MY QUESTION YET AGAIN---WILL THIS TAKE DOWN THE BANKSTERS, TOO? ARE THEY THINKING THEY WILL ESCAPE WITH THE GOODS? ARE THEY WRONG?

[xchrom]

41. +1

[xchrom]

42. asia: BOJ expands lending scheme by ¥500 billion

http://search.japantimes.co.jp/cgi-bin/nb20110615a1.html

The Bank of Japan kept its key interest rate unchanged at virtually zero and expanded a lending program to bolster the disaster-hit economy.

The central bank's nine-member Policy Board voted unanimously Tuesday to leave the overnight call rate target at zero to 0.1 percent. The decision was widely expected.

But to support recovery, the board decided to offer commercial banks ¥500 billion in new credit as part of a measure introduced last year to fuel economic growth.

The low-interest lending facility is designed to encourage private banks to lend money to businesses in growth sectors such as energy, the environment, elderly care and tourism. Under the expansion announced Tuesday, the facility now includes equity investments and loans without real estate collateral.

[xchrom]

43. China warns outside nations to stay out of sea dispute

http://uk.reuters.com/article/2011/06/15/us-china-vietnam-idUKTRE75E1DJ20110615

(Reuters) - China opposes external powers weighing in on territorial disputes in the South China Sea, it said on Tuesday after Vietnam said other countries, including the United States, could help defuse tensions over the potentially resource-rich region

Vietnam outlined the terms of a possible military draft, a move that experts called a signal meant to show the country was prepared to defend its interests, but Beijing's warning appeared aimed at Washington, which urged a collective solution to the sea tensions last year.

"We hope that countries that are not parties to the South China Sea dispute truly respect the efforts of the countries concerned to resolve their disputes through consultation," Chinese Foreign Ministry spokesman Hong Lei said.

China's main military newspaper was blunter.

[xchrom]

45. PRECIOUS-Gold extends gains as econ worries linger

http://uk.reuters.com/article/2011/06/15/markets-precious-idUKL3E7HF04U20110615

SINGAPORE, June 15 (Reuters) - Gold rose further on
Wednesday on inflation fears ignited by recent strong Chinese
economic data, lingering worries over debt problems in Europe
and the United States as well as a softer U.S. dollar.

Although the long-term outlook remains positive, gold is
still struggling to breach $1,550, a peak touched last week,
while physical buying subsided after gold snapped a two-day
losing streak in the previous session.

Spot gold added $2.25 an ounce to $1,525.50 an ounce
by 0319 GMT, extending Tuesday's gains after data in China
showed inflation was running at its fastest pace in almost three
years and U.S. retail sales fell less than forecast.

Gold is well below a lifetime high around $1,575 touched in
early May.

[Demeter]

46. Billionaire Heiress Petra Ecclestone Buying $150 Million Spelling Manor

http://blogs.forbes.com/morganbrennan/2011/06/14/billionaire-heiress-petra-ecclestone-to-buy-150-million-spelling-manor/?partner=yahoofpapp

In a year that’s seen housing prices continue to plummet and the U.S. unemployment rate hover around 9%, billionaires have been shelling out gargantuan amounts of cash on opulent estates. A few short months after billionaire investor Yuri Milner forked over a hefty $100 million for a Silicon Valley home (which will be used as a secondary residence), another billionaire is contending for the real estate title of most expensive home: Petra Ecclestone, daughter of British billionaire Bernie Ecclestone and heiress to his Formula One racing empire.

Ecclestone is the pending buyer of the $150 million Spelling Manor, reports the Wall Street Journal. The 56,500-square foot mansion is currently America’s most expensive home for sale. The huge abode, originally named L’Oiseau (or “Wing of a Bird”), is situated on about 4.7 acres in tony Holmby Hills, an exclusive Los Angeles neighborhood. The seller is Candy Spelling, mother of actress-turned-reality show star Tori Spelling and widow of famed T.V. producer Aaron Spelling, whose works include the “Beverly Hills 90210,” “Charlie’s Angels,” and “Dynasty” series.

The three-story, seven bedroom estate boasts every outrageous amenity a celebrity or billionaire could imagine. Among the offerings are a dog grooming room, five bars, a wine cellar and tasting room, a China room for displaying ritzy server ware, a “gift-wrapping” room, a flower-cutting hall with professional florist fridge, a projection room, game and billiards rooms, and a bowling alley. The attic even touts a beauty salon. An elevator runs between the floors so as move around the giant manse more quickly. The master bedroom suite is an apartment within the home. It comes complete with his-and-her baths, a sitting room, an office, a kitchenette and a “grand entrance,” ...The grounds encompass expansive gardens, an orangery, a koi pond, lamp posts imported from Paris, a pool complex and tennis courts. The fountain-studded motor court holds up 100 cars in front of the limestone mansion...Spelling Manor has been listed since 2009 officially, and despite a nearly three year run on the sale block amid plummeting home prices, the property’s asking price was never reduced....

Ecclestone, 22, is said to be moving into the palatial pad following her August nuptials to James Stunt, a businessman and London nightclub fixture. The Journal reports that the couple will “split time between London and Los Angeles.”

THERE GOES THE NEIGHBORHOOD!

[Demeter]

47. Justice Goes Global By THOMAS L. FRIEDMAN

http://www.nytimes.com/2011/06/15/opinion/15friedman.html

...Harvard students, some 15,000 of whom have taken Sandel’s legendary “Justice” class. What makes the class so compelling is the way Sandel uses real-life examples to illustrate the philosophies of the likes of Aristotle, Immanuel Kant and John Stuart Mill. Sandel, 58, will start by tossing out a question, like, “Is it fair that David Letterman makes 700 times more than a schoolteacher?” or “Are we morally responsible for righting the wrongs of our grandparents’ generation?” Students offer competing answers, challenge one another across the hall, debate with the philosophers — and learn the art of reasoned moral argument along the way...Besides being educational, the classes make great theater — so much so that Harvard and WGBH (Boston’s PBS station) filmed them and created a public television series that aired across the country in 2009. The series, now freely available online (at www.JusticeHarvard.org), has begun to stir interest in surprising new places.

Last year, Japan’s NHK TV broadcast a translated version of the PBS series, which sparked a philosophy craze in Japan and prompted the University of Tokyo to create a course based on Sandel’s. In China, volunteer translators subtitled the lectures and uploaded them to Chinese Web sites, where they have attracted millions of viewers. Sandel’s recent book — “Justice: What’s the Right Thing to Do?” — has sold more than a million copies in East Asia alone. This is a book about moral philosophy, folks!...But what is most intriguing is the reception that Sandel (a close friend) received in China. He just completed a book tour and lectures at Tsinghua and Fudan universities, where students began staking out seats hours in advance. This semester, Tsinghua started a course called “Critical Thinking and Moral Reasoning,” modeled on Sandel’s. His class visit was covered on the national evening news.

Sandel’s popularity in Asia reflects the intersection of three trends. One is the growth of online education, where students anywhere now can gain access to the best professors from everywhere. Another is the craving in Asia for a more creative, discussion-based style of teaching in order to produce more creative, innovative students. And the last is the hunger of young people to engage in moral reasoning and debates, rather than having their education confined to the dry technical aspects of economics, business or engineering. At Tsinghua and Fudan, Sandel challenged students with a series of cases about justice and markets: Is it fair to raise the price of snow shovels after a snowstorm? What about auctioning university admissions to the highest bidder? “Free-market sentiment ran surprisingly high,” Sandel said, “but some students argued that unfettered markets create inequality and social discord.”

Sandel’s way of teaching about justice “is both refreshing and relevant in the context of China,” Dean Qian Yingyi of Tsinghua’s School of Economics and Management, explained in an e-mail. Refreshing because of the style and relevant because “the philosophic thinking among the Chinese is mostly instrumentalist and materialistic,” partly because of “the contemporary obsession on economic development in China.” Tsinghua’s decision to offer a version of Sandel’s course, added Qian, “is part of a great experiment of undergraduate education reform currently under way at our school. ... This is not just one class; it is the beginning of an era.”...Sandel is touching something deep in both Boston and Beijing. “Students everywhere are hungry for discussion of the big ethical questions we confront in our everyday lives,” Sandel argues. “In recent years, seemingly technical economic questions have crowded out questions of justice and the common good. I think there is a growing sense, in many societies, that G.D.P. and market values do not by themselves produce happiness, or a good society. My dream is to create a video-linked global classroom, connecting students across cultures and national boundaries — to think through these hard moral questions together, to see what we can learn from one another.”

I'LL HAVE TO WATCH A FEW OF THESE TO SEE IF I PERSONALLY THINK THE MAN IS "MORAL"...

[tclambert]

104. Judge Judy makes more than all 9 Supreme Court Justices combined.

After the Citizens United decision, I'm okay with that.

[xchrom]

48. China increases holdings of US Treasury securities

http://hosted.ap.org/dynamic/stories/U/US_FOREIGN_HOLDINGS?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2011-06-15-09-00-42

WASHINGTON (AP) -- China, the biggest buyer of U.S. Treasury debt, boosted its holdings in April, the first increase after five straight declines.

The Treasury Department says China increased its holdings by $7.6 billion to $1.15 trillion.

Total foreign holdings of Treasury securities rose 0.2 percent to $4.49 trillion.

Japan, the second largest buyer of U.S. debt, trimmed its holdings slightly by $1 billion to $906.9 billion. There had been concerns that the March 11 earthquake and tsunami would lead Japan to sharply reduce its purchases to use the money for reconstruction.

[xchrom]

49. The end of cheap goods?

http://www.economist.com/node/18805862

“IT IS the end of cheap goods,” says Bruce Rockowitz. He is the chief executive of Li & Fung, a company that sources more clothes and common household products from Asia than perhaps any other. In the low-tech areas in which Li & Fung specialises, the firm handles an estimated 4% of China’s exports to America and a sizeable chunk of its exports to Europe, too. It has operations in several East Asian countries, where it diligently searches for cheap, reliable suppliers of everything from handbags to bar stools. So when Mr Rockowitz says the era of low-cost Asian production is drawing to a close, people listen.

He argues that Asian manufacturing has gone through a number of phases, each lasting about 30 years. When China was isolated under Mao Zedong, companies in Hong Kong, Taiwan and South Korea grew expert at making things. When China reopened in the late 1970s, after Mao’s death, these experienced Asian operators converged on southern China. With almost free access to land and labour, plus an efficient port and logistics hub in nearby Hong Kong, they started to make things ever more cheaply and sell them to the whole world.

For the next 30 years manufacturers in China helped to keep global inflation in check. But that era is now over, says Mr Rockowitz. Chinese wages are rising fast. A wave of new demand, especially from China itself, is feeding a surge in commodity prices. Manufacturers can find some relief by moving production to new areas, such as western China, Vietnam, Bangladesh, Malaysia, India and Indonesia. But none of these new places will curb inflation the way southern China once did, he predicts. All rely on the same increasingly expensive pool of commodities. Many have rising wages or poor logistics. None can provide the scale and efficiency that was created when manufacturers converged on southern China.

[Demeter]

53. Cheap in What Context?

in stable currency--not likely. In fact, in stable currency, prices would probably continue to fall, as the buyers are shut out by lack of cash. That's the deflation side.

But in the depreciating currencies....there may be some inflation of prices, but nothing like it ought to be, so deflation world-wide will be tempering inflation world-wide...

and I get a headache, just thinking about it.

[mrdmk]

97. Allow me to translate

The end of Supply-Side Economics. Milton Friedman must be spinning in his deep thirty-six foot grave. Too-bad!

[Demeter]

51. SEC probes Merrill on CDO sale

The Securities and Exchange Commission is investigating Merrill Lynch’s sale of a complex mortgage-related security it created for Magnetar, an Illinois hedge fund, and the collateral manager involved in the deal, according to people familiar with the matter.

The investigation is one of several SEC probes into banks that helped underwrite billions of dollars of collateralised debt obligations, securities comprised of mortgages or derivatives linked to them.

Read more >>
http://link.ft.com/r/YIQXNN/GDX3LF/XBAN6/V1FBZF/D47HZC/LE/t?a1=2011&a2=6&a3=14

[Demeter]

75. Mirabile Dictu! SEC Probes Relationship Among Toxic CDO Sponsor Magnetar, Merrill, and CDO Manager

http://www.nakedcapitalism.com/2011/06/mirabile-dictu-sec-probes-relationship-between-toxic-cdo-sponsor-magnetar-merrill-and-cdo-manager.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

It has taken forever for the SEC to probe the workings the biggest sponsor of toxic CDOs and of course the agency is going after only one highly publicized doggy deal. Nevertheless, the SEC has finally decided to look at the less than arm’s length relationship between the hedge fund Magnetar, whose Constellation program played a central role in blowing up the subprime bubble, and its collateral manager, which in this case a Merrill affiliated firm called NIR. As we will discuss, collateral managers were critical because they effectively served as liability shields for the other participants...Note that Magnetar does not appear to be the target; the Financial Times reports that the SEC is examining how the deal’s underwriter Merrill sold the deal and how it worked with NIR.

The very same CDO that is the focus of the SEC probe, Norma, was also the first to be noticed outside the comparatively small community involved in creating and buying these deals, in a Wall Street Journal story by Serena Ng and Carrick Mollencamp in late 2007. By the standards of CDOs, Magnetar’s were somewhat exotic, in that they were heavily synthetic. Most (but not all) of the assets were credit default swaps; about 20% of the deal’s asset were bonds, primarily BBB tranches of subprime bonds or the lower rated tranches (AA to BBB) of other “mezz” (for mezzanine, meaning made largely of lower rated bond tranches) CDOs.

Ng and Mollencamp did a second story about Magnetar, which discussed how it had launched a series of CDOs (by their tally, $30 billion) and had set the deals up to fail. We did a fuller treatment of Magnetar in our book ECONNED and broke the story of how the fund played a central role in pumping up demand for the very worst subprime mortgages in the toxic phase of the bubble

Magnetar constructed a strategy that was a trader’s wet dream, enabling it to show a thin profit even as it amassed ever larger short bets (the cost of maintaining the position was a vexing problem for all the other shorts, from John Paulson on down) and profit impressively when the market finally imploded. Both market participant estimates and repeated, conservative analyses indicate that Magnetar’s CDO program drove the demand for between 35% and 60% of toxic subprime bond demand. And this trade was lauded and copied by proprietary trading desks in 2006...

TAKE A BOW, MS. SMITH, FOR BRINGING LIGHT IN THE DARKNESS AND JUSTICE IN THIS LAWLESS LAND

MUCH MORE AT LINK

[Demeter]

52. Here comes the "Down Like a Rock" Stage

-107 at opening...

[Demeter]

54. Bank chiefs’ pay rises by 36%

Bank chiefs’ average pay in the US and Europe leapt 36 per cent last year to $9.7m, according to data compiled for the Financial Times, despite variable performance across the sector

Read more >>
http://link.ft.com/r/OZMCDD/VLU2B6/IEP5S/M9DFU4/IYXOAQ/W1/t?a1=2011&a2=6&a3=14

[xchrom]

55. south asia: Mkts plunge ahead of RBI meet tomorrow; Sensex down 176 points

http://timesofindia.indiatimes.com/business/india-business/Mkts-plunge-ahead-of-RBI-meet-tomorrow-Sensex-down-176-points/articleshow/8863263.cms

MUMBAI: The BSE benchmark sensex nosedived by 176 points on Wednesday on intense selling in banking and realty stocks, triggered by fears of a rate hike by the Reserve Bank on Thursday in its mid-quarterly policy review to tame inflation.

Shares of IT companies were also battered by investors after the release of recent weak economic data in the US amid the continuing sovereign debt crisis in Europe. The US and Europe are the two key markets for Indian IT companies.

Markers opened on a bad note and remained under pressure throughout the day. The 30-share sensex closed the day down at 18,132.24, down 176.42 points or 0.96% from last close.

The NSE 50-share Nifty also fell by 53.00 points or 0.96% to settle at 5,447.50.

[xchrom]

56. ‘Policy formulation is never abrupt in India, it only moves forward’

http://timesofindia.indiatimes.com/business/india-business/Policy-formulation-is-never-abrupt-in-India-it-only-moves-forward/articleshow/8858603.cms

Apart from pushing trade with other countries, commerce & industry minister Anand Sharma has been trying to step up the share of manufacturing in India's economy as also foreign direct investment inflows. He spoke to Sidhartha & Surojit Gupta about the slowdown, scams and their impact on policymaking. Excerpts:

Growth seems to be moderating and there is an impression of policy paralysis due to the developments on the political front. What is your assessment of the investment climate?


There are various factors that get reflected in upswing or downswing of the investments. We have done commendably in the last three years. Of late there has been a decline. Last year, we didn't do as well as we should have done. And we have reviewed it. We are trying to reach out to our global partners through various initiatives. We have concluded several comprehensive economic partnership agreements where investments are included. In addition, we are further strengthening Invest India, the not-forprofit company which the government set up in partnership with Ficci.

[Roland99]

62. Shedding a little brightness up here....

Haven't been around much as I was back up north for my daughter's wedding!!

The beautiful bride



My beautiful ladies

[Demeter]

63. Congrats!

[Fuddnik]

65. Double congrats.

[xchrom]

67. how wonderful! congratulations! nt

[DemReadingDU]

70. Congrats!

lovely bride!

[Demeter]

64. Zombie consumers lead US into lost decade

The global economy is being hobbled by a new generation of zombies — the economic walking dead. American consumers are in the early stages of an unprecedented retrenchment. In the 13 quarters since the beginning of 2008, inflation-adjusted annualised growth in consumption has averaged just 0.5 per cent. Never before in the postwar era have US consumers been this weak for this long.

The zombie syndrome has an important antecedent. It was, in fact, a key symptom of the Japan disease, which led to the first of two lost decades for that country. Encouraged by the government, Japanese banks kept extending credit lines for a broad cross-section of insolvent companies — postponing restructuring and inevitable failure.

Read more >>
http://link.ft.com/r/R5WAEE/R3FVUA/RP6QL/OJIP5V/XTUQQ5/ID/t?a1=2011&a2=6&a3=15

AMERICAN CONSUMERS WOULD ONLY BE ZOMBIES IF THEY KEPT BORROWING, AND SOMEBODY KEPT LENDING TO THEM...I DON'T SEE MUCH OF THAT GOING ON....

[xchrom]

68. US factory output rose in May after April decline

http://hosted.ap.org/dynamic/stories/U/US_INDUSTRIAL_PRODUCTION?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2011-06-15-09-49-58

WASHINGTON (AP) -- U.S. factories produced more goods in May, rebounding after supply disruptions stemming from the Japan crises and tornadoes in the South cut their output for the first time in 10 months.

Factory production increased 0.4 percent last month, the Federal Reserve said Wednesday. The gain follows a decline in April of 0.5 percent. A rise in production of business equipment and construction materials offset the second straight decline in auto production. A parts shortage out of Japan has hampered U.S. car manufacturers.

Excluding motor vehicles and parts, manufacturing increased 0.6 percent in May.

Overall industrial production was basically flat for the second month in a row. It was dragged down by a decline in utility activity caused by milder spring weather. Production at mines rose 0.5 percent.

[Fuddnik]

71. This morning's harvest.

Roma's, Early Girl's, Better Boy's, Sweet 100's.

Habanero's, Jalapeno's, Eggplant, and more!

[xchrom]

72. have the dogs acquired a taste for the peppers?

i know some dogs do.

but other wise -- GORGEOUS!makes want to some grilling and make a pot of chili.

[Fuddnik]

74. That would be torture.

Then they'd try to lick my face and eyes with pepper mouth for revenge.

Most of the tomatoes will go in the dehydrator today, and the peppers Monday when I return from SC. By then I'll have another bunch ready to pick, plus some cucumbers, cantaloupe, and watermelon.

[xchrom]

76. YUM & that sounds like so much fun. nt

[Viva_La_Revolution]

79. NOT FAIR! I'm just this week getting my toms in the ground.

freaky weather here in the PNW has got me seriously worried there won't be much of a harvest this year. :(

[tclambert]

106. Strawberry season here. Tomatoes and peppers a month away.

I thought I got started early, in mid-May, but it turns out I could have put tomatoes out two weeks earlier. We had no frost in all of May. It used to be in Michigan we had to wait until the last week of May. Our growing season is 2 or 3 weeks longer now. We harvested our lettuce and spinach already. I can't get all the salad ingredients to ripen at the same time. And the crouton bush just isn't working out.

[xchrom]

73. World stocks down as China, India rate hikes loom

http://www.thejakartapost.com/news/2011/06/15/world-stocks-down-china-india-rate-hikes-loom.html

World stock markets mostly slipped Wednesday as investors anticipated growth-denting rate hikes by central banks in India and China to contain stubbornly high inflation.

Oil prices hovered around $99 a barrel after a report showed US crude inventories fell more than expected, suggesting demand may be improving. The dollar was up against the euro and unchanged against the yen.

In early European trading, Britain's FTSE 100 slipped 0.2 percent to 5,788.97. Germany's DAX and France's CAC-40 each lost 0.3 percent. Wall Street was set to head lower, with Dow Jones industrial futures and S&P futures both down 0.5 percent.

Asian shares fared only slighter better.

[Demeter]

78. Martin Wolf: Why China Could Fail Like Japan

http://www.nakedcapitalism.com/2011/06/martin-wolf-why-china-could-fail-like-japan.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

The Financial Times’ economics editor Martin Wolf takes up the theme treated at some length by China-based economist MIchael Pettis: that Chinas’ economy has moved into unknown and dangerous terrain. No sizeable economy has had investment and exports combined constitute nearly 50% of GDP, and that model is not sustainable. As we have indicted, there is evidence that investment is becoming less and less productive. China is taking $7 of debt to generate $1 of GDP, when the US at the tail end of the bubble needed a mere $4 to $5 of debt for each incremental $1 of growth.

MUCH MORE

[xchrom]

81. so now we have both posted articles seriously considering stagflation in india

& a 'hard landing' in china.

wow -- i have no real idea -- but it looks like a bumpy road coming up.

where's my seat belt?

[Demeter]

80. The Epidemic of Mental Illness: Why? Marcia Angell

http://www.nybooks.com/articles/archives/2011/jun/23/epidemic-mental-illness-why/

I DON'T THINK WE HAVE TO LOOK ANY FARTHER THAN THIS DYSFUNCTIONAL ECONOMY AND POLITICS OF THE NATION...PSTD IS A CONSEQUENCE OF MAN'S BRUTALITY TO OTHERS, AND THERE'S BEEN A LOT OF THAT GOING AROUND...THERE HAS ALWAYS BEEN MENTAL ILLNESS IN THIS COUNTRY--JUST LOOK DOWN YOUR FAMILY TREE. THE FUNNY UNCLE, THE CRAZY AUNT...BUT THERE WAS NOTHING TO BE DONE ABOUT IT, SO FAMILIES JUST COPED--OR NOT. TODAY, THE ABILITY TO COPE WITH ADVERSITY HAS BEEN WRUNG OUT OF THE COUNTRY BY THE RAPACIOUS PROFITEERS WHO HAVE TAKEN EVERYTHING THAT WASN'T NAILED DOWN, AND THE HOPE THAT WAS AMERICA'S BEST SELLING POINT IS NOW AN EMPTY SLOGAN FOR AN EMPTY SUIT CANDIDATE...


It seems that Americans are in the midst of a raging epidemic of mental illness, at least as judged by the increase in the numbers treated for it. The tally of those who are so disabled by mental disorders that they qualify for Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI) increased nearly two and a half times between 1987 and 2007—from one in 184 Americans to one in seventy-six. For children, the rise is even more startling—a thirty-five-fold increase in the same two decades. Mental illness is now the leading cause of disability in children, well ahead of physical disabilities like cerebral palsy or Down syndrome, for which the federal programs were created.

A large survey of randomly selected adults, sponsored by the National Institute of Mental Health (NIMH) and conducted between 2001 and 2003, found that an astonishing 46 percent met criteria established by the American Psychiatric Association (APA) for having had at least one mental illness within four broad categories at some time in their lives. The categories were “anxiety disorders,” including, among other subcategories, phobias and post-traumatic stress disorder (PTSD); “mood disorders,” including major depression and bipolar disorders; “impulse-control disorders,” including various behavioral problems and attention-deficit/hyperactivity disorder (ADHD); and “substance use disorders,” including alcohol and drug abuse. Most met criteria for more than one diagnosis. Of a subgroup affected within the previous year, a third were under treatment—up from a fifth in a similar survey ten years earlier.

Nowadays treatment by medical doctors nearly always means psychoactive drugs, that is, drugs that affect the mental state. In fact, most psychiatrists treat only with drugs, and refer patients to psychologists or social workers if they believe psychotherapy is also warranted. The shift from “talk therapy” to drugs as the dominant mode of treatment coincides with the emergence over the past four decades of the theory that mental illness is caused primarily by chemical imbalances in the brain that can be corrected by specific drugs. That theory became broadly accepted, by the media and the public as well as by the medical profession, after Prozac came to market in 1987 and was intensively promoted as a corrective for a deficiency of serotonin in the brain. The number of people treated for depression tripled in the following ten years, and about 10 percent of Americans over age six now take antidepressants. The increased use of drugs to treat psychosis is even more dramatic. The new generation of antipsychotics, such as Risperdal, Zyprexa, and Seroquel, has replaced cholesterol-lowering agents as the top-selling class of drugs in the US.

What is going on here? Is the prevalence of mental illness really that high and still climbing? Particularly if these disorders are biologically determined and not a result of environmental influences, is it plausible to suppose that such an increase is real? Or are we learning to recognize and diagnose mental disorders that were always there? On the other hand, are we simply expanding the criteria for mental illness so that nearly everyone has one? And what about the drugs that are now the mainstay of treatment? Do they work? If they do, shouldn’t we expect the prevalence of mental illness to be declining, not rising?

THIS ARTICLE REVIEWS 3 BOOKS THAT ASK: DO PILLS HELP, OR DO THEY MAKE IT WORSE? DOES BIG PHARMA DEFINE MENTAL ILLNESS FOR PROFIT? WORTHY OF A READ.

TH

[Demeter]

82. Lawyers Settle... for Temp Jobs

http://online.wsj.com/article/SB10001424052702303714704576383641752966666.html?mod=WSJ_hp_MIDDLENexttoWhatsNewsSecond

[Demeter]

83. This Land Is Your Land (LAND REFORM, REDISTRIBUTION, ETC)

http://www.worldpolicy.org/journal/summer2011/this-land-is-your-land

In 2000, the Peruvian economist Hernando de Soto published The Mystery of Capital, his landmark study of the relationship between property rights and poverty. De Soto claimed that some $9 trillion of “dead capital” was locked up in land, homes, and businesses belonging to poor people who did not technically “own” them. Without deeds or titles, he argued, poor people all over the world are not able to leverage their property for profit. Solving this problem became de Soto’s mission.

Though his ideas are controversial, they have been immensely influential. (In 2004, Bill Clinton described him as “probably the world’s most important living economist.”) During the past decade, he has attempted to put his theories to the test, advising governments and heads of state around the world. As a first step, de Soto and his colleagues at the Lima-based Institute for Liberty and Democracy designed an administrative reform of Peru’s property system—some 400 initiatives, laws and regulations that have allowed more than 1.2 million Peruvian families to claim title to the lands they farm, and helped some 380,000 firms which previously operated in the black market to enter the open economy. But Peru was only the beginning. From his base in Lima, de Soto spoke with World Policy Journal editor David A. Andelman and managing editor Justin Vogt.

*****
*****

World Policy Journal: Let’s begin by looking at property, which is your particular interest and focus. You seem to suggest that the poor, especially in the most deprived portions of the world, are poor only on paper. In fact, they are wealthy, in terms of the land they can control to grow their food and live with their families. Explain to us why that form of ownership isn’t sufficient to prevent these people from being poor. Why is legal documentation so important?

Hernando de Soto: Let me try an example, because we just started working now in the Peruvian Amazon where, together with the Brazilian Amazon, we’re discovering a lot of the potential wealth of the world. It is a huge source of petroleum, a huge source of gas, a huge source of hydroelectric power, and minerals and metals. The same thing is happening in India and in tropical Nigeria. But let’s concentrate on Peru. In this case, you’ve got native lands where we found that only 5 percent of indigenous people have titles to the land that—by description in the constitution—is theirs...On the other hand, you’ve got solid property rights that are given to any company, foreign or Peruvian, that wishes to extract oil or any other mineral. So here comes an American company, for example. They get a property right from the Peruvian government and that property right is in the form of a concession. It establishes that it’s theirs, provided you renew agreements and commitments over so many years, but it’s a property right. And they’re going to have it for 60 years, 120 years, or it’s unlimited. This property right then becomes even more “perfected”—that’s the word we use in Spanish—and thus it becomes even more detailed as to how far these rights go. Then that property right—which has been protected by the bilateral international treaty that has been signed between Peru and the United States—gets inscribed and blessed by the United States Overseas Private Investment Corporation (OPIC), which issues guarantees that makes it interesting for everybody to look at that property, because it’s got the backing of OPIC. Then that property right goes to the Multilateral Investment Guarantee program of the World Bank, where again it is ratified by its 187 member countries, who of course view this as a way of guaranteeing investment in developing nations. Then the owner of that title goes to Toronto, Wall Street, or London and says, “I have got a property right that even the Peruvian congress can’t take away.” On that basis, the investor gets $3 billion and brings it back to Peru. Now they’re right next to tribes who have the same amount of land or even more, but are poor. The difference between the foreign investor and the local investor is strictly the paper. In other words, the paper is by law the statement that tells the truth, that gives direct information. That’s what makes people accountable and raises the funds. It’s not the land, it’s not work, it is not machines. It is a legal statement that is solid. So what I’m trying to say is that we have had all this land that has all this oil, that’s got all this gold, probably for eternity, and it can only be developed through capital. And the only thing that can attract capital is the ability to go to the markets and demonstrate that it can be monetized...

MUCH MORE AT LINK

[Demeter]

84. We Have Been Ruled By Really Stupid People

THE ORIGINAL LINK TAKES YOU TO THIS ONE:

Forget About Hoover Dam and Other Job-Growth Lessons: Ron Klain

http://www.bloomberg.com/news/2011-06-14/forget-about-hoover-dam-and-other-job-growth-lessons-ron-klain.html

When I worked in the Obama White House, one of my most important assignments was to help oversee implementation of the American Recovery and Reinvestment Act, commonly known as the stimulus. The measure met its major objectives, hitting spending targets on time, keeping down waste and fraud, and surpassing the goal of saving or creating 3 million jobs. Yet it never won favor with the public.

In defending it, the most common question I heard from friends and foes was something like: “Why didn’t you guys just do what FDR did, and build another Hoover Dam?”

Even my administration colleagues sometimes expressed Hoover Dam nostalgia as they grew disappointed that the act’s signature initiatives such as solar and wind power, high-speed rail, a smarter power grid and electric car battery plants failed to rally the public. No one cares about the small projects, I was often told. So why wasn’t the answer to start another mega-project like the Hoover Dam? And why isn’t it the right policy now, with the unemployment rate so stubbornly high?

First, it’s important to understand how small a role giant construction projects played in ending the Great Depression. Millions of Americans were employed by the Works Progress Administration and the Civilian Conservation Corps on scores of discrete projects, including reclaiming land, constructing federal buildings, planting windbreak trees, erecting park lodges and paving park roads. The spectacular mega-endeavors that we now associate with the New Deal were actually a small part of the overall program....

SOUR GRAPES AND MISSING THE POINT, IMO

[Demeter]

85. I Ruined the Economy and All I Got Were These Lousy Tax Cuts

http://prospect.org/cs/articles?article=i_ruined_the_economy_and_all_i_got_were_these_lousy_tax_cuts

SOUNDS LIKE A DAVE BARRY ARTICLE, BUT IT ISN'T...I THINK. SURE SOUNDS LIKE HIM, THOUGH

Last week, Ben Bernanke delivered a speech in which he agreed that the government should reduce the deficit. However, he cautioned, “a sharp fiscal consolidation focused on the very near term could be self-defeating if it were to undercut the still-fragile recovery.”

In economist speak, that’s a warning to Vice President Joe Biden and the handful of congressional leaders he has assembled to tackle the deficit: Don’t cut spending too fast or you’ll kill the economy. Already, the federal government’s limit on the amount it can borrow has been reached, and Treasury Secretary Tim Geithner has warned that the government is now taking “extraordinary measures” to meet its obligations. Yet Republicans refuse to raise the limit without big cuts to government spending.

Also last week, Sen. Jon Kyl, a Republican from Arizona and a member of the Biden negotiating team, reiterated his party’s demand: Every dollar the debt ceiling is increased must be accompanied by at least a dollar in spending cuts. That would require a $2.5 trillion deficit-reduction package that would rely on spending cuts and not include tax increases, according to Kyl.

Kyl gave no timeframe over which that $2.5 trillion in savings would be spread. But Republicans have insisted on taking immediate steps to reduce the nation’s current budget deficit, estimated at $1.6 trillion. The first batch of cuts could commence as early as this October, when the 2012 fiscal year begins...

[Demeter]

87. Greek Unions Stage Strike Against Austerity

WE ARE ALL STILL PLAYING AT THIS--A 24 HOUR STRIKE IS JUST A DAY OFF. A STRIKE FOR THE DURATION...NOW THAT WOULD BE SOMETHING THAT CANNOT BE IGNORED IN THE HIGH TOWERS OF GOVERNMENT AND BUSINESS...

http://www.bloomberg.com/news/2011-06-14/greek-unions-stage-24-hour-strike-to-oppose-papandreou-s-cuts-asset-sales.html

Greece’s ports, banks, hospitals and state-run companies grind to a halt today as the two biggest labor unions strike to oppose Prime Minister George Papandreou’s additional budget cuts and asset sales. ADEDY, the largest public-sector union, and the General Confederation of Labor, or GSEE, the biggest private-sector union, called the third general strike of the year to protest the government’s five-year fiscal plan and program of state asset sales, according to e-mailed statements.

Papandreou aims to get the 78 billion-euro ($113 billion) package passed in parliament by the end of the month. He faces growing dissent within his Socialist Pasok party and among Greeks. One Pasok lawmaker said yesterday he won’t vote for the bill, the To Vima newspaper reported. Papandreou holds a six-seat majority in the 300-member assembly. “This government has the responsibility to save the country from default,” spokesman George Petalotis told reporters in Athens yesterday in response to questions on the strikes.

A group called The People’s Assembly of Syntagma, a reference to Athens’s main square, has called on people to encircle parliament as lawmakers begin a debate on the bill, submitted on June 9. Demonstrators have gathered in the square in front of parliament for 21 days, setting up tents and calling on others to join them. Police said the largest rally was on June 5, when 50,000 people gathered in front of the chamber.

[Po_d Mainiac]

96. And again the folly of the 'shadow banking' schemes rears

its ugly head.

French banks are freighted with Greek junk, and no doubt the turds will spread to lower Manhattan. Bear, Lehman, AIG redux. :popcorn:

[Demeter]

88. What QE3 could look like Economy | Edward Harrison |

Read more: http://www.creditwritedowns.com/2011/06/parsing-helicopter-speech-
part-two.html#ixzz1PMQMz1Y9

I CAN'T LOOK--SOMEBODY ELSE READ IT AND REPORT, PLEASE?

[Roland99]

95. this passage probably describes it best....

Bernanke is by no means saying they will abstain from "nonstandard means of injecting money" into the economy. Notice that Bernanke uses the phrase 'injecting money' what I am euphemistically calling 'more cowbell.' Bernanke goes on to say the Fed should do this before deflation takes hold.

Translation: it is always preferable to a central bank to print money or create some reasonable facsimile of printing to prevent deflation before its onset than to try and deal with deflation once it has set in.

Quantitative easing: printing money like mad to ward off deflation, 30 Nov 2008

I believe that's where we are now – right on the verge of debt deflation taking hold via a housing double dip and negative equity. Commodity prices may be rising and passing through in a regressive way into food, energy and clothing. Healthcare and education costs are rising too. But core inflation as measured by the government is declining due to a lack of pricing power. Companies have combated this by trying to prevent cost pressures from feeding through by keeping headcount down. This has effectively meant that lower income households get the bad side of both commodity price inflation and debt/income deflation.

it's essentially deconstructing "Chopper" Ben's words/quotes from the last 9-10 years

[Demeter]

90. WWFDRD (What would Franklin Delano Roosevelt do)?

http://elizabitchez.blogspot.com/2011/06/wwfdrd-what-would-franklin-delano.html

Bear with, cause it's about to get rambly up in here...I've heard, hell I've said, that what we need right now is an FDR, not a BHO. We need a new New Deal, a new WPA, a new social contract to break the strangle hold Big Money has on us in every single aspect of life. But if we look at things with a cold, hard, historical eye then we'd have to admit to ourselves that just having an FDR wouldn't bring about the changes we desperately need..We've all heard the Gandhi quote "Be the change you want to see in the world". Sometimes that seems a bit trite when such powerful forces are using every effort to keep squashed. But if we think back to what kind of push back the elites were receiving when FDR was president, then we can see concrete examples of what be the change means...FDR was able to get his progressive policies passed because in the world at the time there was a MASSIVE push from the underclass. There were socialists and communists and anarchists on every corner. There were strikes and pickets and rallies and speeches. There were average people making the elites afraid...And the elites ONLY EVER ACT IN THEIR OWN BEST INTEREST. FDR could be a progressive capitalist because to the elites progressive capitalism was preferential to straight up socialism, or god forbid, communism and state seizure of property and capital.

But, and this is a big, questionable but, part of the fear the elites were feeling was physical. I love Emma Goldman and all her big, bold ideas, but she was a proponent of actual physical violence...It is long past time that us(WE) progressives started acting offensively instead OF responding defensively to the increasing levels of state violence. I'm not a pacifist, I do firmly believe in the right of people to defend themselves. But I also know that when we let revolution come at the hands of violent uprising, the philosophy of the winning elites may change in tone but the violent tools used to contain the populace do not change. And quite frankly I am tired of the prison industrial complex and the military industrial complex and economic blackmail of us peasantry. I don't want those things to be part of my world anymore....So how do we make the elites afraid enough to let change happen without becoming brutal hooligans? The first step is to strip the system of it's veneer of legitimacy. Legitimacy is a huge part of political theory. It is the main tool used for distributing power, political and economic. Legitimacy has been established through the divine right of kings, or the brute force of military dictatorships, or through the simple act of voting. When we vote, we grant the political class legitimacy to govern us. For decades we've been told to vote based on defensive fear. Vote for one side of the binary or the other out of fear of what the other side will do if they win the horse race. But politics, like many things, is not a simple binary system. There are more, many many more, ways to distribute power and resources in a society than just Neoliberal and Neoconservative. By voting for the lesser evil, we guarantee a system that is still evil and we give that system legitimacy. We put our actual mark of legitimacy on things that we abhor.

The first step to creating fear in the elites is to stop giving them legitimacy through elections. Vote for anyone other than a legacy party politician (even the so-called good ones) or don't vote at all. It doesn't matter if you vote Green or Socialist or even for the damn Libertarians. Just don't give either of the two big parties the legitimacy they need to keep stealing from us. Be the change by being the person who commits the single, radical act of not voting for your own demise. Without that kind of change, the powers that be will continue to have the permission of the populace to squash and crush us. Without that kind of change, there is no mechanism for creating the fear that the elites need to allow positive change to happen. Not voting for evil is simple, cheap and non-violent. It doesn't even require us to risk jail time for protesting. It can be done by just about every citizen (excluding, of course, those citizens and residents that the state has already decreed dangerous to the system by purging them from voting rolls). It was fear of lost legitimacy that made a rich man like Roosevelt the champion of the poor and disemployed. We have to put that same fear in the heart of every democrat and republican, every banker and insurance exec. Once they realize that we no longer consider them legitimate, change can happen. But not before then.

[Demeter]

91. Control Fraud and the Irish Banking Crisis By William K. Black

The leading cause of catastrophic bank failures has long been senior insider fraud. James Pierce, The Future of Banking (1991). Modern criminologists refer to these crimes as “control frauds.” The person(s) controlling seemingly legitimate entities use them as “weapons” to defraud creditors and shareholders. Financial control frauds’ “weapon of choice” is accounting. The officers who control lenders simultaneously optimize reported (albeit fictional) firm income, their personal compensation, and real losses through a four-part recipe:

1. Grow extremely rapidly by
2. Making poor quality loans at premium yields while employing
3. Extreme leverage and
4. Providing grossly inadequate provisions for losses for the inevitable losses

This recipe produces guaranteed, record reported income in the near term. In the words of George Akerlof and Paul Romer in their famous 1993 article – Looting: the Economic Underworld of Bankruptcy for Profit – accounting fraud is a “sure thing.” Even if the firm fails (“bankruptcy”) – which is no longer a sure thing given the bailouts of systemically dangerous institutions (SDIs) the CEO walks away wealthy (the “profit” part of the title). The use of “underworld” also demonstrates that Akerlof & Romer understood how important it was that the bank appears to be legitimate in order to aid the CEO’s “looting.”

Lenders engaged in accounting control frauds will tend to cluster in the most criminogenic environments. The most criminogenic environments have these characteristics

1. Non-regulation, deregulation, desupervision, and/or de facto decriminalization
2. Assets that lack easily verifiable market values
3. The opportunity for rapid growth
4. Extreme executive compensation based on short-term reported income
5. Easy entry, and an
6. Expanding bubble in the asset category that lacks easily verifiable market values

Individual accounting control frauds are exceptionally dangerous. The recipe makes them an engine that destroys wealth at prodigious rates. Control frauds cause greater financial losses than all other forms of property crime – combined. A single large accounting control fraud can cause losses so large that it renders a deposit insurance fund insolvent and causes a crisis. This happened in Maryland and Ohio “thrift and loans” in the mid-1980s. The failure of a single accounting control fraud in each state caused the collapse of the entire privately insured thrift and loan system in each state.

Accounting control frauds are also criminogenic. I will only discuss two ways in which these frauds are criminogenic and mention a third way in passing. The first concept is the “Gresham’s dynamic.” In this context, that term refers to a perverse dynamic in which those that cheat gain a competitive advantage over their honest rivals. This twists “competition” and “private market discipline” into perverse forces that can drive honest firms and professionals from the market place. There are three primary variants of Gresham’s dynamics that are criminogenic. Accounting control frauds’ record reported profits and their leaders’ extreme compensation inherently create Gresham’s dynamics with respect to rival firms and senior officers. The CEOs who lead accounting control frauds can intentionally create Gresham’s dynamics among their employees, customers, and agents in order to suborn them into becoming fraud allies. Accounting control frauds that are lenders can also create an undesired Gresham’s dynamics among third parties. The fraud recipe requires them to render their underwriting ineffective and to suborn their internal and external “controls.”

SOLID BACKGROUND FOR THE SERIOUS STUDENTS

[Demeter]

92. Need a bigger graph there

It has to be longer in the DOWNWARD direction...-173 at 1 PM

[Roland99]

93. 1:10pm - yuck

Dow 11,892 -184 -1.53%
Nasdaq 2,636 -43 -1.60%
S&P 500 1,266 -22 -1.68%
GlobalDow 2,054 -41 -1.97%
Oil 96.95 -2.42 -2.44%
Gold 1,526 +2 +0.13%

[Po_d Mainiac]

98. Not much support till E/S 1256, and that ain't a hard bottom n/t

[Pale Blue Dot]

101. Po_d, can you explain that?

I frequently see blog posts and financial analysts talking about "supports", particularly for the S&P, but I have no idea what that means. What happens at the "support" level? How are these "supports" decided on?

[Po_d Mainiac]

107. Look at any charts for SPX or the Mini. (1 yr range)

The two graphs differ by just a couple points, but essentially are close enough for this explaination.

You'll notice that the market lows for the last half of 12/10 were 1250ish. Mid March, the same lows were touched, but not taken out.

That is a support level. It's not a real strong floor due to the short duration.(In the old days it signified a total market P/E plateau. P/E's don't mean shit any more, but the levels of support still appear to have some bearing )

Now go back to Oct-Dec of last year and the 1173 floor appears. That point has more strength since it also held breifly back in May of 2010 as well.

If you grasp this, then u will now be able to see where the index bumped its ass several times at 1050 (Just as QE1 ended) between June and Sept 2010. That is what a stronger support level looks like.

My numbers probably differ from those on a Bloomberg, but not by more than a couple bips.

[wordpix]

105. closing numbers just as bad

DOW
11897.27
-178.84
-1.48%

NASDAQ
2631.46
-47.26
-1.76%

S&P 500
1265.43
-22.44
-1.74%

[Hotler]

108. kicking. n/t

[girl gone mad]

110. No relief overnight.

Asian markets selling off.

http://finance.yahoo.com/intlindices?e=asia