STOCK MARKET WATCH, Tuesday February 19

[ozymandius]

Source: DU

STOCK MARKET WATCH, Tuesday February 19, 2008

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 337
DAYS SINCE DEMOCRACY DIED (12/12/00) 2585 DAYS
WHERE'S OSAMA BIN-LADEN? 2311 DAYS
DAYS SINCE ENRON COLLAPSE = 2602
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 10
Enron execs conveniently deceased = 3
Other Arrests of Execs = 54

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

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AT THE CLOSING BELL WHEN BUSH TOOK OFFICE on January 22, 2001
Dow - 10,578.24
Nasdaq - 2,757.91
S&P 500 - 1,342.90
Oil - $27.69/bbl
Gold - $266.70/oz.

AT THE CLOSING BELL ON February 15, 2008

Dow... 12,348.21 -28.77 (-0.23%)
Nasdaq... 2,321.80 -10.74 (-0.46%)
S&P 500... 1,349.99 +1.13 (+0.08%)
Gold future... 906.10 -4.70 (-0.52%)
30-Year Bond 4.60% -0.06 (-1.25%)
10-Yr Bond... 3.78% -0.04 (-1.00%)






GOLD, EURO, YEN, Loonie and Silver

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PIEHOLE ALERT

Heads Up!
Preliminary info on appearances by Bush & Co. throughout the country. Details & links are added as they become available so check back. And if you know more, are organizing something, or would like to, contact [e-mail]

For information on protests and other actions Citizens For Legitimate Government

---

Read more: DU

[ozymandius]

1. Market WrapUp: Fair Retails?

BY BRIAN PRETTI

Yeah, that’s really the story. And I’m not so sure it’s even that, especially set against the context of an economy very heavily dependent on personal consumption expenditures in terms of GDP growth. I thought it a bit amusing this week to see the media pundit’s credit “better than expected retail sales” for the rally in equity market averages mid-week. C’mon, it had nothing to do with the retail sales number as, of course, it was an options expiration week. Not even a mention of that fact at all in the press, which would have been much closer to the truth than not. But since the number hit the Street and was supposedly better than it could have been, it’s time for a quick reality check in the land of retail sales trends. Why now? Because I’m seeing a few trends in subcomponents of the retail sales report we have not seen since the last recession. And this was what investors were apparently celebrating Wednesday? Any rationale for a frat party, right?

To the point, have a look at the as of January year over year trends in the components of the retail sales report. They tell one big story.
.....

On a month over month basis in January, retail sales growth stripped of the influence of auto and gasoline sales was literally flat. I guess that’s an improvement from being down, right? As usual, I personally like to look at longer term retail sales trends excluding what are often volatile monthly auto and gasoline sales. And what do we see? The following table documents the year over year growth rate in non-auto and gas retail sales going back to the end of the last recession. Is the trend of the last two years clear enough for you? Of course it is, unless you are employed as a media pundit.
.....

So what other corroborating evidence do we monitor as we form our opinions about where US retail sales trends will take us ahead? Really since the beginning of this decade, there has been a very close directional relationship between the year over year twelve month moving average of total retail sales and the year over year quarterly moving average of total US payroll employment. The following chart clearly shows us the very close directional correlation between these two moving averages. And at least at the last rate of change trough, it was the change in trend in payroll employment that led the ultimate reacceleration in retail sales growth. Will it be so again as we look ahead? We’ll just have to see, but I believe it’s a very basic and common sense relationship. We watch trends in generic labor market strength.

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

[Demeter]

7. Pretty Grim Facts

Not the sort of thing one would see in a State of the Union. Although it would have been useful and honest....

[ozymandius]

2. no goobermint reports today n/t

[ozymandius]

3. Oil prices rise above $96 a barrel

BANGKOK, Thailand - Oil prices rose Tuesday in Asia as investors eyed the possibility that OPEC may cut production just ahead of the second quarter, when gasoline demand in the Northern Hemisphere usually becomes the central focus of the market.

An explosion at a 70,000-barrel-a-day refinery in Texas may have also boosted prices, but the primary worry is that the Organization of Petroleum Exporting Countries may cut supplies next month to support prices in a $85-$100 a barrel range, said Tetsu Emori, commodity markets fund manager at ASTMAX Futures Co. in Tokyo.

OPEC may do so just ahead of the second quarter when oil prices have started an annual run-up the past five years as people looked ahead to "gasoline demand coming in the spring," Emori said.
.....

Light, sweet crude for March delivery rose 83 cents from Friday's floor close to $96.33 a barrel in Asian electronic trading on the New York Mercantile Exchange by midday in Singapore.

The price is now about $9 a barrel more than the closing price in the U.S. on Feb. 6.

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

[ozymandius]

4. Oil nears $98 on supply worries, OPEC

LONDON (Reuters) - Oil rose on Tuesday to the highest level in a month, near $98 a barrel, driven by expectations that supplies will be tight.
.....

But the Organization of the Petroleum Exporting Countries (OPEC) has said it thinks there is enough oil in the market and is not expected to increase supplies. It may even cut them.

http://news.yahoo.com/s/nm/20080219/bs_nm/markets_oil_dc_9

[happyslug]

56. OPEC will cut production, like OPEC ever controlled the price of oil.

The old joke about OPEC that is was like a Dog, except the tail (Saudi Arabia) wagged the Dog NOT the Dog wagging the tail. The various OPEC producers have always produced as much as they could, that is why you had the oil glut of the 1980s (Everyone tried to maintain the volume of oil they were producing, even if that meant price per barrel dropped). The price was maintained by Saudi Arabia by how much oil Saudi Arabia pumped. The more the House of Saud pump, the lower the price, the less the higher the price. OPEC by the 1980s had returned to what it had been in the 1960s, a place where OPEC learned what the price of oil will be. The only difference was WHO was making the decision, In the 1960s the Seven sisters told OPEC what the Texas Railroad Commission (Which set how much oil was produced in Texas, the ten "Swing" Producer) had set the price of oil. In the 1980s it was Saudi Arabia who told its follow OPEC member what the price will be (Texas oil had peaked and entered into a slow decline about 1969, thus Texas Railroad Commission opened all of the oil fields to full production to keep prices low, but it was NOT enough, Saudi Arabia NOT Texas was the "Swing" producer and thus the group that set price worldwide.

During the period 1969-1973, the price of oil slowly went up. I remember my father complaining of Gasoline being to high at 35 cents a gallon. This was because Texas was NO longer the "Swing producer" i.e. the group that could increase or decrease oil production when it wanted to to set price. In 1973 OPEC did an embargo of oil during the Yom Kipper war, as it had done in 1956 and 1967 (I know OPEC only formed up in 1960, but most Arab producers participated in the 1956 embargo). The results SHOCKED the Arabs, for the first time the US was affected (US had been an oil EXPORTER prior to 1969, by 1973 we were a net IMPORTER). The House of Saud quickly found out it was the Swing Producers, no one else would cut production, but Saudi Arabia Could and did to set the price. The early 1980s saw the North Slope and NORTH Sea oil fields opening up, prices drop do to the introduction of these two fields. Thacher kept on cutting price every time the House of Saud tried to set a bottom. Finally after several attempts to set a price had been undermined by Thacher who kept cutting the price of North Sea oil, the House of Saud put their production at a pace BELOW the cost of production of North Sea oil. Thacher panicked so when the House of Saud raised the price, Thacher just matched the price, the days of price cutting was over (Through the oil glut would last till the late 1990s). During that crisis the rest of OPEC REFUSED to cut back production, even to the production numbers set for them by OPEC (Yes, everyone except the house of Saud were cheating).

This brings me to my point, OPEC has NEVER controlled the price of oil. Since 1973 the price of oil has been set by Saudi Arabia NOT OPEC. Furthermore it looks like Saudi Arabia is going through the same situation that happened to Texas in the late 1960s, they are UNABLE to increase oil production to lower prices. If Saudi Arabia can NOT increase production, no one can and the price is being set by those people who can no longer afford the price of oil (i.e. price is being set by consumers who STOP buying, NOT producers who increase production).

OPEC wants to give the impression it still sets the price of oil, Saudi Arabia wants to give the impression it controls the price of oil via OPEC. No one believes them and most people have not believed them since the price of oil went over $50 a barrel. Thus what OPEC is doing is accepting that they can NOT increase production, so they are claiming they are REDUCING production. Thus the reduction in production is NOT the result of an inability to produce, but an unwillingness to produce. Unwillingness impose control, inability implies NO CONTROL.

Thus the production reduction is more a reflection on reality, but with a cover story of intent. Wait till Summer when the price will go even higher.

[ozymandius]

58. OPEC has NEVER controlled the price of oil.

Hit the nail squarely on the head with that one. They only control the flow of oil to market. It rhymes with mark-to-market.

By the way, I differ with your description of oil pricing. The New York Mercantile Exchange and the London Oil Bourse are the catalyst organizations for setting oil prices. Both exchanges are owned by American oil companies. Both exchanges trade with deference to any global oil recovery company. That's their profit motive doing its work. Exxon/Mobil is able to create such obscene profits through their part-ownership that sells oil for today's contract rate while paying the owner of the oil patch real estate a previously-contracted rate per barrel.

[happyslug]

62. Exxon main source of profit is from old wells.

These wells, mostly in Texas, seep oil to this day. The cost of this oil to produce is minimal, in some wells less then $10 a barrel. With oil $90 plus a barrel, that $80 profit quickly adds up. Such seeping wells exist even in Pennsylvania, which peak in the 1860s (Through we had a secondary boom which peaked in the 1890s).

As to the Pricing of oil, the markets you mention do the day to day, week to week pricing. Those have always varied, even when the Texas Railroad Commission controlled production (and prior to that when Standard Oil Controlled Production). The price can vary $10-20 a barrel depending on short term supply and production. What the Swing producers do is to make sure the price is within a certain range. If the price starts to get to high, production is increased. If the price starts to get to low, production is reduced. People, in the long run, wants to know, within certain parameters, what a price will be. Economists (Friedman actually won his Noble Prize in economist on this issue) have shown that people will pay a premium for a set price, even if a variable price would produce a generally lower price (This is why Standard Oil came to control the oil industry in the late 1800s, Standard oil could guarantee a price, something no one else could. people preferred predicable pricing to rapid changes in price and Standard oil became and stayed a Monopoly till Texas oil started to come on line about 1900 (Yes Standard Oil was broken up in 1912, but that was minor compared to the introduction of Texas oil, then NOT controlled by Standard oil, into the Economy).

One last comment, The Texas Railroad Commission only started to restrict production (And thus long term pricing) in the 1930s, do to the boom-bust cycle oil had returned to after the break up of Standard Oil and the Discovery of Oil in Texas. The Texas Railroad Commission set LONG TERM price from the 1930s to the 1970s by controlling how much Texas oil was produced. The Commission lost control when it permitted Texas oil producers to produce all the oil their could AND IT DID NOT DROP PRICE FOR DEMAND WAS TO GREAT. Saudi Arabia took over in the mid -1970s, now Saudi Arabia has lost control. We will be returning to a Boom-Bust cycle, for I do NOT see anyone able to control price on a long term basis.

[ozymandius]

5. Huge beef recall stems from Calif. plant

LOS ANGELES - The U.S. Department of Agriculture on Sunday ordered the recall of 143 million pounds of frozen beef from a California slaughterhouse, the subject of an animal-abuse investigation, that provided meat to school lunch programs.

Officials said it was the largest beef recall in the United States, surpassing a 1999 ban of 35 million pounds of ready-to-eat meats. No illnesses have been linked to the newly recalled meat, and officials said the health threat was likely small.

The recall will affect beef products dating to Feb. 1, 2006, that came from Chino-based Westland/Hallmark Meat Co., the federal agency said.

Secretary of Agriculture Ed Schafer said his department has evidence that Westland did not routinely contact its veterinarian when cattle became non-ambulatory after passing inspection, violating health regulations.
.....

Federal officials suspended operations at Westland/Hallmark after an undercover video from the Humane Society of the United States surfaced showing crippled and sick animals being shoved with forklifts.

Two former employees were charged Friday. Five felony counts of animal cruelty and three misdemeanors were filed against a pen manager. Three misdemeanor counts — illegal movement of a non-ambulatory animal — were filed against an employee who worked under that manager. Both were fired.

http://news.yahoo.com/s/ap/20080218/ap_on_bi_ge/slaughterhouse_abuse

[ozymandius]

6. Foreclosed homes occupied by homeless

CLEVELAND - The nation's foreclosure crisis has led to a painful irony for homeless people: On any given night they are outnumbered in some cities by vacant houses, and some street people are taking advantage of the opportunity by becoming squatters.

Foreclosed homes often have an advantage over boarded-up and dilapidated houses abandoned because of rundown conditions: Sometimes the heat, lights and water are still working.

"That's what you call convenient," said James Bertan, 41, an ex-convict and self-described "bando," or someone who lives in abandoned houses.

While no one keeps numbers of below-the-radar homeless finding shelter in properties left vacant by foreclosure, homeless advocates agree the locations — even with utilities cut off — would be inviting to some. There are risks for squatters, including fires from using candles and confrontations with drug dealers, prostitutes, copper thieves or police.

http://news.yahoo.com/s/ap/20080218/ap_on_bi_ge/homeless_foreclosure

[Demeter]

8. Only a Matter of Time!

We've had discussions of this possibility in our co-op. The under 50's think we are joking.

[TalkingDog]

12. Send yourself a postcard at that address, then use it to get a library card.

You've established residence.

I'm not sure what the current laws are, but it used to be 5 years of residence in an abandoned property gave you squatter's rights. If the final numbers in the wave of walk-offs and foreclosures is as big as everyone expects, odds begin to favor the squatter.

A little legal legwork might actually be worthwhile....

[northernsoul]

50. The legal concept is called "adverse possession"

But the statute of limitations is usually over 10 years. Also, your occupation needs to be "open and notorious," so if you are taking steps to conceal residence it may count against you.

[happyslug]

57. Adverse Possession is 21 years in most states (Through Out West it tend to lower numbers)

And you have to hold out that you own it, not just living in someone else's property. Thus just living in a house is NOT enough for adverse possession, you have to show you have some belief (which may be wrong) that you OWN the property.

Now Squatter's rights is a different animal. Abolished now in most states, but a big factor in settlement of the area between the Appalachians Mountains and the Mississippi river. Squatter's rights gave anyone who lived on property the right to be paid for any "improvements" to the land and a reduction in price (maybe to Zero) for such improvements. Used in the Colonial period by people who moved West and then after living for many years on the land, found out it is own by another. Rare today, if not complete abolished, more of historical knowledge then anything practical today.

[northernsoul]

63. Tip o' the cap to you!

Obviously, you did better in Property than I did.

[ozymandius]

9. International sales drive Wal-Mart 4Q

BENTONVILLE, Ark. - Wal-Mart Stores Inc. said profit for its fiscal fourth-quarter grew 4 percent in line with Wall Street expectations on improved performance in its U.S. stores and strong international growth.

The world's largest retailer said net income was $4.096 billion, or $1.02 per share, in the quarter that ended Jan. 31. It was $3.94 billion, or 95 cents a share, a year earlier.

http://news.yahoo.com/s/ap/20080219/ap_on_bi_ge/wal_mart_earns

[Demeter]

10. U.S. Credit Markets Collapsing! by Martin D. Weiss, Ph.D.

http://www.moneyandmarkets.com/Issues.aspx?NewsletterEntryId=1453


The Fall of The Nation's Three Largest Bond Insurers Is Accelerating
This is the "Great Ratings Debacle" I highlighted last year.

And now, the critical watershed event that I said would trigger the next phase — the collapse of the bond insurers' triple-A ratings — is here in aces and spades. Without the triple-A rating, their whole reason to exist falls by the wayside: They cannot enhance the credit of bond issuers. They cannot do more business. They may as well close their doors and go home.

The facts:

Financial Guarantee Insurance Co. (FGIC), the nation's third largest, just lost its triple-A rating last week. Moody's literally gutted its rating by a full six notches in one fell swoop.
At the same time, Moody's warned that unless FGIC can raise the needed capital, it's ready to cut FGIC's rating to a hair above junk. To underscore that it means business, Moody's has already downgraded FGIC's senior debt to junk, threatening to drop it to deeper junk.
Ambac's triple-A rating was zapped by all three major rating agencies in late January.


Next, MBIA is on the chopping block, slated to lose its triple-A rating within a matter of days.
All three of the largest bond insurers are engulfed in the mess. And all three are trapped between two major business lines — their traditional business of insuring municipal bonds against default, which is supposedly still stable ... and their newer business of insuring mortgage- and debt-backed securities, which is in total disarray.

Meanwhile, the nation's banks and other big investors — the last hope for bond insurers — have so far failed to come forward with the needed capital.

So, in a surprise announcement on Friday, New York Governor Eliot Spitzer threatened to intervene with massive, radical action. He said he would ...

take over the two bond insurers which are regulated by New York State — MBIA and Ambac ...
strip out all their supposedly good assets (insurance policies covering municipal securities) ...
pack away those assets in newly formed separate companies, and ...
leave behind strictly the bad assets (polices covering the disaster-plagued mortgage and debt sectors).

The bankers were shocked and dismayed. Instead of being the first to hear the news as part of their intense, ongoing discussions with New York State regulators, they heard about it on CNBC. And instead of responding with fear and remorse, their primary reaction is anger and rebellion.

What's next? Follow along with me, and you'll see that, like four different pathways engulfed by the same forest fire, all four likely scenarios lead to essentially the same result: Credit collapse.

Scenario A
Bank Rescue

Despite their instincts not to get dragged into the morass, bankers and other investors come through with 11th-hour capital infusions for the bond insurers.

Consequences: The banks take a big step closer to insolvency, creating an even broader threat to the financial system.

Reason: The true liabilities of the bond insurers are incalculable. The potential exposure to losses is virtually unlimited. And before the bond insurance crisis, the banks were already buckling under their subprime mortgage losses.

Scenario B
No Rescues, No Takeovers

The banks stay out. But despite his warnings, Spitzer fails to move forward promptly to take over the bond insurers.

Consequences:The current downward spiral of the bond insurers continues unabated. MBIA, the last of the Big Three to be downgraded, loses its triple-A rating. FGIC is downgraded to junk; Ambac, to near junk. The $2.6 trillion municipal bond market virtually dies.

Reason: When the bond insurers are downgraded, the hundreds of thousands of municipal bonds they cover are automatically downgraded — a ratings collapse that's so massive, it can shut off the credit spigot to all city and state governments, whether insured or not.

Scenario C
New York State Takes Over

Spitzer acts this week to take over MBIA and Ambac, promptly splitting them in half and creating new companies for each. According to plan, the pre-existing bond insurers are stuck holding the sick insurance business; the new companies get the supposedly healthy insurance business.

Consequences: The existing bond insurers are immediately downgraded to deep junk, and that's generous. By all reasonable measures, they are insolvent from day one. And any floating ships still remaining in the market for mortgage- and debt-backed securities are sunk.

Meanwhile, local governments are the winners. But it's a pyrrhic victory.

Reason: The municipal bond market isn't in trouble just because of what's happening to the bond insurers. It's also in trouble because municipal governments all over the country are suffering falling property values — and falling property tax revenues.

By sacrificing mortgage securities for the sake of protecting municipal securities, Spitzer doesn't do local governments any long-term favors. They depend on a healthy mortgage and real estate market to sustain their own finances. When mortgages and real estate go down, so do they.

Scenario D
Federal Bailout

The federal government steps in to bail out the bond insurers — either with or without the plan Spitzer's proposing. The hope is that the good credit of the U.S. Treasury uplifts the bad credit of the insurers.

Consequences: Precisely the opposite happens. The bad credit of the bond insurers — and their boundless exposure to defaulting mortgages — drags down the good credit of the U.S. Treasury.

Treasury notes and bonds fall in price, while their yields rise. And since 10-year Treasury-note yields are closely tied to the rates on 30-year fixed mortgages, rather than supporting the housing market, the federal government inadvertently drives it into a deeper hole with a spike in interest rates.

Reason: The sheer volume of mortgages outstanding in America is far bigger than the volume of U.S. Treasuries.

Moreover, with $150 billion being spent on the economic stimulus package, with inevitably huge federal deficits in a recession, and with looming seas of red ink in Medicare ... the U.S. Treasury Department's long-term credit is not exactly fool-proof.

Bottom line: There's no scenario that ends in a soft landing for the bond insurers. The underlying assets are rotten. The credit markets are sour. And no type of bailout — public or private — can cover up the stench.

Meanwhile ...

At Least Five More
Credit Market Sectors
Are Now Collapsing

You've no doubt heard about the disasters in subprime mortgages, Alt-A (intermediate quality) mortgages, prime mortgages, credit cards, auto loans and student loans.

Now, brace yourself for five more credit sectors that are falling victim to collapse:

The nation's largest mortgage insurers — responsible for protecting lenders and investors from defaults on millions of homes — are being ravaged by losses. MGIC Investment Corp., swamped with claims, just posted a $1.47 billion loss. Triad Guaranty, a much smaller mortgage insurer, reported a $75 million loss.


Municipalities, public hospitals and other institutions have been slammed by the failure of nearly 1,000 auctions for their "auction-rate" securities. Their borrowing costs have tripled and quadrupled — to 15%, 20%, even 30%. Survival money is drying up.


Low-rated corporate bonds, which had fueled a wave of leveraged corporate buyouts in recent years, are being abandoned by investors. Their prices are plunging to the lowest levels in history. Property and casualty insurers, among those loaded with corporate bonds, are taking it on the chin.


More hedge funds are getting slammed. CSO Partners, for example, has lost so much money and suffered such a massive run on its assets, its manager (Citigroup) was recently forced to shut the hedge fund's doors to further withdrawals by investors.


Commercial real estate credit is collapsing. Regional and super-regional banks are taking big hits. Life and health insurance companies will get smacked.
Even some sectors of the short-term money markets are affected. Treasury-only money funds are safe. But beware of money funds that put your money in commercial paper, CDs and other non-Treasury instruments.

The End of an Era

This is no longer just one institution in trouble — like Long Term Credit Management, which threatened to shatter the financial markets in 1998.

Nor is it just a crisis in one corner of the credit markets — like the near collapse of Penn Central Railroad and Chrysler in 1970 ... the collapse of Franklin National Bank in 1974 ... the junk bond debacle of 1989-90, the S&L crisis of the 1980s or the insurance company failures of the early 1990s.

No. This has all the earmarks of a sweeping and devastating credit paralysis that threatens to end decades of U.S. economic expansion.

We will survive. It is not the end of the world. And there are practical, prudent strategies immediately available to protect yourself.

But for most Americans, the credit collapse will bring about a rapid transition that is both terrifying and traumatic — a shocking shift from growth to contraction ... reckless spending to forced thrift ... wealth to poverty.

My mission is to make sure you're not among them; to help you join a growing minority of foresighted individuals who are building their wealth through the worst of times, keeping it safe, and preparing for the future day when they can invest it in some of the greatest bargains of our time.

Your goal: To do well, but also to do good — to be one of the few who can accumulate a treasure-trove of liquid resources for yourself ... and also join those with the courage and means to pick up the pieces later, trigger a lasting rally from the bottom, and ultimately help lead the nation on the path to a true recovery.

Take These Urgent Steps! It
Could Be Your Last Chance!

We told you to get the heck out of danger over a year ago. If you haven't, it's not too late to do so now, provided you act immediately ...


Step 1. Get up to speed: Watch our Weiss seminar online now.


Step 2. Get rid of bonds and mortgages: Don't wait for the next shoe to drop in the credit markets. Get out of all fixed instruments that could be seriously impacted, including ...

Mortgages and mortgage-backed securities, regardless of duration and rating
Corporate bonds, whether rated "junk" and already collapsing ... or investment grade on the verge of becoming junk
Tax-exempt municipal and state securities, whether high grade or low grade, short term or long term, insured or not
Money market funds that invest in bank deposits, banker's acceptances, commercial paper, or short-term tax-exempt securities
Any other instrument invested in the now-uncertain future of the U.S. credit markets

Step 3. Sell real estate: Don't get stuck with sinking properties just because you can't get the price you hoped for.

If you're selling your home, price it like you mean it. Instead of cutting your price in dribs and drabs and always trailing the market, cut it aggressively now.
If you're looking for a new home, rent for now if possible. If that's not a viable alternative and you must buy now on credit, favor a 30-year fixed-rate loan. But make sure you have enough cash for a decent down payment.
If you invest in commercial property, get out now while the market is still not far from its peak. Commercial property valuations got nutty during the recent boom, while capitalization rates plunged sharply. It's going to take a sizable drop in property values to get the cap rates back up to anything near normal.
Sell REITs. The recession will drive vacancy rates up and absorption rates down, while keeping a lid on rents, especially in the office and retail sectors.
If you are still exposed to the risk of falling real estate — whether residential or commercial — seriously consider a protective hedge, using the UltraShort Real Estate ProShares.
Step 4. Get out of bank, brokerage and insurance company stocks: Use any Fed-inspired rally to sell. Don't let big names lull you into complacency. Stocks like Merrill Lynch, Capital One Financial, Washington Mutual and AIG could actually be among the most vulnerable.
If you cannot sell, at least consider buying some protection with an inverse ETF that's tied to the financial industry, such as the UltraShort Financials ProShares.

Step 5. Unload other stocks: Use rallies to sell retail stocks, semiconductors, transportation stocks, Dow stocks and most S&P stocks.

Some investors protest: "Martin, I can't sell now. I can't afford to take the loss." My answer: If your stock portfolio is in the red, you've already taken the loss. Remember — the value of your brokerage account is marked to market every day. It doesn't distinguish between paper losses and realized losses, and you shouldn't either.
Other investors say: "But, Martin, I can't sell now.I can't afford to take the profit and pay the taxes." My answer: Your true net worth is always after taxes. So avoiding taking profits now buys you little. Better to write a big check to Uncle Sam on your profits than to write no check due to losses.

Step 6. Build cash: As you do this, park it in the one place that is still the single safest in the world — 3-month Treasury bills or Treasury-only money market funds.

Step 7. Buy hedges against inflation: To the degree that the Fed and Congress throw more money at the credit collapse, inflation will be a continuing — and growing — danger. So stick with your inflation hedges.

[DemReadingDU]

14. Doesn't look good out there

reminders to me from the article...
Even some sectors of the short-term money markets are affected. Treasury-only money funds are safe. But beware of money funds that put your money in commercial paper, CDs and other non-Treasury instruments.

Step 6. Build cash: As you do this, park it in the one place that is still the single safest in the world — 3-month Treasury bills or Treasury-only money market funds.

[Roland99]

20. Or perhaps a combination of those options?

The banks have already sucked up $50 billion quietly from the gov't. Sure, it's just a drop in the bucket but surely Ben can protect us all with a well-timed drop.

[AnneD]

42. Is that a photo...

of those infamous flying turkeys? :rofl:

[Roland99]

44. Closest I could find at google.

[AnneD]

45. What...

couldn't get a picture of Bush on AF1. He's on tour now. "The Edge of Destruction" tour.

[DemReadingDU]

27. Gary Dunton , MBIA chief steps down

MBIA Inc. said Tuesday that Chairman and Chief Executive Gary Dunton will step down, marking the latest development in the unfolding bond insurer crisis.

The Armonk, N.Y.-based company said that Dunton, 52, would be replaced by former Chairman and CEO Joseph "Jay" Brown, 59, who retired from the firm last May.

Brown, who became chairman and CEO in January 1999 after serving on the board of directors since 1986, conceded that MBIA faces "meaningful challenges" but said he remained confident in the company's future.

"We expect to rebuild confidence in the company and in the industry," Brown said in a statement.

Tuesday's announcement comes at harrowing time for the bond insurance industry.

Credit rating agencies have threatened to cut the 'AAA' rating on MBIA (MBI) and rival Ambac (ABK), fearing that they do not have the ability to pay claims on mortgage-backed securities that turned toxic as a result of the credit crisis. Many fear that such a move could set off a chain reaction across the broader financial landscape, including more losses at the nation's largest banks.

a bit more...
http://money.cnn.com/2008/02/19/news/newsmakers/mbia_ceo/index.htm?postversion=2008021908

[Warpy]

54. Solid advice except for #5

Take a look at the stocks you're holding. Look at what they're paying you despite what the per share price might be doing. I'm making a good income from stock dividends, most of which are tax exempt to one extent or another.

Take a look at those bond yields and whether or not you're being paid quarterly. My bonds are still paying quarterly, independent of what the face value is doing during the insurance crisis. My bonds are all giving me tax free income. The one bond group that isn't doing well is giving me this year's tax loss, something I might need because my income is going up.

Remember, the per share price of the stock is only part of the story. If that stock is paying dividends, it would be a good idea to go long on it rather than eat a loss, a loss that will extend only until the next Democrat gets into office with a sensible economic plan. The per share price is your paper profit or loss. The dividends, which remain fairly stable, are your income.

However, do dump those hedge funds and other funny money stocks.

As for hedges against inflation, it all depends on what China is going to do. If they let the yuan float against the dollar, something more interest rate cuts will force them to do, then inflation will be ruinous and you'd better replace that old fridge today, rather than next month. Skip the gold certificates, they're oversold. Gold itself is a thief magnet and never gets its true worth in a real meltdown. You might want to stock up on beans and rice and other staples, though.

On edit: he forgot the most important piece of advice: REDUCE YOUR DEBT LOAD. That one should speak for itself.

[ozymandius]

11. UK govt outlines Northern Rock plans

LONDON - Prime Minister Gordon Brown's government faced accusations of mismanagement Monday as it began nationalizing stricken mortgage lender Northern Rock PLC — the first time in 20 years that a private company has been taken into public ownership.

The government repeatedly insisted a private sale was its preferred option. But after five months of intense speculation about the future of Britain's most public casualty of the global credit crunch, Brown said that nationalization was the best choice until market conditions improve.
.....

The opposition Conservative Party said Britain's reputation as a major financial services center had been dealt a serious blow.

.....

The government's troubles were compounded by the threat of a drawn-out legal battle with unhappy shareholders and the potential of hundreds, or thousands, of workers losing their jobs.

Brown's reputation as a guardian of financial stability in Britain has been dented, eroding some of the plaudits he received for presiding over an unprecedented stretch of economic growth as treasury chief before becoming prime minister.

http://news.yahoo.com/s/ap/20080219/ap_on_bi_ge/britain_northern_rock

[Demeter]

13. I Hardly Think Brown is Responsible for Rock's Collapse

and at least he's trying to stop the crisis, instead of just sitting on his hands.

Unlike some Presidents I could mention....

[ozymandius]

59. This is probably more associative guilt.

Pity for Brown. This happened on his watch. He could hardly be held responsible for the failures of a formerly private bank.

[DemReadingDU]

30. Regulators coy about Goldman Sachs role in saving lender

2/19/08
The government and the financial regulators have refused to reveal information about the role investment bank Goldman Sachs played in nationalising Northern Rock, despite the taxpayer's money that is being used to prop up the Newcastle-based bank.

The taxpayer is also expected to pick up the bill from Goldman Sachs which has been advising the Tripartite Authorities - the Treasury, Bank of England and Financial Services Authority - on the future for Northern Rock. The bill is formally to be paid by Northern Rock but now that it is nationalised the burden will fall on the public purse.

Goldman's fee is yet to be published but it is thought that it has limited its expenses to less than £10m, much less than it might ordinarily be expected to charge for five months of round the clock work.

The Financial Services Authority, the City regulator, suggested that releasing such information could "have an adverse impact on the UK's position as a major international financial centre, as well as on the economy of the north east where Northern Rock is based and is a major employer".

In response to a request under the Freedom of Information Act, the FSA cited a number for reasons for not being able to supply the information, including the fact that it would exceed the "appropriate time limit".

more...
http://www.guardian.co.uk/business/2008/feb/19/northernrock.goldmansachs

[Roland99]

15. Oil/gas/gold skyrocketing? Credit markets collapsing? The Futures are so bright!!

7:47am

DJIA INDEX 12,480.00 130.00
S&P 500 1,365.60 14.30
NASDAQ 100 1,810.50 24.00

[DemReadingDU]

16. Healthcare fraud trial in Columbus, Ohio - Update

2/15/08 No orders to defraud investors, National Century witnesses testify

National Century Financial Enterprises officials never gave orders to defraud investors, two employees testified this week at a trial prosecutors have called the nation’s largest case of private corporate fraud.

Nor did any executives balk when a midlevel supervisor questioned why the company routinely loaned health-care providers more money than what their patients’ insurance payments could cover.

And executives never told employees they shouldn’t document the shortages, said Jessica Bily, the company’s associate vice president of funding, and Jon A. Beacham, who directed client development.

The testimony was drawn out of the government witnesses by defense attorneys during the first full week of testimony in the trial in U.S. District Court in Columbus. Five former executives of National Century Financial Executives are charged with wire fraud, securities fraud and money laundering.

Rebecca S. Parrett, Donald H. Ayers, Roger S. Faulkenberry, Randolph H. Speer and James E. Dierker are being tried before District Judge Algenon L. Marbley.

Prosecutors have alleged the collapse of National Century was brought about after executives defrauded investors for years. Too many unsecured loans were made to companies, the books of other companies National Century owners held a stake in were padded, all while the wallets of executives were fattened, prosecutors said.

When the Dublin-based business collapsed in 2002, investors lost $1.9 billion.

more...
http://www.columbusdispatch.com/live/content/local_news/stories/2008/02/15/national_century.html

link to previous articles...
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3183233&mesg_id=3183352

[UpInArms]

17. dollar watch

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

Last trade 75.876 Change -0.358 (-0.47%)

What Matters More For the US Dollar: Yield or Growth?

http://www.dailyfx.com/story/bio1/What_Matters_More_For_the_1203354316740.html

US traders were off celebrating Presidents Day, leaving the currency market at a standstill after London traders left the office. In Friday’s Daily Fundamentals, we talked about how the dollar could rally over the next few days and it has indeed started the week on firmer footing. There was no news or economic data to drive the move, but inflation is the big focus this week and we expect the rise in food and energy prices to drive the price of consumer goods higher. The main reason why the dollar is putting up a good fight is because the market is trying to figure out what is more important, yield or growth. If the only driver of market fluctuations were interest rates, then the US dollar would have already hit record lows against the Euro because Fed fund futures are pricing a more than 75 percent chance that US interest rates will be cut by another 50bp in March. However the recent price action of the US dollar suggests that interest rates may not be the only thing that traders are thinking about. They are looking beyond the current easing cycle to the eventual recovery, which they believe will come swiftly. At that time, those central banks that have not cut interest rates or is just beginning to will find themselves behind the curve, rushing to deal with weakening economic data at a time when US economic data is showing signs of a recovery. The only problem with this thesis is that 2 percent interest rates or 100bp is about as low as the market expects the Fed will go. If banks are forced to take more write-offs and the US economy deteriorates further, the Federal Reserve may be forced to go below 1.00 percent. At the last G7 meeting, finance ministers expect subprime losses to reach 400 billion, far more than the 100 to 150 billion that banks have already reported. More write-offs and losses suggest that banks could continue to tighten their belts, leading to further layoffs and tighter lending standards. Also, the market is pricing in between 50 to 75bp of easing by the ECB this year. So far, the central bank has hinted that they have no plans to lower interest rates. If the expectation for easing proves to be excessive because the Eurozone economy only weakens slightly and inflationary pressures prevent the ECB from taking interest rates far below its current level of 4 percent, we could still see the Euro attempt to break its all time highs.

...more...

Euro Above 1.4700 as Fear Shifts Back to US-Challenge of New Highs?

http://www.dailyfx.com/story/bio2/Euro_Above_1_4700_as_Fear_1203414185851.html

The dollar rally turned out to be a one day wonder, as currency markets shifted their focus back to the risks of the US economy and rallied the EURUSD above the 1.4700 level in early European trade. Report in the Financial Times noted that US banks have quietly borrowed upwards of $50 Billion from the Fed using the new Term Auction Facility set up by US monetary authorities to relieve the credit crunch conditions prevailing throughout the market.

The $50 Billion figure – a significant sum of money - surprised the market as it revealed the extent of the underlying problems in the US financial system with banks forced to turn to the Fed as the lender of last resort for their capital needs. The euro was also aided by comments from Jean Claude Junker the head of EU Finance Ministers who noted that while “"08 growth expectations are below potential, EZ won’t be heavily affected by US subprime,” stating that there will be “no need for US-style fiscal stimulus.” Mr. Junker words suggested that EZ officials remain relatively sanguine about the economic prospects in the region and implied that any speculation of ECB easing is premature.

In the past few weeks, the euro has come under heavy assault on fears that ECB will soon be forced to follow the Fed towards a more accommodative monetary policy. However, if market perception changes, with traders coming to a consensus that EZ rates will remain at 4% for at least the first half of 2008, the unit could regain its upward momentum and challenge new highs as interest rate differential dynamics come back into play.

Finally, the yen rallied today despite the fact that Nikkei ended the day on positive note and risk appetite remained healthy. The reason for yen’s strength was the report that Chinese inflation accelerated to 7.1 percent in January — its highest rate in 12 years — after devastating snowstorms worsened food shortages, setting back government efforts to cool rising prices. Worries that inflation could rise further due to high costs for coal and other industrial materials have sparked rumors of a possible rate hike from the PBOC which would strengthen the yuan and in turn help the yen. With China now Japan’s largest export market, a rise in the Yuan would increase the value of Japan’s earnings in the region helping to underpin the yen. With USDJPY beginning to diverge significantly from the usual carry trade dynamics we invite you to read our special report Is The Correlation Between Carry Trades And Equities Fading?

...more...

[UpInArms]

18. Citigroup sells Japan HQ to Morgan Stanley

http://news.yahoo.com/s/nm/20080219/bs_nm/morgan_stanley_citibank_japan_dc

TOKYO (Reuters) - Citigroup (C.N), which has been raising funds since taking a huge hit from the U.S. subprime mortgage meltdown, has sold its Japan headquarters to rival Morgan Stanley (MS.N) in a deal reportedly worth US$445 million.

Citigroup reported last month a record quarterly loss and wrote off $18.1 billion for investments damaged by a downturn in the U.S. housing market and a subsequent credit crunch.

The bank said it planned to raise $14.5 billion, including from the Government of Singapore Investment Corp Pte (GIC) and the Kuwait Investment Authority and Saudi Prince Alwaleed bin Talal, and has also floated the sale of peripheral businesses, such as a Brazilian credit card operation.

Citigroup said in a statement on Tuesday that it had completed the sale-and-lease back deal of the Citigroup Center in Tokyo's Shinagawa district as part of efforts to improve Citibank Japan's balance sheet and cut risk of holding property assets.

...more...

[UpInArms]

19. Banks "quietly" borrow $50 billion from Fed: report

http://news.yahoo.com/s/nm/20080219/bs_nm/usa_banks_fed_dc

NEW YORK (Reuters) - Banks in the United States have been quietly borrowing "massive amounts" from the U.S. Federal Reserve in recent weeks, using a new measure the Fed introduced two months ago to help ease the credit crunch, according to a report on the web site of The Financial Times.

The newspaper said the use of the Fed's Term Auction Facility (TAF), which allows banks to borrow at relatively attractive rates against a wide range of their assets, saw borrowing of nearly $50 billion of one-month funds from the Fed by mid-February.

The Financial Times said the move has sparked unease among some analysts about the stress developing in opaque corners of the U.S. banking system and the banks' growing reliance on indirect forms of government support.

[UpInArms]

21. Wall Street faces fury over subprimes

http://news.yahoo.com/s/ap/20080219/ap_on_bi_ge/subprime_wall_street

BOSTON - Regulators are trying to punish Wall Street for mortgage finance practices that expanded home ownership and spread risk among a host of new players — but also may have duped borrowers and investors who supplied cash to fuel a housing boom that's turned bust.

A handful of state securities regulators and a couple foreclosure-blighted cities have fired the opening shots with lawsuits trying to prove that investment banks and big lenders are guilty of more than just bad business decisions and failing to foresee looming mortgage troubles. Some regulators say greed and fraud underlie much of the subprime mortgage mess that has spread across the broader housing market, triggering a spike in foreclosures.

Aside from the civil cases, the FBI is looking at possible criminal action, focusing on what Wall Street firms knew about the risks of mortgage securities backed by subprime loans, and whether they hid risks from investors.

Observers don't expect the financial penalties that regulators extract in the civil cases to be massive. But the cases could turn up evidence that forces Wall Street to defend itself amid growing talk of government help to ease subprime-related financial strains on bond insurers. Revelations of bad behavior turned up by the government also could spur private investors to file even more lawsuits than the hundreds they've already brought to recover losses.

"This could get a lot nastier, for many reasons," said John Akula, a business law lecturer at the Massachusetts Institute of Technology's Sloan School of Management. "Prolonged close scrutiny often turns up all kinds of dubious practices that in normal times are under the radar.

"If the government sponsors any kind of bailout with public funds, this may be coupled with an aggressive prosecutorial agenda in support of efforts to get private parties to kick in."

...more...

[whistle]

22. That cartoon is right on the money, what the Federal Government should be

...doing, is what FDR did in 1933 with his New Deal, add buoyancy to the economy with long term jobs programs and fiscal investments in infrastructure, not to sink it with more "stimulus" consumer debts!

[DemReadingDU]

23. Whitney: "The worst has just begun"

2/15/08 Paulson's Wild Ride on the Hindenburg: "The worst has just begun" by Mike Whitney

It's a good thing Hank Paulson wasn't around in 1929 or we'd all be hawking apples on a street-corner. Paulson is currently on a losing-streak that would have been the envy of Marvelous Marv” Thorneberry and the '67 Mets. In the last three months he's put together three new programs to deal with the subprime crisis which have fizzled out in a matter of weeks. First, he tried to entice struggling investment banks to put their mortgage-backed bonds in a Super SIV (structured investment vehicle) to see if it would help off-load billions of dollars of down-graded junk onto unsuspecting investors.

That flopped. Then he brokered "Hope Now"” (1-888-995-HOPE) which was designed to help the banks and homeowners work out the details for a rate freeze on mortgage resets. Paulson assured the public that 500,000 homeowners would take advantage of the program, which would dramatically reduce rate of foreclosures. So far, the Hope Now hotline has provided counseling to just 36,000 borrowers. Representatives have suggested loan workouts for fewer than 10,000 of them, a small fraction of borrowers in need.” (Earlier Subprime Rescue Falters; Wall Street Journal) "Only 10,000 homeowners; and Paulson promised 500,000? Another slight miscalculation.

This week, Paulson announced another new program, "Project Lifeline”, which targets homeowners who are delinquent 90 days or more on their mortgages.


Are you listening, Hank Paulson?

Consumer spending is down (excluding food and fuel) and consumer confidence is falling at the fastest pace since the 1990-91 recession. Also, $2 trillion has been wiped out from falling home prices and another $600 billion will vanish this year from mortgage equity withdrawals (MEWs). Traffic to the shopping malls has slowed to a crawl and retail shops had their worst January on record. Homeowners are hoarding their earnings to cover basic expenses and to make up for their lack of personal savings. The spending-spigot has been turned off. America's consumer culture is in full-retreat.

In the fourth quarter of 2007, new foreclosures averaged 2,939 a day, double the pace of a year earlier. Business inventories are on the rise. This week's release of the Institute for Supply Management's Non-Manufacturing Index (ISM) showed steep declines in all areas of the nation's service sector---including banks, travel companies, contractors, retail stores etc—The Business Activity Index, the New Orders Index, the Employment Index, and the Supplier Delivery Index have all contracted at a historic pace.

These are the classic signs of overproduction. The next shoe to drop will be rising unemployment. Layoff notices have already gone out in new construction, retail, car manufacturing and financial services. This is all the predictable outcome of low interest” bubble-making. It invariably ends in a painful deflationary spiral.

more...
http://www.informationclearinghouse.info/article19354.htm

[DemReadingDU]

24. Whitney: "You are all Dead Ducks"

2/16/08 Bernanke's State of the Economy Speech: "You are all Dead Ducks" by Mike Whitney

Even veteran Fed-watchers were caught off-guard by Chairman Bernanke's performance before the Senate Banking Committee on Thursday. Bernanke was expected to make routine comments on the state of the economy but, instead, delivered a 45 minute sermon detailing the afflictions of the foundering financial system. The Senate chamber was stone-silent throughout. The gravity of the situation is finally beginning to sink in.

For the most part, the pedantic Bernanke looked uneasy; alternately biting his lower lip or staring ahead blankly like a man who just watched his poodle get run over by a Mack truck. As it turns out, Bernanke has plenty to worry about, too. Consumer confidence has dropped to levels not seen since the 1970s recession, real estate has gone off a cliff, credit-brushfires are breaking out everywhere, and the stock market continues to gyrate erratically. No wonder the Fed-chief looked more like a deck-hand on the Lusitania than the monetary-czar of the most powerful country on earth.

Bernanke's prepared remarks were delivered with the solemnity of a priest performing Vespers. But he was clear, unlike his predecessor, Greenspan, who loved speaking in hieroglyphics.


Bernanke's summation:

"At present, my baseline outlook involves a period of sluggish growth, followed by a somewhat stronger pace of growth starting later this year as the effects of monetary and fiscal stimulus begin to be felt....It is important to recognize that downside risks to growth remain, including the possibilities that the housing market or the labor market may deteriorate to an extent beyond that currently anticipated, or that credit conditions may tighten substantially further."

(Editor's translation) "Discount everything I've said here today if the economy blows up---as I fully-expect it will---from decades of regulatory neglect and the myriad multi-trillion dollar Ponzi-schemes which have put the entire financial system at risk of a major heart attack".

Bernanke's candor is admirable, but it is little relief for the people who will have to soldier-on through the hard times ahead. Perhaps, next time he could spare us all the lengthly oratory and just forward a brief cablegram to Congress saying something like this:

"We are deeply sorry, but we have totally fu**ed up your economy with our monetary hanky-panky. You are all in very deep Doo-doo. Prepare for the worst."

our sincerest regrets,

the Fed

more...
http://www.informationclearinghouse.info/article19365.htm

[paparush]

38. This dovetails nicely with Bush's summary that our Economy Remains Fundamentally Strong (tm)

:sarcasm:

[DemReadingDU]

25. David Walker Resigns (Head of GAO)

maddezmom posted this on 2/15/08, but with the long weekend, it may have been missed

2/15/08 The head of the audit and investigative arm of the US Congress announced his resignation Friday, citing "real limitations" on what he could do.

David Walker, 51, a respected voice on fiscal matters, said he was making an early departure from the US Government Accountability Office (GAO) to head a new public interest foundation.

"As Comptroller General of the United States and head of the GAO, there are real limitations on what I can do and say in connection with key public policy issues, especially issues that directly relate to GAO's client -- the Congress," Walker said in a statement.

He did not elaborate but Walker last year issued an unusually downbeat assessment of his country's future in a report that drew parallels with the end of the Roman empire.

He had warned that the US government was on a "burning platform" of unsustainable policies and practices with fiscal deficits, chronic healthcare underfunding, immigration and overseas military commitments threatening a crisis if action was not taken soon.

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=3183631


Here's the video of David Walker on 60 Minutes last year
http://www.youtube.com/watch?v=OS2fI2p9iVs

[AnneD]

37. Morning Marketeers....

:donut: and lurkers.

Integrity is a priceless commodity. It is as precious as gold. But integrity in government is as precious as platnimun. I frequently trash most of the numbers and government issued reports as they are frequently not worth the paper they are printed on. One agency that one could count on was the GAO. Congress and the President ignored it at their peril. Day after day, report after report was issued with unblinking honesty. David Walker was the Joe Friday of the government beuracrats. It was always 'Just the facts, Ma'am. Just the facts.'

David Walker gave civil servants a good name and he will succeed in what ever venture he . For the second time ever, I award him the Iron Arrow of Truth. Although this award has no monetary, I can think of no better person so deserving of this token than an honest civil servant.

Thank you David Walker.

Happy hunting and look out for the bears.

[DemReadingDU]

26. bonddad: What inflation?

The bonddad has a series of 4 postings concerning inflation

Conclusion: inflation is a problem.
This is a summary of the 4 postings below
http://bonddad.blogspot.com/2008/02/what-inflation-conclusion.html

1.) There have been very large price spikes in a variety of energy and food commodities. These are not small increases. In addition, the breadth of the increases nullifies the argument that the price increases are the result of a disruption in a particular market.
http://bonddad.blogspot.com/2008/02/what-inflation_18.html

2.) Out largest trading partner has high and accelerating inflation.
http://bonddad.blogspot.com/2008/02/what-inflation-pt-ii.html

3.) The US dollar -- which is the base currency for most commodities -- has been dropping in value for the last two years. In addition, the zero maturity money supply has been increasing at a high year over year rate for the last year and that rate of increase is accelerating.
http://bonddad.blogspot.com/2008/02/what-inflation-pt-iii.html

4.) The US government's methodology for computing CPI has changed over the last 25+ years and the that methodology may be understating the official inflation rate. I can't speak to the validity of this argument. However, considering the price increases I am seeing at the personal level I find this argument at worst worth discussion.
http://bonddad.blogspot.com/2008/02/what-inflation-pt-iv.html

[kineneb]

41. What inflation? This inflation: my propane report

The truck came by yesterday (guys didn't get a vacation, I guess), filled up the propane tank from 35% to 80% full. Total charge: $367.90; 115.9 gal., @ $3.14/gal + fee.

OUCH.

I'm going to look at alternatives for next winter. I expect the next "fill up" will be over $400. Maybe I will go with a smaller tank and shut off the central heating next winter. Room heating with electricity may actually be cheaper.

[DemReadingDU]

28. Peter Schiff: Upping the Inflation Dosage

2/15/08
In perhaps one of biggest ironies to ever to come out of Washington, this week Congress simultaneously pilloried major league baseball players for using artificial stimulants to pump up their performance while passing legislation to do just that to the national economy. Am I the only one laughing?

In reality, the current slump in the U.S. economy is simply the come down from years of financial doping in the form of skyrocketing home values and easy credit. Rather than reaching for yet another syringe, Congress should ask Americans to do what it demands of ballplayers: play within their natural means. Unfortunately in the case of the economy, the patient is already so juiced up that further doses may not only fail to stimulate but may result in a trip to the emergency room.

As the widely praised "economic stimulus" bill was signed into law, the only dissent heard was from those saying the plan did not go far enough. Speaking for those unheard voices who disagree with the strategy entirely, I believe the most significant aspect of the plan is that it creates a new and improved method for delivering inflation.

My prediction is that over the course of the next few years, successive doses of even larger stimulus packages will fail to revive the economy. As the recession worsens and the dollar drops through the floor and consumer prices and long-term interest rates shoot thought the roof, politicians and economists will look for scapegoats. Few, if any, will properly attribute the problems to the toxic effects of the stimulus itself.

more...
http://www.safehaven.com/article-9477.htm

[AnneD]

43. So when do....

the economic gonads shrivel up-or does that happen before the stimulus.

The thing that chaps my ass is we are having an inquest about something that was done which was legal at the time and acting like this is a shock that athletes took them to extend a career or speed healing. Aside from fact that this sends a bad message to kids-I don't give a rat's ass what these professional guys did when it was legal. Congress should be investigation some articles of impeachment instead of this crap.

[DemReadingDU]

46. 100 things Congress could do that would matter more to me than steroids in baseball

2/16/08 by emptypockets

If Congress has run out of ideas for what to do, or finds itself unsure where my priorities lie, here are 100 things Congress could work on that would matter more to me than investigating steroids in baseball.

http://thenexthurrah.typepad.com/the_next_hurrah/2008/02/100-things-cong.html

[AnneD]

49. That looks....

like a good list to me. This crap just steams my clams.

[DemReadingDU]

29. Financial weapons of mass destruction

from Mike Larson's blog

"Financial weapons of mass destruction." That's what Warren Buffett called derivatives back in his 2002 letter to shareholders (see this pdf link, page 15). Those comments certainly seem germane today, especially in light of the almost daily headlines about more turmoil in the credit market. Many forms of complex derivatives are causing big problems in the financial industry. Some contracts can't be valued at all. And the values being put on those that can are causing widespread writedowns and headaches.

If you didn't check out the cheery New York Times story "Arcane Market Is Next to Face Big Credit Test" over the weekend, it may help better explain potential problems in one derivatives market for you. Here's an excerpt:

"Few Americans have heard of credit default swaps, arcane financial instruments invented by Wall Street about a decade ago. But if the economy keeps slowing, credit default swaps, like subprime mortgages, may become a household term.

"Credit default swaps form a large but obscure market that will be put to its first big test as a looming economic downturn strains companies’ finances. Like a homeowner’s policy that insures against a flood or fire, these instruments are intended to cover losses to banks and bondholders when companies fail to pay their debts.

"The market for these securities is enormous. Since 2000, it has ballooned from $900 billion to more than $45.5 trillion — roughly twice the size of the entire United States stock market.

"No one knows how troubled the credit swaps market is, because, like the now-distressed market for subprime mortgage securities, it is unregulated. But because swaps have proliferated so rapidly, experts say that a hiccup in this market could set off a chain reaction of losses at financial institutions, making it even harder for borrowers to get loans that grease economic activity."

more...
http://interestrateroundup.blogspot.com/2008/02/more-on-financial-wmd.html

[Tansy_Gold]

48. Okay, wait a minute, wait a minute, WAIT A MINUTE! Are these

"credit swaps" that are worth $45.5 TEE-RILLION -- are they funny money? Meaning, is this something some yay-hoo on Wall Street dreamt up and said, "Hey, Lenny, I got ten of these here credit swaps, and I'll sell 'em to ya for five grand apiece. Then you sell 'em to Larry over there at Merrill Lynch for ten grand apiece. That'll make the others that I got -- or can scrounge up or manufacture or whatever -- worth, oh, twenty grand apiece. If I can finagle a couple thousand of 'em, we be talkin' real big money, Len, ol' boy!"

In other words -- WHAT IN FUCKING HELL ARE CREDIT SWAPS?



Tansy Gold, who has been away from SMW and not even lurking due to personal crises and then comes back to see stuff like. . . . this?????


:grr:

[DemReadingDU]

53. Wikipedia - Credit Swaps

A credit default swap (CDS) is a bilateral contract under which two counterparties agree to isolate and separately trade the credit risk of at least one third-party reference entity. Under a credit default swap agreement, a protection buyer pays a periodic fee to a protection seller in exchange for a contingent payment by the seller upon a credit event (such as a default or failure to pay) happening in the reference entity. When a credit event is triggered, the protection seller either takes delivery of the defaulted bond for the par value (physical settlement) or pays the protection buyer the difference between the par value and recovery value of the bond (cash settlement).

Credit default swaps resemble an insurance policy, as they can be used by debt owners to hedge, or insure against credit events such as a default on a debt obligation. However, because there is no requirement to actually hold any asset or suffer a loss, credit default swaps can be used to speculate on changes in credit spread.

Credit default swaps are the most widely traded credit derivative product<1>. The typical term of a credit default swap contract is five years, although being an over-the-counter derivative, credit default swaps of almost any maturity can be traded.

more...
http://en.wikipedia.org/wiki/Credit_default_swap


2/19/08 John Hussman: Financials Can't Quantify Their Own Risks, Let Alone Others'
over half of the world's trading in the credit swaps market is concentrated among five banks: J.P. Morgan (26%), Citigroup (10%), UBS Warburg (9%), Bank of America (7%) and Deutsche Bank (7%).

... Last week, AIG (AIG) was hit hard when it admitted it could not “reliably quantify” its losses on these credit default swaps. One wonders how companies can have much sense about the risks of their counterparties when they cannot reliably quantify their own.

more...
http://seekingalpha.com/article/65140-john-hussman-financials-can-t-quantify-their-own-risks-let-alone-others


sounds like a another profit generating scheme for the big banks

[Karenina]

60. And how CDSs differ from "derivatives?"

Are they part and parcel? I've seen $200-405T bandied about as "notational value" for these financial instruments worth more in an order of magnitude than ALL THE FUCKING MONEY IN THE WHOLE WIDE WORLD!!!

First and foremost, the banks are all lying to each other!

[DemReadingDU]

31. Egg on Credit Suisse’s face

2/19/08
So much for Credit Suisse’s (CS) savvy handling of the mortgage meltdown. The Swiss bank said Tuesday morning it will write down the value of some asset-backed structured credit trading positions by $2.85 billion, due to “significant adverse first quarter 2008 market developments.” Credit Suisse said it expects the writedown to shave $1 billion from its first-quarter earnings, though the bank says it believes it remains profitable for the period. Shares fell 4% in premarket trading in New York.

The announcement comes just a week after Credit Suisse posted a 72 percent decline in fourth quarter earnings that nonetheless made it look substantially sharper than rival UBS (UBS), which took some $14 billion in fourth-quarter writedowns tied to souring mortgage-backed securities. Credit Suisse said Tuesday that it continues to probe the problems in its asset-backed book, adding that the bank “has identified mismarkings and pricing errors by a small number of traders in certain positions in our Structured Credit Trading business.” Credit Suisse spokesman Marc Dosch said a “small number” of traders had been suspended, Bloomberg reported. Just another case of savvy risk management, no doubt.

http://dailybriefing.blogs.fortune.cnn.com/2008/02/19/egg-on-credit-suisses-face/


I guess if the Swiss have money problems, it must be bad out there.

[antigop]

35. Credit Suisse CEO says unaware of upcoming writedowns when reporting FY results

http://money.cnn.com/news/newsfeeds/articles/newstex/AFX-0013-23123561.htm

Credit Suisse Group (NYSE:CS) was unaware of the need for fresh writedowns on various asset-backed investments of 2.85 bln usd, announced earlier today, when it reported full-year results last week, chief executive Brady Dougan said.

Speaking in a conference call, Dougan said the problems had only been discovered last week.

'I wasn't aware of it,' he said.

The fresh writedowns disclosed earlier today relate to various positions that had been disclosed in the bank's fourth-quarter results last week, Dougan said.

Earlier, Credit Suisse said market conditions over last six weeks caused the fresh writedowns.

[antigop]

32. Pension company (PBGC) will invest more in equities

I posted this last night in LBN.

Looks like they found a way to help prop up the stock market...

http://www.usatoday.com/money/perfi/retirement/2008-02-18-pensions_N.htm#uslPageReturn

The Pension Benefit Guaranty Corp. said Monday it has adopted a new investment policy, which increases the amount the company can invest in equities and is designed to increase chances the government pension guarantor will be fully funded within 10 years.

"The PBGC is responsible for the pensions of 1.3 million Americans, but we don't currently have the resources to keep all of our future commitments," director Charles Millard said in a statement announcing the policy.

The PBGC, a federal but privately funded corporation created by Congress in 1974 to guarantee payment of basic pension benefits for roughly 44 million American workers and retirees, had an accumulated deficit of $14 billion at the end of 2007.

"The new investment policy adopted by the PBGC Board of Directors will better manage our invested assets," Millard said. He added that although it should generate higher returns, it also offers lower risk through broader diversification.

The new investment strategy is pegged to give the corporation a 57% likelihood of full funding within 10 years, compared with a 19% chance under the previous policy, Millard said.

[DemReadingDU]

33. and another way to steal our pension money

:(

[antigop]

34. yep. n/t

[Tansy_Gold]

51. Lower risk but higher return?

Isn't there an old saying about "If it sounds too good to be true. . . . ."???

[antigop]

36. Qatar fund buys Credit Suisse stake

http://www.ft.com/cms/s/05f50ce0-de51-11dc-9de3-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F05f50ce0-de51-11dc-9de3-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Feurope

Credit Suisse has become the latest Western financial institution to be targeted by a sovereign wealth fund after the Qatar Investment Authority bought a stake in the Swiss investment banking and wealth management group as part of plans to invest about $15bn in US and European banks.

The QIA acquired its holding in the stock market, in contrast with other sovereign funds that have bought fresh equity in troubled financial institutions, diluting existing shareholders. The stake is believed to have cost no more than $500m, and amounts to between 1 and 2 per cent of the bank.

[DemReadingDU]

40. A hint for reading FT articles

If you click on an FT link and you reach "To continue reading, please subscribe..." Do the following: copy the first two-three lines (article title author date) and paste it into your Google search bar. Most of the times you will get a link to the article (this may not work when the article is too fresh)

[Roland99]

39. 12:27pm - Up Up and Away!

Dow 12,442.16 +93.95
Nasdaq 2,337.25 +15.45
S&P 500 1,359.85 +9.86
10 YR 3.83% +0.05
Oil $98.15 $2.65
Gold $932.00 $25.90

[UpInArms]

47. U.S. Fed Increases Scrutiny of - ANB Bancshares - Arkansas Bank

http://www.reuters.com/article/bondsNews/idUSN1927180320080219

WASHINGTON (Reuters) - The Federal Reserve Board on Tuesday said Rogers, Arkansas-based ANB Bancshares Inc agreed to adopt measures to strengthen its capital base and improve its cash flow under a written agreement with the Federal Reserve Bank of St. Louis.

The measures include submitting within 45 days an acceptable consolidated capital plan based on ANB's financial condition, risk profile and planned growth, the Fed Board said. It must take into consideration adequacy of loan loss reserves, concentrations of credit and the volume of problem or volatile assets held by the group that could require higher capital levels.

The Fed Board also said ANB Bancshares would submit within 45 days a cash-flow plan for servicing its existing outstanding debt and added that it cannot incur new debt without the St. Louis Fed's approval.

<snip>

ANB Bancshares also cannot increase any executive officer salaries, bonuses or directors fees without the St. Louis Fed's approval, and executive officer expenses exceeding $500 per month also need the St. Louis Fed's approval, the Fed Board said.

...more...

[RUMMYisFROSTED]

52. Who pissed in the pixie dust?

[Karenina]

61. BWHAHAHAHAHA!

:rofl::rofl::rofl:

[ozymandius]

55. NYSE once again proves it's the place for swingers. (closing out)

Dow 12,337.22 Down 10.99 (0.09%)
Nasdaq 2,306.20 Down 15.60 (0.67%)
S&P 500 1,348.78 Down 1.21 (0.09%)
10-Yr Bond 3.88% Up 0.10
NYSE Volume 3,596,703,500
Nasdaq Volume 1,989,819,250

4:30 pm : The major indices opened sharply higher on Tuesday without a specific catalyst, but eventually ended the day with modest losses due to weakness in financials and tech as inflation concerns weighed on sentiment. Although the declines are slight, when compared to this session's highs they are more significant. The Dow, Nasdaq and S&P fell 1.3%, 2.0% and 1.0%, respectively, from their session highs to their closing levels.

Financials (-0.8%) once again weighed on the broader market, with investment services posting the largest decline. The Wall Street Journal reported Lehman Brothers (LEH 53.57, -1.20) may face its rockiest quarter since the mortgage crisis began, noting it may face $1.3 billion in additional write-downs. Also adding to the selling pressure was news that Credit Suisse (CS 48.22, -2.66) had overvalued assets by about $2.85 billion, with the company blaming a small number of traders for the write-down.

Tech (-1.0%) was also a laggard. Internet stocks saw the most selling pressure. Google (GOOG 508.95, -20.69) was the main laggard with a 4% decline. Silicon Alley Insider noted Google may face near term pressure on revenues due to "accidental" advertising clicks that were stated in the company's 10-K. Yahoo! (YHOO 29.01, -0.65) declined after Bill Gates said Microsoft (MSFT 28.17, -0.14) won't raise its bid for the company, according to Reuters. Also weighing on Yahoo's stock are reports that Microsoft is preparing for a proxy fight.

Shares of AT&T (T 35.89, -1.99) and Verizon (VZ 35.34, -2.49) got clipped after Verizon announced it is offering a $99.99 per month unlimited wireless plan. AT&T quickly responded with a matching plan of its own. Traders fear a pricing war will crimp profits for both of the Dow components. As a result, telecom (-5.1%) finished the day as the main laggard.

A strong $4.51 gain in crude oil provided a lift to the energy sector. Crude was up on news of an explosion yesterday at a Texas refinery that shut down its operations, unrest in Nigeria and speculation that OPEC may cut output. Crude hit an all-time intraday high of $100.10 per barrel, and settled at an all-time closing high of $100.01.

Likewise, the materials sector (1.9%) was a standout due to a strong advance in commodities price. Agriculture companies Monsanto (MON 117.87, +2.52) and Mosaic (MOS 109.41, +6.41) provided leadership. Gold producer and Briefing.com Active Portfolio holding Newmont Mining (NEM 50.48, +2.59) posted a hefty gain as gold advanced $23.90 to $930.00 per ounce.

The soaring commodities fueled inflation concerns, spurring a sell-off in Treasuries. The 30-year bond shed 47 ticks, sending its yield up to 4.67%. The market will get an inflation reading tomorrow, with January's CPI reading set for release at 8:30 ET.

In earnings news, Wal-Mart (WMT 49.66, +0.22) reported earnings of $1.04 per share, topping expectations by two cents. The company issued conservative guidance for its first quarter and fiscal 2009, which limited the stock's advance.

Also making headlines was news that Fidel Castro will step down as president and commander in chief of Cuba. Due to the country's minuscule economy, this news had a limited effect on the stock market. DJ30 -10.99 NASDAQ -15.60 NQ100 -0.9% R2K +0.1% SP400 +0.1% SP500 -1.21 NASDAQ Dec/Adv/Vol 1528/1392/1.99 bln NYSE Dec/Adv/Vol 1379/1763/1.43 bln