STOCK MARKET WATCH, Wednesday March 18

[ozymandius]

Source: du

STOCK MARKET WATCH, Wednesday March 18, 2009

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

AT THE CLOSING BELL ON March 17, 2009

Dow... 7,395.70 +178.73 (+2.42%)
Nasdaq... 1,462.11 +58.09 (+4.14%)
S&P 500... 778.12 +24.23 (+3.21%)
Gold future... 916.80 -5.20 (-0.57%)
30-Year Bond 3.80% +0.04 (+1.04%)
10-Yr Bond... 3.00% +0.05 (+1.76%)

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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

Wonderland: Touring the Upside-Down Room
BY FRANK BARBERA, CMT

Over the last few days, as stock prices have continued to rebound we have seen a significant number of longer-term ‘super bears’ reverse their gears and become bulls. The likes of Marc Faber, Robert Prechter, Doug Cass come to mind, as a few who have swung from the bearish to bullish camp. Looking back, we note that as recently as March 6th, at the S&P low of 667, at least a few sentiment data points moved to important extremes, the most prominent of which was the much discussed AAII Sentiment Survey, which recorded a record number of bears at 70.30% the week ended March 6th.

....

Historically, when the AAII five week moving average has been below –20 to –25%, it is usually a good sign that the stock market is nearing an important extreme. Unfortunately, like all indicators, the AAII survey is not perfect and in very strong markets it can stay in one area for some time. Yet, the early March reading on this gauge was quite extreme at a reading of –36%, the second most extreme reading in history going back to the 1989 time period. With the market now up 16% from those lows, the question now becomes, is the stock market engaged in a sustainable bear market rally, or is this advance coming to an end?

....

From the technical point of view, the stock market lows of early March did not encompass a “well developed base.” Major bear markets invariably end and yield to bull markets with the construction of a well-developed base. To construct a well-developed base, markets need to push down, create a panic low as they become deeply oversold. From there, markets then need to undergo a rally sharply (for a time) off those lows, and then a “retest” where they go back down and revisit the original panic low. The retest portion of base construction is absolutely critical as this is the phase where lots of positive divergence is seen. It is the positive divergence on indicators of breadth, volume, momentum and occasionally sentiment, which hints that a truly sustainable turn is at hand. To date, the stock market rally of the last few days is NOT coming from a well-constructed base.

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

[Kip Humphrey]

20. Pssst... Taxpayer. Over here... Its not too late to give us your refund in your IRA or 401K.

[ozymandius]

2. Today's Reports

08:30 Core CPI Feb
Briefing.com 0.0%
Consensus 0.1%
Prior 0.2%

08:30 CPI Feb
Briefing.com 0.2%
Consensus 0.3%
Prior 0.3%

08:30 Current Account Balance Q4
Briefing.com NA
Consensus -$137.1B
Prior -$174.1B

10:30 Crude Inventories 03/13
Briefing.com NA
Consensus NA
Prior +749K

14:15 FOMC Rate Decision
Briefing.com NA
Consensus NA
Prior 0.00% -0.25%

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

[UpInArms]

23. U.S. Feb. consumer price index up 0.4% - Feb. real weekly earnings fall 0.3%

01. U.S. Feb. consumer price index up 0.4% vs. 0.3% expected
8:30 AM ET, Mar 18, 2009

02. U.S. Feb. core CPI up 0.2% vs. 0.1% expected
8:30 AM ET, Mar 18, 2009

03. U.S. CPI up 0.2% in past year, core CPI up 1.8%
8:30 AM ET, Mar 18, 2009

04. U.S. Feb. real weekly earnings fall 0.3%
8:30 AM ET, Mar 18, 2009

05. U.S. Feb. energy prices up 3.3%, most in 7 months
8:30 AM ET, Mar 18, 2009

06. U.S. Feb. shelter prices unchanged
8:30 AM ET, Mar 18, 2009

07. U.S. Feb. food prices fall 0.1%, first decline in 3 years
8:30 AM ET, Mar 18, 2009

[UpInArms]

33. Current Account Balance @ -$132.8 Billion

Mar 18 8:30 AM Current Account Balance Q4
report -$132.8B
briefing.com NA
concensus -$137.1B
last report -$181.3B
rev'd from -$174.1B

[UpInArms]

49. Petroleum Inventories Report - every category rises - oil prices fall

06. U.S. gasoline inventories rise 3.2 million barrels last week
10:31 AM ET, Mar 18, 2009

07. U.S. distillate inventories rise 100,000 barrels last week
10:31 AM ET, Mar 18, 2009

08. Crude extends losses after inventories data, falling over 3%
10:31 AM ET, Mar 18, 2009

09. U.S. crude inventories rise 2 million barrels last week: EIA
10:30 AM ET, Mar 18, 2009

[UpInArms]

90. Fed maintains 0 rate and prints $1 trillion by monetizing debt (look out for inflation!)

29. Fed to give more details on purchases early next week

2:49 PM ET, Mar 18, 2009
30. Fed will buy Treasurys maturing in 2 to 10 years
2:48 PM ET, Mar 18, 2009

31. Fed will also buy other maturities and TIPS
2:48 PM ET, Mar 18, 2009

32. Purchases will be made two or three times a week, Fed says
2:48 PM ET, Mar 18, 2009

33. Fed says will start buying Treasurys late next week
2:46 PM ET, Mar 18, 2009

34. Ten-year Treasury yields drop by most since 1987
2:33 PM ET, Mar 18, 2009

47. Fed to buy up to $300 bln of Treasurys in next six months
2:17 PM ET, Mar 18, 2009

48. Fed to buy up to $1.25 trln in mortgage-backed securities
2:17 PM ET, Mar 18, 2009

49. Fed to buy up to $200 bln in GSE debt
2:17 PM ET, Mar 18, 2009

50. Fed more pessimistic on outlook, no time table for recovery
2:17 PM ET, Mar 18, 2009

51. Fed maintains zero-bound rates
2:17 PM ET, Mar 18, 2009

52. Fed still sees risk of deflation
2:17 PM ET, Mar 18, 2009

53. Fed vote unanimous
2:17 PM ET, Mar 18, 2009

[ozymandius]

3. Oil drifts below $49 in Asia as rally stalls

SINGAPORE – Oil prices drifted below $49 a barrel as investors mulled whether a still-weak global economy and crude demand have justified a recent rally in prices.

Benchmark crude for April delivery fell 41 cents to $48.75 a barrel by late afternoon in Singapore on the New York Mercantile Exchange. Prices rose $1.81 a barrel on Tuesday to settle at $49.16.

.....

Investors will be watching for the weekly crude inventory report for the week ended March 13 by the Energy Information Administration later on Wednesday. Analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., expect an increase of crude stocks of 2 million barrels.

.....

In other Nymex trading, gasoline for April delivery fell 1.18 cents to $1.41 a gallon, while heating oil dropped 0.47 cent to $1.27 a gallon. Natural gas for April delivery was up 1.2 cents to $3.83 per 1,000 cubic feet.

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

[UpInArms]

25. April crude down 44 cents at $48.76 a barrel on Globex

01. April crude down 44 cents at $48.76 a barrel on Globex
8:31 AM ET, Mar 18, 2009

[Demeter]

37. Local gas prices up 20 cents overnight

the weekend started early this week--school break, most likely.

[UpInArms]

85. April crude up 49 cents to $49.68 a barrel on Globex

26. April crude up 49 cents to $49.68 a barrel on Globex
2:52 PM ET, Mar 18, 2009

[ozymandius]

4. Fed scopes out options with key rate near zero

WASHINGTON – With a key interest rate already near zero, Federal Reserve policymakers are weighing what other tools they can use to jolt the country out of recession.

Fed Chairman Ben Bernanke and his colleagues resume their two-day meeting Wednesday, and at its conclusion they are all but certain to leave a key bank lending rate at a record low to try to bolster the economy, which has been stuck in a recession since December 2007.

Economists predict the Fed will hold its lending rate between zero and 0.25 percent for the rest of this year and for most — if not all of — next year.

The hope is that rock-bottom borrowing costs will spur Americans to step up spending, which would aid the economy. So far, though, hard-to-get credit, rising unemployment and other negative forces have forced consumers and businesses to retrench.

http://news.yahoo.com/s/ap/20090318/ap_on_bi_ge/fed_interest_rates

---

Delusional peeps! Until the mechanisms that relieve rampant unemployment are working, none of the Fed's policies will be worth squat. The Fed wants to bolster the mortgage market by buying T-notes to drive down interest rates. The Fed wants to begin programs to spark new consumer loans with credit card lending programs, providing the backstop for investors to buy this kind of debt. Think about it: Credit card lending programs. Good luck with that.

[ozymandius]

5. Housing Rebound Is Hopeful, Maybe; Fed Mulls Options (Hope is a plan - again.)

Housing starts unexpectedly rose in February for the first time in eight months, the government said Tuesday, as the Federal Reserve began a two-day meeting to mull steps to revive the economy.

The data added to signs that the economic downturn may be less severe in early 2009 after plunging at a 6.2% annual rate in Q4, the worst since 1982.

....

The housing data, along with higher retail sales excluding autos in January-February, give optimists some hope that the recession, which began in December 2007, may be starting to ease.

Pessimists note that single-family starts -- up just 1.1% -- are essentially at record lows, consumer spending has been helped by one-time factors, and industrial activity shows no glimmer of recovery.

....

Yet tight credit continues to hurt sales of homes, autos and other big-ticket items, keeping manufacturing in a deep slump.

To free up credit to consumers and small businesses, the Fed plans this week to launch its long-awaited $200 billion Term Asset-Backed Securities Loan Facility to help purchases of auto, credit-card and other loans. The TALF could expand to $1 trillion.

http://news.yahoo.com/s/ibd/20090317/bs_ibd_ibd/20090317feature

---

See previous post for appropriate outrage aimed at this stupidity.

[ozymandius]

6. Bad year or good, AIG employees got big bonuses

NEW YORK – A Wall Street firm loses billions of dollars, nearly destroying its business and crippling the nation's economy. But top executives still receive huge bonuses?

As crazy as that sounds to most Americans, paying such bonuses even after a company suffers big losses is common practice on Wall Street, and it's at the heart of the outrage surrounding insurer AIG.

.....

For starters, AIG's retention payments were guaranteed in the executives' contracts. By breaking them, AIG says it would risk triggering a wave of employee lawsuits. And the cost of those lawsuits would likely dwarf the size of the retention bonuses.

One way around the contracts would be to prove fraud. A 2002 law adopted after the accounting scandals at Enron and other companies allows publicly traded corporations to take back ill-gotten compensation.

.....

A day earlier in New York, state Attorney General Andrew Cuomo subpoenaed information from AIG to determine whether the payments made over the past weekend constitute fraud under state law.

In a letter Tuesday, Cuomo said 73 AIG employees received retention bonuses of $1 million or more — including 11 who have since left the company. Cuomo said the bonus checks were mailed Friday.

http://news.yahoo.com/s/ap/20090317/ap_on_bi_ge/aig_bonus_culture

[ozymandius]

7. AIG required to repay lavish bonuses: Geithner

WASHINGTON, (AFP) – AIG will be required to repay lavish employee bonuses, US Treasury Secretary Timothy Geithner said, as the bailed-out insurance company's boss prepared to face furious lawmakers.

Geithner said in a letter to the House leadership the payments could not be legally blocked but the government would "impose on AIG a contractual commitment" to repay to taxpayers the 165 million dollars in bonuses,adding that sum would be deducted from the 30 billion dollars still to be handed out from AIG's total bailout of some 180 billion dollars.

Geithner said the Department of Justice is reviewing "what avenues are available" to recoup bonuses already paid. If they violate provisions of the economic recovery plan passed last year, he said the government would negotiate with the company and employees on a payback.

http://news.yahoo.com/s/afp/20090318/bs_afp/uspoliticsinsurancepublicaidaig

[54anickel]

26. F'ing pocket change. What about the rest of the 170 b-b-b-b-b-billion buck-a-roos

we handed over to them?

I'm beginning to see Madoff and these various corporate execs that are paraded out in front of us (even though some remain faceless/nameless) as some sort form of scapegoat, shiny diversions, artificial sacrifices to appease us little savages while the machination continues to pick our pockets.

This isn't doing anything to boost confidence in the system either. With that in mind you know damned well where the majority of that stimulus money is going to be going......

[ozymandius]

8. Washington aims to get AIG money back -- one way or another

WASHINGTON -- The Obama administration and members of Congress scrambled Tuesday to find ways to rescind $165 million in bonuses paid to employees of bailed-out insurer American International Group as constituent ire grew.

....

At the Capitol, members of Congress proposed using the tax code to take back the money. However, it was unclear whether, or how quickly, Washington could act to reclaim bonuses paid to 73 executives of AIG, which so far has received $170 billion in federal aid.

....

Earlier Tuesday, the top members of the Senate Finance Committee, Democrat Max Baucus of Montana and Republican Charles Grassley of Iowa, said they intended to introduce legislation that would slap a 35 percent excise tax on excessive executive compensation. Others proposed a tax as high as 100 percent.

The Baucus-Grassley measure would apply to all bailout recipients and companies in which the federal government has taken an equity interest, including Fannie Mae and Freddie Mac, senior Senate Finance Committee aides said.

Under the proposal, retention bonuses -- the type that AIG paid out -- would be subject to the tax and would have to be paid both by the offending company and the bonus recipient.

http://www.miamiherald.com/news/nation/story/955416.html

[Demeter]

36. That Might Work--If It Passes All the Hurdles

This could provide the spring entertainment which we don't get in theaters until the summer....

I like the way it's phrased comprehensively, any corporation getting federal money--could also apply to subsidies, perhaps? Agribusiness?

[ozymandius]

10. Geithner Says ‘Wind Down’ of AIG May Accelerate (Update1)

March 17 (Bloomberg) -- Treasury Secretary Timothy Geithner told leaders in Congress he will ensure taxpayers aren’t footing the bill for American International Group Inc.’s employee bonuses and indicated the firm’s “wind down” may accelerate.

“We will continue our aggressive efforts to resolve the future status of AIG in a manner that will reduce systemic risks to our financial system while minimizing the loss to taxpayers,” Geithner wrote in a letter today to House Speaker Nancy Pelosi, Senate Majority Leader Harry Reid and other top lawmakers.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aCr02b8ce6B8&refer=home

[Kolesar]

12. "Winding down" AIG sounds "impossible"

Unless we honestly address that fact that the US taxpayer will be taking on debt to reimburse bondholders who bought these fraudulent products from US bankers. Frequent readers of this SMW thread have been talking about this for a while.

[amandabeech]

72. I think that the bondholders are simply going to have to take a substantial haircut.

If AIG had gone Chapter 11 or 7, that would have happened.

There is risk in holding bonds. Surely the investors or their advisers knew that, be they individuals, sovereign wealth funds, or state pension funds. Why is Geithner so unwilling to tell them the truth?

[Tansy_Gold]

145. You're WRONG! You're WRONG! Don't say that!!!

There is NO risk in holding bonds! None at all! Don't you know that by now????!!! That's what we have CDSes for!!!!



:sarcasm: or maybe not.


TG

[ozymandius]

11. AIG Employees Not Too Happy With Persistent Death Threats (really?)

Interesting summation of the AIG populist anger from an employee's point of view. AIG's Financial Products office at 50 Danbury Road, in Wilton, CT is not a happy place. Inside "death threats and angry letters flooded e-mail inboxes. Irate callers lit up the phone lines. Senior managers submitted their resignations. Some employees didn't show up at all." And as more employees leave(as soon as the bonus hits their bank account of course) and join the witness protection program, and nobody who understands the complexity of AIG FP's trades remains, the outcome can only be a horrendous one:

"It's going to blow up," said a senior Financial Products manager, who spoke on condition of anonymity because he was not authorized to speak for the company. "I have a horrible, horrible, horrible feeling that this is going to end badly."

When you have insiders telling you they are bracing for armageddon, it kinda takes away from the President's and Bernanke's message that all is well and that America will be back to its merry uberleveraged ways by the end of 2009 at the latest.

http://zerohedge.blogspot.com/2009/03/aig-employees-not-too-happy-with.html

[Demeter]

22. It Was Going To Blow Up, One Way or the Other, Regardless

If Bernanke, Geithner, Paulson, and the rest thought they could gracefully sweep this under the carpet, they were deluding themselves. I think they have been disabused of the notion that the American sheeple would be glad to clean up AIG vomitus.

[RUMMYisFROSTED]

34. So bonuses intended to retain have resulted in flight?

Ya can't make this shit up.

[Demeter]

38. Sign of Intelligence--Maybe They WERE the Smartest Guys in the Room!

[radfringe]

13. AIG CEO to Testify Before Congress Today

Liddy will be grilled... He was already scheduled to testify before the "BONUS BABY" poop hit the fan - so this appearance is NOT because of the "BONUS BABIES" - however you can bet your bippy that he will be questioned about it...
http://abcnews.go.com/Business/Economy/story?id=7102844&page=1

and....blatherhead blather are hinting that Geithner's job is on the line...

[tclambert]

15. Begging for sarcasm

But, Ozy, you're not appreciating how stressful it is to work for a company that's losing a hundred billion dollars. These executives deserve bonuses for sticking with it through all the pain and anguish. The fact that they caused the pain and anguish with their own incompetence does not lessen the stress they must feel. Indeed, those with consciences (hypothetically) may feel additional stress from feelings of shame or guilt, not in a criminal sense, oh no, but emotional guilt. Though criminal guilt could be another source of stress. And it would need to be further rewarded with large bonuses to discourage ratting out to the feds. In short, the bonuses are a reward for loyalty, a key component of performance, not just for results, which do, in fact, look bad from a certain technical point of view. In the end, results haven't really been that bad when you factor in the successful transfer of paper losses to the government and the taxpayer. If you go beyond the traditional balance sheet and include the bailout monies as part of the revenue stream, the harm to the company doesn't look so bad. Who knows, future companies may want to study and imitate this new business model. Then these same executives you mock may be in high demand to create such massive losses at other companies that the government must bail them out, too.

[willing dwarf]

19. And talent, don't forget that these are highly talented individuals.

Atleast according to a Andrew Sorkin at the NY Times.

[tclambert]

77. Well, obviously. They figured out how to transfer their massive losses onto other people.

Us. A year ago who would have thought that was possible? These brilliant executives found a way to make the worst deals in the history of business, and yet come out of it without the company failing, and making fortunes for themselves. You think Einstein, Shakespeare, or Socrates could have worked this miracle? Not a chance. It's genius, sheer ruthless genius.

[ozymandius]

9. Asian Stocks Advance on Japan Bank Support, U.S. Housing Starts

March 18 (Bloomberg) -- Asian stocks gained for a fourth day, the longest winning streak since the start of the year, after the Bank of Japan said it will buy more bonds from banks to spur lending and U.S. housing starts unexpectedly surged.

Mizuho Financial Group Inc., which has reported the most credit-related losses in Asia, rose 3 percent in Tokyo as the central bank pledged to increase debt purchases and provide loans to banks. HSBC Holdings Plc, Europe’s largest lender, jumped 5.8 percent in Hong Kong, its seventh day of gains, after saying it remains “well capitalized.” James Hardie Industries NV, which sells fiber-cement siding for homes in the U.S., climbed 5.9 percent in Sydney on speculation demand will rise.

.....

Japan’s Nikkei 225 Stock Average gained 0.3 percent, while Hong Kong’s Hang Seng Index rose 1.9 percent. India’s Sensitive Index climbed 2 percent as Citigroup Inc. said the country’s central bank may lower borrowing costs. All markets advanced except Australia.

.....

The Bank of Japan said today it will buy 1.8 trillion yen ($18.3 billion) of government debt from banks each month, up from 1.4 trillion now. The central bank said yesterday it may provide as much as 1 trillion yen in subordinated loans to banks to replenish capital and keep them lending.

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

[Festivito]

14. Debt: 03/16/2009 11,033,157,578,669.78 (UP 49,407,396,322.53) (Big rise.)

(Many small days, one big day, another small day, now another big day.)

= Held by the Public + Intragovernmental(FICA)
= 6,741,972,565,592.27 + 4,291,185,013,077.51
UP 47,789,810,398.18 + UP 1,617,585,924.35

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: $9.8, ABOUT TEN BUCKS for a 1B$ 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 305,986,372 people in America.
http://www.census.gov/population/www/popclockus.html
Currently, each of these American's owe $36,057.68.
A family of three owes $108,173.03. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 21 reports in the last 30 to 31 days.
The average for the last 21 reports is 13,054,357,000.80.
The average for the last 30 days would be 9,138,049,900.56.
The average for the last 31 days would be 8,843,274,097.32.
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$/day.
There were 38 reports in 55 days of Obama's part of FY2009 averaging 0.89B$ per report, 0.66B$/day so far.
There were 113 reports in 167 days of FY2009 averaging 8.92B$ per report, 6.04B$/day.

PROJECTION:
There are 1,406 days remaining in this Obama 1st term.
By that time the debt could be between 13.0 and 23.5T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
03/16/2009 11,033,157,578,669.78 BHO (UP 406,280,529,756.70 so far since Obama took office.)

Fiscal Year ends: Sep 30
Borrowed in FY1993: (Maybe later.)
Borrowed in FY1994: 281,261,026,873.94
Borrowed in FY1995: 281,232,990,696.07
Borrowed in FY1996: 250,828,038,426.34
Borrowed in FY1997: 188,335,072,261.61
Borrowed in FY1998: 113,046,997,500.28
Borrowed in FY1999: 130,077,892,735.81
Borrowed in FY2000: _17,907,308,253.43 Bill alone
Borrowed in FY2001: 133,285,202,313.20 Bill and George
Borrowed in FY2002: 420,772,553,397.10 All George
Borrowed in FY2003: 554,995,097,146.46
Borrowed in FY2004: 595,821,633,586.70
Borrowed in FY2005: 553,656,965,393.18
Borrowed in FY2006: 574,264,237,491.73
Borrowed in FY2007: 500,679,473,047.25
Borrowed in FY2008: 1,017,071,524,650.01
Borrowed in FY2009: 1,008,432,681,757.30 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
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
03/03/2009 +000,498,419,440.82 ------------********
03/04/2009 +000,625,214,862.41 ------------********
03/05/2009 +006,943,273,604.61 ------------*********
03/06/2009 +000,851,040,035.06 ------------********
03/09/2009 -000,039,321,146.54 ---- Mon
03/10/2009 +000,452,187,222.11 ------------********
03/11/2009 +000,187,775,216.55 ------------********
03/12/2009 +031,351,798,430.48 ------------**********
03/13/2009 -000,013,659,079.13 ----
03/16/2009 +047,789,810,398.18 ------------********** Mon

212,052,953,437.68 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,368,525,775,410.71 in last 179 days.
That's 1,369B$ in 179 days.
More than any year ever, including last year, and it's 135% of that highest year ever only in 179 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 179 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=3786348&mesg_id=3786491

[TheWatcher]

16. Morning Commentary: The Hen House Gets A New Fox, And Our Leaders Play Patty Cake With The Others

There is so much to cover going in so many directions, with the continuing Blitzkrieg Of Propaganda continuing to try drown out the sound of the oncoming Tsunami Of Reality.

I don't even know if there is going to be much coherence or cohesiveness in this Post, so I hope it will all work out in the end.

::Looks at what I just wrote:: Hey! Maybe I should work for the TREASURY!

And the biggest problem the American People have is that NO ONE IN POWER IS ON THEIR SIDE.

NO ONE IS REPRESENTING THEIR INTERESTS.

The Foxes are in charge of our Hen House.

And it appears they will never be done eating until we are all dead.

And LOOK! We got a new one Yesterday!


Citigroup's top economist tapped for Treasury post
Citigroup chief economist Lewis Alexander to become counselor to Treasury Secretary Geithner


WASHINGTON (AP) -- Citigroup's chief economist is being tapped for a job at the short-staffed Treasury Department, which is at the center of the Obama administration's efforts to battle the financial crisis.

Lewis Alexander will become a counselor to Treasury Secretary Timothy Geithner, according to a government official who spoke on condition of anonymity because a formal announcement has not been made. Alexander will work on domestic finance matters, the official said.

Alexander had worked at the Federal Reserve and also served as the Commerce Department's chief economist in the 1990s.

Geithner so far has battled the crisis with no key deputies in place. That's made for a rocky start for the man President Barack Obama put on the front lines of the financial crisis.

http://finance.yahoo.com/news/Small-Victories-Market-Looks-cnbc-14619835.html

WOW. Now whenever the Economy needs a Boost, Someone will just write a Memo and everything will be fine within 72 Hours!


Meanwhile our leadership continues to play Patty-Cake and Faux Justice with the Criminals who continue to run wild with reckless and unchecked abandon.

The AIG thing is just getting more and more Bizarre by the hour is it not?

Let's take a look at some of the latest headlines that prove there is no longer any Rule Of Law for the Corporate Monsters in this country:

AIG likely won’t be able to pay taxpayers back
Ties to foreign partners siphoning off some of the $170 billion lent to it

March 16: Anger erupted Monday over huge bonus payments being made to employees of AIG, the former insurance giant that's being backstopped with $162 billion in taxpayer funds. NBC's Tom Costello reports.

Pressure is mounting on the government to revise its bailout of AIG to ensure that taxpayers are repaid as much as possible of the $170 billion lent to the troubled insurer.

Experts warn we shouldn't expect to get much back.

The problem stems from AIG's obligations to its trading partners. :eyes: So far, the hobbled insurance giant has honored in full its contracts with U.S. and foreign banks. It's paid out more than $90 billion in taxpayer money to keep some of the biggest names in finance from losing money on bad bets linked to subprime mortgages and other risky assets.

http://www.msnbc.msn.com/id/29728732

For God Sake, THEY NEVER INTENDED to. The American People MUST come to an understanding. AIG is a Criminal Ponzi Scheme, run by Criminals, it always has been, it always will be, and they are going to continue to do whatever they want until they are PHYSICALLY STOPPED.

The Company Must be broken down, liquidated, and every conspirator needs to get due process, have all their assets stripped, and they need to Go to Jail, Go DIRECTLY To Jail, Do NOT Pass Go, and GET THE FUCK OUT OF OUR FACES.

AIG is a PENNY Stock. WHY have they not been DE-LISTED? WHY have they not been LIQUIDATED? WHAT The Fuck Is GOING ON?

Well, I'm glad I asked, because there are answers to that. I am afraid no one will like them, but hey, we're not Corporations, so we get no representation.

Look How "Tough" our leadership is getting:

(Let's See How Many Contradictions and Mixed Messages you can pick out)

US to 'wind down' AIG in 'orderly way': Geithner

WASHINGTON (AFP) – US Treasury Secretary Timothy Geithner said that the government would work with AIG chief executive Edward Liddy to "wind down" the troubled insurer "in an orderly way."

In a letter to lawmakers Geithner addressed what he described as "considerable outrage" stemming from 160-million-dollar bonuses paid to AIG top executives, and said his department would "explore any and all responsible ways to accelerate this wind down process."

He said he would "work with" AIG chief executive Edward Liddy "on measures to wind down AIG in an orderly way and protect the American taxpayer."

AIG, which received billions in US bailout funds, is also to pay back the government for the hefty bonuses shelled out to top executives, Geithner said.

http://news.yahoo.com/s/afp/20090318/ts_afp/uspoliticsinsurancepublicaidaig_20090318034026

Wow. Can you FEEL The Faux Outrage. Goofy's having a FIT, isn't he? He's SO outraged. Hey Goofy, YOU SHOULDN'T HAVE ALLOWED THE BONUSES TO EVER BE PAID. The COMPANY SHOULD HAVE BEEN LIQUIDATED AND NEVER BAILED OUT TO BEGIN WITH.

Don't Insult my Intelligence, Goofy. Just DON'T.

And what in the hell is an "Orderly Way?" What does that even MEAN?

And now, in a contradiction, they now say they want to Tax the Bonuses that they never should have given to begin with.

"Oh, just give us the tax money, and we're all good. Now go Rape The Country some more *wink* *wink*"

But wait just a minute, Goofy. From the way I have read it over the past few days, although I could be wrong since you guys talk out of so many orifices at once, that YOU were the one who gave the blessing for them to do it to begin with. And now you want to write "strongly worded letters" and Wag Your Finger, and say "Now, Now, I think someone needs a Time Out."

What Did You Know And When Did You Know It?

Ahhhhh, here we go:

WASHINGTON – Cue the outrage.

For months, the Obama administration and members of Congress have known that insurance giant AIG was getting ready to pay huge bonuses while living off government bailouts. It wasn't until the money was flowing and news was trickling out to the public that official Washington rose up in anger and vowed to yank the money back.

Why the sudden furor, just weeks after Barack Obama's team paid out $30 billion in additional aid to the company? So far, the administration has been unable to match its actions to Obama's tough rhetoric on executive compensation. And Congress has been unable or unwilling to restrict bonuses for bailout recipients, despite some lawmakers' repeated efforts to do so.

The situation has the White House and Treasury Secretary Timothy Geithner on the defensive. The administration was caught off guard Tuesday trying to explain why Geithner had waited until last Wednesday to call AIG chief executive Edward M. Liddy and demand that the bonus payments be restructured.

http://news.yahoo.com/s/ap/20090318/ap_on_go_pr_wh/aig_what_did_they_know

Well Goofy, Looks like you got some "Splainin' To Do."

Oh but don't worry, Our "Leaders" are on top of it.

Senate to explore taxing controversial AIG bonuses
Posted: 11:38 AM ET

Senate Democrats want to tax the controversial bonuses doled out to AIG employees who work for the division that led to the company's downfall.

WASHINGTON (CNN) — Senate Democrats want to tax the controversial bonuses doled out to AIG employees who work for the division that led to the company's downfall.

Senate Majority Leader Harry Reid announced on the Senate floor Tuesday that the tax-writing Senate Finance Committee will pursue a legislative fix in such a way that the "recipients of those bonuses will not be able to keep all their money — and that's an understatement."

Senate Finance Committee Chairman Max Baucus, D-Montana, will propose a special tax within the next 24 hours, Reid said.

"I don't think those bonuses should be paid," Baucus said Tuesday.

Publicly, the White House expressed confidence in Geithner — but still made it clear he was the one responsible for how the matter was handled.

http://politicalticker.blogs.cnn.com/2009/03/17/senate-to-explore-taxing-controversial-aig-bonuses/?ref=fp1

Is your head spinning yet? And here's the most interesting part. NONE Of the Above really matters, if you consider that ALL of this Posturing and Patty-Cake is nothing more than a Roman Colosseum Special Event to distract the Sheep from the REAL Elephant In The Room they DON'T want you to look at.

The Ticking Time Bomb that is the AIG CDO CDS Mess. What do you think will happen when THAT goes off? It makes all of this silly Posturing and Theater over the Bailout shenanigans look almost insignificant.

Scared Yet?

PISSED yet?

Now, on to the Propaganda Front:

US consumer confidence edges higher in latest week -ABC
Tue Mar 17, 2009 5:06pm EDT


NEW YORK, March 17 (Reuters) - ABC News on Tuesday released
its weekly index on consumer confidence in the United States.
The Consumer Comfort Index rose to -47, from -48 in the
previous week.

YES. A Scorching Rise from -47 from -48.

You CAN'T Make this stuff up.

Oh, And remember last week During Propaganda Rush Week when GM was smiling and said they "didn't need
anymore help?"

GM CEO says bankruptcy would cause liquidation
Mar 17, 12:25 PM (ET)

DETROIT (AP) - General Motors Chief Executive Rick Wagoner says the automaker would end up being liquidated if it enters Chapter 11 bankruptcy protection.

Wagoner says restructuring out of court would accomplish 99 percent of what could be achieved in bankruptcy. But he says it wouldn't have the risk of scaring away customers or the huge expense of Chapter 11.

Wagoner made the statements Tuesday at a breakfast in Washington, D.C., sponsored by the Christian Science Monitor.

General Motors Corp. (GM) (GM) has received $13.4 billion in federal loans and is seeking another $16.6 billion. The company faces a March 31 deadline to finish its viability plan and show the government it's worthy of the money.

http://apnews.excite.com/article/20090317/D96VSTSO1.html

But....But....I thought THEY WERE PROFITABLE AGAIN? Everything was Just Fine. But...But...The Smiling.....The Memo.....The Happy Talk.....

And while ALL this is going on TPTB still continue to Blow The "Hope Bubble" ("Now Held Over for 2nd Big Week!")

And they continue to do it based SOLELY on Propaganda and Conjecture and Fake, Massaged Data.

We are truly in uncharted Territory here folks.

I mean, at LEAST Clinton's and the Giggling Murderer's Bubbles were based on SOMETHING of substance. Sure it was toxic and unsustainable, and led to a collapse, but at least it was SOMETHING.

Clinton's was Tech, and a Reckless Monetary Policy and Fake Economic Boom run by The Three Amigos of Economic Adventurism: Greenspan, Rubin, and Summers.

Bush? Well, we all know what that was about. Illegal War, Real Estate Bubble, Sub-Prime Shenanigans, Out Of Control CDO and Derivatives Markets, and an even MORE reckless Monetary Policy, that had not been previously seen in the history of Man.

This Administrations Bubble?

Hope. Blitzkrieg Propaganda. Assurances. Soothing Talk. Upbeat Rhetoric.

They literally want to TALK us out of the worst Economic Crisis, perhaps EVER.

People, this is not CHANGE. This is not even VOODOO ECONOMICS. This is ALICE IN WONDERLAND ECONOMICS.

And O, look, let's be frank here. I really like you as a person. You are light years ahead of the Giggling Murderer we just dismissed in November, but let's be honest here, the same could be said of Donald Duck and Homer Simpson. AND THEY'RE NOT EVEN REAL.

You ran a campaign based on CHANGE. But how in the world are you going to bring about that change when the people you have appointed and surrounded yourself with are part of the same brigade that has been the very ANTI-THESIS of the CHANGE you promised to bring about?

The Country cannot Propagandize itself to where it needs to be. You know, another country tried that about 80 years ago. You are a very smart guy, would you care to impress us with your historical knowledge and refresh our memories with how that worked out?

You promised CHANGE. You gave us HOPE. But you must remember that HOPE means nothing if there are not ACTIONS and TANGIBLE PROGRESS AS A RESULT OF THOSE ACTIONS that gives relevance to said Hope. If there is nothing born out of that Hope, then it was all just a Placebo.

The Foxes Still Guard The Hen House. The Criminals who caused this Crisis are still running amok, and there is no sign that very much is being done to stop them. Your team can Talk, Soothe, Propagandize, Espouse Rhetoric and Upbeat Notions, and Rain Platitudes like Mana from Heaven.

But we are no longer interested in that.

What Are You Prepared To DO?

You were not hired to Protect the Corporations.

You Were Not Hired to Protect and Preserve The Status Quo of The Banks.

You Were Not Hired To Protect and Preserve The Status Quo Of Wall Street.

You were not hired to Let The Criminals who caused this Crisis to continue to run wild, voraciously violating the Rule Of Law without limits.

You Were Hired To Represent WE THE PEOPLE, and to faithfully execute the office of President of the United States, and to the best of your ability, preserve, protect and defend the Constitution of the United States.

ARE YOU LISTENING MR. PRESIDENT?

And that is NOT the Criminal Scum Rick Santelli speaking those words

It is WE THE PEOPLE. Remember Us?

YOUR BOSS? THOSE WHO YOU WORK FOR?

And although we have been inspired and moved by your words:

NOW is the time for ACTION.

With All Due Respect, Sir.....And this goes for the rest of what passes for our leadership as well.....

GET TO WORK.

Enough Is Enough.

[Tansy_Gold]

18. Some people get it

I was listening to NPR yesterday while out running errands. Neal Conan had some dude on Talk of Nation defending the AIG bonuses. Of course, he introduced the dude as head of the Commitee on Deregulation at the American Enterprise Institute, at which point I came close to driving my car into a bridge abutment except there were none around.

Obviously he spoke crap.

If you go to the website http://www.npr.org/templates/story/story.php?storyId=102006900 the guy is identified as Prof Charles Calomiris of Columbia, without the AEI affiliation, but some listeners caught it just as I did.

read past the long cover article down to the comments.

Here's a sample, the most current one posted today:

Glenn Richard (JavaGAR) wrote:

To the students of Dr. Calomiris:

Perhaps the National Public Radio interview with Dr. Calomiris, coupled with the comments posted here in response, can serve as an educational opportunity for you, as is does for our nation as a whole. Hopefully, in class you are given the freedom to think creatively and challenge economic dogma. After all, not all economists agree with each other. In the context of the current economic crisis, it is worth considering whether there is fundamental conflict between our current economic structure and the bedrock democratic principles upon which our nation was founded. Justifiably, we continue to derive inspiration and growth from these principles.

A prominent question that has arisen during the current situation is whether all citizens are truly equal under the law, or whether it has it become commonplace for those with subsantial financial resources to buy justice or legal privilege that ought to be the province of us all. When the principles of democracy and the free market collide, how should we rectify the conflict?


None were supportive of the good professor, and many excoriated Conan for the "powder-puff" interview.

I have to get to work, folks. I'm way way way behind schedule and it's 5 A.M. already.


Have fun,



Tansy Gold

[Demeter]

39. Good Thing You Didn't Hear Sorkin's Apologia

It was breath-taking, as in omigod! he's going to walk right off that cliff!

[Tansy_Gold]

45. Where was that? On NPR?

I'll need some entertainment later today.. . . .you know, sick entertainment.

Listening to TOTN yesterday, I was SCREAMING at this jack ass and then later at T Friedman. Thought I was gonna puke right in my car.

[Demeter]

46. Oh, Yes, of course. Neil Conan's Talk of the Nation

I believe they quoted from that interview on All Things Considered, as well.

[Tansy_Gold]

53. Thanks. I'll have to listen

It'll just make my day.


Not.

[bread_and_roses]

21. Fox in the henhouse indeed

I was going to post this awhile ago, but I think I have outrage fatigue or something.

"Dear President Obama, the Banksters can't take back the campaign donations they gave to you and the other Democrats last year, but they can take you down with them this year. Get a grip on this, please. Sincerely, your supporter, bread_and_roses"

[Dr.Phool]

42. The foxes have bought the henhouse.

It's theirs. They own it, lock, stock, and barrel.

We are so screwn.

And has anyone noticed lately, DU seems to be infiltrated with Shruggers lately? I seeing some crazy posts out there.

[newfie11]

28. Very well said,

I only wish someone in office would listen!

[DemReadingDU]

32. TAE: The present anger is being controlled by spin doctors. You're being played.

From Ilargi at The Automatic Earth...

Ilargi: So how angry do we think the public will get over the bonuses at AIG? In Washington, the spin doctors and pollsters are running overtime, that's for sure. Obama runs the risk of severe damage to his status if he can't solve this one in way the public deems satisfactory. And he'll provide the Republicans, who were roadkill just a few months ago, with a new and solid way back into the people's favor.

Still, the true outrage should not be directed against a bunch of bonuses, no matter how unethical they may be. That they are the target of the outrage today is somewhat disconcerting. $180 billion in taxpayer's money has gone to AIG, alongside tens of billions more that went to Citi, Bank of America, JPMorgan, Morgan Stanley, Goldman Sachs. What is now becoming obvious is that the AIG bail-out is nothing but a hidden additional vehicle to push extra funding into the vaults of the major banks.

There are plenty voices claiming that credit derivatives are something “good", since they supposedly can spread risk around, but the reality is that they are just another instrument that enables more gambling and more leverage. The amounts of money from the AIG bail-out that went to these banks points to one clear issue: no risk was spread in any substantial fashion, it all ended up inside AIG’s financial unit, the same one whose "best and brightest" bonuses are the cause of the outrage.

In other words, the anger applies to -at most- 0.1% of the money the US government has put into AIG. Mind you, we still have no way of knowing how big the losses will eventually be. The total credit default swaps figures were at $62 trillion not so long ago, so there may be much more yet to follow. And none of these losses were caused by innocent mistakes. It was very clear at AIG that insuring tens of trillions of dollars in swaps was a disaster waiting to happen, simply because the amount of money and risk involved was hundreds of times higher than what the company possessed in "real" assets. There may have been a few dim folk at the trading desks who thought the swaps would bring in money forever, but surely not all, let alone the managers. Who incidentally are the receivers of last week's bonus pay-out.

A similar situation of course existed at the banks that bought AIG's "insurance" (it's not really insurance, which is why AIG wasn't compelled to hold reserves against them). It's not just fractional banking on steroids, which would be bad enough, it's simply betting. And the majority of those best and brightest have known that very well all along. their bets went bad, and they received trillions of dollars of your money. And I can't guarantee you that they're not still playing the same wagers, after all that's where the big paydays came from.

It's high time to divert your attention from AIG bonuses, and to focus on the entire system. The one that's cost you $2 trillion, not just $165 million. Time to look at Goldman Sachs and Morgan Stanley, at the people who run those operations. At the role played in the whole scheme by the revolving door crowd of Henry Paulson, Tim Geithner, Robert Rubin, Lloyd Blankfein etc etc., who were all actively involved in the creatively innovative deals of the past decade that have led to the government spending $2 trillion on their firms. Actually, there are the very people who, once they entered government, obtained the power to spend your cash to cover the losses they had incurred -for their companies- while working in the private sector.

The present anger is being controlled by spin doctors. You're being played. They are very good at what they do. They want nothing more than for you to focus on a bunch of AIG minions, so your attention can be drawn away from their masters. Are you going to let that happen? The AIG bonus receivers should be fired, of course. But many of the higher-ups need to be prosecuted. The problem is that they presently hold the reins of power. Perhaps that is where your anger would be far more useful.

http://theautomaticearth.blogspot.com/2009/03/march-17-2009-youre-being-played.html


P.S. Thank you Watcher, great commentary!

[Demeter]

40. And They Are STILL Writing Those CDS!

What is Congress waiting for? Regulate those WMDs out of existence!

[Marie26]

41. And why isn't anyone talking about regulating CDS'?

Anyone? Or are we just supposed to keep shoveling trillions of dollars to cover these CDS's ad infinitum?

[DemReadingDU]

43. shoveling trillions of dollars to cover these CDS's

Because that is their plan (IMO) to take all of our money. The select few want it all, and none for us. They won't stop until they have all the gains from the stock market whereby it falls to zero, until our 401Ks/IRAs are worthless, until pensions are gone, until there is no more social security/medicare/medicaid.

There is no one stopping them from taking our money. Our Representatives and Senators aren't stopping them. We aren't stopping them either...How many of us are storming Washington with our pitchforks demanding accountability!

Nothing is going to change, until We the People, millions of us, visibly protest Congress. Probably won't happen until so many are jobless, homeless, penniless, hungry, and nothing else to lose.

[SlowDownFast]

44. BRAVO! n/t

[Roland99]

17. RGE Monitor - Reversal of Capital Flows in the Emerging World

From email:

The reversal of capital inflows due to deleveraging or losses in financial markets has been one of the most significant effects of the financial crisis on emerging and frontier economies. After a period in 2007 and 2008 when many emerging markets faced the problem of dealing with extensive capital inflows, now capital flows have reversed. Private capital flows in 2009 are expected to be less than half of their 2007 levels, posing pressure on emerging market currencies, asset markets and economies. Countries that relied on readily available capital to finance their current account deficits are particularly vulnerable. Furthermore, capital outflows pose the risk that governments may react with some type of capital controls or barriers to the exit of foreign investments.

Foreign direct investment (FDI) is considered by many to be a major and more stable source of financing for many developing countries. FDIs slowed down sharply in recent quarters due to two major factors affecting domestic as well as international investment. First, the capability of firms to invest has been reduced by a fall in access to financial resources, both internally (due to a decline in corporate profits) and externally (due to lower availability and higher cost of finance). Second, the propensity to invest has been affected negatively by economic prospects, especially in cases involving corporations with operations in the developed countries which are hit by a severe recession. In addition, a very high level of perceived risk is leading companies to extensively curtail their costs and investment programs to become more resilient to any further deterioration of the business environment and their balance sheets. The fact that many multinational enterprises can easily shift financial resources from one country to another, adds another degree of uncertainty, contributing to the growing macroeconomic instability in developing countries.

The outlook for the flow of portfolio investments is even less encouraging. Redemptions of US$41.2 bn out of EM equity funds in 2008 have fully reversed the record US$40.8 bn inflow of 2007. About half of the EM fund purchases that have occurred since 2003 have now been withdrawn. According to the Institute for International Finance (IIF), net private capital flows to emerging markets are estimated to have declined to US$467 bn in 2008, half of their 2007 level. A further sharp decline to US$165 bn is forecast for 2009, with just over three-quarters of the decline due to deterioration in net flows from commercial banks. Moreover, net lending of international banks to emerging countries (excluding Gulf countries) is expected to fall to US$135 bn in 2009 from US$401 bn in 2007 and US$245 bn in 2008.

The World Bank estimates that in 2009, 104 of 129 developing countries will have current account surpluses inadequate to cover private debt coming due. For these countries, total financing needs are expected to amount to more than US$1.4 trillion during the year. External financing needs are expected to exceed private sources of financing (equity flows and private debt disbursements) in 98 of the 104 countries, implying a financing gap in 98 countries of about US$268 bn. Should bank rollover rates be lower than expected, or should capital flight significantly increase, this figure could rise to almost US$700 bn. Well over US$1 trillion in EM corporate debt and US$2½-3 trillion in total EM debt matures in 2009, the majority of which reflects claims of major international banks extended cross-border or through their affiliates and branches located in emerging markets.

For most of the reasons presented above, a number of emerging economies have recently imposed controls on capital outflows as a way of managing financial crises. Iceland, Ukraine, Argentina, Indonesia and Russia, among others, have resorted to a number of restrictions on the availability of foreign exchange as a way of dealing with the collapse in global risk appetite. Although those are frequently used as a way of rationing forex during a crisis, there is a risk that capital controls might become a normal part of policymakers’ tool-kits well beyond strict emergency needs. In principle, capital controls permit monetary and fiscal policy to be directed to the stabilization of economic activity without having to worry about a collapse of the currency and its deleterious effects on the sectoral and national balance sheets. The imposition of capital controls should be viewed as temporary, with a gradual relaxation as economic conditions improve and global financial stability returns. Such controls might restrict the ability to attract capital in the future as foreign investors fear that they will be unable to repatriate their profits

With rising unemployment and falling real wages, remittances will also subside with pressure on the standard of living, growth and external balances of labor-sending countries. In addition to these private capital flows the reduction of official flows, including development assistance is also set to slow as donors scale back their funding in the face of greater domestic needs. However funds available from multilateral institutions like the IMF and regional development banks may partly offset the decline in other funds and withdrawal of private capital. The G20 seems to have neared an agreement on doubling or tripling the IMF’s lending capacity and regional development banks like the EBRD, ADB and others are boosting their capital base and scaling up their lending to support regional banks.

The fall in the price of oil (and the reduction in oil revenues) has eroded the surpluses of oil exporting nations, lowering the funds they have to invest abroad in advanced economies and in emerging markets. Furthermore the need for capital at home (to support domestic banks, finance fiscal stimulus packages, stabilize asset markets) and losses on past investments are leading sovereign investors to privilege liquid assets rather than the riskier assets like equity, corporate bonds and alternatives – which they tended to invest in until mid 2008. The reduction in funds entrusted to the international banking system by countries like Russia and African oil exporters, some of which, the IMF suggests, were re-lent to Eastern European countries, provide further pressure on bank lending. Governments of commodity rich countries are now having to take on a larger role in financing infrastructure projects that had been earmarked as public-private partnerships rather than making significant investments overseas. However, other investors like some of Chinese government institutions may be emerging to take up some of the slack. China recently extended loans to several cash-strapped resource companies and may also be emerging as a source of investment to countries like Pakistan and Kazakhstan.


Eastern Europe

Eastern Europe’s heavy reliance on external financing may be its Achilles Heel, as it looks set to be the hardest hit of emerging market regions as such financing dries up. Almost every country in the region is either in or close to recession, and the sharp drop-off in capital flows is both a reflection of, and a contributor to, the region’s deteriorating growth prospects.

For the last decade, a bonanza of foreign financing has helped the region grow faster than the world average. The region’s capital account liberalization, financial sector reforms and its prospects for convergence with the EU made it an attractive destination for inflows. But that ‘attractive’ status is changing, given the current environment of global credit tightening and given investors’ waning EUphoria. Net private capital flows to the CEE-6 (Poland, Czech Republic, Hungary, Romania, Bulgaria, Turkey) are forecast to fall to around $60 bn in 2009, less than half that received in 2008, according to the Institute of International Finance (IIF).

Besides boosting growth, the stream of foreign capital inflows contributed to a build-up of external imbalances in recent years, specifically high current-account deficits. Such deficits are the norm in the region, but the Baltics (Estonia, Latvia, Lithuania), Bulgaria, and Romania stand out for their sky-high deficits (in the double-digits as a % of GDP in 2008), making them particularly vulnerable to a drop-off in capital inflows. While current-account deficits are expected to narrow across the board in Eastern European countries in 2009, the adjustment is painful and has led to concerns over a full-blown balance of payments crisis. Latvia and Hungary have already turned to the IMF for financing.

While the region’s heavy dependence on foreign financing has been apparent for years, alarm bells were muted. The rationale was two-fold. One, the region was playing catch-up to the EU and current-account deficits were seen as a normal part of that process. Two, the inflows to the region consisted of relatively ‘safe’ forms of financing. That is, FDI – generally considered more stable and less susceptible to rapid outflows than other capital flows, like portfolio investment - accounted for the majority of inflows, although that is now changing. FDI inflows covered almost 100% of the EU newcomers’ current-account deficits from 2003-2007. However, in 2008, FDI coverage dropped to an estimated 55%, according to the Economist. The recession in Western Europe, the source of the bulk of the region’s FDI inflows, is not helping matters.

With the drop-off in FDI, debt - particularly intra-bank lending - has been financing an increasing portion of these countries’ current-account deficits. Nevertheless, intra-bank lending – that is, lending between foreign parent banks and their subsidiaries in the region – is also set to drop off sharply in 2009. Net bank lending to emerging Europe, excluding Russia, is projected to be a meager $22 bn in 2009, down from $95 bn in 2008, according to the IIF. Foreign parent banks, who dominate the region’s banking systems, have pledged to continue to support their CEE subsidiaries, but the global credit crisis has made it difficult for them to maintain previous levels of lending. With the slowdown in both FDI and intra-bank lending, central banks in the region are increasingly being forced to tap their foreign reserves. As for growth, the sharper the decline in capital flows, the sharper the contraction in growth. Future growth prospects hinge on a recovery in capital inflows to the region.


Emerging Asia

Private capital flows to Asia slowed sharply from US$315 bn in 2007 to around US$96 bn in 2008. Risk aversion, de-leveraging and redemption by investors to offset losses in developed markets contributed to portfolio outflows of US$55 bn in 2008 and foreign bank borrowing slowed from US$156 bn in 2007 to just US$30 bn in 2008. While these trends will continue to erode capital flows to Asia in 2009, albeit at a slower pace, even more resilient flows like FDI and debt inflows will take a hit also. South Korea, India and Indonesia are most vulnerable to capital outflows, however foreign capital fueled credit growth and lending to firms and households even in countries like Hong Kong, Taiwan, Singapore and Vietnam. Therefore, the ongoing liquidity crunch will hit fixed investment, consumer spending, raise credit costs and bank delinquencies as well as undermine asset markets.

After emerging Europe, emerging Asia has been most severely hit by the decline in foreign bank borrowing especially firms and banks in South Korea, India, China and Indonesia which relied heavily on foreign capital to drive investment and consumer spending. But despite having high external debt and short-term debt relative to foreign exchange reserves, countries like South Korea, India and Indonesia will be able to meet the debt obligations due in 2009 (over 50% of it to Western European banks) or even roll over debt. After 2008 reversed the portfolio inflows of 2007, outflows might continue even in 2009 led by India, Taiwan and South Korea. The main drivers will likely be domestic risks (GDP growth and export slowdown, lower corporate earnings, easing fiscal and external balances), not just global factors. This might exacerbate equity market sell-offs in India, Thailand, Philippines, China, Vietnam, Singapore and Hong Kong so that valuations, in spite of being attractive in markets like Hong Kong, Indonesia, Singapore and Vietnam, might trend down further.

Fiscal stimulus and subsidy spending are affecting fiscal balances and raising external financing needs of countries like Malaysia, Philippines, India, Vietnam and Indonesia. Others like China will boost domestic bond issuance. While yields will go up, bond issuance might continue to face a tepid response due to risk aversion in EMs, flight to safe-haven (the U.S.!), narrowing interest rate differential with the U.S., risk of ratings downgrade, and expectations of limited currency appreciation in the near term.

The global credit crunch, high credit costs and export contraction have also taken a toll on FDI into Asia, a large share of which is export-related. China, Indonesia, Malaysia and Vietnam where FDI accounts for a large share of total fixed investment, are most affected. FDI to China began slowing in the second half of 2008, and has been declining for the last five months as the global outlook began to worsen, and revaluation expectations were reversed. The decline in corporate profits though poses a bigger risk to investment as retained earnings are the biggest contributor to investment. Moreover, large lay-offs across the world, especially in the West and the GCC will impact countries dependent on remittances such as Philippines, Vietnam and India, challenging the financing of current account balances and also domestic demand in some countries.

Capital outflows have pulled down most Asian currencies since 2008 led by South Korea, Malaysia, Singapore, India, Indonesia and Taiwan. In response, many central banks like India, South Korea, Thailand, Philippines, Vietnam and Indonesia have run down foreign exchange reserves to defend their currencies. And even Chinese reserve growth has been much more subdued, with the most recent numbers suggesting that China may have experienced capital outflows in several months in Q42008 and Q12009. Amid dollar squeeze, countries like Indonesia have imposed restrictions on currency conversion and US$ outflows, while others like India have eased foreign investment rules to attract the much needed capital. Waning capital inflows will put pressure on the BOP as shrinking exports affect the current account, especially for those running trade and/or current account deficits – South Korea, India, Thailand, Vietnam, Indonesia and Philippines and those running surpluses like China and Taiwan will run narrower surpluses. Nevertheless, large foreign reserve accumulation and current account balances will contain risks of BOP and currency crises like in 1997-98. Asian central banks have also been actively injecting dollar liquidity, entering swap agreements (South Korea, Indonesia, Singapore, Hong Kong), easing credit costs for firms, and expanding Asian reserve pooling under the Chiang Mai Initiative to relieve selling pressure on their currencies. The expansion of Asian Development Bank’s resources, as advocated by the G20 will provide further financing to avert the reversal of other development assistance and avoid balance of payments pressure.


Commonwealth of Independent States

While Russia’s current account has yet to sink into deficit as the sharp fall in the rouble and lack of credit led imports to contract more than exports, a deficit is likely in 2009 if the oil price stays below $50 a barrel. Furthermore portfolio and direct inflows have been reduced, leaving Russian corporates to seek funds from the government to meet their outstanding liabilities accrued when credit was cheap. With the global IPO and bond markets frozen, Russia is trying to raise funds at home. The government is stepping back from its plans to implicitly guarantee all the foreign liabilities, but it has provided significant funds to the banking sector and will increase spending to offset the withdrawal of foreign investment. Some Russian officials find the ideal of capital controls very attractive, though Putin worries that it will offset the opportunity for the rouble to become a regional currency.

Like Russia, banks in countries like Kazakhstan and Ukraine borrowed heavily while international capital was cheap and have accumulated large foreign debts, many of which are coming due in 2009 and 2010. This has put pressure on the banking system that has been frozen out of international credit markets and is facing domestic liquidity shortages and the rising domestic costs of external debts after currency depreciation, which might increase defaults and lead to a pattern of non-payments. The Ukraine with its wide current account deficit is particularly vulnerable and has turned to the IMF to avoid a balance of payments crisis. Kazakhstan by contrast will rely on its past savings and may seek Chinese funds.

Remittances are the largest source of external financing for many Central Asian countries, accounting for at least 20% of the regions GDP in total - they account for over 30% of the GDP of Kyrgystan and Tajikistan. The deteriorating economic situation in Russia, rising unemployment and the quota cuts for foreign workers have reversed migration trends and drastically reduced remittances flows to many CIS countries, in the face of current account deterioration as well as the social and political unrest that an influx of returning labor could trigger.


Latin America

Historically, Latin America was poorly placed to handle external capital market shocks, as it typically did little to save in expansion phases, remaining quickly vulnerable to deterioration in both real and financial external conditions. Key parts of the region remain prone to these problems: both Argentina and Venezuela are now facing much more challenging conditions in an environment of lower commodity prices. Ecuador has already defaulted. By contrast, other countries in the region appear relatively well placed to handle global difficulties, in large part because of their relative prudence in the post 2002 global credit boom. Foreign currency borrowing by the public sector was sharply curtailed (although not that by the private sector). Owing mainly to a fall in commodity prices, the region’s aggregate current account will be in deficit of about $65 bn in 2009. The accumulation of substantial foreign exchange reserves provides some leeway to finance the deficit, while reduced levels of dollar-denominated public debt allow currency depreciation to occur without raising solvency concerns.

In Brazil, the balance of payments printed only a slight surplus in 2008, US$2.9 bn compared to a huge surplus of US$87.4 bn in 2007. For 2009, the data so far suggest a much weaker reading as well. In fact total flow of FDI of only US$11 bn is expected in 2009, down from US$45 bn in 2008 reflecting the sluggishness of capital markets and the sharp contraction in the advanced economies, the main sources of those flows in the past. At the same time, some recovery of portfolio flows is likely if there is a marginal bounce back in risk appetite vis-à-vis 2008. Total capital and financial accounts inflow might amount to around US$17 bn, nearly matching the estimated current account deficit of US$19.2 bn, characterizing a nearly zero balance of payments for 2009.

Mexico experienced a significant decrease in FDI and portfolio inflows in Q42008 (-US$ 3.6 bn vs. US$ 11.9 bn in Q42007) as growth expectations for the U.S. and Mexico were revised significantly lower, credit conditions abroad tightened (deleveraging), and global risk appetite dried up. However, assets held abroad increased sharply (by US$ 8.1 bn vs. a decrease of US$ 3.7 bn in 4Q07), thus compensating for the shortage in capital inflows. Overall, the capital account ended up with a slightly wider surplus in 2008 (US$ 20.9 bn vs. +US$ 20.8 bn in 2007) and was enough to finance the much larger current account deficit (of US$ 15.5 bn vs. US$ 8.2 bn in 2007). Although workers' remittances are considered part of the current account, they are an important source of capital inflows and for the first time since 1995 they declined to US$25.1 bn in 2008 (US$ 26 bn in 2007). In 2009, the current account deficit will most likely widen (US$ 25 bn). Pairing this with a flat capital account result in 2009 (US$ 21 bn), the balance of payment deficit should amount to roughly US$4 bn.

In Colombia, unfriendly growth and financial external conditions are impacting capital flows. The most recent data (to February 2009) suggest an outflow of US$ 140 mm vs. an inflow of US$ 1.75 bn in the first two months of 2008. The central bank stated that the outflow was mainly explained by 'other special operations' (US$ 1.7 bn), which are most likely related to transfers to the treasury and the central bank intervention mechanism in the FX market (options) to control for volatility, among others. Moreover, capital flows were impacted by a decline in FDI (32% to US$ 1.2 bn) and in remittances (7% y/y to US$ 800mn).


Africa

The reduction in capital flows, especially private capital and the fall in commodity prices is undermining Africa’s recent high growth rates. With investors now fleeing to safe assets rather than seeking out yields, exotic investments like African equities and government bonds are finding it difficult to attract capital even as official sector flows also seem to be scaled back. Official development assistance, FDI inflows and remittances that have contributed to financing current account imbalances in a number of African economies in recent years are set to drastically decline in 2009 threatening to offset economic gains they helped to achieve. Furthermore commodity exporters like Nigeria who recently ran surpluses are now facing the prospect of current account deficits even as the reduction in energy and metals prices reduces FDI to the continent including in Southern Africa’s mining sector.

Estimates suggest that FDI to Sub-Saharan Africa fell sharply by about 21% in 2008, a trend likely to worsen in 2009. This means that governments with ambitious investment and development programs will need to revise their current spending and financing plans downwards. Furthermore with contraction in credit, and risk aversion, portfolio flows are increasingly difficult to attract, with outflows reported from most African exchanges. Most of the region’s equity markets are dominated by domestic investors though but the reduction in global liquidity and bank lending has created vulnerabilities for banks, especially in Nigeria. Overall, there were no international bond issues by African countries in 2008 compared with US$ 6.5 bn in 2007.

Remittance inflows from Africans working abroad, estimated at US$3 bn in 2007, are bound to fall because they originate from advanced economies that are experiencing deteriorating economic situations and rising unemployment. Remittances between African countries (eg from South Africa to others) have also fallen along with the contraction in the mining sector.

The UN estimates that aid flows will need to double by 2010 to meet the cost of financing the Millennium Development Goals. Yet core development aid has declined by 4% since industrialized nations committed to increasing it at the Gleneagles summit in 2005. France and Ireland are considering cutting aid budgets as the cost of the recession rises and while President Obama pledged to double the country’s aid budget eventually the timeline is unclear. According to the IMF a 1% drop in global growth leads to a 0.5% fall in growth in Sub-Saharan Africa but given the freezing of capital flows the effects could be more pronounced with the region likely to grow less than 3% in 2009.

[UpInArms]

24. dollar watch

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

Last trade 86.924 Change +0.061 (+0.08%)

US Dollar Falls on Improved Risk Appetite - Fed Announcement Could Impact FX Trade on Wednesday

http://www.dailyfx.com/story/dailyfx_reports/daily_fundamentals/US_Dollar_Falls_on_Improved_1237325893692.html

The US dollar generally ended Tuesday down against the majors, though the currency did manage to eke out some gains versus the Japanese yen and British pound. As it stands, a look at a daily chart of the DXY index shows that the greenback has likely made an important turn lower, but the outlook will likely continue to hinge upon risk trends as US fundamentals haven’t come into play for the currency in a while. In fact, US economic news was generally positive today, as data showed that both housing starts and building permits surged in February to 583K and 547K, respectively.

Looking ahead to Wednesday, the Federal Open Market Committee (FOMC) is widely expected to leave the fed funds target range at 0.0 percent - 0.25 percent, and this should remain the case throughout much of the year. In fact, the FOMC said on January 28 that they continue “to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.” Furthermore, the last statement said that the Committee's policy focus is now “to support the functioning of financial markets and stimulate the economy through open market operations and other measures that are likely to keep the size of the Federal Reserve's balance sheet at a high level.” As long as we see these sorts of statements continue to be published, the news shouldn’t be too market-moving. However, the statement could have an impact on risk trends if any sort of fresh initiatives are announced or if the Fed’s sentiment turns more bearish. Ultimately, any news that is positive for the stock markets may be negative for the greenback (which has been trading solely as a safe-haven asset lately), and vice versa.

...more...

Sterling the Standout Loser on Much Weaker UK Jobs Data; All Eyes on FOMC

http://www.dailyfx.com/story/bio2/Sterling_the_Standout_Loser_on_1237373702109.html

The key standout in the overnight session of trade was the much weaker than expected UK jobless claims change coming in at a whopping 138.4k after analysts had been looking for an 84.8k print. Looking ahead, while it is quite clear that the Fed will likely remain on hold, all eyes will be more keenly focused on any sign of an announcement of US Treasury purchases, which would indeed be viewed as a form of quantitative easing.

Fundys - The key standout in the overnight session of trade was the much weaker than expected UK jobless claims change coming in at a whopping 138.4k after analysts had been looking for an 84.8k print. This in conjunction with upward revisions to the previous month was seen heavily weighing on Sterling across the board, with Cable clearing sell-stops below 1.3965 and Eur/Gbp rallying sharply through 0.9400 barriers. Also in the UK, the Bank of England minutes were released showing a unanimous decision to cut rates by 50bps to 0.50% at the previous meeting while also showing a unanimous decision to implement a quantitative easing policy. The MPC did offer some optimism in their commentary, saying that were some signs that the UK recession was on track to ease in 2009. Elsewhere, the continued rally in global equities and increased risk appetite has helped to keep the USD offered against some of the other major currencies, although we have begun to see some notable USD buying against the higher yielding Kiwi today. ECB Trichet was on France’s radio earlier repeating much of what he has been saying over the past several days but did offer that 2010 could be a year of recovery. In Switzerland, retail sales came out at +1.2% versus the previous +3.6% reading but this did not factor into price action. While it is quite clear that the Fed will likely remain on hold with their 0.00-0.25% rates, all eyes will be more keenly focused on any sign of an announcement of US Treasury purchases, which would indeed be viewed as a form of quantitative easing. Looking ahead to the North American calendar, US CPI (0.0% y/y, 1.7% core expected) and current account (-137.1B expected) are due at 12:30GMT along with Canada wholesale sales (-2.7% expected). Later in the afternoon the FOMC rate decision (0.25%-no change expected) is due at 18:15 GMT. On the official circuit, Fed Cole is slated to testify on risk management oversight at 18:30GMT.

...more...

[Demeter]

27. Where the Bailout Money is Really Going

http://www.dailyreckoning.com/where-the-bailout-money-is-really-going/

AIG is today's main story. Everyone is appalled, outraged...or apoplectic about it. First, we under-reported the amount in bonuses paid out. The real amount is $450 million, says the Wall Street Journal...and one member of Congress charges that many bonuses were disguised as other things...and that the real total is more like $1 billion.

The average lumpenvoter has no idea how bailouts work. He was willing to believe that giving Wall Street hundreds of billions in taxpayer money would somehow make his house go up in price, but now that he sees how it really operates, he is ticked off about it. He may not understand macroeconomics, but he knows chicanery when he sees it.

Under pressure, AIG revealed what it did with the bailout money. It came as no shock to us to discover Goldman Sachs at the top of the list of recipients. Goldman's main man was in the room with the feds - the only representative of Wall Street - when the decision was made to rescue AIG. What's more, the feds' main man at the time - Hank Paulson - also used to be the top honcho at Goldman. So the fix was in. The government gave money to AIG and AIG gave it to a long list of speculators - including Goldman.

This seems perfectly natural to us. If we'd been in on the fix we would have steered some of the loot our way. But the politicians are feigning shock and horror. Senator Grassley even said AIG management should "resign or commit suicide." He later calmed down and said he didn't mean it.

But we would have simply edited his remarks, giving the schmucks at AIG a last chance to exit with honor: "Resign AND commit suicide, in that order."

Barney Frank added that "maybe it's time to fire some people." Why not? The feds own 80% of the insurance giant now. Go ahead; fire all the people you want. That's about the only pleasure a real capitalist has left to him. Reach out...and fire someone today!

[Demeter]

29. Bill Bonner Doing a Garrison Keillor Riff

First, Mr. Market is downsizing fortunes - fast. In the last 12 months, the average rich person has probably lost half his wealth. Not only did he own millions worth of stocks and real estate...he was also among the privileged few to get into good deals on derivatives, SIVs, hedge funds and private equity. Many of those complicated and conflicted assets have been wiped out completely. Or, maybe he was unlucky enough to count Bernie Madoff as a friend.

Second, what Mr. Market doesn't take, Mr. Politician is looking at. All over the world, plans are afoot to increase his taxes...and close down his tax havens. President Obama has already revealed his plans to soak the rich. Every other group will come out even...or better...from Obama's tax proposals. But the rich are going to be saturated...marinated...soaked to the bone.

And third, the poor rich guy has become a pariah. He doesn't get invited to charity events anymore - or even to join the guys after work for a beer. Europeans have always distrusted rich people. But in America, a rich man used to be respected - just because he was rich. People asked his opinion on politics...on fashion...on art. He was presumed to be an authority on all things and was generally treated with respect...even deference.

But now rich are seen as chumps, losers, incompetents and malefactors. Even Americans look at rich people and think they must be either stupid or corrupt.

"Le secret des grandes fortunes sans cause apparente est un crime oubli , parce qu' il a t proprement fait." said Balzac. Which has been paraphrased to "Behind every great fortune lies a great crime." Of course, he was referring to France, where it is has probably always been true. Money is dirty in France. But in America, money was supposed to be clean...innocent...honest and forthright. The richest man in town always sat in the front pew in church and stood for election to local office.

But come the depression and even the rich suffer. And unlike the starving urchins, unlucky widows and innocent orphans, no one cries a tear for the rich. Here at The Daily Reckoning we always take the side of the underdog...and always support the lost cause. So when we think of the rich...those darling people with their Italian suits...German cars...and Swiss bank accounts...our cheek gets a little moist. For we - and we alone - still admire and respect the rich. Of course, the rich are human beings too - just like the rest of us. And yes, dear reader...we still despise them as much as anyone else. When it comes to intelligence or moral rectitude, they are probably no better than the lower classes, though probably no worse. But we still admire and respect their money. Their money is no better either - but they have more of it.

[Demeter]

30. Can the AIG Honchos Get Their Bonuses From a Bankrupt Company?

http://www.prospect.org/csnc/blogs/beat_the_press

Like the rest of the media, the Post was anxious to tell the public that there is nothing that can be done to prevent bonuses from being paid to AIG executives. Did they really give this a huge amount of thought and talk to the experts before reaching this conclusion?

How about breaking off the financial unit from the rest of AIG and then take away the government life support? The highly valued executives can then try to get their bonuses from a hopelessly indebted company that has debts that exceed its assets by tens of billions of dollars. That should provide good entertainment for us all.

--Dean Baker

[Demeter]

31. Small Asteroid Buzzes Earth Last Night

http://spaceweather.com

ASTEROID BUZZES EARTH: Newly-discovered asteroid 2009 FH is flying past Earth tonight only 85,000 km (0.00057 AU) away. That's a little more than twice the height of a geosynchronous communications satellite. Experienced amateur astronomers in North America can photograph the 20-meter-wide space rock racing through the constellation Gemini after sunset on March 17th. It should be about as bright as a 14th magnitude star. Please visit http://spaceweather.com for an ephemeris and updates.

This is the second time in March that an asteroid has flown so close to Earth. On March 2nd, 2009 DD45 passed by only 72,000 km away. Measuring some tens of meters in diameter, 2009 DD45 and 2009 FH are approximately Tunguska-class objects, meaning they pose no global threat but could cause local damage if they actually hit Earth. In years past, asteroids of this size often passed unnoticed, but recent improvements in asteroid surveys have resulted in growing numbers of space rocks caught in the act of near-Earth flybys.


posted for my favorite space "junkie"

[tclambert]

80. Has Cheney found a way to blame Obama yet?

After all, The Bush administration kept the Earth safe from asteroids for the last eight years.

[Hugin]

91. I only ask that they give us a couple of months ADVANCED notice on "The Big 'un"

As, I'd like to pencil in some old fashioned debauchery on my Rolodex before it hits.

These things require planning... I don't intend to succumb to anarchy and confusion in the last moments of our species.

Oh, and... THANK GAWD IT PASSED!!!!!

[Demeter]

102. You're Welcome!

[DemReadingDU]

35. Michael Hudson: Mr. Bernanke Spreads the Fire

3/17/09 Mr. Bernanke Spreads the Fire by Michael Hudson

On the March 15 CBS show “60 Minutes”, Federal Reserve Chairman Ben Bernanke used a false analogy already popularized by President Obama in his quasi-State of the Union Speech. He likened the financial sector to a house burning down – fair enough, as it is destroying property values, leading to foreclosures, abandonments, stripping (for copper wire and anything else recoverable) and certainly a devastation of value. The problem with this analogy was just where this building was situated, and its relationship to “other houses” (e.g., the rest of the economy).

Mr. Bernanke asked what people should do if an irresponsible smoker let his bed catch fire so that the house burned down. Should the neighbor say, “it’s his fault, let the house burn”? That would threaten the whole neighborhood with fire, Mr. Bernanke explained. The implication, he spelled out, was that economic recovery required a strong banking and financial system. And this is just what he said: The economy cannot recover without yet more credit and debt. And that in turn requires trillions and trillions of dollars given by “the neighbors” to the bad irresponsible man who burned down his own house. This is where the analogy goes seriously off track.

But watching “60 Minutes,” my wife said to me, “That’s just what Mr. Obama said the other night. What do they do – have a meeting and agree on what metaphor to popularize?” They seem to have an image that will lock Americans into supporting a policy even though they don’t like it and many feel like letting the financial house (A.I.G., Citibank, and Bank of America/Countrywide) burn down.

What’s false about this analogy? For starters, banking houses are not in the same neighborhood where most people live. They’re the castle on the hill, lording it over the town below. They can burn down and leave the hilltop revert “back to nature” rather than having the whole down gaze up at a temple of money that keeps them in debt.

More to the point is the false analogy with U.S. policy. In effect, the Treasury and Fed are not “putting out a fire.” They’re taking over houses that have not burned down, throwing out their homeowners and occupants, and turning the property over to the culprits who “burned down their own house.” The government is not playing the role of fireman. “Putting out the fire” would be writing off the debts of the economy – the debts that are “burning it down.”

more...
http://www.counterpunch.org/hudson03172009.html

[DemReadingDU]

68. More Hudson: Bait and Switch

This is very good!


Bait and Switch
The Real AIG Conspiracy

By MICHAEL HUDSON

It may seem odd, but the public outrage against $135 million in AIG bonuses is a godsend to Wall Street, AIG scoundrels included. How can the media be so preoccupied with the discovery that there is self-serving greed to be found in the financial sector? Every TV channel and every newspaper in the country, from right to left, have made these bonuses the lead story over the past two days.

What is wrong with this picture? Is there not something over-inflated about the outrage led most vociferously by Senator Charles Schumer and Rep. Barney Frank, the two leading shills for the bank giveaways over the past year? And does Pres. Obama perhaps find it convenient that finally, at long last, he has been able to criticize something that he believes Wall Street has done wrong? Even the Wall Street Journal has gotten into the act. The government’s takeover of AIG, it pointed out, “uses the firm as a conduit to bail out other institutions.” So much more greed is involved than just that of AIG employees. The firm owed much more to other players – abroad as well as on Wall Street – than the assets it had. That is what drove it to insolvency. And popular opposition has been rising to how Obama and McCain could have banded together to support the bailout that, in retrospect, amounts to trillions and trillions of dollars thrown down the drain. Not really down the drain at all, of course – but given to financial speculators on the winning “smart” side of AIG’s bad financial gambles.

“The Washington crowd wants to focus on bonuses because it aims public anger on private actors,” the Journal accused in a March 17 editorial. But instead of explaining that the shift is away from Wall Street grabbers of a thousand times the amount of bonuses being contested, it blames its usual all-purpose bete noire: Congress. Where the right and left differ is just whom the public should be directing its anger at!

Here’s the problem with all the hoopla over the $135 million in AIG bonuses: This sum is only less than 0.1 per cent – one thousandth – of the $183 BILLION that the U.S. Treasury gave to AIG as a “pass-through” to its counterparties. This sum, over a thousand times the magnitude of the bonuses on which public attention is conveniently being focused by Wall Street promoters, did not stay with AIG. For over six months, the public media and Congressmen have been trying to find out just where this money DID go. Bloomberg brought a lawsuit to find out. Only to be met with a wall of silence.

Until finally, on Sunday night, March 15, the government finally released the details. They were indeed highly embarrassing. The largest recipient turned out to be just what earlier financial reports had rumored: Paulson’s own firm, Goldman Sachs, headed the list. It was owed $13 billion in counterparty claims. Here’s the picture that’s emerging. Last September, Treasury Secretary Paulson, from Goldman Sachs, drew up a terse 3-page memo outlining his bailout proposal. The plan specified that whatever he and other Treasury officials did (thus including his subordinates, also from Goldman Sachs), could not be challenged legally or undone, much less prosecuted. This condition enraged Congress, which rejected the bailout in its first incarnation.

It now looks as if Paulson had good reason to put in a fatal legal clause blocking any clawback of funds given by the Treasury to AIG’s counterparties. This is where public outrage should be focused.

Instead, the leading Congressional shepherds of the bailout legislation – along with Obama, who came out in his final, Friday night presidential debate with McCain strongly in favor of the bailout in Paulson’s awful “short” version – have been highlighting the AIG executives receiving bonuses, not the company’s counterparties.

There are two questions that one always must ask when a political operation is being launched. First, qui bono -- who benefits? And second, why now? In my experience, timing almost always is the key to figuring out the dynamics at work.

Regarding qui bono, what does Sen. Schumer, Rep. Frank, Pres. Obama and other Wall Street sponsors gain from this public outcry? For starters, it depicts them as hard taskmasters of the banking and financial sector, not its lobbyists scurrying to execute one giveaway after another. So the AIG kerfuffle has muddied the water about where their political loyalties really lie. It enables them to strike a misleading pose – and hence to pose as “honest brokers” next time they dishonestly give away the next few trillion dollars to their major sponsors and campaign contributors.

Regarding the timing, I think I have answered that above. The uproar about AIG bonuses has effectively distracted attention from the AIG counterparties who received the $183 billion in Treasury giveaways. The “final” sum to be given to its counterparties has been rumored to be $250 billion, do Sen. Schumer, Rep. Frank and Pres. Obama still have a lot more work to do for Wall Street in the coming year or so.

To succeed in this work – while mitigating the public outrage already rising against the bad bailouts – they need to strike precisely the pose that they’re striking now. It is an exercise in deception.

The moral should be: The larger the crocodile tears shed over giving bonuses to AIG individuals (who seem to be largely on the healthy, bona fide insurance side of AIG’s business, not its hedge-fund Ponzi-scheme racket), the more they will distract public attention from the $180 billion giveaway, and the better they can position themselves to give away yet more government money (Treasury bonds and Federal Reserve deposits) to their favorite financial charities.

Let’s go after the REAL money given to AIG – the $183 billion! I realize that this has already been paid out, and we can’t get it back from the counterparties who knew that Alan Greenspan and George Bush and Hank Paulson were steering the U.S. economy off a real estate cliff, a derivatives cliff and a balance-of-payments cliff all wrapped up into one by betting against collateralized debt obligations (CDOs) and insuring these casino bets with AIG. That money has been siphoned off from the Treasury fair and square, by putting their own proxies in the key government slots, the better to serve them.

So let’s go after them altogether. Sen. Schumer said to the AIG bonus recipients that the I.R.S. can go after them and get the money back one way or another. And it can indeed go after the $183-billion bailout recipients. All it has to do is re-instate the estate tax and raise the marginal income and wealth-tax rates to the (already reduced) Clinton-era levels.

The money can be recovered. And that’s just what Mr. Schumer, Mr. Frank and others don’t want to see the public discussing. That’s why they’ve diverted attention onto this trivia. It’s the time-honored way to get people not to talk about the big picture and what’s really important.

Michael Hudson is a former Wall Street economist. A Distinguished Research Professor at University of Missouri, Kansas City (UMKC), he is the author of many books, including Super Imperialism: The Economic Strategy of American Empire (new ed., Pluto Press, 2002) He can be reached via his website, [e-mail]

http://www.counterpunch.org/hudson03182009.html

[Demeter]

82. Oh, Yes, It Was All Intentional

the "oopses" are the lying parts of it all. Why Obama continues with the Bush giveaway is not clear. He believes their threats of the apocalypse?

The dollar can be repudiated in a flash, and all their hoard devalued to the paper it's printed on.

The real assets can be confiscated. Roosevelt took all the gold. Remember? Chavez is taking land and business assets. It happens all the time. Don't think it can't happen here and now.

And if you think nobody but the obviously insane Demeter (who has a throbbing headache from either the virus or the weather or lack of sleep from the board meeting) is thinking these options, you are delusional.

[amandabeech]

126. Obama got lots of cash from Wall Street, including AIG.

O was their number one recipient. He's just dancing with those what brung him.

He also seems to have drunk the faculty lounge kool-aid when he was at Univ. of Chicago. That's Milton Friedman's place, and it seems that everyone who passes through there is infected by the extreme laissez faire, anti-fair trade meme that seems to infuse the place.

Why Obama can't figure out that his whole team is of the same mindset that brought on this problem, particularly those who directly participated like Summers and Geithner, I simply can't figure out.

Economics are obviously his blind spot.

[UpInArms]

127. I've been thinking a lot about just that, amandabeech

and I agree with your summation.

I refuse to stand and say that I support anyone's stupidity and blindness

whether it is done intentionally or stupidly does not change the outcome

Obama better set down the kool-aide and get his head out of Geithner's ass in a hurry or we really are doomed

[amandabeech]

132. I agree.

I suggest that he invite Krugman and some of Krugman's friends up to Camp David for a week for a deprogramming session.

If Obama doesn't DO something very positive soon, the voters will stage an intervention in 2012, I'm afraid.

[UpInArms]

135. am none too certain they voters will wait that long

eom

[amandabeech]

136. Are you referring to a Nixon exit or a JFK exit?

Or are you thinking about Republican majorities in the House and Senate in 2010?

I pray that we have no more JFK exits, but if Obama doesn't have the economy in recovery by 2010, there will be hell to pay at the ballot box.

With this bailout thing, someone is bound to have said something that could be construed as a "what did he know and when did he know it" moment.

[UpInArms]

146. neither JFK or Nixon came to mind on that thought

more like

....

Rome

failing to pay its military

the money was all gone

rome was burned

....

everything changed

maybe it's time for a change?

[TheWatcher]

142. Obama not only got a lot of Cash From Wall Street

He received the MOST Cash from Wall Street that ANY Candidate has received.

EVER.

It's like i said this morning, if he has surrounded himself with Foxes, how is he going to protect the Hens, and bring about the "Change" he promised?

I think a lot of Americans are in the kind of denial that we would expect them to be, and as much as it drives me crazy, it IS understandable. And unfortunately unavoidable.

You have to look at what we just survived the past 8 Years. THE most Criminal administation in the history of this country, and once again, according to recently released secret documents, we WERE in a Dictatorship.

So many people put EVERYTHING on this Horse, and the majority of Americans cannot even begin to deal with the possibility they MAY have gotten another Bill Of Goods.

But so far, we have seen too many indications of 180 degrees the OPPOSITE of what we were told we would receive.

And waiting in the wings?.....

You DON'T want to know.

If the other side gets control of things again, you should have no illusions, they WILL finish the job, and this country will surely perish.

*Sigh* I'm not so certain it won't anyway.

Have a good night everyone.

I'm working on some stuff for tomorrow morning's chat.

GOD KNOWS what the landscape will look like in a few hours.

Stay Safe.

[formercia]

47. Something happening in the Gold Market

The Gold lease rate went negative and Gold is down $19.

[skoalyman]

103. no problem its up now

magic lol

[UpInArms]

109. oh, skoalyman - that one was so funny -

it hurt

[formercia]

151. While you're at it, check out the dollar.

That was hilarious.

[Demeter]

114. The Fed Is Monetizing the Debt

This is the moment gold bugs have been waiting for. Vindication!

[Demeter]

48. Stolen from cali: Wanna know the names of some of the AIG bonus boys? Here you go.

THIS MAN IS JACKPOT JIMMY
RELATED STORIES
March 18, 2009

Meet James Haas, one of AIG's bigtime bonus babies.

The beleaguered firm has yet to publicly identify the execs rolling in dough courtesy of the taxpayers who saved their jobs, but The Post has learned the names of three, all in the troubled financial-products unit.

They're Haas (above, at his multimillion-dollar home on a hill in Fairfield, Conn., last night), Douglas Poling, also of Fairfield, and Jonathan Liebergall, of New Canaan, Conn.


Haas, 47, an executive VP and the co-leader of North American marketing, said, "I wish I could give you a whole story, but I'm ordered not to. You'll hear from my lawyer."

Poling, 48, the unit's general counsel, as well as a director, executive vice president and chief administrative officer, declared, "This is not the time to be talking."

And Liebergall, 43, a unit director and head of municipal finance, said, "I can't talk - I'm not allowed."

An AIG spokesman said last night, "I honestly don't know who got what."
<snip>
http://www.nypost.com/seven/03182009/news/nationalnews/...

How unsurprising that they all three live in Fairfield County, CT.

[UpInArms]

50. SEC charges Madoff auditors with securities fraud

04. SEC alleges David Friehling deceived regulators over Madoff
10:57 AM ET, Mar 18, 2009

05. SEC charges Madoff auditors with securities fraud
10:55 AM ET, Mar 18, 2009

[Tansy_Gold]

58. From sabra in LBN: Madoff accountant under arrest

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3788495

UPDATE THE FRONT PAGE, OZY!!!




simple pleasures for simple minds



Tansy Gold, former (cost) accountant

[Hugin]

59. Madoff accountant turns himself in (CNN)

David Friehling, accountant for Bernard Madoff, could face 105 years on charges he "rubber stamped" falsified books.

By Aaron Smith, CNNMoney.com staff writer
Last Updated: March 18, 2009: 12:11 PM ET


David Friehling operated from this accounting office in New City, N.Y.

Bernard Madoff, shown here in his mug shot, allegedly paid David Friehling to "rubberstamp" his books, Feds say.

NEW YORK (CNNMoney.com) -- David Friehling, accountant for Bernard Madoff, turned himself in on Wednesday to answer charges that he "rubber stamped" the Ponzi schemer's falsified numbers and lied about it, said federal prosecutors.

Friehling was charged with securities fraud, aiding and abetting investment adviser fraud and four counts of filing false audit reports to the Securities and Exchange Commission, according to the U.S. Attorney for the Southern District and the Federal Bureau of Investigation.

If convicted, Friehling, 49, could face a sentence of up to 105 years.

http://money.cnn.com/2009/03/18/news/companies/madoff_jail_appeal/?postversion=2009031811

__________________________________________________________

Hmm... I guess he decided against going camping.

[Robbien]

51. One Eight Hundred Mattress not paying their bills

Sealy and Comfort Solutions filing a petition to force 1-800-mattress into bankruptcy. They are trying to force the company to liquidate its assets and distribute the proceeds to creditors.

http://www.furnituretoday.com/article/190247-Producers_seek_to_force_1800mattress_com_into_bankruptcy.php

[Robbien]

52. S&P drops mall owner's rating below junk status (owns over 200 malls)

LOS ANGELES -- Standard & Poor's Ratings Services on Tuesday lowered its corporate credit rating on General Growth Properties Inc. below junk status, citing the debt-laden mall operator's default on some of its credit agreements.

The Chicago-based real estate investment trust has been struggling to stave off a Chapter 11 bankruptcy filing by trying to persuade its creditors to put off calling in payments until the end of this year while it tries to refinance its debt load.

The company defaulted on $395 million in unsecured bonds that came due after maturing Sunday. General Growth also has defaulted on loans originally due in November. The company got a waiver on payment default until Feb. 12 but still hasn't paid the debt. As a result of its nonpayment of those loans, General Growth is in default on its unsecured bank credit facility, S&P noted.

Another $200 million comes due in little more than a month.

. . .

Shares of General Growth, which has a stake in more than 200 malls across 44 states, closed unchanged at 61 cents Tuesday.

http://www.oregonlive.com/business/oregonian/index.ssf?/base/business/123734850923940.xml&coll=7

[Hugin]

55. Here's a link for those who are feeling a fit of 'Dawn of the Dead' nostalgia at this news.

http://www.deadmalls.com/

Zombies! :zombie:

Be sure to check out the Deadmalls links link.

[specimenfred1984]

65. Darn, I like gang-filled teen hangouts with overpriced merchandise

that I have to park 1/2 a mile away from, 4 stories up in a parking garage; it seems like such a good business model.

[DemReadingDU]

54. Bankruptcy Judge Rules Calif. City Can Void Union Contracts

3/17/09 In a First, Bankruptcy Judge Rules Calif. City Can Void Union Contracts



In the first ruling of its kind, a bankruptcy judge held the city of Vallejo, Calif. has the authority to void its existing union contracts in its effort to reorganize, holding public workers do not enjoy the same protections Congress gave union workers at private companies.

Municipal bankruptcy is so rare that no judge had yet ruled on whether Congressional reforms in the 1990s that required companies to provide worker protections before attempting to dissolve union contracts also applied to public workers' union contracts

U.S. Bankruptcy Judge Michael McManus held March 13 that when Congress enacted 11 U.S.C. sec. 1113 to limit companies from outright rejection of union contracts it limited it to Chapter 11 bankruptcies. By failing to extend the limits to Chapter 9, which covers municipal bankruptcy, McManus said cities have broader latitude to break existing union pacts, In re City of Vallejo, 08-26813-A-9 (E. Dist. Calif.)

"This will have a huge effect nationwide if it is upheld," said Kelly Woodruff, of Farella, Braun & Martel in San Francisco, representing the firefighters and electrical workers unions. Woodruff said the unions would certainly appeal if the city ultimately voids the existing contracts with the two unions. "And I think we have a good chance of success," she said.

"My understanding is that a lot of cities are watching this and particularly this motion," said Woodruff. "If the city of Vallejo succeeds in using bankruptcy to void union contracts I am sure others will follow," she said.

Vallejo attorney Norman C. Hile of Orrick, Herrington & Sutcliffe's Sacramento, Calif. office said, "This is a decision that is somewhat groundbreaking."

"There are a number of other cities and government entities watching it very closely," he said, but declined to speculate on whether others would take the step Vallejo took of seeking bankruptcy protection.

The decision will be particularly important to cities with large unfunded pension liabilities, according to James Spiotto, of Chapman & Cutler in Chicago and a specialist in municipal bankruptcy who helped advise the Senate Judiciary Committee on Chapter 9 reforms.

He said the unfunded pension liabilities for states and cities was $800 billion a few years ago and may be at $1 trillion today. "The question is whether it is an inability to pay or an unwillingness to pay. If municipalities can't provide basic services and still pay labor costs or pensions then that is a real issue," Spiotto said.

Chapter 9 should be a last resort, he warned, because it causes problems in the municipal bond market. There are 50,000 municipalities but have only been 567 Chapter 9 filings since 1937, when the law was created, he said. By contrast, there may be 10,000 corporate bankruptcies in a single year.

Vallejo, a suburb of San Francisco, issued a statement saying the union challenge of the city's insolvency "at a time of an unprecedented economic downturn and the labor groups ongoing intransigence regarding the modifications of their labor agreements has cost the city more than $3.5 million in bankruptcy costs. These funds could have provided critical municipal services to the Vallejo community," the city stated.

Vallejo declared bankruptcy in 2008 that it blamed on spiraling payroll costs and declining revenue and within weeks asked U.S. Bankruptcy Judge Michael McManus in Sacramento to void all four contracts with 400 police, firefighters, electricians, maintenance workers, secretaries, clerks and other city workers.

Since then two unions, the police and city clerks and managers groups have settled with the city, making concessions in the contracts. Only the firefighters and electricians contracts have not been resolved.

McManus held that because Congress did not impose limits on invalidating union contracts under Chapter 9, cities must only meet the requirements under the U.S. Supreme Court's ruling in NLRB v. Bildisco, 456 U.S. 513 (1984), which gives broader discretion to break the contracts in bankruptcy.

"Section 1113 applies in chapter 11 cases and imposes on chapter 11 debtors procedural and substantive requirements that must be met prior to rejection of collective bargaining agreements," he wrote.

"Section 1113, however, is not incorporated into chapter 9," he concluded. He pointed out Congress considered such an extension in 1991 but did not add Chapter 9 and he would "not presume to do what Congress has not done."

The unions maintained that the city has not proven, as required in Bildisco, that the contracts are a burden to the city because it has $136 million in 100 special purpose funds, portions of which could be used to pay the wage obligations. In addition, the unions assert that negotiation has not been exhausted.

McManus did not allow for an immediate action by the city but ordered both sides back to court March 23 to tell him if negotiations with the two unions have progressed.

Woodruff said at this point the sides are not talking.

http://www.law.com/jsp/article.jsp?id=1202429132330

[Hugin]

56. Nothing like the double-standard of Union vs. 'talent retention' contracts.

:eyes:

[antigop]

57. Mornin', everyone. Go to TPM now--excellent stuff

I don't have much time to post and am having computer issues.

Josh has some excellent stuff --
http://www.talkingpointsmemo.com/archives/2009/03/looking_further.php

In a series of posts last night I looked at various pieces of evidence suggesting fraud and criminal activity at AIG's Financial Products division. We're continuing to dig on that front. But for those of you doing your own sleuthing we want to be looking very closely at what happened to AIG's credit default swap portfolio over the course of 2007 -- what the people at AIGFP knew about its value, what they were telling people at AIG corporate, what they were telling shareholders and what they were telling regulators (of whom, of course, there were very few, given the prevailing regulatory structure).

To give a little more background, a mix of congressional testimony, SEC filings and news reports suggest that there were concerns and suspicions going back at least to 2005 that Joe Cassano wasn't letting AIG corporate or anyone else look at his divisions books. Remember, this is the divisions where the CDSs were written, the ones that played substantial role in triggering the global financial crisis. The auditor they installed to find out what was going on was shut out. Their accountancy, PricewaterhouseCoopers, was disturbed by what it saw and felt obliged to note what was happening in SEC filings. Employment and compensation contracts aren't the issue here. That is a distraction. Think more in terms of RICO. Let us know more about the on-going criminal probe.

Lots more...

[Robbien]

64. A half trillion in total fraud but everyone is glued to less than a half billion in bonuses

Josh Marshall and his crew are fantastic on keeping their focus on the real crime here.


By the way did everyone help him out by taking the reader survey?
http://www.talkingpointsmemo.com/archives/2009/03/a_favor.php

[Karenina]

67. Really. Focus, people. Focus.

I am amazed at all the blather of outrage over 1% of the problem! :eyes:

[DemReadingDU]

69. Bait and Switch

see Michael Hudson's article

Here is my link to the above article
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3788190&mesg_id=3788804

[Demeter]

83. It's the Chutzpah

the "spit in your face and take a dump in your cereal bowl" attitude.

Or the straw that broke the camel's back.

[nc4bo]

107. If people would just follow the money......Bonuses are the tip of the berg

and I keep hearing statements like why should any one receive a bonus from a corp that's on a ventilator and receiving taxpayer money?

Next follow up question (by any capable journalist) would be; how in the hell did AIG get into such a predicament - real deep sea diving stuff that could be broken down into mush for the populice - and name the damn names (corporate as well as government officials) of those involved, responsible or negligent in the grand swindle.

But, I guess that's what happens when the very Main $tream Media that has the power to ask these questions and publicize and DEMAND the answers are corp whores themselves.

We really do need a left-wing/counter voice in Main Stream Media NOW.

Most people are too damn lazy or ignorant to dig past the top soil. It's sad but it's the facts.

[tclambert]

81. C'mon, it's not like they stuck up a 7-11 for a couple hundred bucks.

For that they'd get 3 to 5 years in a maximum security prison. For a white collar crime, maybe a year in minimum security. For a giant white collar crime, like $500 billion in fraud, maybe they'll get an invitation to teach at a B-school.

[antigop]

60. Cassano, head of AIG Financial Products--very interesting...

http://www.talkingpointsmemo.com/archives/2009/03/a_closer_look_please_1.php

Over the last couple weeks we learned that after Joseph Cassano, head of AIG Financial Products, got a $1 million a month consulting contract after being canned for destroying the company. He was eventually completely, finally fired last fall after AIG exploded and the government had to take it over.

Michael Daly, at joseph-cassano-blog.jpgthe NY Daily News, has put together the numbers. And as AIGFP was collapsing into hundreds of billion dollars of losses that the US taxpayer had to pick up, he managed to walk away with a cool $315 million.

Now, I knew that Cassano started out at Drexel Burnham Lambert under Michael Milken, which I believe is that major investment house to go under, at least in the last generation prior to the current crisis (someone tell me, am I forgetting one?). He apparently got hired away from the rubble of Drexel to start AIGFP.

Gotta go.. Josh has other stuff worth reading.

[Hugin]

63. They must've decided to 'retain the talent' way back when...

I think you're correct in remembering Michael Milken as The Mother of All Junk Bonds.

[Hugin]

61. NBC boss: Jon Stewart's criticism absurd, unfair (Reuters)

By Paul Thomasch

NEW YORK, March 18 (Reuters) - NBC Universal Chief Executive Jeff Zucker fired back at comedian Jon Stewart on Wednesday, saying it was "unfair" and "absurd" for the funnyman to criticize CNBC and question its coverage of financial news.

"Everybody wants to find a scapegoat. That's human nature," Zucker said during a keynote address at a media industry conference. "But to suggest that the business media or CNBC was responsible for what is going on now is absurd."

"Just because someone who mocks authority says something doesn't make it so," Zucker said, describing the comedian's comments as "completely out of line."

http://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSN1835152820090318

______________________________________________________________

No mention of Zucker's obvious conflict-of-interest making a statement on this matter.

(Disclaimer: I've never watched Mr. Stewart's show... But, this is a hoot. Thanks Jon! :D )

[Roland99]

62. CNBC was as reponsible for letting the AIGs of the world scam us as the media was re:the Iraq War

fuckers.

[Wednesdays]

70. Zucker is worse than Cramer, IMO...considering he's Cramer's boss

I would pay to see Stewart goad Zucker into appearing on his show. Let's see how his bravado stands up, then.

[Robbien]

66. Congressman Says AIG Sold Snake Oil Without Even Having The Oil

We've been watching the first panel of the AIG hearings this morning. It's not getting much play on the cable news channels, but it's been pretty entertaining and surprisingly informative. You can watch on CSpan's website by clicking here.

Without a doubt, the best line of the session came from Congressman Gary Ackerman, a Democrat from New York. He actually uses three fun analogies to describe the AIG CDS products:

* "Most members of Congress didn't know what CDS is. I want to make sure I understand it," Ackerman said. "Two guys on a life raft. A storm blows up. There are sharks in the water and waves 10 feet high. First guy says, I'm scared, so the second guy sells him a policy. You're selling something with nothing to back you up, no money in wallet, if everything goes right, you're collecting a premium."

* "It's like snake oil salesman, and they don't even have the oil in the jar".

* "There's a great company called I can't believe it's not butter. This is insurance without being insurance, but if they called it "I can't believe it's not insurance" maybe nobody would buy it. How is this suddenly an industry?...How did we allow this to happen? You're playing "I can't believe we're not regulators." And we're playing "we can't believe we're not oversight."

http://www.businessinsider.com/congressman-says-aig-sold-snake-oil-without-even-having-the-oil-2009-3


Nice.

[Demeter]

141. Or a Snake. Or a Bottle.

[hamerfan]

71. Federal Reserve to buy $300B T Bonds?

Is this even Kosher? Can someone explain if this is a good/bad/neutral thing? Has it happened before? I don't think I've ever heard of it, but I am no expert by any means. To me it sounds like one illusion propping up another illusion.
hamerfan


:shrug:

[DemReadingDU]

74. Interesting comments over at Denninger's forum

Does not appear to be a good thing, at all
http://www.tickerforum.org/cgi-ticker/akcs-www?post=87675

[Warpy]

76. Look at what the dollar did today

Yow.

[DemReadingDU]

79. straight down

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

[DemReadingDU]

73. FOMC Statement

3/18/09 The Fed's Decision: PRINT

To net today's FOMC statement for you, the Fed today made an aggressive commitment to monetary expansion today in the expansion of its balance sheet to support the financial system.

What was particularly repugnant was the co-ordinated actions in the market ahead of this announcement. This included a major bear raid on the precious metals, and the panic-covering of the financial shares before the official announcement. The cure of the crisis ought not to be an occasion for looting, fraud, deception, and personal enrichments by insiders who in many cases caused the problems which are facing today.

The US government is engaging in the same artificial tactics that lead to the tech bubble and the housing bubble. They are artificial because they are not accompanied by systemic change and meaningful reform. We are shooting the patient with morphine so they can go back to work without treating the disease.

The next phase of this financial credit crisis may be take down the US Bond and the dollar. That is what is known as a financial heart attack.

click to read the official FOMC Statement
http://jessescrossroadscafe.blogspot.com/2009/03/feds-decision.html


edit: link for official Fed statement
http://www.federalreserve.gov/newsevents/press/monetary/20090318a.htm

[specimenfred1984]

75. We're buying our own bonds, I feel so reassured

Corrupt people will keep corrupt interest rates corrupt, what a relief! LOL.

[TheWatcher]

93. Fred, what exactly do they expect to solve with this?

I ask this almost facetiously, but this smells like just another rotten egg laid by an even more rotten Fed.

[skoalyman]

106. yay lets break out the inflated champaign I bought with my dump truck

full of dollars:toast: :puke:

[Dr.Phool]

78. WTF happened?

I left for a few hours to have lunch with a friend in St. Pete.

Gold was about $885, Dow was down 120.

Now Gold is $945 and the Dow closed up 90.

[TheWatcher]

87. Helo Ben is going to Start Byuing Treasuries To "Loosen Up And Soothe" Credit Markets

Wall Street Just Got A Laxative!

Stocks jump after Fed says it will buy Treasurys (I Guess Wall Street Doesn't SPELL CHECK)

Stocks rise after Federal Reserve says it will buy up to $300B in Treasurys; Dow gains 91

NEW YORK (AP) -- The Federal Reserve is keeping Wall Street's big rally alive -- and giving the Treasury market a boost as well.

The Fed said Wednesday it will pump about $1 trillion into the economy, including the purchase of up to $300 billion of long-term Treasury securities over the next six months, as it works to revive the housing market and halt a punishing recession.

The decision sent both government bonds and stocks soaring as investors expected the move to drive down borrowing costs for everything from mortgages to credit cards. The Dow Jones industrial average reversed early losses to end up 91 points the yield of the benchmark 10-year Treasury note plunged.

The move, analysts said, is likely to produce an immediate drop in mortgage rates -- of 0.25 to 0.5 percent percentage points, as the Fed made clear that it would be able to purchase the majority of new mortgage-backed securities for at least the rest of the year -- and possibly longer.

That's great news for those borrowers with good incomes and healthy credit scores who are able to qualify for a loan. But dramatically tighter lending standards have made it tough for many borrowers to qualify.

http://finance.yahoo.com/news/Stocks-jump-after-Fed-says-it-apf-14682192.html

You See, Doc? All the patient needs is MORE DEBT! More PLAY MONEY for the Pigs!

This is better than a Colonic!

This is just ANOTHER parlor trick that will have little to no effect for the rest of us.

Someone needs to explain to me how this is going to help, because I cannot for the life of me get it.

I mean, The Fed has been Buying up Stock Futures throughout the last Bubble.

THAT worked out well.

:banghead:

[tclambert]

89. Fed to buy long-term U.S. government debt

By Mark Felsenthal and Alister Bull

WASHINGTON (Reuters) - The Federal Reserve on Wednesday said it would pump an additional $1 trillion into the U.S. economy to try to pull it out of a deep recession, partly by buying longer-term government debt for the first time in more than 40 years.

In a statement at the end of a regular two-day policy meeting, the central bank's panel said it would buy up to $300 billion in longer-term Treasuries.

The decision caught many off guard. While the Fed has said it was considering such a move, it had seemed to be backing away from it recent weeks. As recently as March 6, New York Fed President William Dudley had said such a move would not be the most efficient way to ease market conditions.

The surprise announcement jolted markets. U.S. stocks shot higher and yields on U.S. government bonds took their biggest one-day tumbled since 1987, while the dollar plunged to a two-month low against the euro.

"When the Fed said it would 'employ all available means' to jump-start the recovery and prevent deflation it wasn't kidding," said Sal Guatieri of BMO Capital Markets in Toronto.

In addition to purchasing Treasury debt, the Fed said it would expand by $850 billion to $1.45 trillion an existing program to buy debt and securities issued by mortgage finance agencies.


More at: http://www.reuters.com/article/newsOne/idUSTRE52H5YE20090318


TC here: Excuse me, but I'm confused. Isn't the government buying its own debt with borrowed money? How exactly does that change anything? They're paying off one credit card with another. Yet this is being cited as the cause of a stock market surge. Splain plz? kthxbai

[Roland99]

148. "Money, Money, Money....Money" "Chopper" Ben is wetting himself with glee

[TheWatcher]

84. And While Wall Street And The Media Flagellate ALL Over Themselves

Over the "New Bubble", Quietly, and Alarmingly, it would appear another one has Burst:

Feast Your Eyes on THIS Chart.

http://quotes.ino.com/chart/?s=NYBOT_DX&t=f

Oh, but DON'T WORRY, America. It's ONLY your currency. Pay no attention to those falling wages and disappearing jobs.

WE HAVE "HOPE"!

And look at that Stock Market Go!

And pretty soon we will have a new currency anyway.

Here's a sneak Preview from The Treasury:



I'll post about Helo Ben's New "Shopping Excursion" tomorrow.

After I've calmed down a little about it.

[UpInArms]

86. here's you a link that you can "see" in a post

on the dollar



www . weblinks247.com/indexes/idx24_usd_en_2.gif

(just take out the spaces)

[TheWatcher]

88. Thanks UIA.

:hi:

I should have gone with that one.

But just LOOK at that.

That is a CLIFF DIVE.

It just goes to show that once again Peter is being Robbed to pay Paul.

[UpInArms]

92. what you see is the first wave of a huge tsunami

that is about to hit

that was just 2 hours of understanding - wait for the whammy that is to come - the printing press is on overnight overdrive and they have the added luxury of just using the computer to "do" some magic in numbers

that $1 Trillion in debt monetization will destroy the buck - should be at about 60 this time next year



a wheelbarrow full of Zimbabwe gazillion buck-a-roos will look good

[Hugin]

94. It's been nice knowing you guys.

:hi:

:eek: :guywithsign:

[TheWatcher]

96. I hear you Hugin

Welcome to the United States Of Zimbabwe.

Where a dollar will buy you.....

"Hope."

[UpInArms]

98. well, the best I can say

is that at least hanging out at the SMW doesn't make me think I'm anywhere near this dude

[Hugin]

100. I was thinking more of this guy and sign.

:yow:

[UpInArms]

104. or there's Homer

[Hugin]

105. Ooo...

That one is even better! :thumbsup:

[TheWatcher]

95. So basically what Helo Ben has done is destroy the Dollar so the Casino can contiue to Profit.....

The Status Quo for the Wall Street Mafioso can continue, and we can Eat Cake.

Sounds Delicious! :crazy:

Do you know where I can get a good deal on a Wheelbarrow?

Our Grocery Store is about a block from our house, and it would really save on Gas.

:evilgrin:

[UpInArms]

97. I think we will all have to become Amish

http://www.youtube.com/watch?v=GsfVw9xxoNY

[Dr.Phool]

108. Yesterday I was Irish.

Gave me a Headache.

[Tansy_Gold]

147. Not just Peter is being robbed. More like. . . . .

Peter Paul and Mary
Ben and Jerry
Larry Daryl and Daryl
Jesus Joseph and Mary
Tom Dick and Harry
Spin and Marty
Simon and Garfunkel
Cisco and Pancho. . . ..




Tansy Gold, who needs to get a life away from her computer. . . . . . .

[GrizzlyMan]

150. I wonder

What was your screen name over at Hillaryis44?

[TheWatcher]

99. WOW. The PM Futures Just Did The 1929 Free Style Dive.

Yes, it's only -1, but they were up +50.

Maybe the Zimbabwe Shuffle isn't going over so well after all.

But then again, that's what the Futures have been doing EVERY Night.

They have been deep in the red EVERY SINGLE NIGHT since this whole thing began.

It would seem not EVERYBODY believes in Fairy Tales.

While YOU Sleep, They BAIL.

Then during the day they throw Pixie Dust everywhere and tell you we will all be rich soon.

This whole thing is as rotten as a Dead Oak.

[Irish Girl]

101. Thank you for all the excellent commentary

Now please excuse me while I ralph up my lunch.


:puke:

[skoalyman]

110. this is plain scary dang and I didn't plan on eating

dog food and scavenging for gas :cry:

[Dr.Phool]

111. Purina Diet.

Yesterday I was at my local Target buying a large bag of Purina dog chow
for my loyal pet, Sheriff, the Wonder Dog and was in the checkout line
when woman behind me asked if I had a dog.

What did she think I had an elephant?
So since I'm retired and
have little to do, on impulse I told her that no, I didn't have a
dog, I was starting the Purina Diet again. I added that I probably
shouldn't, because I ended up in the hospital last time, but that I'd
lost 50 pounds before I awakened in an intensive care ward with tubes
coming out of most of my orifices and IVs in both arms.

I told her that it was essentially a perfect diet and that the way
that it works is to load your pants pockets with Purina nuggets and
simply eat one or two every time you feel hungry. The food is
nutritionally complete so it works well and I was going to try it again.

(I have to mention here that practically everyone in line was now
enthralled with my story.)

Horrified, she asked if I ended up in intensive care because the
dog food poisoned me. I told her no, I stepped off a curb to sniff an
Irish Setter's butt and a car hit us both.

I thought the guy behind her was going to have a heart attack he
was laughing so hard.

Target won't let me shop there anymore.

Better watch what you ask retired people. They have all the time in
the world to think of crazy things to say.

[UpInArms]

112. ...

:applause:

[TheWatcher]

115. .....

:rofl:

[skoalyman]

116. lmao that was a good one doc

:spray: :rofl:

[Dr.Phool]

124. I found that in my e-mail when I got home.

It just seemed fitting.

[DemReadingDU]

138. sent that to spouse

Sounds like something he would say, too funny!

[Demeter]

117. I Wish I'd Been There

I can do straight man very well.

[Demeter]

113. Conn. lawmakers reconsider wage law cited by AIG

http://www.seattlepi.com/business/1310ap_aig_outrage_connecticut.html

By SUSAN HAIGH
ASSOCIATED PRESS WRITER

HARTFORD, Conn. -- Connecticut lawmakers said Tuesday they hope to change a state law that's being partially blamed by insurance giant American International Group as a reason for paying $165 million in retention bonuses to executives.

AIG, which has received tens of billions of dollars in federal bailout money, has said it is bound by Connecticut's Wage Act to pay the bonuses because its financial products division is headquartered in Wilton, Conn.

The state law allows employees to sue for twice the full amount of contractually owed wages - in this case $330 million - as well as attorney's fees, if the employer refuses to pay up. House Minority Leader Lawrence Cafero, an attorney, said he believes Connecticut's definition of wages is written broadly enough to include the retention bonuses and other bonus pay.

"They have consistently cited the Connecticut Wage Act as the primary reason that they must give out those bonuses. We hope to put an end to that," said Cafero, adding that Connecticut "should not be used as the scapegoat or the excuse for AIG" to pay the controversial bonuses.

The White House and Congress are looking for ways to block the bonuses or recoup that money. Congressional Republicans said President Barack Obama and his administration should have leaned harder on AIG executives to reject the bonuses.

Connecticut Gov. M. Jodi Rell, a Republican, called it "contemptible" for AIG to cite her state's wage act.

"I strongly support legislation that would prohibit entities which receive federal or state bailout money from using those funds for excessive bonuses or payouts similar to AIG's outrageous attempt at self-enrichment," she said.

An AIG spokesman did not immediately return a call seeking comment.

Cafero said that while it could be too late to affect this latest round of payments, he hopes the state's General Assembly can revamp the law, possibly as early as March 25, to exempt future bonuses that AIG is expected to pay executives.

A draft of the bill specifically targets employers receiving funds from the federal Troubled Asset Relief Program or any other government stimulus program "designed to purchase assets or equity from financial institutions."

Cafero said Republican leaders planned to work on a final version over the coming days with Democrats, who control the General Assembly.

Connecticut Attorney General Richard Blumenthal said he has "significant doubts" about the validity of AIG's claim that it is required to pay the bonuses because of the state's wage law.

"AIG is shamelessly shielding itself behind the Connecticut Wage Act - a joke of a justification for squandering scarce taxpayer resources," he said.

Blumenthal said his office is investigating the merits of AIG's claim and will "take every step necessary to fight this gross misuse of taxpayer money."

.

[Demeter]

118. Dave Lindorff: Now We Can See Why Open Government is the Only Way to Go

http://www.buzzflash.com/articles/lindorff/213


For years, advocates of open government, mostly on the left but also on the right, have railed against the growing secrecy of the U.S. government. But the focus, particularly of left critics, has been on the Intelligence budget, a $40+ billion "black box" completely protected from public and even Congressional scrutiny, and on large swaths of the Pentagon budget, allegedly kept hidden for "national security" reasons.

For the most part, the American public has adopted an ovine attitude towards such secrecy, assuming that the "government knows best."

Now, with the economic crisis, and the collapse of AIG, Citibank, Bank of America, Merrill Lynch, Bear Stearns, Lehman Brothers, General Motors, Chrysler, and other leading U.S. firms, and with bailouts that are putting taxpayers on the hook to the tune of trillions of dollars, the people are waking up, or at least are starting to get restless in their slumber.

Perhaps there will be a new awareness soon of the importance of transparency in all parts of government.

For now, the Obama Administration, the Federal Reserve and Congress are all trying desperately to ease the citizenry back into a state of torpor by adopting a position of mock outrage at the $135 million in bonuses paid out by AIG to the very employees who created the disastrous and crooked credit default swap market that precipitated the global economic collapse.

What they don't want to happen is for people to start thinking about the $183 billion that Congress and the Fed approved for AIG, which we now have learned was simply a devious scheme for passing more money in secret through to troubled banks and investment banks -- among them Citigroup, Bank of America, Goldman Sachs, Morgan Stanley and others -- that had bought these collateralized debt obligations (CDO).

Recall that back in September, when the crisis first hit in earnest and Treasury Secretary Henry Paulson first called for a bailout program, he asked -- in a three-page proposal to Congress that he insisted they must pass or risk total economic collapse and the imposition of martial law! -- for absolute authority as Treasury Secretary to hand out the $700 billion and for protection against any legal action for whatever he might choose to do with it.

Congress didn't accede to his imperious request, though it did give him half the money he wanted: $350 billion, saying it would provide the second $350 billion later (the new Congress did hand the second half of the money over just before President Obama took office). A sizeable chunk of that huge sum of taxpayer money went to AIG, the giant insurance company that had devised a scheme to sell "insurance" for the mortgage-backed securities that banks were gorging on. The term "insurance" has to be placed in quotes, because since these contracts were not backed by any assets, they were really not insurance at all.

As rumors spread that much of the so-called Troubled Assets Relief Program (TARP) money that was provided to AIG was actually passed through to banks and investment banks that were already receiving TARP funds directly (including nearly $50 billion to foreign institutions), Congress and some news organizations, notably Bloomberg, sought to learn what firms were actually receiving the cash. AIG, the Treasury Department and the Bush and later the Obama Administration initially fought such disclosure, as did all the bank recipients, claiming that releasing the names of the recipients would make investors doubt their stability.

Finally, thanks to the efforts of New York State Attorney General Andrew Cuomo, whose office has been pursuing the issue in the courts, we have the answer: the money was going primarily to the nation's biggest banks.

But most troubling is that a disproportionate amount of the AIG bailout money -- $13 billion -- went to Goldman Sachs, a company that until July 2006 was headed by Treasury Secretary Paulson himself. No wonder Paulson, AIG, Goldman Sachs, and others wanted to keep this all under wraps. No wonder too that Paulson initially tried to get Congress to immunize him from the legal consequences of his bailout actions.

The truth is that Goldman Sachs and Paulson should be prosecuted for corruption. The deal that Paulson engineered in secret for shoveling taxpayer money into his former firm is surely one of the largest acts of official larceny of public funds in the history of the country.

Goldman Sachs even publicly announced in early February that it was returning $10 billion in TARP funds it had received last fall, saying it didn't need the money. Well sure the company didn't need the money -- because it was getting even more in secret via the AIG conduit.

With this backdrop, the rest of the bailout might well be seen as a hugely expensive cover: give enough money to the rest of the big banks and investment banks, and nobody in the industry will squeal about the sweet deal Goldman Sachs was getting.

Of course, the corruption goes much deeper. While public money was being funneled into the banks and other financial institutions, those same institutions were using some of this taxpayer largesse to lobby Congress to do even more. Just between October 1 and the end of 2008, 18 recipients of TARP funds reported spending nearly $15 million on lobbying efforts in Washington. Among the biggest bailout-recipient/lobbyists: American Express ($1.1 million), AIG ($1.1 million), B of A ($880,000), Citigroup ($1.5 million), Goldman Sachs ($720,000), JPMorgan Chase ($1.1 million), and Wells Fargo ($580,000). These amounts represent quite an investment considering that these firms all received, in return for their TARP lobbying efforts, billions of dollars in bailout money.

Remember, Paulson's original plan was to have even the TARP direct bailout grants kept secret from the public. That idea didn't fly. But many of these companies that used their public funds to lobby for more public funds also received secret bonus bailouts via AIG.

So here's what happens when you have secret government. The public gets royally shafted.

Now that the story is coming out, the crooks in Congress, the White House, Treasury, and the Fed are desperately trying to lull us all back to sleep by feigning anger at the relatively paltry sums AIG is handing out in bonuses to some of the crooks and scheisters on its staff.

We should not put our heads down on the pillow being offered, though.

The lesson here is that we need open government, and that we need to demand that our media not go for the cheap and easy story being handed out by government press release.

There's this last thought: If you thought that the banking mess was a horrible ripoff, just try to imagine what level of corruption there must be in the Pentagon and the intelligence programs that have been operating in absolute secrecy and with no scrutiny for decades!

Baa-a-a-a-a-a-a.

DAVE LINDORFF is a Philadelphia-based journalist. He spent five years reporting on China and Hong Kong for Business Week magazine in the 1990s and is author, most recently, of "The Case for Impeachment" (St. Martin's Press, 2006 and now available in paperback). His work is available at www.thiscantbehappening.net.

[Demeter]

119. Dilbert's boss Knows What To Do

http://dilbert.com/dyn_file/str_strip/44417/gif/strip.print/

Click on the link to see

[skoalyman]

122. lol

you know today I was looking in our local news paper that a friend had brought over.I was scanning down the back of the paper for the job listing ads they only had one ad.I asked my friend about it he said there used to be 2 whole pages.Its getting terrible out there.

[Demeter]

120. AIG CEO says employees starting to return bonuses

http://news.yahoo.com/s/ap/20090318/ap_on_go_co/aig_outrage_159


By JIM KUHNHENN and TOM RAUM, Associated Press Writers Jim Kuhnhenn And Tom Raum, Associated Press Writers 22 mins ago

WASHINGTON – Under intense pressure from the Obama administration and Congress, the head of bailed-out insurance giant AIG declared Wednesday that some of the firm's executives have begun returning all or part of bonuses totaling $165 million. Edward Liddy offered no details, and lawmakers were in no mood to wait.

He was still fielding their questions when House Democratic leaders announced plans for a vote Thursday on legislation to tax away 90 percent of the extra pay for executives at AIG and many other bailed-out firms.

Liddy, brought in last year to oversee a company that has received $182 billion in federal bailout funds, said he, too, was angry about the bonuses. But he did not respond directly when advised in pungent terms to pay to the Treasury all the money handed out last weekend in "retention payments."

MORE BLATHER AT LINK

[Demeter]

121. Paulson group buys into AngloGold

http://www.ft.com/cms/s/0/af0e54aa-132d-11de-a170-0000779fd2ac.html

By Michael Kavanagh and James Mackintosh in London

Published: March 17 2009 20:07 | Last updated: March 17 2009 20:07

Paulson & Co spent $1.28bn buying Anglo American’s stake in gold miner AngloGold Ashanti on Tuesday as the New York hedge fund moved from betting against banks to betting against governments.

Paulson, founded by billionaire John Paulson, bought 11.3 per cent of the Johannesburg miner as part of its bet that gold benefits as paper currencies suffer from the financial crisis and from governments printing money.

Mr Paulson has become one of the most closely followed hedge fund managers after his bet against subprime mortgages became the most profitable trade in history in 2007, securing profits of more than $10bn for his funds.

[Demeter]

123. I'm Thinking We Are Pulling an All-Niter Tonight

What massive load of shit was coming down that they decide to monetize the debt on a Wednesday?

The witching hour?

[skoalyman]

129. Hadn't thought of it that way yea it does make you wander.

we'll have to wait and see:scared:

[TheWatcher]

139. Indeed.

Take a Look at the PM Futures.

Once again a complete Cliff Dive into the Red.

It is absolutely clear now that ALL of the Market Support form the past seven days has been COMPLETELY Artificial and Official Sector Driven.

Helo Ben would NOT do this unless something was coming.

Something BIG.

Everyone who was cheering all this nonsense last week and shouting all of us down is going to be getting a RUDE awakening.

Welcome To Weimar 2.0

[Demeter]

140. Care To Speculate On What Is Coming?

Killing off Citi? or AIG? or GM? or all 3?

[TheWatcher]

143. I've got a lot of research ahead of me, Demeter.

:hug:

Right now I cannot see what the future holds for those three. I think GM's survivability is very uncertain, and as for the other two, WHO KNOWS at this point.

What we should be MOST concerned about is this Monetization move by Helo Ben.

This is BAD.

If you took a look at the Chart for the Dollar today, I think that was one of the biggest Cliff Dives it has EVER taken. That was swift, Horrific, and portends BAD things to come. It is very ominous. I would need to view some historical Charts for the Dollar, but THAT was something that makes your heart jump up in your throat.

The other big question is what will this do to treasuries?

THAT is one of the big worries of this move, and one of the things I will be analyzing tonight.

The one thing I know right now is that this is NOT Good.

People do not need to be cheering this.

This could be the Death Of The Dollar as we know it.

And if it IS, here is the biggest Question of them all:

What Is China Going To Do?

[Demeter]

149. that Was My first Thought, Too

Right after the Chinese openly express their anxious suspicions, right after a G20 meeting, Helicopter Ben pulls this stunt.

Maybe Obama will come to his senses, arrest Ben for treason (taking down the govt), shut down the Fed Reserve system, close the borders and confiscate the assets of the rich.

Nah. That would make too much sense.

[DemReadingDU]

144. That was my first thought

The market is being propped high every day, for a reason. Someone wants to get out with the highest gain, before the crash.

[Demeter]

125. I Proclaim Bernanke "King of De Nile"

He thinks he can stop a Depression dead in its tracks by inflating the dollar by a trillion fake bucks, without ever having to say "I'm sorry, let me liquidate those zombie banks and companies for you. It should all come out with a little water."

The man is insane, the plan is insane, and tomorrow I fully expect Krugman will authoritatively say so.

This is Cassandra, Demeter's Alter Ego, posting

[UpInArms]

128. UIAs loves your Cassandra, Demeter

:thumbsup:

[Tansy_Gold]

131. We're Twins!!!!!!!!!!!!

well, we are.





Tansy Gold

[Demeter]

133. You and Me? Or You and Cassandra?

Doesn't matter, we're sisters for sure.

[DemReadingDU]

134. Triplets!

We are all Cassandra

[Demeter]

137. If We are 3, We are the Moirae

The Moirae were the three goddesses of destiny in Greek mythology. They were Clotho, Lachesis and Atropos.

They controlled the life and destiny of everyone. Klotho spins the thread of life, Lachesis measures it (looks how long it is), and Atropos cuts the thread. When the thread is cut the person dies.

The parents of the Moirae are not surely known. Some said they were the daughters of Zeus and the Titaness Themis, or of primordial beings like Nyx, Chaos or Ananke.

Their Roman equivalent were the Parcae.

The Norns (Old Norse: norn, plural: nornir) are a kind of dísir,<1> numerous female beings who rule the fates of the various races of Norse mythology.

According to Snorri Sturluson's interpretation of the Völuspá, the three most important norns, Urðr (Wyrd), Verðandi and Skuld come out from a hall standing at the Well of Urðr (well of fate) and they draw water from the well and take sand that lies around it, which they pour over the ash Yggdrasill so that its branches will not rot.<2> These norns are described as three powerful maiden giantesses (Jotuns) whose arrival from Jötunheimr ended the golden age of the gods.<2> They may be the same as the maidens of Mögþrasir who are described in Vafþrúðnismál (see below).<2>

[UpInArms]

130. end o' the day ponies and chocolates for everyone except the ones footing the bill for the party

Dow 7,486.58 90.88 (1.23%)
Nasdaq 1,491.22 29.11 (1.99%)
S&P 500 794.35 16.23 (2.09%)
10-Yr Bond 2.533% 0.47

NYSE Volume 10,528,057,000
Nasdaq Volume 2,823,449,500

4:10 pm : The latest policy statement from the Federal Open Market Committee (FOMC) enticed buyers to enter the bidding process and push stocks markedly higher. Buyers rallied around financial stocks, which yet again helped provide leadership to the broader market.

The FOMC is maintaining a target fed funds lending rate within the range 0.00% to 0.25%, as predicted. Exceptionally low levels are expected for an extended period.

The Fed will bolster its balance sheet by buying up to $300 billion of Treasuries during the next six months. The 10-year Note surged on the news; it finished almost 4 points higher, pushing its yield down to a two-month low of 2.55%.

Asset purchases didn't end there, though. The Fed will purchase an additional $750 billion of agency mortgage-backed securities this year, bringing the total to $1.25 trillion.

An additional $100 billion of agency debt will also be purchased this year, bringing the total to $200 billion.

News the Fed will be expanding its balance sheet weighed on the Dollar Index, which lost 2.7% as it fell to its lowest level since late January.

Still, the Fed's decision to purchase so many of these assets is aimed at helping stimulate the flow of credit and creating demand for the assets.

That recognition provided a lift to financial stocks. Financials had already overcome an early fit of weakness, but managed to climb even higher to close at session highs with a gain of 10.1%.

The strength of a broad range of diversified financial services companies (+13.2%) and diversified banks (+14.9%) helped the S&P 500 outperform its counterparts. The broader market had been stuck in negative territory and traded in a relatively narrow range until the FOMC's announcement convinced traders to follow the lead of the financial sector.

The stock market closed with broad-based gains even after sellers resurfaced during the last couple of hours of trading to knock the stock market off its session highs.

Outside of the financial sector, Sun Microsystems (JAVA 8.89, +3.92) and Adobe (ADBE 21.35, +2.22) traded with considerable strength. Sun was boosted by news from The Wall Street Journal that IBM (IBM 91.97, -0.94) is in talks to acquire the company for at least $6.5 billion in cash. As of Tuesday's close, Sun Microsystems had a market capitalization of just $3.7 billion. Meanwhile, Adobe is garnering interest after posting better-than-expected earnings for its latest quarter.

Oracle (ORCL 15.83, +0.43) also showed strength. The company announces its latest quarterly results after the closing bell.

Trading volume was heavy as more than 2.0 billion shares traded hands on the NYSE.

There were some higher-than-expected inflationary readings posted this morning. Still, they are unlikely to fuel inflation concerns. Instead, the reports should help ease deflation concerns. The Consumer Price Index for February showed a 0.4% month-over-month increase, which topped the 0.3% increase that was expected. Core CPI for February increased 0.2% month-over-month, which also exceeded the consensus 0.1% increase. DJ30 +90.88 NASDAQ +29.11 NQ100 +1.2% R2K +3.5% SP400 +3.1% SP500 +16.27 NASDAQ Adv/Vol/Dec 1926/2.15 bln/756 NYSE Adv/Vol/Dec 2492/2.07 bln/592

3:30 pm : Crude oil contracts for April delivery closed with oil priced 2.0% lower at $48.16 per barrel. Despite the loss, crude prices were able to climb back from session lows, which were registered after the Department of Energy reported a larger-than-expected weekly inventory build. Crude traded as low as $46.92 per barrel.

April natural gas contracts also closed lower. Natural gas contracts are being priced at $3.69 each, down 3.3%. Natural gas actually fell as low as $3.67 per contract, which is the lowest level in more than six years. Natural gas inventory data is due tomorrow morning.

Precious metals closed lower. Gold contracts for April delivery closed with gold priced 3.0% lower at $889.70 per ounce. Silver contracts for May delivery closed pit trading with silver priced at $11.94 per ounce, down 5.8%. However, following the latest FOMC policy announcement, prices of both metals have spiked sharply higher in electronic trade.DJ30 +52.57 NASDAQ +17.98 SP500 +12.25 NASDAQ Adv/Vol/Dec 1745/2.15 bln/909 NYSE Adv/Vol/Dec 2318/1.5 bln/752

3:00 pm : Stocks continue to build on earlier gains as they ascend to session highs. The move has been broad-based as every major sector in the S&P 500 sports a gain.

Financial stocks continue to boast the best advance of any sector. Financial stocks are now up 9.0%.

The upbeat tone contrasts the relatively dour mood seen in the early going. During this morning's low point, every sector in the S&P 500 was in the red. Stocks had spent the majority of the session restricted to negative territory, movement was rangebound until the FOMC released its latest policy statement.

Trading volume has also picked up on the New York Stock Exchange.DJ30 +142.65 NASDAQ +40.48 SP500 +21.76 NASDAQ Adv/Vol/Dec 1885/2.03 bln/737 NYSE Adv/Vol/Dec 2524/1.31 bln/535

2:30 pm : The stock market was fluttering along the unchanged mark prior to the release of the latest policy statement from the Federal Open Market Committee (FOMC). Stocks have spiked higher in the wake of the statement's release, and are now trading at their best levels of the session.

The FOMC left the benchmark lending rate unchanged at 0.00% to 0.25%, as expected. The committee expects economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period.

The FOMC said it will buy up to $300 billion of Treasuries during the next six months. Treasuries at the long end of the yield curve have surged.

The committee also said the Fed will buy up to an additional $750 billion of agency mortgage-backed securities, bringing total purchases of these securities to $1.25 trillion this year. The Fed will also purchase an additional $100 billion of agency debt this year, bringing total agency debt purchases to $200 billion. DJ30 +84.58 NASDAQ +33.48 SP500 +14.74 NASDAQ Adv/Vol/Dec 1804/1.72 bln/807 NYSE Adv/Vol/Dec 2223/1.08 bln/795

2:00 pm : The S&P 500 has made its way into positive territory. The broad-based index encountered some resistance at the neutral line, but enough buyers emerged to push the index across the line.

As has been the case in recent weeks, financials were largely responsible for the push. Financial stocks are now up 4.0%.

Life and health insurers are the strongest performers within the financial sector. The group is up 10.0%, while multiline insurers also show strength by climbing 8.4%.

MetLife (MET 23.75, +2.56) is showing particular strength after its shares were upgraded by analysts at Bank of America. MetLife also indicated during a JPMorgan conference that they are always looking at mergers, but they do not have "deal fever."DJ30 -52.33 NASDAQ +9.90 SP500 +0.19 NASDAQ Adv/Vol/Dec 1572/1.47 bln/1003 NYSE Adv/Vol/Dec 1690/922 mln/1311