STOCK MARKET WATCH, Wednesday March 26

[ozymandius]

Source: du

STOCK MARKET WATCH, Wednesday March 26, 2008

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 301
DAYS SINCE DEMOCRACY DIED (12/12/00) 2621 DAYS
WHERE'S OSAMA BIN-LADEN? 2347 DAYS
DAYS SINCE ENRON COLLAPSE = 2638
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 10
Enron execs conveniently deceased = 3
Other Arrests of Execs = 54

---

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

---

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 March 25, 2008

Dow... 12,532.60 -16.04 (-0.13%)
Nasdaq... 2,341.05 +14.30 (+0.61%)
S&P 500... 1,352.99 +3.11 (+0.23%)
Gold future... 935.00 +16.30 (+1.74%)
30-Year Bond 4.30% -0.01 (-0.30%)
10-Yr Bond... 3.49% -0.03 (-0.85%)






GOLD, EURO, YEN, Loonie and Silver

---

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

BY FRANK BARBERA, CMT

Well, another week and another round of negative news. Earlier today, the release of the Case-Shiller Home price index showed U.S. home prices declining a record 2.4% in January, falling for the 18th month in a row and bringing prices down a record 10.70% in the last 12 months. Against the barrage of generally negative housing news over the last few weeks, it was no surprise that the 7:00am Conference Board release for Consumer Confidence showed a continued decline in March, with the index of Consumer Confidence falling to a reading of 64.50, down from 76.40 in February. Within the report, Consumer Expectations fell to 47.90, the 2nd lowest reading ever, down from 58.00 in March.

It is indeed an ironic twist of fate that just as several ‘contrarians’ are suggesting that the crisis is over (huh?), that the directional data continues to plunge with expectations hitting the second lowest reading on record, with the lowest being the value of 45.20 seen back in December 1973. Footnote: December 1973 was the trough of the deepest US recession since the Great Depression and was within four months of President Nixon’s resignation after the Watergate affair, truly a low point in this nation's history. Thus, we are amazed that in the face of data showing not only a recession, but the odds favoring a deep recession or worse, some folks still don’t get it. In the chart below, we show the broad Consumer Confidence Survey for the Conference Board which this month confirmed recession with a decline below 70. In our previous update on the deteriorating economy back in late February, we noted that given the directional strength of forward leading indicators, the odds were overwhelming that the recession signal would be confirmed.

-see chart-

.....

Of course in our mind, perhaps the really big questions center on whether the Banking System will survive and whether or not the Dollar will collapse. At present, we believe that a huge Banking System crisis will be seen in the next 18 to 20 months, and that several large ‘mainstream’ banks may end up failing. We also believe that the risk of a Dollar collapse is extremely high, and that an Argentina style Devaluation is brewing up like an afternoon thunderstorm in the tropics. Whether or not a deep recession evolves into a full out Depression may ultimately hinge on how much damage is inflicted on the Dollar as the falling dollar has been pushing up commodity prices over time, and in so doing, pushing down real consumer spending.

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

[Demeter]

10. Since None of the Economic Indicators Has Changed Direction

why should anyone think the economy has? Just wishful thinking on their part.

[TalkingDog]

39. Well if that were true

that would mean the gentleman from Botswana who is kindly offering to let me help him get 3 million dollars out of the country might not be on the up and up.

Or that the Canadian Lottery Board did not issue me a winning number (even though I never even bought a ticket - isn't that cool?)that I should write back to with my personal bank information, so they can deposit the proceeds for me.

Chicken Little, Doom and Gloom Endtimers will not get this country back on track, missy. Starry-eyed, head in the clouds optimimists are what we need. And right now! So slap on those rose colored glasses, lift your head up high, stare directly into the sun, it can't hurt you, and go marching into our glorious future!!!!

*scuse me, I've got something in my eye*

[Demeter]

40. I Am Properly Chastized

sorry I strayed off the reservation.

[burf]

54. That was beeeeautiful 11!!

May I add; the surge in Iraq is a success, the dollar is strong, and this is just a minor blip in the markets. It makes one proud to be a 'meican.

[Hugin]

57. "Slap on those rose colored glasses"

"So slap on those rose colored glasses, lift your head up high, stare directly into the sun, it can't hurt you, and go marching into our glorious future!!!!"

Yeeehaw!

:patriot:



(You must feel much better... :rofl: )

[ozymandius]

2. Today's Reports

08:30 Durable Orders Feb
Briefing.com 1.5%
Consensus 0.8%
Prior -5.3%

10:00 New Home Sales Feb
Briefing.com 570K
Consensus 580K
Prior 588K

10:30 Crude Inventories 03/22
Briefing.com NA
Consensus NA
Prior 133K

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

[UpInArms]

34. U.S. Feb. durable-goods orders fall 1.7%; 0.5% gain expected

02. U.S. Feb. durable-goods shipments fall 2.8%
8:30 AM ET, Mar 26, 2008 - 3 minutes ago

03. U.S. Feb. aircraft orders rise 5.4%
8:30 AM ET, Mar 26, 2008 - 3 minutes ago

04. U.S. Feb. machinery orders fall record 13.3%
8:30 AM ET, Mar 26, 2008 - 3 minutes ago

05. U.S. Feb. core capital equipment orders fall 2.6%
8:30 AM ET, Mar 26, 2008 - 3 minutes ago

06. U.S. Feb. durable orders ex-transportation fall 2.6%
8:30 AM ET, Mar 26, 2008 - 3 minutes ago

07. U.S. Feb. durable-goods orders fall 1.7%; 0.5% gain expected
8:30 AM ET, Mar 26, 2008 - 3 minutes ago

[Robbien]

37. CNBC pundits were tap dancing around these numbers

trying to get a positive spin going. The dark cloud hanging over their heads just wouldn't go away though.

[UpInArms]

41. Factory orders decline for second month

http://news.yahoo.com/s/ap/20080326/ap_on_bi_go_ec_fi/economy

excerpt:

The problems in manufacturing are a reflection of weakness in the overall economy as the country struggles with a prolonged slump in housing, a severe credit crunch, soaring energy prices and higher unemployment.

Economic growth slowed to a barely discernible 0.6 percent in the final three months of last year, and many economists believe the gross domestic product will turn negative in the current quarter, signaling the start of a recession.

The 1.7 percent drop in orders for durable goods, items expected to last at least three years, was worse than the 1 percent increase that many economists had expected.

The weakness came even though orders for transportation equipment rebounded with a 0.6 percent rise in February after a big 12.6 percent plunge in January. The swing in both months reflected changes in demand for commercial aircraft, which rose 5.4 percent in February following a 30.2 percent plunge in January. Orders for motor vehicles fell by 2.7 percent in February as U.S. automakers continued to face weak demand, reflecting the weak economy and soaring energy prices.

Excluding transportation, orders fell by 2.6 percent in February, representing the fourth decline in the past five months.

...more with a bit of spin...

[wordpix]

60. we still have factories that manufacture stuff?

[formercia]

66. That's the problem

When you have such a small statistical sample, estimates really become meaningless.

[donkeyotay]

73. And if exports are up, what are we exporting? nt

[Demeter]

75. Fraud

[wordpix]

81. lol, I guess the Iraqis are following the BushCo example

as well as others

[AnneD]

58. Morning Marketeers...

:donut: and lurkers. Robbien, when I read your post, I got the funniest mental picture-a la Monty Python- of the commentators at CNBC swinging dead cats by the tail. We have all heard the expression-dead cat bounce to describe a market rally (even a dead cat will bounce if you drop it). I think it is time to introduce a new financial term-dead cat spin. This will be a term used to describe business show commentators (or any talking head) trying to put a positive spin on what is obviously bad news.

And another disturbing trend I have noted as of late is the Cramerization of news reporting. As the numbers and information gets bleaker and bleaker-they have taken to practically yelling their news. It's as if the louder they yell, the more believable they will be. I was distressed to see Maria Bartiromo engaging in this tactic over the last few weeks. It is annoying and this is one reason I don't like to watch Cramer.

Well, I need to hit my mood altering cup of coffee. I think they need to start putting lithium in the water 'cause once it soaks in Joe six pack's pea brain what awaits him in the near and long term due to the fiscal irresponsibility of our current leaders-beer and wine won't calm him down.

Right now, folks are internalizing this-like some of this financial mess is their fault. Wait til they figure out they were set up. FDR managed to head off a revolt but it has happened before in this country and if the Congressional folks don't get it together, they might find themselves the focus of public anger again.

Happy hunting and watch out for the bears.

[Robbien]

82. Ha, How's this for dead cat spin

CNBC talking head: We are down triple digits. But hey when that first digit is a one, eh, no big deal.

The other day I was in the other room hearing the television through the walls and thought they switched the channel to sports. They didn't. CNBC being the go to source for market info is a travesty these days.

[mahina]

85. Hi AnneD,

I peek in here but never post I don't know anything about the financial markets. But I do spend a lot of my time trying to make things better in my little corner of the world. Could you spare a minute to say what lies ahead for the regular people as you describe in your post? Thanks, aloha~

[AnneD]

88. This is what awaits some of us

Tent city in suburbs is cost of home crisis


ONTARIO, California (Reuters) - Between railroad tracks and beneath the roar of departing planes sits "tent city," a terminus for homeless people. It is not, as might be expected, in a blighted city center, but in the once-booming suburbia of Southern California.

The noisy, dusty camp sprang up in July with 20 residents and now numbers 200 people, including several children, growing as this region east of Los Angeles has been hit by the U.S. housing crisis.

The unraveling of the region known as the Inland Empire reads like a 21st century version of "The Grapes of Wrath," John Steinbeck's novel about families driven from their lands by the Great Depression.

As more families throw in the towel and head to foreclosure here and across the nation, the social costs of collapse are adding up in the form of higher rates of homelessness, crime and even disease.

more....

http://features.us.reuters.com/cover/news/D8C99CD0-AF35-11DC-9E67-616F0DA5.html

Right now, the politicians are selling us hope. But these are diffrent times. If they can't deliver-it will crush folks. And folks without hope get angry and they fight back. They have nothing to lose. You only have to look as far as the West Bank to figure that one out.

[54anickel]

107. Did you catch the related article linked at the bottom?

Cities grapple with surge in abandoned homes

http://features.us.reuters.com/cover/news/A089C8D8-FA97-11DC-A47A-9939C5584F1C.html

snip>

In western New York, the city of Buffalo filed a lawsuit on Feb. 21 against 36 lenders -- including big names like JPMorgan Chase & Co Inc and Countrywide Financial Corp -- who were involved in 57 foreclosures that led to properties being abandoned and ultimately demolished by authorities.

The struggling Rust Belt city, plagued by about 10,000 vacant homes and commercial buildings, estimated the 57 foreclosures cost Buffalo $1 million in demolition work and another $1 million in nuisance costs -- from police patrols to boarding up buildings, to the social toll on communities. "We have found homicide victims in these structures," Buffalo Mayor Byron Brown said in a telephone interview. "Dog fighting has taken place in these structures. Drug dealing has been conducted. Last year one of our fire fighters was critically injured, losing one of his legs from the knee down, fighting a fire at a vacant structure," he said.

Alisa Lukasiewicz, who runs the city's law department, said Buffalo drew inspiration from similar lawsuits in Cleveland and Baltimore. "These properties are in a state of legal limbo," she said. "Banks walk away. The homeowners are gone, and the property is still there."

The city also launched "Bank Day" in a housing courtroom to consolidate cases against lenders into one afternoon each month. About 50 cases are pending, mostly against creditors accused of housing code violations -- from trash-strewn lawns to chipped paint and collapsing ceilings.

In some cases, mortgage companies threaten foreclosure if borrowers fall behind in loan payments but never go through with it, leaving the borrower technically the property's owner and complicating efforts to revive an abandoned home. "Another big problem we have had is this new wave of lending," said Cindy Cooper, a Buffalo city prosecutor who specializes in housing. "It's difficult to work out who holds the note, who is in control of a property. These mortgages have been packaged into portfolios and sold on Wall Street."

HOMES FOR A $1 EACH

Further east, Syracuse, New York, began selling vacant homes last year for $1 each to non-profit groups who promise to tear them down and renovate them. Last month, Syracuse Mayor Matthew Driscoll extended the deal to private companies.

The aim is to get abandoned homes back on the market in one to two years and back on the tax rolls. "The foreclosure crunch has now meant that no neighborhood is exempt from having a vacant property pop up," said Kerry Quaglia, executive director of Home Headquarters, a non-profit that demolished about 100 homes and renovated 40 last year.

Some cities such as Cleveland are developing land banks to buy and either demolish or repair distressed properties. "Because of the foreclosure crisis we are seeing this incredible glut of inexpensive distressed houses being sold at pennies on the dollar," Cleveland city councilman Tony Brancatelli said in a telephone interview. "The mortgage companies don't want to hold onto them so they are dumping them on the Internet at a rapid rate. People are buying them 15 to a 100 at a time," he added. "One of the most significant parts of the land bank is stopping this cycle of abandonment."

more...

[Mojorabbit]

108. It sucks

that someone had these mortgages and with some creative financing may have been able to remain in the home. Instead now companies can buy them for pennies on the dollar.

[UpInArms]

53. U.S. Feb. new homes for sale fall 2.1% to 471,000 - Feb. new-home inv 9.8 mths supply, 27-yr high

01. U.S. Feb. new-home median sales price down 2.7% in past year
10:00 AM ET, Mar 26, 2008 - 34 seconds ago

02. U.S. Feb. new-home inventory 9.8 months supply, 27-year high
10:00 AM ET, Mar 26, 2008 - 34 seconds ago

03. U.S. Feb. new homes for sale fall 2.1% to 471,000
10:00 AM ET, Mar 26, 2008 - 34 seconds ago

04. U.S. new home sales down 29.8% in past year
10:00 AM ET, Mar 26, 2008 - 34 seconds ago

05. U.S. Feb. new-home sales stronger than 575,000 expected
10:00 AM ET, Mar 26, 2008 - 34 seconds ago

06. U.S. Feb. new-home sales lowest in 13 years
10:00 AM ET, Mar 26, 2008 - 34 seconds ago

07. U.S. Feb. new-homes sales fall 1.8% to 590,000 pace
10:00 AM ET, Mar 26, 2008 - 34 seconds ago

[ozymandius]

3. Oil near $102 as US dollar weakens

SINGAPORE - Oil prices rose Wednesday as the depreciation of the U.S. dollar drove investors to oil futures despite new economic worries and expectations that U.S. crude supplies were continuing to build.

News that consumer confidence and home prices in the United States were slumping prompted the greenback's decline against major currencies Tuesday, in turn fueling oil prices.

"U.S. economic woes give mixed signals for oil ... all these poor economic data should affect demand in the U.S. negatively and the weaker supply demand fundamentals should pull down prices," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.

......

Analysts and investors appear split on crude's future direction. Many analysts believe oil prices rose much higher in recent weeks than could be justified by supply and demand factors. Prices topped out at a trading record of $111.80 early last week, but have fallen about 10 percent since then.

Other analysts believe the falling dollar will continue to lure investors to the market, particularly given expectations that the Federal Reserve will cut interest rates several more times this year. Falling interest rates tend to weaken the dollar.

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

[Ghost Dog]

95. Oil Price Leaps ($105.90 a barrel on low inventories)

Associated Press 03.26.08, 3:33 PM ET
NEW YORK - Following is a summary of top stories in the energy sector Wednesday afternoon.

Buyers Back in the Oil Pit

Oil prices soared more than $4 a barrel as lower-than-expected fuel inventories and another dollar drop brought buyers out in force for the first time in a week.

Light, sweet crude for May delivery rose $4.68 to settle at $105.90 a barrel on the New York Mercantile Exchange.

The Energy Department's Energy Information Administration (EIA) said gasoline and distillate supplies - including heating oil and diesel fuel - dropped much more than forecast last week, while crude-oil inventories were unchanged. Analysts surveyed by Dow Jones Newswires expected crude supplies to rise by 1.7 million barrels.

April heating-oil futures jumped 11.9 cents to settle at $3.0438 a gallon, and gasoline futures gained 6.27 cents to settle at $2.7429 a gallon. April natural-gas futures rose 15.3 cents to settle at $9.572 per 1,000 cubic feet.

Refiners Still Face Weak Margins

Although analysts said the EIA report of a 6.9 million-barrel decline in refined products last week was positive for refiners, many think refiners are far from out of the woods, as high crude prices and weaker demand for gasoline and diesel are likely to persist.

"We expect refiners to continue limiting production of gasoline in the coming week due to the weak margins," said Soleil-Back Bay Research analyst Jacques H. Rousseau. "Refining stocks have declined significantly over the past few weeks, and appear to be pricing in a worst-case, no-demand-growth scenario, in our view."

/... http://www.forbes.com/feeds/ap/2008/03/26/ap4817836.html

[Ghost Dog]

96. OPEC crude oil basket up five cents, settles at USD 96.20

VIENNA, March 26 (KUNA) -- The Organization of Petroleum Exporting Countries' (OPEC) basket of 12 crudes gained five cents on Tuesday to settle at USD 96.20 per barrel, after being at USD 96.15 the day before.
According to the OPEC bulletin on Wednesay, the average annual price of the basket last year was USD 69.10 per barrel.

OPEC Reference Basket (ORB), implemented as of 10 September 2007, is currently made up of the following: Saharan Blend (Algeria), Girassol (Angola), Minas (Indonesia), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE) and BCF 17 (Venezuela).

On March 5, OPEC had agreed to maintain its production ceiling at 29.6 million barrels per day, with the exception of Iraq which did not fall within the production quota system.

The OPEC OPEC oil ministers justified the decision by the fact that the world oil market was "well-supplied with current commercial oil stocks standing above their five-year average," according to a final communique issued following OPEC's 148th regular meeting.

The price hike resulted from factors uncontrolled by the OPEC such as the heated speculations by dealers and the inefficiency of refineries as well as geopolitical unrest in oil-rich regions, it added.

The communique also noted, with concern, that the current price environment did not reflect market fundamentals of supply and demand, as crude oil prices were being strongly influenced by the weakness in the US dollar, rising inflation and significant flow of funds into the commodities market.

/. http://www.kuna.net.kw/NewsAgenciesPublicSite/ArticleDetails.aspx?id=1894542&Language=en

[ozymandius]

4. Goldman sees $1.2 trillion global credit loss

NEW YORK (Reuters) - Goldman Sachs forecasts global credit losses stemming from the current market turmoil will reach $1.2 trillion, with Wall Street accounting for nearly 40 percent of the losses.

U.S. leveraged institutions, which include banks, brokers-dealers, hedge funds and government-sponsored enterprises, will suffer roughly $460 billion in credit losses after loan loss provisions, Goldman Sachs economists wrote in a research note released late on Monday.

Losses from this group of players are crucial because they have led to a dramatic pullback in credit availability as they have pared lending to shore up their capital and preserve their capital requirements, they said.

Goldman estimated $120 billion in write-offs have been reported by these leveraged institutions since the credit crunch began last summer.

http://news.yahoo.com/s/nm/20080325/bs_nm/usa_credit_goldman_dc

[enough]

33. Can someone explain what is meant by "government-sponsored enterprises"

and "U.S. leveraged institutions?"

Thanks.

[54anickel]

43. Government-sponsored enterprises are financial corporations created by our Congress

They include the Federal Home Loan Banks (one of the first non-agricultural), Fannie Mae, Ginnie Mae, Freddie Mac, and Sallie Mae (student Loans).

The US leveraged institutions sounds like a catch-all for anything not covered by the terms "banks, brokers-dealers, hedge funds" segment of our economy. LTCM was considered an HLI (highly leveraged institution) back in it's day.


Here's an attempt to define them from an old (1999) paper on the bank's interaction with them. This has been festering for a long time.
http://64.233.169.104/search?q=cache:4BsFVQH97i0J:www.newyorkfed.org/newsevents/news/aboutthefed/1999/bihli.pdf+leveraged+institution&hl=en&ct=clnk&cd=3&gl=us">Banks’ Interactions with Highly Leveraged Institutions

While it is virtually impossible to provide a precise definition of an HLI, for the purpose of this paper the focus will be on large financial institutions that have the following characteristics: (a) theyare subject to little or no direct regulatory oversight, as a significant proportion operate through offshore financial centres; (b) they are subject to limited disclosure requirements; and (c) they take on significant leverage. The Committee recognises that not all so-called hedge funds have these characteristics whilemany mainstream financial institutions exhibit some of them. As such, the recommendations of thereport refer to banks’ dealings with institutions that pose the particular counter party risks arising from such characteristics, however they may be classified.

[UpInArms]

56. hiya 54anickel!

sure have been missing you - you were much better at your definition on GSEs than I was - thanks for being thorough

:pals:

[54anickel]

76. Mornin' UIA. I miss bantering witcha- all too. You bring up the most important point

in your explanation - the loss of regulation due to Greedy Pigs that now also just happen to run the majority of those Highly Leveraged Institutions. Greedy Pigs that tout the benefits of "the laissez faire let-the-markets decide crapitude"...the same type of people who were against these entities meant to help the working class, who consider it "big government meddling", who were so quick to scream for the idea of "moral hazard" when it came to grandpa Jo unable to pay back his loan due to lost crops from the weather, cousin Jessie who couldn't make the mortgage payment when his $25/hr union manufacturing job got outsourced, or any other hard-working American who hit on some bad luck.. Those Greedy Pigs have been screaming that we all must "learn from our sins"...well that is until it's their "sins" being called on. There cannot be such a thing as "moral hazard" and in a way they are right because it's not only their money that's at risk - it's the entire economy.

"Laissez faire let-the-markets decide" cannot, will not work when an amoral entity, which is what a corporation is - even Uncle Miltie would agree with that - is given personhood and expected to behave as if it somehow had morals. It's goal and objective - what's demanded of it by law and charter no less - is to make a profit for it's shareholders. In an ideal world, everyday shareholders would be the ones holding the board seats, making some of the decisions and common sense and the long-term health and welfare of the corporation would be the guiding factors, regulations would help to further guide those decisions to keep the interest of the public in the decision making process. Instead what we have is a "buddy" system of greedy cronies serving on each other's boards granting each other huge salaries and benefits, figuring our how to rob from the workers, shareholders, customers and public coffers.

What we have now after years of deregulation, re-edumaction into thinking "what's good for the corporation is good for me", the attitude of "I've got mine, go get your own", and young people aspiring to be one of those top Greedy Pigs (remember when kids wanted to emulated their elders in a skilled or trade or profession? Now nearly all college-bounds are looking for business degrees and business related classes have replaced the many of liberal arts/social classes as requirements for a degree.

Ahhh, but I once again digress and must get back to my painting.....

Good to "see" you! :hug:

[Ghost Dog]

91. Right on. Watch out for the spin:

The rescue of Bear Stearns marks liberalisation’s limit
By Martin Wolf, FT, Published: March 25 2008 19:06

Remember Friday March 14 2008: it was the day the dream of global free- market capitalism died. For three decades we have moved towards market-driven financial systems. By its decision to rescue Bear Stearns, the Federal Reserve, the institution responsible for monetary policy in the US, chief protagonist of free-market capitalism, declared this era over. It showed in deeds its agreement with the remark by Josef Ackermann, chief executive of Deutsche Bank, that “I no longer believe in the market’s self-healing power”. Deregulation has reached its limits.

Mine is not a judgment on whether the Fed was right to rescue Bear Stearns from bankruptcy. I do not know whether the risks justified the decisions not only to act as lender of last resort to an investment bank but to take credit risk on the Fed’s books. But the officials involved are serious people. They must have had reasons for their decisions. They can surely point to the dangers of the times – a crisis that Alan Greenspan, former chairman of the Federal Reserve, calls “the most wrenching since the end of the second world war” – and the role of Bear Stearns in these fragile markets.

Mine is more a judgment on the implications of the Fed’s decision. Put simply, Bear Stearns was deemed too systemically important to fail. This view was, it is true, reached in haste, at a time of crisis. But times of crisis are when new functions emerge, notably the practices associated with the lender-of-last-resort function of central banks, in the 19th century.

The implications of this decision are evident: there will have to be far greater regulation of such institutions. The Fed has provided a valuable form of insurance to the investment banks. Indeed, that is already evident from what has happened in the stock market since the rescue: the other big investment banks have enjoyed sizeable jumps in their share prices (see chart below). This is moral hazard made visible. The Fed decided that a money market “strike” against investment banks is the equivalent of a run on deposits in a commercial bank. It concluded that it must, for this reason, open the monetary spigots in favour of such institutions. Greater regulation must be on the way.

The lobbies of Wall Street will, it is true, resist onerous regulation of capital requirements or liquidity, after this crisis is over. They may succeed. But, intellectually, their position is now untenable. Systemically important institutions must pay for any official protection they receive. Their ability to enjoy the upside on the risks they run, while shifting parts of the downside on to society at large, must be restricted. This is not just a matter of simple justice (although it is that, too). It is also a matter of efficiency. An unregulated, but subsidised, casino will not allocate resources well. Moreover, that subsidisation does not now apply only to shareholders, but to all creditors. Its effect is to make the costs of funds unreasonably cheap. These grossly misaligned incentives must be tackled.

/more... http://www.ft.com/cms/s/0/8ced5202-fa94-11dc-aa46-000077b07658.html

[UpInArms]

55. GSEs are things like

Fannie Mae, Freddie Mac, Sallie Mae

they insure loans with the implicit backing of the US gov

and they are for-profit corporations

and they are supposed to be tightly regulated ... but those regulations have been stripped away under the laissez faire let-the-markets decide crapitude of the Greedy Oil Pigs

[ozymandius]

5. Report: Clear Channel deal collapsing

SAN ANTONIO - Shares of Clear Channel Communications Inc. plummeted in late trading Tuesday, following a report that the media company's private buyout is on the brink of collapse.

Shares fell $1.89, or 5.5 percent, to end regular trading at $32.56, then fell 21 percent in after-hours trading to $25.82 — far below the $39.20 per share the buyout firms promised shareholders.

The Wall Street Journal reported on its Web site Tuesday that the private equity firms leading the $19.5 billion buyout were having difficulty reaching terms with the banks committed to financing the deal. The report cited unnamed people familiar with the matter.

http://news.yahoo.com/s/ap/20080325/ap_on_bi_ge/clear_channel_buyout

[ozymandius]

6. Deutsche Bank Says Worsening Markets May Affect Goal (Update1)

March 26 (Bloomberg) -- Deutsche Bank AG, Germany's biggest bank, said the U.S. subprime collapse and slowing economic growth will make it harder to reach a full-year profit goal.

Deutsche Bank fell as much as 2.9 percent in Frankfurt trading after it said further possible asset writedowns and worsening economic conditions would ``adversely affect our ability to achieve our pretax profitability objective.''

The Frankfurt-based bank aims for pretax earnings of 8.4 billion euros this year, excluding one-time costs and charges, helped by growth from consumer banking and money management. Those units may not be able to offset a slowdown in investment banking should the economy weaken more than expected, the bank said in its annual report published today.

.....

Deutsche Bank may miss its 2008 forecast and earn 6.77 billion euros before taxes this year because of a slowdown in debt markets, according to the median estimate of 7 analysts surveyed by Bloomberg.

http://www.bloomberg.com/apps/news?pid=20601087&sid=ayxXx8RpaHaQ&refer=home

[ozymandius]

7. European Stocks Fall, Led by Deutsche Bank; U.S. Futures Drop

March 26 (Bloomberg) -- European stocks fell, led by banks and mining companies, after Deutsche Bank AG said it may not meet earnings estimates and Brazil's Cia. Vale do Rio Doce dropped a proposal to buy Xstrata Plc.

Deutsche Bank sank the most in a week after Germany's biggest bank said the collapse of the U.S. subprime mortgage market and an economic slowdown will make it difficult to achieve full-year targets. Xstrata tumbled as much as 11 percent in London. U.S. index futures fell before a report that may show may show home sales slipped to the lowest level in almost 13 years.

Europe's Dow Jones Stoxx 600 Index lost 0.5 percent to 305.07 as of 9:58 a.m. in London, extending this year's decline to 16 percent. Futures on the Standard & Poor's 500 Index fell 0.4 percent, while the MSCI Asia Pacific Index rose 0.6 percent.

.....

Citigroup Inc., the biggest U.S. bank by assets, and Goldman Sachs Group Inc. dropped in German trading after Oppenheimer & Co. analyst Meredith Whitney cut earnings estimates for U.S. banks.

National benchmark indexes fell in 11 of the 17 western European markets that were open. The U.K.'s FTSE 100 lost 0.5 percent. France's CAC 40 and Germany's DAX declined 0.2 percent.

The Stoxx 50 and the Euro Stoxx 50, which tracks companies in the euro zone, both slipped 0.4 percent.

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

[Ghost Dog]

44. Banks lead Europe shares lower; Xstrata tumbles

LONDON, March 26 (Reuters) - ... At 1235 GMT, the FTSEurofirst 300 index of top European shares was down 0.8 percent at 1,255.73 points, as weak U.S. durable goods data weighed further on the market.

The index surged 3.2 percent on Tuesday as banks rebounded but they were again the biggest sector losers in Wednesday's session.

...

In the banking sector, Deutsche Bank (DBKGn.DE: Quote, Profile, Research) fell 2.2 percent after the German lender said the disruption to revenues and writedowns on assets stemming from the global credit crisis could put its profit goal for this year at risk.

...

The DJ Stoxx European banking index was down 1.4 percent, with HSBC (HSBA.L: Quote, Profile, Research) down 1 percent, Societe Generale (SOGN.PA: Quote, Profile, Research) down 2.4 and Credit Agricole (CAGR.PA: Quote, Profile, Research) 1.8 percent lower.

...

Around Europe, France's CAC 40 .FCHI was down 0.5 percent, Germany's DAX .GDAXI shed 0.3 percent and Britain's FTSE 100 .FTSE was 0.5 percent lower.

/... http://www.reuters.com/article/marketsNews/idCAL26802120080326?rpc=611

[Ghost Dog]

89. Banks, Xstrata bid failure drag on Europe shares

LONDON, March 26 (Reuters) - European shares fell on Wednesday, dragged down by fresh concern over the fallout from the credit crisis and by a drop in Xstrata (XTA.L: Quote, Profile, Research) after takeover talks with Brazil's Vale (VALE5.SA: Quote, Profile, Research) (RIO.N: Quote, Profile, Research) collapsed.

Deutsche Bank (DBKGn.DE: Quote, Profile, Research) said the credit crisis threatened its profit target for this year, while some of the world's most influential central bankers warned there was no end in sight to the global credit crunch, which weighed on the banking sector.

Pharmaceutical stocks fell after Morgan Stanley cut its price targets on some of Europe's largest drugmakers.

Weak U.S. durable goods orders and a surprisingly large fall in U.S. gasoline stockpiles that drove crude oil CLc1 back through $105 a barrel added to the pressure on the broader European market.

The FTSEurofirst 300 index of top European shares ended down 0.6 percent at 1,258.48 points.

The index rallied 3.2 percent on Tuesday but is still on course for its weakest quarterly performance since the third quarter of 2002 and its fifth monthly loss in a row.

"My personal view is the market is extremely good value at these levels, but the newsflow is unrelentingly bad and that's not a background for markets to show any particularl strength because you dont know what you're going to find when you come into work in the morning," said Roger Noddings, chief investment officer at HSBC Investments, which holds an underweight position in equities at the moment.

"No one is going to be brave when you don't know what the next bit of news is going to be," he said.

...

"We are reaching a floor, at least for now. Historically, when the market starts pricing in a recession, there is a 20 percent drop in stocks. And this time, equities were not overpriced when the downturn started," said Jean-Luc Buchalet, CEO of Pythagore Investissement, in Paris.

...

Within the banking sector, Deutsche Bank fell 2.8 percent after saying the disruption to revenues and writedowns on assets stemming from the global credit crisis could put its profit goal for this year at risk.

The DJ Stoxx European banking index was down 1.5 percent, with HSBC (HSBA.L: Quote, Profile, Research) down 1.8 percent, RBS (RBS.L: Quote, Profile, Research) off 3.1 percent and UBS (UBSN.VX: Quote, Profile, Research) down 2.9 percent.

...

Xstrata fell as much as 12.3 percent before paring losses to show a 5.2 percent fall, after Merrill Lynch advised buying aggressively into the company below 3,300 pence.

Drugmakers Novartis (NOVN.VX: Quote, Profile, Research), GlaxoSmithKline (GSK.L: Quote, Profile, Research) and AstraZeneca (AZN.L: Quote, Profile, Research) were down between 2 and 4.5 percent after Morgan Stanley analysts cut their price targets on all three.

German builder Hochtief (HOTG.DE: Quote, Profile, Research) lost 4 percent after saying it would be tough to avoid a drop in pretax profit this year as the company feels the pinch of a strong euro and a drop in new orders. Hochtief shares were among the largest decliners on Frankfurt's MDAX index, which was flat.

Around Europe, Britain's FTSE 100 .FTSE was 0.5 percent lower, along with Germany's DAX .GDAXI, while France's CAC 40 .FCHI lost 0.3 percent.

Vodafone (VOD.L: Quote, Profile, Research) rose 1.1 percent making it one of the top weighted gainers. The world's largest mobile phone company by revenue said it expected to start receiving dividends from U.S. joint venture Verizon Wireless next year.

/... http://uk.reuters.com/article/eurMktRpt/idUKL2643541320080326

[Ghost Dog]

90. FTSE falls as ditched bid talks undermine Xstrata

LONDON, March 26 (Reuters) - Britain's leading share index fell on Wednesday after the collapse of takeover talks knocked miner Xstrata (XTA.L: Quote, Profile, Research) and banks sank on profit-taking in the wake of the previous session's roaring rally.

Xstrata shed 5.2 percent after the Anglo-Swiss miner and Vale (VALE5.SA: Quote, Profile, Research) said late on Tuesday they failed to agree on terms of what would have been one of the world's biggest takeovers, valued by some analysts at $90 billion.

Other miners traded higher as metal prices held firm. Kazakhmys (KAZ.L: Quote, Profile, Research) gained 4.2 percent after saying it welcomed a recent statement by the Kazakhstan government that it wished to take a minority interest of up to 15 percent in the miner.

The FTSE 100 .FTSE ended down 28.7 points, or 0.5 percent at 5,660.4. The UK benchmark index has fallen more than 12 percent so far this year on fears of a U.S. recession stemming from a meltdown in risky subprime mortgages, and is on track for its worst quarter since the third quarter of 2002.

"It feels like we could bump along the bottom, give or take 200 points each way, for weeks if not months," said Roger Cursley, a strategist at Investec.

"People are very bruised and very shaken up, and trying to find some positive arguments but just a bit tired of ... coming in looking at the markets," he added.

"It's become a very long drawn-out business."

/... http://uk.reuters.com/article/londonMktRpt/idUKL2657276820080326

[Ghost Dog]

20. Asian Stocks Rise for Fourth Day; Bank of China, Woodside Gain

March 26 (Bloomberg) -- Asian stocks rose for a fourth day after Bank of China Ltd. reported profit that beat analyst estimates and commodity prices advanced.

Industrial & Commercial Bank of China Ltd. rose to a one- month high in Hong Kong after posting its fastest profit growth in three years. Woodside Petroleum Ltd. and Newcrest Mining Ltd. jumped in Sydney on higher oil, copper and gold prices.

``Solid corporate earnings and the strength of commodity prices have restored some confidence and stirred buying,'' said Lu Yizhen, who oversees the equivalent of $1.3 billion at Citic- Prudential Fund Management Co. in Shanghai.

The MSCI Asia Pacific Index added 0.5 percent 141.22 as of 7:43 p.m. in Tokyo. The gauge, which swung between gains and losses at least 17 times today, accelerated its advance late in the day as a strengthening yen boosted the value of Japanese stocks on the dollar-denominated index.

The MSCI benchmark has declined 11 percent this year amid concern a U.S. housing slump will drag the world's largest economy into a recession.

Japan's Nikkei 225 Stock Average retreated 0.3 percent to 12,706.63. The number of shares traded in Tokyo was the lowest for a full day this year. About 85 percent of the companies in the Nikkei traded without the right to a dividend from today, erasing about 103 points from the measure, according to data compiled by Bloomberg.

About half of Asia's benchmarks rose today. Asian automakers and technology stocks dropped after U.S. consumer confidence declined and falling U.S. sales forced Hino Motors Ltd. to take a one-time charge.

/... http://www.bloomberg.com/apps/news?pid=20601080&sid=aWpw.UN2fZSw&refer=asia

[Ghost Dog]

23. German Business Confidence Unexpectedly Rose in March

March 26 (Bloomberg) -- German business confidence unexpectedly rose for a third month in March, suggesting Europe's largest economy is coping with near-record oil prices, a surging euro, and a global credit squeeze.

The Munich-based Ifo institute said its business climate index, based on a survey of 7,000 executives, increased to 104.8 from 104.1 in February. Economists predicted a drop to 103.5, according to the median of 37 forecasts in a Bloomberg News survey.

German companies have increased efficiency and reduced labor costs, helping them remain competitive even after the euro gained 17 percent against the dollar in the past year and oil rose above $100 a barrel. Volkswagen AG last month announced a dividend increase after completing a plan to cut 20,000 jobs. Economic growth may pick up in 2009 after slowing in 2008, two of the country's leading economic institutes said last week.

``It's surprising how well the Germany economy is coping with the strong euro and the financial-market crisis,'' said Glenn Marci, a fixed-income strategist at DZ Bank AG in Frankfurt. The economic outlook will allow ``the European Central Bank to keep borrowing costs on hold this year.''

The euro rose more than a cent to $1.5700 at 10:26 a.m. in Frankfurt. European bonds pared gains.

Hiring, Exports

Companies in Germany's metal, electronics and car industries created more jobs in January than at any time in the past four decades to meet orders, the Gesamtmetall lobby said yesterday. The group, which represents companies including Daimler AG, said ``the strong trend in exports has firmed.''

Exports jumped 3.8 percent in January, unemployment fell to a 15-year low of 8 percent in February, and investor confidence unexpectedly rose for a second month in March.

Ifo's gauge of expectations rose to 98.4 from 98.2, while the index of sentiment on current conditions advanced to 111.5 from 110.3.

...

German companies are benefiting from booming demand for their goods in emerging economies such as Russia and China. While export growth will slow to 5 percent this year from 8.5 percent in 2007, sales should still breach the 1 trillion-euro ($1.56 trillion) mark for the first time, the BGA exporters' lobby said March 12.

/... http://www.bloomberg.com/apps/news?pid=20601085&sid=aNgmyqqPYz.o&refer=europe

[Ghost Dog]

25. EU - Industrial new orders up by 2.0% in January; 7,3% YoY

FXstreet.com (Barcelona) - Demand for industrial goods produced in EuroZone has increased in January well above expectations due to transport equipment's sector jump, according to the Eurostat's latest report.

New orders have increased by 2.0% from December to January, instead of the 0.2% increases expected by market analysts, an increased that follows a 3,6 decreases in December. New orders for transport equipment rose by 6.2% in January and machinery & equipment grew by 2.4%.

Year to Year, industrial new orders increased by 7,3% en January, new orders for transport equipment increased by 14.7% in the EuroZone, Manufacturing of machinery & equipment grew by 8.3% and Electrical & electronic equipment rose by 5.6% respect to January 2007.

Total industry, excluding ships, railway & aerospace equipment grew by 5,8% in January

/. http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=ab1ef9f5-be6f-452a-a157-14955d44d84b

[Ghost Dog]

27. Trichet Says Interest Rates Will Curb Inflation Risks

March 26 (Bloomberg) -- European Central Bank President Jean- Claude Trichet said interest rates at a six-year high will help curb inflation in the 15 nations sharing the euro, suggesting he sees no immediate need to cut borrowing costs.

``The current monetary-policy stance will contribute to achieving our price-stability objective,'' Trichet told European lawmakers in Brussels today. ``In the Governing Council's view, the risks to the medium-term outlook for inflation are on the upside.''

...

Trichet said today inflation will stay ``significantly'' above the ECB's 2 percent limit for most of this year.

Trichet said the euro area's economic ``fundamentals are sound'' even as the currency's 18 percent appreciation against the dollar over the past year makes European exports less competitive. The single currency touched a record $1.5903 on March 17.

``Excessive volatility and disorderly movements in the exchange rate are undesirable for growth,'' Trichet said. `` We're concerned about excessive exchange rate moves. We have noted with great attention that U.S. authorities have reaffirmed that a strong dollar was in the interest of the U.S. economy.''

The euro rose 0.8 percent after today's German business confidence report, climbing as high as $1.5731. The currency has jumped partly as the gap between benchmark rates in the U.S. and the euro region widened.

/... http://www.bloomberg.com/apps/news?pid=20601085&sid=aXslb1vw8DOw&refer=europe

[Ghost Dog]

28. European govt bonds come off highs on Trichet comments, strong German IFO

LONDON (Thomson Financial) - European government bonds came off highs after hawkish comments from European Central Bank president Jean-Claude Trichet and a stronger-than-expected German business confidence survey reinforced views that the ECB will remain focused on inflation for some time to come.

In a testimony to the European Parliament's economic and monetary affairs committee, Trichet raised his expectations for euro zone inflation, saying it is likely to remain significantly above 2 pct for most of 2008, rather than just in the coming months.

"Trichet opened his testimony with comments that risks to price stability were skewed to the upside into the medium-term -- not the subdued hawkish sentiment we had expected," said Matthew Foster-Smith, analyst at Thomson IFR Markets.

"His following comments have also held an overtly hawkish tone with sentiment on inflation not to be dulled for the EU," said Foster-Smith.

The comments added to the more negative tone for bonds following an unexpectedly strong German business confidence survey.

...

Over in the UK, gilts were outperforming their European counterparts after one of the Bank of the England's rate setting Monetary Policy Committee members said the size of the UK's current account deficit means sterling is likely to fall.

Speaking before the Treasury Select Committee, chief economist Charlie Bean said that given the size of the UK current account gap, "sterling is likely to move to the downside".

UK bond prices were also supported by governor Mervyn King's response to a question that tighter lending conditions have made interest rate cuts more likely.

/... http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=f9c3ed42-2a30-4734-b18d-b43cea3b7adf

[Ghost Dog]

30. BoE's King says will not follow US Federal Reserve's lead on policy

LONDON (Thomson Financial) - Bank of England governor Mervyn King said he will not be taking the Federal Reserve's lead for policy, saying conditions in the US are "materially worse" than in the UK.

Appearing before the Treasury Select Committee, King said central banks' policy should be determined by the outlook for inflation.

...

King noted in terms of providing liquidity the BoE is operating in a similar fashion to the European Central Bank.

/... http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=8b4fa096-5e42-47ae-90f3-64172a904931

[Ghost Dog]

35. Business confidence resilient at Europe's core

LONDON (MarketWatch) -- Expectations are far from rosy throughout the euro zone, but business sentiment in Germany and France remains resilient, according to closely watched gauges released Wednesday.

...

Earlier, France's Insee statistical agency said its French business sentiment index improved slightly, rising to 109 from 107 in February. Markets were expecting a decline to 106.

Italy, meanwhile, saw its business confidence gauge fall to a two-and-a-half year low, the research center ISAE reported. Its measure of business confidence in Europe's third-largest economy came in at 89.0 after a reading of 89.6 in February, below a consensus forecast of 89.4.

...

Analysts said the data show that the euro's strong rise has yet to significantly dent export confidence in Europe's biggest economy.

"This continues to suggest to us that the ECB is unlikely to feel under pressure to intervene and, with the U.S. unlikely to act, the euro should be able to scale the <$1.60> region" against the dollar, said David Brown, chief European economist at Bear Stearns.

/.. http://www.marketwatch.com/News/Story/business-confidence-remains-resilient-europes/story.aspx?guid=%7BAC112E28%2DD314%2D4896%2D8C20%2DB93995D291C8%7D

[ozymandius]

8. U.S. Stock-Index Futures Fall; Citigroup, Bank of America Drop

March 26 (Bloomberg) -- U.S. stock-index futures declined after Oppenheimer & Co. analyst Meredith Whitney slashed earnings estimates for U.S. banks, adding to concern further writedowns will curb profit growth.

Citigroup Inc. dropped in Europe after Whitney said the biggest U.S. bank by assets may post a loss in 2008 and reduced her projections across the industry by an average of 84 percent. Bank of America Corp. fell as Goldman Sachs Group Inc. lowered its full-year earnings estimate by 17 percent on higher credit costs. Clear Channel Communications Inc. may retreat on concern the radio broadcaster's $19.5 billion private-equity buyout is in danger of falling apart.

Standard & Poor's 500 Index futures expiring in June lost 2.9, or 0.2 percent, to 1,348.5 at 10:22 a.m. in London. Dow Jones Industrial Average futures fell 21 to 12,494. Nasdaq-100 Index futures decreased 1.25 to 1,824.75.

http://www.bloomberg.com/apps/news?pid=20601084&sid=aVXrLIYcO89k&refer=stocks

[Robbien]

11. Reducing projections by 84%

Appears someone was fooled by all the happy talk when making her original projections.

[ozymandius]

9. Treasuries Rise on Speculation Home Sales Fell to 13-Year Low

March 26 (Bloomberg) -- Treasuries rose on speculation a government report will show U.S. new-home sales fell to the lowest level in 13 years and after Deutsche Bank AG said it may miss a profit forecast.

Demand for three-month bills, considered the safest securities, also rose as the worst housing slump in 26 years threatens U.S. growth. Deutsche Bank, Germany's biggest bank, dropped as much as 2.9 percent in Frankfurt after it said the collapse of the U.S. subprime-mortgage market and slowing economic growth will make it harder to reach its earnings goal.

``The crisis is not over, and any improvement in risk appetite is likely to be short-lived,'' said Wilson Chin, a fixed-income strategist in Amsterdam at ING Groep NV, the biggest Dutch Bank. The Federal Reserve will cut its benchmark interest rate as low as 1 percent to revive growth, he said.

The two-year yield fell 3 basis points to 1.75 percent as of 6:09 a.m. in New York, according to bond broker Cantor Fitzgerald LP. The 2 percent security due February 2010 rose 2/32, or 63 cents per $1,000 face amount, to 100 16/32. Three- month yields dropped 2 basis points to 1.25 percent, snapping two days of gains. Ten-year yields also declined 2 basis points, to 3.49 percent. Yields move inversely to prices.

.....

U.S. Treasuries have outperformed their European counterparts amid speculation the Fed will be forced to cut borrowing costs at a more aggressive pace than the European Central Bank, whose primary mandate is to control inflation.

http://www.bloomberg.com/apps/news?pid=20601009&sid=a_Q60.Q6wvfg&refer=bond

[Demeter]

12. American markets continue to do what they do best – separating fools from their money

Yesterday, markets in Europe were closed. But in America, they kept doing what they are supposed to do – separating fools from their money.

What is really remarkable – and entertaining – is that some of the biggest fools are the very same people who claimed to be Masters of the Universe, the hustlers who work for the financial industry. That is to say, the separators are being separated from their money too.

And the more you look into it, the more you discover that they are not masters of the universe at all – but slaves to it; nothing but clowns in the great human circus…just like us.

Last week, Bear Stearns’ shareholders were separated from a lot of money; in a panic, they agreed to sell out for $2 a share. We wondered how these accountants, lawyers and market-savvy traders could have been so wrong about what they had. When the market closed on Friday they still had billions. When it opened again on Monday, they had almost nothing. How could it be?

Well, now the geniuses have had time to think; and they’ve come to the conclusion that they shouldn’t have sold so cheap. And the buyers – JP Morgan Chase – apparently messed up too. They thought they had closed the deal, only to find that they’d forgotten to get the key documents signed. So when the sellers wanted to go back to the bargaining table, the buyers had no choice. They had to up the ante by 400%. Now, instead of paying $2 a share…they’re going to spend $10, or about a billion dollars more.

So, here is the same question we asked last week: how can such clever people be so clueless about what they’ve got in their own pockets? Is it worth $2 a share? Or $10?

Of course, it is worth what you can get for it. But this is a financial institution. Its assets are marketable. It should be worth exactly the net value of those assets – plus the value of the operating business (typically determined by smoothing earnings over some period of years and multiplying times a capitalization factor – 5 to 20, depending on what kind of mood the buyer is in).

But in the strange new world we live in, however, it’s hard to know what those financial assets are really worth.

DailyReckoning.com

[Demeter]

13. "Grim Outlook" for JP Morgan

http://www.nakedcapitalism.com/2008/03/grim-outlook-for-jp-morgan.html


A hedge fund correspondent pointed us to an article at Institutional Risk Analytics on the Bear-JP Morgan deal. While we don't subscribe to its view that Bear was "raped" (please, the firm was going to file for bankruptcy a week ago Monday), it contains an intriguing analysis of JP Morgan.

Differing with popular opinion, IRA argues that JPM is far from a financially strong institution. It has the highest gearing of any of the three large US banks (and remember, that includes the CDO-laden, walking wounded Citigroup) and by their measures, also has the highest level of economic risk per their metrics. JPM's chickens have not yet come home to roost because its book is heavily weighed toward consumer business, and those problems are coming to the fore later. (The cognoscenti may take issue with their use of RAROC as another measure, but I'm not troubled when making cross company comparisons if you have access only to published financials).

Although IRA does not say so explicitly, the reasoning appears to be that the Fed pushed Bear into JPM's arms as a way to shore up JPM. If asking a firm to take on a $13 trillion derivatives book, of which only $2 trillion is exchange traded, is a favor, I'd hate to see what punishment looks like.

I believe JPM will regret this deal (assuming it comes off) and not simply for the impact it is having on Jamie Dimon's reputation. Bear is stuffed with the some of riskiest assets in the credit game: mortgage debt credit defaults swaps, JPM is thus increasing its exposures at time when it would be more prudent to reduce risk, effectively doubling down. As Smart Money describes it:

The Martingale, gambling lingo for what experienced traders call "doubling down," is perhaps the quickest means to a bloody end. I got my first gray hair the day I understood why the Martingale system, despite all its attractions, simply doesn't work.

The gambling system, which dates back to a London gaming house in the late 1700s, is completely irrational, yet incredibly seductive. The thinking: If you keep doubling your losing bets, eventually a winning trade will make up for the losses. Like making a deal with the devil, the Martingale system will always comes back to haunt you — and often more quickly than you might expect......

Sure, you might win once in a while with the Martingale — perhaps enough to keep you interested in the strategy. But eventually, you'll lose it all, in a very quick and undignified fashion. Take it from somebody who has tried it — the Martingale will kill you. It has to kill you. Why? The strategy is inherently flawed. It's designed to have you increase your bet at exactly the wrong time.

From Institutional Risk Analytics:


Look at the balance sheet of JPM's three main subsidiary banks and the mounting stress from loans losses is apparent. At the end of 2007, JPM aggregated 97bp of gross loan charge offs, 1.25 SDs above peer, and produced a Loss Given Default of 85%, likewise well above peer. The Exposure at Default calculated by the IRA Bank Monitor using data from the FDIC was 202%, more than 2 SDs above peer.

At the end of 2007, JPM's Tier One Risk Based Capital held by its subsidiary banks was just $88.1 billion, a tiny foundation for the bank's vast trading operations. The Economic Capital ("EC") simulation in The IRA Bank Monitor generates an EC benchmark of $422 billion for JPM or a ratio of EC to Tier One RBC of 4.79:1, suggesting that JPM needs almost five times current capital levels to fully support its economic risks.

This EC produces a "Stressed" result for JPM under IRA's Counterparty Risk Rating and a RAROC of just 0.22%.

While JPM currently boasts the highest Tier One leverage ratio of the top three US banks by assets, in EC terms it appears to be the clear outlier in the marketplace with the highest levels of economic risk vs. capital of any large bank in the US -- with one exception: Commerce Bancorp (NYSE:CBH). The relatively large MBS holdings of CBH push its ratio of EC to Tier One RBC over 8:1 in the IRA Bank Monitor simulation.

Why do we take such a dim view of JPM and the US banking sector generally? First, because the US real estate market is not yet even close to the bottom. Second, the commercial real estate and corporate credit sectors are being dragged down by the same deflationary forces that are causing the US economy to slow dramatically. When you consider that US real estate markets and bank loan losses are unlikely to bottom before this time next year, you begin to understand our bearish outlook.

JPM has been lucky so far because its risk book is heavily weighted toward commercial rather than consumer risk, unlike our beleaguered friends at Citigroup (NYSE:C). But like last week's debacle involving BSC, the fast deteriorating situation at C could provide a catalyst that takes JPM down a couple of notches in the next few months.

We hear in the risk channel that the internal situation at C is going from bad to worse as veteran Citi bankers are in near-mutiny against the new, two-headed management team imposed by regulators. Meanwhile, former CEO Chuck Prince, who is a consultant to C, is leading the discussions with regulators on behalf of the bank and is, in effect, acting as shadow chief executive of C. One insider predicts that the C annual meeting in several weeks time will be "very messy" and notes that acting Chairman Robert Rubin is nowhere to be seen.

Keep in mind that C, JPM and many other large banks are still trying to get their arms around the full dimension of the risks facing their institutions, this even as bank loan default rates remain well-below long-term averages. All of the subsidiary banks of C, for example, reported 127bp of charge offs in 2007, a full 2 SDs above peer but well below 1991 loan loss levels.

[wordpix]

61. "C, JPM and many other large banks are still trying to get their arms around ...the risks"

Looks like we're not at the end of the debacle.

[Demeter]

14. Bear: Did the Fed and Treasury Push Too Hard?

http://www.nakedcapitalism.com/2008/03/bear-did-fed-and-treasury-get-too.html

Andrew Ross Sorkin in the New York Times provides some important background on how the Bear deal wound up being retraded today. But he does his readers and the greater public a huge disservice by telling the story so as to flatter Wall Street.

According to Sorkin, the $2 price for Bear was the Fed's and Treasury's idea; JP Morgan was prepared to pay more, but they nixed the idea, saying they did not like the "optics" of the deal. The implication is that the officials overstepped their bounds. That is a pretty outrageous spin when the government is putting up taxpayer money.

Had it been an option, the Fed should have nationalized Bear. It was going to declare bankruptcy Monday if there was no deal; its shareholders would have been wiped out. Why am I so confident of this view? If bondholders, as rumored, were buying shares to make sure the JPM deal went through (and thus would take losses on their stock purchases when the deal closed), that meant that they thought their bonds were worth well under 100 cents on the dollar in a bankruptcy. Shareholders are subordinate to bondholders, so equity owners would have gotten zilch.

I can think of a host of reasons, however, why the Fed did not go the nationalization route, the biggest being that it lacked clear authority (it couldn't declare Bear to be insolvent, as it could a member bank). And letting Bear fail (and having acsounts frozen) was what the Fed was trying to avoid, so letting it fail and then seizing control (even assuming it could do that) was never an option. No doubt, the central bank also did not want to assume administrative control of an entity that it had never regulated (ie, its supervisors had never kicked its tires) that dealt actively in markets in which the Fed has little expertise. Even in an orderly liquidation scenario, that it a lot to take on.
.............

Bear was going to fail as of Monday. Bye bye equity and many if not most jobs. How hard is this to understand? I thought anyone who was remotely financially literate understood what bankruptcy means. The employees should be grateful to get anything. But no, the media slavishly accepts their sense of entitlement.

So I don't buy Sorkin's theory that the Fed overreached. In fact, I'm deeply offended that he is presenting this idea at all. It's part of the conspiracy to foist the losses of a reckless securities industry onto the public at large.

[AnneD]

69. Paulson reviewing financial regulation

WASHINGTON — The crash of Wall Street's once mighty Bear Stearns underscores the need to bring investment houses under the kind of federal oversight that has long been given to commercial banks, Treasury Secretary Henry Paulson said Wednesday.

In a speech to the U.S. Chamber of Commerce, Paulson said the Bush administration will soon release just such a blueprint in an effort to promote a smoother functioning of financial markets.

For months the financial markets — rocked by the double blows of a housing and credit crises — have been suffering through extreme turmoil, threatening to plunge the U.S. economy into a deep recession. The modern U.S. financial system is a complex web of financial players — institutions and individuals and practices that are subject to different rules and regulations. Commercial banks, long a financial bedrock, are subject to regulations and supervision.

"This latest episode has highlighted that the world has changed as has the role of other nonbank financial institutions and the interconnectedness among all financial institutions," Paulson said. "These changes require us all to think more broadly about the regulatory and supervisory framework that is consistent with the promotion and maintenance of financial stability," he added.

http://www.chron.com/disp/story.mpl/ap/business/5649750.html

File this one in you Day Late Dollar Short file:sarcasm:

[donkeyotay]

78. It's like Jessie James giving a speech to the gang.

"Boys, we've robbed so many stagecoaches that the settlers are going to stop coming. We've got to lay low until this blows over, and then we can rob em some more."

BTW, if I were TPTB, I'd heavily medicate Paulson before sending him out in public. Last time I saw him he looked like he had peered into the abyss. At one point he was saying the system was fine while vigorously shaking his head, "no." Very unsettling. Reminded me of George pre-9/11.

[AnneD]

84. That's what happens....

when you stare into the eye of Mordor.

[Demeter]

15. Some Subprime Debt Valued at 5 Cents on the Dollar

http://www.nakedcapitalism.com/2008/03/some-subprime-debt-valued-at-5-cents-on.html


Gillian Tett has an intriguing little piece in Monday's Financial Times, in which she reports on the first public valuation of particular structured credit instruments. The odd bit (and theories by those that may have insight are welcome) is that JP Morgan apparently elected to make these prices public. JPM needed to value the securities for a court filing; perhaps it decided it had nothing to lose by sharing its pricing and thought it might encourage other banks to similarly disclose value estimates in legal cases in the hopes of encouraging more transparency. But as the article makes clear, the markdowns from face value, even of the top rated instruments, were considerable.

From the Financial Times:


The first public price estimates for specific structured credit securities to have emerged since the start of the credit crisis show that values have fallen sharply. Some securities have lost almost a third of their value – even though many were considered to be so safe that they carried top-notch ratings from the credit ratings agencies. Meanwhile, some subprime mortgage-linked securities issued by groups such as UBS have lost almost 95 per cent of their value.

The price estimates were made in a legal filing following a decision by JPMorgan Chase to ­publish detailed securities valuations in a Canadian court. The securities are linked to commercial loans and medium-grade mortgages. The estimates are likely to be scrutinised by auditors and regulators since they come at a time when the issue of security pricing has become controversial.

Banks are under pressure from regulators to book losses they have incurred on such instruments. However, trading has virtually dried up in many corners of the credit markets, and it is hard to compare prices for these instruments between banks. Many regulators and investors fear that banks are still varying in the degree to which they have booked losses on their credit instruments in recent months – not least because it is hard for auditors to compare internal estimates with external benchmarks.

The figures have emerged because the US bank is leading an effort to restructure a group of 20 Canadian structured investment vehicles that issued $32bn of asset-backed commercial paper.

[Tansy_Gold]

52. "Trading has virtually dried up"???

Does this mean no one wants to buy these "instruments"? If so, does that mean they're essentially, um, worthless?

Tansy Gold, inquiring

[donkeyotay]

80. Nooo, no, no, silly. The instruments merely need to be "restructured"

Kids, don' try this at home. (Only as not seen on teevee.) It's only available to people with their own federal reserve.

[Demeter]

16. Japan Says US Financial Crisis Worse Than Its Bust, Urges Government to Recapitalize Banks

http://www.nakedcapitalism.com/2008/03/japan-says-us-financial-crisis-worse.html

Yoshimi Watanabe, Japan’s financial services minister, ventured to give the US advice on its credit crunch based on Japan's experience during its post-bubble-years banking crisis. And it's not pretty.

Why are these remarks so unusual? Consider:


Most countries don't give other countries advice on how to run their financial services sector. That alone is pretty unheard of (however, the IMF dictated the terms of rescue programs in the Asian crisis of 1997, but those were third world countries suffering capital flight. Of course, their situation, with excessive borrowings, wobbly banks, and unsustainable current account deficits, bears no resemblance to ours)

The Japanese are particularly loath to stick their noses in other countries' affairs (that gives others license to comment on their practices). Note that even the often-belligerent Chinese sound off in response to US pressure, not in a vacuum

This statement came from the head of Japan's top financial regulator. If the powers that be had wanted to soft-pedal the message, they would have used a lower-ranking bureaucrat or a retired official

The Japanese comment is effectively a statement that significant actors in the US financial sector are bankrupt and will need to be recapitalized. Again, that is a shocking diagnosis to make in a public forum. Wantanabe says that the US banking system will need to get new equity from the government. The delay in recapitalizing Japanese banks (it was hard to win over the public) is considered within Japan the biggest reason for the length of their economic crisis

The Japanese are as nicely as they possibly can telling the US that we are in a terrible mess and we need to get on top of it ASAP. This is a blunt warning. I am sure the significance of the Japanese attempt at tough love will be lost.

CITATIONS AND QUOTATIONS AT LINK...

[Demeter]

21. If the bailout comes, watch for a dollar dive By James Saft / Reuters

http://uk.reuters.com/article/stocksNews/idUKNOA54771920080325?rpc=401&=undefined&pageNumber=2&virtualBrandChannel=0&sp=true


If the United States bails out the financial system by buying mortgage debt directly, the price just might be surging inflation and a dollar crisis. Calls are increasing for the government, either directly or via the Federal Reserve, to cut the knot of the credit crisis at a stroke by buying up mortgages that banks and investment banks are finding difficult to finance. If the United States bought mortgage debt at or very near 100 cents on the dollar, despite the fact that much of it is trading well below that, it would allow banks to pay back loans used to finance these holdings.
If done in sufficient size, say $800 billion (400 billion pounds) or $1 trillion, it would relieve the terrible pressure on bank balance sheets and allow other credit markets, like those for corporate loans, to return to something approaching equilibrium. That in turn would make Fed monetary policy more effective in the sense that banks would be able to increase lending and pass on interest rate reductions.

Of course this is a radical step, and way beyond the Fed's already extraordinary policy of swapping mortgages held by banks and some investment banks for easy to finance Treasuries.

It is also hugely risky in terms of the Fed's obligation to maintain stable prices. Putting aside moral hazard -- many foolish borrowers and lenders would thus be given a free ride -- and depending on how such a bailout was done, it could stoke inflation to levels intolerable to foreign creditors, provoking a sharp fall in the dollar as they sought safety elsewhere. Such a bailout would either have to be paid for by taxes, which seems unlikely, or would involve issuing more government debt or effectively expanding the money supply.

"There would be an inflationary impact because of the huge introduction of credit," said Philip Gisdakis, strategist at Unicredit in Munich. "It's not $50 billion; we are talking about more like $1 trillion. This injection of capital you need will have consequences for the U.S. economy."

To be sure, there is no political consensus for a major bailout, which is openly opposed by the Bush administration and would face serious difficulties gaining agreement in an election year. The U.S. Treasury said on Wednesday that proposals it had seen would do more harm then good. That is partly why there has been such a startling turn around on allowing Fannie Mae (FNM.N: Quote, Profile, Research) and Freddie Mac (FRE.N: Quote, Profile, Research) to take on more risk and buy more mortgages. While their debt has an implicit government guarantee, they are shareholder owned.
But the $200 billion in new lending allowed to Fannie and Freddie by their regulator, The Office of Federal Housing Enterprise Oversight, might not prove enough....

(James Saft is a Reuters columnist. The opinions expressed are his own. At the time of publication James Saft did not own any direct investments in securities mentioned in this article. He may be an owner indirectly as an investor in a fund.)

[Ghost Dog]

22. Japan's Export Growth Unexpectedly Quickens to 8.7%

March 26 (Bloomberg) -- Japan's export growth unexpectedly accelerated in February as demand from emerging markets helped automakers ride out the U.S. slump.

Exports, which contributed more than half of the economy's expansion last quarter, climbed 8.7 percent from a year earlier after increasing 7.6 percent in January, the Finance Ministry said today in Tokyo. The median estimate of 19 economists surveyed by Bloomberg News was for a 7.5 percent gain.

Consumers in China and Indonesia are helping Hino Motors Ltd. and Honda Motor Co. make up for waning demand in the U.S., Japan's largest market. Overseas sales are proving resilient even after a slump in the U.S. dragged the dollar down 12 percent against the yen this year.

``This is an impressively strong number and we may need to reassess the outlook for exports,'' said Richard Jerram, chief economist at Macquarie Securities Ltd. in Tokyo. ``Exports are less sensitive to the U.S. slowdown than expected.''

Imports increased 10.1 percent, and the trade surplus widened 0.9 percent to 969.9 billion yen ($9.7 billion), the ministry said.

The yen rose to 99.96 per dollar at 11:59 a.m. in Tokyo from 100.07 before the report was published.

Japan's currency surged to a 12-year high against the dollar last week, eroding exporters' earnings. Toyota Motor Corp., Japan's biggest carmaker, last week said the company may miss its sales target this year because the yen's gains make its cars more expensive in the U.S.

Global Demand

Export growth to Asia quickened to 13.9 percent in February from 8.l percent a month earlier, today's report showed. Shipments to China rose 14.9 percent, and sales to Europe gained 7.2 percent. Exports to the U.S., meanwhile, slid 6 percent from a year earlier, a sixth monthly decline.

``So far Japanese exports have held up nicely,'' said David Cohen, director of Asian economic forecasting at Action Economics in Singapore. ``The big question is whether growth in the rest of the world will hold if the U.S. goes off a cliff.''

/... http://www.bloomberg.com/apps/news?pid=20601080&sid=a01XuUvoaKTU&refer=asia

[DemReadingDU]

17. 2nd Healthcare fraud trial in Columbus, Ohio - update

3/26/08 Fate of chairman, friend up to jury
Defense denies pair swayed main witness in fraud trial

By the end of the day, the co-founder of National Century Financial Enterprises could be a felon or closer to becoming a free man.

Lance K. Poulsen, who founded the health-care financing company and served as chairman, chief executive and president, and his friend Karl A. Demmler have been on trial for conspiracy, obstruction of justice and two counts of witness tampering.

They're accused of actions aimed at swaying the testimony of Sherry Gibson, a former National Century executive. She is considered a key witness against Poulsen in his upcoming trial in connection with the company's bankruptcy in 2002 and a resulting loss to investors of more than $1.9 billion.

The witness-tampering case, being conducted in U.S. District Court in Columbus, was handed over late yesterday afternoon to the seven-woman, five-man jury. Deliberations are expected to resume this morning.

If convicted in this case, Poulsen, 64, and Demmler, 57, could be sentenced to a maximum of 35 years in prison.

Poulsen is to be tried on the fraud charges in the summer.

Nine other executives have been convicted or pleaded guilty in National Century's collapse. Only Poulsen and executive James Happ still await trial. However, Poulsen was the only defendant that federal Judge Algenon L. Marbley jailed pending trial, and the witness-tampering charges were a major reason, Marbley said last year.

Poulsen is accused of using Demmler as a middleman to encourage Gibson, a former National Century vice president, not to testify against Poulsen. Gibson pleaded guilty in 2003 to falsifying National Century records, went to prison and became the government's key witness in the fraud case.

The government's case against Poulsen and Demmler was based largely on wiretapped conversations between the two and between Demmler and Gibson.

In his closing yesterday, Prosecutor Leo Wise recited from one of the taped conversations in which Demmler told Gibson: "Put it this way: Next time it rains, slip and fall down. You don't remember nothing.' "

"Mr. Poulsen wanted to buy justice, but justice isn't for sale," Wise said.

Poulsen took the stand in his defense Monday, acknowledging that he had agreed when Demmler said he told Gibson to forget.

"He tried to explain it all away," Wise said. "He didn't because he couldn't."

Defense attorneys told the jurors to focus on other facts about the alleged bribes. Peter C. Anderson, one of Poulsen's three attorneys, pointed out that no money ever changed hands, that Poulsen and Gibson did not communicate directly, and that no testimony was ever changed.

Poulsen "was trying to set the record straight," Anderson said. "He was indicted based on suspicious comments."

Poulsen acted on the advice of his attorney and offered money only to help Gibson get a new attorney, Anderson said.

But Thomas Tyack, then Poulsen's attorney, testified that he told Poulsen he shouldn't loan Gibson money, Wise said.

Darryl Harper, Demmler's attorney, said that Gibson misunderstood the discussions with Demmler. "It was a continuation of a conversation she had with Demmler in prison," Harper said.

Demmler visited Gibson in prison and told her he thought she had been railroaded and could have her conviction overturned, Harper said. Demmler, a former owner of the Bogey Inn in Dublin, did not take the stand in his defense.

http://www.columbusdispatch.com/live/content/business/stories/2008/03/26/obstruct.ART_ART_03-26-08_C8_TD9OEC1.html?sid=101


link to previous articles...
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3241692&mesg_id=3241727

[UpInArms]

105. Ex-CEO of National Century guilty of witness tampering

http://news.yahoo.com/s/nm/20080326/bs_nm/nationalcentury_dc

WASHINGTON (Reuters) - A federal jury in Ohio convicted the former chief executive of National Century Financial Enterprises of interfering with a witness in a criminal fraud case involving the bankrupt company, the U.S. Justice Department said on Wednesday.

Lance Poulsen, the former head of the health-care finance company, was convicted after a week-long jury trial along with his personal associate, Karl Demmler, the department said in a statement.

The witness tampering charge was linked to a key witness who was scheduled to testify in the trial of Poulsen and other executives for an alleged $2 billion fraud at the National Century, the government said.

The Columbus, Ohio jury convicted Poulsen and Demmler of trying to tamper with the testimony of Sherry Gibson at the separate National Century fraud trial, which ended earlier this month with the conviction of five other company executives. Those five executives were found guilty of scheming to deceive investors and credit rating agencies about the financial health of National Century.

Poulsen will be tried on fraud charges in August, the Justice Department said.

Poulsen and Demmler each face up to 35 years for the witness tampering, conspiracy and obstruction of justice convictions, the government said.

...more...

[Demeter]

18. Hedge funds cut commodities exposure

http://www.ft.com/cms/s/0/c2226436-f8f9-11dc-bcf3-000077b07658.html


Commodities prices have been falling across the board as hedge funds cut their exposure to one of the most popular asset classes so far this year, suggesting that recent record prices have been buoyed by speculative flows. The spread of deleveraging to commodity hedge funds could be good news for central bankers – usually afraid of any financial contagion.

Crude oil prices late last week retreated by 10 per cent from the record high of $111.80 a barrel reached on Monday, while other commodity prices have also fallen sharply. David Holmes, of Dresdner bank in London, said that hedge funds were getting out of many of their positions. “Clearly, they were betting that prices would rise in commodities and now they are reducing exposure and most likely locking in profits.”

The Federal Reserve has long been baffled by the strength of oil and other commodities – especially the recent step-up in prices, which has increased inflation risk and greatly complicated the decision as to how aggressively to ease monetary policy. Fed officials see no fundamental economic justification for the recent strength. Demand in China and India may be strong, they reason, but that was not news to traders. Indeed, the global growth outlook has deteriorated since the start of the year. The International Monetary Fund shares the Fed’s view, highlighting in a report published on Thursday a “disconnect between commodity prices and the ongoing slowdown”...Fed officials recognise that aggressive interest rate cuts have contributed to commodity strength by weakening the dollar – producing both a mechanical effect on dollar-denominated commodity prices, and feeding investment in commodities as a hedge against inflation and further dollar declines.
Indeed, one reason the Fed cut interest rates by 75 basis points this week – and not the 100 basis points the market expected – was in order to avoid fuelling a falling dollar/rising commodity price spiral. That strategy appears to have succeeded for the time being. But even allowing for this, policymakers did not believe the rise in commodity prices this year was justified on economic grounds – leading them to attribute much of it to financial developments.

If financial forces were the main drivers behind the recent spike, then deleveraging – driven by tighter bank lending to hedge funds and losses on other assets – should deliver lower prices. That would reduce inflation risk and give central bankers greater latitude to ease monetary policy to combat the risks to growth. However, the IMF warned against any expectation of a large decline in commodities prices, cautioning that markets remained tight and demand in countries such as China, India or Brazil was strong. “Unless there is a substantial global downturn, the extent of easing may be small,” it said. It added that the apparent disconnect between rising commodities prices and the global economic slowdown reflected the fact that developing countries, which have been responsible for the bulk of recent commodity demand growth, have so far been less affected by the credit crisis.

[Demeter]

19. This Is The House That Ronnie Built

http://economistsview.typepad.com/economistsview/2008/03/a-coordinated-e.html



Fred Block, an economic sociologist at UC Davis, explains the political changes that led to the financial crisis:


The story begins with systematic efforts by Ronald Reagan to dramatically reduce the regulation of financial markets and facilitate a huge transfer of income and wealth to the highest income households. These policies were embraced and expanded by later Republican presidents and “succeeded” in producing a new era of income inequality and out-of-control financial activity. ...

Starting in 1981, Ronald Reagan set out to deliver on two major changes that he had promised his business supporters. He significantly rolled back government regulation of the financial sector... At the same time, Reagan cut taxes for the very rich, a policy initiative that was replicated by George W. Bush. Taken together, these steps facilitated a dramatic shift of income...

As the rich grew wealthier, they invested growing amounts in hedge funds that pursued risky strategies to earn annual returns that were far higher than those available for ordinary investments... The government never regulated these funds because they were closed to most people; one had to exceed a certain wealth threshold to play. The theory was that these already rich investors could cope if these highly speculative investments turned bad. ...

As hedge funds grew increasingly successful, they produced rate of return envy among established financial institutions. Pension funds, for example, wanted a piece of the higher return action and started putting some of their money into these unregulated funds. The big investment banks, similarly ... started imitating the strategies pioneered by the hedge funds. Many of them, like Bear Stearns, were even allowed to create their own hedge funds. ...

This is where the subprime mortgages come in. Starting in the 1990s, some independent mortgage brokers and mortgage firms figured out how to make money by lending to poor people who could not qualify for standard mortgages. The firms acted just like the local pawn shop, appealing to relatively desperate people who would be willing to pay substantially higher interest rates if only they could own a home. ...

Since housing prices, even in low income neighborhoods, were rising steadily, the lenders thought they faced little risk. Even if the borrower defaulted, the lender could always foreclose and sell the house for an even higher price... Bankers were eager to package large bundles of these mortgages and resell them to hedge funds and other investors. ... Hedge funds bought huge quantities..., usually using borrowed money..

This whole house of cards rested on the assumption that housing prices would continue the rise... But as subprime lending expanded, so too, inevitably did foreclosures, and as more foreclosed properties hit the market, prices started heading downward. ... By February 2008, almost nine million homeowners ... owed more on their mortgages than the house is worth, and that number is bound to rise...

A task for a new administration is to reverse the mistaken policies that created this mess. The right-wing experiment with free market orthodoxy has been a complete and total failure. It is time to repair the damage by driving the top 1 percent share of household’s income back down... We also need to restore effective regulation to all corners of the financial sector, especially hedge funds. ...

[DemReadingDU]

24. FDIC adds 140 workers to bank-failure division

3/25/08 Federal regulators will increase by 60% the number of workers who handle bank failures.

Anticipating a surge in troubled financial institutions, federal regulators will increase by 60% the number of workers who handle bank failures.

The Federal Deposit Insurance Corp. wants to add 140 workers to bring staff levels to 360 workers in the division that handles bank failures, John Bovenzi, the agency's chief operating officer, said Tuesday.

"We want to make sure that we're prepared," Bovenzi said, adding that most of the hires will be temporary and based in Dallas.

There have been five bank failures since February 2007 following an uneventful more than two-year stretch. The last time the agency was hit hard with failures was during the 1990-1991 recession, when 502 banks failed in three years.

more...
http://money.cnn.com/2008/03/25/news/economy/bc.na.fin.us.bankfailur.ap/index.htm?postversion=2008032518


FDIC Failed Bank List
http://www.fdic.gov/bank/individual/failed/banklist.html

[Demeter]

42. A Second Increase?

The first report said they were calling people out of retirement....from the Savings and Loan collapse!

[DemReadingDU]

50. sort of - from MSNBC

3/25/08

FDIC officials said last month they planned to bring back about 25 retirees to the agency and noted those workers will train new hires. Over the next five years, about 50 percent of employees with experience in bank failures, especially those who were at the agency during the savings and loan crisis of the late 1980s and early 1990s, will be eligible for retirement, officials added.


http://www.msnbc.msn.com/id/23798121/

[Robbien]

26. British finance watchdog blames itself over Northern Rock crisis

The Financial Services Authority said in a statement that it had been guilty of insufficient "supervisory engagement" with Northern Rock in the run-up to the crisis in late 2007.

It also stressed that its supervisory team had failed "to follow up rigorously with the management of the firm on the business model vulnerability arising from changing market conditions."

. . .

The Financial Services Authority, which has been heavily criticised for its perceived failings, said it was reforming its working practices following the findings of its internal review.

The FSA's director of internal audit, Rosemary Hilary, said Wednesday that reform to the watchdog would ensure that in future there was "good record-keeping, good information flows ... and the right amount of engagement and supervision of front-line staff by management."

FSA chief executive Hector Sants added: "It is clear from the thorough review carried out by the internal audit team that our supervision of Northern Rock in the period leading up to the market instability of late last summer was not carried out to a standard that is acceptable, although whether that would have affected the outcome in this case is impossible to judge.

"However, I am determined through the programme of work that I am announcing today, that proper standards will apply to all significant firms supervised by the FSA," Sants added in the Authority's statement.

http://afp.google.com/article/ALeqM5jS2x1vDYJKS4XmqUZXj7BhNLusAw

While the US watchdog says "Problem? There's a Problem? Don't look at me."

[UpInArms]

29. dollar watch

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

Last trade 71.718 Change -0.335 (-0.46%)

Dollar Weakness Resumes as Housing and Confidence Deteriorates

http://www.dailyfx.com/story/bio1/Dollar_Weakness_Resumes_as_Housing_1206481455973.html

The sell-off in the US dollar resumed sooner than we had initially anticipated on the heels of surprisingly weak economic data. Consumer confidence slipped to 5 year lows as house prices tumbled more than 10 percent. Despite the increase in existing home sales, the housing market remains very weak. Sales only increased because bargain hunters were scouring the inventory for foreclosures. The weakness in the housing market spells more trouble for the US economy and the US dollar because consumers are now dealing with the triple blow of falling housing market values, a deteriorating labor market and rising prices. If we do not see a rise in both the average price of new home sales as well as the amount of homes sold, the Federal Reserve may have no choice but to step up the gas on lowering interest rates. In addition to the housing market numbers, durable goods are also due for release. Believe it or not, the futures curve is pricing in a 45 percent chance that the Fed funds rate will be at 2percent by the end of August. This means that they expect the Federal Reserve to slow down significantly with their next rate cut possibly being their last. We believe that this is overly optimistic because the labor market in the US should deteriorate even further over the next few months. Over the past two weeks, we have had layoff announcements from Citigroup and Goldman Sachs. The NY Times is reporting that another 20,000 jobs could be cut in the high-paying financial sector over the next 2 years. CNBC expects Bear Stearns to cut 50 percent of its 14,000 large workforce. We are not going to speculate about the extent of the layoffs, but this does agree with our overall view that the labor market will get worse before it gets better. The statistic that we have been quoting for some time is from 2001 and 2002, when the US economy endured 15 consecutive months of negative job growth. In many ways, the US economy faces bigger risks now than it did a few years ago and for that reason a third month of negative non-farm payrolls is not only possible but probable.

...more...

Euro Takes 1.5700 on IFO Blowout -- No Weakness in Sight

http://www.dailyfx.com/story/bio2/Euro_Takes_1_5700_on_IFO_1206526792104.html

The IFO survey of business sentiment printed a much stronger 104.8 versus expectations of 103.5 helping to rally the EURUSD more than 100 points in a matter of minutes as euro shorts betting on a slowdown in the EZ economy were forced to cover their position in a hurry. The IFO data suggests that at least for the moment the economy in the 17 member region continues to operate at a healthy pace irrespective of the troubles in US.

The boom in EZ is led by the export sector, most notably in Germany as gains in efficiency coupled with strong demand from emerging markets, have helped producers in metal, electronics and car industries create more jobs in January than at any time in the past four decades, according to an article in Bloomberg.

We have long contended that the ECB will not change its hawkish posture until and unless employment in the region begins to contract. Tonight’s strong IFO results which are supportive of continued expansion in labor demand, indicate that Mr. Trichet and company will not be in any hurry to change their course anytime soon. Indeed in comments this morning he reaffirmed his commitment to keeping rates steady by stating that such policy will help control price pressures caused by elevated energy costs.

In UK on the other hand Governor Mervn King was decidedly more downcast in his assessment of the situation, noting that risks were balanced to the downside. While all the MPC members agreed that the condition of the UK economy was far better than that of the US, they also appear to concur that some slowdown in UK economic activity was likely. The tone of their testimony suggested that UK monetary authorities were considering lowering the overnight lending rate at their next meeting in April. As a result EURGBP gained more than half a cent as traders adjusted for the idea of a possible rate cut. Meanwhile, today’s price action in North America is likely to be dictated by the Durable Goods orders data. The last bastion of hope for dollar bulls is that exports help offset some the negative impact of housing. If the market doesn’t see any improvement in DG data, the greenback may be in for more pain.

...more...

[Ghost Dog]

32. Euro= USD 1.572, CHF 1.572 JPY 156.8 and GBP 0.787 at this time

[Ghost Dog]

45. Dollar drops after surprising fall in durable orders

LONDON (MarketWatch) -- An unexpected 1.7% decline in February U.S. durable goods orders saw the dollar extend losses Wednesday. A MarketWatch survey of economists produced a consensus forecast for a 0.5% rise after a revised decline of 4.7% in January. The euro rose to a session high of $1.5754 after the release of the data. The single currency remains 0.6% higher at $1.5724. The dollar is down 0.8% against the Japanese yen, slipping back below the 100 yen level to change hands at 99.11 yen.

/. http://www.marketwatch.com/news/story/dollar-drops-after-surprising-fall/story.aspx?guid=%7B6CFFC777%2DABE7%2D4905%2DB42D%2D9D97B17F3B5F%7D&dist=hplatest

[hatrack]

49. "Surprising"? "Unexpected"? Good God, who WRITES this shit?

:eyes:

[Ghost Dog]

62. Euro= USD 1.574, CHF 1.569 JPY 156.4 and GBP 0.788 at this time

Swiss Franc At Multi-day High Versus Euro

(RTTNews) - The Swiss franc advanced further versus most if its major counterparts during early New York trading on Wednesday. Extending early European session's uptrend, the Swiss currency advanced to 6-day high of 1.9889 versus the pound and a multi-day high of 1.5673 versus the euro. Against the greenback, the Swiss franc reached a 6-day high of 0.9957 in early New York.

...

As of now, the Swiss franc is worth 99.38 versus the Japanese yen, 1.9905 versus the pound, 1.5678 versus the euro and 0.9969 versus the greenback.

/.. http://www.nasdaq.com/aspxcontent/NewsStory.aspx?cpath=20080326\ACQRTT200803260957RTTRADERUSEQUITY_0743.htm

[Ghost Dog]

87. Euro= USD 1.576, CHF 1.570 JPY 156.8 and GBP 0.786 at this time

Dollar slides as weak data back further US rate cuts

NEW YORK, March 26 (Reuters) - The dollar fell for a second straight session on Wednesday after an unexpected drop in durable goods orders heightened worries about the health of the U.S. economy and backed expectations of further interest rate cuts.

The dollar managed to trim its losses against the yen after a slightly better-than-expected U.S. new home sales report for February, but the data did little to ease concerns about the beleaguered sector.

Both the durable goods and housing reports contrasted with European data on Wednesday that suggested the euro-zone economy was much healthier than that of the United States despite a soaring euro and higher interest rates.

"It has not been a good environment for the U.S. dollar," said Rafael Martorell, chief dealer at BNP Paribas in New York. "Everyday we have confirmation that the European Central Bank will keep interest rates on hold, while the U.S. economy is in pretty bad shape and that means lower rates," he added.

...

"This goes to show that European producers continue to operate on all engines despite higher exchange rates and despite a slowdown in the United States. We're not seeing much of a spillover of the U.S. slowdown just yet," said Boris Schlossberg, senior currency strategist at DailyFX.com in New York.

Euribor interest rate futures turned negative after the data. Futures traders are now pricing in only a 50 percent chance of an European Central Bank cut by year-end while they factored in more than two 25 basis point moves a week ago FEIZ8.

"Euro is right now clearly overbought, but for the time being the fundamentals point pretty much the euro zone's way. The ECB has absolutely no reason to change course since their economy is far stronger than that of the U.S,"

/... http://uk.reuters.com/article/marketsNewsUS/idUKN2641611320080326?rpc=401&

[Ghost Dog]

94. Dollar Nears Record Low Versus Euro As Data Signals Economy In Recession

(RTTNews) - The dollar weakened versus other major currencies on Wednesday as central banks came into focus and US data provided further evidence that the economy has slipped into recession.

Traders were treated to a trio of economic reports, all of which fueled the dollar's decline. Before the opening bell, the Commerce Department released its advance report on durable goods orders in February, showing that orders for goods meant to last for at least three years fell unexpectedly.

The report showed that orders for durable goods fell 1.7 percent in February following a revised 4.7 percent decrease in January. Economists had been expecting durable goods orders to edge up 0.8 percent compared to the 5.3 percent decrease originally reported for the previous month.

Meanwhile, new home sales showed a notable decline in the month of February, according to a report released by the Department of Commerce on Wednesday, with new home sales falling for the fourth consecutive month.

Shortly after, data from the Energy Information Administration revealed that crude oil inventories unexpectedly came in unchanged in the week ended March 21. The price of oil accelerated above $105 following the release.

The dollar was hammered versus the euro, dropping to 1.5828 from an early level near 1.56. The dollar moved within a cent of its record low of 1.59 from earlier this month. The dollar was on the defensive even before the dismal US data, with ECB President Jean-Claude Trichet saying that euro zone inflation is expected to remain significantly above 2 percent for most of 2008, lowering the likelihood that the central bank will slash interest rates anytime soon.

/... http://www.nasdaq.com/aspxcontent/NewsStory.aspx?cpath=20080326\ACQRTT200803261514RTTRADERUSEQUITY_1127.htm

[DrDebug]

97. 1.585 Only half a cent to go for the new record

Next: Fed slashes interest rates to 0.25%. Dollars for nothing and Bear Stearns toxic waste for free...

[Ghost Dog]

100. Euro= USD 1.584, CHF 1.569 JPY 157.6 and GBP 0.788 at this time

(RTTNews) - Euro rises to 1.5858 versus greenback

http://www.nasdaq.com/aspxcontent/NewsStory.aspx?cpath=20080326\ACQRTT200803261630RTTRADERUSEQUITY_1240.htm

Dollar Posts Biggest Two-Day Decline Versus Euro Since 2001

March 26 (Bloomberg) -- The dollar posted its biggest two- day decline against the euro since January 2001 as traders increased bets the Federal Reserve will cut borrowing costs further while the European Central Bank holds rates steady.

The currency tumbled after reports unexpectedly showed U.S. durable-goods orders fell and German business confidence increased. The yen rose against the Australian and New Zealand dollars as concern that credit market losses will widen led investors to bet on a reduction in holdings of higher-yielding assets funded by cheap loans in Japan.

``The U.S. has been the center of financial-sector stress and now will be the center of economic weakness,'' said Robert Sinche, head of global currency strategy at Bank of America Corp. in New York. ``We will test $1.60 again.''

Against the euro, the dollar fell 1.2 percent to $1.5838, within 1 cent of the all-time low, at 4:17 p.m. in New York, from $1.5650 yesterday. The dollar dropped 0.8 percent to 99.16 yen, from 99.98 yesterday. The euro rose 0.4 percent to 157.05 yen, from 156.49.

The U.S. currency is down about 8 percent against the euro this quarter. It touched $1.5903 on March 17, the lowest level since the European currency debuted in 1999.

Yields on three-month Euribor futures show traders bet the ECB won't lower its 4 percent main refinancing rate until next year. The yield on the contract expiring in December 2008 was 4.01 percent. The two-year U.S. Treasury note's yield of 1.65 percent was 181 basis points less than that of the same-maturity German bund. The gap was the widest since 1993.

Fed Rate Outlook

Futures on the Chicago Board of Trade showed traders see a 42 percent chance the Fed will lower the 2.25 percent target lending rate by a half-percentage point at its April 30 meeting, compared with 28 percent odds yesterday. The remaining bets are for a cut of a quarter-percentage point.

The dollar has fallen 12.5 percent against the yen and 14 percent against the Swiss franc this quarter. The latter decline is the biggest since 1987. Analysts surveyed by Bloomberg forecast the U.S. currency will rebound to $1.45 per euro by the end of the year.

The pound weakened against most of the major currencies after Bank of England policy makers said they expect sterling to decline as economic growth slows. The U.K. currency fell 1.1 percent against the euro, the most in a week, and dropped below $2 as central bank governor Mervyn King told lawmakers the pound's decline is an ``unwinding of the appreciation'' in 2006.

/... http://www.bloomberg.com/apps/news?pid=20601083&sid=a7Rfz5dpq5.g&refer=currency

[Ghost Dog]

101. Euro Money Markets Remain Under Stress

FRANKFURT -(Dow Jones)- Euro-zone money market rates continue rising Wednesday despite the European Central Bank's massive liquidity injections.

Euribor rates - money market reference rates for terms of up to 12 months - were fixed higher Wednesday, highlighting the tightness of liquidity and banks' hesitance to lend to each other - a question of confidence.

The European Central Bank Wednesday allocated EUR50 billion in its regular long-term refinancing tender, keeping the intended volume of EUR50 billion unchanged, despite bids from 190 financial institutions totaling EUR131.334 billion.

The 91-day funds were allotted at a marginal, or lowest rate of 4.44%, while the average allotment rate was 4.53%, both the highest at the ECB's regular or renewed supplementary long-term refinancing operations this year. The minimum rate bid was 3.51%, while the maximum rate bid was 4.72%.

The maximum bid rate matches the closely watched three-month Euribor, which was set at 4.718% Wednesday compared with 4.699% Tuesday. The one-week Euribor was set at 4.338% after 4.315%.

Analysts say the rising money market rates reflect a combination of the underlying tension on the market and banks' reserving requirement at the end of the quarter.

...

The tender allocation comes one day after the ECB injected an extra EUR50 billion to the banking system via its weekly main refinancing operation.

Tuesday the ECB allotted EUR216 billion via its main refinancing operation at a marginal rate of 4.23% and a weighted average allotment rate of 4.28%. The allocated amount was EUR50 billion above the ECB's estimate of funds banks need to conduct their routine operation.

Also Tuesday the ECB also allocated $15 billion in a 28-day dollar-denominated tender, the fifth of its kind jointly conducted with the U.S. Federal Reserve, but the first with a volume of $15 billion. In each of the previous four tenders the ECB allotted $10 billion.

The long-term refinancing tender was conducted at a variable rate tender under the multiple rate allotment method.

European Central Bank Web site: http://www.ecb.int

/.. http://www.smartmoney.com/bn/ON/index.cfm?story=ON-20080326-000341-0807

[DemReadingDU]

31. Hoarding by banks stokes fear over crisis

3/26/08
By Chris Giles in London and James Politi in Washington

Central banks' efforts to ease strains in the money markets are failing to stop financial institutions from hoarding cash, stoking fears that the recent respite in equity markets may not signal the end of the credit crisis.

Banks' borrowing costs - a sign of their willingness to lend to each other - in the US, eurozone and the UK rose again even after the Federal Reserve's unprecedented activity in lending to retail and investment banks against weaker than usual collateral and similar action in Europe.

The continued friction in the money markets came even as stock markets were showing new signs of optimism in spite of fresh data from the US showing consumers at their most pessimistic for 35 years and house prices falling at the fastest rate on record.

In London, where the Bank of England has faced criticism for not being as proactive as other central banks, the three-month Libor rate was set yesterday at 5.995 per cent, its highest of the year.

This is nearly 0.9 percentage points above the level investors demand for risk-free money, a spread nearly as high as that which led to central bank interventions in September and December.

more...
http://www.ft.com/cms/s/0/a5bb2302-fad7-11dc-aa46-000077b07658.html?nclick_check=1

[DemReadingDU]

36. Citigroup slams BoE for risking damage to real economy

3/26/08
By Ambrose Evans-Pritchard, International Business Editor

Citigroup has called for radical measures to end Britain's financial crisis, rebuking the Bank of England for moving too slowly to meet liquidity needs and waiting too long to head off an economic downturn.

"The downside risks to UK growth are sufficiently severe that the Bank of England should now be adopting a more determined approach to easing financial market strains. Relative inaction has a cost," said the bank's chief UK economist, Michael Saunders.

The blunt criticisms come as Britain's interbank borrowing market began to sieze up again.

Three-month LIBOR rates rose yesterday for the 11th session in a row to 5.995pc.

"The UK money markets have become dysfunctional. Three-month money rates are up 50 basis points since mid-January. The Bank of England seemed to think that the problem would fade away of its own accord. Instead, it is getting worse," Mr Saunders said.


more...
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/26/cnciti126.xml

[PassingFair]

103. What's WRONG with those English people? Can't they just ...

"magic" up more money, like WE do?

:eyes:

[Robbien]

38. Goldman sees credit losses totaling $1.2 trillion

NEW YORK (Reuters) - Goldman Sachs forecasts global credit losses stemming from the current market turmoil will reach $1.2 trillion, with Wall Street accounting for nearly 40 percent of the losses.

U.S. leveraged institutions, which include banks, brokers-dealers, hedge funds and government-sponsored enterprises, will suffer roughly $460 billion in credit losses after loan loss provisions, Goldman Sachs economists wrote in a research note released late on Monday.

Losses from this group of players are crucial because they have led to a dramatic pullback in credit availability as they have pared lending to shore up their capital and preserve their capital requirements, they said.

Goldman estimated $120 billion in write-offs have been reported by these leveraged institutions since the credit crunch began last summer.

"U.S. leveraged institutions have written off less than half of the losses associated with the bursting of the credit bubble," they said. "There is light at the end of the tunnel, but it is still rather dim."

http://www.reuters.com/article/bankingFinancial/idUSN2539260820080326

[wordpix]

63. that is a lot of money!

[UpInArms]

46. Caterpillar CEO says U.S. likely in recession

http://news.yahoo.com/s/nm/20080326/bs_nm/caterpillar_dc

TOKYO (Reuters) - The head of Caterpillar Inc (CAT.N), the world's largest maker of earthmoving equipment, said on Wednesday the U.S. economy is probably in a recession and is unlikely to start recovering until late this year.

Caterpillar Chairman and CEO Jim Owens said fiscal stimulus would help support an economy dogged by mortgage foreclosures, a steep drop-off in residential construction and financial market turmoil triggered by the subprime loan crisis.

"The U.S. economy is probably in recession now but will likely have real growth this year of around 0.5 percent, so very very slow growth and probably a couple of quarters of negative growth," Owens said.

He made the comments at a news conference in Tokyo to announce plans to raise Caterpillar's stake in a Japanese joint venture with Mitsubishi Heavy Industries Ltd (7011.T).

...more...

[UpInArms]

47. Recession is a given. Can we avoid depression?

http://www.csmonitor.com/2008/0324/p17s02-wmgn.htm

When economist Robert Parks predicted early last week that there was more than a 60 percent probability the current financial meltdown in the United States would lead to the "Bush depression," his phone began ringing like crazy with calls from the media.

Only last fall, most economists were forecasting a modest slowdown. Now, a good majority of them see a slump big enough to qualify as a recession.

But a depression?

Nah! Most number crunchers are counting on the Federal Reserve to stop any failure on Wall Street from cascading to other financial institutions and leaving them falling down like dominoes.

The Fed, under Chairman Ben Bernanke, has taken several orthodox and unorthodox monetary actions to prevent the credit freeze-up from spreading and damaging further the basic economy.

Last Tuesday, for instance, the Fed dropped short-term interest rates another 0.75 percentage points to 2.25 percent, hoping to revive financially squeezed banks and encourage consumers to borrow and spend.

Mr. Parks, however, doubts the cuts will do much to boost the economy. Rather, he sees a further steep fall in housing prices, continued major deficits in the federal budget and in the international trade balance, a tumbling dollar, and a weak stock market leading to a genuine depression with 30 to 35 percent unemployment, greater poverty, more loss of homes, plunging bond and stock prices, even some starvation. Parks, now a Pace University finance professor (for years he was chief economist at three Wall Street firms), says he has never predicted a depression before. His e-mail to press acquaintances sparked a lot of interest, as Parks was daring to express publicly the financial community's worst nightmare.

What prompted Parks's pessimism is his assumption that the "right-wing ideology" prevalent in the White House will keep Washington from acting to ward off a major depression. A fan of famed British economist John Maynard Keynes, who called for major government spending programs to remedy the Great Depression of the 1930s, Parks would like the federal government to step up outlays to fix rickety bridges, repair pot-holed roads, improve schools, and more to provide more jobs, more income, and thus more spending to cure any economic downturn.

...more...

[Demeter]

51. Bernanke And What Army?

There's little anyone can do to stop forces unleashed by economic tsunamis. The thing to do is pick the most important things to save and get them out of the way. The quality of those choices will determine the total pain, suffering, and speed of recovery to something stable and productive.

Of course, if Boy George ever raised taxes on the wealthy, it might make the recovery miraculous.

[wordpix]

64. "30-35% unemployment"---that on top of the falling apart infrastructure IS depressing

[AnneD]

67. I hope they listen to this economist.......

in the next admin, instead of putting Greenscum on ANY committee.:eyes:

[UpInArms]

48. 9:37 EST and today's color is red

Dow 12,447.77 84.83 (0.68%)
Nasdaq 2,323.33 17.72 (0.76%)
S&P 500 1,342.64 10.35 (0.76%)
10-Yr Bond 3.47% 0.022

NYSE Volume 176,098,125
Nasdaq Volume 80,011,054.688

09:15 am : S&P futures vs fair value: -8.0. Nasdaq futures vs fair value: -11.5. Pessimism in the pre-market has eased during the last hour, but futures still indicate a lower start to today's trading.

09:00 am : S&P futures vs fair value: -7.8. Nasdaq futures vs fair value: -12.8. The stock market remains set to open in negative territory, though to a lesser extent than previously indicated.

08:35 am : S&P futures vs fair value: -10.0. Nasdaq futures vs fair value: -15.0. February's durable goods orders declined 1.7%. Economists expected orders to advance 0.7%. January's durable goods orders initially showed a 5.3% retreat, but were revised up to a less severe 4.7% retreat. Excluding transportation, new orders for February fell 2.6%, worse than the decrease of 0.3% economists expected. Excluding transportation, January's durable goods orders were revised higher from a 1.6% decline to a 1.0% decline. Futures continue to indicate a negative start.

08:00 am : S&P futures vs fair value: -9.4. Nasdaq futures vs fair value: -12.8. Motorola (MOT) has announced its board has began a process to split the company into two independent, publicly traded companies, while an article in The Wall Street Journal noted Sprint Nextel (S) and Clearwire (CLWR) have been named possible operators for a new wireless company created by Comcast (CMCSA) and Time Warner (TWX). Futures currently indicate a down open to today's session.

[Hugin]

59. ~10:15 EST: Today's Market Chart Topper... "A Touch of Honey" played by the Tijuana Brass.

Dedicated to the Gold Bugs we all know and love.

(Also, I thought a little brass would be useful right now... Just ask radfringe. :) )

Index Last Change % change
• DJIA 12438.41 -94.19 -0.75%
• NASDAQ 2321.23 -19.82 -0.85%
• S&P 500 1344.70 -8.29 -0.61%

[AnneD]

68. I'm OK with the Tijuana Brass......

but "The Lonely Bull" would have been a better choice. ;)

[Hugin]

72. I used that one a couple of weeks ago...

I'm trying to keep it original. Also, upbeat, in keeping with the euphoria generated by TalkingDog's post at
the top of the thread. :)

[AnneD]

83. Then go for...

"Whipped Cream"...(AKA The Dating Game theme song). Considering the match up between BS and JP Morgan-that could fit. Missed the "Lonely Bull" send up.

[wordpix]

65. 10:45 Nasdaq down 31, Dow down 141, S&P down 15

[AnneD]

70. Americans fear harder times

Americans are bracing for rising unemployment and shrinking salaries, a gloomy outlook that could translate into a serious cutback in consumer spending, the primary engine of the economy.

A survey of about 2,500 households found that Americans feel worse about the economy's prospects than at any time since 1973, when Americans struggled with soaring oil prices and runaway inflation.

Fears often prove overblown, of course, and this particular survey, released Tuesday by the Conference Board, has a spotty track record as an indicator. But expectations can often be self-fulfilling: Worried consumers are less likely to make the big purchases that help keep the economy humming.

With home prices falling at record rates, Americans are also finding it more difficult to draw on their home equity, further depressing their spending power. A separate report Tuesday said the value of single-family homes in major metropolitan areas plummeted 10.7 percent in January from a year earlier, the steepest annual decline since the height of the 1990s housing slump.

more....

http://www.chron.com/disp/story.mpl/business/5648630.html

[kineneb]

74. the corporate press, uh like, just noticed?

guess they don't eat or drive cars... oh, wait, that what the servants are for...

[AnneD]

71. If this dosen't scare the bejesus out of you.....

FDIC Plans for Rise In Bank Failures

Anticipating a surge in troubled financial institutions, federal regulators aim to increase by 60 percent the number of workers who handle bank failures.

The Federal Deposit Insurance Corp. wants to add 140 workers in the division that handles bank failures, bringing the total to 360, said John Bovenzi, the agency's chief operating officer.

"We want to make sure that we're prepared," Bovenzi said yesterday, adding that most of the hires will be temporary and based in Dallas.

There have been five bank failures since February 2007 following an uneventful stretch of more than two years. The last time the agency was hit hard with failures was during the 1990-91 recession, when 502 banks failed in three years.

more..........:scared:

http://www.washingtonpost.com/wp-dyn/content/article/2008/03/25/AR2008032502984.html

[54anickel]

77. RTC take two!!!! n/t

[Tansy_Gold]

99. Wait! Wait! I worked for the RTC on the Lincoln Savings

liquidation back in 91-92. Does this mean I have hope of finding gainful employment?

Seriously -- I'm not sure how I feel about this. I don't want banks to fail, not "real" banks. I just don't want to see the "investment" banks that played stupid with other people's money (including probably some of mine) get bailed out.


Tansy Gold, job hunting

[Amonester]

79. "Vote Republican And Your Bank Will Fail"

Testing My New Bumper-Sticker.

[Robbien]

86. What's this leverage thingie the big guys are always going on about

Over at Agonist, Ian Walsh has a very clear concise diary which makes the concept of leveraging easy for people to understand. Thought I'd share

I recently had an acquaintance ask what leverage was, which made me realize that many of our readers without financial backgrounds may be scratching their heads.

Let's give a simple example (when I used to trade I was shocked and astounded when I first realized just how much leverage they allowed).

Let's say that you have a trade or investement that you expect will make 5%. Say you've got a $1,000 to trade with. Your normal profit would be $50. Not bad, but meh, you want more.

So, borrow more money against it - borrow $29,000. Now you have $30,000. By $30,000 worth of the stock. Your profit? $1,500.

And all the money of your own you put up was $1,000. At the end of the trade, you have $2,500 in your account. Your profit? 150%! Wow!

Sounds rocking!

But what if the instead of the security you were buying going up 5% it declines 5%? When you sell out, you owe $1,500. Too bad you only have $1,000.

So, if that's your life savings and/or capital, you're now bankrupt.

Let's take it one step further. It drops 20%. Which means you're at -$5,000. What do you do?

Well, since you don't want to go bankrupt, perhaps you don't close out the trade. Theoretically your at negative worth, but as long as no one asks for money, as long as you aren't forced to close out that trade... well, it's all good.

And that's where many of us are quite sure that a lot of brokerage houses are. They're probably insolvent. But as long as they aren't forced to sell (or "unwind") well, they can stay in operation.
But if someone says "no, we want that trade closed out now", well then, it all comes down.

Leverage is really, really dangerous, especially if you don't limit downside risk somehow. And in a lot of cases the banks and brokerages seem to have not limited their losses properly.

(I left the cost of borrowing out for simplicity. Borrowing does cost money and it will eat into your profits. So if you're earning 6% and borrowing at 1%, which was entirely possible for quite a while, then you would make less, depending on duration. )

http://agonist.org/ian_welsh/20080324/leverage_explained

[skids]

98. And here is a picture of it...

[Robbien]

92. Citigroup Settles Enron Litigation for $1.66 Billion

- Citigroup Inc., the biggest U.S. bank by assets, will pay $1.66 billion and give up an estimated $4.25 billion in claims to settle an Enron Corp. creditor lawsuit over its alleged role in the former energy trader's collapse.

The creditors, represented by Houston-based Enron Creditors Recovery Corp., were seeking as much as $20 billion from New York-based Citigroup.

. . .

The deal `accelerates distribution to creditors of significant cash trapped in the estate,'' Enron Creditors Recovery Corp. President John Ray III said today in a statement.

Ray's group can now distribute over $5 billion to Enron creditors, much of which was held in reserve due to the litigation. Since a bankruptcy plan was approved in 2004, Enron creditors have recovered 36 cents on the dollar.

Citigroup had as of Dec. 31 about $2.8 billion of reserves for litigation related to Enron, WorldCom Inc. and initial public offerings, according to a U.S. Securities and Exchange Commission filing last month.

. . .

Bank spokeswoman Shannon Bell declined to comment on whether the company would book a gain from a release of reserves. Citigroup took a $4.95 billion after-tax charge in 2004 related to the cases.

http://www.bloomberg.com/apps/news?pid=20601103&sid=ax6iTdnmEok0&refer=us

[Robbien]

93. Big Pharma raised U.S. wholesale drug prices 9% in 2007

If not for pricey drugs, sales would have fallen more than 10%.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aHq9.4jizbSQ&refer=home



Must be nice to have no-price-negotiation drug contracts.

[ozymandius]

102. Here's the capper for the day.

Dow 12,422.86 Down 109.74 (0.88%)
Nasdaq 2,324.36 Down 16.69 (0.71%)
S&P 500 1,341.13 Down 11.86 (0.88%)
10-Yr Bond 3.4940% Up 0.0020
NYSE Volume 3,941,776,500
Nasdaq Volume 1,939,744,000

4:25 pm : The stock market has been on a bull run recently, but it got tripped up Wednesday by a number of familiar concerns.

In particular, the health of the financial sector was brought back into question by the analyst at Oppenheimer & Co. who slashed first quarter earnings estimates for Bank of America (BAC 39.84, -1.13), Citigroup (C 22.05, -1.37), JPMorgan Chase (JPM 44.11, -1.95) and Wachovia (WB 28.02, -2.02) to reflect expected mortgage and CDO related write-downs.

The estimate revision, combined with press reports the private equity deal for Clear Channel Communications (CCU 26.92, -5.64) was on the verge of collapse and a warning from Deutsche Bank (DB 114.31, -1.29) that it might not hit its 2008 profit target, set the tone for a weak start for the financial sector and the broader market.

In turn, a weaker than expected Durable Orders report for February didn't do anything to improve the morning mood.

Prior to the start of trading, the Census Bureau indicated durable orders fell 1.7% against the market's expectation for a 0.7% increase and a 4.7% decline in January. Excluding transportation, orders dropped 2.6%. Similarly, nondefense capital goods orders excluding transportation, a measure seen as a proxy for business investment, also declined 2.6%.

Shortly after the market opened, it was reported that February new home sales declined 1.8% from January to an annualized rate of 590K units. The latter was actually ahead of the 578K consensus estimate, yet it failed to inspire much enthusiasm given the accompanying indication that inventory remained unchanged at 9.8 months worth of supply.

Selling pressure then picked up when Treasury Secretary Paulson all but suggested in a speech to the U.S. Chamber of Commerce that Wall Street investment firms should be subjected to increased regulation if they are going to borrow from the Fed. The related stocks faded to their worst levels of the session in the wake of that view, compounding the losses for the financial sector, which dropped 3.6% at its worst level of the day.

The broader market tried to rebound in the afternoon trade after re-testing its morning lows. Bear Stearns (BSC 11.21, +0.27) was an initial standout in that effort after headlines crossed the wires that Senator Dodd said the JPMorgan Chase transaction raised serious questions and that he was going to hold a hearing on the market turmoil.

The recovery try ultimately failed, though, as buyers lacked conviction in today's trade. One notable exception in that respect was seen in oil prices, which jumped $4.94, or 4.9%, after a weekly inventory report from the Dept. of Energy showed a build in stockpiles that was much smaller than expected. Oil led a 2.0% jump in the CRB Index, which also got a boost from a weakening dollar.

Other headlines of note Wednesday included an announcement from Motorola (MOT 10.02, +0.26) that it plans to split into two, independent publicly-traded companies, word from Ford (F 5.87, -0.13) that it sold its Jaguar Land Rover operations to Tata Motors (TTM 16.18, -1.18) for approximately $2.3 billion, and news that AMR Corp. (AMR 8.61, -1.02) canceled 300 flights to reinspect bundled wires on its MD-80 aircraft.DJ30 -109.74 DJTA -1.8% NASDAQ -16.69 NQ100 -0.4% R2K -0.5% SP400 -0.8% SP500 -11.86 NASDAQ Dec/Adv/Vol 1664/1267/1.90 bln NYSE Dec/Adv/Vol 1830/1315/1.43 bln

[Pale Blue Dot]

104. Oracle missed earnings estimate; down 9% so far in after hours trading.

Could be a rough day tomorrow.

http://www.forbes.com/2008/03/26/oracle-technology-software-markets-equity-cx_ra_0326markets46.html?partner=yahootix

[fascisthunter]

106. I Know I Come Off Cynical with this Economy

by I sure as hell don't want to see it tank. My life financially has gotten better in the past two years to the point where I can pay back my student loans and have a few bucks to invest in coins. I can afford to take my girlfriend out to dinner and even go to Europe for a couple weeks. I don't want to be layed off again and go through being jobless while bill collectors call me day and night. I just want a life to work and be economically free from debt.