STOCK MARKET WATCH, Tuesday February 2

[ozymandius]

Source: du

STOCK MARKET WATCH, Tuesday February 2, 2010

Bush Administration Officials Convicted = 2
Name(s): David Safavian, James Fondren

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

Financial Sector Officials Convicted since 1/20/09 = 11

AT THE CLOSING BELL ON February 1, 2010

Dow... 10,185.53 +118.20 (+1.17%)
Nasdaq... 2,171.20 +23.85 (+1.11%)
S&P 500... 1,089.19 +15.32 (+1.43%)
Gold future... 1,105 +21.50 (+1.98%)
10-Yr Bond... 3.65 +0.07 (+1.96%)
30-Year Bond 4.56 +0.08 (+1.69%)

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

Market Conditions During Trading Hours

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

---

Handy Links - Market Data and News:
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    Brad DeLong    Bonddad    Atrios    goldmansachs666

Handy Links - Government Issues:
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Handy Links - Videos:
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---

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

Read more: du

[ozymandius]

1. Market Observation

2010, Transitioning From Push to Pull
BY RYAN J. PUPLAVA

There were a slew of economic reports over the past two trading days that have meaningful data points to review; hopefully, shedding light on the direction our economy is heading. The main economic releases to review are the Gross Domestic Product (GDP) report released last Friday, followed by the ISM Manufacturing Index and Personal Income today. The economy is transitioning in 2010 from inventory destocking (push) back to a consumer driven economy (pull). For this transition to happen smoothly we should see a few things happen, economically, including a peak in the unemployment rate, better credit flows, and an expanding global economy.

Right now the economic recovery is skating on thin ice. The consumer is deleveraging, unemployment is rising, and banks aren’t lending. Companies have been deleveraging as well, destocking inventories and slowing fixed investment. Herein lies the making of an economic recovery. Demand needs to rise. In order for that to happen, the American consumer needs a job to pay for goods and services. Goods and services need to be produced to create jobs. Credit needs to flow to fund fixed investment. ...

-see Econ 101 graphic-

Now I’m not going to argue which came first: the chicken (consumption) or the egg (production) in this equation—I’ll leave that for the Austrians and the Keynesians to battle it out. As a fund manager I want to see that one of the gears in the economic machine is turning. The rest of the machine will start to work when this gear turns because all of the gears are interconnected. The consumer empowers the producer who in return empowers the consumer with a job.

Why is this relationship important? It’s the basis for our economic recovery.

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

[ozymandius]

2. Today's Reports

10:00 Pending Home Sales Dec
Briefing.com -3.2%
Consensus 1.1%
Prior -16.0%

14:00 Auto Sales Jan
Briefing.com NA
Consensus NA
Prior 4.14M

14:00 Truck Sales Jan
Briefing.com NA
Consensus NA
Prior 4.49M

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

[rfranklin]

52. U.S. Dec. pending home sales index rises 1%

Feb. 2, 2010, 10:00 a.m. EST

U.S. Dec. pending home sales index rises 1%
WASHINGTON (MarketWatch) - Buyers returned to the market for U.S. preowned homes in December after a federal tax credit was reinstated, according to a survey of real estate agents released Tuesday by the National Association of Realtors. The pending home sales index rose 1% in December after plunging 16.4% in November, with buyers reacting first to the expiration and then to the return of the tax credit, NAR data showed. The index is up 10.9% compared with December 2008. The gain in the pending sales index portends a similar gain in existing home sales for January, which will be reported in three weeks. In December, existing home sales fell 16.7%.

[rfranklin]

54. If we pay them, they will come...

The only reason that sales are up even 1%, as noted, is that the government is paying people to purchase homes.

[ozymandius]

3. Oil near $75 in Asia amid improved economic data

...Benchmark crude for March delivery was up 27 cents at $74.70 a barrel at early afternoon Bangkok time in electronic trading on the New York Mercantile Exchange. The contract rose $1.54 to settle at $74.43 on Monday.

Major regional stock indexes were higher after losing ground the past two weeks, giving a boost to the oil market which sometimes looks to stocks as a barometer of optimism about the economy.

The gains in markets were driven by reports Monday from the U.S. that showed improvements in manufacturing and personal incomes. If those gains are sustained, it would suggest a lift in demand for gasoline and other crude products from the world's biggest consumer of oil. ...

In other Nymex trading in March contracts, heating oil rose 0.81 cent to $1.963 a gallon and gasoline added 0.86 cent to $1.9407 a gallon. Natural gas rose 4.7 cents to $5.481 per 1,000 cubic feet.

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

[ozymandius]

4. Exxon quarterly profit tops Street, stock up 3 percent

HOUSTON (Reuters) – Exxon Mobil Corp (XOM.N) reported a fourth-quarter profit on Monday that topped Wall Street expectations as natural gas projects boosted results at the largest U.S. oil company's exploration arm.

Still, Exxon's net income fell 23 percent as weak demand for fuel in the global economic slowdown caused a loss in its refining business. ...

Oil and gas production increased nearly 2 percent in the quarter to 4.18 million barrels of oil equivalent (BOE) per day -- better than some analysts had expected -- helped by production from Exxon's massive liquefied natural gas (LNG) projects in Qatar. ...

Exxon is also investing in natural gas closer to home. The company has said it plans to buy XTO Energy Inc (XTO.N) for about $30 billion in stock in a big bet on North America's fast-growing natural gas industry.

http://news.yahoo.com/s/nm/20100201/bs_nm/us_exxon_8

[Roland99]

9. My heart just breaks.

[Demeter]

12. You Are Such a Tender, Caring Soul

Bless you!

[Roland99]

19. We must love and cherish *all* of God's creatures

Oh wait...there is no God? Oh ok. Well....FUCK EXXON!



;-)

[ozymandius]

15. Let's hope that Lee Raymond does not downgrade

his preferred brand of cat food in his declining years.

[Tansy_Gold]

33. You should issue a warning before posting something like that.

EEeeeeiuw!


Tansy Gold, making a drive-by post on her way to another day with the completely screwed up mess she was handed yesterday under the heading "This is the new software we're going to be using from now on and we've trained exactly one person how it works for both outgoing and incoming documents and she's not real bright and she's got skin about the thickness of tissue paper so if something goes wrong, even if it costs you money, you'd better not complain to her or show her any frustration or anger because she'll run crying right to the VP and have the VP call you and chew you out for not being a Nice Person."

[rfranklin]

55. What's the problem, just a still photo from "Star Wars"

Isn't that Jabba?

[Tansy_Gold]

68. No, it's not Jabba.

Jabba is the VP of the company I work for.

:evilgrin:



TG

[rfranklin]

79. LOL

[dixiegrrrrl]

75. look! He can afford an extra chin...or two.

Sigh...must be nice to be that rich.

[ozymandius]

5. BP Sees ‘Slow’ Recovery as Profit Misses Estimates

Feb. 2 (Bloomberg) -- BP Plc, Europe’s biggest oil company, expects the recovery from last year’s recession to be “slow and gradual” as fourth-quarter earnings missed analyst estimates.

Earnings excluding one-time items and gains or losses from inventories rose 68 percent to $4.38 billion from a year earlier. That missed the $4.7 billion median estimate of 13 analysts surveyed by Bloomberg News. The shares fell the most since March.

Chief Executive Officer Tony Hayward, who beat last year’s cost-cutting target and ramped up operations in the Gulf of Mexico to become Europe’s leading energy producer, said output will be “slightly lower” in 2010. Refining margins will “remain depressed” for the time being, he said. ...

In 2010, BP expects the quarterly loss, excluding non- operating items, for businesses such as alternative energy and shipping to average around $400 million. The company’s adjusted loss widened to $2.3 billion last year, from $1.2 billion in 2008, “primarily due to a weaker margin environment for shipping and our BP solar business and adverse foreign exchange effects.”

BP’s Global Indicator Margin, a broad measure of refining profitability, dropped to $1.49 per barrel in the fourth quarter, the lowest level since the first quarter of 1995, according to BP data.

http://www.bloomberg.com/apps/news?pid=20601087&sid=awX_D_ZKX55U&pos=1

[ozymandius]

6. Swiss Banks Find Achilles Heel Is Workers Selling Stolen Data

Feb. 2 (Bloomberg) -- Swiss banks are discovering that the biggest threat to client privacy is their own workers.

German Chancellor Angela Merkel said yesterday her government may buy stolen data on Swiss bank accounts as French authorities comb information acquired from an employee of HSBC Holdings Plc’s private bank in Geneva. The cases come two years after Germany paid 5 million euros ($7 million) for details filched from LGT Group in neighboring Liechtenstein. ....

The willingness of governments to pay for stolen data is fanning tensions with France and Germany as Switzerland seeks to negotiate treaties implementing its commitment to cooperate with international tax probes. The Swiss government said last month it will draft a law barring officials from assisting foreign countries in cases involving stolen data. ...

An unidentified individual has offered to sell Germany information on about 1,300 holders of Swiss bank accounts for 2.5 million euros, the Financial Times Deutschland reported yesterday, without saying where it got the information. The newspaper said the data came from HSBC’s private bank in Geneva, while the German newspaper Handelsblatt said it was drawn primarily from accounts at UBS.

The information may yield 200 million euros in lost tax revenue to the German government, Handelsblatt reported.

http://www.bloomberg.com/apps/news?pid=20601109&sid=akmcfUr7TqHs&pos=13

[dixiegrrrrl]

76. ozy, THAT is a hoot. So glad the job market is picking up for bank workers.

:evilgrin: :evilgrin:

[Demeter]

78. Rather Like a Bank Robbery in Reverse

[AnneD]

82. That's how the rank and file bank workers....

get THEIR bonus. :evilgrin:

[Festivito]

7. Debt: 01/29/2010 12,278,635,997,966.88 (UP 4,204,569,929.60) (Fri)

(Down a bit. Debt seems to jump up big then drop slowly maybe up a little and down a little for days--repeat. A^2. Good day all.)

= Held by the Public + Intragovernmental(FICA)
= 7,759,490,293,035.97 + 4,519,145,704,930.91
DOWN 416,981,206.21 + UP 4,621,551,135.81

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 309-Million person America.
If every American, man, woman and child puts in $3.24 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.72, ABOUT TEN BUCKS for a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is the federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)

PERSONALIZED DEBT:
Every 10 seconds we net gain another American, so at the end of the workday of the report, there should be 308,599,518 people in America.
http://www.census.gov/population/www/popclockus.html ON 11/07/2009 08:19 -> 307,879,272
Currently, each of these Americans owe $39,788.25.
A family of three owes $119,364.76. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 22 reports in the last 30 to 31 days.
The average for the last 22 reports is 8,109,887,213.21.
The average for the last 30 days would be 5,947,250,623.02.
The average for the last 31 days would be 5,755,403,828.73.
There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 75 reports in 112 days of GWB's part of FY2009 averaging 8.03B$ per report, 5.38B$/day.
There were 174 reports in 253 days of Obama's part of FY2009 averaging 7.33B$ per report, 5.07B$/day so far.
There were 249 reports in 365 days of FY2009 averaging 7.57B$ per report, 5.16B$/day.
There were 82 reports in 121 days of FY2010 averaging 4.50B$ per report, 3.05B$/day.
Above line should be okay

PROJECTION:
There are 1,087 days remaining in this Obama 1st term.
By that time the debt could be between 13.8 and 18.5T$.
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)
01/29/2010 12,278,635,997,966.88 BHO (UP 1,651,758,949,053.80 so far since Obama took office.)

FISCAL YEAR DEBT CHANGE, Sep 30 prior year to Sep 30 named year:
(One "* " for each 40B$ reached)
FY1994 +0,281,261,026,873.94 ------------* * * * * * * WJC
FY1995 +0,281,232,990,696.07 ------------* * * * * * * WJC
FY1996 +0,250,828,038,426.34 ------------* * * * * * WJC
FY1997 +0,188,335,072,261.61 ------------* * * * WJC
FY1998 +0,113,046,997,500.28 ------------* * WJC
FY1999 +0,130,077,892,735.81 ------------* * * WJC
FY2000 +0,017,907,308,253.43 ------------WJC
FY2001 +0,133,285,202,313.20 ------------* * * C&B
01-WJC +0,053,598,528,417.78 ------------* WJC 31% of FY, 40% of FY-Debt
01-GWB +0,079,686,673,895.42 ------------* GWB 69% of FY, 60% of FY-Debt
FY2002 +0,420,772,553,397.10 ------------* * * * * * * * * * GWB
FY2003 +0,554,995,097,146.46 ------------* * * * * * * * * * * * * GWB
FY2004 +0,595,821,633,586.70 ------------* * * * * * * * * * * * * * GWB
FY2005 +0,553,656,965,393.18 ------------* * * * * * * * * * * * * GWB
FY2006 +0,574,264,237,491.73 ------------* * * * * * * * * * * * * * GWB
FY2007 +0,500,679,473,047.25 ------------* * * * * * * * * * * * GWB
FY2008 +1,017,071,524,649.92 ------------* * * * * * * * * * * * * * * * * * * * * * * * * GWB
FY2009 +1,885,104,106,599.30 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * B&O
09GWB +0,602,152,152,000.60 ------------* * * * * * * * * * * * * * * GWB 31% of FY, 32% of FY-Debt
09-BHO +1,282,951,954,598.70 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * BHO 69% of FY, 68% of FY-Debt
FY2010 +0,368,806,994,455.10 ------------* * * * * * * * * BHO
Endof10 +1,112,516,966,744.73 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * Linear Projection

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
01/08/2010 -000,177,723,158.27 ---
01/11/2010 -000,226,209,166.36 --- Mon
01/12/2010 +000,163,748,521.92 ------------********
01/13/2010 -000,144,326,167.15 ---
01/14/2010 -025,105,278,682.17 -
01/15/2010 +057,080,501,160.91 ------------**********
01/19/2010 -000,292,818,574.91 --- Tue
01/20/2010 +001,498,198,188.82 ------------*********
01/21/2010 -031,161,420,148.11 -
01/22/2010 -000,070,049,877.74 ----
01/25/2010 -000,041,466,126.01 ---- Mon
01/26/2010 +000,973,181,275.87 ------------********
01/27/2010 +000,063,416,019.94 ------------*******
01/28/2010 -024,245,578,618.07 -
01/29/2010 -000,416,981,206.21 ---

-22,102,806,557.54 Total of 15 above reports.

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

For a prettier and more explanatory view of our nation's debt:
http://www.brillig.com/debt_clock
http://www.usdebtclock.org/
DUer primer on National debt

(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=4251615&mesg_id=4251639

[Festivito]

74. Debt: 02/01/2010 12,349,463,585,067.42 (UP 70,827,587,100.54) (Mon)

(Up a good bit. Debt seems to jump up big then drop slowly maybe up a little and down a little for days--repeat. Good day all.)

= Held by the Public + Intragovernmental(FICA)
= 7,849,809,516,401.30 + 4,499,654,068,666.12
UP 90,319,223,365.33 + DOWN 19,491,636,264.79

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 309-Million person America.
If every American, man, woman and child puts in $3.24 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.72, ABOUT TEN BUCKS for a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is the federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)

PERSONALIZED DEBT:
Every 10 seconds we net gain another American, so at the end of the workday of the report, there should be 308,625,438 people in America.
http://www.census.gov/population/www/popclockus.html ON 11/07/2009 08:19 -> 307,879,272
Currently, each of these Americans owe $40,014.41.
A family of three owes $120,043.22. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 21 reports in the last 30 to 32 days.
The average for the last 21 reports is 1,814,947,978.83.
The average for the last 30 days would be 1,270,463,585.18.
The average for the last 32 days would be 1,191,059,611.11.
There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 75 reports in 112 days of GWB's part of FY2009 averaging 8.03B$ per report, 5.38B$/day.
There were 174 reports in 253 days of Obama's part of FY2009 averaging 7.33B$ per report, 5.07B$/day so far.
There were 249 reports in 365 days of FY2009 averaging 7.57B$ per report, 5.16B$/day.
There were 83 reports in 124 days of FY2010 averaging 5.30B$ per report, 3.55B$/day.
Above line should be okay

PROJECTION:
There are 1,084 days remaining in this Obama 1st term.
By that time the debt could be between 13.6 and 17.9T$.
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)
02/01/2010 12,349,463,585,067.42 BHO (UP 1,722,586,536,154.34 so far since Obama took office.)

FISCAL YEAR DEBT CHANGE, Sep 30 prior year to Sep 30 named year:
(One "* " for each 40B$ reached)
FY1994 +0,281,261,026,873.94 ------------* * * * * * * WJC
FY1995 +0,281,232,990,696.07 ------------* * * * * * * WJC
FY1996 +0,250,828,038,426.34 ------------* * * * * * WJC
FY1997 +0,188,335,072,261.61 ------------* * * * WJC
FY1998 +0,113,046,997,500.28 ------------* * WJC
FY1999 +0,130,077,892,735.81 ------------* * * WJC
FY2000 +0,017,907,308,253.43 ------------WJC
FY2001 +0,133,285,202,313.20 ------------* * * C&B
01-WJC +0,053,598,528,417.78 ------------* WJC 31% of FY, 40% of FY-Debt
01-GWB +0,079,686,673,895.42 ------------* GWB 69% of FY, 60% of FY-Debt
FY2002 +0,420,772,553,397.10 ------------* * * * * * * * * * GWB
FY2003 +0,554,995,097,146.46 ------------* * * * * * * * * * * * * GWB
FY2004 +0,595,821,633,586.70 ------------* * * * * * * * * * * * * * GWB
FY2005 +0,553,656,965,393.18 ------------* * * * * * * * * * * * * GWB
FY2006 +0,574,264,237,491.73 ------------* * * * * * * * * * * * * * GWB
FY2007 +0,500,679,473,047.25 ------------* * * * * * * * * * * * GWB
FY2008 +1,017,071,524,649.92 ------------* * * * * * * * * * * * * * * * * * * * * * * * * GWB
FY2009 +1,885,104,106,599.30 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * B&O
09GWB +0,602,152,152,000.60 ------------* * * * * * * * * * * * * * * GWB 31% of FY, 32% of FY-Debt
09-BHO +1,282,951,954,598.70 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * BHO 69% of FY, 68% of FY-Debt
FY2010 +0,439,634,581,555.70 ------------* * * * * * * * * * BHO
Endof10 +1,294,085,663,450.25 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Linear Projection

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
01/11/2010 -000,226,209,166.36 --- Mon
01/12/2010 +000,163,748,521.92 ------------********
01/13/2010 -000,144,326,167.15 ---
01/14/2010 -025,105,278,682.17 -
01/15/2010 +057,080,501,160.91 ------------**********
01/19/2010 -000,292,818,574.91 --- Tue
01/20/2010 +001,498,198,188.82 ------------*********
01/21/2010 -031,161,420,148.11 -
01/22/2010 -000,070,049,877.74 ----
01/25/2010 -000,041,466,126.01 ---- Mon
01/26/2010 +000,973,181,275.87 ------------********
01/27/2010 +000,063,416,019.94 ------------*******
01/28/2010 -024,245,578,618.07 -
01/29/2010 -000,416,981,206.21 ---
02/01/2010 +090,319,223,365.33 ------------********** Mon

68,394,139,966.06 Total of 15 above reports.

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

For a prettier and more explanatory view of our nation's debt:
http://www.brillig.com/debt_clock
http://www.usdebtclock.org/
DUer primer on National debt

(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=4253003&mesg_id=4253017

[Dr.Phool]

8. Puxatawney Phools Phabulous Phorecast.

Geithner sees his shadow, as the Four Horseman of the Apocolypse, Summers, Rubin, Bernanke, and Peterson gather over the country.

A shitstorm forms over the CRE market, as an unemployment line forms out in front of a supply side front.

To be continued.

[ozymandius]

11. Hey, here's Geithner's horse right here. The one on the left.

[Demeter]

14. I'm betting he's going to swerve first.

Rita: Why would anybody steal a groundhog?
Larry: I can probably think of a couple of reasons... pervert.

[AnneD]

26. Morning Marketeers...

:donut: and lurkers. Phor sure Dr.Phool, phor sure. Been suffering phrom cajun spelling impediment since the Saints won. We gonna be eating good come Sunday. We have more Cajuns here than New Orleans.

Well, the living hell that has become my job continues. They still are holding the teacher's bonuses pending a TEA investigation yet they haven't submitted a request to TEA. The TEA had already signed off on the test. The union has filed a grievance. I feel sorry for the teachers, some took out payday loans based on receiving the bonus. I have been shafted by employers over pay before so I never count my chicks before they hatch. Morale is in the crapper needless to say. The up side-I figured up my retirement time,,,,I am much closer than I thought, I may be leaving school nursing sooner than I thought and going back to the hospital. That can boost my retirement check so I am strongly thinking of it. I am watching for an opening to happen.

Happy hunting and watch out for the bears.

[DemReadingDU]

43. Good luck to you AnneD

It's tough working in conditions like that. Have you kept in contact with your previous school, as conditions weren't good there either. I feel bad for the kids. Hospital nursing is seeing cutbacks too, as well as police and firemen. The thing is, we need good nurses, police and firemen. We don't need CEOs who make $100 million in bonuses. What a screwed up world we live in.

[AnneD]

81. I am lucky.....

I have 3 or less years before I get full retirement. There is a tightening of the Nursing Market but I won't leave one job until I have another. I can work anywhere for 3 years-I've had to eat many a shit sandwich in my career. You get up and do what you need to do to support your family. I could do this for three years, it is just a sorry way to end my career. I have decided I will go for the money at a hospital. That could boost my monthly retirement check.:headbang:

I am not the only person planning on going out my other Nurse friend is looking to go out soon and I know many teachers here that are retiring. I think the new superintendent and board will be in for a shock next year.

[ozymandius]

10. Obama Budget Seeks $1.9 Trillion Tax Rise on Richest, Business

Feb. 2 (Bloomberg) -- The Obama administration seeks a $970 billion tax increase over the next decade on Americans earning more than $200,000 and wants to take in an additional $400 billion from businesses even as it retools a proposed crackdown on international tax-avoidance techniques.

The administration budget released yesterday would reinstate 10-year-old income tax rates of 36 percent and 39.6 percent for single Americans earning more than $200,000 and joint filers making more than $250,000 as part of a broad $1.9 trillion tax increase proposal. It proposes to eliminate preferences for oil and gas companies, life-insurance products, executives of investment partnerships and U.S.-based companies that operate overseas. ...

Obama proposed $143.4 billion in new tax cuts for individuals who earn under $200,000. While the budget sets out $93.5 billion in gross tax reductions for businesses, overall they would face a net tax increase.

“The proposed budget’s $300 billion in tax relief over the next 10 years for individuals, families, and businesses is mostly targeted and limited, often to people who don’t have to pay any taxes,” said Senator Charles Grassley of Iowa, the ranking Republican on the tax-writing Senate Finance Committee. “The tax increases in the budget dwarf the tax relief.” ...

The biggest change would delete a proposal to abolish “check-the-box” rules, which allow companies to legally disregard foreign subsidiaries in tax havens when they file corporate tax returns. It also scales back a proposal to restrict the ability of companies to defer U.S. taxes on their foreign profits.

In place of abolishing the check-the-box rules, the administration proposed $15.5 billion in new taxes. These would make it harder for companies to abuse so-called transfer-pricing rules to improperly inflate expenses through trades between subsidiaries.

http://www.bloomberg.com/apps/news?pid=20601070&sid=a6qcwZCtO0_w

---

On a personal note: If Grassley thinks that Chez Ozymandius does not have to pay any taxes then he obviously spends most of his time on another planet (or maybe with his head firmly planted in his colon). As a single person with no dependents under Clinton, I had a smaller tax liability than my wife and I have filing married with one dependent. In short, we have been hammered with taxes under the Bush regime with a sycophantic Congress. For the record: our income has been less than $100k. That's below the midpoint in the range at which Assley asserts that people do not pay taxes.

[Demeter]

32. US president unveils his budget plans

http://www.ft.com/cms/s/0/9bd52b80-0edf-11df-bd79-00144feabdc0.html

President Barack Obama on Monday unveiled budget plans that would reduce the US government deficit from 10.6 per cent of gross domestic product in 2010 to below 4 per cent by 2014.

In cash terms, the deficit would peak at $1,556bn this year – even higher than the $1,413bn deficit in 2009 – then gradually decline to $706bn in 2014 before starting to drift up again. The 10-year cumulative deficit from the fiscal year 2011 to 2020 would come in at $8,532bn.

The 2011 budget proposals are insufficient to reduce the deficit to the 3 per cent of GDP level that would be consistent with a stable ratio of debt to GDP. But Mr Obama said the blame lies with the previous Bush administration which cut taxes and engaged in two wars “without paying for any of it”.

“If we had taken office during ordinary times we would have started to take down these deficits immediately,” he said. But he added that the financial rescue and stimulus programme had been essential to shore up the economy: “We initiated a rescue and that rescue was not without significant costs.”

“We won’t be able to bring down this deficit overnight,” said Mr Obama. ”We will continue to do what it takes to create jobs.”

Expected losses from the $700bn troubled asset relief programme, one of the major costs of the government’s financial rescue, have been falling. The new estimate puts total losses at $117bn, compared with an earlier estimate of $141bn.

Last August the loss was estimated at $341bn. The reduced loss estimate comes from many of the biggest banks paying back their Tarp money early and with interest. Internal Treasury estimates suggest the ultimate loss will be below $100bn.

Mr Obama’s budget request will be examined by Congress and the discretionary elements will face hearings. The appropriations bills that come out of this process are due to be signed by the president before October 1, although the wrangling with Congress usually ensures that this does not happen.

Judd Gregg, the senior Republican on the Senate budget committee and a leading fiscal hawk, was quick to attack Mr Obama’s budget, claiming it “will solve nothing”.

“This country is sinking into a fiscal quagmire – the president’s stimulus plan has not resulted in job growth, this year’s deficit is expected to reach $1.6 trillion, and Congress just agreed to extend the federal credit limit to more than $14 trillion,” he said. “At the same time, liberals in Congress continue to pass massive spending bills that are financed on the backs of our children.”

The administration’s projections show debt rising from 64 per cent of national output to 73 per cent by 2015 and 77 per cent by 2020 – long after the economy has returned to full employment.

The White House will ask a bipartisan fiscal commission to develop additional proposals to bring the deficit down to about 3 per cent of GDP.

The commission will be charged with balancing the budget before interest payments (the so-called primary balance) by 2015, as well as developing policies to “meaningfully improve the long-run fiscal outlook”.

With interest payments equal to about 3 per cent of GDP, a balanced primary account would equate to an overall deficit of about 3 per cent – sufficient to stabilise the debt-GDP ratio.

It remains uncertain, however, whether the commission structure will be able to deliver a bipartisan plan capable of commanding sufficient support in Congress.

Senior administration officials said the budget decisions would shave $1,200bn off the 10-year deficit compared with current policy.

Not renewing the Bush tax cuts for those earning $250,000 or more would save $678bn; a three-year spending freeze on non-security discretionary spending would save $250bn, while the proposed bank levy would raise $90bn and ending some funding for fossil fuels would save $40bn.

However, compared with a current law benchmark – in other words, assuming the Bush tax cuts expire on schedule – the savings look much smaller. Moreover, the budget assumes that the “alternative minimum tax” will continue to draw in additional taxpayers – even though Congress annually applies a fix to stop it from doing so.

Within the overall cap on non-security discretionary spending, the administration said it would save $20bn by scrapping and curtailing some programmes. It will scrap the Nasa Constellation project, which aimed to take man back to the moon.

Officials identified some increases on priority items – including a $3bn increase for a schools programme, a $17bn increase in Pell grants for college education funded by reduced subsidies for commercial student loan providers and $4bn extra for basic research and development.

But the numbers were dwarfed by a combined $192.3bn in additional supplemental financing requests for the wars in Iraq and Afghanistan.

[amandabeech]

65. This is $97 billion a year, on average.

To me, this looks downright timid. A 39% marginal rate after adjustments is incredibly timid considering what that top rate was until that devil Reagan.

But, considering how Obama was lauding Reagan during his campaign, I guess that I can't expect much.

I'm still waiting for the surcharges on capital gains for 1) social security, 2) medicare and medicaid, 3) war making and 4) deficit reduction, eventually.

[ozymandius]

13. Obama calls for $30 billion small business lending fund

NEW YORK (CNNMoney.com) -- President Obama will call on Congress Tuesday to recycle $30 billion of the remaining Troubled Asset Relief Program (TARP) funds into a new government lending program offering super-cheap capital to community banks that boost their small business lending this year.

Touted last week in Obama's State of the Union address, the plan is the latest incarnation of a proposal the president first floated in October. While credit conditions for large businesses have improved over the past year, small companies are still widely reporting problems finding the capital they need to fund their operations. ...

At a town hall meeting in Nashua, N.H., Obama plans to unveil his proposed new Small Business Lending Fund. The initiative targets banks with assets of under $10 billion, which collectively account for more than half of the nation's small business lending, according to White House estimates. Those banks would be able to borrow money from the Treasury at a dividend rate as low as 1% if they use the cash to make more small business loans this year than they did in 2009. ...

Banks with less than $1 billion in assets would be able to receive capital infusions of up to 5% of their assets, and banks with assets of $1 billion to $10 billion would be eligible to access investments totaling 3% of assets. More than 8,000 of the country's 8,400 banks would be eligible to participate under these terms, according to government estimates.

http://money.cnn.com/2010/02/02/smallbusiness/obama_lending_fund/index.htm

[Demeter]

16. My Horoscope Confirms It's Groundhog Day

"...Relationships may seem like a minefield today as you attempt to establish clear boundaries in new or existing friendships. You might feel as if you are losing ground or, perhaps, addressing issues that you believed were already resolved. It doesn't matter if you think you've been here before; you still must reconsider your goals and how best to achieve them."

[Po_d Mainiac]

56. I'll tranlate that for u

U missed a pile of poo last week in the park, and now they're gunnin for u

[Demeter]

17. Voting is now open for the Ignoble Prize for Economics !

The Ignoble Prize for Economics is to be awarded to the three economists who contributed most to enabling the Global Financial Collapse (GFC)

Voting is ultra quick and easy. Click here

http://rwer.wordpress.com/poll-procedures-for-the-ignoble-prize-for-economics/vote-for-the-ignoble-prize-for-economics/
or go to http://rwer.wordpress.com/

and you will see the ballot. Click on your three choices and then the big yellow “vote” button.

22 economists were nominated for the prize. Through consultation with contributors to the Real-World Economics Review Blog, the following short list of ten, including two pairs of economists, has been selected for the ballot.

Dossiers of short-listed of nominees for the Ignoble Prize for Economics

Fischer Black and Myron Scholes

They jointly developed the Black-Scholes model which led to the explosive growth of financial derivatives. The importance given to their hypothetical calculation of derivative prices was baneful not just because it was bogus, but also because it meant that relevant and often urgent real-world economic research was widely neglected by the profession.

Eugene Fama

His “efficient market theory” provided the moral umbrella for all sorts of greed, predatory behaviour and incompetent corporate management. It also provided the rationale for deregulation. And his theory’s widespread acceptance meant that “discussion of investor irrationality, of bubbles, of destructive speculation had virtually disappeared from academic discourse.” In these three ways Fama’s work created the environment which made possible the GFC.

Milton Friedman

He propagated the delusion, through his misunderstanding of the scientific method, that an economy can be accurately modeled using counterfactual propositions about its nature. This, together with his simplistic model of money, encouraged the development of the financial theories with unrealistic assumptions that facilitated the GFC. In short, he opened the door for everyone subsequently to theorize without fear of having to be attached to reality.

Alan Greenspan

As Chairman of the Federal Reserve System from 1987 to 2006, he both led the over expansion of money and credit that created the bubble that burst and aggressively promoted the view that financial markets are naturally efficient and in no need of regulation. Before a Congressional committee on 28 October 2008 Greenspan confessed that his theoretical beliefs of 40 years were now proven to be without foundation, hence his total confusion and failure at his job.

Assar Lindbeck
By working to make the Riksbank Prize in Economic Sciences (“Nobel Prize in Economics”) almost exclusively a prize for neoclassical economists, this Swedish economist has contributed significantly to the conversion of the economics profession and of world public opinion to market fundamentalism.

Robert Lucas

His development of the rational expectations hypothesis, which defined rationality as the capacity to accurately predict the future, both served to maintain Friedman's proposition that monetary factors do not affect the real economy and, in the name of “rigor”, distanced economics even further from reality than Friedman had thought possible.

Richard Portes

As Secretary-General of the Royal Economic Society from 1992-2008, he helped suppress worries expressed by non-mainstream economists about developments in the financial sector. In 2007 he wrote a Report for the Icelandic Chamber of Commerce giving a clean bill of health to Icelandic banks only a few months before they collapsed. When investigators called attention to the real state of Icelandic banking, he wrote a series of letters to the Financial Times defending the soundness of Icelandic banks and imputing professional incompetence to those who doubted it.

Edward Prescott and Finn Kydland

For jointly developing and popularizing “Real Business Cycle” theory, which by omitting the role of credit greatly diminished the economics profession’s understanding of dynamic macroeconomic processes.

Paul Samuelson

Through his textbook Economics: An Introductory Analysis (19 English language editions and translated into 40 languages), he popularized neoclassical economics, contributing more than any other economist to its diffusion and thereby to the deregulation of financial markets which made possible the GFC.

Larry Summers

As US Secretary of the Treasury (formerly an economist at Harvard and the World Bank), he worked successfully for the repeal of the Glass-Steagall Act, which since the Great Crash of 1929 had kept deposit banking separate from casino banking. He also worked with Greenspan and Wall Street interests to torpedo efforts to regulate derivatives.


Procedures

The voting is being conducted using PollDaddy. Its system uses cookies to prevent repeat voting. A voting box showing the short-listed candidates and a link to their dossiers will remain till voting closes near the top of the right-hand column on the home page of the Real-World Economics Review Blog . Voting is open to all interested parties. Each voter can vote for up to three of the listed candidates. The ballots are secret. Voting will remain open for several weeks. No results will be announced before closing the poll.

[ozymandius]

22. I voted.

Friedman, Greenspan and Summers. My cursor hovered over Fama. But he was merely stupid rather than the others who employed their stupidity in making public policy.

[Demeter]

34. That Was a Difficult Vote!

So many worthy candidates....

I couldn't support Larry Summers, though. To call him an economist is to fully destroy the meaning of the term. But he'd get my vote for "Miserable Excuse for a Human"!

[Demeter]

35. And Now, The Winner of DailyReckoning's Financial Darwin Award

..we are here today to celebrate the death of a corporate giant...an ill-fated, poorly adapted industrial dinosaur that, last year, finally found a tar pit of its own... In short, it is our chance to thank those companies that were kind enough to remove themselves from the corporate gene pool, either through Kamikaze-like dedication to self destruction or, more often, through a stubborn refusal to change with the times. It is, after all, in the fertile aftermath of such creative destruction that the cycle of free market capitalism blooms anew.

Readers wrote in from all over the country and, indeed, the world, with nominations for this year's award. By the time we got around to tallying the votes this past weekend, our DR inbox was brimming with so many accounts of idiocy and uncompromising incompetence that we briefly considered nominating it for a government post...

"On a sheer vote count, Ben Bernanke won hands down," we noted in the Weekend Edition. "Alas! We regret to inform that he must be disqualified from this particular competition. Remember, we are here to praise the extinct. But Bernanke is not extinct; he is thriving...like a cockroach in the fallout of a nuclear blast. His prognostications might have been way off the mark...he might have forecast a period of 'Great Moderation' during the bubbliest decade in history...and he also did more to rescue hideously mutated financial species from extinction than any central banker in history. However, Bernanke was just ushered in for his second term. In Darwinian terms, he is adapting to the Big Government era, toxic as it is, as well, if not better, than just about anyone else in the ecosystem.

"Nor can we bestow this year's Financial Darwin Awards on any of the financial mutations or extinctions that occurred in 2008 and before," we continued. "So, as much as we empathize with the fellow who wrote in to raise a hand for 'the year 1913, for spawning the Fed,' we simply must impose some parameters."

..In the end, and notwithstanding the exceedingly strong field, the choice was rather easy. We are pleased to bestow this year's Daily Reckoning Financial Darwin Award on a company that, through a lethal combination of union concessions, bloated bureaucracy and an unrivaled dedication to fiscal and automotive inefficiency, last year became the largest industrial bankruptcy in American corporate history.

The award goes, if you haven't guessed by now, to General Motors - also known, since July of 2009, as Motors Liquidation Company.

Reading through the history of this once mighty American icon is a bit like watching a car wreck in slow motion...

After William Crapo Durant founded the company back in 1908, GM went through a series of high profile management evolutions, including the twice removal of Durant himself, the second time for good. Nevertheless, the early years for GM were, by and large, years of innovation, of expansion and seemingly unstoppable growth. The twenties saw a slew of acquisitions for the Detroit company, including the German automaker, Opel, and Britain's Vauxhall. Market share grew enormously, both domestically and abroad. The wind and the ingenuity of the can-do American was behind her.

Then in 1937, something curious happened. Workers in GM's Fisher Bay Plant in Flint, Michigan, sat down. They weren't standing up again, they told managers, until their demands were met: better work conditions, hours and benefits. It seemed reasonable enough, said many. General Motors is large enough. It can afford a few extra bob for the poor souls on the production lines in Detroit. And so the first battle with the union was fought: United Automobile Workers - 1; GM - 0.

But by the time the score could be tallied, much less properly understood, WWII had rolled around. General Motors stopped making cars for American people and began making tanks for Allied soldiers. As history would have it, GM found itself on the winning side this time and, by the time its factories were again pumping out Chevys and Caddys, they were the biggest game in town. By 1954 GM's share of the American market, then the largest in the world (before China overtook it last month), stood at a whopping 54%. One in every two cars started in a GM factory.

Through the '60s and early '70s, GM cruised along. In 1961 she sold more than half of all the cars AND trucks in the US. With the introduction of the GTO Pontiac Tempest in 1964, Detroit's darling set about ushering in the era of the muscle car. Then something else happened: the energy crisis. All of a sudden people didn't want a V8 engine in a medium sized American body; they wanted a four-cylinder engine in a small-sized Japanese body.

A continuation of that shift through the '80s saw GMs market share in the US drop from 45% to 35% and, for the first time in 59 years, the company actually reported a net loss.

Then, in 1990, those workers sat down again. By the time they stood up again, GM had signed a contract guaranteeing nearly full wages and benefits for workers, whether or not they showed up at work. UAW - 2; GM - 0. Later that same decade, in '98, the workers scored their 3rd victory. After seven weeks of UAW protests, it was three strikes and you're out for GM.

General Motors might have been conceding ground to its union workers...but it would be damned if it was going to look like a sissy to its competition. In 1999, GM bought Hummer, making every mom's dream of driving a military vehicle closer to a reality. SUV sales peaked in 2002...but GM pressed on with its giantmobiles, rolling out new Surburbans and Escalades even as market sales dwindled and the price of oil marched higher and higher.

At a time when it most needed to adapt, GM stuck to its guns. But by then it was unable to move. The more it struggled, the deeper it sank into the tar pit. Finally, investors began fretting about legacy costs and, in 2005, credit agencies downgraded both GM and Ford.

By the time it became eligible to contest this year's Daily Reckoning Financial Darwin Awards, GM was at Washington's door, begging for handouts, bridging loans and credit extensions. Bush gave more money. Obama gave more time. But the ride was over. Shares of GM, which had peaked in 2000 at around $94, fell to 75 cents. What was once the richest company on the Fortune 500 was now a penny stock awaiting bankruptcy.

Much has happened since then...GM sold Hummer to China and Saab to the Swedes...dealerships across the country were closed by the hundreds...and yes, tens of thousands of GM workers now cash food stamps in Detroit.

Ideally, marketplace extinctions would occur quickly and quietly, with little or no life support financing from the poor ol' American taxpayers. Alas, it was not to be the case for GM. General Motors Corporation is now General Motors Company...and the majority owner is the government of the United States of America.

Congratulations to Washington. Commiserations to taxpayers.
http://dailyreckoning.com/the-worst-corporate-failure-of-2009-revealed/

[ozymandius]

18. PRIVATIZE THE GAINS, SOCIALIZE THE LOSSES - a brief history

From The Big Picture:

Dr. Treadway previously served as Chief Economist at Fannie Mae (1978-81), and prior to that, was an institutional equity analyst at Smith Barney (1985-98). He was ranked as “all star” analyst eleven times by Institutional Investor Magazine. Dr. Treadway also worked at The Board of Governors of the Federal Reserve. He holds a PhD in economics from the University of North Carolina at Chapel Hill, an MBA from New York University and a BA in English from Fordham University in New York.

It's the System

The public and the politicians have been outraged at the bonuses the recently bailed out banks have decided to pay themselves. In the United States, bankers are now held in lower esteem than politicians.

Unfortunately the public’s anger is misplaced. Yes the bankers are greedy but after all why else would anyone put up with the long hours and grueling machismo that a job on Wall Street entails? As Adam Smith taught us in 1776 in his Wealth of Nations, “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love…” If the system works, greed is good.

Unfortunately, our monetary system – including its domestic and international components — is broken. It has been providing excess money supply and credit growth on a global basis which has promoted one bubble after the other and which has encouraged bankers and everyone else to take excessive risks. A surfeit of liquidity and debt combined with financial deregulation reeking of moral hazard. What a system! When the bankers are right they keep their rewards. The government absorbs the losses when they are wrong. You can’t blame the bankers for picking the ripe fruit from the trees that the politicians have planted.

The system didn’t get broken in one day. The next section is a brief review of some financial history. It’s taken just short of one hundred years to get to the broken system we have today. That’s the trouble. The prophets of doom have always been too early, too impatient. Change takes time; the black swan doesn’t fly every day. Most of the time, the optimists are right.

---

Investors Should Prepare for a Bumpy Ride– Capitalism Is In Crisis

Several things have now become very clear. First, as has been argued here many times here, the international monetary system is in dire need of reform. Since the US’s abnegation of fiscal and monetary responsibility in 1971 and its termination of the quasi gold standard Bretton Woods system, the international monetary system has dumped excess liquidity on the world and enabled bubble after bubble. ...

...the US government has become the real capital of the banking system. The US has rigged the yield curve so that it’s virtually zero at the short end and very steeply inclined at the long end. Perfect for bankers who love to borrow short and lend long. And a myriad of bank support programs such as the TARP have been put in place. The market knows — Lehman was the exception– big banks won’t be allowed to fail. The government has in effect substituted its own implied guarantee for bank capital. “We are all Fannies now,” bankers ought admit. Bank balance sheets are consequently much more highly leveraged than they would be under pure free market conditions. Highly leveraged institutions make fortunes in good times. In bad times they go broke. Were there no hope of bailouts, no Federal Reserve and no special programs propping up the banks, the market would require that the banks carry huge amounts of capital as compared to what they have now.

---

There's much more at the link and well worth your time. This mini dissertation clearly establishes the foundation that banks really do own our political system.

[Roland99]

20. 'The Quants': It Pays To Know Your Wall Street Math

'The Quants': It Pays To Know Your Wall Street Math
http://www.npr.org/templates/story/story.php?storyId=123209339&sc=fb&cc=fp

In 1962, Ed Thorp became every gambler's favorite mathematician when he published the first mathematically proven method for beating the dealer at blackjack.

Thorp's work revolutionized the game. But he went further: In 1967, Thorp devised a system that uses math and computers to predict the future of the stock market. His hedge funds and his personal portfolio have been profitable ever since.

Thorp and the people who use such systems have come to be known as "quants" — it's a reference to the quantitative-analysis techniques they employ — and their stories are told in Scott Patterson's new book The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It.

Thorp has taught at MIT and UCLA. Patterson writes for the Wall Street Journal. They join Terry Gross for a conversation about Patterson's new book.

[Name removed]

21. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Demeter]

23. Citigroup set to sell part of investment arms (More Detail Than Yesterday's Report)

http://www.ft.com/cms/s/0/4f45a878-0f41-11df-8a19-00144feabdc0.html

Citigroup is preparing to sell parts of its private equity, real estate and hedge fund investment arms, which together manage about $20bn of assets, as the bank presses ahead with plans to sell $900bn of non-core assets to repay debt.

People familiar with the bank said the managers of Citi Private Equity were looking to raise capital for a management buy-out of the division, which has $10bn of assets. But no auction of the business has started yet.

The move comes just weeks after US President Barack Obama announced plans to prevent banks from owning or investing in private equity or hedge funds under the Volcker Rule, which was inspired by Paul Volcker, former chairman of the Federal Reserve.

Citi said it designated Citi Private Equity, Citi Property Investors and Hedge Fund Management Group as non-core operations a year ago – before the Volcker Rule was announced – by moving them into Citi Holdings, its vehicle for assets due to be sold.

Banks across the world have been reconsidering whether to keep their in-house private equity and hedge funds arms, as their performances have fallen and pressure has increased to put more regulatory capital against such investments.

Citi has decided to sell the parts of its Alternative Investments business that rely most heavily on its own proprietary funds.

It is keeping the parts that invest mainly on behalf of its clients, making them more acceptable under the Volcker Rule.

The US bank is closest to completing the planned sale of Citi Property Investors, its real estate arm, which has about $12.5bn of assets under management and has attracted interest from Apollo Management and Macquarie.

Citi Private Equity manages investments in other private equity funds, a portfolio of minority co-investment stakes in buy-outs, and mezzanine debt investments.

It invests about $2bn on behalf of Citi’s proprietary accounts and about $8bn for third-party clients.

A person close to the bank said the managers could find it tough to raise money to buy the business themselves.

It was not clear if Citi would sell its proprietary share of the funds or just the management company that earns fees for running the investments.

Citi plans to keep some of its other private equity businesses.

It is also looking to sell its Hedge Fund Management Group, which allocates money to hedge funds on behalf of its own investors.

[Demeter]

24. Goldman Sachs eyes stake in China assurer

http://www.ft.com/cms/s/0/68a5221e-0f58-11df-a450-00144feabdc0.html

The private equity unit of Goldman Sachs has emerged as a leading contender to acquire a minority stake in a Chinese life assurer being sold by Axa.

People familiar with the situation said that Goldman’s principal investment arm is in talks to acquire some, or all, of the 15.6 per cent stake in Taikang Life being sold by the French insurer.

The Government of Singapore Investment Corp, the sovereign wealth fund, which holds 8 per cent of Taikang Life, is also considering raising its stake.

Axa’s stake, estimated to be worth $1bn, offers exposure to China’s fast-growing life assurance sector.

A minority stake is especially attractive for financial investors such as Goldman Sachs because Taikang Life is pushing for a stock market listing, a move that would provide shareholders with a clean exit route.

Goldman Sachs’ principal investment arm has successfully invested in financial companies across Asia over the past 15 years.

It was an early investor in Ping An, Taikang Life’s larger rival, before its stock market listing in 2004.

Taikang Life has a market share of about 8 per cent, in a sector dominated by China Life and Ping An. It has total assets of $28bn and net income last year reached approximately $250m.

Axa last year appointed Morgan Stanley to advise on the sale, which has been triggered by regulatory demands.

The French insurer also owns a 51 per cent stake in an insurance joint venture with China Minmetals Corp, formed 10 years ago, and inherited the Taikang stake when it acquired Winterthur Life from Credit Suisse in 2006.

Chinese regulations prohibit overseas groups from having financial interests in more than one insurance company....

[Demeter]

25. US companies set for upbeat earnings

http://www.ft.com/cms/s/0/822408ee-0f63-11df-a450-00144feabdc0.html

Corporate USA is on track to report one of the best quarterly earnings seasons on record in terms of the number of companies that beat market expectations with their profits.

Nearly four out of five S&P 500 companies that have reported fourth-quarter earnings have beaten consensus forecasts on the back of higher-than-expected jumps in revenue, according to data compiled by Thomson Reuters.

S&P companies are now set to break a run of nine consecutive quarterly declines in profits.

But the performances have not translated into increased optimism over the outlook for 2010, with many analysts cautious over the impact of the withdrawal of economic stimulus programmes and reduced rebuilding of inventories held by companies.

Analysts now expect 27.1 per cent earnings growth for the S&P 500 companies in 2010, down from 30.6 per cent forecast at the start of the year.

“Corporate earnings have been on the mend for a year now but the exact pace of growth for 2010 is still uncertain,” said Nicholas Colas, chief market strategist at BNYConvergEx Group.

“Estimates for whole-year 2010 results are truck-lane wide at $40-75 per share (average for S&P 500 companies).”

Rekha Sharma, global strategist at JPMorgan Asset Management, said: “You might get a strong 2010. We’re just not very optimistic that it’s going to be very strong thereafter.”

To date, 77 per cent of the 226 companies in the S&P 500 that have reported earnings for the fourth quarter have beaten analyst expectations, according to Thomson Reuters.

Thanks to the shocking fourth quarter of 2008, the blended earnings growth rate for 2009’s fourth quarter – reported numbers plus consensus forecasts – is 202 per cent.

Revenue estimates are being beaten by 68 per cent of companies that have reported, a turnround from the third quarter when aggressive cost-cutting put companies in positive territory in spite of weak fundamental sales.

“We’re beginning to see some evidence of top line sales growth recovering, a sign that the recovery is actually sound,” said Ms Sharma.

This week will see results from 94 companies in the S&P, with a further 61 companies due next week.

In earnings surprises, the fourth quarter trails the third quarter of 2009 when 79 per cent of companies beat their profit forecasts, according to Thomson Reuters, which has records stretching back to 1994.

Technology and consumer discretionary are the sectors leading the quarterly earnings charge, while financials have been hit by the repayment of US government funds.

“Concerns that the banking sector is still struggling to get on track is probably a bigger worry than non-financial companies turning a corner,” said Gareth Williams, equity strategist at ING.

“Twenty per cent of financials missed expectations and I think that’s the thing that the market is keying into a bit more,” he said. “We’re still seeing a lack of improvement on the credit side of economy especially in the west.”

[rfranklin]

46. Where are the jobs...this is mostly balance sheet magic...

I personally can't figure out where the jobs are going to come from in this "recovery." So far, the only thing that has recovered and grown are the bonuses for banksters.

[Demeter]

50. It's ALL Smoke and Mirrors

and has been since Reagan pulled the plug on the greening of America: renewable energy resources. That alone could have kept us alive for another 50 years, as it is in Europe, Asia, and even parts of Africa...instead, we got eternal war, scrabbling over the bones of the dead.

[Demeter]

27. Shell in $12bn Brazilian ethanol partnership

http://www.ft.com/cms/s/0/7133e6a6-0f47-11df-8a19-00144feabdc0.html


Royal Dutch Shell has outlined plans for a biofuel venture that could dominate Brazil’s market for ethanol and provide a platform for its worldwide export.

Shell will partner Brazil’s Cosan, one of the biggest producers of ethanol from sugarcane, in a 50-50 joint venture the companies value at $12bn.

Rubens Ometto, Cosan’s chairman, said the joint venture would provide “the step forward that was lacking, in spite of all our efforts, to make ethanol a global commodity.”...

Shell’s deal follows that of BP, its closest European rival, which saw BP providing half the $1bn investment in two ethanol plants being prepared by Tropical BioEnergia, a venture it entered with Grupo Maeda, a Brazilian agribusiness group, and Santelisa Vale, a Brazilian sugar and ethanol producer.

Brazil is a leader in biofuel production and consumption because of its abundant land and sugarcane production and is a testing ground for how the wider world might one day use “green” fuels.

Ninety per cent of all new cars sold in Brazil have “flex fuel” engines that can run on petrol or ethanol or any mixture of the two...

[Demeter]

28. Japan Post Bank urged to diversify holdings

http://www.ft.com/cms/s/0/209e34e2-0f62-11df-a450-00144feabdc0.html

One of the largest buyers of Japanese government bonds is under pressure to diversify its holdings in a move that will reverberate throughout the huge JGB market.

Shizuka Kamei, Japanese financial services minister, said on Monday that Japan Post Bank should diversify its investments into US Treasuries and corporate bonds in an effort to reduce the risks of over-concentration in JGBs.

“Nearly 80 per cent of Japan Post Bank’s funds go towards buying JGBs, but from now on could go towards buying corporate bonds . . . and US Treasuries,” said Mr Kamei, who is also in charge of postal reform.

His comments come amid growing fears about the risks of sovereign debt after governments around the world have borrowed record sums to support ailing economies in the wake of the financial crisis.

“The US is having difficulty due to a lack of funds. It’s only natural that we should support the US when it is weakened so Japan Post Bank’s funds may go towards that,” said Mr Kamei.

Standard & Poor’s last week warned that it might cut its sovereign debt rating on Japan due to concerns that the policies of the Democratic party-led government did not include sufficiently aggressive action to tackle Japan’s chronic budget deficit and huge debt burden...

Although it has attempted to expand lending since it was privatised in 2007, Japan Post has largely failed to make inroads in new businesses and remains dependent on buying JGBs.

[Demeter]

29. Eurozone issues record €110bn in bonds

http://www.ft.com/cms/s/0/4ea2556c-0f62-11df-a450-00144feabdc0.html

Eurozone governments have borrowed a record €110bn from the markets so far this year, forcing up borrowing costs for those countries with the weakest public finances as they pay a heavy price for their ballooning debt levels.

Investors warned that the yields, or interest rates, they will demand to lend to Greece and other peripheral economies, such as Portugal, Spain, Ireland and Italy, will continue rising until they are convinced they have put their finances in order.

Theodora Zemek, global head of fixed income at Axa Investment Managers, said: “The problem of sovereign risk is just beginning.

“Countries with high debt levels will have to pay higher and higher yields to issue new bonds.”

Another investor said: “Confidence in high-debt countries has reached such a low point. If there is any sign from politicians that they are not prepared to tackle their debt levels, then there will be a sell-off in eurozone bonds.”...

EVIDENTLY THEY ARE SCREWING GREECE

[Demeter]

30. Global manufacturing surges back

http://www.ft.com/cms/s/0/4436e98e-0f6d-11df-a450-00144feabdc0.html

Manufacturing activity soared around the world in January, according to surveys released on Monday that will bolster the hopes of a strong global recovery.

In the US, the Institute for Supply Management index – a key measure of industrial activity – rose from 54.9 to 58.4, its highest level since August 2004 and well ahead of economists’ expectations.

The key components of the index – production, employment and new orders – all increased, leading Norbert Ore, chair of the ISM survey, to declare that the report offered “significant assurance that the manufacturing sector is in recovery”.

The comforting US data followed strong evidence from Asia and Europe that manufacturers are beginning to ramp up production to meet stronger demand.

China reported record industrial activity for the month while the purchasing managers’ indices in India, South Korea and Taiwan also rose strongly.

India’s HSBC PMI rose from 55.6 in December to 57.7 in January, the strongest level since August 2008.

The eurozone’s manufacturing purchasing managers’ index rose to 52.4 last month, against 51.6 at the end of 2009.

It was the fourth month in succession that the 3,000-strong panel surveyed by Markit reported overall growth in the manufacturing sector.

Industrial growth was led by the region’s healthiest economies, especially France, where manufacturing expanded at the fastest pace in almost a decade.

Germany and Italy were also strong, as was the UK, where weaker sterling helped manufacturing activity increase to a 15-year high last month.

The latest ISM data in the US underscores the good news on the health of the economy.

On Friday, the government said output rose unexpectedly quickly in the fourth quarter – at an annualised rate of 5.7 per cent – on the back of higher business spending and much slower inventory reductions.

[Demeter]

31. Australia holds interest rates steady

http://www.ft.com/cms/s/0/8a91c19a-0fb5-11df-b10f-00144feabdc0.html

The Reserve Bank of Australia on Tuesday decided to keep its benchmark interest rate steady at 3.75 per cent, defying forecasts from most economists who had predicted the bank would make a fourth consecutive 25 basis point increase.

Australia’s three interest rate hikes since October had marked out the country as the developed world’s most aggressive in unwinding monetary stimulus....

[Demeter]

36. China is Still King of the Gold Hill

http://dailyreckoning.com/turns-out-obama-is-a-dyslexic-socialist/

China produced over 300 tons gold in 2009, a new world record in output. Already, for the past three years, China has been the world’s largest producer ahead of South Africa, and now the massive nation is also on the verge of becoming the world’s leading gold consumer...

[Demeter]

62. Ooops! Wrong link

http://dailyreckoning.com/china-is-still-king-of-the-gold-hill/

[Demeter]

37. Turns Out, Obama is a Dyslexic Socialist By Rocky Vega

http://dailyreckoning.com/turns-out-obama-is-a-dyslexic-socialist/


Jon Stewart's Daily Show

[DemReadingDU]

48. LOL. The market hates the stimulus, it hates the bailouts...

Then gives us back our f@#% money!

[Demeter]

38. Colorado Springs Cuts into Services Considered Basic by Many By Michael Booth

http://www.denverpost.com/news/ci_14303473

This tax-averse city is about to learn what it looks and feels like when budget cuts slash services most Americans consider part of the urban fabric...More than a third of the streetlights in Colorado Springs will go dark Monday. The police helicopters are for sale on the Internet. The city is dumping firefighting jobs, a vice team, burglary investigators, beat cops — dozens of police and fire positions will go unfilled... The parks department removed trash cans last week, replacing them with signs urging users to pack out their own litter... Neighbors are encouraged to bring their own lawn mowers to local green spaces, because parks workers will mow them only once every two weeks. If that. Water cutbacks mean most parks will be dead, brown turf by July; the flower and fertilizer budget is zero...City recreation centers, indoor and outdoor pools, and a handful of museums will close for good March 31 unless they find private funding to stay open. Buses no longer run on evenings and weekends. The city won't pay for any street paving, relying instead on a regional authority that can meet only about 10 percent of the need.

"I guess we're going to find out what the tolerance level is for people," said businessman Chuck Fowler, who is helping lead a private task force brainstorming for city budget fixes. "It's a new day."

Some residents are less sanguine, arguing that cuts to bus services, drug enforcement and treatment and job development are attacks on basic needs for the working class. "How are people supposed to live? We're not a 'Mayberry R.F.D.' anymore," said Addy Hansen, a criminal justice student who has spoken out about safety cuts. "We're the second-largest city, and growing, in Colorado. We're in trouble. We're in big trouble."

Mayor flinches at revenue

Colorado Springs' woes are more visceral versions of local and state cuts across the nation. Denver has cut salaries and human services workers, trimmed library hours and raised fees; Aurora shuttered four libraries; the state budget has seen round after round of wholesale cuts in education and personnel.
The deep recession bit into Colorado Springs sales-tax collections, while pension and health care costs for city employees continued to soar. Sales-tax updates have become a regular exercise in flinching for Mayor Lionel Rivera.

"Every month I open it up, and I look for a plus in front of the numbers instead of a minus," he said. The 2010 sales-tax forecast is almost $22 million less than 2007.

Voters in November said an emphatic no to a tripling of property tax that would have restored $27.6 million to the city's $212 million general fund budget. Fowler and many other residents say voters don't trust city government to wisely spend a general tax increase and don't believe the current cuts are the only way to balance a budget.

Dead grass, dark streets

But the 2010 spending choices are complete, and local residents and businesses are preparing for a slew of changes:

• The steep parks and recreation cuts mean a radical reshifting of resources from more than 100 neighborhood parks to a few popular regional parks. The city cut watering drastically in 2009 but "got lucky" with weekly summer rains, said parks maintenance manager Kurt Schroeder.

With even more watering cuts, "if we repeat the weather of 2008, we're at risk of losing every bit of turf we have in our neighborhood parks," Schroeder said. Six city greenhouses are shut down. The city spent $19.6 million on parks in 2007; this year it will spend $3.1 million.

"If a playground burns down, I can't replace it," Schroeder said. Park fans' only hope is the possibility of a new ballot tax pledged to recreation spending that might win over skeptical voters.

• Community center and pool closures have parents worried about day-care costs, idle teenagers and shut-in grandparents with nowhere to go.

Hillside Community Center, on the southeastern edge of downtown Colorado Springs in a low- to moderate-income neighborhood, is scrambling to find private partners to stay open. Moms such as Kirsten Williams doubt they can replace Hillside's dedicated staff and preschool rates of $200 for six-week sessions.

"It's affordable, the program is phenomenal, and the staff all grew up here," Williams said. "You can't re-create that kind of magic."

Shutting down youth services is shortsighted, she argues. "You're going to pay now, or you're going to pay later. There's trouble if kids don't have things to do."

• Though officials and citizens put public safety above all in the budget, police and firefighting still lost more than $5.5 million this year. Positions that will go empty range from a domestic violence specialist to a deputy chief to juvenile offender officers. Fire squad 108 loses three firefighters. Putting the helicopters up for sale and eliminating the officers and a mechanic banked $877,000.

• Tourism outlets have attacked budget choices that hit them precisely as they're struggling to draw choosy visitors to the West.

The city cut three economic-development positions, land-use planning, long-range strategic planning and zoning and neighborhood inspectors. It also repossessed a large portion of a dedicated lodgers and car rental tax rather than transfer it to the visitors' bureau.

"It's going to hurt. If they don't at least market Colorado Springs, it doesn't get the people here," said Nancy Stovall, owner of Pine Creek Art Gallery on the tourism strip of Old Colorado City. Other states, such as New Mexico and Wyoming, will continue to market, and tourism losses will further erode city sales-tax revenue, merchants say.

• Turning out the lights, literally, is one of the high-profile trims aggravating some residents. The city-run Colorado Springs Utilities will shut down 8,000 to 10,000 of more than 24,000 streetlights, to save $1.2 million in energy and bulb replacement.

Hansen, the criminal-justice student, grows especially exasperated when recalling a scary incident a few years ago as she waited for a bus. She said a carload of drunken men approached her until the police helicopter that had been trailing them turned a spotlight on the men and chased them off. Now the helicopter is gone, and the streetlight she was waiting under is threatened as well.

"I don't know a person in this city who doesn't think that's just the stupidest thing on the planet," Hansen said. "Colorado Springs leaders put patches on problems and hope that will handle it."

Employee pay criticized

Community business leaders have jumped into the budget debate, some questioning city spending on what they see as "Ferrari"-level benefits for employees and high salaries in middle management. Broadmoor luxury resort chief executive Steve Bartolin wrote an open letter asking why the city spends $89,000 per employee, when his enterprise has a similar number of workers and spends only $24,000 on each.

Businessman Fowler, saying he is now speaking for the task force Bartolin supports, said the city should study the Broadmoor's use of seasonal employees and realistic manager pay.

"I don't know if people are convinced that the water needed to be turned off in the parks, or the trash cans need to come out, or the lights need to go off," Fowler said. "I think we'll have a big turnover in City Council a year from April. Until we get a new group in there, people aren't really going to believe much of anything."

Mayor and council are part-time jobs in Colorado Springs, points out Mayor Rivera, that pay $6,250 a year ($250 extra for the mayor). "We have jobs, we pay taxes, we use services, just like they do," Rivera said, acknowledging there is a "level of distrust" of public officials at many levels...

[Demeter]

39. A look back at the debate on the role of monetary and fiscal stimulus in depression

http://www.nakedcapitalism.com/2009/12/a-look-back-at-the-debate-on-the-role-of-monetary-and-fiscal-stimulus-in-depression.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

the policy choices in a deep downturn are the ones I outlined last month in “Stop the madness now!.”

You have four options:

1. No stimulus. Let the chips fall where they may. Yves Smith calls this the ‘Mellonite liquidationist mode.’ The thinking here is that trying to avoid the inevitable bust only makes it that much larger. And the economic policies during recessions in 1991 and 2001 seem to bear that out. The Harding Recession of 1921 is commonly seen as gold standard response.
2. Monetary stimulus only. Quantitative easing mania. My understanding is this is what Ambrose Evans-Pritchard has been advocating. The thinking here is that the flood of money and the low rates will eventually jump start the economy. No deficit spending needed.
3. Monetary and fiscal stimulus. Full tilt Keynesian. This is the Krugman view. The thinking here is that one needs to credibly commit to higher inflation and close the output gap to avoid a deflationary spiral. If that is insufficient, then one needs to go full bore on fiscal stimulus aka deficit spending. And if that doesn’t work, subsidize jobs. The New Deal is commonly seen as the gold standard response.
4. Fiscal stimulus only. Deficit spending. I have been talking up this view. The thinking here is that we need to both close the output gap to prevent a deflationary spiral and revive private sector savings in order to promote deleveraging.

There is no magic bullet here. We are living through a situation unique in time with few historical precedents. And there are a lot of competing ideas being tossed about. So policy makers are groping around, desperately seeking the holy grail of depression-busting economic policy. In that regard, I don’t envy them. They are certainly going to make a lot of mistakes. It may seem at times that I don’t realize this given the harshness of my critiques, but I do...

COMPREHENSIVE DISCUSSION WITH SUPPORTING LINKS.

[DemReadingDU]

40. good toon today

Many people are so clueless they don't realize that the Republican polices of the past 8 years have setup the bad economy today.

[Demeter]

41. Volcker Rule: Dead on Arrival? And is Obama a Lame Duck?

http://www.nakedcapitalism.com/2010/02/volcker-rule-dead-on-arrival-and-is-obama-a-lame-duck.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29


We’ve argued that the “Volcker Rule,” which would limit “proprietary trading” by banks, is in theory a very good idea, but the proposal put forward by Volcker/Team Obama goes wide of the mark by defining any customer trade as not being part of proprietary trading. That’s a spurious distinction; large-scale position-taking well beyond what was needed for market-making dates back to the 1980s, long before firms had separate proprietary trading desks or in-house hedge funds. As a result, they looked likely to have little impact. As we noted:

You can drive a supertanker though the loopholes in this proposal, which are:

1. If a firm does not own a bank, it can do proprietary trading

2. Trades with customers are not proprietary trades

These are so silly that I’m astonished anyone is treating this proposal seriously.

Let’s dispatch them in order.

Whoever thinks that proprietary trading is just swell as long as the firm does not own a bank (meaning the kind that takes deposits) must have slept through the entire credit crisis (note I am not saying prop trading cause the crisis, but I guarantee there will still be readers who demonstrate in comments that reading comprehension is not one of their strong suits).

The implicit idea is that government backstops extend just to deposit-taking firms. That is patently ridiculous and is an attempt to hide from the public the reality of how the financial system works.

Thanks to thirty years of deregulation, a very large portion of credit intermediation (finance speak for the process of providing loans) has shifted from banks to the capital markets. As most readers know, many types of loans are originated by a bank, combined with other loans, turned into bonds, and sold to investors.

For reasons too long to go into now, bonds are traded over the counter (this is not a nefarious plot; there are legitimate reasons why). Over the counter markets have economies of scale, and in particular, network effects. So trading of credit market instruments, over, time, is dominated by a comparatively small number of very large firms.

Credit is critical to the functioning of any economy beyond the barter stage….. we have a world in which the credit markets are crucial to modern commerce, more so than banks…So any capital markets player of reasonable heft WILL be backstopped. That was the big lesson of the crisis just past and is not lost on the industry incumbents. Does anyone with an operating brain cell believe that if BofA divested Merrill and Merrill hit the wall again that it would be allowed to collapse? Look, we have twice had rescues of major non-banks, first LTCM, then AIG, due to the impact their failures would have ON CAPITAL MARKETS, not on depositors!

Clusterstock also noted:

But sources at three banks tell us that they are already finding ways to own, investment in and sponsor hedge funds and private equity funds. Even prop trading seems safe.

A person familiar with the operations of one big Wall Street bank said it expects that new regulation will affect less than 1% of its overall business.

But we also anticipated that even these weak measures would be gutted:

This is going to be very difficult to implement at this juncture, unless Team Obama has a purely regulatory solution. This should have been implemented months ago, when the banks were on the ropes and beholden to Washington. They are now emboldened and will fight tooth and nail. And the report at the Financial Times says the plan will require new legislation. Given how derivatives reform was gutted and health care reform was botched, what do you think the odds are that something with teeth will be voted in? Pretty close to zero.

And that is precisely what is happening. From the Financial Times (hat tip reader LeeAnn):
A proposal by former Federal Reserve Chairman Paul Volcker to limit bank’s proprietary trading will be either be dropped or significantly modified in the Senate…

Senate Banking Committee ranking member Richard Shelby (R-AL) said he opposes the so-called Volcker rule and the Obama administration’s call to levy a USD 90bn tax on banks. His comments come as House Financial Services Committee Chairman Barney Frank (D-MA) predicted the proposals outlined by President Obama could be law within six months.

…..Shelby said if Democrats push forward with the proposals they risk unravelling much of the bipartisan support already reached regarding the passage of financial regulatory reform in the Senate. Shelby said that the Obama administration risks losing Republican support for the bill if they begin to “politicise” the issue.

Now consider the broader implications: the Republicans don’t simply in theory have the votes to be intransigent; they have another vital element of the equation, party discipline. As James Fallows explains:

Bipartisanship in the American sense means compromising on legislation so that a sufficient number of members of Congress from BOTH parties will support it, even if (as is typically the case) a few majority party members defect and most minority party members don’t join. Bipartisanship consists of getting ENOUGH members of the minority party to join the (incomplete) majority in voting for major legislation. It can’t happen if the minority party members vote as a block against major legislation. And that can happen only if the minority party has the ability to discipline its ranks so that none join the majority, which is the unprecedented situation we’ve got in Congress today. (boldface theirs)

So take this situation to its logical conclusion. Obama can’t get anything done unless he accedes to the demands of the Republicans. And absent some sort of miracle between now and November, the Democrats look certain to lose Congressional seats in the mid-term elections. Is Obama already a lame duck? Now that may be going a tad far; after all, with nearly three more years in office, no one would question Obama’s authority to take action within normal Executive branch authority. But given Obama’s peculiar propensity to be seen as doing a lot, even when his “change” does not add up to progress, how is he going to react to the near certainty of being stymied on the domestic front? Will he seek to compensation by devoting more effort to foreign policy? Given his surprising and troubling surge strategy in Afghanistan, I’m not sure I like the possibility that Obama will try to score policy victories, and perhaps literal victories, abroad.

[Demeter]

42. Demand for corporate loans in US falls

http://www.ft.com/cms/s/0/cc303a60-0f91-11df-b10f-00144feabdc0.html

US banks made it easier for big companies to borrow money for the first time since the financial crisis started, but loan demand fell as corporate America remained worried about the economy, the Federal Reserve said on Monday in its quarterly loan-officers survey.

The Fed report underlined banks’ growing desire to lend to companies at a time when politicians are calling on financial institutions to aid the economic recovery by extending credit to companies and consumers.

For the first time since mid-2007, the percentage of domestic banks that eased lending standards for companies with more than $50m in annual sales outweighed the percentage of institutions that tightened their standards, the study found.

The looser credit standards during the past three months translated into lower prices and longer maturities for loans and were spurred by a more favourable economic outlook and “more aggressive competition from other banks and non-bank lenders”, the Fed said.

After suffering huge loan losses during the crisis, banks sharply tightened credit standards, sparking a political outcry over their unwillingness to help the recovery in spite of having been bailed out by taxpayers.

However, bankers say the low-interest rate environment and the improving economy has increased their appetite for lending to companies.

“We make money by lending,” a senior banker said recently. “We want to lend as soon as the conditions are right.”

In consumer lending, the survey of more than 70 large domestic and foreign lenders found a mixed picture.

The Fed said banks showed an increased willingness to make “instalment loans” – those not secured on real estate – for the first time in nearly three years but had continued to tighten standards on credit cards.

In spite of the improving economy, the survey found individuals and corporations remained reluctant to borrow.

“Banks reported that loan demand from both businesses and households weakened further . . . during the survey period,” the Fed said.

Areas such as commercial real estate loans were a particular worry, the central bank added.

Economists said that in spite of the loosening standards for corporate credit, lacklustre loan demand would hamper the economic recovery.

“Our concern is that, regardless of the availability of credit, firms and households are focused on reducing their existing debt burdens and will remain unusually reluctant to take out new loans,” wrote Paul Ashworth senior US economist at Capital Economics in a note to clients. “This deleveraging is yet another reason for fearing that the recovery will ultimately disappoint.”

[Demeter]

44. Rising FHA default rate foreshadows a crush of foreclosures

http://www.washingtonpost.com/wp-dyn/content/article/2010/02/01/AR2010020103527.html

The share of borrowers who are falling seriously behind on loans backed by the Federal Housing Administration jumped by more than a third in the past year, foreshadowing a crush of foreclosures that could further buffet an agency vital to the housing market's recovery.

About 9.1 percent of FHA borrowers had missed at least three payments as of December, up from 6.5 percent a year ago, the agency's figures show.

Although the FHA's default rate has been climbing for months and eating into the agency's cash, the latest figures show that the FHA's woes are getting worse even as the housing market shows signs of improvement. The problems are rooted in FHA mortgages made in 2007 and 2008. Those loans are now maturing into their worst years because failures most often occur two to three years after a mortgage is made.

If the trend continues and the FHA's cash reserves are exhausted, the federal government would automatically use taxpayer money to cover the losses -- a first for the agency, which has always used the fees it charges borrowers to pay for its losses.

As these loans from 2007 and 2008 go bad and clear off of the FHA's books, agency officials said, losses are expected to taper off, aided by the housing market's anticipated recovery and an influx of more creditworthy borrowers, who have flocked to the FHA's home-buying program in the past year.

Agency officials said they have cracked down on poorly performing lenders and announced higher qualifying fees for borrowers. On Monday, the agency projected that the fees should generate $5.8 billion in fiscal 2011, up from $2 billion this year. That would fatten the FHA's cash cushion, used to cover unexpected losses.

Beleaguered books

For now, just about every major measure of the agency's financial health is worsening.

The FHA does not make loans but insures lenders against losses. And claims have already spiked. The agency had to pay out on 47 percent more loans in October and November than in the corresponding period a year earlier, according to an FHA report.

The number of loans in foreclosure, including those that have not yet been billed to the agency, has also increased. They were up 26 percent in the last quarter from a year earlier.

FHA Commissioner David H. Stevens, who joined the agency in July, flagged his agency's troubles with the 2007 and 2008 loans in October, when he told a House panel that "rogue players on the margin" immediately migrated to the world of FHA lending after the subprime mortgage market collapsed.

Their aggressive lending tactics attracted borrowers with unusually poor credit profiles to the FHA. "That clearly impacted the books of business in 2007 and 2008, and that performance data is showing up very clearly in today's balance sheet," Stevens said at the time.

Plunging home prices have exacerbated matters by leaving some FHA borrowers unable to sell or refinance their homes because they owe more than their homes are worth. Yet with unemployment running high, many borrowers can't afford to keep up their payments.

Adding to the trouble was a now-defunct FHA program that enabled sellers to cover the down payments of buyers. This meant many borrowers had no skin in the game and were more likely to walk away at early signs of trouble. The program resulted in excessive defaults before it was ended in late 2008, and it is projected to cost FHA an additional $10.5 billion in losses, Stevens said.

For all these reasons, the FHA projects that it will pay out claims to lenders on one out of every four loans made in 2007 -- the worst rate in at least three decades. The claim rate should be nearly the same on the vastly larger volume of loans made in 2008.

Better borrowers

But agency officials said they have reasons to be optimistic.

The FHA-backed loans made in 2009 tended to go to borrowers with higher credit scores than in previous years. These borrowers turned to the FHA when the mortgage market collapsed and other lending sources dried up. By then, reputable lenders doing business with the agency were already imposing tougher restrictions on FHA borrowers, further boosting the credit profile of those loans. The average credit score of an FHA borrower is now 690, up from 630 only two years ago, agency officials said.

These higher-quality loans are expected to result in lower losses, so the agency should make money on loans issued this year and over the next few years, according to an independent audit designed to gauge the agency's health.

The audit, released in November, found that the cash the FHA set aside to pay for unexpected losses had dipped to historic lows, well below the level required by law. As of Sept. 30, those reserves were estimated at $3.6 billion, down from nearly $13 billion a year earlier. The most recent figure represents 0.53 percent of the value of all FHA single-family-home loans -- far lower than the 2 percent required by Congress.

But Ann Schnare, a former Freddie Mac official, said the situation could be even worse. She said the audit underestimates future losses because it does not take into account all loans that are now overdue, only those that the FHA has paid claims on.

Stevens said his agency has pored over its data to analyze risk and is taking steps to shore up its financial health. "You have a limited set of options under these circumstances: Raise fees or make policy changes," Stevens said in an interview. "We've done both."

The agency banned 268 lenders from making FHA loans last year, more than double the total terminated in the previous eight years. The FHA suspended six other firms. Among them were some of the largest FHA lenders -- Taylor, Bean & Whitaker and Lend America, both of which shut their doors soon thereafter.

The agency also proposed a rule that would require banks to hold up to $2.5 million in capital that they can use to repay the agency for losses if they were involved in fraud. Banks are now required to hold only $250,000.

Borrowers are also facing tougher scrutiny from the agency. People taking out FHA loans will have to pay higher upfront fees, perhaps as early as this spring. Those with especially weak credit scores will also have to put down at least 10 percent instead of the usual 3.5 percent down payment. The amount of money sellers can kick in toward closing costs and other fees will also be limited.

[Demeter]

45. What's a Degree Really Worth?

http://online.wsj.com/article/SB10001424052748703822404575019082819966538.html?mod=WSJ_hps_MIDDLEFifthNews

A college education may not be worth as much as you think.

For years, higher education was touted as a safe path to professional and financial success. Easy money, in the form of student loans, flowed to help parents and students finance degrees, with the implication that in the long run, a bachelor's degree was a good bet. Graduates, it has long been argued, would be able to build solid careers that would earn them far more than their high-school educated counterparts.

The gap between pay for college graduates and high school graduates isn't as wide as has been reported.

The numbers appeared to back it up. In recent years, the nonprofit College Board touted the difference in lifetime earnings of college grads over high-school graduates at $800,000, a widely circulated figure. Other estimates topped $1 million.

But now, as tuition continues to skyrocket and many seeking to change careers are heading back to school, some researchers are questioning the methodology behind the high projections.

Most researchers agree that college graduates, even in rough economies, generally fare better than individuals with only high-school diplomas. But just how much better is where the math gets fuzzy.

The problem stems from the common source of the estimates, a 2002 Census Bureau report titled "The Big Payoff." The report said the average high-school graduate earns $25,900 a year, and the average college graduate earns $45,400, based on 1999 data. The difference between the two figures is $19,500; multiply it by 40 years, as the Census Bureau did, the result is $780,000.

"The idea was not to produce a definitive 'This is what you'll earn' number, but to try and give some measure of the relative value of education attainments," says Eric Newburger, a lead researcher at the Census and the paper's co-author. "It's not a statement about the future, it's a statement about today."

Mark Schneider, a vice president of the American Institutes for Research, a nonprofit research organization based in Washington, calls it "a million-dollar misunderstanding."

One problem he sees with the estimates: They don't take into account deductions from income taxes or breaks in employment. Nor do they factor in debt, particularly student debt loads, which have ballooned for both public and private colleges in recent years. In addition, the income data used for the Census estimates is from 1999, when total expenses for tuition and fees at the average four-year private college were $15,518 per year. For the 2009-10 school year, that number has risen to $26,273, and it continues to increase at a rate higher than inflation.

Dr. Schneider estimated the actual lifetime-earnings advantage for college graduates is a mere $279,893 in report he wrote last year. He included tuition payments and discounted earning streams, putting them into present value. He also used actual salary data for graduates 10 years after they completed their degrees to measure incomes. Even among graduates of top-tier institutions, the earnings came in well below the million-dollar mark, he says.

And just like any investment, there are risks—such as graduating into a deep economic downturn. That's what happened to Kelly Dunleavy, who graduated in 2007 from the University of California, Berkeley, with $60,000 in loans. She now works as a reporter for a small newspaper in the Bay Area and earns $34,000 a year. Her father is currently paying her $700 monthly loan payments. "It's harder than what I think I expected it to be," she says.

"Averages don't tell the whole story," says Lauren Asher, president of the Institute for College Access & Success, a nonprofit group based in Berkeley, Calif. She points out that incomes vary widely, especially based on majors. "The truth is that no one can predict for you exactly what you're gong to earn," she says.

And that includes the College Board, which recently said on its Web site: "Over a lifetime, the gap in earning potential between a high-school diploma and a bachelor of arts is more than $800,000. In other words, whatever sacrifices you and your child make for college education in the short term are more than repaid in the long term."

The $800,000 number, it turns out, was pulled from a footnote of the College Board's 2007 "Education Pays" report that explained lifetime earnings. The report's author, Sandy Baum—an emeritus Skidmore College economics professor who didn't write the promotional text on the Web site—says that $450,000 is actually a more reasonable estimate of the difference in lifetime earnings, something she's said in interviews for more than a year.

Steve Talbott, a journalism professor at Cleveland State University, who is researching the cost of education and student loan debt , says he urged the College Board to take down the "misleading use" of the $800,000 number a year ago. Others have voiced their objections to the College Board figure via letters and blogs.

A College Board spokeswoman says it doesn't have a record of when the content was written and that "it's possible that during an update of the content the writer misinterpreted the data within the report." She also says the text represented old data and reflected "a different methodology." The $800,000 figure was removed from its Web site in December, once the group learned of the error, she says.

[MilesColtrane]

53. Instead of a music degree, I should have used the money as a down payment on a house.

[Hugin]

61. I should have spent the four years in a casino...

Same outcome, on the Income.

[FarCenter]

57. Statistics about the worth of a degree are meaningless without categorizing by major

Bachelor degrees vary widely in the extent to which they prepare the graduate to succeed in a well-paying career.

[Warpy]

59. A four year degree in anything was enough

to get a person into lower and middle management 20 years ago. It didn't guarantee a position, it was simply a requirement for it.

I remember reading obfuscated want ads in the Boston Globe in the early 80s when companies had gotten completely degree happy. I plowed through one extremely long ad and came to the conclusion they were looking for a baccalaureate prepared stock boy. Clearly such a position would lead only so far within a corporation and could have been filled by any bright high school graduate, but the name of the game had become job hopping, padding the resume with the same language used in the want ad in order to climb the ladder.

Unfortunately for the hapless graduate, a degree of entitlement came with the degree that caused them to live far beyond their means, meaning they often assumed high debt loads in order to supply themselves with the lifestyle they had been promised by the college brochures.

I've been telling smart kids from working class homes to go into trades like plumbing for years, to take night courses in accounting so that by the time they're 40, they're ready and able to start their own shops. It's a much better strategy than assuming a crippling debt load so that they're in a position to pad a resume and take on even more debt as they go through life.

I'm sure if they compared earnings and subtracted debt load and servicing from those earnings they'd find that the payoff of a 4 year degree is fairly small.

[Dr.Phool]

60. I'd like to see the difference between a union card and a degree.

[Demeter]

63. I Should Have Gone Into Politics

But with my personality--blunt and incurably honest--I would have been a miserable failure at getting votes. I'd have to be behind the scenes, like Joe Trippi...

[Dr.Phool]

64. You get to meet a lot of people you really don't like being around.

[Demeter]

77. Story of My Life, Doc.

Even in the People's Republic of Ann Arbor I don't really fit in.

[Demeter]

47. Dem. senators spent weekend with bank, energy, tobacco lobbyists

http://www.politico.com/blogs/bensmith/0210/Dem_senators_spent_weekend_with_bank_energy_tobacco_lobbyists.html

Twelve Democratic Senators spent last weekend in Miami Beach raising money from top lobbyists for oil, drug, and other corporate interests that they often decry, according to a guest list for the event obtained by POLITICO.

The guest list for the Democratic Senatorial Campaign Committee's "winter retreat" at the Ritz Carlton South Beach Resort doesn't include the price tag for attendance, but the maximum contribution to the committee, typical for such events, is $30,000. There, to participate in "informal conversations" and other meetings Saturday, were senators including DSCC Chairman Robert Menendez; Michigan's Carl Levin and Debbie Stabenow; Bob Casey of Pennsylvania; Claire McCaskill of Missouri; freshmen Kay Hagan of North Carolina and Mark Begich of Alaska; and even left-leaning Bernie Sanders of Vermont.

Across the table was a who's who of 108 senior Washington lobbyists, including the top lobbying officials for many of the industries Democrats regularly attack: Represented were the American Bankers Association, the tobaco company Altria, the oil company Marathon, several drug manufacturers, the defense contractor Lockheed, and most of the large independent lobbying firms: Ogilvy, BGR, Quinn Gillespie, Heather Podesta, and Tony Podesta.

The retreat's guest list is a marked contrast to Menendez's recent rhetoric, which has echoed the White House denunciation of "special interests" and "fat cats."

“In the upcoming elections, voters will face a choice between Republicans who are standing with Wall Street fat cats, bankers and insurance companies -- or Democrats who are working hard to clean up the mess we inherited by putting the people’s interests ahead of the special interests," Menendez said in a press release last Wednesday.

The contrast between Menendez's words and how he spent his weekend is a mark of how, even in the age of Obama, who has barred contributions from lobbyists, Democrats -- and particularly Congressional Democrats -- are riding a new wave of corporate support, the natural fruit of their majority status.

The weekend's mellow schedule political included a Friday night dinner followed by a Saturday morning Political Breakfast Briefing, two Saturday evening "informal conversations with Senators, followed by a reception and dinner at DiLido Beach Club.

The Miami beach fundraiser guest list, to which a DSCC spokesman didn't immediately have a reaction, was a standard, corporate-heavy event that both parties have long used for high-dollar fundraising. Other guests included lobbyists for two Indian tribes, for McDonalds, for beer and wine sellers, Ford, and a small handful of advocacy groups, including the gay group Human Rights Campaign.

HAVE I RECENTLY MENTIONED HOW MUCH I DESPISE MY SENATORS LEVIN AND STABENOW?

[UpInArms]

49. dollar watch

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

Last trade 79.165 Change -0.077 (-0.10%)

Daily Sound Bites 02.02

http://www.dailyfx.com/forex/fundamental/article/daily_sound_bites/2010-02-02-1215-Daily_Sound_Bites_02_02.html



...more...

US Dollar Forecast to Appreciate versus Euro Ahead of NFPs Data

http://www.dailyfx.com/forex/fundamental/forecast/weekly/usd/2010-01-30-0514-US_Dollar_Forecast_to_Appreciate.html

http://www.dailyfx.com/forex/fundamental/forecast/weekly/usd/2010-01-30-0514-US_Dollar_Forecast_to_Appreciate.html



...more...

[Demeter]

51. the Dollar Is Rising?

Delusions.

[FarCenter]

58. Valero closed 192,000 bpd Delaware City Refinery; Sunoco closed 145,000 bpd Eagle Point, NJ

A couple of years ago, there were complaints that the US was building no new refineries.

In 2009, we closed two of them. According to the story on Blooberg radio, there is no longer demand for their output and refining margins make them unprofitable.

See also http://www.businessinsider.com/refinery-closures-push-us-gas-infrastructure-to-the-breaking-point-2009-12

[amandabeech]

66. Much cheaper to refine petroleum at low cost Asian and Caribbean refineries.

Lower wages, less regulation. The usual.

[FarCenter]

67. Sales per employee are pretty high at oil companies

More likely it is property taxes, other taxes and regulation costs.

[Zenlitened]

69. Fidelity Cuts Trading Fees, Waives Commissions on 25 E.T.F.’s

New York Times:

The competition is heating up in the online brokerage world.

Fidelity said on Tuesday that it would cut its online trading commissions to a flat $7.95 fee, undercutting Charles Schwab, which lowered its online trading commissions to a $8.95 last month.

Fidelity also announced that it would waive all brokerage commissions on 25 exchange-traded funds from BlackRock’s iShares family of E.T.F.s for at least three years. That comes on the heels of Schwab’s entry into the E.T.F. marketplace with eight proprietary, commission-free E.T.F.’s, announced in November.

Link:
http://bucks.blogs.nytimes.com/2010/02/02/fidelity-cuts-trading-fees-waives-commissions-on-25-etfs/?ref=business

Guess it's time for small investors to pile into the market, right? I mean, think of all the money you'll be saving on commissions!

:eyes:

Seriously, folks. Trading costs do matter, but for long-term investors they should have little to no bearing on whether you buy or sell a particular stock or ETF right now.

[fan of the arts]

70. I want an ETF that tracks all ETFs and derivatives so I can trade options on them!

I plan to make a trading strategy so difficult that it can't be regulated for years then when it finally comes to the idiot-public's attention, I'll just say it's way too difficult for them to ever understand so they should just let me keep trading it with their tax-bailout money.

Then I'll scream "Hey look over there, health care needs fixed"!

[Zenlitened]

80. Unfortunately, ticker symbol WTF is already taken

LOL!

:hi:

[Robbien]

71. SEC Worker Tried To Search For Porn 1880 Times In Two Weeks

Thank you, Freedom of Information Act, for blessing us with the tale of the SEC worker who looked up porn 1,880 times in just 17 days.

That has to be a record. And this guy gets even more points for persistence.

He was denied every time of those 1,880 times he tried to looked up porn.

According to the Washington Times, during a 17-day period, the SEC worker received about 1,880 "access denials," wherein the computer system blocked his attempts to view Web sites that were deemed pornographic.

And he's barely the only SEC worker whose love for porn was denied many, many times.

The committee filled more than 150 pages with records and transcripts on investigations into their employees looking up porn while at work.

The inspector general's office declined to identify the over 24 employees involved in the investigations though, because it "could conceivably subject them to harassment and annoyance in the conduct of their official duties and private lives."

http://www.businessinsider.com/sec-worker-sets-record-for-amount-of-porn-searched-in-two-weeks-1880-2010-2

[fan of the arts]

72. They were likely told to lay off Goldman and JPMorgan and so have nothing to do

The markets are completely corrupted by those 2 and not only is nobody doing anything about it, the were also giving 100s of billions to keep committing the crimes.

[Roland99]

73. Banks shouldn't be hedge funds, Volcker tells Senate

Banks shouldn't be hedge funds, Volcker tells Senate
Federal safety net shouldn't cover speculators, Obama adviser says
http://www.marketwatch.com/story/banks-shouldnt-be-hedge-funds-volcker-testifies-2010-02-02?dist=countdown

The federal safety net for commercial banks should protect depositors, not speculators, former Federal Reserve Chairman Paul Volcker told senators on Tuesday, urging them to pass the so-called Volcker Rule that would ban banks from trading for profit and that would restrict the size of the biggest banks.

Volcker, now an adviser to President Barack Obama, told the Senate Banking Committee that the banking system must be restructured to prevent a repeat of the bailouts of 2008.

The top Republican on the Senate Banking Committee, Sen. Richard Shelby of Alabama, said he was open to any idea that would prevent another "calamity," but chastised the administration for "air dropping" its latest proposal months after debate had begun on rewriting the rules of the banking system.

Sen. Chris Dodd, D-Conn., said he "strongly supports" Volcker's proposal. Banks must not be allowed to reap the benefits of successful speculation while handing taxpayers the costs of failure.