STOCK MARKET WATCH, Thursday March 19

[ozymandius]

Source: du

STOCK MARKET WATCH, Thursday March 19, 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 18, 2009

Dow... 7,486.58 +90.88 (+1.21%)
Nasdaq... 1,491.22 +29.11 (+1.99%)
S&P 500... 794.35 +16.23 (+2.09%)
Gold future... 889.10 -27.70 (-3.12%)
30-Year Bond 3.57% -0.23 (-6.10%)
10-Yr Bond... 2.53% -0.47 (-15.65%)

---

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

Commodities - Signaling Reflation or Stabilization?
BY CHRIS PUPLAVA

Oil Strengthening

Probably the biggest development in the commodity sector is the solid break of oil through its 50 day moving average (MA), which has acted as price resistance since crude’s peak last year. Not only has crude broken above its 50d MA but it has also broken the declining trend since its peak last year, as well as broken the declining trend in its relative strength to the stock market (S&P 500, middle panel), with a break into above neutral territory on the RSI, all bullish developments.

-chart-

Signs of oil prices stabilizing were presented several weeks ago in a prior article, “Myopic vs. Strategic Thinking,” in which several leading indicators were highlighted that pointed towards crude oil stabilizing and even strengthening. Some of those indicators are presented below, which show even more bullish implications for oil than they did when first presented. For example, my commodity currency index has strengthened further with oil along with it. A break above the January highs in the commodity currency index and oil’s January highs would clearly be bullish for oil, and could mean that oil is more than stabilizing and setting up for a significant rally ahead.

.....

As mentioned above, with global exports collapsing recently, the relationships highlighted may only be signaling that economic growth is getting “less bad” rather than signaling an outright recovery, but the improvement to “less bad” is a hallmark for bear market conclusions as the markets discount the future. Thus, the relationships highlighted above may not necessarily be signaling economic growth ahead, but rather the conclusion to the bear market in commodities. A clear break of the CRB index below support at 180-200 would invalidate the above analysis and prove that recent developments were only working off oversold extremes before resuming their declines. However, if the CRB can hold support then we may have indeed witnessed the end to the commodity bear market that began last year.

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

[Demeter]

17. Does This Even Matter Any More?

Every canned article has been rendered obsolete before publishing by Helicopter Ben.

Memo to self:

NEVER have anything to do with anybody that has "helicopter" in his nickname.

[muleboy303]

32. stupid question ?

perhaps, but 'tis how i learn

to wit, does not the FED's announcement yesterday present the Chinese with an opportunity to sell a fraction of their estimated near 2 trillion dollars worth of US bonds at an even greater profit? and without sending alarm signals ? (i.e. lost in the flood and/or sell some at great profit while buying an equal amount anew)

and, might that not be one of the intentions of the FED's actions ?

[Demeter]

I Really Don't Think The Chinese Want More Dollars Now

Not when the dollar is going into significant devaluation.

They would rather hold land, buildings, manfacturing companies (capital epuipment), resources esp. water and minerals and forests.

The Chinese are going to dump their Treasury holdings as fast as they possibly can. There will be no market, probably.

By the way, there are no stupid questions here--sometimes there are sarcastic answers, meant for humorous effect. (This isn't one of them)

[muleboy303]

38. makes one wonder

if China's nixing of Coke's attempted purchase is reciprocity ? or laying the groundwork for opening the way for China to purchase depressed US manufacturing entities ?

[Demeter]

42. Protection from the Corporate Hordes is Always a Good Idea

We should have tried it.

[burf]

46. It would seem to me

the Chinese if they are going to move into assets here in the US, would do so sooner rather than later. Reason being, get it before the forces of inflation kick in. Just my guess.

Good morning and good day to all!

[Hugin]

53. I wouldn't go quite that far...

I have several good friends who have rotor-wing inspired nicknames.

Of course, most of them are involved in humanitarian Med-evac operations... and they're not the Savior-of-Big-Banks.

:sigh: I don't know about you, but, the news about Natasha R. has me feeling very Mortal this Morning. :/

[specimenfred1984]

101. It helps to see what the propagandists are saying and therefore...

get an idea of what they never say which, is what is really going on. Misinformation is a distraction away from reality and us proles aren't ever supposed to see reality. We're supposed to follow the old Chomsky "manufactured consent".

[ozymandius]

2. Today's Reports

08:30 Initial Claims 03/14
Briefing.com 640K
Consensus 655K
Prior 654K

10:00 Leading Indicators Feb
Briefing.com -0.5%
Consensus -0.6%
Prior 0.4%

10:00 Philadelphia Fed Mar
Briefing.com -40.0
Consensus -39.0
Prior -41.3

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

[UpInArms]

47. Initial Claims @ 646,000 - last week rev'd up 4,000 - continuing claims at 26-yr high

09. U.S. weekly initial jobless claims fall 12,000 to 646,000
8:30 AM ET, Mar 19, 2009

10. U.S. weekly continuing claims rise 185,000 to record 5.47M
8:30 AM ET, Mar 19, 2009

16. U.S. 4-week avg. intial claims rise to 26-year high 654,750
8:30 AM ET, Mar 19, 2009

17. U.S. insured unemployment rate rises to 4.1%, 26-year high
8:30 AM ET, Mar 19, 2009

[UpInArms]

66. U.S. March Philly Fed index -35.0 - U.S. Feb. leading economic indicators fall 0.4%

01. U.S. March Philly Fed index -35.0 vs -41.3 in Feb.
10:02 AM ET, Mar 19, 2009

02. U.S. March Philly Fed above consensus -39.0
10:02 AM ET, Mar 19, 2009

03. U.S. Feb. leading economic indicators fall 0.4%
10:00 AM ET, Mar 19, 2009

[UpInArms]

91. More Philly Fed details - very grim

10. U.S. March Philly Fed job index record low -52.0
10:05 AM ET, Mar 19, 2009

16. U.S. March Philly Fed new orders -40.7 lowest since July '80
10:04 AM ET, Mar 19, 2009

17. U.S. March Philly Fed inventory index record low -55.6
10:04 AM ET, Mar 19, 2009

[ozymandius]

3. Oil rises to near $49 as stock rallies boost hopes

SINGAPORE – Oil rose to nearly $49 a barrel Thursday in Asia, brushing off news of increasing U.S. crude supplies, as traders took heart from rallies in global stock markets as an indication of overall investor optimism.

But others cautioned that oil prices wouldn't go much higher because the outlook for the global economy remains murky.

.....

Oil is up despite signs that U.S. crude supplies are rising. The Energy Information Agency reported crude inventories rose 1.94 million barrels for the week ended March 13. The 353.3 million barrels of crude is the highest reported level in U.S. inventories since June 29, 2007.

Gasoline stocks surged by 3.2 million barrels, surprising analysts who had expected a draw down of 2.1 million barrels.

.....

In other Nymex trading, gasoline for April delivery rose 1.73 cents to $1.38 a gallon, while heating oil gained 2.64 cents to $1.29 a gallon. Natural gas for April delivery was steady at $3.69 per 1,000 cubic feet.

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

[RoyGBiv]

4. Good Morning ...

I'm not often up or in a place where I can read this thread when you guys are around, but as someone who lurks a lot after hours, I just wanted to tell you how much I appreciate it.

This is always one of the first threads I read when I get a chance to sit down and do some actual reading.

[ozymandius]

6. Good morning.

:donut: And thank you.

You posted during the quiet moments. It really gets fund around here in the late morning and late afternoon.

:hi:

[RoyGBiv]

8. Yeah ...

That's usually when I'm busy dealing with my own chaos at work and can't pay attention properly.

Got a flight this morning, so I had a little time.

Have a great day.

:donut:

[adamuu]

30. yeah. that. n/t

[ozymandius]

5. Fed launches bold $1.2T effort to revive economy

WASHINGTON – With the country sinking deeper into recession, the Federal Reserve launched a bold $1.2 trillion effort Wednesday to lower rates on mortgages and other consumer debt, spur spending and revive the economy.

To do so, the Fed will spend up to $300 billion to buy long-term government bonds and an additional $750 billion in mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac.

Fed Chairman Ben Bernanke and his colleagues wrapped a two-day meeting by leaving a key short-term bank lending rate at a record low of between zero and 0.25 percent. Economists predict the Fed will hold the rate in that zone for the rest of this year and for most — if not all — of next year.

The decision to hold rates near zero was widely expected. But the Fed's plan to buy government bonds and the sheer amount — $1.2 trillion — of the extra money to be pumped into the U.S. economy was a surprise.

.....

The dollar, meanwhile, fell against other major currencies. In part, that signaled concern that the Fed's intervention might spur inflation over the long run.

http://news.yahoo.com/s/ap/20090319/ap_on_bi_ge/fed_interest_rates

[amandabeech]

9. I hope that someone mentioned the bonuses that Fannie and Freddie

are preparing to pay their executives.

This just isn't a time to pay bonuses.

[RoyGBiv]

16. No kidding ...

And Fannie (at least ... not sure about Freddie) just did some mass layoffs.

Friend of mine who did database design and had worked for them for about 15 years was laid off with his entire department a few weeks back. Lots of people gone.

And they want to give bonuses.

My friend's head may explode.

[Hugin]

79. Lots of silence about bonuses at Goldman, too.

You know darn well they're handing them out!

[Ghost Dog]

80. Fed says let's Twist again after 48 years

... The move to purchase longer-dated U.S. government debt, on top of regular purchases of short-term Treasury bills, marked the first time it has done so since Operation Twist, which ran from 1961 until 1965. But that is where the similarities end.

In the 1960s, in an effort to flatten the yield curve to simultaneously tackle a recession and a lingering trade deficit, the Fed bought long-term bonds and sold short-term bills.

As a result, the operation was sterilized in terms of its impact on the money supply and was not an expansion of monetary policy. This time, the intervention will not be sterilized and should help ease monetary conditions.

"We see this as equivalent to a 75 basis point cut in the (fed) funds rate," said Ethan Harris, co chief U.S. economist at Barclays Capital in New York. A basis point is one one-hundredth of a percentage point.

"A combination of monetary, credit and fiscal easing will slow the recession in the second quarter and spark a modest recovery by year-end," he said.

To reinforce aggressive Fed action, President Barack Obama has won $787 billion in emergency fiscal spending, and has drafted a multi-trillion dollar budget to aid the economy.

All this stimulus comes with risks.

"It will raise inflation uncertainty," said Gregory Hess, an economics professor at Claremont McKenna College in Claremont, California.

The Fed has deliberately pumped up the money supply to encourage spending and beat back the risk that deflation, or a prolonged, broad-based decline in prices, might set in. However, the money-supply surge could spark inflation when growth resumes, unless the Fed can bleed off the heavy support.

"The risk is that the public misunderstands this as excessively inflationary; as policy that is premature; perhaps excessively concerned about the contraction and the possibility of deflation," said Goodfriend.

/... http://biz.yahoo.com/rb/090319/business_us_usa_fed_twist.html?.v=3

[ozymandius]

7. Asia markets mixed after Fed's $1.2 trillion plan

HONG KONG – Asian stock markets were mixed Thursday as investors digested the U.S. Federal Reserve's massive $1.2 trillion spending plan to revive growth in the world's largest economy. Japanese exporters got whacked as the dollar tumbled against the yen.

Most of the region's other markets posted small gains, buoyed after Wall Street gained for a sixth time in seven days on optimism over the Fed's announcement. Banks in several markets helped lead the way, while commodity firms rose on stronger prices for crude and metals.

.....

But while anything to support Western demand might help Asia's export-reliant economies, analysts worried the ambitious scope of the Fed's plans could signal the U.S. economic prospects are even worse that originally thought.

.....

In Tokyo, the Nikkei 225 stock average lost 26.21 points, or 0.3 percent, to 7,945.96 as the Fed's action weighed on the dollar and pulled back exporters like Toyota and Honda. Hong Kong's Hang Seng dropped 74.43, or 0.6 percent, to 13,042.74, in up-and-down trade, and South Korea's Kospi edged lower by 0.7 percent to 1,161.81.

Mainland China's market was higher, as were benchmarks in Australia, Singapore, Malaysia and Thailand.

http://news.yahoo.com/s/ap/20090319/ap_on_bi_ge/world_markets

[Ghost Dog]

21. Bank of Japan expands bond buying to cushion

TOKYO, March 18 (Reuters) - The Bank of Japan said it would increase its purchases of government bonds from banks by nearly a third, pumping cash into the economy to help cushion the worst recession since World War Two.

The second expansion of debt buying since December signalled the bank may be edging towards quantitative easing, a policy that Japan tested during a decade of deflation and that is now being studied around the world as a response to the financial crisis.

But the Bank of Japan, which left interest rates on hold at 0.1 percent on Wednesday, said it had little room to keep expanding its bond buying.

BOJ Governor Masaaki Shirakawa added that its decision to buy more bonds was based on market needs and had no link to planned government spending to pull the economy out of recession and what is expected to be a second spell of deflation.

Analysts took that with a pinch of salt.

"The BOJ's decision can be interpreted as an effective monetisation of government debt, although the central bank will never say so because it is independent of the government," said Junko Nishioka, chief Japan economist at Royal Bank of Scotland.

...

The central bank raised the value of JGBs it would buy to a record 1.8 trillion yen ($18.3 billion) a month from 1.4 trillion yen.

"Today's announcement shows the BOJ is doing more than what the markets expected to strengthen monetary easing," Nishioka said.

...

The quantitative easing policy the BOJ used to try to revive demand after a property bubble burst in the 1990s barely succeeded, but Western central banks are drawing on Japan's experience as they grapple with the collapse of the U.S. housing market.

The Bank of England aims to buy 75 billion pounds ($105.2 billion) of British government bonds in three months, and the U.S. Federal Reserve has talked of the possibility of buying Treasuries.

The term quantitative easing in Japan is used specifically to describe the policy that flooded the banking system with cash to revive lending and meet targets for the quantity of money circulating in the economy.

Other central banks use the term more generally to describe a dramatic expansion of their balance sheets through asset purchases that boost money supply, with or without a specific target.

"The BOJ has effectively entered the territory of quantitative easing, and it may eventually shift its policy target towards that and cut interest rates to zero if it tries to further ease financial conditions to cope with the worsening of the economy," said Naomi Hasegawa, senior fixed income strategist at Mitsubishi UFJ Securities.

...

The central bank, not wanting to be seen as a money printing machine for the government, has set an internal rule that its JGB holdings should not exceed the amount of yen notes in circulation.

The BOJ holds 43.6 trillion yen of JGBs, compared with around 76.9 trillion yen notes in circulation.

...

The Japanese economy shrank 3.2 percent in the fourth quarter, its fastest decline since the 1974 oil crisis and twice as fast as the U.S. and euro zone economies, due to its heavy reliance on exports.

/... http://www.reuters.com/article/marketsNews/idINT845520090319?rpc=44&pageNumber=2&virtualBrandChannel=0&sp=true

[Demeter]

37. Gentlemen, Start Your Presses!

the race to inflate is off!

[Ghost Dog]

22. Fed action boosts world shares, hits dollar

LONDON, March 19 (Reuters) - World shares rose on Thursday as the U.S. Federal Reserve's surprise announcement it would start large-scale buying of government debt sparked optimism that the battered U.S. economy could soon begin to recover.

The announcement put the dollar under severe pressure, sharply lowered U.S. Treasury yields and tightened European credit spreads, while crude oil and metal prices gained on hopes that there would be a pick up in global industrial activity.

...

World stocks, as measured by MSCI's all country index .MIWD00000PUS climbed 1.5 percent to 200.30, while European shares .FTEU3 rose 0.4 percent. U.S. stocks rallied overnight as investors bet the Fed's move would kick-start lending.

...

The dollar index .DXY, a gauge of its performance against a basket of major currencies, was flat at 84.206 after a 3 percent slide on Wednesday that was its biggest one-day drop since 1985. Traders said the dollar may resume its fall.

...

The U.S. was not alone in buying of government debt. The Bank of England is buying 75 billion pounds of gilts and the Bank of Japan on Wednesday announced it would increase its purchases of Japanese government debt.

The Swiss National Bank surprised markets last week with intervention to weaken the Swiss franc as well as an interest rate cut to fight a deep recession.

In addition, the European Central Bank may also eventually turn to non-standard policy measures after cutting interest rates to a record low 1.5 percent in March.

"We'll have to see how this pans out, but ultimately the Fed are printing paper, the UK are printing paper, the Swiss are printing paper, the Japanese are printing paper -- they are all at it and I don't want to buy those currencies," said David Bloom, global head of FX research at HSBC markets in London.

"I don't believe in the argument that its going to create economic growth and you will get portfolio flows -- forget it, they are sorting out a crisis," he added.

/... http://www.reuters.com/article/marketsNews/idINLJ36170520090319?rpc=44&pageNumber=2&virtualBrandChannel=0&sp=true

[ozymandius]

10. Cuomo Wins Ruling to Name Merrill Bonus Recipients

Andrew M. Cuomo is starting to unearth some of the most closely guarded secrets on Wall Street: the identities of Merrill Lynch employees who collected large bonuses even as the brokerage firm lost billions.

Mr. Cuomo, the New York attorney general, won a legal battle on Wednesday to compel Bank of America, which bought Merrill in December, to provide his office with the names of the Merrill employees with the 200 largest bonuses. Mr. Cuomo said he would make the names public as early as Thursday.

He also vowed to identify publicly the employees who had received bonuses at the American International Group, whose payouts prompted an uproar, and to work with other financial companies that have received taxpayer dollars to consider disclosing more about employee compensation.

http://www.nytimes.com/2009/03/19/business/19cuomo.html?ref=business

[tclambert]

23. Why is it business executives can't stand to be named in public? Aren't they proud of their

accomplishments? If they're so ashamed of what they are do, maybe they shouldn't do it.

That rule should apply to government, too. If you're so ashamed of doing something that you have to keep it secret, don't do it.

[adamuu]

58. oh, i'm sure they are not ashamed

I bet they are scared, though.

When the only tool you have is a hammer, everything looks like a nail. Investment banks took the "hedging" approach to all business dealings, including their own employment contracts. These obscene payments make sense to them, based on their closed-world, but when it is in the open the public is aghast. The payments are so out of proportion with any amount of work an individual can complete in a year.

[Hugin]

65. or as in this case an entire Career.

I've extrapolated it out several times and based on the current median income in the US during their entire working years most Americans can expect to make around $1.5 to $2.0 Million...

These Clowns are claiming they are more important to the Economy in one year than 4 or 5 other Americans are in their entire LIVES! In some cases it's that they are more important that 2 or 3 HUNDRED Americans during their entire working years!

I'd say they have a hugely over-inflated estimation of their own worth. Typical attitude of Psychopaths and in a realistic world would be used as symptomatic of their pathology in diagnosis.

[tclambert]

70. "The payments are so out of proportion with any amount of work

an individual can complete in a year." Maybe they get up early.

Oh, wait, if it worked that way, Ozy would be a multimillionaire, instead of just a multithousandaire.

[MattSh]

11. VAB Bank (Ukraine) accused in Ponzi scheme, assisted by...

Citibank, and Bank of New York Mellon. Who would have thought....


KIEV, UKRAINE -- A major Ukrainian bank has been sued in Federal Court in New York, under the Racketeer Influenced and Corrupt Organization Act of 1970 ("RICO"), for allegedly operating a gigantic Ponzi scheme in Ukraine and allegedly transferring the money to two New York banks, Citibank, N.A. and The Bank of New York Mellon. Both Citibank and The Bank of New York Mellon are also named as defendants in the action. 



The lawsuit which was commenced in the United States District Court, Southern District of New York, accuses All-Ukrainian Joint Stock Bank a/k/a/ Vseukrainsky Aksionerny Bank ("VAB") of using fraud and deception to induce the plaintiff and others, to deposit money with the bank pursuant to a so-called deposit agreement in which VAB promised depositors a high rate of interest on money deposited with the bank and the right to terminate the agreement early and to receive their money back on short notice. 



The complaint alleges that the representations by VAB contained in the deposit agreement were allegedly false and fraudulent in that the promised high interest rate and the right of early termination of the agreement were merely devices to induce the plaintiff, and others, to in the aggregate, deposit millions, if not billions of dollars, with VAB and that various portions of the money which were deposited with VAB have allegedly been transferred to accounts maintained by VAB at Citibank and The Bank of New York Mellon; were allegedly used to pay earlier depositors, as part of the Ponzi scheme, and were otherwise allegedly misappropriated. Citibank and The Bank of New York Mellon are alleged to have aided and abetted VAB's fraudulent scheme and to have violated, as correspondent banks to VAB, their obligations under the Patriot Act. 



The lawsuit seeks to recover, among other things, compensatory and punitive damages from VAB, Citibank and The Bank of New York Mellon. The plaintiff in the action is being represented by New York attorney Anna Val [phone].

http://www.pressrelease365.com/pr/financial/news/banking-practices-federal-court-new-york-rico-3280.htm

[ozymandius]

13. Oh this is so rich!

Charles Ponzi would be dazzled at what his brain-child has become. Ten years of growth and profits are shaping up to be one giant ponzi scheme. Several reports have surfaced of late describing big U.S. banks involvement in eastern European investments. Central to this issue: this involvement does not pass the credibility smell test.

[tclambert]

74. The beauty of the Ponzi scheme is that it works . . . for a while.

You could make money investing in actual Ponzi schemes if you get in and out early. If you could get enough people in it, say an ever-growing population over several generations, maybe it could work forever! Wait a minute. Isn't that how the whole stock market works?

[tclambert]

75. Honestly, isn't Charles Ponzi the most brilliant investment manager ever?

His theory makes more sense and has lasted longer than most others on Wall Street. He deserves a posthumous Nobel Prize in Economics.

[KoKo]

77. VAB (the Ponzi in question) has a promotion Ad placed below the article....

:rofl: Sorry...dark humor seeing that ad placement with an article charging them with being a Ponzi scheme. Can these times get any weirder?

--------some text of ad...

VAB Bank is #3 most transparent Ukrainian bank according to 2008 S&P survey




VAB Bank

Welcome to the official web-site of VAB Bank!

We aim to share with you the information about VAB Bank, our products, shareholders and strategy, and keep you updated about our latest news, achievements and innovations. We want you to have a clear knowledge of who we are and what we do.

We are more than a bank. VAB Bank is a member of VAB Group, a full-service financial group that combines the assets of 9 companies to meet various financial needs of our customers.

We serve our clients with devotion by offering diversified product lines, competitive pricing, excellent customer service and individual approach to all groups of customers, whether individuals, small and medium enterprises or corporates.

We strive to be useful to you and hope that you shall find what you are looking for!

[ozymandius]

12. We all knew Geithner would find a faux-populist rationale for dumping money into banks.

U.S. Considers Broadening TALF Program to Distressed Assets

March 19 (Bloomberg) -- The Obama administration may use a new Federal Reserve program designed to spur consumer lending to help remove distressed assets from banks’ balance sheets, according to people familiar with the matter.

Officials may meld the Treasury’s plan to set up private investment funds to buy frozen assets with the Fed program, known as the Term Asset-Backed Securities Loan Facility, the people said. The Federal Deposit Insurance Corp. may also get a wider role, they said.

Treasury Secretary Timothy Geithner may use an array of approaches to maximize the likelihood of cleansing banks’ balance sheets so they can start lending again. The next announcement, which may come as soon as this week, will be critical after Geithner’s first unveiling of the strategy caused a sell-off in financial stocks.

....

[Tansy_Gold]

54. I'm probably not the first one to come up with this idea, but

If they're so "distressed," are they really "assets" any more at all?


Tansy Gold

[Hugin]

60. I've been calling them 'liabilities' for awhile...

Heck, if TPTB consider their workers to be 'costs', why not? :shrug:

[Tansy_Gold]

64. Yeah, it's regular "newspeak," ain't it? up is down, rich is poor.....

makes my eyelashes hurt.

good day to go outside and pull some weeds.




Tansy Gold

[ozymandius]

14. Naked Short Sales Hint Fraud in Bringing Down Lehman

March 19 (Bloomberg) -- The biggest bankruptcy in history might have been avoided if Wall Street had been prevented from practicing one of its darkest arts.

As Lehman Brothers Holdings Inc. struggled to survive last year, as many as 32.8 million shares in the company were sold and not delivered to buyers on time as of Sept. 11, according to data compiled by the Securities and Exchange Commission and Bloomberg. That was a more than 57-fold increase over the prior year’s peak of 567,518 failed trades on July 30.

The SEC has linked such so-called fails-to-deliver to naked short selling, a strategy that can be used to manipulate markets. A fail-to-deliver is a trade that doesn’t settle within three days.

.....

Twice last year, hundreds of thousands of failed trades coincided with widespread rumors about Lehman Brothers. Speculation that the company was being acquired at a discount and later that it was losing two trading partners both proved untrue.

.....

Short sellers arrange to borrow shares, then dispose of them in anticipation that they will fall. They later buy shares to replace those they borrowed, profiting if the price has dropped. Naked short sellers don’t borrow before trading -- a practice that becomes evident once the stock isn’t delivered. Such trades can generate unlimited sell orders, overwhelming buyers and driving down prices, said Susanne Trimbath, a trade- settlement expert and president of STP Advisory Services, an Omaha, Nebraska-based consulting firm.

http://www.bloomberg.com/apps/news?pid=20601109&sid=aB1jlqmFOTCA&refer=exclusive

[adamuu]

52. thanks for this. very informative. n/t

[ozymandius]

15. Barry Ritholtz makes a good point.

Time for Wall Street Insurance?

Why does the US taxpayer have to guarantee every single transaction done on Wall Street? Since when is that our obligation?

If the taxpayer is on the hook to bailout systemic risk, then don’t they have the right to prevent that systemic risk? Or alternatively, reserve for/insure it?

....

Here is the thing that really gets me angry about all of this nonsensical “innovation” on Wall Street talk: Its a misnomer. This innovation without oversight is in reality has led to an enormous transfer of wealth – first from shareholders to senior executives, then from taxpayers to bankrupt firms and their counter-parties. The entire industry has been hijacked by a few rogue finance engineers, and its been an utter disaster.

....

All of the trillions of dollars in bailout expense plus the blather about restricting innovation has led me to this unfortunate conclusion: We need Wall Street Insurance.

more...

[Demeter]

20. "Innovation" a Fancy Name for Fraud

Morning, Ozy. Well, maybe, in an hour the sun might come up, at least. Whether it will ever be morning again is debatable.

[tclambert]

24. I'd like to know the names of these "innovators." Who invented the

derivatives and subprime mortgages and Option ARMs? Who were the financial engineers whose inventions wrecked the economy? And who sold those inventions as the "next big thing?" Who were the consultants who persuaded the Wall Street financiers to bet so much on so little? There must have been first movers who started this. There were lots of followers. Wall Street has a strong herd behavior. But who were the handful of individuals who master-minded the new fad?

[UpInArms]

34. Christopher Ricciardi

http://articles.moneycentral.msn.com/Investing/CompanyFocus/WhosToBlameForTheMortgageMess.aspx

No. 1: Alan Greenspan

Alan Greenspan

In his best-selling book, Alan Greenspan describes how well he managed the economy during an "age of turbulence." Unfortunately, he's largely responsible for the current dose of it.

As chairman of the Fed, Greenspan took the federal funds rate down to 1% in 2003 and left it there for a year. Even as the Fed began raising rates, Greenspan's exceptionally low interest rates "planted the seeds for the housing bubble," says Robert Rodriguez, a money manager at First Pacific Advisors who saw the emerging subprime mess early on and has managed to dodge most of it so far.
Talk back: Who do you think is really responsible for the subprime mess?

Greenspan's role in the current mess doesn't stop there. He encouraged the use of adjustable-rate mortgages in a 2004 speech, which was "an insane, idiotic recommendation," says Rodriguez. The following year he endorsed subprime loans to help marginal borrowers get into houses. And true to his somewhat naive brand of Ayn Rand libertarianism, Greenspan dismissed calls for more oversight of the mortgage business. This gave free rein to our next culprits: greedy mortgage brokers who had no problem pushing inappropriate loans on borrowers so that they could reap lucrative fees.
No. 2: Countrywide CEO Angelo Mozilo

Angelo Mozilo

None of this would have been possible without the help of mortgage lenders willing to go along with the charade. There are many of them, but I'd cite Countrywide Financial (CFC, news, msgs) CEO Angelo Mozilo as one of the most egregious.

Mozilo acknowledged potential risks in the subprime market early on, but he continued to compete to maintain market share, even though the only way to do this was to water down loan underwriting standards like everyone else. "If the market was offering something, they wanted to offer it too," says Erin Swanson, a Morningstar (MORN, news, msgs) analyst who covers the stock.

Even though Mozilo made more than $20 million a year in salary and bonuses in 2004 and 2005, he wanted to book more profits, mainly by selling stock options, as Countrywide was riding high on the bubble. We know this because he took advantage of a special rule to set up an automatic selling program in his company's stock. Company documents show he realized $310 million in the three fiscal years ending in June 2007. If his agenda was to cash out personally, he had a good motive to play along with the subprime charade.

Countrywide declined to comment, but a company spokesman has told other media outlets that no one, including Mozilo, could have foreseen the events that led to the current problems with subprime-mortgage debt and that all of Mozilo stock sales complied with regulatory rules.

No. 3: Christopher Ricciardi

Mozilo and the rest of the subprime lenders couldn't have underwritten all those dodgy home mortgages without having a way to sell them and get them off their books. In this effort, they got a hand from our next culprits: the crafty bankers who created a Wall Street debt machine that repackaged subprime loans so they could be sold to investors.

An investment banker named Christopher Ricciardi helped turn Merrill Lynch (MER, news, msgs) into the "Wal-Mart of the CDO industry" between 2003 and 2006, according to The Wall Street Journal. Ricciardi "lobbied both credit-rating firms and investors, talking up the safety and juicy returns of CDOs," the Journal says. Ricciardi has since left Merrill, which on Oct. 24 reported a $7.9 billion write-down related to its collateralized debt obligations.

...more...

[Demeter]

39. Thank you , UIA

Sharpening up Madame La Guillotine now...

[tclambert]

81. Thank you, thank you. I'm knitting their names into a scarf.

Bookmarked the link, that is. In today's world, Madame DeFarge would bookmark rather than knit.

BTW, the photo of Angelo Mozilo they have makes him look just like a gangster. Does he have cool mob nickname, like "Angie the mortgage breaker" or "Angelo CDO Mozo?"

[antigop]

99. tclambert---upthread asked for names of the "innovators"

Some background here on this thread...

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=114x60004

I don't think you'll find too many MBAs in the quants group. The mathematics involved is far beyond the typical MBA grad (imo).

[Dr.Phool]

45. I'll bet AIG will sell it to us.

[ozymandius]

18. Charlie Rose interviews Meredith Whitney about banks' future

Found this one at Calculated Risk

CHARLIE ROSE: Listen, you saw this early certainly in terms of the banks, and you got a lot of credit for that. Have we not seen the worst? Is the worst still to come, or have we passed some point of beginning to understand and just waiting for the plan to get us back on track?

MEREDITH WHITNEY: I really believe the longer we wait, the longer we head down this path -- well, the math is the worst is ahead of us. And...

CHARLIE ROSE: So the end of 2009 or beyond?

MEREDITH WHITNEY: At least the end of 2009. Look, you have credit continuing being pulled from the system, and until it stabilizes, there is nowhere to go but down. And from an unemployment perspective, no one is pricing in low, mid teens unemployment in any of their assumptions. So it is just a question of not if the banks need to raise capital, it’s when, and, you know, let’s get some capital back in the system by looking at who can provide it, like the local banks. We will go back to a time that was and not try to preserve a system that is and -- or was more recently and will never be again.

You are throwing good money down black holes ...

[Demeter]

25. Excellent Discussion

and all the experts are women!

[DemReadingDU]

97. Why not Meredith Whitney as Secretary Treasury

Just a thought

[ozymandius]

19. Gotta run...

Have a nice day folks. I'll check back when there's time.

:hi:

[Hugin]

61. See you on the flip side, Ozy.

Have a good day. :)

[Demeter]

26. Not That It Matters Any More, but More on Madoff

http://www.opednews.com/articles/Madoff-Did-Not-Exactly-Tak-by-Lawrence-Velvel-090316-957.html

March 16, 2009

Madoff Did Not Exactly Take It on the Chin Last Thursday

By Lawrence Velvel

A few comments about last Thursday’s hearing before Judge Chin on the Madoff matter may be warranted.


Reading the transcript with a lawyer’s eye, it seems evident that Judge Chin had made up his mind as to what he was going to do before he walked into the courtroom. Giving people a right to speak was form, not substance. The transcript shows that it plainly affected nothing. The judge took no account of people’s comments or logic when rendering his decisions. Sic semper transcriptus.


For judges to walk into courtrooms with their minds already made up, so that whatever is then said to them is of no moment, is hardly unusual. If anything, the reverse. Allowing lawyers or, as here, others to speak is often just a pro forma way of fooling people into thinking courts are open minded and objective. To doubters, to the naïve, all I can say is “Sorry, but those are often the facts.” So too they plainly seem the facts here, notwithstanding that there were those who came thousands of miles to speak.


One of the judge’s decisions was to deny bail and have Madmanoff locked up. Nobody but Madmanoff’s lawyers objects to that. But it is curious that little has changed since another judge previously granted bail, and let Madoff stay in his penthouse, with access to his computer -- and to who knows how much or what information -- so that he could work for three months on keeping his money hidden, on keeping it beyond the reach of the feds (as by transfers and attempted transfers of money and property (remember the jewels?) to his wife and family.)


Judge Chin pointed out that Madoff has the motive and means to flee and therefore presented a risk of flight. This was all correct. But he had the same motive and means and presented the same risk three months ago, when a different judge merely put him in an ankle bracelet and under house surveillance, both of which could have been continued now if they in truth were sufficient. True, now he has pled guilty. But he had confessed to the FBI on December 11th. Am I wrong in thinking a confession is itself an admission of guilt, just like a plea of guilty is? Madoff knew in December that he would be going away for a long time. In fact, if you believe his allocution (his statement in court), he has known it for many years. So nothing about motive and means to flee and risk of flight had changed last Thursday. The only difference was that in December a judge, with the leniency typically extended to white collar criminals, let a man, who had 800 million dollars which he could use for fleeing from the jail time awaiting him, stay in his penthouse and use his computer to move and hide money, whereas Judge Chin said, defacto, enough already.

Judge Chin’s other decision was to accept Madoff’s guilty plea. The judge was in possession of at least one document showing that there were people who thought with good reason that accepting Madmanoff’s guilty plea was a very bad idea, and heard one person who had come thousands of miles to say that, very briefly, in court.

But as the transcript makes evident, Chin had made up his mind to accept the guilty plea. This was a bad decision, I think. Rejection of the plea would have put pressure on Madoff to disclose much more to the feds, with whom he apparently is being uncooperative, including being uncooperative as to where all the money went. If the guilty plea were rejected, and remained rejected, there would be a trial at which lots of evidence would come out about how the dirty deed was done and who was involved, evidence that would likely -- I personally think would certainly -- implicate family members whom Madmanoff is therefore trying to protect, if he can, by pleading guilty. If the pressure of a possible trial at which hordes of facts would become public were put on him, Madoff could prove more tractable to the feds in exchange for a reduction in the punishment to be meted out to his family members. Such tractability could include telling feds where all the money is, including the money set aside for his family.


In response to any and all such objections to accepting Madmanoff’s guilty plea, Judge Chin said only that “as the government has just said, it is continuing its investigation and this guilty plea certainly does not preclude the government from proceeding.” That putative answer is actually a non answer. Not only does everyone know the government is continuing its investigation, but Judge Chin did not even mention, let alone assess, the relative advantages to the government’s investigatory effort of accepting or rejecting the guilty plea at this time and thereby eliminating right now even the threat of a trial. This was bad. Very bad, in my estimation.


But there is, unfortunately, more.


I personally am not familiar with the law on whether a guilty plea should be accepted when the judge knows, suspects, or should know or suspect that the defendant is lying to him or holding back important information. But I’ll bet the law says the judge can, or maybe it conceivably even says he should, reject the guilty plea, especially since the lies or continuing concealment show the defendant is not accepting full responsibility for what he did. Lying and holding back information is what Madoff did in his allocution if one believes the government.


For example, Madmanoff says his best recollection is that his Ponzi scheme began in the early 1990s. Can you imagine that? The operator of what might be the world’s largest fraud ever, the man who probably had to keep huge amounts of relevant information in his head over fifteen or twenty years or so, claims he does not remember for certain when he started this fraud! He can only give his best recollection. Gimme a break!


Even more important, the government says the fraud started at least as far back as the 1980s, not as “late” as the early 1990s. What’s the chance that Madmanoff is not lying when he claims his best recollection is that he started his scheme in the early 1990s? Pretty low, if you ask me. Why is he lying about the starting date? That is an interesting question, is it not? But Judge Chin did not ask it, and seemed oblivious of the entire point.


Why did Madoff start the scheme, regardless of what the starting date was? He said the reason for starting it was that:

"I had received investment commitments from certain institutional clients and understood that those clients, like all professional investors, expected to see their investments out-perform the market. While I never promised a specific rate of return to any client, I felt compelled to satisfy my clients’ expectations, at any cost."

Huh? He felt “compelled” to satisfy the clients’ expectations “at any cost”? Just who were these supposed institutional clients whose expectations he had to fulfill at any cost, and why? His statements resonate of leg breakers or worse, not of institutional clients. In any event, what clients -- and what kind of clients -- were so important that he had to fulfill their expectation by a massive fraud if he could not do so legitimately. The question fairly screams from the transcript, as I would think it must have screamed from Madoff’s allocution if one had been listening carefully and thinking about what was being said. Judge Chin was oblivious.


Another point, raised by the government in papers it filed prior to the hearing, so that Judge Chin could have read and absorbed the point at his leisure before the hearing, is similar in import. The government said Madoff had promised some people returns as high as 46 percent. Huh? Forty-six percent? Are you kidding me? Who were these people? Mafiosi with leg breakers or worse? People who knew what was going on and demanded such huge “earnings” in return for silence? Complete dummies who would believe you could make 46 percent year after year? -- it is inconceivable that anyone could be that stupid, could believe this could be done honestly and legitimately. So the questions of who were the people who were promised returns like 46 percent, and why were they promised this, scream for an answer. But Judge Chin was oblivious.


Madoff claimed his Ponzi scheme had zip to do with his legitimate broker-dealer business. The feds said it helped finance that business. Once again, Judge Chin should have known that, if the feds were telling the truth, then Madoff was lying to his face. Once again the Chin was oblivious. It never even quivered.


So, if you ask me, the judge acted badly in accepting Madoff’s guilty plea. He allowed Madoff to lie to his face and not to answer questions that cried out for answers. As well, by eliminating the possibility of a trial in which so much would come out, he potentially cloaked much or most of the facts in the non transparency for which the U.S. government and all its branches have been infamous since at least 1964, if not before. Now what we shall learn -- and, maybe more importantly, what is kept from us -- is totally within the discretion of the government, rather than almost inevitably being exposed at a trial due to the exigencies of trial. Bad. All very bad -- unless one takes the position that what this country needs, and what Madoff’s victims need, is more secrecy, not less.*

This posting represents the personal views of Lawrence R. Velvel. If you wish to comment on the post, on the general topic of the post, or on the comments of others, you can, if you wish, post your comment on my website, VelvelOnNationalAffairs.com. All comments, of course, represent the views of their writers, not the views of Lawrence R. Velvel or of the Massachusetts School of Law. If you wish your comment to remain private, you can email me at [e-mail].

VelvelOnNationalAffairs is now available as a podcast. To subscribe please visit VelvelOnNationalAffairs.com, and click on the link on the top left corner of the page. The podcasts can also be found on iTunes or at www.lrvelvel.libsyn.com


In addition, one hour long television book shows, shown on Comcast, on which Dean Velvel, interviews an author, one hour long television panel shows, also shown on Comcast, on which other MSL personnel interview experts about important subjects, conferences on historical and other important subjects held at MSL, and an MSL journal of important issues called The Long Term View, can all be accessed on the internet, including by video and audio. For TV shows go to: www.mslaw.edu/about_tv.htm; for conferences go to: www.mslawevents.com; for The Long Term View go to: www.mslaw.edu/about­_LTV.htm.





Author's Website: http://velvelonnationalaffairs.com/

Author's Bio:

Lawrence R. Velvel is the Dean of the Massachusetts School of Law, which educates the working class, mid-life people, minorities and immigrants. He is the editor of a journal called The Long Term View, hosts an hour-long TV book show called Books of Our Time, which appears in the New England and Mid-Atlantic states on Comcast's CN8 and is streamed on the internet, and hosts a radio program called What The Media Doesn’t Tell You. The radio program, which is carried on World Radio Network and is streamed on the internet, discusses important matters which the media doesn’t disclose (or insufficiently discloses) and the reasons for the nondisclosure.

Velvel wrote a 1970 book on the constitutionality of the Viet Nam War and civil disobedience, and a recent quartet called Thine Alabaster Cities Gleam, comprised of: Misfit In America; Trail of Tears; The Hopes and Fears of Future Years: Loss and Creation; and The Hopes and Fears of Future Years: Defeat and Victory.

Velvel blogs at velvelonnationalaffairs.com. His 2004 and 2005 posts have been published in Blogs From the Liberal Standpoint: 2004-2005.

[radfringe]

27. R.I.P. for the Economy

R.I.P. for the Economy

No, this isn't an eulogy. It's a simple way to remember what needs to be done

1. REGULATE - If the current mess has taught us anything - a market without rules is doomed.

2. INVESTIGATE - To understand what happened, how it happened and how to best avoid a similar mess in the future - it's necessary to investigate. How much of the problem was caused by a lack of regulation, by a lack of competent oversight, or by flagrant disregard for the "rules"?

3. PROSECUTE - Accountability and Responsibility, without it there is no confidence in our economy, our regulatory departments, or our laws. If any is 'held above the law' then there are no laws to be upheld.

[Demeter]

29. Amen!

[Hugin]

56. Super Excellent!

Great meme, radfringe! :)

[MilesColtrane]

67. I think it could use a RUB too.

1. Repeal Gramm-Leach-Bliley -Put the firewall back up between commercial banks and investment banks

2. Unseat Bernanke as Fed Chairman - Find a better option from among the Board of Governors until Robert Reich can be seated there and ultimately appointed as Chairman.

3. Bust some trusts - Never allow a financial institution become too big to fail again. Break them up and introduce some much needed competition back into the system

[tclambert]

85. Good on ya, both youse guys. RIP and RUB, I like it.

Bust some trusts, that's double plus good. I'm for simplifying the anti-monopoly laws, so they can't use their size to defeat the anti-trust suits by burying the government in warehouses full of paper. If a company gets too big, it should just have to fission, like a microbe undergoing mitosis.

We haven't seen a good anti-trust effort in ages. These companies that grew "too big to fail" did so because our political leaders allowed it to happen, co-operated with the monopolists. We've known this was a bad idea for over two hundred years. Yet they let the corporate conglomerates grow to unhealthy sizes just because they wanted to seem friendly to corporate executives.

[MilesColtrane]

88. Lobbyists, glad handlers, and PR men have effectively established the idea that...

... a company must be bigger than God to compete effectively in the global arena.

It's not likely we'll hear any talk of government enforced break ups coming over the wire any time soon.

[Demeter]

28. The US Is Facing a Weimar Moment by Robert Freeman Published March 15, 2009 by CommonDreams.org

SO THIS WAS OUT BEFORE THE HELICOPTERS WERE FIRED UP---


In early 1919, Germany put in place a new government to begin rebuilding the country after its crushing defeat in World War I. But the right-wing forces that had led the country into the War and lost the War conspired even before it was over to destroy the new government, the "Weimar Republic." They succeeded.

The U.S. faces a similar "Weimar Moment." The devastating collapse of the economy after eight years of Republican rule has left the leadership, policies, and ideology of the right utterly discredited. But, as was the case with Germany in 1919, Republicans do not intend to allow the new government to succeed. They will do everything they can to undermine it. If they are successful, the U.S. may yet go the way of Weimar Germany.

World War I left Germany utterly devastated. The landed aristocrats, industrial magnates, wealthy financiers, weapons makers, and the officer corps of the military that formed the locus of right wing power were completely discredited. Their failure in provoking and prosecuting the War was catastrophic, undeniable, and complete.

The economy was destroyed. Prices were at 800% of pre-war levels and rising quickly. Agriculture, pillaged for the War, lay in ruins. Social insurance payments for the War's injured, to widows and orphans, and newly unemployed soldiers were astronomical. And all this was before the cost of rebuilding was even begun.

At the same time, Germany faced massive reparations payments to the Allied victors, France and England. But Germany's foreign properties had been confiscated and its colonies turned over to the victors. The combination of these conditions, both domestic and international, made it extraordinarily difficult for the German economy to recover.

As a result of the failure of the right, the German people elected a moderately leftist government to lead the nation's rebuilding. It was named the Weimar Republic for the city in which the new post-imperial constitution was written. The new government was led by Friedrich Ebert, head of the German Socialist Party.

But the country's new parliamentary system had allowed dozens of parties to run, making it impossible for any one party to win an outright majority. Ebert's party had achieved the highest portion of votes, 38%, in the first post-War elections, held in January 1919. Ebert would have to govern by coalition.

It was at this time that the right wing made its crucial decision. Despite its shocking, naked failure over the prior decade, despite the horrific devastation it had wrought on the German people, despite the discrediting of everything they had purported to stand for, they would fight Ebert, his new government, and its plans for recovery. They would do everything they could to make sure that the new government failed.

Their strategy was two-fold: first, stoke the resentment of the population about the calamitous state of its living conditions-no matter that those conditions had been created by the very right-wing oligarchs who now pretended to befriend the little guy. Rage is rage. It is glandular and unseeing. Once catalyzed it is easy to turn on any subject.

And stoking resentment was easy to do. Just before the War ended, the military concocted its most sensational lie: the German army hadn't actually been defeated. It had been "stabbed in the back" by communists, traitors, and Jews. It was an easy lie to sell. It entwined an attack on an alien political ideology - liberalism- with the latent, pervasive myth of German racial superiority.

The second strategy of the right was to prevent the new government from succeeding. To begin with, success of the left would conspicuously advertise the failure of the right. Moreover, success by the left would legitimize republican government, so hated by the oligarchs of the right. Much better for the people to be ruled by the self-aggrandizing right-wing autocracy that had governed Germany for centuries.

So the rightists set out to do everything they could to make it impossible for the leftists to govern. They would use parliamentary maneuver, shifting coalitions, domination of the new mass media, legislative obstruction, staged public relations spectacles, relentless pressure by narrow but powerful interests, judicial intimidation and, eventually, outright murder of their political opponents.

Contrition for their abject failure, humility for their destructive hubris, compassion for their crippled country-those had nothing to do with it. All they possessed was a blinding, visceral hatred of the left and a masturbatory lust for the return to power.

Eventually, they succeeded. Every setback in recovery - and there would inevitably be many - was met with hysterical demonizing of the left wing government. The lie was repeated relentlessly that the government was run by communists, traitors, and Jews-the same furtive cabal that had purportedly stabbed the country in the back at the end of the War. They steadily chipped away at the efficacy and, thereby, the legitimacy of successive republican governments.

By the time of the Great Depression, Adolph Hitler's ironically named National Socialist Party had become the biggest vote getter in the nation. The Nazis had once been derided as the lunatic fringe of the far right. But the "respectable" right-wing power brokers who had started and lost the Great War anointed Hitler Chancellor in January, 1933.

He immediately suspended the constitution, abolishing most civil liberties. He outlawed opposition parties, began a massive military build-up and a relentless propaganda campaign, and set Germany and the world onto the path of the greatest destruction it would ever know.

America now faces its own "Weimar moment."

The failure of right wing policy and leadership over the past eight years, especially in matters economic, is comparable to Germany's right-wing failure in World War I. It is catastrophic, undeniable, and complete.

Consider:

According to the World Economic Forum, forty percent of the entire world's wealth has been destroyed in the recent financial collapse. In the U.S. alone, between housing and the stock market, more than $18 trillion in wealth has already been destroyed.

The private mega-banks that anchor the financial systems of the western world are bankrupt. This makes it all but impossible to jump-start the western world's economies which are heavily dependent on bank-system credit to operate.

More than 10,000 homes go into foreclosure every day. More than 20,000 people lose their job every day. And the collapse is accelerating, developing its own self-reinforcing dynamic. Job losses breed foreclosures, reducing demand, leading to more job losses and further degradation of the financial system. None of the stopgaps designed to stanch the bleeding have yet worked. There is no bottom in sight.

Meanwhile, debt has risen to astronomical levels. Reagan and Bush I quadrupled the national debt in only twelve years. Bush II doubled it again in only eight. It is now ten times higher than it was in 1980 when Reagan was elected. Total public and private debt exceeds 300% of GDP, half again higher than it was in 1929.

The government's unfunded liabilities, promises it has made to the American people but for which no payment source can be identified, now exceed $60 trillion, a literally inconceivable sum that can never, will never, be paid. Federal Reserve economist Lawrence Kotlikoff has suggested that the U.S. government is "actuarially bankrupt."

The full measure of the nation's plight is revealed in Hillary Clinton's first trip as Secretary of State. It was to China, to beg them to fund Obama's new fiscal deficits. Without loans from China, the U.S. economy cannot be revived. The significance of this cannot be overstated: the U.S. no longer exercises sovereignty over its own economic affairs. That sovereignty now resides in the hands of China, the U.S.'s greatest long-term rival.

Thanks to Republican policies of massive debt and shipping jobs abroad, the U.S. has technically become a colony of China. It exports raw materials and imports finished goods, together with the capital to make up the difference. Should the Chinese decide not to lend the trillions of dollars the U.S. is begging for, the U.S. economy will implode, plummeting onto itself in a World Trade Center-like collapse that will leave dust clouds circling the planet for decades.

Notwithstanding the destruction inflicted on the economy by Republican policies, the most devastating breakdown is in the intellectual foundation on which right wing economic ideology itself is premised. Free market doctrine, the secular religion of right-wing America, is in utter, irretrievable shambles.

One of the most lofty tenets on which free markets are premised is their claim for themselves that they are "efficient," that is, that market prices always reflect "fundamental values" of assets. But if that's true, how could the world's largest insurance company, AIG, have lost 99.5% of its market value in only 18 months? How could the world's largest bank, Citibank, have lost 98% of its value over the same period?

How could the world's largest brokerage company, Merrill Lynch, have gone bankrupt and need to be bought by Bank of America? How could the world's largest car company, General Motors, have lost 95% of its value and stand on the threshold of extinction? How could the world's largest industrial conglomerate, General Electric, have lost 85% of its value in only 18 months?

If the largest companies in the world, those at the very heart of the capitalist system itself, can lose virtually all of their value in only 18 months, what is the possible meaning of the phrases "efficient markets" and "fundamental value"?

The other core tenets of free market ideology are equally compromised. Major actors are clearly not rational - a breakdown of theological proportions admitted by no less an avatar of the cult than its pope himself, Alan Greenspan. Free markets clearly cannot, will not, regulate themselves. It is precisely their innate, irrepressible propensity for sociopathic greed and predatory fraud that has brought the whole of the world's economy to the precipice of collapse.

Free markets clearly do not align risk and reward, allocating capital to its most productive uses, as its promoters advertise. They clearly do not automatically return to equilibrium, but must be bailed out with trillions of dollars of injections from the shrinking coffers of the public to the ever-bulging coffers of a private priesthood of pillage and plunder.

And in perhaps the greatest indictment of all, one going back to its primeval roots in Adam Smith's eighteenth century opus, The Wealth of Nations, the unrestrained behavior of self-interested individuals clearly, manifestly, does not "coalesce as if by an Invisible Hand to the greatest good for the greatest number."

These are not peripheral premises that have failed. They are not tangential tenets. Efficient markets. Rational actors. Market equilibrium. Risk and reward. Self interest. These are the essential sacraments on which the entire free market system is founded. They are in tatters. And it isn't that any one of them has been discredited by the glaring, merciless force of events. All of them have been. All of them together. And all of them at the same time.

Free markets have long been the basis for a legitimate - though rightly debated - economic policy framework. But they have become little more than a robotically-recited cultural catechism, a mindless mantra mumbled to mask the looting of the nation's resources that is the true purpose of Republican economic policy as demonstrated by the staggering upward transfers of wealth that inevitably occur under Republican regimes. A more complete, conspicuous, catastrophic, and irrefutable repudiation of right wing leaders, right wing policies, and right wing ideology could not possibly be contrived.

So what is the right wing response?

They have adopted the strategy and tactics of the failed right wing plotters in Weimar Germany. First, stoke the resentment of the population about the increasingly dire state of its living conditions-no matter that those conditions were created by the very right-wing oligarchs who now pretend to befriend the little guy. Rage is rage. It is glandular and unseeing. Once catalyzed it is easy to turn on any subject.

Second, prevent the new government from succeeding in any meaningful endeavor. The Republicans have set all their efforts to doing everything they can to make sure the Obama administration fails. Rush Limbaugh's infamous, "I hope he fails" pronouncement is only the beginning of the fomenting of hatred from the right. As Limbaugh said, "Let's be honest. Every Republican in America is hoping for Obama's failure."

The same malignant hope oozes unadulterated from all the other Dogpatch Demagogues that rent themselves out to the Republican party to foment resentment against anything liberal: Joe the "Plumber," Rick Santelli, Glenn Beck, Michael Savage, Ann Coulter, and virtually every other wing-nut operative whose intellectual stock in trade has been vaporized by the collision of right-wing policies with objective reality.

Equally so for the "respectable" members of the party, the all-but-three Republican members of Congress who refused to sign on to Obama's first stimulus package and continue to grandstand against every effort toward any form of progress. Contrition for their own abject failure, humility for their destructive hubris, compassion for their crippled country-those have nothing to do with it. All they possess is a blinding, visceral hatred of the left and a masturbatory lust for the return to power.

And what else can they do? Bereft of ideas, bankrupt in ideology, architects of collapse, obstruction is all they have. If Obama is successful, it will not only advertise the full extent of their failure, it will provide a model of liberal governance that would render Republicans irrelevant for decades, much as FDR's success left them out in the political cold for an entire generation. Liberal failure is a matter of life and death for Republicans.

And it's not at all clear that the liberals won't fail. No one should underestimate the task at hand. Never before - not even during the Great Depression - has the country inherited such a daunting, intractable set of economic problems: a debt burden so crushing; inequality so vast; a loss of financial sovereignty so constricting; an intellectual edifice so bankrupt; a private economy so uncompetitive; or an opposition so callously self interested in its own recovery and so cavalierly disinterested in the nation's.

The economy has been so damaged, successful rescue requires threading a series of policy needles, each of them so complex in their own right that none could be solved by any administration of the past 50 years. This includes rehabilitating and re-regulating the nation's banking system, restructuring health care, reducing national dependence on oil, reviving manufacturing so as to reduce the trade deficit, rebuilding the nation's crumbling infrastructure, dealing with a soaring national debt, trying to resuscitate a collapsing housing market, and all the while maintaining the safety net under 77 million baby boomers entering retirement with a net worth 60% what it was only 18 months ago.

Success will require much more than luck, hard work, brilliant policy, or soaring rhetoric. It will require cooperation and contribution from every American. It is those two offerings, cooperation and contribution, that Republicans are intent on withholding, the better to ensure Obama's failure. Simply put, the Republicans hate Democrats more than they love America.

If they succeed in derailing Obama's efforts, the cost will be incalculable.

After World War I, one of the consequences of the liberal government's failure was Adolph Hitler. Hitler had a genius for exploiting the resentment of the German people for their condition. More than 80% of the Nazi party's members were unemployed. It was these legions of idle thugs who made up the ranks of Hitler's brownshirt militia, the SA. The right wing oligarchy that had set out from the beginning to destroy the Weimar Republic recognized the potency of resentment and Hitler's genius at exploiting it. It was they who sponsored Hitler's ascension to Chancellor in 1933.

Resentment and obstruction are all the right wing in America have to peddle. Their policies are utterly discredited. Their ideology - even by its own standards - is a sham. They are so bereft of leaders, their de facto leader is a former drug addicted, thrice-divorced radio talk show host. That is literally the best they can muster. But they have built a national franchise inciting the downwardly mobile to blame the government, not the right, for their problems, exactly as Hitler did in the 1920s.

The Republican propensity for fascism must not be underestimated. Witness their phony justifications for the war in Iraq, fanning the flames of nationalistic aggression, just as Hitler did with Austria, the Sudetenland, Czechoslovakia, and Poland in the 1930s. Consider their symbiotic embrace of corporate interests in the oil, weapons, telecommunications, pharmaceutical, finance, and other industries-the same type of corporate interests that sponsored Hitler's ascent to power. Look at their efforts to dismantle civil liberties with the Patriot Act and the Military Commissions Act. Or their relentless, pervasive propaganda laundered through their corporate-owned right-wing media machine.

These are the classic hallmarks of fascism. The strategy is to obstruct recovery, facilitate collapse, and then incite the faux-populism of public resentment to re-install a corporatist oligarchy which has failed, but which will not abide a reduction of its privileges or a diminution of its control. It is a fetid, seditious agenda, awaiting only its own latter day mustachioed messiah for its final fulfillment.

World War I was a once-in-a-millennium upset in the architecture of global power. In four years, it shifted the center of that power from Europe to the United States. But failure now by the U.S. will shift that center once again, from the United States to China, out of the western world where it has resided for the past 500 years. The psychic shock to the billion-odd people living in western civilization, with its liberal democracies, capitalist economies, and Enlightenment ideals, will be incalculable, irretrievable.

This shift may be inevitable and only a matter of time. It is quite possible that the damage inflicted on the western world's economy by rapacious Republicans is already beyond repair. But it will be tragedy beyond measure if such a shift is consummated by the very wrecking crew that took us down the road to ruin, all the while so unctuously proclaiming "patriotism" as its crowning ideal. They are not patriots and their goal is not the revival of American power. It is the revival of their own power, even at the expense of America's. They represent a very dangerous threat to the nation's future.
Robert Freeman writes on history, economics and education. He can be reached at [e-mail].

COMMENTS FROM READERS--ALSO VERY READABLE


This article is missing a huge point. The Weimar Republic paid for everything by just printing money out of nothing. This led to huge inflation which destroyed the dollar. That author says the prices were "800%" of the prewar prices. Well, he never explains why.

The scariest part is that the federal reserve and the US treasurey is doing what the bankrupted Weimar did, they are just printing money out of thin air, which will destroy the currency. That is the lesson we should take from this.

Granted our monetary system has been based on nothing of tangible value for a while, but what has happened in the last year in terms of bailouts and stimuluses, is unprecedented. But just because the Weimars weren't pyscho fascists who wanted to exterminate a group of people doesn't mean they were smart and did a good job of governing.

I understand that the authors point is that radical fascism came to flourish because of these circumstances, but he turns it into republican bashing... as opposed to the democrats... who have been complicit with the destruction of this country. Both the repubs and dems are complicit in this BS monetary system that screws over everyone besides the top few percent. The party politicians are either too stupid or take advantage of the system at the expense of the citizen because they can.

And Germany's huge international debt came from somewhere... same goes for hitler start up money. To import everything he needed for his war machine he needed money from somewhere.

[GrizzlyMan]

36. Here's my question

After the dust settles and the fascists take control (as they did in the years following the Weimar Republic) who will be the new Hitler?

I'm thinking right now it may be Glen Beck, but I think there's always a chance it might be Kirk Cameron. He's a sneaky little shit and clearly nows how to manipulate people of that world view.

[Demeter]

41. Interesting Question

Don't think Der Fuhrer has been publicly introduced yet--or maybe the auditions are still ongoing.

After all, BushCo is probably out of the running (I hope to God) after the W disaster, and that includes Jeb and the nephew.

[GrizzlyMan]

43. We know it won't be Jindal

Their kind wouldn't have someone who looks like him. It COULD be Beck. Don't laugh. I know he's a talk show host, but at one time Hitler was just a painter.

[TalkingDog]

108. Hitler was just a BAD painter

He lacked creativity AND technical skill. Having either in excess can make up for a lack in the opposite number.

If there is a Hitler out there he's so bad at what he wants to do that he is becoming frustrated by those with the connectioms or talent to accomplish what he cannot.

People who are satisfied with what they have don't start revolutions or populist genocidal movements.

[Hugin]

57. My soon-to-be inflated money is on someone presently unknown.

They'll need a clean slate for the masses to project upon... However, the crew lurking in the background will be the same un-prosecuted faces we see now.

Just as in the post Wiemar.

[MilesColtrane]

68. I'm thinking someone in the mold of Mom from Futurama.

Perhaps Kay Bailey Hutchinson will soon be ready to step into the role?

Mom manages and owns 99.7% of MomCorp, a large, multi-billion dollar industrial complex specialising in robot maintenance, development and also the production of weapons.<1><2> Publicly, she retains the corporate image of a sweet, bustling old woman who often slips into the stereotype of a Deep South grandmother (she wears antiquated clothes that greatly accentuate her bust and general figure, while using rustic metaphors such as 'squeaking like an old screen door').<1>
However, behind the scenes Mom is a malevolent, foul-mouthed, chain-smoking, deeply bitter, cruel and narcissistic gravel-voiced crow with an almost anorexic physique, who routinely abuses her terrified sons (see below) into submission, treating them like dogsbodies.
She occasionally attends charity functions as a way of boosting her public image, but really has no empathy for any of the people she's supposed to be supporting (in "A Fishful of Dollars" she describes one such gathering as an event for 'knocked up teenage sluts').<[/div>

[UpInArms]

31. dollar watch

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

Last trade 84.090 Change -0.066 (-0.08%)

Fed Keeps Rates Unchanged but FOMC Statement Triggers a Dollar Sell-Off

http://www.dailyfx.com/story/topheadline/Federal_Reserve_Leaves_Rates_Unchanged_1237391355907.html

As widely expected, the US Federal Reserve made a unanimous decision to keep the Fed Funds rate unchanged at the 0.25% to 0% range, a historical low. However, the FOMC statement was more dovish than expected and the U.S. dollar sold-off on the news that the Federal Reserve decided to purchase up to $300 billion of longer-term Treasury securities over the next six months. In other words, the Fed has a real concern about deflation and its governors will do whatever it takes to deal with it including quantitative easing.

Federal Reserve Leaves Rates Unchanged

This Wednesday, the Federal Open Market Committee of the US Federal Reserve made a unanimous decision to keep the Fed Funds rate unchanged at the 0.25% to 0% range. The rate decision was not a surprise for a good number of investors since the Federal Reserve stated clearly on its last FOMC statement that “economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time”. Even so, today’s FOMC statement sounded a bit more dovish than expected, not reflecting the positive performance of the U.S. stock, bond and credit markets over the last two weeks. The Federal Reserve said "it sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term". In addition, "to help improve conditions in private credit markets, the Committee decided to purchase up to $300 billion of longer-term Treasury securities over the next six months." So once gain, the Fed said it will employ all available tools to promote the resumption of sustainable economic growth and this makes us believe that the Fed will continue to purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets. In other words, the Fed will use quantitative easing.

Currency traders reacted very negatively to the FOMC statement driving the U.S. dollar lower against the world’s most heavily traded currencies.



Federal Open Market Committee Statement

"Information received since the Federal Open Market Committee met in January indicates that the economy continues to contract. Job losses, declining equity and housing wealth, and tight credit conditions have weighed on consumer sentiment and spending. Weaker sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories and fixed investment. U.S. exports have slumped as a number of major trading partners have also fallen into recession. Although the near-term economic outlook is weak, the Committee anticipates that policy actions to stabilize financial markets and institutions, together with fiscal and monetary stimulus, will contribute to a gradual resumption of sustainable economic growth.

In light of increasing economic slack here and abroad, the Committee expects that inflation will remain subdued. Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.

In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide greater support to mortgage lending and housing markets, the Committee decided today to increase the size of the Federal Reserve’s balance sheet further by purchasing up to an additional $750 billion of agency mortgage-backed securities, bringing its total purchases of these securities to up to $1.25 trillion this year, and to increase its purchases of agency debt this year by up to $100 billion to a total of up to $200 billion. Moreover, to help improve conditions in private credit markets, the Committee decided to purchase up to $300 billion of longer-term Treasury securities over the next six months. The Federal Reserve has launched the Term Asset-Backed Securities Loan Facility to facilitate the extension of credit to households and small businesses and anticipates that the range of eligible collateral for this facility is likely to be expanded to include other financial assets. The Committee will continue to carefully monitor the size and composition of the Federal Reserve's balance sheet in light of evolving financial and economic developments

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen. "

...more...

US Dollar Plummets with Treasury Yields as Fed Announces Quantitative Easing Measures

http://www.dailyfx.com/story/dailyfx_reports/daily_fundamentals/US_Dollar_Plummets_with_Treasury_1237409081832.html

The Federal Reserve was easily the biggest source of volatility on Wednesday, and it wasn’t due to their rate decision. Indeed, the Federal Open Market Committee (FOMC) left their fed funds target range at 0.0 percent - 0.25 percent, as expected. What was somewhat unexpected, though, was the FOMC’s announcement that they would buy up to $300 billion worth of longer-term Treasury securities over the next six months in order to help improve conditions in private credit markets. While the FOMC has given clues in the past that they were considering such measures, the actual announcement sent demand for Treasuries skyrocketing and yields on 10-year Treasury notes down 50 basis points to 2.505 percent, while the US dollar fell sharply across the majors and the DJIA and S&P 500 surged. The FOMC also said that they would buy up to an additional $750 billion of agency mortgage-backed securities and increase purchases of agency debt by up to $100 billion. The extent of the US dollar’s drop leaves the door open for at least a brief correction higher over the next 24 hours, but with the DXY index extending its break below a key multi-month trendline, medium-term risks remain in favor of further declines for the currency.

...more...

[UpInArms]

50. dollar at 83.36 - I think we need to start crafting its tombstone

[KoKo]

115. lol's...sad laughs...good pix...n/t

[Ghost Dog]

76. Dollar extends broad slide as Fed buys govt debt

Thu Mar 19, 2009 10:45am EDT NEW YORK, March 19 (Reuters) - The U.S. dollar extended a sharp sell-off on Thursday, a day after posting its biggest one-day loss against a basket of currencies since at least 1985, as investors digested Federal Reserve plans to buy Treasury debt.

The Fed said on Wednesday it will will purchase $300 billion of long-dated Treasuries over the next six months, its first large-scale purchases of government debt since the early 1960s, while also boosting buying of mortgage-backed securities and agency debt in its bid to rescue the economy. This raised concerns that an expansion of the Fed's balance sheet -- which has already doubled in size in the past six months -- would lead to oversupply of the world's main reserve currency, triggering the sell off. "Investors were already selling the dollar before the Fed, but the announcement seemed to have given a green light for more euro buying (and dollar selling)," said Marc Chandler, global head of forex strategy at Brown Brothers Harriman in New York. "This correction in euro-dollar seem to be moving towards the $1.40 level. I wouldn't be surprised if we hit that mark soon."

The euro rose to as much as $1.3694 <EUR=>, a two-month high, and by mid-morning was up 1.2 percent at $1.3670. The single currency jumped 3.8 percent on Wednesday for its biggest one-day rise since its launch in 1999, according to Reuters data.

The dollar index .DXY, a gauge of its performance against a basket of six major currencies, slipped 1.4 percent to 82.994 after a 3 percent slide on Wednesday -- its biggest one-day drop in about of a century, according to Reuters data. It earlier slipped to 82.880, the lowest since early January.

Against the yen, the dollar was 1.5 percent lower at 94.34 yen <JPY=> after falling almost 3 percent on Wednesday.

...

ING strategists said the euro would be a major beneficiary of the Fed's 'shock and awe' policy, adding that new dollar supply and debt monetisation meant a run-up to the $1.40 area could be on the cards even though the single currency bloc faces severe economic problems. Daily technical charts show the euro faces resistance around $1.3635. Above that lies the 200-day moving average near $1.3900.

Commodity currencies such as the Australian dollar <AUD=>, Norwegian crown <NOK=> and Canadian dollar <CAD=> also rose on Thursday while many emerging market currencies such as Brazil's real <BRL=> and and the Mexican peso <MXN=> gained. "Emerging market currencies are not homogeneous and should be taken separately," said Chandler at Brown Brothers. "But for now, most seem to be rebounding sharply against the dollar."

/... http://www.reuters.com/article/marketsNews/idINN1941216120090319?rpc=44&sp=true
____

[Demeter]

33. The Fix is In at AIG

http://www.dailyreckoning.com/the-fix-is-in-at-aig/

What did the feds think when they gave AIG the money? That they were donating to charity?

No, dear reader...the fix was in. And it's still in. And while the press and politicians huff about a few million in bonuses to AIG's hacks, billions more is being paid out to AIG's counterparties.

It's not only a waste of money, says our old friend Jim Rogers, the bailouts actually retard a recovery. How so? In the obvious way. Like any kind of subsidy or welfare payment, they invite people to keep doing what they've been doing - no matter how unproductive it is. Instead of letting AIG and its bosses and counterparties go broke, the feds give the whole brain-dead system a transfusion of taxpayers' money. So the executives don't have to go out and find other work. And AIG can continue peddling its mortgage insurance. And its counterparties, too, are protected from their mistakes.

Of course, the government doesn't want to raise taxes in order to keep these incompetents in business, so it bleeds the money from the next generation of taxpayers - who aren't around to protest. Instead of letting the debt be reduced by the natural process of deflationary default, in other words, the government adds more debt...

Already, as we pointed out yesterday, there's about $20 trillion worth of debt debris that must be brushed aside before the economy can begin rebuilding on a solid foundation. At the present rate of savings, it will take about 45 years to do the job. Which suggests to us that it ain't gonna happen. We don't think the feds can sit still that long. And they're not sitting still now. In fact, they're adding to the public debt faster than the private debt is getting paid down.

By our calculations, the private economy is paying off about $420 billion - net - per year. (Just based on higher rates of saving...not counting write-downs, and defaults.) But the federal deficit is expected to run to $2 trillion! In other words, the feds are adding debt 4 times faster than the private sector is paying it down.

This is not a formula for putting this problem behind us. Instead, it just pushes it ahead.

[UpInArms]

35. From the WTF? Dept: Goldman leads $1.2 billion bid for Japan theme park

http://news.yahoo.com/s/nm/20090319/bs_nm/us_usj_goldman

TOKYO (Reuters) – USJ Co Ltd, the operator of a struggling Universal Studios theme park in Japan, said on Thursday it was being sold for $1.2 billion to a consortium led by Goldman Sachs.

The deal, the biggest such buyout in Japan in a year, was at a 28.5 percent premium to USJ's share price before the offer became public.

Customer numbers at the Osaka theme park, which features rides based on the movies Spiderman and Jurassic Park, have fallen in the midst of the global financial crisis and its shares have halved in value since 2007.

The new group would upgrade the theme park, including introducing new attractions and characters, the Goldman fund said in a statement.

It said the theme park faced tough growth prospects in tough times and as Japan's population ages.

Goldman, which holds about 40 percent of USJ through its fund, said private equity firm MBK Partners and Owl Creek Asset Management would take stakes in the privatized company.

Goldman said it would offer 50,000 yen per share to buy the remaining 60 percent of shares and rights by May 21, at a cost of 111.2 billion yen ($1.2 billion).

USJ said in a statement it had agreed to the deal.

That is a premium of 11,100 yen to the shares' closing price on Tuesday, the last closing price before Reuters reported an imminent tender offer on Wednesday, and just over half its record high price of 90,900 yen in May 2007, just after it listed.

...more...

this piece of shit "investment" company takes American Taxpayer dollars and buys a Japanese fun park??????

someone - please hold my hair - I think I'm going to :puke:

[Demeter]

40. Season Passes Would Have Been a Lot Cheaper

[Dr.Phool]

71. Speaking of which, I'm using mine to head over to Busch Gardens today.

The wife took the day off for our anniversary.

But, the pricks who bought out Busch don't give out free beer anymore.

[54anickel]

78. Well, they must believe Japan will come out of this in decent enough shape for people to be able to

utilize a re-creational theme park....What does that say for our future? Looks like we taxpayers are on our own and we need to collectively invest what little we have left in ourselves since it's apparent "the system" doesn't deem us worthy of saving.
I say cut the banks and investment firms loose - who the fuck needs them? They're doing more harm than good. Tax the shit out of them to get our money back and let'em go.

[KoKo]

92. Oh My...and yet "Six Flags" amusement parks here in US are in Big Trouble...

I guess it just doesn't pay to invest in the US with our tax dollars since we peasants are having to pull back because of lack of jobs, crashed 401-k's and debt. Better to help the Japanese "savers" who might have crappy banks but still have a dollar or two to spend for recreation. :eyes:

---
Can Six Flags Get Off the Debt Rollercoaster?


Amusement park giant Six Flags Inc. (SIX) announced strong numbers for Q308. Park attendance was up by 200,000 in the quarter and by 600,000 year-to-date. The company has announced a park opening in Dubai and has another Middle East opening on the horizon. It's also in talks to open in South Korea.

Logically amusement parks will fare relatively better in a downturn as people travel less, stay closer to home and look for better value for their money. Attendance was up as was advertising, because advertisers go where the people are.

Despite all this, Six Flags shares are trading around $0.30 and bonds are in the dumps. Debt is threatening to undermine the Six Flags turnaround story. Fitch Ratings put the company on ratings watch late Tuesday. Fitch believes Six Flags will have trouble raising money to repay the $287.5 million debt which comes due in August 2009.
http://seekingalpha.com/article/105564-can-six-flags-get-off-the-debt-rollercoaster

[Demeter]

44. Maggie Was Right

U.K. Prime Minister Margaret Thatcher said, “The problem with socialism is that you eventually run out of other people’s money.”

I think that's exactly what happened to the Federal Reserve. They ran out of "other people's money" for their corporate socialism program. Hence their move to inflate the dollar.

Too bad the money won't go to investing in human infrastructure. then at least there might be something to show for it, and increasing tax revenue to pay off the debt. These zombie banks will never again show a net profit.

[radfringe]

48. 'Money is like manure;

Thornton Wilder: 'Money is like manure; it's not worth a thing unless it's spread around encouraging young things to grow.'

[Hugin]

62. So, that's where my Economic paradigm comes from...

I'd always wondered. :)

[Joanne98]

49. Dry ships up 20% in pre-market....

http://finance.yahoo.com/q?s=DRYS

Eiriksson for 3 Years With Petrobras


ATHENS, GREECE, Mar 19, 2009 (MARKET WIRE via COMTEX) -- DryShips Inc. (NASDAQ:
DRYS) (the "Company" or "Dryships"), a global provider of marine transportation
services for drybulk cargoes and off-shore contract drilling oil services,
announced today that its wholly-owned subsidiary Ocean Rig ASA has received a
Letter of Award from Petrobras for a 3-year period employment contract for
exploration drilling in the Black Sea. The 3 year term includes mobilization,
disassembly and reassembly of the derrick structure for transit through the
Bosporus Strait. The contract is expected to commence in direct continuation
from the current contract with Shell. The contract value is approximately USD
630 million including an estimated 60 days of mobilization,
disassembly/reassembly of the derrick structure and an incentive bonus of 8%.

George Economou, Chairman and Chief Executive Officer of DryShips Inc.
commented:

"We are very pleased to be part of this exciting exploration project with
Petrobras and see this as an excellent opportunity to expand our relationship
with Petrobras, the biggest end-user of ultra deep water units in the world.
This will enhance the cash flow stability and visibility of our UDW drilling
unit. This recent fixture is testament of the strong fundamentals of the ultra
deep water drilling segment which is underpinned by the large exploration and
production projects already under way by oil majors and national oil companies."

http://finance.yahoo.com/news/DryShips-Announces-Letter-of-iw-14687682.html

[spotbird]

51. Citi Losing Economist to Treasury

Citigroup Inc.'s chief economist is leaving the company for a job at the Treasury Department, according to an internal Citigroup memo.

Lewis Alexander, who has been at Citigroup since 1999 and before that worked at the Federal Reserve, will head to the Treasury "to work on domestic financial issues," said the Citigroup memo, which was sent Tuesday.

According to a government official, Mr. Alexander will be a counselor to Treasury Secretary Timothy Geithner. Mr. Alexander and a Treasury spokesman weren't available to comment Tuesday. A Citigroup spokesman declined to elaborate on the company's memo.

Mr. Alexander, who was the Commerce Department's chief economist from 1993 through 1996, is joining the Treasury at a time when the department is scrambling to beef up its ranks of senior officials. The staff shortage has fostered doubts on Wall Street and in Washington about the Obama administration's ability to get its arms around the financial crisis.




http://online.wsj.com/article/SB123732747181462245.html

[Joanne98]

55. Citigroup Plans Reverse Stock Split

Citigroup Inc. said it plans to seek shareholder approval to both increase the number of shares outstanding and undertake reverse stock split as part of the company's effort to exchange common stock for preferred securities.

The embattled financial-services giant said last month it would offer to convert as much as $27.5 billion in preferred stock not held by the federal government to common stock, with the U.S. agreeing to match up to $25 billion of the conversions in the latest effort to keep the banking giant afloat.

http://online.wsj.com/article/SB123746075961583107.html?mod=yahoo_hs&ru=yahoo

[Joanne98]

59. Cisco to buy maker of Flip Video for $590 million

http://finance.yahoo.com/news/Cisco-to-buy-maker-of-Flip-apf-14688108.html

[Joanne98]

63. AIG up 40% in pre-market

http://finance.yahoo.com/q?s=AIG

Go figure

[Joanne98]

69. Stocks Retreat as Shorts Move In on Banks

Stocks skidded Thursday as investors were encouraged by efforts by Citigroup to boost capital but started cashing in some profits, particularly in sectors that have seen big runups like financials.

And, investors were still digesting the previous days' news that the Federal Reserve was buying huge quantities of government debt.

http://www.cnbc.com//id/29772677?__source=yahoo%7Cheadline%7Cquote%7Ctext%7C&par=yahoo

[denem]

72. Helicopter money? I find these references to Friedman amusing.

As Galbraith argued, the Fed in 1930 was preoccupied with avoiding Wiemar, while Fisher's Debt-Deflation cycle was kicking into high gear. Throwing new money into black holes may be many things, but inflationary isn't one of them.

[Hugin]

73. Jaguar, Buick dethrone Lexus in reliability study (AP)

NEW YORK (AP) — British luxury carmaker Jaguar surged to the top of J.D. Power and Associates' closely watched vehicle dependability study this year, tying Buick for the No. 1 spot and dethroning Lexus for the first time since the Japanese luxury brand has been a part of the survey.

Lexus, Toyota Motor Corp.'s luxury brand, took the next spot in the study released Thursday, followed by Toyota's namesake brand, then Mercury, Infiniti and Acura.

"Buick and Jaguar both lead the industry in nameplate performance," said Neal Oddes, director of product research and analysis at J.D. Power. "In terms of individual model performance, Lexus and Toyota still do very, very well."

The annual study measures problems experienced by the original owners of vehicles after three years. Suzuki owners reported the most problems among the 37 brands assessed by J.D. Power.

http://www.google.com/hostednews/ap/article/ALeqM5iZf407goV06gqCuhz8oVbYeoSXBQD9713B880

____________________________________________________________

I had to post this one! :lol:

Take *that* you Buick deriders!

This post provided by:

B.A.D.D. (The Buick Anti-Defamation Delegation)

[Dr.Phool]

82. I think J.D. Power is like a AAA rating from Moody's or S&P.

You get what you pay for. I know they've always ranked Dish Network #1 in customer satisfaction. Anybody who's ever had dealings with their customer service department will dispute that.

[Hugin]

83. Well, the biggest turds tend to float to the top.

Point taken. ;)

I learned that Truth in one of my former jobs pumping septic tanks. Ah, no... It was more of a Hobby really.

I mean... Statistics are relative to what you have to compare.

:rofl:

I still LIKE Buicks. :|

[tclambert]

86. That news about Jaguar will make the guys on Top Gear happy.

My son, the auto engineer, has turned me into a fan of that show. I'm sure Jeremy Clarkson will have something witty and biting to say about Buick, however.

Edited for a misspelling! (They're going to demand I return my spelling bee trophy, I just know it!)

[Hugin]

90. Season 12: Communist Cars

Did the Communists ever make a decent car?

Watch Video

"The Soviets imported fuel from Finland... It didn't have twigs in it."

:rofl:

I'm pretty sure I've read they imported the tooling for one of those cars from the US. Chrysler? Studebaker? Hudson?

[CatholicEdHead]

95. This is apparently only cars through 2yrs old

Even though in rural areas I see lots of Buicks that just go and go and go. This is not to discount Lexus/Toyota or Honda models which seem to stay together longer than domestic sedans. Full sized pickups are a bit different and seeing older Chevy trucks on the road is pretty common.

[tyrant888]

84. I can't bear to watch.

My 401k is now a 101k.

[tclambert]

89. Welcome to DU. And welcome to Stock Market Watch.

When we were kids, we used to watch monster movies from behind the couch. You might try that when watching the stock market. When it gets too scary, you can crouch down and cover your eyes. Yet it is very entertaining, often comically bizarre. You could try putting your hands over your eyes, but with your fingers spread just enough to allow you to peek between them.

We'll try to signal you when the Monty Python-type bits appear. Like, for instance, after immense public outrage, SOME of AIG's executives are now willing to return HALF their bonus money. Because apparently the tiny, shriveled kernel of conscience remaining to them made them feel half bad about accepting a reward for colossal incompetence.

[Festivito]

87. Debt: 03/17/2009 11,042,553,971,450.47 (UP 9,396,392,780.69) (11T$, FICA.)

(Small rise in public debt, bigger rise in intragovernmental-ahem-SS/FICA. Tuesday afternoon's report showed it rising to 11T$.)

= Held by the Public + Intragovernmental(FICA)
= 6,742,004,029,257.94 + 4,300,549,942,192.53
UP 31,463,665.67 + UP 9,364,929,115.02

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 305,992,543 people in America.
http://www.census.gov/population/www/popclockus.html
Currently, each of these American's owe $36,087.66.
A family of three owes $108,262.97. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 21 reports in the last 30 to 28 days.
The average for the last 21 reports is 12,036,676,719.48.
The average for the last 30 days would be 8,425,673,703.63.
The average for the last 28 days would be 9,027,507,539.61.
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$/day.
There were 39 reports in 56 days of Obama's part of FY2009 averaging 0.90B$ per report, 0.68B$/day so far.
There were 114 reports in 168 days of FY2009 averaging 8.93B$ per report, 6.06B$/day.

PROJECTION:
There are 1,405 days remaining in this Obama 1st term.
By that time the debt could be between 13.0 and 23.7T$.
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)
03/17/2009 11,042,553,971,450.47 BHO (UP 415,676,922,537.39 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: 1,017,829,074,538.00 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
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
03/17/2009 +000,031,463,665.67 ------------*******

211,610,615,169.42 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,377,922,168,191.40 in last 180 days.
That's 1,378B$ in 180 days.
More than any year ever, including last year, and it's 135% of that highest year ever only in 180 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 180 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=3788190&mesg_id=3788236

[Festivito]

112. Debt: 03/18/2009 11,034,225,094,391.03 (DOWN 8,328,877,059.44) (Small.)

(Small move, mostly FICA down.)

= Held by the Public + Intragovernmental(FICA)
= 6,742,241,452,096.13 + 4,291,983,642,294.90
UP 237,422,838.19 + DOWN 8,566,299,897.63

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 305,998,715 people in America.
http://www.census.gov/population/www/popclockus.html
Currently, each of these American's owe $36,059.71.
A family of three owes $108,179.13. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 21 reports in the last 30 to 28 days.
The average for the last 21 reports is 11,633,300,914.01.
The average for the last 30 days would be 8,143,310,639.81.
The average for the last 28 days would be 8,724,975,685.51.
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$/day.
There were 40 reports in 57 days of Obama's part of FY2009 averaging 0.75B$ per report, 0.59B$/day so far.
There were 115 reports in 169 days of FY2009 averaging 8.78B$ per report, 5.97B$/day.

PROJECTION:
There are 1,404 days remaining in this Obama 1st term.
By that time the debt could be between 13.0 and 23.3T$.
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)
03/18/2009 11,034,225,094,391.03 BHO (UP 407,348,045,477.95 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: 1,009,500,197,478.60 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
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
03/17/2009 +000,031,463,665.67 ------------*******
03/18/2009 +000,237,422,838.19 ------------********

211,434,402,498.34 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,369,593,291,131.96 in last 181 days.
That's 1,370B$ in 181 days.
More than any year ever, including last year, and it's 135% of that highest year ever only in 181 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 181 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=3789909&mesg_id=3790507

[Ghost Dog]

93. China backs talks on dollar as (no longer) reserve -Russian source

MOSCOW, March 19 (Reuters) - China and other emerging nations back Russia's call for a discussion on how to replace the dollar as the world's primary reserve currency, a senior Russian government source said on Thursday. Russia has proposed the creation of a new reserve currency, to be issued by international financial institutions, among other measures in the text of its proposals to the April G20 summit published last Monday.

Calls for a rethink of the dollar's status as world's sole benchmark currency come amid concerns about its long-term value as the U.S. Federal Reserve moved to pump more than a trillion dollars of new cash into the ailing economy late Wednesday.

Russia met representatives of China, India and Brazil ahead of the G20 finance ministers meeting last week, as the big emerging powers seek to up their influence on decisionmaking globally. Their first ever joint communique did not mention a new currency but the source said the issue was discussed.

"They (China) did not formally put forward their position for the G20 summit but unofficially they had distributed their paper regarding the same ideas (the need for the new currency)," the source told Reuters, speaking on condition of anonymity.

The source said the Chinese paper envisaged the International Monetary Fund's Special Drawing Rights (SDRs) being first assigned a role of a clearing currency on some transactions and then gradually becoming the main global reserve currency. "They said that the role of reserve currency should be given to SDR," the source said.

A U.N. panel of experts is also looking at using expanded SDRs, originally created by the International Monetary Fund in 1969, but now used mainly as an accounting unit within similar organisations as a new reserve currency instead of the dollar.

Currency specialist Avinash Persaud, a member of the U.N. panel, told a Reuters Funds Summit on Wednesday that the proposal was to create something like the old Ecu, or European currency unit, that was a hard-traded, weighted basket.

The SDR and the old Ecu are essentially combinations of currencies, weighted to a constituent's economic clout, which can be valued against other currencies and against those inside the basket.

The Russian source said Moscow was aware that the emergence of the new global currency would not happen overnight and said its goal was to initiate a discussion about it at the G20 summit in London on April 2.

/... http://www.reuters.com/article/marketsNews/idINLJ93633020090319?rpc=44

[54anickel]

100. I really thought this would have hit sooner. Then again, who would have dared

bring it up with the previous admin controlling the button.

Alas, I made a bet this would happen within 5 years after the 2004 election. I still believe it will happen, but I'm afraid my timing was a bit off. I wanted us each to purchase 1/2 oz roos back then instead of just betting $100, but the guy I was betting with didn't want to "waste" his money buying "trinkets". :eyes:

[Ghost Dog]

94. World trade plunges in January - Dutch CPB

GENEVA, March 19 (Reuters) - World trade growth remained on a sharp downward trend in January, as volumes plunged at the start of the year, the Dutch CPB economic institute said on Thursday.

Trade growth in the 12 months ended January slowed to 0.6 percent from 2.4 percent in the year to December and a high in the current cycle of 9.4 percent in August 2007, said the CPB Netherlands Bureau for Economic Policy Analysis, whose figures are used by the European Commission and World Bank.

This trend was last negative in 2002, data in its latest world trade monitor show.

The CPB data reflect sharp falls in exports around the world, particularly from Asia, as the recession hits demand.

Trade volumes in January were 17 percent lower than a year earlier, it said.

The IMF forecast in January that trade will contract 2.8 percent this year, the first fall since 1982, after growing 4.1 percent in 2008.

The institute said trade in the three months ended January was a record 40.7 percent down at an annual rate from the preceding three months, after growing at an annual 9.2 percent in the three months ended October.

This reflected a 53 percent drop at an annual rate in emerging countries' imports and a 68.7 percent fall at an annual rate in Japan's exports.

On the more volatile monthly figures, world trade dropped an unprecedented 6.6 percent in January from the previous month after a revised 5.9 percent drop in December. The institute has been tracking trade data since 1991. (For the full trade monitor go to: here )

/. http://www.reuters.com/article/marketsNews/idINLJ66614920090319?rpc=44

[Hugin]

96. Kick.

Back into chronological order you!

:kick:

[Ghost Dog]

98. Global economy needs 'multi-lateral forex regime'

(AFP) The global economy needs a coordinated arrangement on exchange rates that would end the "monetary chaos" the world is currently caught in, a United Nations agency said on Thursday.

Under the proposal by the UN Conference on Trade and Development (UNCTAD), several key currencies would be linked through exchange rates that are in turn adjusted according to inflation rates in each country.

Other currencies would then be pegged to one or a group of these key currencies, according to an UNCTAD report on the global economic crisis.

It argued that it would be critical to stabilise exchange rates by "direct and coordinated" government intervention in order to confront the next wave of the crisis.

...

UNCTAD said that "herd behaviour" driven by speculation on financial markets had gone unregulated, while deregulation was driven by "blind faith" in the virtues of market forces.

The agency reiterated its argument in favour of widespread government intervention and "multilateral remedies," including reform of the international financial system.

/... http://uk.news.yahoo.com/18/20090319/tbs-global-economy-needs-multi-lateral-f-5268574.html

[antigop]

102. AIG and securities lending

http://www.time.com/time/business/article/0,8599,1886275-2,00.html

Securities-lending is supposed to be a sort of Christmas club of high finance. Companies like insurers, which own tons of equities and Treasury bonds that they are holding long term, lend them out short term, often overnight, to borrowers who need the shares to fulfill other commitments. For instance, if hedge funds want to sell shares short, they borrow them, putting up cash collateral that includes a small spread to the lender. Typically, the owner of the shares takes that collateral and invests it in something with low risk and of short duration, like commercial paper. The lender is exposed to some risk, but it usually isn't catastrophic. However, AIG took the collateral and invested in longer-term, higher-risk mortgage- and asset-backed securities. "Crap," as a portfolio lending expert describes them. When those securities crashed in value, so did AIG.

Any discussion of regulatory reform should include not only credit default swaps but the practice of securities lending. IMO.

Some other interesting info in the article:

Just for good measure, AIG is a huge provider of insurance to U.S. municipalities, pension funds and other public and private bodies through guaranteed investment contracts and other products that protect participants in 401(k) plans.

[DemReadingDU]

106. AIG provides insurance to pension funds, 401(k) plans?

How does that work?
I thought if a company went bankrupt and had a pension fund, it was taken over by the PBGC (where participants receive a tiny portion of their previous pension). What would be the purpose for AIG insurance?

How does AIG provide insurance to participants in 401(k)? Does a company make a deal with AIG? or does a participant get the insurance on his own?

[antigop]

103. No more updates from financialweek.com

I was wondering why there were no updates for the past couple of weeks.

A pop-up came up today:
"Financial Week suspended publication of its online product, FinancialWeek.com, on March 6, 2009.

Unfortunately, the economy coupled with the state of the corporate financial services markets weighed heavily against its continuance as an ongoing business enterprise."

[UpInArms]

104. Fed crosses rubicon and sets off firestorm - New plan to buy Treasury debt 'a step in the dark'

http://www.marketwatch.com/news/story/Fed-crosses-rubicon-setting-off/story.aspx?guid=%7BCC678D54%2D22B8%2D4E39%2D8F0B%2D13A24308E7E8%7D

WASHINGTON (MarketWatch) - The Federal Reserve's decision Wednesday to buy $300 billion in longer-term Treasury securities has ignited a firestorm, with analysts saying it will either cause a currency crisis or jolt the economy out of the morgue.

"We're in a car heading for a cliff and the Fed has just stepped on the gas," said Peter Schiff, the author of a best-selling book 'Crash-proof' and one of a handful of economists who worried about the economy long before it slipped into a severe recession.

On the other hand, David Jones, chief executive of DMJ Advisors and a long-time Fed watcher, hailed Bernanke's decision as a "turning point" for the economy.

The Fed's plan now is essentially to print money to raise the supply of credit. It wants to push investors out of Treasurys into riskier assets, but investors might balk, said Ian Shepherdson, economist at High Frequency Economics.

"It is a step in the dark. We simply do not know how this will play out because there is no prior experience to use as a road map," Shepherdson said.
Schiff believes that the move will lead to a collapse of the value of the dollar, an outcome he has long predicted.

"Bernanke has sent a giant sell signal to the rest of the world to sell their Treasurys to the Fed. There is going to be a stampede," Schiff said.
"This is going to be a currency crisis. That's what is coming," he added.
Schiff believes that the recession was the "cure" for an economy built on the sands of consumer debt.

Many analysts believe Fed chief Ben Bernanke decided to take the unprecedented step because Congress and the Obama administration now seemed paralyzed as public outrage builds over bailouts for Wall Street and bonuses paid to employees of American International Group.

...more...

[Demeter]

113. Murphy's Law Comes To Mind Here

"Whatever can go wrong, will, in the most devastating way possible. Sometimes even a way that nobody could have imagined."

[antigop]

105. WSJ Video: How hedge funds siphoned AIG bailout cash

http://online.wsj.com/video/how-hedge-funds-siphoned-aig-bailout-cash/A571ED99-B862-4FA6-B552-96F64417AD16.html

Hedge fund manager Patrick Morris of Hagin Investment Management explains to Dow Jones Newswires' Simon Constable how money to fund the beleaguered insurance giant found its way to unregulated money managers.

[Karenina]

107. Who could have imagined?

:eyes:

[Tansy_Gold]

109. Right. I mean, isn't that what it was SUPPOSED to do?

Maybe I'm just stupid or something, but I figured the people (?) who were buying the CDSes were hedge funds, bond funds, or whatever else the entities were that were "investing" in all the other toxic shit and wanted "protection." So it stood to reason that if anyone defaulted and they needed to fall back on the insurance, they'd naturally be the "big" traders -- the hedge funds, etc.

Well, I mean, that's what I thought, but what do I know??????


Tansy Gold

[UpInArms]

110. Goldman to detail AIG trading relationship Friday

http://www.marketwatch.com/news/story/Goldman-detail-AIG-trading-relationship/story.aspx?guid=%7B83E134BA%2DA983%2D451F%2DB6A7%2DFF4D005EEECF%7D&dist=hplatest

NEW YORK (MarketWatch) -- Goldman Sachs said it would hold a conference call with reporters on Friday to, "answer questions from journalists, and clarify certain misperceptions in the press regarding Goldman Sachs' trading relationship with American International Group."
Members of the public can listen to the call via webcast, the company said in a press release.

Lawmakers and pundits have been questioning the Goldman (GS: 99.30, -5.95,
-5.6%) /AIG (AIG: 1.62, +0.24, +17.4%) relationship after it was revealed that
about $13 billion of government funds that went to AIG, ended up being paid to Goldman Sachs.

Goldman's position with AIG came to light officially on Sunday, when the insurer revealed on Sunday details of $105 billion of government funds that it paid to U.S. and international banks including Goldman, Deutsche Bank and Societe Generale.

Most of the leading U.S. and European banks were represented on the list of recipients of AIG payouts. But Goldman got the biggest single total, receiving $12.9 billion. See full story.

A lot of the payments were made to satisfy collateral demands from derivative-based hedges Goldman purchased from AIG.

Goldman's trading relationship with AIG came front-and center again on Wednesday, when the House grilled AIG Chairman Edward Liddy about the company's business dealings.

Liddy, the former Allstate chief executive and ex-Goldman Sachs director -- who became chief of American International Group Inc. when the giant insurer collapsed into the arms of the U.S. government in September - faced the grilling of his career on Capitol Hill at a hearing dominated by outrage over its latest bonus scandal.

...more...

yeah, and they'll be honest and those questions are bound to be tuff -

hopefully, we won't hear:

"is it fun being billionnaires?"

[Hugin]

111. I hope they bring up Goldman Sachs as the originator of the 'Pay for Performance' bonus system.

It's such a smashing success!

:bounce:

I can hardly wait!

Uh, you do think they'll bring that up?

:|

Me neither...

[UpInArms]

114. end o' day numbers

Dow 7,400.80 85.78 (1.15%)
Nasdaq 1,483.48 7.74 (0.52%)
S&P 500 784.04 10.31 (1.30%)
10-Yr Bond 2.597% 0.064

NYSE Volume 10,309,208,000
Nasdaq Volume 2,376,778,750

4:30 pm : Commodities and commodity-related stocks logged solid gains this session. However, profit takers had their way with financial stocks, which undercut the broader market for virtually the entire session and brought about choppy trading.

Energy stocks (+1.4%) and materials stocks (+1.4%) were helped by stronger commodity prices. The CRB Commodity Index climbed more than 5% in this year's largest single-session advance by percent. Crude oil futures prices gained 6.5% to close pit trading at $51.25 per barrel, while gold prices advanced 7.8% to close at $958.50 per ounce.

Underpinning the strength in commodity prices was a considerably weaker U.S. dollar. According to the Dollar Index, the greenback sank 1.7% this session, and more than 4% during the last two sessions. The dollar's weakness follows the Fed's latest policy directive.

Several steel stocks (+7.0%) benefited from stronger underlying commodity prices and reports that the Treasury will launch a $5 billion program for car parts suppliers. Shares of autoparts companies spiked on the news, but the enthusiasm dwindled as the session progressed. Autoparts and equipment companies still closed 8.6% higher.

Profit takers focused their efforts on financial stocks (-8.0%), which were looking overbought after surging 60% in less than two weeks. That rally carried the broader market to key resistance levels.

The S&P 500 has been unable to crack 800, which is near the 50-day simple moving average for the stock market, and a sort of psychological line in the sand.

Corporate announcements were relatively mixed heading into trading this session. Citigroup (C 2.60, -0.48) has filed to exchange common stock for convertible and nonconvertible preferred securities, and plans to authorize a reverse common stock split.

General Electric (GE 10.13, -0.19) continues working to restore its credibility with investors. The company held an investor meeting today, during which the company explored its asset holdings and reaffirmed it expects its troubled capital arm to post a profit for the first quarter and full year.

Oracle (ORCL 17.37, +1.54) posted better-than-expected adjusted earnings, issued upside guidance, and declared its first dividend, winning support for large-cap tech stocks.

Economic news remains uninspiring. Weekly initial claims dipped 12,000 to 646,000, which was better than the consensus estimate of 655,000. Continuing claims hit another record high, though, jumping to 5.47 million from 5.29 million.

Leading indicators for February showed a 0.4% decline, which wasn't as bad as the 0.6% decline that was expected. The report had little impact on trading. Tomorrow's calendar is relatively light on data.

There are neither economic reports nor market-moving earnings announcements scheduled for release, though Fed Reserve Chairman Bernanke is giving a speech about the financial crisis and community banking (12:00 PM ET). Absent any surprise announcements, the near-term focus will continue to be the technical picture, with some not-too surprising profit-taking occurring at the key 800 resistance level in the S&P 500.DJ30 -85.78 NASDAQ -7.74 NQ100 -0.2% R2K -1.1% SP400 -0.6% SP500 -10.31 NASDAQ Adv/Vol/Dec 1198/2.15 bln/1456 NYSE Adv/Vol/Dec 1525/1.95 bln/1557

3:30 pm : Commodities made a strong move to the upside today with the second straight weak session for the U.S. Dollar Index, currently down 1.7%.

April crude oil enjoyed a strong session and closed above the psychological $50 level. The April contracts closed at $51.25 per barrel, up 6.5%.

April natural gas also closed significantly higher. The futures contracts saw a significant spike at the open of the pit trade and hit session highs of $4.42 per contract. The contracts finished at $4.12, up 11.7% on the session; weekly inventory showed a draw.

Gold futures expiring in April rose an impressive 7.8% on the session to close at $958.50 per ounce. The contracts hit a session high midmorning of $963.50 per ounce.

Silver futures contracts enjoyed a modest gain. May silver contracts closed up 1.2% to $13.52 per ounce.DJ30 -89.93 NASDAQ -8.75 SP500 -10.03 NASDAQ Adv/Vol/Dec 1182/1.95 bln/1458 NYSE Adv/Vol/Dec 1569/1.47 bln/1500