STOCK MARKET WATCH, Tuesday March 3

[ozymandius]

Source: du

STOCK MARKET WATCH, Tuesday March 3, 2009

Bush Administration Officials Under Indictment = 0
Financial Sector Officials Under Indictment = 0
Financial Sector Officials In Prison = 1

AT THE CLOSING BELL ON March 2, 2009

Dow... 6,763.29 -299.64 (-4.24%)
Nasdaq... 1,322.85 -54.99 (-3.99%)
S&P 500... 700.82 -34.27 (-4.66%)
Gold future... 940.00 -2.50 (-0.27%)
30-Year Bond 3.65% -0.07 (-1.96%)
10-Yr Bond... 2.92% -0.12 (-4.01%)

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

Market Conditions During Trading Hours

GOLD, EURO, YEN, Loonie and Silver

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Read more: du

[ozymandius]

1. Market WrapUp

Deleveraging: Round II
BY RYAN J. PUPLAVA, CMT

The last bubble holding up the stock market has burst. The confidence we held in fiscal policy to swoop down and rescue the financial markets from the financial woes of last year – was for naught. I say this because there’s a correlation between the drop in the S&P 500 and the day our new Treasury Secretary advised us that there’s a plan (sold separately and details not included) on February 10th.

Bailout Plan: $2.5 Trillion and a Strong U.S. Hand
NY Times, 02/10/09

...“The stock market, propped up for weeks on the expectation that Washington would finally deliver a comprehensive rescue plan, dipped almost as soon as Mr. Geithner began speaking in the morning. The Dow Jones industrial average fell 382 points, or 4.6 percent, by the time the market closed. Yields on Treasury bills dropped, indicating a flight from stocks to the safety of government bonds”

The jawboning from the Federal Reserve last week did much to rally the banks to stem the falling tide at key support levels in the financial markets, but today was a firm break in that support with a drop in the S&P 500 to 700. Since January, the long-term trend has been down. An accelerated downtrend started on February 10th.

I’m not blaming Timothy Geithner for our financial problems. I’m saying, our confidence in fiscal policy has burst and the deleveraging we saw in September of last year has started round II.

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

[sarcasmo]

2. 6000 Today, How far will the house of card tumble today?

Predictions anyone?

[ozymandius]

4. Sounds like a good theme for a new pool.

Let me consult the Magic-8 Ball and check the Witching Day schedule and I'll get back to you.

[sarcasmo]

6. You have a little time to place your bets. I call six thousand.

[ozymandius]

8. You mean today?

That would be nothing less than dramatic. We saw panic selling yesterday toward the close. Today's news does not look to soothe one's nerves either. I will call for a dramatic drop on March 20th. That's the next Triple Witching day when options, index options and futures contracts expire at the same time.

[sarcasmo]

10. When do the next auto numbers come out?

[ozymandius]

11. See: Today's Reports

It's a double helping of auto and truck sales.

[sarcasmo]

13. I stand by my six thousand.

[PassingFair]

62. 6.5 n/t

I've felt all along that 6.5 would be the
bottom, but then again, this thing might
be bottomless!

[tclambert]

92. Looks like 6500 might be today.

DJIA started higher today, but the slope seems to be heading southward.

[tclambert]

95. The numbers just went red.

Seems to be getting worse the more Bernanke talks.

[ozymandius]

99. I nominate Bernanke for our Piehole Alert recipient.

Who else could do better? Geithner, who certainly has some support, may not be around long enough to hold the title.

I hope.

[Loge23]

73. 6K bottom?

I've been calling Dow 6,000 the bottom for several months now.
If it goes below 6,000 (which I now believe is very possible), well...brace yourself.

[Warpy]

120. Don't forget the last depression

If they do everything right, we might see it crash through 4000 before it begins to recover slowly.

If they don't, we'll likely see it crash through 1000 and stay there for a prolonged period.

[radfringe]

I'm guessing

we'll see some gains. Probably won't go back over the 7k line, most likely in the 10-50 point range.

Typically over the past few months, the day after a big drop in the Dow we see some gain.

rest of the week:

Wednesday - drop
Thursday - break even
Friday - drop

[ozymandius]

21. That's what the early futures say.

S&P 500 +3.60 709.10 3/3 6:11am
NASDAQ +1.75 1087.75 3/3 5:45am
Dow Jones +35.00 6825.00 3/3 6:10am

I always keep in mind that the futures are only good for the first half hour of trading. After that it's anybody's game.

[ozymandius]

9. How the Dow Jones industrials fared Monday

A relentless sell-off in the stock market Monday blew through barriers that would have been unthinkable just weeks ago, and investors warned there was no reason to believe buyers will return anytime soon. The Dow Jones industrial average plummeted below 7,000 at the opening bell and kept driving lower all day. It was the first close below 7,000 was May 1, 1997.

The broader Standard & Poor's 500 stock index dipped below the psychologically important 700 level before closing just above it. It hadn't traded below 700 since October 1996.

http://news.yahoo.com/s/ap/20090302/ap_on_bi_ge/wall_street_box

[ozymandius]

20. Shell-shocked investors flee stocks

As stock prices tumble to fresh lows, investment strategy is coming down to this: How much pain can you stand?

Some investors reached that threshold Monday, when the Dow Jones industrial average fell almost 300 points in a global sell-off and closed below 7,000 for the first time since May 1997.

....

The Dow has now fallen 52% during the bear market that began almost 17 months ago. The blue-chip gauge has plunged 23% just since the first of the year.

Such staggering declines are making some people think twice about holding on to their stock portfolios.

....

The Dow's move last month below what had been the bear market's previous nadir -- reached in late November -- has persuaded more investors to flee stock mutual funds. A net $32 billion was pulled from stock funds in February, TrimTabs Investment Research estimates. That would be 0.9% of the $4.33 trillion invested in U.S.-based stock funds at the end of February and the biggest outflow of money since October, when stock funds were hit with $72.3 billion in net redemptions.

The market's latest round of punishing declines was triggered by renewed signs of trouble at faltering insurer American International Group Inc. and a series of uninspiring reports on the state of the U.S. economy. A downbeat appraisal by investment guru Warren Buffett didn't help matters.

http://www.latimes.com/business/investing/la-fi-markets3-2009mar03,0,3531112.story

[ozymandius]

24. Irrational Exuberance? We Are Now Below It . . .

On December 5, 1996, Alan Greenspan gave his famous Irrational Exuberance speech.

At the time, the S&P500 was at 744.38. It blew through that number today, closing at 700. We’re still 350 points above the Dow’s closing price of 6,437.10; The Nasdaq is a stone’s throw (22 points) from its closing price of 1,300.12.

In other words, the SPX is now lower than when Greenie gave his infamous speech 13 years ago, and the other indices are just above their levels when Al was suggesting that buyers had gotten too, well exuberant.

Astonishing . . .

http://www.ritholtz.com/blog/2009/03/irrational-exuberance-we-are-now-below-it/

---

The link is worth the chart.

[4dsc]

39. Cramer’s S.O.S.: Obama, Save Our Stocks

Madman at work here..

President Obama needs to put his budget plans on hold, Cramer said Monday, to give the markets a chance to recover. If not, investors can expect more 300-point Dow declines and 4.7% losses in the S&P 500, which is what we got today.

Cramer wouldn’t say that what’s good for the stock market is always good for America, but right now that’s the case. Stability’s the key metric here, and the market is one of the ways that is measured. Obama and his administration seem totally oblivious to this fact, though. The recession has already pushed stocks down, but the White House’s plans – a balanced budget, increased taxes for the rich, changes to health care – are pushing them down even further. As a result, the wealth destruction we’ve seen over the past 19 months or so continues.

Watch the video for the full story. Find out what could happen if the Dow drops below 6,000 – or even 5,000.

http://www.cnbc.com/id/29468599

[Demeter]

42. There's Been Too Much Delay and Denial Already

That dog won't hunt.

[KayLaw]

47. He was on TV this morning.

On the Today Show or Good Morning America - the NBC morning show - pretty much blaming Obama's budget for the slide, calling it radical. Did anyone else see it?

[hatrack]

98. Typically Republican BS - MY chestnuts are important, and YOU must pull them from the fire!

Cramer = Buffoon.

[sendero]

48. Blah blah blah...

... the markets are just starting to catch up to the reality that's been obvious for months. Cramer is a total tool.

[Kolesar]

61. It is the corruption in the banks and the markets that is pushing the "stocks" down

It is consumer pessimism and an expectation of 5 years of scant earnings growth that is pushing the "stocks" down.

[ozymandius]

3. Today's Reports

10:00 Pending Home Sales Jan
Briefing.com -3.5%
Consensus -3.5%
Prior 6.3%

14:00 Auto Sales Feb
Briefing.com NA
Consensus NA
Prior NA

14:00 Truck Sales Feb
Briefing.com NA
Consensus NA
Prior NA

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

[ozymandius]

70. Pending home sales fell 7.7 pct to new low in Jan.

WASHINGTON (AP) -- The National Association of Realtors says pending U.S. home sales sank to a new record low in January as economic woes turned buyers away from the staggering housing market.

The trade group said Tuesday its seasonally adjusted index of pending sales for previously owned homes for January fell 7.7 percent to 80.4 from a downwardly revised December reading of 87.1.

http://biz.yahoo.com/ap/090303/pending_home_sales.html

[ozymandius]

116. See post #112 for Ford's latest bad news.

[ozymandius]

5. Oil hovers near $41 after US news spurs big drop

SINGAPORE – Oil prices hovered near $41 a barrel Tuesday in Asia after grim U.S. economic news and tumbling stock markets sparked a huge drop Monday.

Benchmark crude for April delivery rose 71 cents to $40.86 a barrel by late afternoon in Singapore on the New York Mercantile Exchange.

Prices fell $4.61, or 10 percent, to settle at $40.15 a barrel Monday after American International Group Inc. reported losses of $61.7 billion in the fourth quarter, the largest quarterly loss in U.S. corporate history. AIG, once the world's largest insurer, will receive up to $30 billion of federal assistance on top of the $150 billion in loans the company has already gotten from the government.

Oil investors often look to equity markets as a measure of broad sentiment on the economy. The Dow Jones industrial average fell 4.2 percent Monday to 6,723, a 12-year low.

....

The bleak news continued Monday as the Commerce Department said private sector wages and salaries, the key component of incomes, fell for a fifth straight month, reflecting massive layoffs during recent months.

....

In other Nymex trading, gasoline for April delivery rose 0.38 cent to $1.29 a gallon, while heating oil gained 0.72 cent to $1.16 a gallon. Natural gas for April delivery jumped 4.9 cents to $4.20 per 1,000 cubic feet.

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

[ozymandius]

7. Downturn to be deeper even than IMF forecast: OECD

PARIS (Reuters) – The global economic downturn will be considerably deeper than even the International Monetary Fund forecast a month ago, the Organization for Economic Co-operation and Development's chief economist Klaus Schmidt-Hebbel told Reuters.

Further substantial cuts in interest rates by the European Central Bank and Bank of England are totally justified, he said in an interview. These were to be expected in response to the worst spell the economy has suffered since 1946, when military spending plunged after World War Two.

....

On January 28, the IMF cut its forecast for global growth to 0.5 percent in 2009 from an earlier prediction of 2.2 percent. It also forecast a 2.0 percent slide in economic output from the world's most advanced economies as a whole, an equally large downgrading of forecasts it had made in November 2008.

Even those drastic revisions failed to reflect the extent of the downturn at this stage, said Schmidt-Hebbel.

http://news.yahoo.com/s/nm/20090303/bs_nm/us_economy_outlook_oecd_interview

[ozymandius]

12. The D-word: Will recession become something worse?

WASHINGTON – A Depression doesn't have to be Great — bread lines, rampant unemployment, a wipeout in the stock market. The economy can sink into a milder depression, the kind spelled with a lowercase "d."

And it may be happening now.

The trouble is, unlike recessions, which are easy to define, there are no firm rules for what makes a depression. Everyone at least seems to agree there hasn't been one since the epic hardship of the 1930s.

But with each new hard-times headline, most recently an alarming economic contraction of 6.2 percent in the fourth quarter, it seems more likely that the next depression is on its way.

....

By one definition, it's a downturn of three years or more with a 10 percent drop in economic output and unemployment above 10 percent. The current downturn doesn't qualify yet: 15 months old and 7.6 percent unemployment. But both unemployment and the 6.2 percent contraction for late last year could easily worsen.

Another definition says a depression is a sustained recession during which the populace has to dispose of tangible assets to pay for everyday living. For some families, that's happening now.

http://news.yahoo.com/s/ap/20090302/ap_on_bi_ge/the_d_word

[sarcasmo]

14. I posted that, thanks for the cross post.

[ozymandius]

16. You're welcome. It has an important academic angle.

The big question is: When does a recession become a depression? The quick response gauges the severity and duration of unemployment numbers. Since those numbers can be manipulated very easily with omissions (compare U3 to U6) and tabulation tricks then that alone is an unreliable test. This article points to other factors that lead to a more broad-based answer.

Then there is the other sensible mode of thought. It's the one that says we cannot know we are in a depression until we emerge from it and take a look backwards. There's a good bit of merit to that. Although I believe we are in one right now.

[Demeter]

29. There's Going to Be Nothing Little About this Depression

The Bush-Greenspan-Gramm Depression of 2000 and forever had a lot of people working overtime to cause it.

[DemReadingDU]

33. Depression - When credit cards have disappeared

When the average person can no longer put items on any credit card, that indicates to me that it is a depression. Must pay with cash, or barter. So that might take a few years, but there would be no denying that would be a depression.

:(

[sarcasmo]

45. I think that may be a true sign. Amex started buying out credit card holders, we are getting close.

[DemReadingDU]

58. Charles Hugh Smith - How to Get Through a Depression and Enjoy Life

3/3/09 Hanging On, or How to Get Through a Depression and Enjoy Life by Charles Hugh Smith

The Great Depression of the 1930s did not just affect financiers and farmers; it also gutted the middle class. It is instructive to ponder first-hand accounts of that era of "hanging on."

Knowledgeable correspondent M.B. recently forwarded an extremely timely and cogent essay on a first-hand account of the Great Depression from the point of view of a once-middle class family.

M.B.'s essay Hanging On, or How to Get Through a Depression and Enjoy Life covers a book of the same title by Edmund G. Love: Hanging On, Or, How to Get Through a Depression and Enjoy Life (out of print but available used).

Here are the first few paragraphs of the essay; I think you'll find the entire piece most informative and even provocative in light of the global Depressionw e are now entering:

Though there are many short accounts and (e.g., Studs Terkel's Hard Times), novels (e.g., Grapes of Wrath), movies and historical analyses of how various populations (e.g., migrant workers, Okies, etc.), I’ve seen few interesting, in-depth accounts of how middle class and upper middle class Americans in particular experienced the 1930s depression.

So Edmund G. Love’s 1972 autobiographical novel Hanging On, Or, How to Get Through a Depression and Enjoy Life was particularly intriguing to me when I found it at a local used bookstore, and his story struck me as an especially timely one given current events. Though the book certainly includes much more then just the depression, relating, for instance, the author’s college experience, it is in large part a discussion of how nation's economic circumstances impacted the author and his friends and family and how they responded to these challenges.

(Love published several other books including Subways are for Sleeping and The Situation in Flushing. Some of these titles are currently sold by the Wayne State University Press. Others titles do not appear to be sold currently but are available used on Amazon. Hanging On was originally published by William Morrow & Company, NY, and was reprinted in 1988 by Great Lakes Books, the imprint of Wayne State University Press.)

Certainly there are many differences, in ways both good and bad, between the 1930s and today, a point made by numerous bloggers and many others in recent weeks and months. Still, even given these differences I believe there are good general lessons which can be learned from how others have dealt with severe economic challenges and dislocations, both in our own nation and elsewhere in the world (e.g., Iceland, pre-collapse Soviet Union, Argentina).

Background

Love, a resident at the time of Flint, MI, a city then of 156,000 people, was young, college aged (he turned 17 in 1929) and upper middle class. At least in theory, the author's father, who owned a coal and lumberyard, was worth $1 million though the author notes that he later realized "ost of his fortune was on paper and mighty flimsy paper at that" (p. 13). (One million dollars in 1930 was equivalent to about 10 million in 2007 depending on how computes this value e.g., based on the consumer price index, gross domestic product or relative purchasing power. See the historical value calculators.

The author's family had a nice house, housekeeper and maid and several cars. Love notes that his family and most of his neighbors had moved to Flint from more rural areas of Michigan in the past decade to work in trades such as plumbing or in the city's auto industry. Housing boomed -- according to the author his father's lumberyard had 20 or 30 contractors as clients in the late 20s (96)—and with the housing industry so too did sales for many other goods, such as (what were then) new types of household appliances including electric refrigerators, toasters and radios. "Prosperity touched everyone. It was a poor man who couldn't make money in Flint," writes the author.

For instance, Love notes that some of his friends families had second homes and he himself received a new car for his 18th birthday.

Denial

One of the undercurrents of this book, in my view, was how long it took the author and many others to realize just how drastically their circumstances had changed and that the depression was not going away anytime soon. Though Love notes that some historians later would divide the depression into different phases (depression, recovery), for him there was little to distinguish these years and when the depression finally did end, it did so fairly suddenly.

As the author explains, the depression, at least at its worst, did not happen overnight and the author was not greatly impacted in the early stages. For instance, in September 1929 between graduating high school and starting college the author attended a military school in Missouri for a year. He notes that between semesters some classmates could not afford to return. His father lost most of his money in the Oct 1929 crash, ended up in debt, had to mortgage the lumberyard and came close to bankruptcy (46). However, the author, away at military school was largely unaware of this. Several of the authors' friends fathers also had lost big in the stock market and many people were worried about slow 1930 model car sales.

His family and others families started to cut spending (47). Still, though people were careful, they were still largely optimistic at that time hoping "hings would be better in the spring when people started building houses again. The situation was only temporary" (48).

By June 1930, with the depression 8 months old, "he panic had subsided and the wreckage had been cleared away. Most people could look about them and see just about where they stood." Though the spring had passed "here was an air of puzzlement but the optimism was there, too" with many still expressing the belief that " 'prosperity is just around the corner.’ "

As the author explains (48-49) this idea: "would be repeated and repeated. When the fall had some and gone, people talked about the upturn that would come the next spring. The next spring people would say that the upturn would come in the summer, and so on. The thing is that people really believed this. They had a blind faith in it, and because they did, they set up a pattern of living called 'hanging on.’


Lots more...
http://www.oftwominds.com/journal09/MB-depression3-09.html


Edit: This is quite long story, but it goes on to talk about as the depression deepened, things had to be paid upfront, in cash, no credit. A truck driver with $50 was better off than a wealthy executive with plenty of money saved in the bank but no cash on hand.

[Demeter]

81. Thanks! You Find the Most Interesting Things

[DemReadingDU]

89. I like your weekend thread

Longer articles are posted when we have more time to read them. During the week, it's more reading of headlines.

But this article was too interesting to wait for the weekend. And I think most of us will find something in it that pertains to us today, for the middle class, even though the author was talking about the 1930s.

[mdmc]

152. kick for a later read

[llmart]

166. Sounds like an interesting book.

I may have to buy it on Amazon. Thanks for the recommendation!

[ozymandius]

15. Mortgage delinquencies up for 8th straight quarter

CHICAGO – The number of people who were late making their mortgage payments shot up 53 percent in the fourth quarter of 2008 from the same period in 2007, according to data provided by TransUnion LLC.

The credit reporting agency said its database shows delinquencies — or the percentage of mortgage holders at least 60 days behind on payments, considered a precursor to foreclosure — jumped to 4.58 percent nationally, from 2.99 percent for the 2007 fourth quarter.

That was 16 percent above the 3.96 percent rate seen in the third quarter, TransUnion said, and marked the eighth straight quarter that deliquency rates rose.

....

TransUnion, best known for its consumer credit rating data, projects delinquency rates could reach as high as 8 percent by the end of the year. The company isn't predicting that the climate will improve until the middle of 2010.

The states that have shown the highest delinquency and foreclosure rates remain the same. Florida is on top, with a 9.52 percent rate for the fourth quarter, while Nevada is second with 9.01 percent. Arizona came in at 6.93 percent and California right behind at 6.88 percent. Carson said there is a glut of homes in those states, which is combining with increasing economic woes and declining home values to keep the rates high.

http://news.yahoo.com/s/ap/20090303/ap_on_bi_ge/transunion_mortgage_delinquencies

[ozymandius]

17. Most Asian markets extend slump amid finance gloom (more AIG contagion)

HONG KONG – Most Asian stock markets extended their slump Tuesday after unremitting troubles at financial giants like American International Group and HSBC sent Wall Street tumbling to new multiyear lows overnight. European markets opened higher.

....

In Europe, HSBC Holdings PLC said it needs to raise nearly $18 billion new capital through a share issue and reported a 70 percent drop in earnings for last year. Shares in the heavyweight lender, Europe's largest by market value, plunged more than 18 percent in Hong Kong trade.

....

Tokyo's benchmark Nikkei 225 stock average lost 50.43 points, or 0.7 percent, to 7,229.72, with losses limited somewhat by comments from the country's finance minister about a potential government plan to buy stocks using public funds.

...

In Hong Kong, the Hang Seng lost 283.58 points, or 2.3 percent, to 12,033.88.

Shanghai's key index was off 1.1 percent, with markets in India, Australia, Singapore, and Malaysia also losing ground.

Elsewhere, South Korea's Kospi gained 0.7 percent to 1,025.57 as the country's currency, the won, rebounded modestly after plunging to fresh 11-year lows on Monday.

http://news.yahoo.com/s/ap/20090303/ap_on_bi_ge/world_markets

[Festivito]

18. Debt: 02/27/2009 10,877,144,501,237.52 (DOWN 4,015,220,784.84) (Small.)

(Small change in public's debt. SS/FICA moves down, payday.)

= Held by the Public + Intragovernmental(FICA)
= 6,579,162,708,614.60 + 4,297,981,792,622.92
UP 306,718,307.89 + DOWN 4,321,939,092.73

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

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 306-Million person America.
If every American, man, woman and child puts in $3.27 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.81, ABOUT TEN BUCKS for a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is the federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)

PERSONALIZED DEBT:
Every 14 seconds we net gain a another American, so at the end of the workday of this report, there should be 305,881,458 people in America.
http://www.census.gov/population/www/popclockus.html
Currently, each of these American's owe $35,560..
A family of three owes $106,680.. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 23 reports in the last 30 to 31 days.
The average for the last 23 reports is 10,915,907,255.09.
The average for the last 30 days would be 8,368,862,228.90.
The average for the last 31 days would be 8,098,898,931.19.
There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 75 reports in 112 days of GWB's part of FY2009 averaging 8.03B$ per report, 5.38B$/day.
There were 27 reports in 38 days of Obama's part of FY2009 averaging 0.33B$ per report, 0.30B$/day so far.
There were 102 reports in 150 days of FY2009 averaging 8.36B$ per report, 5.68B$/day.

PROJECTION:
There are 1,423 days remaining in this Obama 1st term.
By that time the debt could be between 12.8 and 22.4T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
02/27/2009 10,877,144,501,237.52 BHO (UP 250,267,452,324.44 so far since Obama took office.)

Fiscal Year ends: Sep 30
Borrowed in FY1993: (Maybe later.)
Borrowed in FY1994: 281,261,026,873.94
Borrowed in FY1995: 281,232,990,696.07
Borrowed in FY1996: 250,828,038,426.34
Borrowed in FY1997: 188,335,072,261.61
Borrowed in FY1998: 113,046,997,500.28
Borrowed in FY1999: 130,077,892,735.81
Borrowed in FY2000: _17,907,308,253.43 Bill alone
Borrowed in FY2001: 133,285,202,313.20 Bill and George
Borrowed in FY2002: 420,772,553,397.10 All George
Borrowed in FY2003: 554,995,097,146.46
Borrowed in FY2004: 595,821,633,586.70
Borrowed in FY2005: 553,656,965,393.18
Borrowed in FY2006: 574,264,237,491.73
Borrowed in FY2007: 500,679,473,047.25
Borrowed in FY2008: 1,017,071,524,650.01
Borrowed in FY2009: 852,419,604,325.10 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
02/06/2009 +000,340,839,567.98 ------------********
02/09/2009 -000,572,980,736.98 --- Mon
02/10/2009 +000,388,825,726.33 ------------********
02/11/2009 -000,221,760,520.78 ---
02/12/2009 +043,810,585,841.25 ------------**********
02/13/2009 -000,268,428,512.00 ---
02/17/2009 +028,425,868,676.29 ------------********** Tue
02/18/2009 +000,178,127,394.43 ------------********
02/19/2009 +012,906,622,783.22 ------------**********
02/20/2009 +035,338,367,983.16 ------------**********
02/23/2009 -000,426,861,213.78 --- Mon
02/24/2009 +000,473,801,933.93 ------------********
02/25/2009 +000,413,635,509.27 ------------********
02/26/2009 +048,048,940,708.92 ------------**********
02/27/2009 +000,306,718,307.89 ------------********

169,142,303,449.13 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,212,512,697,978.45 in last 162 days.
That's 1,213B$ in 162 days.
More than any year ever, including last year, and it's 119% of that highest year ever only in 162 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 162 DAYS NOT 365.

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

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3763097&mesg_id=3763131

[Festivito]

156. Debt: 03/02/2009 10,942,165,294,650.89 (UP 65,020,793,413.37) (Big.)

(Up 74B. Let's stimulate.)

= Held by the Public + Intragovernmental(FICA)
= 6,653,326,026,607.72 + 4,288,839,268,043.17
UP 74,163,317,993.12 + DOWN 9,142,524,579.75

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

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 306-Million person America.
If every American, man, woman and child puts in $3.27 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.81, ABOUT TEN BUCKS for a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is the federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)

PERSONALIZED DEBT:
Every 14 seconds we net gain a another American, so at the end of the workday of this report, there should be 305,899,972 people in America.
http://www.census.gov/population/www/popclockus.html
Currently, each of these American's owe $35,770.4.
A family of three owes $107,311.21. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 20 reports in the last 30 to 28 days.
The average for the last 20 reports is 13,710,101,312.88.
The average for the last 30 days would be 9,140,067,541.92.
The average for the last 28 days would be 9,792,929,509.20.
There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 75 reports in 112 days of GWB's part of FY2009 averaging 8.03B$ per report, 5.38B$/day.
There were 28 reports in 41 days of Obama's part of FY2009 averaging 0.88B$ per report, 0.62B$/day so far.
There were 103 reports in 153 days of FY2009 averaging 8.91B$ per report, 6.00B$/day.

PROJECTION:
There are 1,420 days remaining in this Obama 1st term.
By that time the debt could be between 12.9 and 24.8T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
03/02/2009 10,942,165,294,650.89 BHO (UP 315,288,245,737.81 so far since Obama took office.)

Fiscal Year ends: Sep 30
Borrowed in FY1993: (Maybe later.)
Borrowed in FY1994: 281,261,026,873.94
Borrowed in FY1995: 281,232,990,696.07
Borrowed in FY1996: 250,828,038,426.34
Borrowed in FY1997: 188,335,072,261.61
Borrowed in FY1998: 113,046,997,500.28
Borrowed in FY1999: 130,077,892,735.81
Borrowed in FY2000: _17,907,308,253.43 Bill alone
Borrowed in FY2001: 133,285,202,313.20 Bill and George
Borrowed in FY2002: 420,772,553,397.10 All George
Borrowed in FY2003: 554,995,097,146.46
Borrowed in FY2004: 595,821,633,586.70
Borrowed in FY2005: 553,656,965,393.18
Borrowed in FY2006: 574,264,237,491.73
Borrowed in FY2007: 500,679,473,047.25
Borrowed in FY2008: 1,017,071,524,650.01
Borrowed in FY2009: 917,440,397,738.40 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
02/09/2009 -000,572,980,736.98 --- Mon
02/10/2009 +000,388,825,726.33 ------------********
02/11/2009 -000,221,760,520.78 ---
02/12/2009 +043,810,585,841.25 ------------**********
02/13/2009 -000,268,428,512.00 ---
02/17/2009 +028,425,868,676.29 ------------********** Tue
02/18/2009 +000,178,127,394.43 ------------********
02/19/2009 +012,906,622,783.22 ------------**********
02/20/2009 +035,338,367,983.16 ------------**********
02/23/2009 -000,426,861,213.78 --- Mon
02/24/2009 +000,473,801,933.93 ------------********
02/25/2009 +000,413,635,509.27 ------------********
02/26/2009 +048,048,940,708.92 ------------**********
02/27/2009 +000,306,718,307.89 ------------********
03/02/2009 +074,163,317,993.12 ------------********** Mon

242,964,781,874.27 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,277,533,491,391.82 in last 165 days.
That's 1,278B$ in 165 days.
More than any year ever, including last year, and it's 126% of that highest year ever only in 165 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 165 DAYS NOT 365.

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

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3764830&mesg_id=3764874

[krispos42]

19. I can't wait for my job to go back up to full-time...

...in a month or so. Hopefully, at least.

My hours got cut back to 32/week, so I immediately moved in with a co-worker who had a room for rent AND stopped contributing to my 401(k) to stabilize my cash flow and cut expenses.

But once I'm back up to full time I'm going to start contributing again. In 40 years I'll be happy I got to buy all these stocks cheap!

[willing dwarf]

23. The trick will be

to keep your spending below your 32 hour rate, once you return to 40 hrs. If you do that, you'll be in good shape. The trouble people have is they generally increase spending to their income level. --I've worked at 25 hr a week for the last 5 years, but my pay rate has gone up so it's more than I was making when I worked full time. As a result, I'm working less, making more. -- And I love that!

[sarcasmo]

46. That is a great Analogy that everyone should use. It amazed me to find out how many people were

paying their bills based on working overtime. I just can't understand that line of thinking.

[InkAddict]

60. Except, not to start a war, but in some small worlds, every hour

a woman (or the partner that assumes that role) works (outside) the cottage is "overtime"; especially true when TPTB have financially castrated the ability of the other partner to provide for one's family, leaving that partner's role to walk the dog (if they can keep it).

With the glass ceiling still in place, TPTB have decided to mutilate both partners. All forms of trust relationships are in jeopardy based on those terms because neither is able to "make progress" toward the higher levels on Maslow's ladder. What would be the point of being so smugly satisfied that one would actually desire to stay in one place forever, and ever. That carrot we chase found at least one nuke and has turned around to chase us all. Talk about "fight or flight." That line should be "What's in your arsenal? (not wallet).

And that is what is wrong with corporate personhood, too - it's a state as contrived as marriage, when the forces are "too big to fail" and slap around the less powerful partners.

[ozymandius]

22. AIG Band-Aid offers no cure

NEW YORK (Fortune) -- The government has a new remedy for sickly financial giants -- but signs of healing remain scarce.

On Monday, the Treasury Department unveiled yet another plan to support struggling insurer AIG (AIG, Fortune 500), which posted a 2008 loss of $99 billion.

Treasury said the latest restructuring in AIG's bailout -- the third since the company first received an $85 billion loan last September -- "will help stabilize the company, and in doing so help to stabilize the financial system."

....

For now, the Treasury plans to provide New York-based AIG with a $30 billion equity line that can be drawn as needed. The government also will convert its $40 billion preferred-stock investment into new shares that "more closely resemble common equity and thus improve the quality of AIG's equity and its financial leverage."

....

The latest moves to prop up AIG and Citi appeal to policymakers on two fronts. First, they add to the common equity bases of the two companies. Officials seem to hope this will relieve fears that shareholders will be totally wiped out in a government takeover.

Second, by converting from preferred shares to common stock, the government does not have to kick in much in the way of new funding upfront. That's a key consideration as the government's support for troubled banks grows more unpopular with the public.

http://money.cnn.com/2009/03/02/news/aig.plan.c.fortune/index.htm

---

Shareholders are critically endangered creatures that must be treated with delicate care and boundless love. :sarcasm:

[Demeter]

30. AIG in Review==James Kwak

http://baselinescenario.com/2009/03/01/aig-bailouts-1-2-3-4/

Well, it’s done. AIG is getting another bailout.

I have to admit I don’t fully understand the ongoing AIG bailout saga, so I thought I would do a little research to try to figure out what is going on. I thought I would just look up all the term sheets, but I found it’s harder to get that kind of information from the Federal Reserve web site than from the Treasury web site. For example, the original September 16 press release doesn’t say what the terms of the 79.9% equity interest are, and I still haven’t been able to figure that out. If you know the details, let me know and I’ll update this post. In any case, I think this is the best single-page overview you’ll find on the web.

September 16: The Federal Reserve gave AIG an $85 billion line of credit for 2 years at a very high interest rate - 3-month LIBOR (an interbank lending rate, which is generally pretty low) plus 8.5 percentage points on the full amount (whether or not it was drawn down). In exchange, the government (not sure which entity) got warrants on 79.9% of AIG stock - I don’t know what the price was, or if they were ever exercised.

October 8: By early October, AIG had already drawn down over $60 billion of its credit line. The Federal Reserve authorized the New York Fed to “borrow” up to $37.8 billion in illiquid securities from AIG and give it “cash collateral” (I think that means “cash”) in return. The problem was that AIG had lent some securities (call them A) to counterparties in exchange for cash or other collateral (call that B), and had then used B to buy some other securities (C) that had lost value. So when the counterparty wanted to return A and get B back, AIG couldn’t give them B back, because the money was tied up in C. So the New York Fed agreed to take C and give AIG cash so AIG could close out its trade - meaning the Fed effectively got stuck with the risk.

November 10: This time the Fed and Treasury got together.

* Treasury invested $40 billion of TARP money in AIG for preferred stock paying a 10% dividend. Treasury also got warrants with an exercise price of $2.50 on 2% of AIG’s outstanding common stock (although I don’t know how this relates to the original warrants on 79.9% of the common stock.)
* Some of that $40 billion was used to pay back the line of credit, which was reduced from $85 billion to $60 billion. The interest rate was reduced from LIBOR + 8.5 percentage points to LIBOR + 3 percentage points (a huge reduction), and the term was extended from 2 years to 5 years.
* The New York Fed created a new entity called AIG RMBS LLC with $1 billion from AIG and a $19.8 billion loan from the Fed. That $20.8 billion was used to buy residential mortgage-backed securities from AIG. Those securities had a face value of $40 billion but a “fair value” of $20.8 billion, or 52 cents on the dollar. (I wonder what those RMBS were on the books at prior to the sale.) The purpose here was simply to relieve AIG of some toxic assets and minimize its losses on them. Interest on those securities and proceeds from sale will pay back the loan to the Fed, meaning that AIG will take the first $1 billion in losses and the Fed anything else. The $20.8 billion paid to AIG (to buy the securities) was paid back to the New York Fed to retire the lending/borrowing facility created on October 8.
* The New York Fed created another entity called AIG CDO LLC with $5 billion from AIG and a loan of up to $30 billion from the Fed. The purpose of this entity was to buy CDOs from third parties who had purchased “insurance” (credit default swaps) from AIG. Since AIG’s biggest exposure was the possibility of having to pay out on this insurance, the idea was to buy up the assets (CDOs, in this case) that had been insured and require the third party to close the CDS contract. (Imagine AIG had underpriced insurance for houses on the Gulf Coast, and the government was buying the houses in order to cancel the insurance contracts.) According to the Fed web site, it looks like this entity has spent $20.1 billion to buy up CDOs with an aggregate face value of $53.5 billion - 38 cents on the dollar - but I’m not certain I’m reading that correctly. If those CDOs lose value, AIG bears the first $5 billion in losses, and the Fed bears the rest.

So as of November AIG had a $40 billion preferred stock injection and a $60 billion credit line. AIG had also put $6 billion into two new entities which could borrow up to $50 billion from the Fed and use the total funds to buy toxic assets: some from AIG (and I have no idea if we overpaid for those or not) and some from third parties.

March 2 (updated 3/2 7:30 am): The announcements are out.

* The $40 billion in preferred shares that Treasury got in November are being exchanged for $40 billion in preferred shares that are on better terms for AIG. There’s no way to get around this point. It’s the Series D to Series E conversion on the term sheet. The new preferred shares pay a “non-cumulative” dividend, which means they basically pay no dividend. More specifically, they only pay a dividend if AIG decides to pay the dividend. And they are non-cumulative, meaning that if AIG skips a dividend payment, they never have to pay it. (With a cumulative dividend, if you skip one payment, it gets added onto the next one.) The only condition is that if AIG skips the dividend for eight quarters in a row, Treasury can appoint some members of the board of directors.
* In addition, Treasury is providing up to $30 billion more in cash in exchange for more preferred shares on yet different terms. That’s the Series F on the term sheet. I don’t see anything about dividends, so this is basically an interest-free five-year loan.
* The terms on the credit line will be improved by reducing the floor on the interest rate (previously 6.5%). In addition, the credit line will be reduced by up to $34.5 billion, according to the two following provisions.
* Two life insurance subsidiaries will be put into separate trusts. After AIG and the New York Fed agree on the valuations of those subsidiaries, the Fed will buy up to $26 billion in preferred stock in these trusts. That money will be used to pay down the credit line.
* AIG will create new entities that own the rights to the cash flows from certain blocks of life insurance policies. The New York Fed will loan these entities $8.5 billion, which AIG will turn around and use to pay down the credit line. The $8.5 billion will be paid back (or not) by the new entities from the life insurance cash flows. (In other words, AIG is securitizing the life insurance policies and the Fed is buying the securities for $8.5 billion.)
* AIG is issuing convertible preferred stock equivalent to a 77.9% ownership share to Treasury. This looks like Treasury is exercising the rights it got under the original loan agreement. The terms of the convertible preferred stock were not released as far as I can tell, but we can probably assume there are no dividends.

In summary: AIG gets better terms on the first $40 billion in preferred stock; AIG gets $30 billion more in cash in exchange for new preferred stock on even better terms; and the credit line gets reduced by giving Treasury some assets (that AIG was presumably unable to sell on the open market). The overall effect is to reduce AIG’s debt burden and shift more risk to the taxpayer. Whether the taxpayer got a good price for taking on that risk is far too complicated for anyone to figure out from just reading a term sheet, since it depends on the nature of the assets.

I know that AIG is different in many respects from the banks that everyone is worried about. In particular, AIG was a net seller of CDS protection, while most banks are (should have been?) net buyers of protection. But one thing still scares me. When the weekend of September 13-14 began, AIG said it needed $40 billion. After digging through the books, Goldman and JPMorgan put the price tag at $75 billion, and declined to put together a consortium to lend the money. The Fed lent $85 billion, thinking that would be enough. Almost six months later, we still don’t know the extent of the damage.

Update: I rewrote the March 2 section.

Update 2: Does anyone else find it strange that, less than one week after announcing that future capital will be given to banks in the form of convertible preferred shares with a 10% dividend, Treasury has already issued preferred stock on three different sets of terms (one to Citigroup and two to AIG), none of which are consistent with last week’s announcement? Also, with the AIG Series E and F, we have reached a new high (or low) of generosity, with a noncumulative dividend in one case and no dividend in the other. Of course, this is a company we already “own” - we control most of the equity, and we have implicitly guaranteed the debt - so maybe none of these terms really matter.

[Demeter]

40. Many More Details at Financial times

http://www.ft.com/cms/s/0/ac6343ee-0731-11de-9294-000077b07658.html

...The fourth-quarter results came as AIG confirmed it would give the US government a large stake in its two largest divisions as part of a $30bn-plus rescue package that could lead to a break-up of the 90-year-old insurer. (...Under the plan, the government will take a controlling stake in AIG’s Asian operations and its global life insurance business - two of its most prized assets - as well as $8.5bn-worth of bonds backed by cash flow from the US life insurance unit. In return, the authorities will forgive most or all of the $38bn lent to AIG, reduce the interest rate on future loans, and provide a $30bn standby credit line to cover further losses....)

AIG’s huge shortfall, which pushed its total net loss for 2008 to nearly $100bn, was partly driven by substantial write-downs on its commercial mortgage-backed securities (CMBS).

“AIG’s results . . . were negatively affected by continued severe credit market deterioration, particularly in CMBS,” the company said.

The value of AIG’s $20bn portfolio of securities backed by commercial property loans fell by nearly a quarter in the three months to December, forcing a $5bn writedown.

The plummeting value of AIG’s commercial mortgage securities will ring alarm bells at the many US banks and hedge funds with large holdings of commercial real estate loans and CMBS.

Bankers have been warning for some time that commercial real estate would be the next source of losses as the slowing economy forces companies to fall back on mortgage payments.

So far, commercial real estate losses for banks have been smaller than the one caused by the collapse in US house prices. But the poor performance of AIG’s portfolio is a sign that the market is rapidly deteriorating, especially in troubled states such as California and Florida.

The rest of AIG’s record loss was driven by yet another shortfall in the securities lending business and the financial product division. AIG also took a $25bn charge for tax losses it was unable to obtain during the quarter and goodwill impairment related to the fall in value of past acquisitions.

[UpInArms]

59. AIG's meltdown has roots in Greenberg era

http://www.reuters.com/article/newsOne/idUSTRE5222EV20090303?sp=true

NEW YORK (Reuters) - Maurice "Hank" Greenberg's legacy as the man who built AIG into the world's largest insurer was tarnished by a 2005 probe but questions about whether he created a financial monster that subsequently ran amok could cause greater damage to his image.

The former Army captain -- who left AIG in 2005 amid allegations he used off-balance sheet transactions to improperly boost profits -- had previously been revered for his track record of steady profit growth over a 38-year tenure.

In the years since he quit AIG, Greenberg has pursued other business interests, but much of his time has been spent defending his name and railing against a succession of CEOs who replaced him at AIG.

But AIG's posting on Monday of a $61.7 billion quarterly loss, the biggest in corporate history, and the announcement of a third bailout by the U.S. government have prompted his critics to ask whether Greenberg planted the seeds of the financial disaster that already threatens to cost taxpayers $180 billion.

Greenberg's creation more than two decades ago of a financial products unit, which has triggered the bulk of AIG's massive losses, is their main focus.

Credit default swaps, or CDS, held by AIG Financial Products have been the biggest driver of AIG's losses, which have exceeded $100 billion over the past five quarters.

"The bottom line is that Hank Greenberg wandered out of the very safe, well-capitalized world of insurance into the surreal world of credit default swaps where you can create endless amount of risk," said Christopher Whalen, co-founder of Institutional Risk Analytics, which provides analysis and ratings to banks.

...more...

that POS should have his assets stripped and be living in a 6 x6 cell on 2 thread count sheets

[ozymandius]

25. Salient points on trading and economic activity from Barry Ritholtz

Context can be found here. I think this segment stands pretty well by itself. - ozymandius

Does Citi still have its prior shareholders from before? Is the same management team there? Then they have NOT been nationalized — yet. When they finally are, trust me, you will know it.

Now, I can make an even stronger rhetorical argument than these guys did. The things that are bothering markets is more or less the same story that some that’s been slowly seeping into people’s stubborn brains for the past few quarters.

The top was made in October 2007, and since then, we have seen:

• This is the first quarter in the history of the S&P500 to have ZERO EARNINGS;

• The ongoing drip drip drip of never ending bailouts — with taxpayers funding its costs — is pressuring prices.

• The worst recession in many generations started over a year ago, and shows no signs of ending anytime soon;

• The market is tanking is due to the lack of nationalization — we’d better off getting it done sooner rather than later;

• The overall market trend has been down (relentlessly so) for the past 18 months;

• The overstretched consumer has retrenched and is now in savings mode;

• The US has deficits are horrific — and are only going to get worse;

• Consumer sentiment is so bad its spilling over to everything else.

• The leadership of corporate America has been shown to be so inept and incompetent that potential buyers of these businesses are marking them down to reflect this;

These are just a few obvious factors off of the top of my head. You can blame either Obama or Bush (or both), but the reality is the forces driving the market are much bigger than either of them.

Smart investors know that the day to day action amounts to little more than noise. What matters most are trend, earnings, and economic activity.

[ozymandius]

26. Buffett's Stock Picks Are Flat!

No, we don't mean in the good way (who wouldn't kill for flat performance over the past year?). We mean in the round-trip way.

As in: All those stock gains Warren had amassed over the years, including the moonrocket WaPo and Coke stakes, have now disappeared.

At the end of 2007, says hedge fund manager Jeff Matthews, Warren had an embedded gain in Berkshire's stock portfolio of $35 billion. Now, he's flat.

Based on the year-end portfolio presented in the letter (and it has changed only modestly over time, but now excludes two stocks, Burlington Northern and Moody’s, in which Berkshire owns 20% and must report its holdings under the equity method,) Berkshire’s entire equity portfolio, which had a $37 billion cost basis and a $49 billion market value at year-end 2008, was, as of yesterday’s market close, worth only about $37 billion...

more...

And here's another bombshell:

Buffett also disclosed what might go down as the second most surprising disclosure in today’s letter: he had to sell some of Berkshire's stocks to make those headline-grabbing investments in GE, Goldman Sachs and Wrigley.

http://www.businessinsider.com/buffetts-stock-picks-are-flat-2009-3

[Demeter]

32. So Much for the Wizard of Omaha

[ozymandius]

88. Buffett's Berkshire cuts jobs broadly, more coming

NEW YORK (Reuters) - Warren Buffett's Berkshire Hathaway Inc (NYSE:BRK-A - News; NYSE:BRK-B - News) reduced staffing last year in half of its nearly 80 operating units, and said more job cuts were coming in an economy unlikely to recover before 2010.

Many of the deepest cuts came in businesses tied closely to the housing market. Clayton Homes Inc, a manufacturing housing unit, eliminated 2,290 jobs, or 16 percent, to end the year with 11,998 workers. Carpeting maker Shaw Industries shed 1,900 jobs, or 6.2 percent, to end with 28,974 workers.

.....

Berkshire detailed the operating unit cuts in a Monday filing with the U.S. Securities and Exchange Commission.

It said the units "will continue to take cost reduction actions in response to the current economic situation, including curtailing production, reducing capital expenditures, closing facilities and reducing employment to partially compensate for the declines in demand for goods and services."

http://biz.yahoo.com/rb/090303/business_us_berkshire_buffett_jobs.html?.v=2

[Grinchie]

27. I'm waiting to see meaningful regulation before I'll ever re-enter the Stock Market

I think a lot of people have see how corrupted the system is, and are as fed up as I am with the state of affairs that Nixon, Reagan, Bush Sr. Clinton and * allowed to occur.

When the economy for the past eight years was pulled straight out of someones ass, it's time to get some disinfectant and deodorizr and clean house.

I hope Obama takes his one chance to destroy the fed, IMF and other predatory moneylenders and take back the currency from them, because they certainly aren't cable of any self control.

We need to be able to specify what our taxes are spent on, and Opt out of the Military machine if we so choose. Until then, I think people are just going to resist passively, and we will sputter along, no matter what kind of stimulus or monetization occurs.

That Hummer will be useless when you have a hard time getting drinking water and food. Of course, it's now a collectors item.

[ozymandius]

28. Obama Must Fire Geithner and Summers

I've previously pointed out that the head of Obama's council of economic advisors - Larry Summers - is the worst possible guy for the job.

Two new articles show why Tim Geithner is the treasury secretary from hell.

As Robert Kuttner writes:

Geithner has ... come up with the idea of subjecting the largest banks to "stress tests" to determine just how badly damaged their balance sheets are. This has been advertised as government examiners crawling all over bank records, but much of this belated effort will rely on the banks' own risk models--the same risk models that got the banks into this mess.

Come to think of it, where have the examiners been all along? Why wasn't there serious investigation of bank balance sheets all along? Why should stress tests be performed only after disaster has struck (shades of Hurricane Katrina)?

The worst culprit among the feeble regulators is the Federal Reserve Bank of New York, whose examiners are responsible for assessing the safety and soundness of the holding companies of Wall Street's largest banks. It was high risk speculative activities by holding company affiliates that put the big banks under water.

Who dropped the ball? You may recall that Secretary Geithner, before he assumed his present post, was president of the New York Fed Bank. According to a withering feature piece from Bloomberg, he was asleep at the switch, and far too cozy with the banks. Heckuva job, Timmy.

http://georgewashington2.blogspot.com/2009/03/obama-must-fire-geithner-and-summers.html

Good stuff! Good enough to yell Hear! Hear!

[Tansy_Gold]

34. Well, sorry, folks, but you all know I called this one back

in November.

The Obama hallmark was change, and on the biggest domestic issue -- the economy -- he offered none. His policies since then have been, with only minor alternations, more of the same. No dramatic change. No fresh new ideas. Just same old, same old.

That's unforgivable.




Tansy Gold

[Demeter]

35. No Argument From Me

It's troubling that Obama sees none of this. Geithner certainly isn't going to point it out, he helped make this mess. And Larry Summers is an ass with a degree. Bernanke has only one tool in his toolbox, and he's broken it already.

The grassroots can do a lot of things, but they can't take out Citi and AIG.

[DemReadingDU]

37. Six Minutes with the Renegade Economist - Michael Hudson Special...

2/27/09 Six Minutes with the Renegade Economist - Michael Hudson Special...
Actually, it's appx 9.5 minutes
Reposting from the weekend thread. Some snippets from the video...

Debts need to be written down to a price that people can pay.

Why is taxpayers money being used for bailouts? If private investors could get their money back, they would have bought these bad assets.

Government should have let the market resolve the bad stuff.

They're not saving the economy, they're saving their constituents, they're saving Wall Street. There's not going to be a recovery until bad debts are written down.

They turned the democracy into an oligarchy.

When Obama talks about change, he is not talking about financial change...Obama is talking about worker laws, health reform.

good interview
http://www.youtube.com/watch?v=3pwAFohWBL4

[Tansy_Gold]

43. A financial tautology?

"If private investors could get their money back, they would have bought these bad assets."


No, if private investors could get their money back, the assets wouldn't be bad.


?????



Tansy Gold

[DemReadingDU]

56. Something like that

I paraphrased from the video.

:)

[UpInArms]

51. the problem with leaving the ones that broke the system

or were complicit in the breaking of the system in place does nothing to instill confidence nor give any impression that he "gets it".

[sendero]

52. Sadly..

.... I have to agree. I really LIKE Obama, and I think his intentions are good. But in choosing his economic team, the Usual Suspects, he indicated a stunning lack of imagination, and it is going to cost him and everyone else.

[bread_and_roses]

54. No argument here. AND there's danger that the lying Rs are claiming the populist

rage at the Banksters. I've been going around ranting about this since the first "bail-out," when the Ds shoveled billions into the banks against R "opposition." (Quotes because I don't believe for one second that they are averse to bankrupting the taxpayer to save their Corporate cronies.) As so often, David Sirota lays it out better than I can: http://www.commondreams.org/view/2009/02/27-3

Robin Hood Republicanism?
by David Sirota

Since rank-and-file House Republicans began criticizing October's Wall Street bailout, a growing faction of the GOP has been channeling the country's rage at Corporate America with us-versus-them rhetoric and appeals to economic patriotism. And they are getting help from a Democratic Party whose actions often imply subservience to Big Money.

Recall that the majority of House Democrats voted to ratify the bank bailout, and the majority of House Republicans opposed it. Recall, too, that Democratic Treasury Secretary Tim Geithner is pushing to throw more no-strings-attached cash at Wall Street, while Republican Sen. Lindsey Graham, R-S.C., makes headlines with calls to nationalize the banks.

Conversely, when Republicans tried to prevent bailout and stimulus money from subsidizing job outsourcing, Democrats blocked their amendments and President Obama criticized such "Buy America" laws.

...To be sure, there is a vaudeville quality to all this...The idea that the GOP's Nottingham Sheriffs have genuinely become Robin Hoods might be plausible in a burlesque subtitled "Men in Tights" -- but this is real life, not a Mel Brooks spoof.

Then again, politics is theater of the absurd... Huckabee won eight conservative states thanks to his speeches calling Wall Street CEOs "criminals," demanding Americans get the same health care as members of Congress, and criticizing unfair trade policies. Meanwhile, Paul attacked "corporations on welfare" who are "dumping all the bills on Main Street"

I am bewildered that Obama seems - deaf? - to the rage out here. Yesterday, or the day before, there was an insta-poll on CNN.com - "should the Government give AIG more money?" or something like that wording. Not scientific of ocurse, but of the well over 100,000 responses, 80 some % were saying "no" when I looked.

[tclambert]

41. It seems every time Geithner talks, the market plunges. Hmm, sounds like an investment strategy.

Step 1, sell short the day before he speaks. Step 2, ???? Step 3, profit!

Anybody have Time Geithner's speaking schedule?

[Demeter]

44. Tim Geithner IS Bush-Lite!

More flavor, less filling...

[ozymandius]

31. Have a nice day folks.

I'm off to ply my trade of educating/corrupting America's youth. :hi:

[Demeter]

36. Chief of Freddie Mac Resigns

http://www.nytimes.com/2009/03/03/business/03freddie.html?_r=1


The struggling mortgage lending giant Freddie Mac said Monday that its chief executive, David M. Moffett, is resigning effective March 12.

The board, in a statement, said it was working with its regulatory overseer, the Federal Housing Finance Agency, to find a successor.

Freddie Mac and its larger sibling, Fannie Mae, were both taken over by the federal government in September amid losses because of a decline in the value of their holding, receiving a lifeline of $200 billion.

In a statement, Freddie Mac said that Mr. Moffett had indicated that he wanted to return to a role in the financial services sector.

The chairman of the company, John Koskinen, said the board hoped to name a successor before Mr. Moffett left in a couple of weeks.

Mr. Moffett had been in the post since September, and had been a senior adviser to the Carlyle Group, a private equity firm in Washington, before joining Freddie Mac. He had also served as U.S. Bancorp’s finance chief for nearly 14 years, overseeing financial reporting, treasury operations and real estate functions, as well as the asset and wealth management group. He left the bank in 2007 after he was passed over for the top job.


SO, CARLYLE CALLED HIM HOME? HIS WORK IS DONE?

[Demeter]

38. Reposting Yesterday's Burning Question

What are we supposed to be saving these "too big to fail" firms for?

There will be nothing for them to do. They destroyed their very reason to exist.

There won't be the kind of business that used to keep them in high rents and bonuses for a long time, if ever. The contraction is world-wide, and Canada is not going to be able to pick up the slack, or even avoid it, and Canada hasn't got banking problems.

So, what are we wasting all that time, effort and money on these extinct, dead-man-walking dinosaurs for?

[closeupready]

53. Because they are politically connected. That's it.

There is no point to propping these enterprises up with taxpayer money except to insure that the current incompetent management in place continues to be pampered in luxury for destroying or neglecting their companies.

[Demeter]

55. But When the Money Is Gone, So Is the Political "Connection"

So that's not going to be true for very long.

It's more likely the delusion that the world will end if these zombies are killed. Nothing could be farther from the truth.

[Dr.Phool]

57. That's where bailout money comes in.

Get enough to keep you and your cronies in a nice comfortable salary, with enough left over to buy off the politicians with campaign contributions. All paid for by the taxpayer.

[Kolesar]

63. You mean let the banks fail ? Are those the firms you refer to?

I have been imagining that the big and corrupt banks could be purged and let smaller ones grow into their place.

[DemReadingDU]

72. Who are these big banks for?

Surely not the poor who have no money. Many of the middle class will become poor during the depression and will not have need of these banks either.

So are these big banks for? The wealthy! The big banks are propped up (with our tax dollars) for the wealthy! The wealthy wants to keep the 'status quo'. It's all about saving the elite.

[Demeter]

74. Evidently Saudi Arabia, Abu Dubai, and Indonesia

Without whom we would all be better off anyway.

[DemReadingDU]

78. Exactly. The wealthy

What do we need a bank for? Hm, pay bills? That electronic banking is convenient. More convenient than getting a money order and mailing the payment.

I remember when I was young, in my small town, my mom would take the bills, and cash, and on her grocery day she would also drive to utility company, the water company, the insurance company, and wherever. Everything was local, no need to mail any payments. Everything was paid in cash.

Nowadays, my only bill that is local, is my water bill.

[llmart]

167. My parents never had a checking account.....

They paid their bills with cash or money orders. And you could pay your utility bills at the bank.

[ozymandius]

76. Yes, unfortunately, they do not serve 98% of the United States population.

These banks do not create wealth. They concentrate wealth. With so much money deposited with these huge banks, the system becomes destabilized by default. So when I hear this mumbo-jumbo about stabilizing AIG and Citi with these huge infusions of taxpayer money, I say bullshit. There's no such thing. It equals the hostile nonsense behind the idea of a jobless recovery. There's no such thing as that either.

[Demeter]

131. Bernanke defends AIG rescue, says U.S. had no choice

http://news.yahoo.com/s/nm/20090303/bs_nm/us_financial_usa_bernanke_6


By Mark Felsenthal Mark Felsenthal 1 hr 1 min ago

WASHINGTON (Reuters) – U.S. Federal Reserve Chairman Ben Bernanke on Tuesday defended the government's latest bailout of embattled insurer AIG, telling irate lawmakers that he was also angry, but that the failure to act could have triggered an economic disaster.

Bernanke, in testimony to the Senate Budget Committee, gave a grim view of U.S. economic prospects, saying labor market conditions may have worsened in recent weeks. His comments helped drive the stock market briefly lower.

Pressed by the Senate committee to justify the latest in an expanding series of bailouts for American International Group, Bernanke said there was no alternative, even though the company had been irresponsible.

"We know that failure of major financial firms in a financial crisis can be disastrous for the economy. We really had no choice," he told the panel.




AND IT'S SO MUCH BETTER, NOW. THANKS, BEN YOU FOOL.

[Demeter]

83. But It's Not Working. The Elite Cannot Be Saved

There isn't enough real wealth in the world to "make whole" the paper losses of the elite. Papering over their paper losses will not make those losses go away.

The economy is not a win-lose game. It is a not a zero-sum proposition. Beggar thy neighbor, and you will starve or be subject to a little neighborly wrath and robbery.

Ask too much for your goods, and you won't sell any. Cheat your labor, and you won't have any laborers, and hence, no business. Sell bad products, and you will go out of business--by force, if necessary.

[ozymandius]

85. I fully expect these classes to eat each other, like Republicans are now.

The monetary food web has few who will outlast the vast sums of money owed through the over-the-counter derivatives market. Those who fail to honor their contracts will be eaten in civil court.

[DemReadingDU]

107. Well, they will keep trying

The elite will always try to concentrate the wealth in their pockets. Eventually, there will be another big war, and they will fight it out again for wealth, and power.

[Demeter]

129. FRSP!

[specimenfred1984]

109. Our "leaders" are brainwashed fascists, yes it's true

I suggest to people that they read a few books on the history of propaganda in the U.S. over the last 100 years. Our culture creates people, most people do not create themselves. To rise in gov't and most business leadership positions, capitalist greed must rule a person's thinking, it's all about the bottom line. It's not about vision, re-creation, thinking outside the box or inventing a better way, it's about maintaining the status quo that been handed down to you, being an average Joe, someone everyone will like. What we've ended up with is a culture of Katie Courics, people who will do or say anything at any time but are completely lacking in their ability to remove themselves from their own flawed paradigms.

[Tansy_Gold]

153. The other big question is

What EXACTLY is AIG doing with this money?

Seriously -- what do they need it for.


Is it to pay off their gambling debts?


Imagine, for a moment if you will, your mother's cousin Archie who has a string of ex-wives, unending charm, and a devastating fondness for gambling. Archie has gone through every penny he's ever had the opportunity to get his hands on, and now that no one will stake him to another trip to Vegas -- or the Apache Gold Casino up in Globe -- Archie has decided to walk into the local bank and ask for some money. He has no assets for collateral and he already owes the max on all his credit cards. His credit score is about 114, and he still hasn't covered the IOUs from his Texas Hold 'Em Saturday night party. Oh, sure, he's got that fat annuity from his paternal grandfather, but that goes to keep him in a decent apartment (rather than coming and living with you!) and put gas in that '66 Cutlass he keeps in prime condition.

Do you really think the bank is gonna lend Archie the $100,000 he's just walked through their front door to ask for?

AIG has done the same thing. They said they'd cover everyone's bets (CDSes) and figured they'd collect enough in premiums to make it worth their while. But the swaps defaulted before they built up enough reserve, just like Archie's bets. They've got the lucrative REAL insurance business, but even it's not enough to cover their horrendous losses.

The worst of it is, their losses are caused by other banks'/investors'/hedgers' losses. If AIG defaults on the others' defaults, what happens? Does the world come to an end? I doubt it, or at least not any worse than it already is.

So here's the ultimate question: Who is AIG (or any other bailee) giving the money to? AIG was the insurer of last resort; nobody's covering their asses/bets but us. Whose asses/bets were they covering?

Not


Tansy Gold

[DemReadingDU]

164. From the way I understand this

and it might not be correct. But, for example, I was thinking that a school (or city or pension) purchased a CDO from a bank that paid the school maybe 10% interest. And somebody paid a fee to AIG for insurance in case the CDO went bankrupt, the school would still get their money. I would think the school would take out this insurance on the CDO, but maybe not.

Except now, not only this CDO is worthless, but also everyone's CDOs are worthless. No one can collect anything. That's why we have to bailout AIG to keep the school from going bankrupt or the city from going bankrupt or a pension from going bankrupt.

I'm not sure that AIG is giving the money to anyone else, but in this perverted world of fraud, who knows for sure? I suppose this potentially could be a huge circle of many investors buying insurance on the same school district?

If AIG defaults, the world is going to feel like it is the end because there are going to be a lot of angry people in school districts, cities, and pension funds with worthless funds.

[Tansy_Gold]

165. Well, here's the thing. Assuming you're correct. . . . . .

some of the purchasers of the CDOs may have been pension plans, universities, etc. So the public sentiment is "We have to bail out the pension plans, the universities, the charities, etc., because they are innocent investors and shouldn't pay the price for their own greed/their fund managers' greed/their fund managers' bad advice." So all the tax monies get forked over to AIG, who pays off on the insured CDOs. The innocent are protected.

Unfortunately, not all the investors are so innocent. There are the nakedly greedy, the hedge funds, the megabillionaires, etc. Are they any less deserving of their insurance policies being honored? So the tax monies bail out the hedgies, the billionnaires, etc., just the same as the retired school teachers in Kansas. (:hi: Diane!)

Here's the problem: The retired school teachers get hit up just as badly for the taxes as they benefit from the pension plan. Oh, maybe not on an individual basis, but some's goin' out and some's comin' in. Kinda cancels each other out.

Meantime, those hedge fund managers, those billionaires who have their wealth locked up in offshore tax havens, they get the benefit with none of the expense! So much of their wealth is tax free that they get much more than they ever pay in.

So, what happens if AIG fails? Well, all the CDOs collapse (they were never worth anything anyway) and some people go broke. yes, some innocent people. But most of them don't have all their eggs in one basket. They also will get the compensation of not seeing the national debt go up by a couple trillion, to be financed by them, their children, their grandchildren, etc. What they lose will be cancelled out by what they gain. On the ohter hand, those who can bet afford to lose the bets will, well, they'll lose. So?

The healthy insurance arm of AIG will survive. The stockholders, the board, will cut the investment arm off and let it die. They'll do what's necessary to survive, and if they don't survive on their own, well, too bad.

Veterinarians at the Phoennix Zoo had to euthanize a rare jaguar the other night. As horrible as the notion is to those of us who are in awe of these magnificent wild creatures, there was no way to keep the 16-year-old cat alive. Letting him go was the best thing.

How often have any of us ever said, facing a suffering and terminally ill loved one, that we treat our pets better at end of life, not allowing them to suffer.

What we're doing with AIG is prolonging its life by means of artificial support, without which it cannot survive. It is no longer a viable organism. And all the other behemoths like it that are gobbling up precious resources that could so much better be used by healthy institutions ought to be allowed to peacefully and painlessly die a natural death.

Or we all will.


Tansy Gold

[UpInArms]

49. dollar watch

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

Last trade 88.791 Change -0.174 (-0.22%)

US Dollar Testing 3-Year Highs as NFPs and Nationalization Loom

http://www.dailyfx.com/story/currency/eur_fundamentals/US_Dollar_Testing_3_Year_Highs_1235794182815.html

The world’s most liquid currency ended the week in a precarious technical and fundamental position. For those watching the charts, the Dollar Index closed Friday just off a three-year high. And, making sure to keep market participants engaged until liquidity returns on Monday, fundamental traders are debating the appeal of a currency that represents a ballooning recession, a market-wide demand for safety and the dawn to a period of nationalization.

Looking ahead to next week and beyond, with so many major fundamental themes evolving throughout the markets; the dollar will have decide which driver will take precedence. The most pressing (and novel) concern for the greenback is the US government’s trend towards nationalization. The stakes were raised this past Friday when it was announced that the Treasury was taking a 36 percent stake in Citi – the world’s largest financial firm. This was a blatant move by officials after a series of questionable steps towards government stewardship that includes: seizing control of Freddie Mac and Fannie Mae; taking over insurance giant AIG after extending it a $150 billion credit line; and announcing that loans from the tax payers coffers will now come with the price of convertible preferred shares from those lending. In normal markets, such a move would spark fear that investor equity could vanish and returns could be dampened. However, it is obvious that we are not experiencing normal market conditions. Global growth is cooling, returns are shrinking, risk of financial seizures is high and many of the world’s largest economies are adopting a similar policy. At this point, the government likely sees this intervention as necessary to ensuring further financial time bombs don’t revive the financial crisis and send the nation into a tailspin that it cannot pull out of; and the markets may agree.

How long the dollar can hold out as the headwinds to free-market economics increase is debatable. One key determinant for the currency is its status as a safe haven. Since the plunge in Japanese GDP numbers led investors to rethink the viability of the yen as a reliable asylum for capital, we have seen investors head towards the US dollar to purchase Treasuries and other low-risk, American assets. Clearly, this dynamic depends upon the presence of risk. There are plenty of indicators and signs to support the proliferation of fear; but ultimately this market driver is a product of sentiment. Should the balance of risk/reward invert and the S&P 500 reverse course, there is little need for a safe haven whose economic recovery will be stifled by its government’s presence.

The final fundamental engine to vie for control of the dollar’s future could help shape long-term trends and short-term volatility. When the dust clears and fears that key market players aren’t on the verge of collapse, global traders will once again look at economic growth to gauge the potential for returns. As it stands, the United States is suffering one of the worst recessions in the industrialized world; but aggressive policy actions and a deep market has left the market feeling that the economy and its dollar is perhaps ahead of the curve. Timely data schedule for release this week will deny or confirm that unspoken claim. Readings of personal and spending, manufacturing and service activity, as well as consumer credit will be treated as second tier data in comparison to Friday’s NFPs. The American consumer will very likely decide the extent and length of this recession; and a confirmed 625,000 additional jobs lost will certainly undermine speculation that the world’s largest economy can recover before its global counterparts.



...more...

Pound Finds Resistance After Construction Falls To Record Low, Will Bernanke, Geithner Impact Dollar Sentiment?

http://www.dailyfx.com/story/bio1/Pound_Finds_Resistance_After_Construction_1236078459570.html

The pound started to take back some its losses from yesterday until in ran into resistance at former support at 1.4150 falling back below 1.4050. U.K. construction PMI falling to a record low of 27.8 from 34.5 in January led to the reverse in sentiment as it shows that the U.K. recession continues to deepen.

Talking Points
• Australian Dollar: RBA Leaves Rate Unchanged
• Pound: Construction Falls To Record Low
• Euro: ECB Rate Decision Coming Into Focus
• US Dollar: Bernanke and Geithner To Testify

Pound Finds Resistance After Construction Falls To Record Low, Will Bernanke, Geithner Impact Dollar Sentiment?

The pound started to take back some its losses from yesterday until in ran into resistance at former support at 1.4150 falling back below 1.4050. U.K. construction PMI falling to a record low of 27.8 from 34.5 in January led to the reverse in sentiment as it shows that the U.K. recession continues to deepen. Sterling has been on the run since the BoE hinted at further rate cuts and quantitative easing. The central bank is forecasted to cut rates by 50 bps on Thursday which may continue to be a weighing factor for the GBP/USD. However, Credit Suisse overnight index swaps are only pricing another 17 bps worth of rate cuts which may signal that a shallower than expected cut could be in store.

The Euro’s rally during Asian trading has run out of steam as it encountered resistance at 1.2680. The German wholesale price index fell 0.4% in January which was less than the 2.0% that was forecasted. Inflation has started to stabilize as we have seen prices globally consistently higher than expected. Despite CPI remaining well below the ECB’s target of 2.0% at 1.2%, the central bank may return their focus to price stability which could lead to a 25 bps rate cut versus the 50bps that is expected at Thursday’s policy meeting. The Euro continues to find support at 1.2500 unlike the Pound which broke from its recent trading range. Therefore, a move below that price level leaves the pair susceptible to sharp decline. Meanwhile, Swiss GDP contracted by 0.3% the most since 2004 on declining exports, but was less than forecasts of a decline of 0.8%. The better than expected growth numbers could be a sign that things aren’t deteriorating as fast as expected which could lead to a quicker rebound.

The first central bank to show restraint and miss markets expectations was the RBA which left its benchmark rate unchanged at 3.25%. RBA Governor Glenn Stevens said that the Australian economy has not contracted “as much as in other countries.” The Australian dollar rallied over 200 pips on the news to a high of 0.6459 before finding resistance. The Bank of Canada is scheduled to announce their interest rate decision this morning at 14:00 GMT and is forecasted to cut rates by 0.25% to an all-time low of 0.75%. Although Canada is a commodity driven economy similar to Australia, its economy has been dragged lower by a sharp decline in demand from the U.S.-its main trading partner. Therefore, a similar surprise is less likely and could lead to further Canadian dollar weakness. The USD/CAD appears to have broken fro its triangle pattern which could signal a break out to the upside.

After a massive sell off in global equity markets, we are starting to see risk appetite creep back in which has lead to some dollar weakness. U.S. equity futures are pointing toward a higher open but expect traders to remain cautious as banking concerns and expectations of a dour NFP report to ends the weak prevail. The U.S. pending home sales report is expected to continue the disappointment from the sector as forecasts are for a 3.0% decline. The most market moving event could be Fed Chairman Ben Bernanke’s testimony to the House budget committee. If the central bank leader recommits to his stance against nationalization of troubled banks and forecast a return to growth by 2010, then we could see a bounce in equity markets and dollar weakness. Additionally, Tim Geithner will speak before the Ways and Means committee today, where he could give more details on the bank rescue plan which could ease markets fears.

...more...

[Demeter]

50. Federal Firefighters to the Rescue!

http://www.dailyreckoning.com/federal-firefighters-to-the-rescue/


...None of this rescuing has done any good. Every bank and business that has gotten help has deteriorated, as near as we can tell. The feds let Lehman go bust and we were done with it. But they saved insurance giant, AIG. Now, AIG is in trouble again. And today’s paper tells us that the feds have stepped in…this time to put in a further $30 billion and “take a controlling stake in two of the stricken insurer’s largest divisions.”

Hey…so now the feds are in the insurance business too....



With this worldwide financial meltdown you can get away with anything. People have come to believe things so absurd you’d think even a Democrat would laugh at them. Most think you can give money to failing companies…and somehow they’ll be healthy businesses again. Some believe that you can print up paper money – and that it will be as good as the real thing. Almost all of them think spending money on anything, no matter how stupid, actually helps the economy. If it were only that easy!


...And here’s a good question for you, dear reader: If the smartest investor in the world (Warren Buffet} can’t make money in this market, how do you expect to?

If we were you, we wouldn’t even try. You see, this is not a recession…and it’s not a buying opportunity. It’s a depression. And at this stage in a depression, the best thing to do is to sell stocks, not buy them. Because they have further to fall…and because they could take a long, long time to recover.

We’ve explained the difference between a recession and a depression before. But we’ll do it again. A recession is a pause in an otherwise healthy, growing economy. A depression is when the economy drops dead. And when it drops dead, the assets that people owned – stocks, bonds, houses, derivatives, debt – are called into question. What are they worth, now that the economy that created them no longer exists? That’s the big question. The U.S. economy has been expanding for the last 60 years – largely by increasing consumer spending and debt. Now, neither consumer spending nor debt is increasing. In the last 6 months, consumers have suddenly reversed their free-spending ways. Borrowers and lenders have repented too. But if it is no longer an economy that grows by increasing consumption and debt…how does it grow at all? And what about all those businesses that are set up to provide products and services to the consumer economy? And what about all the debts and obligations that the consumer economy produced; what are they worth?

That’s what everyone wants to know. So the markets have entered into a period of vigorous price discovery. Some things are still valuable, of course. A house, for example. But many things aren’t as valuable as they used to be. The house won’t be worth as much if people can’t borrow to buy it…or if potential buyers can’t get a job. And the mortgage debt that the house carried…which was recycled into a leveraged debt instrument…is bound to be worth a lot less than people once thought.

But it takes time to sort out the good assets from the bad ones. How much does the business owe? To whom? Who owes it money? Will the debtor be able to pay? And what about those strange piece of paper – CDOs, MBOs, SIVs – in the company vault? What are they worth?

For a while, people are so afraid of making the wrong move that markets freeze up. No one wants to lend when he doesn’t know if he’s going to get his money back. That’s called a ‘credit crunch.’ And no one wants to buy when he has no idea what things are worth. That’s when markets go “no bid.”

But eventually – unless the feds stop the process – things sort themselves out. Businesses go broke. Homeowners are defenestrated. Automobiles go back to the dealers’ lots. Prices sink to a level where people are able to buy. And the whole process starts over again.

This can take a long, long time…especially when government is trying to stop it.

*** “We must kill zombie banks or face a lost American decade,” says James Baker, U.S. Treasury Secretary under Ronald Reagan and U.S. Secretary of State under George Bush I. Japan is still trying to adjust to the realities of its post-bubble world…after the initial crash 19 years ago. It propped up banks instead of fixing them, he says. The banks were kept alive…but not performing their function. Result: a lost decade. Maybe two.

In the United States, in the ’30s, on the other hand, the zombie banks were allowed to die. More than 1,000 banks were buried. Still, the economy didn’t really recover until after WWII – some 2 decades after the crash of ’29.

Maybe killing the zombie banks isn’t enough. Zombie companies must be allowed to fail, too. And zombie homeowners. And all the zombie investments made in the preceding bubble years.

Of course, that is what is needed. A period of creative destruction. But in this period of discovery, we don’t know who’s a zombie and who’s not. Not yet. It will take time to find out. A new economic model must take shape. Then, the markets must tell us what things are still valuable…and what they are worth.

An example: a mall. Shopping malls were designed for an economy in which consumption increased at a more-or-less predictable rate. As consumption increased, mall owners could project how much retail space they could let out…and what yield it would produce. Based on those figures, banks could lend against the value of the mall…and investors could put their money to work building new malls.

But that economy is missing and presumed dead. Consumption is no longer increasing, it’s declining. And the biggest consuming group – the baby boomers – seem to be changing their habits forever. From here on out, they are likely to be saving money for their retirements…not spending.

What is that mall worth now? What do the projections show? The commercial property loans used to build the mall were based on projections made years ago; what are those loans worth now?

We’re all waiting to find out. A new economy needs to arise, step over the corpse of the dead one, and get moving. What kind of economy? We don’t know… When will it happen? We don’t know that either. What companies will prosper…which ones will fail?

We wish we could tell you.

In the meantime, all we have is guesses… Stay tuned for more…tomorrow.

Regards,

Bill Bonner
The Daily Reckoning

[InkAddict]

64. I don't know, gone is gone...

"But that economy is missing and presumed dead. Consumption is no longer increasing, it’s declining. And the biggest consuming group – the baby boomers – seem to be changing their habits forever. From here on out, they are likely to be saving money for their retirements…not spending."

I'm an early boomer who has been at the leading edge of this downsizing of America...and since it's unlikely that I'll ever recover enough to provide a semblance of "lifestyle," I'm thinking, what the heck, you can't take it with you" and I'm not interested in "heroic efforts" so perhaps I won't be bothered with saving for retirement at all...until I'm truly spent/burdensome and someone will wag a finger that says, "Shame on you for not providing for your sick and elderly" or "Shoot 'em." Either way, gone is gone.

[ozymandius]

65. Since I have a little time - here's an update on early trading.

Not a lotta gusto.

9:48
Dow 6,806.23 Up 42.94 (0.63%)
Nasdaq 1,335.68 Up 12.83 (0.97%)
S&P 500 707.29 Up 6.47 (0.92%)
10-Yr Bond 2.95% Up 0.0330

[ozymandius]

69. Gusto all gone.

10:00
Dow 6,811.72 Up 0.72 (0.01%)
Nasdaq 1,336.92 Up 14.07 (1.06%)
S&P 500 707.08 Up 0.89 (0.13%)
10-Yr Bond 2.95% Up 0.0260

[ozymandius]

71. update on blather

10:00 am : Stocks are surrenduring their gains in the wake of disappointing January pending home sales data.

Pending home sales for January decreased 7.7% month-over-month, which is worse than the 3.5% decline that was widely expected. December's data was revised downward to reflect a 4.8% increase. The December change remains the only positive monthly change since the August data was released.

Early movers: Trading up: BRKR +15.4%, TYPE +14.6%, FR +12.4%, PDLI +11.8%, THO +11.5%, BPOP +11.3%, DDR +11.1%, CBG +11.1%, DCT +11%, AZO +10.7%, SOL +9.5%. Trading down: ICTG -20.5%, IMMR -18.2%, PRX -16.6%, SNTA -11.8%, HTE -9.8%, MTW -8%, MGM -7.9%.DJ30 +39.35 NASDAQ +11.38 SP500 +4.31 NASDAQ Dec/Adv/Vol 823/1402/220 mln NYSE Dec/Adv/Vol 1215/1612/213 mln

[AnneD]

77. Which brings me to our theme today......

Blues Great BB King.


The thrill is gone
The thrill is gone away
The thrill is gone baby
The thrill is gone away
You know you done me wrong baby
And you'll be sorry someday

The thrill is gone
It's gone away from me
The thrill is gone baby
The thrill is gone away from me
Although I'll still live on
But so lonely I'll be

The thrill is gone
It's gone away for good
Oh, the thrill is gone baby
Baby its gone away for good
Someday I know I'll be over it all baby
Just like I know a man should

You know I'm free, free now baby
I'm free from your spell
I'm free, free now
I'm free from your spell
And now that it's over
All I can do is wish you well

[Tansy_Gold]

80. Thanks, AnneD!

It's been a long intermission since our last musical accompaniment. . . . .

:hi:

[AnneD]

96. I just felt like the blues......

fit the day and the market.

[antigop]

66. Citi's real masters live abroad

http://www.financialweek.com/apps/pbcs.dll/article?AID=/20090227/REG/902279968/1036

Treasury Secretary Tim Geithner’s latest move to save Citigroup shows that the Obama administration may care more about foreign investors than U.S. taxpayers.

Under the terms of the deal, the Treasury would convert $25 billion of the Treasury’s holdings of preferred shares into common assuming private holders of its preferred shares do the same. Those holders include the government of Singapore and Prince Alwaleed of Saudi Arabia. Sure enough, the conversion price represents a 32% premium over that of Citi’s common.

Granted, the deal may help Citi pass the stress test that it and the nation’s other 19 biggest banks have to undergo by the end of April under the Treasury’s Capital Assistance Program. But Citi will only will jump that hurdle if the bar is set so low that a dying elephant could clear it.

And that’s what the Treasury seems to have arranged in Citi’s case, though unlike a real restructuring after takeover by the Federal Deposit Insurance Corporation, the latest bailout does nothing to deal with Citi’s bad assets.
...
Thus, when the Treasury secretary has another chance to explain the Administration’s approach to propping up ailing banks, he might want to note that the White House doesn’t want to offend foreign investors—not when they’re needed to buy Treasury bonds to finance the government’s massive deficit.

[antigop]

67. World's biggest sovereign fund mulling Citigroup options

http://www.financialweek.com/apps/pbcs.dll/article?AID=/20090301/REUTERS/903019995/1036

Abu Dhabi is assessing its $7.5 billion investment in Citigroup as the bank's problems deepen and consequences of a possible nationalization become clearer, according to sources close to the Abu Dhabi Investment Authority.

ADIA invested $7.5 billon last year in Citi through convertible bonds that pay 11 percent in interest, but it must start converting the bonds into 235.6 million shares in Citigroup from March next year.

"Nothing has changed from ADIA's perspective at this point. ADIA's convertible bonds are due for conversion in a phased manner between March 2010 and September 2011, and that stands," an Abu Dhabi government official told Reuters.

"But it is carefully assessing its options due to the latest events -- although no decision is taken yet," he said, declining to be named.

[antigop]

68. J.P. Morgan reportedly made killing in derivatives trading

http://www.financialweek.com/apps/pbcs.dll/article?AID=/20090303/REUTERS/903039996/1036

J.P. Morgan Chase generated $5 billion in profit during the worst year in Wall Street history by trading over-the-counter fixed-income derivatives, Bloomberg said, citing two people with knowledge of the results.

The bank, which reported $5.6 billion of total profit in 2008, has not disclosed earnings for its interest-rate swap, municipal bond and foreign exchange derivatives group, the agency said. The unit was among the most profitable at the New York-based company, it added.

The J.P. Morgan trading desk may have benefited as the collapse of Lehman Brothers and J.P. Morgan’s takeover of Bear Stearns left companies and hedge funds with fewer trading partners in the private derivatives markets, the agency said.

Among commercial lenders, J.P. Morgan dominates OTC derivatives trading, the agency said, citing data compiled by the Office of the Comptroller of the Currency.

The bank held $87.7 trillion worth of outstanding OTC contracts as of September 30, more than the next two banks, Bank of America and Citigroup, combined, the agency reported.

J.P. Morgan could not be immediately reached by Reuters for comment.

[Renew Deal]

75. $87 Trillion???

Is that real money or are these just contracts?

[CatholicEdHead]

104. It depends on if you can get a bailout in real funds on those contracts

:scared:

The numbers are so large whenever total Derivative amounts are talked about it is insane.

[tclambert]

142. That must be a typo.

I'm sure they meant gazillion.

[Demeter]

79. Dynamite Essay

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=103&topic_id=429736&mesg_id=429736

[ozymandius]

82. Imagine what would happen if the bailout funds went to the consumer.

This essay points to this fundamental element missing in the bailout dialogue.

[tclambert]

101. I believe Tansy and I have many times.

$700 billion to families would be $7,000 per family of three, $9,333 for a family of four. I know my family would have bought a car if we got that much. Many others would have made their mortgage payments rather than defaulting. Fewer foreclosures, maybe none!, fewer houses on the market, property values don't sink, fewer bad debts in the Mortgage Backed Securities, big banks no longer needing to foist their bad investments off on the government. No need for loans to auto companies, not so many retail stores going bust, rents for commercial properties getting paid, fewer commercial properties going into default. Fewer layoffs, more jobs, possibly millions more as consumer spending increased by thousands of dollars per family and businesses expanded in order to help relieve consumers of the burden of hundreds of billions of dollars.

There would be no threat of major financial institutions going bankrupt until their next harebrained scheme goes horribly awry. The money would eventually reach the big financial companies, but would percolate through the economy, changing hands a few more times on the way. That changing hands over and over again is where the economic magic occurs. You give a middle-class person a dollar and it will become many dollars worth of economic activity and wealth before it comes to rest in the vaults of the rich.

[ozymandius]

84. List of 2008 lobbying fees of $1 million or more

This list is heavily redacted. I included some of the more interesting firms who have invested so much money in our democracy. - ozymandius

List of firms who reported lobbying fees last year of $1 million or more and their clients

....

Listed for each is the fee reported; the lobbying firm; the company that retained the firm; and, if relevant, the subsidiary.

$3 million paid to Hogan & Hartson by Nissan North America.

$2.56 million paid to Ogilvy Government Relations by the Blackstone Group LP.

$1.96 million paid to Akin, Gump, Strauss, Hauer & Feld by Kohlberg Kravis Roberts & Co.

$1.53 million paid to Clark Consulting Federal Policy Group by the General Electric Co.

$1.5 million paid to Canfield & Associates by the Consumer Mortgage Coalition.

$1.36 million paid to Hogan & Hartson by FM Policy Focus.

$1.33 million paid to Patton Boggs LLP by Cerberus Capital Management LP.

$1.32 million paid to Arnold & Porter by the Altria Group Inc.

$1.26 million paid to Sidley Austin LLP by MasterCard International Inc.

$1.13 million paid to Mayer Brown LLP by AT&T Inc.

$1.04 million paid to Bracewell & Giuliani LLP by the Electric Reliability Coordinating Council.

$1.04 million paid to Ogilvy Government Relations by Verizon Communications Inc.

http://biz.yahoo.com/ap/090303/big_bucks_lobbying_list.html?.v=1

[ozymandius]

86. 11:01

Dow 6,784.56 Up 21.27 (0.31%)
Nasdaq 1,328.13 Up 5.28 (0.40%)
S&P 500 703.09 Up 2.27 (0.32%)
10-Yr Bond 2.93% Up 0.0130

[Demeter]

87. GM urges EU states to come to its aid

http://www.ft.com/cms/s/0/8fb98036-07ff-11de-8a33-0000779fd2ac.html

General Motors said on Tuesday that its European arm could run out of money by as early as next month, putting up to 300,000 jobs on the continent at risk.

Fritz Henderson, the struggling Detroit carmaker’s chief operating officer, said that GM would face a liquidity crunch “early in the second quarter” if emergency funds from European countries did not materialise.

[Demeter]

90. What Next? (James Kunstler)

http://www.worldnewstrust.com/wnt-reports/news/what-next-james-kunstler.html

The Peak Oil story was never about running out of oil. It was about the collapse of complex systems in a world economy faced by the prospect of no further oil-fueled growth. It was something of a shock to many that the first complex system to fail would be banking, but the process is obvious: no more growth means no more ability to pay interest on credit... end of story, as Tony Soprano used to say.

There was a popular theory among Peak Oilers the last decade that the world would enter a "bumpy plateau" period when the global economy would get beaten down by peak oil, would then revive as "demand destruction" drove down oil prices, and would be beaten down again as oil prices shot up in response -- with serial repetitions of the cycle, each beat-down taking economies lower -- the only imaginable outcome being some sort of quiet homeostasis. This scenario did not play out as expected. It was predicated on a mistaken assumption that all systems would retain some kind of operational resilience while ratcheting down. Anyway, the banking system was mortally wounded in the first go-round and the behemoth is dying hard.

The last desperate act of the banking system in the face of Peak Oil's no-more-growth equation was to engineer species of tradable securities that could produce wealth out of thin air rather than productive activity. This was the alphabet soup of algorithm-derived frauds with vague and confounding names such as credit default swaps (CDSs), collateralized debt obligations (CDOs), structured investment vehicles (SIVs), and, of course, the basic filler, mortgage backed securities. The banking system is now choking to death on these delicacies.

The trouble is that the EMT squad brought in to rescue the banking system -- that is, governments -- can't remove these obstructions from the patient's craw. They don't want to drown in a mighty upchuck of the alphabet soup....

[tclambert]

91. Bernanke talking to Senate right now. Anyone else think he sounds really, really nervous?

They keep asking pointed questions about AIG. And the Fed chairman's voice sounds quavery. Not exactly confidence inspiring. When asked what the endgame is for the AIG situation, he evaded. He said AIG was an "uncomfortable" situation that made him "more angry" than any other.

Bernie Sanders (I-Vermont) asked Bernanke, "Was repealing Glass-Steagull a tragic mistake?"

Bernanke said, "No, I don't think so."

I thought everyone was in agreement that it was. Is Bernanke really that far behind the curve?

[ozymandius]

93. He needs to find a new gig.

There is no way in the world that this shaking leaf of an idiot should influence public policy.

Bernie Sanders (I-Vermont) asked Bernanke, "Was repealing Glass-Steagull a tragic mistake?"

Bernanke said, "No, I don't think so."

I rest my case.

[Tansy_Gold]

94. "Is Bernanke really that far behind the curve?"

You have to ask????!!!!!

[ozymandius]

117. Wall St. drops on financial woe and Bernanke

NEW YORK (Reuters) - Stocks fell on Tuesday as financial shares reversed earlier gains due to lingering uncertainty about efforts to shore up the financial system.

Federal Reserve Chairman Ben Bernanke added to the cautious tone, saying in testimony before the Senate Budget Committee that economic prospects remain uncertain and urging more action to jolt the economy out of recession.

http://biz.yahoo.com/rb/090303/business_us_markets_stocks.html?.v=8

[Demeter]

132. See Post Up Thread on AIG stem

[ozymandius]

97. 11:21 - all red now

Dow 6,730.56 Down 32.73 (0.48%)
Nasdaq 1,319.39 Down 3.46 (0.26%)
S&P 500 695.58 Down 5.24 (0.75%)
10-Yr Bond 2.93% Up 0.0060

[Hugin]

100. Pretend I'm a three year old and please explain this to me...

Cuz I'm at a loss to understand it.

"The TALF will start by offering $200 billion in loans to hedge funds and other investors aimed at jumpstarting lending to consumers for autos, education and credit cards and to small businesses. The program also will help auto dealers finance the cars on their lots."

How is loaning money to Hedge Funds going to do anything? What does it accomplish other than the Taxpayers buying a whole lot of losing lottery tickets? I don't get it... :shrug: But, then I've never claimed to be the Smartest Master of the Universe. Looks like a bailout to the Hegies.

What?

:shrug:

Quote taken from here: http://www.bloomberg.com/apps/news?pid=20601087&sid=aRRVAbvwBqpw&refer=home

[tclambert]

105. I'm with you on that one, Hugin.

If you want the money to go "to consumers for autos, education and credit cards and to small businesses," why give the money to Hedge Funds and hope they pass it on? Why not give it to consumers and to small businesses? I guarantee they will pass it on, thus stimulating the economy and giving the Hedge Funds sound investments to make. It obviously and automatically percolates upward. Why do they still think money floats downward?

And what with millions of job losses in the last year and millions more threatened, why would any lender be eager to pass that money on?

[Abq_Sarah]

151. I'm trying to wrap my head around the concept

Of issuing loans to people when the economy sucks, causing more loan defaults. What we need is jobs and people able to afford goods and services. I would be insane to take out a loan for my business with no guarantee I will receive an increase in sales. That happened to several businesses in my town and now they are closed and those loans will never be repaid.

Isn't that what got us in this mess?

[ozymandius]

106. I wish I knew where to begin to explain this gently in 3-year-old terms.

My sailor's vocabulary wants to jump to the front of the stage at full volume when I read this stuff. Hedge Funds are unregulated.

When I apply to occam's razor to this idea, I arrive at the snap conclusion that these funds are not intended to help the consumer. We are witness to further looting of future generations' financial security viability.

Should there be anything altruistic about this plan. It is hope. And hope is not a plan.

[antigop]

102. "...we are in the midst of an emergency at least equal to that of war. Let us mobilize to meet it."

Here is FDR's "Forgotten Man" speech...

http://newdeal.feri.org/speeches/1932c.htm

Such objectives as these three, restoring farmers' buying power, relief to the small banks and home-owners and a reconstructed tariff policy, are only a part of ten or a dozen vital factors. But they seem to be beyond the concern of a national administration which can think in terms only of the top of the social and economic structure. It has sought temporary relief from the top down rather than permanent relief from the bottom up. It has totally failed to plan ahead in a comprehensive way. It has waited until something has cracked and then at the last moment has sought to prevent total collapse.

#
It is high time to get back to fundamentals. It is high time to admit with courage that we are in the midst of an emergency at least equal to that of war. Let us mobilize to meet it.

[Hugin]

124. Well said.

Sage advice... Speaking of sage advice, I've been wondering lately how much influence Teddy had on some of FDR's policies.
I haven't researched it, but, I think it's highly likely Teddy was a progressive voice in the room (Yes, I mean figuratively speaking). Eleanor was Teddy's favorite niece (some say he liked her more than some of his own children) and FDR thought highly of him. It would make sense also due to the remaining bad feelings after the ugliness between Teddy and the Republicans/Wilson Democrats and Teddy's extensive writings. There's something there.

[Hugin]

103. Madoff agrees to give up property, art, tickets

"NEW YORK — Bernard Madoff (MAY'-dawf) is giving up rights to his business, along with the company's artwork and entertainment tickets.

The agreement is in a New York court document filed late Monday.

The trustee for the liquidation of Bernard L. Madoff Investment Securities LLC asked a federal judge to let him take over the assets to benefit its customers.

A criminal complaint charges Madoff with securities fraud. He's accused of squandering more than $50 billion.

The trustee told a judge that Madoff will voluntarily give up all ownership rights to his business. He'll also give up rights to three pieces of business real estate."

From: http://www.chron.com/disp/story.mpl/ap/business/6291169.html

_________________________________________________________________________________________________

Gee, I didn't know he had to 'agree' to anything... Why isn't this bum in jail?

Aside: I think it's hilarious that they have a pronunciation key to MAY'-dawf's name embedded in the article. :rofl: Hence, I will keep on calling him MADE-off.

[tclambert]

108. Even though he confessed, he's innocent until proven guilty.

The Feds are slow to prosecute this kind of case because they want to uncover as much of the fraudulent deals as possible. And I wonder what happens when Madoff mysteriously dies before the criminal trial is complete. They'll attribute it to his age and the stress of a lengthy trial, no doubt.

When the defendant dies, the criminal case dies with him, penalty-free. Civil cases will also be hindered by the absence of a defendant, though his hedge fund can still be sued. Since Madoff can't be cross-examined, his confession may be inadmissible. I've already heard someone suggest he was just speaking figuratively when he said it was a Ponzi scheme. And what parts of your business exactly were you referring to, Mr. Madoff? Testimony from spiritualists is inadmissible.

[ozymandius]

110. The estate is also a target for a suit.

Before the will is read and before any property of the deceased is distributed - the court may appoint an executor in the event of a suit, if it does not have one already, to represent the deceased. The executor will then be tasked with the defense of the deceased's assets.

The Madoff family is not clear of this by a long shot.

[Hugin]

115. Oh, yeah... Sounds familiar.

Similar to the dismissal of all of the charges against Kenny-boy's estate.

[tclambert]

130. That's the example I had in mind.

Anybody know the disposition of the civil suit against Ken Lay's estate?

[antigop]

113. Ooh, ooh, pick me, pick me! I'll take the entertainment tickets if they are to the theater or opera

I'll take them.

[ozymandius]

111. lunchtime check-in

12:13
Dow 6,742.27 Down 21.02 (0.31%)
Nasdaq 1,321.69 Down 1.16 (0.09%)
S&P 500 696.93 Down 3.89 (0.56%)
10-Yr Bond 2.88% Down 0.0360

12:00 pm : The stock market continues to drift lower, extending its losses. Every sector in the S&P 500 is now in the red.

There has been little in the way of market-moving headlines this session. Participants continue to await the latest vehicle sales data, which is expected to be released during market hours.

Walgreens (WAG 22.76, -0.48) reported a 1.9% drop in same-store sales for February, though total sales increased 3.4%. Pharmacy sales gained 3.9% overall, while same-store pharmacy sales declined 0.9%.DJ30 -32.25 NASDAQ -4.46 SP500 -5.49 NASDAQ Dec/Adv/Vol 1591/911/859 mln NYSE Dec/Adv/Vol 2242/794/672 mln

[tclambert]

112. Ford sales down 46.3% from a year ago.

Just announced on CNBC.

[tclambert]

133. CNN says Ford sales slipped 48%

The Detroit Free Press says 48.8%. They should know. It's local news for them.

[Dr.Phool]

134. The guy from W.Va, who won the big Powerball several years ago.

He owns several dealerships in SC. The Atlantic Auto Group. My dad worked for them part time a few years ago driving cars to and from auctions, and for export.

He built a nice, big new Ford showroom last year between Myrtle Beach and Loris. I drove by last Sunday, and they had any stock at all. And what they had was mostly trucks and SUV's.

He also built a new showroom for Chrysler and GM in Loris. Same story there.

[tclambert]

114. Oh, no. Geithner is about to testify.

I propose the "ball-gag" market recovery policy: Issue ball-gags for Bernanke and Geithner. When they speak, the market retches.

[ozymandius]

121. Wall St mostly inches up after Obama's comments

NEW YORK (Reuters) - U.S. stocks mostly edged higher on Tuesday after President Barack Obama said share prices are potentially a good deal at current levels, offsetting persistent uncertainty about plans to shore up the financial system.

U.S. Treasury Secretary Timothy Geithner said the Obama administration will evaluate potential costs to stabilize banks as more information becomes available, in testimony before a congressional panel.

http://finance.yahoo.com/news/Wall-St-mostly-inches-up-rb-14528016.html

...apparently Geithner was of little help to instill confidence...

[ozymandius]

118. Bernanke defends AIG rescue, says U.S. had no choice

WASHINGTON (Reuters) - U.S. Federal Reserve Chairman Ben Bernanke on Tuesday defended the government's latest bailout of insurer AIG, telling irate lawmakers that he, too, was angry, but that failure to act could have triggered an economic disaster.

....

Bernanke said AIG's extensive relationships with banks around the globe presented the risk of "contagion" should the company fail, and said authorities were working hard to try to neutralize dangerous positions.

"We have been doing what we can to break the company up, to get it into a salable position and to try to defang it," he said. "If there's a single episode in this entire 18 months that has made me more angry, I can't think of one (other than) AIG," he added, equating the company's financial services division with an unregulated hedge fund.

http://biz.yahoo.com/rb/090303/business_us_financial_usa_bernanke.html?.v=7

---

I'll believe that when I see it. The implied goal through these various bailout scenarios seems to be aimed at leaving these gargantuan entities intact. There are so many ways that this could have been handled differently. Leaving the zombie dinosaur on life support has taken top priority.

[goforit]

119. Break up all these MONOPOLIES!!!!

[antigop]

122. Krugman: Zombie financial ideas "..are they stupid, or do they think we're stupid?"

http://krugman.blogs.nytimes.com/2009/03/03/zombie-financial-ideas/

Indeed. Every plan we’ve heard from Treasury amounts to the same thing — an attempt to socialize the losses while privatizing the gains. We’re going to buy up all the bad assets at premium prices; no, we’re going to offer the banks guarantees against losses; no, we’re going to let private investors buy the stuff, but offer them de facto guarantees against losses in the form of non-recourse loans.
...
And the insistence on offering the same plan over and over again, with only cosmetic changes, is itself deeply disturbing. Does Treasury not realize that all these proposals amount to the same thing? Or does it realize that, but hope that the rest of us won’t notice? That is, are they stupid, or do they think we’re stupid?

I don’t know which possibility is worse.

[DemReadingDU]

125. Americans aren't stupid, they just have other priorities

Otherwise, there would be millions of protesters in Washington DC, storming the Congress, and demanding to put a stop to all this

[Hugin]

127. Personally, I know for a fact...

they have nothing, but, contempt for us.

At first I had my doubts, I thought that all of the sub-prime hating (Disclaimer: Although, I've never had a 'sub-prime' loan, I'm not exactly what a Billionaire or even a Millionaire would consider 'prime') was merely a smoke-screen, now the more I hear, I think they really do BLAME US for what has happened. Of course, in their minds, it couldn't be their broken voo-doo supply-side ideology which is to blame.

[antigop]

123. Krugman: All your downside are belong to us

http://krugman.blogs.nytimes.com/2009/03/03/all-your-downside-are-belong-to-us/

AIG is much in the news these days. But I’m not sure, even now, if people are getting the ultimate message.

AIG is in trouble because it wrote many credit default swaps, in effect guaranteeing others against losses it lacked the resources to cover. We, the taxpayers, are now covering those losses, for fear that not doing so would cause a financial catastrophe. But this means that US taxpayers have now assumed the downside risks for all of AIG’s counterparties.

In effect, then, we’ve already nationalized a large part of the financial industry’s potential losses.

So at the very least, we have a right to know who the counterparties are: who are we subsidizing, here? And beyond that, shouldn’t there be some quid pro quo? Shouldn’t the US government get something in return for taking on so much of the risk?

Yes, Paul, whom are we subsidizing?

[DemReadingDU]

126. They don't want us to know, because they are all worthless

The financial industry model is broken.

[tclambert]

128. GM's February sales down 52.9% from a year ago.

From the Detroit Free Press.

Also Nissan down 37.1%.

And Toyota sales down 39.8%.

[ozymandius]

135. details

* Says fleet sales down 75 percent versus prior year

* Says car sales down 50 percent, truck sales down 55 percent

* Says initial Q2 2009 production forecast at 550,000 vehicles

* Says end-February inventory 781,000 vehicles

http://finance.yahoo.com/news/GM-says-US-sales-for-February-rb-14529274.html

[tclambert]

138. They are saying overall car sales are at the lowest numbers since 1982

when we only had 3/4 the number of licensed drivers.

[ozymandius]

139. Last month GM reported U.S. sales fell 48.9% compared to January 2008. nt

[tclambert]

136. Honda down 35.4%

[ozymandius]

137. 2:46 numbers and blather

Dow 6,816.26 Up 52.97 (0.78%)
Nasdaq 1,340.88 Up 18.03 (1.36%)
S&P 500 706.38 Up 5.56 (0.79%)
10-Yr Bond 2.94% Up 0.0190

2:30 pm : Energy stocks are now trading with the largest gain of any other sector. The sector is currently up 2.3%.

Within the sector, Noble (NE 23.30, +1.09) is trading with leadership after Dow Jones reported shares of NE were upgraded by analysts at Goldman Sachs.

Meanwhile, BP PLC (BP 34.49, -0.66) is lagging after having its shares downgraded by other analysts, and a Dow Jones report said an executive from the company expects refining margins to be lower next year. Those announcements have overshadowed news that the company discovered a new offshore oil location.

[Hugin]

140. I'll again post my warning of areas to expect price gouging as the economy gets worse.

1. Food
2. Shelter (Particularly rent)
3. Energy (Watch those gasoline/heating/electric rates charged by our privatized utilities go through the roof.)
4. Medicine/Medical Care (Big Pharma is already doing it.)

[Dr.Phool]

143. Good idea.

1. Food-Check. I have about a 4 month supply of dry and canned goods in the garage. My wife thinks I'm crazy. Wait until I get back from Costco tomorrow. She'll know it!

2. Shelter-Check. House payments made early.

3. Energy-Already screwed. Progress Energy just hit all their customers with a 25% surcharge to pay for two nuke plants that they MIGHT build in 10 years. I'd convert to solar tomorrow if I could afford it.

4. Medicine-Who knows? It all depends on what Blue Cross decides they're going to pay for month to month.

5. Security-Still thinking about buying a firearm.

[Hugin]

144. It's basically all of the lower level of Maslow's pyramid of Self-Actualization.

It may not be organized gouging... Except by the Enronites Energy Cartels,but, you know it will happen. (If you've filled a prescription lately you know Big Pharma has jacked them to the sky in the last couple of weeks.) I don't see anyone making any serious moves to prevent it either.

[tosh]

150. What?? Progress Energy is doing that too?

I don't know how I missed that. Georgia Power (Southern Company) just got the vote to do the same thing.

<Off to look for details.>

[DemReadingDU]

146. Good idea

1. Food - check. (except spouse keeps eating it all)
2. Shelter - check. house is paid for
3. Energy - check. have generator for emergency
4. Medicine/Medical Care - check. stockpiling ibuprofen
5. Security - check. 2 barking dogs

[Hugin]

148. Oh, I forgot to add... 6. Cash reserves.

Anybody tried to use an ATM at a different bank lately?

Just for grins I stuck a card in a Wells-Fargo machine the other day... THREE DOLLARS! Holy CATS!

Yep, there's going to be gouging on access to YOUR money too.

[antigop]

141. Sirota: If it's too big to fail, it's too big to be private

http://openleft.com/showDiary.do?diaryId=11979

As I wrote in an earlier post, we shouldn't be afraid of permanent nationalization, because it is - thankfully - already all around us. Indeed, in some sectors of the economy, we have embraced nationalization thanks to an era where our government at least considered the possibility that if a function or service or entity is too big to fail, it is too big to be private.

That era's government believed a minimum retirement benefit and health insurance for the elderly is a "too big to fail" kind of function - too important to be subjected to the whims of the private marketplace. So we now have government-run Social Security and Medicare. That era's government also created the Pension Benefit Guaranty Corporation, which nationalized the catastrophic insurance of pension plans. It forces corporations to pay premiums that underwrite a fund that pays out the pensions of companies that go bankrupt. The government deemed that function - catastrophic pension insurance - as a "too big to fail" kind of function, understanding that if the service was in private for-profit hands, there would be a risk of that private venture overleveraging itself, and then failing when it needed to pay out retirement benefits to millions of Americans.

Now, clearly, it's time to resurrect the principle that if something is too big to fail, it's too big to be private. We can resurrect that principle both through far tougher regulation that prevents individual private institutions from ever becoming so singularly important to our nation,* and by nationalizing the few core functions and services that are probably best left to the government as insurer of last resort. In the former category, that means much stronger financial regulation, and in the latter category it means some kind of nationalization of basic market insurance (and, I might add, health insurance).

If ever there was a time that the country was ready for this kind of back-to-what-made-us-great argument, that time is now.

[Dr.Phool]

145. Faeries must have hit the bug zapper again today.

[TheWatcher]

147. Everything is playing out pretty much like I feared it would.

As I posted last night, The coordinated support to stem the bleeding in Asia (which had little effect, by the way), and the blazing activity in the overnight futures pointed to a strong reversal at the opening, which we got, about 103 points, but whether they could hold that was in question.

There have been a couple of prop attempts, the most embarrassing and laughable when Obama "soothed" investors by saying stocks were potenitially a good bargain at this level :wtf:, and they did manage to ram it back up to the highs, but it has since retreated again.

Right now, as usual, they are trying to bang the close positive in the last 10 minutes.

They really should move the Market Coverage from CNBC to ESPN, right along side with the World Poker Tour Coverage.

Because that's about how much legitimacy it has left.

[TheWatcher]

149. ANOTHER Ugly Close.

Failed rally attempt at the close to close down about 40 points.

Those Magical 4% Reversal Days may be a thing of the past, folks.

They are running out of Rabbits.

S&P Closes BELOW 700.

Keep any eye on Eastern Europe and Mexico.

I simply do not know where any strength for this Market could come from right now.

[Tansy_Gold]

154. All our wealth has been funneled into the pocket of the

oligarchs. Current wealth and, via national debt, our as-yet-unearned wealth for at least a generation to come.

We are, though we may not realize it, in much worse financial condition than the sans-culottes. They at least knew how bad off they were; we are still kept in befuddled, bedrugged denial/delusion.


Tansy Gold

[RUMMYisFROSTED]

155. Leaning on their shovels.

I'll take it.

[ozymandius]

157. End of the day - vacillating to a loss

Dow 6,726.02 Down 37.27 (0.55%)
Nasdaq 1,321.01 Down 1.84 (0.14%)
S&P 500 696.33 Down 4.49 (0.64%)
10-Yr Bond 2.938% Up 0.019
NYSE Volume 8,660,685,000
Nasdaq Volume 2,444,014,500

4:25 pm : Stocks traded without clear direction as market participants were left uninspired by the absence of market-moving headlines. In turn, the major indices swung back and forth before closing lower for the fifth straight session.

Consequently, the mounting losses have taken the S&P 500 and the Dow to new multiyear lows. The S&P 500 is now down almost 56% from its bull market high, which was reached in late 2007. The Dow is down roughly 53% from its 2007 high.

With stocks looking oversold, market participants actually bid the stock market up as much as 1.5% in the early going. The advance was broad-based, but eventually fell apart. Only the energy (+0.3%), technology (+0.3%), and materials (+0.6%) sectors were able to finish the session higher.

Treasury and the Federal Reserve are launching the Term Asset-Backed Securities Loan Facility (TALF), which will lend up to $200 billion to eligible owners of certain AAA-rated asset-backed securities. The effort has the potential to generate up to $1 trillion of lending for businesses and households.

The program will hold monthly fundings through December 2009 or longer if the Federal Reserve chooses to extend the facility.

By creating a facility that will purchase certain asset-backed securities, the Fed is aiming to improve liquidity and credit conditions in the financial system. According to Fed Chairman Bernanke the effectiveness of actions in restoring financial stability will be critical in the timing and strength of a broader economic recovery.

Still, Bernanke indicated the near-term outlook for the economy remains weak. Economists at Goldman Sachs concur; they expect the U.S. economy will fall 7.0% in the first quarter, according to Dow Jones.

Despite housing stimulus provisions, pending home sales in January declined 7.7%. The consensus estimate called for a 3.5% decline. The data reflect the effects of ongoing job losses, lost wealth, and weak consumer confidence.

Similar forces continue weighing heavily on auto sales. Ford Motor (F 1.81, -0.07) reported February sales in North America fell roughly 48%, which is steeper than the 42% drop that was expected. General Motors (GM 1.99, -0.02) reported February sales sank nearly 53%, exceeding the 45% fall that was widely forecast. Separate reports indicated GM's chief operating officer said that without government funds the company's European unit would run out of cash in the second quarter.

On a similar note, reports indicate Toyota Motor (TM 61.01, +0.35) may ask the Japanese government for aid, which would help offset expected losses.

Despite the lack of market-moving news this session, tomorrow's trade should get its cues early in the morning. The ADP Employment Report for February is due first thing (8:15 AM ET). The report will provide a glimpse of the government's official jobs report, which is due Friday. The February ISM Services Index is due later in the morning (10:00 AM ET).DJ30 -37.27 NASDAQ -1.84 NQ100 +0.4% R2K -1.9% SP400 -0.7% SP500 -4.49 NASDAQ Dec/Adv/Vol 1730/942/2.15 bln NYSE Dec/Adv/Vol 2109/1003/1.90 bln

[Tansy_Gold]

158. Explain to me how $200 billion magically morphs into $1 trillion.

That's not a question. It's a demand.

Mr. Geithner, tell me, in rational words that the average high school graduate can understand without additional definition, how it is possible for money to quintuple its value. Lending it around to your friends at low interest rates does not create wealth. It makes the same kind of funny munny that got AIG, Bear Stearns, Lehman Brothers, Merrill Lynch, CitiGroup, and all the other collapsing/bankrupt/insolvent/greedy/begging bastards into trouble.

The only thing, Mr. Geithner, that makes wealth is labor. The coal, the gold, the oil, the diamonds, the seeds in the ground have no value where they are; only when they are extracted by labor and made by labor into something useful and desirable do they have value. And don't, Timothy, give me any shit about "machines can do it." You know as well as I do that the machines themselves are the product of labor, of human inventiveness and design and manufacture and operation.

Lending imaginary money around and around and around does not solve the problem. You need to get yourself out of the Milton Friedman/Alan Greenspan/Arthur Laffer/Ayn Rand mindset and back into the real world.

Oh, and the same goes for you, Mr. Obama.

And I'm still waiting for that explanation.



Tansy Gold, who has just screamed EAT SHIT AND DIE to Tom DeLay on tv. . . . .

[ozymandius]

160. Tansy Gold, you could make a significant impact and maybe some money

by writing protest letters that MoveOn, True Majority, the ACLU and others can offer to their members. I mean - they would probably respond to this 'pick them up by the lapels and shake them' writing style with a pointed message.

To your point: it's Reaganomics all over again. Voodoo economics: Give a hedge fund $200 million on Monday and by Friday well have.... crap. Geithner would have us believe glorious fairy tales about trickle down economics.

Fuck him.

[Tansy_Gold]

163. I will take your suggestion under advisement ;-)

Thank you, dear Ozy, for your encouraging words. And of course for your daily gift of this thread.

At present time, I am overwhelmed with work that doesn't pay particularly well ..... but it pays, and for the moment I must rely on it. But in another couple of months I will be able, I hope, to cut back on that work and have a bit of time to devote my energy to exactly the kind of writing I seem to have a flare for -- the rabble-rousing sort of polemic that once got me quoted in a research book.

The thing is, guys like Geithner and Summers and Rubin, Greenberg and Madoff and all the rest of those idiots really NEED to be taken by the lapels, backed up against a wall, and confronted with the full monstrosity of their lies. No one is doing it. I don't care if they call it Reaganomics, voodoo math, the Laffer curve, the Enron loophole, or Alice's Restaurant -- it doesn't work. It doesn't exist. It's make-believe. Faery dust, pixie dust, angel dust. If no one could have imagined hijacked planes flying into tall buildings, they sure as fucking hell imagined turning the minimum wage earnings of babysitters and Wal-mart greeters into a steady flow of lucrative cash for the Swiss bank accounts of mortgage brokers and hedge fund mismanagers.

I'm struggling through David Lebedoff's absurd screed THE UNCIVIL WAR about a nameless, faceless "New Elite" that he claims is bent on destroying our "democracy." Lebedoff, who claims to be somewhat liberal, comes across as a terrified right wing rabbit, decrying "activist" judges who dare to determine if a law passed by a legislature is constitutional or not. In Lebedoff's often hidden logic, ANYTHING passed by a duly elected legislature is by definition constitutional and no law should ever be overturned, certainly not by a federal judge who, also by definition, is a member of that shadowy and menacing New Elite. Judges, appointed by duly elected leaders, have somehow less democratic (as defined by majority rule) authority than legislatures who may in fact not vote the way the majority of their constituents would want them to.

It's not necessary that you understand all this -- Lebedoff is every bit as convoluted and opaque as that brief summary. The point I'm trying to make is that all of us to one extent or another tend to have a certain amount of respect for those who wear the trappings of expertise. Lebedoff, like the Scarecrow, has credentials, but does he have credibility? Do the Jonathan Turleys, the Paul Krugmans, the John Deans have a monopoly on wisdom? Or is it time our media -- as opposed to the MSM -- break free of that straitjacket and find out what's really being thought out here in the Real World? It's great that 68% of those polled give Obama a favorable rating, but what are those 68%ers really thinking?

I'm quite sure there are people out there in medialand who read DU. Maybe some have even taken a peek at SMW or WEE. I suppose thre's even a chance that someone has read one of my posts and engaged in a moment of thought provoked by my utterings. I'll believe it, I guess, when I get quoted. :rofl:


Tansy Gold (:hi: to PG of V,BC, who did quote me)

[TheWatcher]

159. You have to love the Weasel Language in those Paragraphs

Treasury and the Federal Reserve are launching the Term Asset-Backed Securities Loan Facility (TALF), which will lend up to $200 billion to eligible owners of certain AAA-rated asset-backed securities. The effort has the potential to generate up to $1 trillion of lending for businesses and households.

The program will hold monthly fundings through December 2009 or longer if the Federal Reserve chooses to extend the facility.

By creating a facility that will purchase certain asset-backed securities, the Fed is aiming to improve liquidity and credit conditions in the financial system. According to Fed Chairman Bernanke the effectiveness of actions in restoring financial stability will be critical in the timing and strength of a broader economic recovery.

Still, Bernanke indicated the near-term outlook for the economy remains weak. Economists at Goldman Sachs concur; they expect the U.S. economy will fall 7.0% in the first quarter, according to Dow Jones.

"launching the Term Asset-Backed Securities Loan Facility (TALF)"

Yet ANOTHER Vaguely Detailed Program that will have little to no effect on anything.

"lend up to $200 billion"

UP to 200 Billion. That's a pretty broad statement there, Ben. Anywhere from $1.00 to 200 Billion. Wow, very informative.

"to eligible owners of certain AAA-rated asset-backed securities."

Who are the eligible owners? Which Asset backed securities? Well, we just can't be certain. No details. Nice language, though. Joseph and Benito would be proud!

"potential to generate up to $1 trillion of lending for businesses and households."

You Have to love that. "Potential to generate UP TO". Once again. Weasel Language, no details.

"certain asset-backed securities."

Again, which ones? We can't be certain!

"aiming to improve liquidity and credit conditions in the financial system."

Translation- We have no idea what to do except release another vaguely detailed statement about a vaguely detailed program which we have no idea whether it will help or not. In other words, we're just pissing up a rope, here. Don't mind us.

The last paragraph gives you the basic truth. Things suck, and they aren't going to improve anytime soon. You can't have a recovery by 2010 when your GDP (And this will be a fake massaged number, who KNOWS what the real truth is) will be -7.0% for the first quarter, with no hope for renewed growth going forward.

There Is Nothing New Under The Sun.

[ozymandius]

161. After all the shit we've been through over eight goddamned years

how did we merit getting stuck with a fucking supply-sider for Treasury Secretary?!? I am really angry about this!

[CatholicEdHead]

162. I think trying to please some Clinton Adminstration retreads

and to throw a bone to the still disgruntled Hillary wing that goes back to the Primary. Healing the 2008 Primary rift should have been done in other ways.