STOCK MARKET WATCH, Wednesday May 20

[ozymandius]

Source: du

STOCK MARKET WATCH, Wednesday May 20, 2009

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

AT THE CLOSING BELL ON May 19, 2009

Dow... 8,474.85 -29.23 (-0.34%)
Nasdaq... 1,734.54 +2.18 (+0.13%)
S&P 500... 908.13 -1.58 (-0.17%)
Gold future... 926.70 +5.00 (+0.54%)
30-Year Bond 4.21 +0.01 (+0.33%)
10-Yr Bond... 3.24 +0.01 (+0.31%)

---

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

Market Conditions During Trading Hours

GOLD, EURO, YEN, Loonie and Silver

---

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---

Read more: du

[Drunken Irishman]

1. LOL at that cartoon. Fucking perfect!

[ozymandius]

3. Thank you.

Michael Steele offers a gift wrapped phrase every day.

[Dr.Phool]

33. Michael Steele is an amateur.

Jon Stewart had Noot Gingrich on the Daily Show last night. He's driving a school bus full of Republicans over the cliff.

Why anyone would give this guy the time of day, much less, any credibility, defies reason.

[AnneD]

53. All the medical folks at MD Anderson (where I once worked)...

wrote him off when he had divorce papers served to is wife while she was in the hospital undergoing chemo. Maybe we were all too close to the subject and lost all objectivity, but Newt wouldn't be elected dog catcher even if his name were the only one on the ballot among health care workers at Anderson. Moral midget...no offense to our smaller brothers and sisters.

[ozymandius]

2. Market Observation

"Green Shoots?": Touring the Periphery
by Frank Barbera

While the stock market remains buoyant and optimistic that ‘green shoots’ are starting to take hold within the global economy, the technical side of the equity market now strongly argues for a “go-slow” approach. Yes, we know that the NAHB reported another uptick in the Housing Market Confidence data yesterday, with the Housing Market Index moving higher by 2 points in May to 16 from 14, and yes, we know that some of the employment data has at least on the surface improved in recent weeks. Yet without digressing endlessly into all of the nitty-gritty detail which lies below the economic headlines, we can report that thus far neither the bank earnings nor the improvements in economic data reflect what they seem to portray. So far, where earnings are concerned, we have seen carefully massaged numbers which actually convert huge bank losses into gains, all on the back of accounting rule changes and other contrived accounting devices. In the case of the economic data, we find the usual Birth-Death ARIMA Model grossly distorting the employment trends, and a classic case of easy ‘comps’ underpinning what some could deliriously interpret as ‘green shoots.’ We are having none of it, as the psychological urgency on behalf of US consumers to rebuild savings and personal balance sheets will assure that any meaningful recovery is still a long way down the road.

.....

Usually, within four to six weeks one can glean a lot about the true nature of a market once readings like this have been attained. In addition to Junk Bonds, another sector with a big vested interest in global recovery are the currencies of natural resource based economies; currencies like the Canadian Dollar, Aussie Dollar, and the Kiwi Dollar. In the case of Australia, much of the natural resource production these days is bound for Asia, which as a result of China’s strong growth trajectory has shown tremendous demand in better times. By contrast, Canada is still largely US centric and supplies the United States with a huge portion of its energy bill. While Canada is also shipping a great deal of resources to Asia, the close proximity to the US market still remains the largest influence on the Canadian Dollar. In my work I watch this sector on two levels. First, I monitor an index of the Natural Resource currencies. In the past, coming out of global crisis and recessions, this index has tended to experience an initial bounce back to the 200 day moving average followed by a test of the lows, and then a second upside cross above the 200 day average with the average flattened out.

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

[ozymandius]

4. Today's Reports

10:30 Crude Inventories 05/15
Briefing.com NA
Consensus NA
Prior -4.63M

May 20 14:00 FOMC Minutes 04/29

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

[UpInArms]

70. Petroleum Inventories Report:

Distillate inventories gain 600,000 barrels: EIA
10:32am Today

Crude remains steady after data, up 2.9% at $61.82
10:32am Today

Gasoline inventories drop 4.3 million barrels: EIA
10:31am Today

U.S. crude inventories fall 2.1 million barrels
10:30am Today

[UpInArms]

81. FOMC line items

Some on FOMC wanted to buy more Treasurys: minutes
2:00pm Today

Some on FOMC favored Treasury buys 'at some point'
2:00pm Today

FOMC agreed to wait-and-see about more asset buys
2:00pm Today

FOMC discussed modalities of more asset buys
2:00pm Today

FOMC sees jobless rate peaking below 10% this year
2:00pm Today

FOMC: Full recovery may take 5 years or more
2:00pm Today

FOMC sees pickup in sales, production in H2 '09
2:00pm Today

[UpInArms]

85. Fed: Full recovery could take five or six years

http://www.marketwatch.com/story/fed-full-recovery-could-take-5-or-6-years

WASHINGTON (MarketWatch) -- Members of the Federal Open Market Committee say they expect the economy to begin to grow later this year, but cautioned that any recovery would be gradual.

How gradual? How about five or six years before the economy is back on even keel?

The FOMC released the minutes of its April 28-29 meeting on Wednesday. The good news: Policymakers said the already-small risk of a truly calamitous depression had gotten even smaller. The bad news: They significantly reduced their forecasts for how the economy would mostly likely to perform this year and over the next two years. See full story.

Although sales and production are expected to begin to grow slowly this year, unemployment is expected to keep rising and stay high for years. Just as occurred after the 1991 and 2001 recessions, U.S. gross domestic product could turn higher long before the unemployment rate begins to fall.

At least one member of the committee expected the unemployment rate at the end of 2011 to be 9%, which is even higher than the 8.9% we saw in April. At least one member said the unemployment rate would hit 10% later this year, although the "central tendency" of the full committee wasn't quite so dire, with an expected jobless rate of "just" 9.2% to 9.6% in the fourth quarter.

...more...

yeah - that's right - 8.9% is soooooo much smaller than 9%

sheesh! what are these asshats smokin'?!

[ozymandius]

5. Oil hovers above $60 as investors eye inventories

SINGAPORE – Oil prices hovered above $60 a barrel Wednesday in Asia as investors looked to U.S. inventory data later in the day for clues about the strength of crude demand.

Benchmark crude for July delivery was up 35 cents to $60.45 a barrel midday in Singapore in electronic trading on the New York Mercantile Exchange. On Tuesday, the contract rose 51 cents to settle at $60.10.

....

Analysts expect a fall of 1.5 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos. Stocks dropped last week after rising for the previous 10 weeks.

....

Inventories dropped by 4.5 million barrels last week, the American Petroleum Institute said Tuesday. The API numbers are reported by refiners voluntarily while the EIA figures are mandatory.

....

In other Nymex trading, gasoline for June delivery rose 1.75 cents to $1.83 a gallon and heating oil was steady at $1.48 a gallon. Natural gas for June delivery was steady at $3.91 per 1,000 cubic feet.

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

[Demeter]

22. but Yesterday Gas Was $2.24 Down from $2.39

at the cheapest station, and for some reason up to $2.49 at the usually reasonable one. Probably Memorial Day anticipation.

[UpInArms]

83. Crude tops $62 on U.S. inventories report

http://www.marketwatch.com/story/crude-tops-62-on-us-inventories-report

NEW YORK (MarketWatch) -- Crude-oil futures rose Wednesday to their highest level in more than six months, ending above $62 a barrel as government data showed U.S. crude inventories fell more than expected last week. Crude inventories decreased by 2.1 million barrels in the week ended May 15, the Energy Information Administration reported. Analysts surveyed by energy information provider Platts had expected a decline of 1.5 million barrels. Crude for July delivery, the new front-month contract, gained $1.94, or 3.2%, to end at $62.04 a barrel on the New York Mercantile Exchange, the highest closing level for a front-month contract since Nov. 10.

let no one mention that the buck is cratering :sigh:

[ozymandius]

6. Bank of America raises $13.47 billion in share sale

NEW YORK (Reuters) – Bank of America Corp (BAC.N) raised $13.47 billion through a share sale, marking a major step toward meeting the U.S. government's requirements for capital-raising following the recent "stress testing" of the bank.

Including proceeds from the sale of part of its stake in China Construction Bank Corp (601939.SS) for $7.3 billion, the bank is now more than half-way toward plugging a $33.9 billion capital shortfall identified by the government.

The bank has issued 1.25 billion shares at an average price of $10.77 each since last Friday, it said in a statement late on Tuesday. Earlier in the day, a source familiar with the transaction said the bank had sold 800 million shares at $10 each on Tuesday alone.

....

Ten of the 19 large U.S. banks that underwent such tests were told this month to raise capital, with Bank of America's $33.9 billion shortfall being by far the largest.

http://news.yahoo.com/s/nm/20090520/bs_nm/us_bankofamerica_offering

[Festivito]

7. Debt: 05/18/2009 11,286,593,315,851.04 (UP 2,482,908,426.53) (Debt's down.)

(Two days of raising and now back to practically nothing.)

= Held by the Public + Intragovernmental(FICA)
= 6,981,959,429,954.02 + 4,304,633,885,897.02
DOWN 12,816,531.74 + UP 2,495,724,958.27

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

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 306-Million person America.
If every American, man, woman and child puts in $3.26 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.79, ABOUT TEN BUCKS for a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is the federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)

PERSONALIZED DEBT:
Every 14 seconds we net gain a another American, so at the end of the workday of this report, there should be 306,375,172 people in America.
http://www.census.gov/population/www/popclockus.html
Currently, each of these American's owe $36,839.13.
A family of three owes $110,517.38. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 21 reports in the last 30 to 31 days.
The average for the last 21 reports is 4,803,682,707.99.
The average for the last 30 days would be 3,362,577,895.59.
The average for the last 31 days would be 3,254,107,640.89.
There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 75 reports in 112 days of GWB's part of FY2009 averaging 8.03B$ per report, 5.38B$/day.
There were 81 reports in 118 days of Obama's part of FY2009 averaging 0.06B$ per report, 0.11B$/day so far.
There were 156 reports in 230 days of FY2009 averaging 8.09B$ per report, 5.49B$/day.

PROJECTION:
There are 1,343 days remaining in this Obama 1st term.
By that time the debt could be between 13.1 and 18.7T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
05/18/2009 11,286,593,315,851.04 BHO (UP 659,716,266,937.96 so far since Obama took office.)

Fiscal Year ends: Sep 30
Borrowed in FY1993: (Maybe later.)
Borrowed in FY1994: 281,261,026,873.94
Borrowed in FY1995: 281,232,990,696.07
Borrowed in FY1996: 250,828,038,426.34
Borrowed in FY1997: 188,335,072,261.61
Borrowed in FY1998: 113,046,997,500.28
Borrowed in FY1999: 130,077,892,735.81
Borrowed in FY2000: _17,907,308,253.43 Bill alone
Borrowed in FY2001: 133,285,202,313.20 Bill and George
Borrowed in FY2002: 420,772,553,397.10 All George
Borrowed in FY2003: 554,995,097,146.46
Borrowed in FY2004: 595,821,633,586.70
Borrowed in FY2005: 553,656,965,393.18
Borrowed in FY2006: 574,264,237,491.73
Borrowed in FY2007: 500,679,473,047.25
Borrowed in FY2008: 1,017,071,524,650.01
Borrowed in FY2009: 1,261,868,418,938.60 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
04/27/2009 +000,285,896,492.06 ------------******** Mon
04/28/2009 +000,154,949,620.57 ------------********
04/29/2009 -034,727,762,120.64 -
04/30/2009 +079,347,503,951.43 ------------**********
05/01/2009 -003,202,605,992.57 --
05/04/2009 +000,068,750,275.89 ------------******* Mon
05/05/2009 +000,122,936,524.80 ------------********
05/06/2009 -000,058,764,073.21 ----
05/07/2009 +027,679,213,817.18 ------------**********
05/08/2009 -000,216,334,016.92 ---
05/11/2009 -000,029,759,155.68 ---- Mon
05/13/2009 -000,207,515,478.68 ---
05/14/2009 +013,927,016,419.76 ------------**********
05/15/2009 +013,064,365,189.63 ------------**********
05/18/2009 -000,012,816,531.74 ---- Mon

96,195,074,921.88 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,621,961,512,591.97 in last 242 days.
That's 1,622B$ in 242 days.
More than any year ever, including last year, and it's 159% of that highest year ever only in 242 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 242 DAYS NOT 365.

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

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3883277&mesg_id=3883301

[Festivito]

94. Debt: 05/19/2009 11,293,355,611,258.51 (UP 6,762,295,407.47) (Up little, mostly FICA.)

(It's a lull in the US debt weekdays. If true to form, we'd see a rise come 3PM on Friday showing Thursday's report. Good day all.)

= Held by the Public + Intragovernmental(FICA)
= 6,982,204,089,081.65 + 4,311,151,522,176.86
UP 244,659,127.63 + UP 6,517,636,279.84

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

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 306-Million person America.
If every American, man, woman and child puts in $3.26 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.79, ABOUT TEN BUCKS for a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is the federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)

PERSONALIZED DEBT:
Every 14 seconds we net gain a another American, so at the end of the workday of this report, there should be 306,381,343 people in America.
http://www.census.gov/population/www/popclockus.html
Currently, each of these American's owe $36,860.45.
A family of three owes $110,581.36. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 22 reports in the last 30 to 32 days.
The average for the last 22 reports is 4,892,710,557.96.
The average for the last 30 days would be 3,587,987,742.51.
The average for the last 32 days would be 3,363,738,508.60.
There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 75 reports in 112 days of GWB's part of FY2009 averaging 8.03B$ per report, 5.38B$/day.
There were 82 reports in 119 days of Obama's part of FY2009 averaging 0.05B$ per report, 0.11B$/day so far.
There were 157 reports in 231 days of FY2009 averaging 8.08B$ per report, 5.49B$/day.

PROJECTION:
There are 1,342 days remaining in this Obama 1st term.
By that time the debt could be between 13.1 and 18.7T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
05/19/2009 11,293,355,611,258.51 BHO (UP 666,478,562,345.43 so far since Obama took office.)

Fiscal Year ends: Sep 30
Borrowed in FY1993: (Maybe later.)
Borrowed in FY1994: 281,261,026,873.94
Borrowed in FY1995: 281,232,990,696.07
Borrowed in FY1996: 250,828,038,426.34
Borrowed in FY1997: 188,335,072,261.61
Borrowed in FY1998: 113,046,997,500.28
Borrowed in FY1999: 130,077,892,735.81
Borrowed in FY2000: _17,907,308,253.43 Bill alone
Borrowed in FY2001: 133,285,202,313.20 Bill and George
Borrowed in FY2002: 420,772,553,397.10 All George
Borrowed in FY2003: 554,995,097,146.46
Borrowed in FY2004: 595,821,633,586.70
Borrowed in FY2005: 553,656,965,393.18
Borrowed in FY2006: 574,264,237,491.73
Borrowed in FY2007: 500,679,473,047.25
Borrowed in FY2008: 1,017,071,524,650.01
Borrowed in FY2009: 1,268,630,714,346.10 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
04/28/2009 +000,154,949,620.57 ------------********
04/29/2009 -034,727,762,120.64 -
04/30/2009 +079,347,503,951.43 ------------**********
05/01/2009 -003,202,605,992.57 --
05/04/2009 +000,068,750,275.89 ------------******* Mon
05/05/2009 +000,122,936,524.80 ------------********
05/06/2009 -000,058,764,073.21 ----
05/07/2009 +027,679,213,817.18 ------------**********
05/08/2009 -000,216,334,016.92 ---
05/11/2009 -000,029,759,155.68 ---- Mon
05/13/2009 -000,207,515,478.68 ---
05/14/2009 +013,927,016,419.76 ------------**********
05/15/2009 +013,064,365,189.63 ------------**********
05/18/2009 -000,012,816,531.74 ---- Mon
05/19/2009 +000,244,659,127.63 ------------********

96,153,837,557.45 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,628,723,807,999.44 in last 243 days.
That's 1,629B$ in 243 days.
More than any year ever, including last year, and it's 160% of that highest year ever only in 243 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 243 DAYS NOT 365.

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

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3885143&mesg_id=3885150

[ozymandius]

8. Banks Use Life Insurance to Fund Bonuses

Banks are using a little-known tactic to help pay bonuses, deferred pay and pensions they owe executives: They're holding life-insurance policies on hundreds of thousands of their workers, with themselves as the beneficiaries.

Banks took out much of this life insurance during the mortgage bubble, when executives' pay -- and the IOUs for their deferred compensation -- surged, and banking regulators affirmed the use of life insurance as a way to finance executive pay and benefits.

Bank of America Corp. has the most life insurance on employees: $17.3 billion at the end of the first quarter, according to bank filings. Wachovia Corp. has $12 billion, J.P. Morgan Chase & Co. has $11.1 billion and Wells Fargo & Co. has $5.7 billion. (Wells Fargo acquired Wachovia at the end of last year.)

The insurance policies essentially are informal pension funds for executives: Companies deposit money into the contracts, which are like big, nondeductible IRAs, and allocate the cash among investments that grow tax-free. Over time, employers receive tax-free death benefits when employees, former employees and retirees die.

http://online.wsj.com/article/SB124277653430137033.html

---

The bar chart accompanying this article is worth a glance. What ghouls these bankers be!

[nc4bo]

12. wth with this bit of ruthlessness?! I'm speechless. nt

[hamerfan]

14. Is this anything like

Dead Peasant Insurance? It seems they both are taken out to help the company/executives.
Morning everyone! :hi:
hamerfan

[ozymandius]

17. It is the one and only 'Dead Peasant Insurance'.

From the article: Does your boss want you dead?

Right now, your company could have a life insurance policy on you that you know nothing about. When you die -- perhaps years after you leave your employer -- the tax-free proceeds from this policy wouldnt go to your family. The money would go to the company.

Whats more, the company might use this policy to pay for retirement benefits and other perks not for you or your fellow workers, but for your company's top executives.

Sound outrageous? Such corporate-owned life insurance is also big business:

* Companies pay a whopping $8 billion in premiums each year for such coverage, according to the American Council of Life Insurers, a trade group.

* The policies make up more than 20% of the all the life insurance sold each year.

* Companies expect to reap more than $9 billion in tax breaks from these policies over the next five years. The policies are treated as whole life policies. So, companies can borrow against the policies (though the IRS won't let them write off the interest). And the death benefits are tax-free.

.....

These policies, nicknamed dead janitors or dead peasants insurance, soared in popularity after many states cleared the way for them in the 1980s. Congress recently tried to crack down on the practice, to the howls of the insurance industry -- which earlier this year managed to derail reforms.

more at link...

Edit to add: This article is undated. The latest date mentioned is 2004.

[DemReadingDU]

28. sounds like the beginning of CDS

a Credit Default Swap, on people.

:crazy:

[tclambert]

34. Say, can I take out life insurance on random strangers?

With myself as beneficiary? You know, hobos, prostitutes, drug dealers, bank CEOs, people who might die violent deaths with not too many questions asked, while I have numerous eyewitness alibis? (Any volunteers? The more the merrier.)

Finally, some useful investment advice!

Seriously, seems like the person being insured ought to at least be informed of who now has good motive to murder him.

[Hugin]

49. Darn, you've just figured out my interest in extinction event sized asteroids.

I stand to make a killing when the "Big 'un" hits!

[tclambert]

41. Dead peasant insurance. See? The rich DO value the little people.

We have worth! We have worth!

At least we won't die in vain.

[willing dwarf]

16. If Bank employees start being disappeared we'll know why

This is one of the most disgusting and revealing stories about the complete lack of decency in the world of banking. It's appalling. Have they no couth? No scruples other than the almighty buck?

It's plain as day that any institution so out of kilter with the fundamental laws of virtue and propriety will pull itself apart. Balance can only be thwarted for so long and then it will hold sway.

We have already seen part of the natural correction to the off-centered aspect of these banking entities, further corrections may be very tumultuous indeed.


So says I, feeling a bit like Tiresias in the ancient city of Thebes.

[ozymandius]

18. Disappeared? They need the body to collect the loot.

Maybe worked to death with stress leading to a massive stroke or coronary event.

[TheWatcher]

21. When Bankster CEO's Start Being "Dissappeared"

The Recovery can truly begin.

:evilgrin:

[tclambert]

38. Ooh, ooh! I know! We can get together and insure Bernie Madoff and Allen Stanford!

What are the odds those guys will survive trial, sentencing, and prison?

[Hugin]

50. And everyone wonders why TPTB are so dead set against Universal Healthcare...

That could delay their payoffs by YEARS!

:eyes:

[Demeter]

60. And Unions. And Prosecutions. Anything That Makes Life Worth Living

You'd think the life insurance companies would be feeling the pain by now...

[UpInArms]

84. Attorney: Wal-Mart Collected On Deaths

http://www.tbo.com/news/metro/MGB5SEJVN3F.html

Published: Jul 3, 2007

TAMPA - When Karen Armatrout died in 1997, her employer, Wal-Mart, collected thousands of dollars on a life insurance policy the retail giant had taken out without telling her, according to a lawsuit filed in U.S. District Court.

Armatrout was one of about 350,000 employees Wal-Mart secretly insured nationwide, said Texas attorney Michael D. Myers, who estimated the company collected on 75 to 100 policies involving Florida employees who died.

Myers is seeking to make the Armatrout lawsuit a class-action case on behalf of the estates of all the Florida employees who died while unwittingly insured by Wal-Mart.

"Creepy's a good word for it," Myers said. "If you ask the executives that decided to buy these policies and the insurance companies that sold them, they would say this was designed to create tax benefits for the company, which would use the benefits for benevolent purposes such as buying employee medical benefits.

"If you asked me, I would say they did it to make more money."

Wal-Mart spokesman John Simley said he could not comment because the company has not been served with the lawsuit.

The company settled two lawsuits with employees represented by Myers in Texas and Oklahoma, one for about $10 million and one for about $5 million. He said Karen Armatrout came to his attention when Wal-Mart mistakenly gave her husband's phone number to an Oklahoman who called the retailer inquiring about the settlement.

...more...

[ozymandius]

9. AIG investors to get $843 million: SEC

WASHINGTON (Reuters) – A federal court has approved the distribution of more than $843 million to harmed investors at insurer American International Group (AIG.N), the U.S. Securities and Exchange Commission said on Tuesday.

The court estimates that checks will soon be mailed to more than 257,000 AIG investors that were affected by an alleged accounting fraud at the company, the SEC said.

http://news.yahoo.com/s/nm/20090519/bs_nm/us_sec_aig

---

Question being: where did AIG get the money for this payout?

[Tansy_Gold]

51. where did AIG get the money? See your post #8??????

:shrug:

[ozymandius]

90. Well, yeah.

That was a rhetorical question. AIG certainly did not earn that money.

[ozymandius]

10. Japan economy shrank at record pace in 1st quarter

TOKYO (AP) — Japan's economy contracted at the fastest pace since 1955 as exports plunged, companies slashed production and families spent less.

Japan's gross domestic product, or the total value of the nation's goods and services, shrank at an annual pace of 15.2 percent in the January-March period, the government said Wednesday.

The drop was the steepest since Japan began compiling GDP statistics more than five decades ago. It also marks the fourth straight quarter of decline after the GDP fell a revised 14.4 percent in the October-December period.

....

Japan's first quarter results were markedly worse than other major economies, outpacing the euro zone's 2.5 percent quarterly decline and a 1.6 percent contraction in the U.S.

http://www.google.com/hostednews/ap/article/ALeqM5jmfkCQFvxtt6IXRmfAjmFGTya2yAD989T6G80

[TheWatcher]

19. But Since it Fell LESS than the 16.1 Expected, The Bottom Is In, The Recession In Japan Is Over, and

We can get back to Beer Swilling, Cheeseburger Gobbling, Reality TV Coma back in the US!

:crazy:

Blomberg's INCREDIBLE Spin:

Japan’s Economy Shrank Record 15.2% Last Quarter (Update2)

May 20 (Bloomberg) -- Japan’s economy shrank at a record 15.2 percent annual pace last quarter as exports collapsed and consumers and businesses cut spending.

The contraction followed a revised fourth-quarter drop of 14.4 percent, the Cabinet Office said today in Tokyo. Gross domestic product fell 3.5 percent in the year ended March 31, the most since records began in 1955, confirming that the recession is Japan’s worst in the postwar era.

HOWEVER:

Economists predicted the economy would shrink 16.1 percent.

Still, reports in the past month suggest the world’s second-largest economy may grow for the first time in a year this quarter, albeit from a low point, as exports stabilize and Prime Minister Taro Aso’s 15.4 trillion yen stimulus plan, announced in April, takes effect.

Earnings projections for the current year add to signs the worst may be over. Japanese companies that reported fiscal 2008 results say profits will rise 26 percent in the current business year...

the failure of export demand to do better than simply stabilize will probably limit the scope of Japan’s recovery. Toyota, Sony Corp., and Panasonic Corp. all forecast continued losses in the current business year. Panasonic said last week it plans to close about 20 factories this year and proceed with the 15,000 job cuts announced in February. ...

( :wtf: EXPORT DEMAND HAS COLLAPSED! This writer is MENTALLY ILL!)

“We basically bottomed out,” said Jesper Koll, chief executive officer of hedge fund adviser TRJ Tantallon Research Japan. Even so, “on the consumer spending side you’ve got a very clear negative from the severe labor market adjustment.”

http://www.bloomberg.com/apps/news?pid=20601080&sid=aESruA91JsS4&refer=asia

Dear God, things are COLLAPSING and we are being told this is GOOD!

The only question that remains in my mind is this:

HOW LONG CAN THIS LEVEL OF PROPAGANDA BE SUSTAINED BEFORE THE PEOPLE WAKE UP AND REALIZE THAT THEY ARE BEING EUTHANIZED BY ECONOMIC MAFIA HITMEN?

This is BEYOND Insane.

This is CRIMINAL.

:banghead:

[Demeter]

23. I Thought a 10% Decline Was Prima Facie Evidence of Depression

This is your country on Geithner.

[Wednesdays]

65. Heard on CBS this morning that housing is off more than 50% since last year

...and more than 80% off its peak of 2006.

But we're not in a depression. :eyes:

[willing dwarf]

26. "Euthanize by economic mafia hitmen"

scariest image I've come upon in quite a while. Thanks (I think).

[TheMachineWins]

71. I like "reality TV coma"

That'd be a great name for a song or a band.

[amandabeech]

73. Hitmen shooting heavy tranquilizer darts out of their Tommy guns?

There's quite a picture to conjure up with that.

[DemReadingDU]

27. It's going to take something major

People see and hear things, but it hasn't affected them directly. Maybe it will be the permanent (instead of temporary) shutdown of the Chrysler & GM factories. Maybe a GM bankruptcy. Maybe when people's pensions get turned over to PBGC. Maybe a massive hurricane or flood. Maybe eliminating credit cards. Something will tip the economy, something that Obama hasn't planned for. Does anyone think Obama even has a Plan 'B'?

[Demeter]

32. I Don't Even Think There IS a Plan A

Plan B is the morning after pill....

[Dr.Phool]

36. But, we're getting screwed every day.

When do we take the pill.

Just wait until the PBGC gets hold of all those auto worker pensions. A lot of people are going to be in for a big surprise. And not a good one.

[AnneD]

57. Hell with a pill....

if I'm getting screwed every day-I want some Kentucky Jelly. That's where you want to invest yer money folks.

[Wednesdays]

67. Hmm! I just googled PBGC and found this...hot off the press

http://www.washingtonpost.com/wp-dyn/content/article/2009/05/20/AR2009052000778.html?hpid=topnews

PBGC's Deficit Triples to $33.5 Billion

By David S. Hilzenrath
Washington Post Staff Writer
Wednesday, May 20, 2009; 8:00 AM

The federal agency that guarantees corporate pensions was $33.5 billion in the red at the end of March, triple its deficit six months earlier, the agency's head has told a Senate committee.

The recession threatens to add to the strain on the Pension Benefit Guaranty Corp. by pushing more companies into bankruptcy and leaving the struggling agency responsible for their pensions. For example, the agency faces a potential tidal wave of claims from Chrysler and General Motors, whose pension plans are underfunded by an estimated $29 billion, the Government Accountability Office has warned.

If the PBGC's condition continues to deteriorate, the government could come under pressure to shore it up with taxpayer funds, the GAO has told the Senate's Special Committee on Aging in preparation for a hearing today.

At the same time, acting PBGC director Vincent K. Snowbarger has told the Senate committee that despite the deficit, the PBGC will be able to meet its obligations to pensioners for many years. That's because the payments it owes aren't due all at once; they are spread over the beneficiaries' lifetimes, Snowbarger explained.

[Dr.Phool]

72. If they had made the corporations fund pensions, like they were supposed to:

Instead of letting them use new accounting tricks, and creative accounting, they wouldn't be in this mess.

[tclambert]

43. I thought Plan B was Bourbon.

Or Brandy. Or some sort of Booze.

[AnneD]

58. No....

that's OUR personal plan for many of our thread members. Personally I subscribe to the M plan (Martinis, Mojitos, and Margaritas). :toast:

[Dr.Phool]

64. I just made a pitcher of margarita's.

I put 'em in the fridge for later. After a trip to the gym.

[InkAddict]

45. Yep, Maureen McGovern's happy place

http://www.youtube.com/watch?v=jK3remdEFlc

There's got to be a morning after
If we can hold on through the night
We have a chance to find the sunshine
Let's keep on looking for the light

Oh, can't you see the morning after?
It's waiting right outside the storm
Why don't we cross the bridge together
And find a place that's safe and warm?

[End Of The Road]

42. Might it be failure of one of the banks that's "too big to fail"?

FDIC is already stretched pretty thin. If one of the biggies failed, it would be prudent for the government to restrict how much you can withdraw from ANY bank at one time, at least temporarily. That'll wake everybody up.

Sorry, pessimism is one of my character flaws. I really have no clue what will cause the damn to burst.

[tclambert]

44. "the DAMN to burst?"

The usual phrase is "the DAM to burst." But perhaps you meant "the DAMNED to burst," which is a really nice turn of phrase. I'm definitely gonna start using that in conversation.

[End Of The Road]

48. LOL. I'm embarrassed

But I guess it is sort of fitting.

[AnneD]

59. Your Freudian slip is showing.....

:spray:

[Demeter]

61. FDIC Is About the Only Agency Staffed to Functional Levels

and I'm including the IRS in that.

[Ghost Dog]

54. Eyup. Japanese economy in shock contraction

Japan's economy shrank a record 4.0 per cent in the first quarter as domestic demand and investment buckled, threatening to crush any export-led rebound later this year.

The data did add to growing evidence that global trade may have bottomed out in the first quarter. Net exports proved to be less of a drag on the world's second-largest economy than in the previous three months, and companies ran down inventory.

While that lent support to the growing chorus of forecasts that the global economy was pulling out of the dive triggered by the financial crisis, there were grim signals on the outlook for Japan, where GDP is shrinking twice as fast as in the United States.

The GDP contraction was slightly less the 4.2 percent median forecast by some commentators, but private consumption and capital spending fared worse than analysts had expected.

Private consumption dropped 1.1 per cent, compared with 0.8 per cent in the previous quarter. The forecast was for a decline 0.9 per cent.

Capital spending shrank 10.4 per cent versus 6.7 per cent in the previous three months and an 8.1 per cent forecast.

/. http://www.yorkshirepost.co.uk/businessnews/Japanese-economy-in-shock-contraction.5283491.jp
____

Emerging Asia FX falls, global stocks skittish

HONG KONG (Reuters) - The Australian dollar and emerging market currencies slid on Wednesday as investors began to question how much longer a near three-month rally in riskier assets can last without evidence of a sustained economic recovery.

...

Asian stock markets were choppy but mostly edged higher, with investors reluctant to abandon cyclical shares, though they trimmed holdings in the financial and materials sectors after reports showed U.S. housing starts at a record low and the worst-ever contraction in Japan's economy in the first quarter.

...

"Risk appetite has held the upper-hand of late but an emerging negative balance of recent economic data should be injecting some caution," said Patrick Bennett, Asia FX and rates strategist with Societe Generale in Hong Kong, in a note.

Japan's Nikkei share average (Osaka:^N225 - News) edged up 0.6 percent despite the bleak economic report, with shares of pharmaceutical companies and trading houses gaining. Japan's gross domestic product contracted 4 percent on a quarterly basis as exports, domestic demand and investment buckled, roughly in line with expectations. The outlook was uncertain, with some economists expecting stimulus spending to hasten a recovery, while others were concerned that collapsed exports would continue to inhibit already weak domestic demand. "The Japanese economy may return to growth temporarily but it could suffer a contraction again afterwards," said Hiroshi Shirashi, an economist with BNP Paribas.

The MSCI index of Asia Pacific stocks outside Japan (^MIAPJ0000PUS - News) was nearly unchanged, after hitting the highest since October 6 on Tuesday.

The index is still up more than 50 percent from lows in early March, but like other global benchmarks appeared to have lost steam in recent sessions on fears markets have risen too far, too quickly without concrete signs of economic recovery.

Hong Kong's Hang Seng index (HKSE:^HSI - News) slipped 0.4 percent, with property stocks under fire, though the sub-index (HKSE:^HSCE - News) of mainland companies listed in Hong Kong edged up 0.2 percent.

BEIJING'S DEEP WALLET

Optimistic investors hope Beijing can essentially spend its way to a recovery, which will then spill over to the rest of the region. To jump start consumer spending, the government said on Tuesday it would increase a subsidy scheme to 5 billion yuan ($733 million) from 1 billion yuan to encourage purchases of automobiles and home appliances. It was not clear if this was new spending.

/... http://finance.yahoo.com/news/Emerging-Asia-FX-falls-global-rb-15299512.html?.v=1

[ozymandius]

11. Hewlett-Packard Drops After Saying Slump Will Persist (Update1)

May 20 (Bloomberg) -- Hewlett-Packard Co., the world’s largest maker of personal computers and printers, fell as much as 5.1 percent in late trading after saying that sales haven’t shown signs of rebounding.

Annual revenue will drop 4 percent to 5 percent, the lower end of a forecast range given in February, Hewlett-Packard said yesterday. Chief Executive Officer Mark Hurd said he’s basing the forecast on the expectation that the economy won’t improve in coming months.

....

Hurd, who’s already trimmed jobs and slashed salaries at the company, will eliminate another 6,400 workers in the next 12 months as sales slump for PCs and printers. Hewlett-Packard’s services unit -- bolstered by the $13.2 billion acquisition of Electronic Data Systems Corp. last year -- is becoming “our largest profit driver today,” he said.

....

Hurd, who marked his fourth anniversary as CEO last month, has used his tenure to pare operating costs and boost profit. In September, after acquiring EDS, he announced plans to eliminate 24,700 jobs. In February, he cut 2009 salaries as much as 15 percent. The job cuts announced yesterday equal to about 2 percent of the company’s workforce of 320,000.

http://www.bloomberg.com/apps/news?pid=20601103&sid=aD0FstEqZxL0&refer=us

[ozymandius]

13. U.S. Considers Stripping SEC of Powers in Regulatory Overhaul

May 20 (Bloomberg) -- The Obama administration may call for stripping the Securities and Exchange Commission of some of its powers under a regulatory reorganization that could be unveiled as soon as next week, people familiar with the matter said.

The proposal, still being drafted, is likely to give the Federal Reserve more authority to supervise financial firms deemed too big to fail. The Fed may inherit some SEC functions, with others going to other agencies, the people said. On the table: giving oversight of mutual funds to a bank regulator or a new agency to police consumer-finance products, two people said.

The 75-year-old SEC, chartered to oversee Wall Street and safeguard investors, has seen its reputation tarnished as some lawmakers blamed it for missing the incipient financial crisis and failing to detect Bernard Madoff’s $65 billion Ponzi scheme. Any move to rein in the agency is likely to provoke a battle in Congress, which would need to approve the changes, and draw the ire of union pension funds and other advocates for shareholders.

....

Treasury Secretary Timothy Geithner and National Economic Council Director Lawrence Summers are leading the administration’s effort to redraw the lines of authority for policing the financial system.

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

---

Huge mistake. If the SEC failed at its duties during the Bush administration, with former Chairman Christopher Cocks, then the thing to do is to reinvigorate its role with resources and repairs. Consider granting more power to the Fed (pushing its responsibilities outside its charter) and adding to the amount of information that the Fed deems proprietary to itself and not recoverable through FOIA requests. In my opinion, this is a plan crafted by Summers and Geithner people with something to hide.

[Demeter]

24. More Crony Protection, No Doubt

Putting embarrassing or actionable information beyond reach of the Freedom of Information Act.

[amandabeech]

74. Yes, beef up the SEC, don't demolish it.

The SEC is a New Deal agency and the basic laws that it enforces were passed during the New Deal period.

The last time we got rid of a New Deal protection, the Glass Steagal Act, we got ourselves in the trouble that we are in today with the big financial players.

This is a situation to leave alone. Those folks in the 1930s and pre-WWII forties seem to have been a lot smarter than the folks we have around now.

I agree that pushing more to the Federal Reserve, without bringing the Fed more closely into federal government fold, will result in less transparency and more shenanigans in favor of the financial good old boys.

I just wonder who actually thought this thing up?

[ozymandius]

15. Terminated Chrysler dealerships to challenge sale

NEW YORK (Reuters) - Some auto dealers that Chrysler LLC plans to close are beginning a challenge to the automaker's plans to quickly sell itself in bankruptcy.

The group, which calls itself the "Committee of Chrysler Affected Dealers," filed papers on Tuesday asking the bankruptcy court to delay hearings that would approve the sale and allow Chrysler to reject almost 800 of its dealership franchise agreements, or about 25 percent of its overall dealer network.

The committee, which said it represents nearly 300 dealers in 45 states, said in a statement it needed more time from the court to investigate the issues and present their defense.

....

The dealers are mounting the third major challenge to Chrysler's plan to sell itself to a "New Chrysler" that will be owned by the company's union, Fiat, and the government. The two previous challenges have largely disbanded, as a group of dissident senior lenders dropped their protest and the new company told concerned nonunion retirees last week that it intends to continue their benefits.

http://www.reuters.com/article/domesticNews/idUSTRE54J0EO20090520

[TheMachineWins]

69. Oh yeh, whodda ever thought when Cerberus, a leveraged-buyout firm

bought Chrysler that Chrysler would soon be going out of business?

Here's what really happened: Cerberus (Satan's multi-headed dog) illegally (OK'd by SEC) bought Chrysler and every Chrysler dealer in America thought "oh boy, the big money has come in now, we'll all be rich -- I got mine so fuck everyone else". Greed once again ruled the minds of all involved and completely overrode the fact that Cerberus has a history of liquidating firms.

Now, it's time for the lawsuits because it's all just so unfair, I mean WHO COULD HAVE SEEN THIS COMING? Jesus f-ing *&%*%*!!!

[DemReadingDU]

76. Probably CDS involved too

Cerberus probably took out CDSs on Chrysler and its dealers. Then if/when Chrysler went bankrupt, Cerberus would get back all their money.

:crazy:

[ozymandius]

20. GM Bankruptcy Would Include Quick Sale to Feds

If General Motors files for bankruptcy, as is widely expected, plans include a quick sale of the automaker's healthy assets to a new company owned by the U.S. government, a source familiar with the situation said Tuesday.

The source, who was not cleared to speak with the media and would not be identified, said the plan also called for the government to forgive the bulk of $15.4 billion worth of emergency loans that the U.S. has already provided to GM.

The source did not specify a purchase price and added that the new company is expected to honor the claims of secured lenders, possibly in full. The remaining assets of GM would stay in bankruptcy protection to satisfy other outstanding claims.

....

Setting up a new company to buy the healthy assets is aimed at reassuring consumers who might not be willing to make a major purchase from a bankrupt company, fearing it would not honor warranties or provide service.

http://www.cnbc.com/id/30829896

[Demeter]

25. Morning Ozy! Looks Like Hubris Will Be the Hallmark of this Administration

Instead of Cheney running around shouting Terra Terra Terra, we've got Geithner and Summers and Bernanke doing it.

I had a mind-blowing day yesterday, in which the high point was a short and sweet board meeting. It's going to take a while to get over Tuesday. Like until June. I apologize in advance for any and all crankiness.

Things are getting so bad so quickly in the economy, I revise my estimate. We'll crash before September, at which point one or more zombies will have to be liquidated. GM will be the trigger. This will have the silver lining (for Pelosi and Cheney) of derailing the torture inquiries, but Pelosi will take a hint, I think. She hasn't the stomach for that kind of turmoil.

Crystal ball going dark now. Have a good day, just to spite them all!

[amandabeech]

75. So what would happen to GM's pension obligations?

Thrown to the underfunded PBGC, I suppose.

[DemReadingDU]

77. I think so, but PBGC is underfunded

so I guess taxpayers will need to bailout PBGC too

[amandabeech]

87. Yes, the PBGC will be in even more trouble with GM and Chrysler retirees.

However, the AIG CDS counterparties were made whole!

Eventually, no one will want to buy Treasuries because this has become totally out of hand over the past 9 years.

[Demeter]

29. AIG poised to return $843m to investors

http://www.ft.com/cms/s/0/4a57005c-44c9-11de-82d6-00144feabdc0.html

Investors in American International Group will soon receive $843m put aside for them as part of a 2006 settlement with the Securities and Exchange Commission over accounting mis-statements.

Cheques will be sent to more than 257,000 affected AIG investors within the next few months, the SEC said on Tuesday.


The funds were set aside after the insurer, now 80 per cent owned by the federal government, settled allegations that it had falsified its financial statements between 2000 and 2005 through a variety of sham transactions and entities.

AIG consented to a federal court judgment in the case in February 2006 and agreed to pay $800m into a fund for investors that would be administered by the SEC. The insurer did not admit or deny the allegations....

News of the distribution came as AIG named six new independent candidates to stand for election as directors, in the first nominations since trustees managing the government stake vowed to overhaul the board. Shareholders will vote on the new directors at the company’s annual meeting on June 30.

Among the candidates are Harvey Golub, former chief executive of American Express; Laurette Koellner, formerly a senior vice president at Boeing; and Christopher Lynch, an independent financial consultant.

Martin Feldstein, a Harvard University professor and an AIG director since 1987, will step down, reported Bloomberg News, citing a person familiar with the matter.

[UpInArms]

30. dollar watch

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

Last trade 81.769 Change -0.330 (-0.42%)

Sterling and Aussie to Fresh 09 Highs Against USD on Talk of TARP Repayment

http://www.dailyfx.com/story/special_report/special_reports/Sterling_and_Aussie_to_Fresh_1242731905669.html

With recent global economic data showing signs of a bottom and some major US banks announcing their intention to apply for TARP repayment, sentiment continues to improve helping to bolster currencies, global equities and commodity prices. Both the Aussie and Sterling have recorded fresh yearly highs against the USD on Tuesday, while oil trades back above $60. Euro bulls now eye a retest of the key trend highs by 1.3740 over the coming session. On the data front, the German ZEW was somewhat mixed with the headline coming in better than expected, while the current situation was slightly weaker. Meanwhile, Eurozone construction was down from the previous month. In the UK, CPI was somewhat concerning after coming in lower than expected. However this did not prove to factor into price action with broader global macro drivers dominating trade. UK PM Brown’s status as PM remains under pressure with a survey published showing 6 out of 10 Labour Party supporters wanting Brown to step down ahead of the general election. Despite the latest signs of stabilization, ECB Tumpel-Gugerell said it was too early to talk of the crisis being at an end. ECB Kranjec reaffirmed that all of the ECB policymakers were unified on the central bank’s next moves. Looking ahead to the North American session, US housing starts (523k expected) and building permits (530k expected) are due at 12:30GMT, followed by ABC consumer confidence later in the day at 21:00GMT. On the official circuit, Fed Stern is scheduled to speak in Minnesota at 17:15GMT.

...more...

Japanese Q1 GDP May Fall Record 16.1% - Yen Response to Serve as Risk Trend Barometer

http://www.dailyfx.com/story/special_report/special_reports/Japanese_Q1_GDP_May_Fall_1242759224319.html

The Japanese yen has been trading according to risk trends lately, but tonight's release of Japanese GDP has the potential to shake that dynamic up.

On January 20, the CBOE’s VIX volatility index reached its 2009 peak of 57.36 (the 2008 record was much higher at 89.53), and since then, its slow and steady decline has signaled that risk appetite has improved, which explains why the Japanese yen has also gradually pulled back. Japanese fundamentals have remained pretty bleak this entire time, and are expected to get even worse. That said, since we haven’t seen Japanese economic news have a clear impact on Japanese yen price action, tonight’s release of GDP and the yen’s reaction may serve as a good gauge of how strong of a hold risk trends have on the market. Indeed, a response in the direction of the news (JPY decline with disappointing data) would suggest that fundamentals are becoming increasingly important, while a response to investor sentiment (JPY appreciation amidst deleveraging on disappointing data) would suggest that the link between FX carry trades and equities remains strong.

CBOE VIX Index (Daily Chart)

Source: Bloomberg

Looking to the data on hand, at 19:50 ET tonight, Japan's Cabinet Office will release preliminary growth readings, and after three consecutive quarters of contraction, the outlook doesn't look good. There are signs that businesses are suffering considerably at the hands of waning domestic and foreign demand. Consumers have very little to work with these days, as the jobless rate has slowly climbed to a nearly five-year high, and perhaps even worse, cash earnings growth contracted by 3.7 percent in March from a year earlier, the sharpest drop since 2002. Meanwhile, Japanese exporters have had to grapple with not only slowing global growth, but also the appreciation of the Japanese yen, all of which has led foreign-bound shipments to tumble a whopping 46.5 percent in March from a year ago, according to figures published by the Ministry of Finance.

As a result, a Bloomberg News poll of economists shows expectations for GDP to fall 4.3 percent in Q1, with the annualized rate forecasted to plummet by a record 16.1 percent. There is a huge range of individual expectations included in that consensus outlook, with the high guess sitting at +2.0 percent and the low guess at -19.8 percent, but all told, the majority of the forecasts are below -13 percent.

...more...

[Demeter]

31. State Street begins stock sale

http://www.ft.com/cms/s/0/1982232c-43d3-11de-a9be-00144feabdc0.html

State Street has begun selling $1.5bn in stock and will sell at least $500m in senior debt as part of the financial services group’s plan to repay money received under the US’s troubled asset relief programme (Tarp).

It is the latest in the big round of capital-raising by financial institutions following the Treasury-administered “stress tests”.

Some are hoping repay to Tarp money and others are raising capital because they have been told they need to.

State Street, which was one of 19 financial institutions to receive money under the Tarp, is among those that were told it did not need more capital. State Street had the ability to weather “more adverse economic conditions”, the Treasury said.

However, Tarp repayment conditions require that the institution shows it is able to raise capital independently.

Goldman Sachs and Northern Trust are among others that have raised capital in hope of gaining approval to begin paying back their Tarp money.

Bank of America, one of those that needed to raise capital, is believed to have raised $3bn to $4bn over the past 10 days by selling more than 250m new shares through an ATM, or “at the market” operation, according to a report issued on Sunday by Keith Horowitz, a Citigroup analyst. Goldman Sachs upgraded BofA to “buy” on Monday, estimating that its capital raising was 50 per cent complete.

State Street also said on Monday it had taken a loss of $3.7bn after marking down the value of assets held in investment vehicles called conduits. State Street would take the conduits, which were held off its balance sheet and are now valued at $16.6bn, on to its balance sheet, the company said. Under the Basel II banking accord, that move would have been necessary by January next year.

State Street is the world’s third-biggest custody bank and the world’s largest asset manager. Custody banks hold stocks and bonds in safekeeping and arrange settlements.

It said that as a result of its conduit writedown, it estimated that operating earnings for the current year would be between $4.25 and $4.50 a share – higher than expected, after a one-time writedown to be taken in the second quarter.

The news pushed State Street shares 8 per cent higher to $41 by noon in New York on Monday. The shares have halved in value over the past year.

[Ghost Dog]

35. China economic recovery claims 'premature': World Bank

May 20, 2009 - 6:07PM

Enthusiasm about an economic recovery in China may be ``premature'' as private investment lags behind government spending, the World Bank said. ``Until we see a recovery in private investment, it's hard to get too excited about the future,'' David Dollar, country director for China, said at a forum in Beijing today.

... The world's third-biggest economy is ``struggling'' and may fall short of the government's target of an 8 per cent expansion this year, Oppenheimer & Co. said this week.

Private investment, the main driver of growth, was ``way down'' in the first quarter, Dollar said, without citing a figure. Manufacturers have excess capacity and ``a lot of the real-estate sector is over-built,'' he said.

...

While China is the only one of the world's five biggest economies still expanding, growth slowed to 6.1 per cent in the first quarter, the weakest pace since at least 1999.

Private investment is ``the main source of job creation,'' Dollar said. ``It's very important for private investment to come back if China's going to be able to continue to grow at a high rate that is sustainable.'' Stimulus spending has ``stabilized'' the Chinese economy, he said, adding that it can't be the source of long-term sustainable growth and more should be done to increase consumption. The government's efforts to spur domestic demand include subsidies for replacing older vehicles with newer models, a program that the State Council said yesterday would be widened to include home appliances.

/... http://business.smh.com.au/business/world-business/china-economic-recovery-claims-premature-world-bank-20090520-bfkr.html

[Ghost Dog]

37. China needs reforms for growth mode shift

(Xinhua) 2009-05-20 15:38 China should reform its social security system in a bid to boost domestic demand and transform the growth mode that relies too much on exports, economists said in Beijing Tuesday. Vivek Arora, IMF's chief representative in China, told a financial forum that China will have to rely more on domestic consumption if it seeks to repeat its economic miracle over the past 30 years.

Exports, the pillar of China's growth, collapsed late last year as the major markets, including the United States, Japan and the European Union, entered recession. China's economy therefore suffered sharp slowdown. The gross domestic product (GDP) expanded 9 percent year on year in 2008 and 6.1 percent in the first quarter of 2009, compared with 13 percent in 2007.

Economists warned that it is not easy to revive Chinese economy by boosting domestic demand as many citizens are unwilling to spend because of the lack of sufficient social security.

"China should carry out social security reforms, such as in medical care, pension fund and education, to reduce economic uncertainty and boost higher spending," Arora said at the two-day China Finance Summit, which ends Wednesday.

...

The infrastructure-focused government spending could ease the slowdown in the short term, but it might not be the solution in the long run, Arora stated.

Pier Carlo Padoan, deputy secretary of the OECD, told Xinhua that many countries need to change their growth models and in China, the government should improve social security for that purpose. Padoan added that he is convinced that China will succeed in transforming the growth mode to rely more on domestic consumption.

Eric Maskin, the 2007 Nobel Prize Laureate in Economics, told reporters that he anticipated the high saving rate in China to turn into more domestic consumption. China's saving rate rose to 49.9 percent in 2007 from 37.5 percent around 1998, compared with 4.2 percent in the United States in February this year.

Arora added that China should encourage major banks to provide more funding to small and medium-sized enterprises (SME) to help them ride out of the crisis. Chinese banks usually lend to big state-owned enterprises and infrastructure projects while shying away from SMEs for fear of bigger bad loan risk.

/... http://www.chinadaily.com.cn/bizchina/2009-05/20/content_7878528.htm

[Robbien]

39. J.G. Wentworth files bankruptcy---but will be back in business in 30 days

Such an evil company

http://www.reuters.com/article/privateEquity/idUSN1944239020090519

NEW YORK, May 19 (Reuters) - J.G. Wentworth, a specialty finance company that buys structured settlements and annuities, filed for bankruptcy on Tuesday, saying it had a "prepackaged" reorganization plan supported by more than 90 percent of its lenders.

The company said it filed Chapter 11 petitions for three of its nonoperating parent holding company units in U.S. bankruptcy court in Delaware. It expects to be able to emerge from bankruptcy protection within 30 days or so.

Prepackaged bankruptcies allow companies to shorten their time in court and are often less expensive and onerous than typical Chapter 11 cases because they have agreements from key creditors prior to the bankruptcy.

. . .

J.G. Wentworth said in court documents that tightness in the credit markets altered its ability to purchase assets last year, and that it was unable to meet a margin call in the fourth quarter of 2008 as it faced liquidity issues.

. . .

It said its vendors, customers and employees will not be affected by the plan. The company said in court papers that it had 76 employees at the end of last year, after it had laid off about 120 employees in December due to lower volume in its business.

[tclambert]

46. It's your money . . . and we want it NOW!

[Hugin]

52. Holy cow! This is big news.

To anybody who watches The Insomniac Channel... J. G. is almost like a member of the family.

Honestly, I thought it was a bigger operation than 76 employees.

This does give me a ray of hope tho... Because, even at a sucker born every minute, the rate isn't fast enough to keep these guys going.

I wrote a research paper on this type of 'lump sum' payoffs in college. You've got to be really careful with these annuity payoff plans... Most people don't realize that time is money and for a very small payment to you these types can really rip you off. Someone could easily end up with pennies (if that much) on the Dollar of what the annuities are worth.

I'm very leery of those 'Reverse Mortgages' too... Same sort of thing.

[Robbien]

62. If it wasn't such a rip off, how else could they buy so much advertising time

It wouldn't surprise me if they also bundled up the annuities and created some fancy instruments sold at inflated prices to hedges/VCs.


Even in bankruptcy these guys are still on every commercial break on every cable channel.

[DemReadingDU]

79. Three years ago, we went to an investment seminar

where you get a free dinner, and they discuss financial instruments. It turned out this was some kind of annuity, sounded great, you would reap double digit interest every good year, but somehow you would never lose your principal during a bad year. The salesmen drove Hummer vehicles, and they took all their clients on a cruise every year.

The more I have learned reading the SMW, I wonder if this was some kind of Ponzi scheme. It seemed, at that time, too good to be true.

[DemReadingDU]

80. The Insomniac Channel?

What is that? I think I must have been sleeping.

[UpInArms]

40. Obama economic panel moves into the spotlight

http://www.reuters.com/article/businessNews/idUSTRE54J0XP20090520?feedType=RSS&feedName=businessNews&sp=true

WASHINGTON (Reuters) - A high-level panel of experts that has been helping to shape President Barack Obama's response to the economic crisis will step into the public view on Wednesday at a meeting to discuss energy issues and job creation.

Obama announced the creation of the 16-member Economic Recovery Advisory Board, led by former Federal Reserve Chairman Paul Volcker, in February, but its work had been entirely behind-the-scenes.

Wednesday's meeting, scheduled for 10:00 a.m., will be open to the media and carried via a live video stream on the White House website. It is the first of what are expected to be quarterly meetings by the board.

Topping the meeting agenda is Obama's proposal to create "green jobs" in sectors of the economy aimed at developing cleaner energy sources.

Volcker's role in advising Obama is of keen interest to many on Wall Street, where the 81-year-old former central banker remains a towering figure known for breaking the back of runaway inflation during the 1980s.

...more...

[tclambert]

47. Here's a group photo

[Robbien]

66. Those guys would be an improvement

Geithner is testifying this morning and if you take a look at the support staff behind him it appears not even one of them could order a drink at a bar without being carded. What did he do, raid the nearest high school for seat warmers?

[amandabeech]

78. That's what many congressional staffs look like.

With the staff members, a lot of the turnover relates to low salaries and better opportunities with lobbying and non-profits.

With Geithner, I'd say that he has some difficulty supervising experienced people with minds of their own. Just a guess.

[Hugin]

55. "diverse set of perspectives and voices"*

*Excluding any Progressive or Populist Voices.

Only H1-B Advocates and Financiers need apply.

[spotbird]

68. Geithner Says Toxic-Asset Plan to Start in Six Weeks (Update1)

Found this in LBN.

The Treasury’s Public-Private Investment Program will use $75 billion to $100 billion of government funds to finance sales of as much as $1 trillion in distressed mortgage-backed securities and other assets. The effort has two components, which the Treasury will manage in conjunction with the Fed and the Federal Deposit Insurance Corp.

“A variety of troubled legacy assets are congesting the U.S. financial system,” he said. “This constraint on capital reduces the ability of financial institutions to provide new credit and uncertainty about the value of legacy assets is constraining the ability of financial institutions to raise private capital.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aenU5AEto8oM&refer=home

Someone help me out here. I honestly don't understand the plan, if the assets are worthless, why would anyone buy them.

[Tansy_Gold]

88. That's the question we've all been asking for. . . . months

And now these pieces of worthless shit are "troubled legacy assets." This is positively orwellian.

THEY ARE SHIT.

But hey, Tom Sawyer got his friends to pay him to whitewash the fence, so maybe there are some smooth talkers -- and some willing suckers -- who will pay for these whitewashed "assets."

Sheesh.





Tansy Gold

[ozymandius]

91. How many "misunderstood" assets will Geithner buy for his very own?

I'm sure he will wallpaper his dining room with these greatly undervalued certificates. :eyes:

[Demeter]

92. That Should Prove Interesting

[Robbien]

56. New IPO. Company which takes restaurant reservations

One can't see a show or concert without paying a fee to ticketmaster.

This new company is doing that one better. It wants to be the intermediary between restaurants and diners.

http://blogs.reuters.com/reuters-dealzone/2009/05/19/opentable-ups-the-ante-at-some-risk/

OpenTable, an online restaurant reservation system operator, upped the estimated price range of its initial public offering by 30 percent Tuesday, a daring move considering that the company relies on the ailing restaurant industry for its growth, and last year had a net loss of $1 million despite fast growing sales.

The San Francisco-based company, whose clients include famed restaurants such as New York’s Union Square Café and Gramercy Tavern, and has backers such as Tom Layton ( a co-founder of CitySearch), said in its filing it is used by about 10,000 restaurants in the U.S. but sees a total market of 30,000 eateries.

[AnneD]

63. Falling short on new ideas hey...

this is what happens when you skimp on research and education. I won't even say anything about manufacturing. It is like outsourcing order taking when you place your order at the speaker in the fast food drive thru.

Remember when they (McDonald's)were experimenting with delivering food orders via satellite to a remote location and beaming them back. Well they can beam your order to India or where ever, but if they don't fill it right or you don't have money to pay for it because you are unemployed-don't mean squat.

[Robbien]

82. Banks' Boards Don't Know Squat About Banking

So a bank CEO walks into a board meeting and tries to explain its toxic assets or broad recovery plans. His audience: a few of his underlings, three academics, two golf buddies, a fellow Princeton alum and a brewery executive daydreaming about the free cookies they’ll get when he’s done.

Good thing CEOs never tell their boards anything important.

But even if they evolve to be more than a rubber stamp as the Obama Administration pushes the major banks to beef up their director ranks, it’s amazing that so few have real financial industry experience.

Bloomberg columnist David Reilly did the math himself and had a startling discovery:

Only about 15 percent of directors have banking experience at the 10 largest U.S. commercial banks by assets, according to my own analysis. Include directors with investing, accounting, insurance or real estate backgrounds and the rate creeps up to only 33 percent.

http://www.businessinsider.com/banks-boards-dont-know-squat-about-banking-2009-5

Aren't board positions given out as awards to ex-politicians and staffers? An easy way to hand over several hundred thousand a year to people who greased the way for lax government regulations.

As part of Ginrich's K Street strategy, wasn't every corporation required to appoint GOPers to their boards otherwise those companies would be locked out of lobbying in DC.

[Robbien]

86. Forbes complaining about new anti-trust AG

A Giant Step Backward In Antitrust Law

This past week Christine Varney, our new Assistant Attorney General for Antitrust, charted what she terms a more "vigorous" course of antitrust enforcement. Starting from the premise that the Bush antitrust Report Competition and Monopoly: Single Firm Conduct under Section 2 of the Sherman Act took a too passive view toward antitrust enforcement, Varney unilaterally "withdrew" the Report, effectively immediately, in her May 11, 2009, speech before the U.S. Chamber of Commerce. Bad move.

. . .

The unceremonious dumping of the Bush Report seems to call for a detailed critique of its contents. But Varney's speech fails miserably on that score. She first attacks the Bush Report for its naïve hope that markets would "self-correct," without explaining where they have gone off the rails. Rather, she simply announced that "i is clear to anyone who picks up a newspaper or watches the evening news" that the Bush antitrust regime has failed.

. . .

Neelie Kroes, head of the European Commission, levied a record $1.4 billion fine against Intel ( INTC - news - people ) for the supposed antitrust violation of aggressively lowering prices to original equipment manufacturers in order to keep its dominant market share.

I think this Intel decision is perverse. Alas, as yet, we have no idea whether Varney wants to outdo Kroes, but Silicon Valley companies like Google ( GOOG - news - people ) are rightfully fearful of the new onslaught. It would be a massive reversal of sound antitrust policy for the Antitrust Division to imitate the worst of what the E.U. has to offer.

The libertarian is always suspicious of any antitrust law because it represents a conscious departure from the basic rule that only punishes force and fraud. We can see our way clear to taking this momentous step in the cartel case under Section 1. But we should hope that, notwithstanding Varney's case to the contrary, that our courts, which have made so much progress on antitrust issues in recent decades, continue to adhere to its sound policy.

http://www.forbes.com/2009/05/18/christine-varney-antitrust-opinions-columnists-law.html?feed=rss_news

[Robbien]

89. Site is keeping track of private equity company takeovers now in bankruptcy

In just this year alone there are over a hundred company/chains going to bankruptcy court in their attempt to get out from under the debt load hedges/PEs dumped on them

http://www.thedeal.com/newsweekly/dealwatch/pebacked-bankruptcies.php

[skoalyman]

93. I get the feeling things are ramping up for another crisis with gold

not far from the grand mark and the dollar slippin away like Geithner's mental ability's