STOCK MARKET WATCH, Thursday April 2

[ozymandius]

Source: du

STOCK MARKET WATCH, Thursday April 2, 2009

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

AT THE CLOSING BELL ON April 1, 2009

Dow... 7,761.60 +152.68 (+1.97%)
Nasdaq... 1,551.60 +23.01 (+1.51%)
S&P 500... 811.08 +13.21 (+1.66%)
Gold future... 927.70 +2.70 (+0.29%)
30-Year Bond 3.49% -0.07 (-1.88%)
10-Yr Bond... 2.66% -0.03 (-1.01%)

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

Market Conditions During Trading Hours

GOLD, EURO, YEN, Loonie and Silver

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Read more: du

[ozymandius]

1. Market WrapUp

Fixed on the VIX
BY CHRIS PUPLAVA

The absolute collapse in global financial markets post the Lehman bankruptcy and AIG bailout last year led to a selling panic that witnessed the Volatility Index (VIX) rise to record levels, peaking at 89.53 on October 24th of last year. Since then the level of fear has declined as investors perceive that the world is not going to fall off the proverbial cliff. As the peak in the VIX appears to have marked the peak in investor anxiety, the VIX’s future direction will likely shed light to whether animal spirits return to the markets as investor risk appetites return. While the VIX proves useful in determining stock market trends, the analysis below shows that the VIX’s utility extends to gauging several other financial and economic relationships. Looking at these relationships appears to be sending a collective message that the worst may indeed be over, with a complex bottoming process likely to ensue in the months ahead.

The September to October decline of 2008 witnessed the VIX rise roughly 371%, with the S&P 500 falling more than 30%. Since then the VIX has been in a declining trend and is currently sandwiched between its 50 day moving average (50d MA) above and its 200d MA from below. I can envision three possible scenarios with the VIX’s future direction, and thus three possible stock market scenarios; the good, the bad, and the ugly.

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

[ozymandius]

2. Today's Reports

08:30 Initial Claims 03/28
Briefing.com 645K
Consensus 650K
Prior NA

10:00 Factory Orders Feb
Briefing.com 1.2%
Consensus 1.5%
Prior -1.9%

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

[UpInArms]

35. Initial Claims @ 669,000

02. U.S. weekly initial jobless claims rise 12,000 to 669,000
8:30 AM ET, Apr 02, 2009

03. U.S. 4-week average initial claims rises 6,500 to 656,750
8:30 AM ET, Apr 02, 2009

04. U.S. ongoing jobless claims rise 161,000 to record 5.73 mln
8:30 AM ET, Apr 02, 2009

05. U.S. 4-week avg ongoing claims up 163,500 to record 5.5 mln
8:30 AM ET, Apr 02, 2009

[UpInArms]

36. Initial jobless claims rise to highest level since 1982

http://www.marketwatch.com/news/story/Initial-jobless-claims-rise-highest/story.aspx?guid=%7BCB321E21%2DDD96%2D445E%2DAEC3%2D35DBBC525CDD%7D

WASHINGTON (MarketWatch) -- First-time claims for state unemployment benefits rose a seasonally adjusted 12,000 in the week ended March 28, hitting the highest level since October 1982, the Labor Department reported Thursday. These initial claims totaled 669,000, a level that is up 72% from the same period in the prior year. The four-week average of these initial claims rose 6,500 to 656,750 - also the highest level since October 1982. For the week ended March 21, the number of people collecting state unemployment benefits reached yet another new record, jumping 161,000 to 5.73 million - a level that is 96% greater than in the prior year. The four-week average of these continuing claims rose 163,500 to a record 5.5 million. The insured unemployment rate - the proportion of covered workers who are receiving benefits - rose to 4.3% from 4.2%, reaching the highest level since May 1983.

[burf]

39. It looks as though

those four million jobs Obama was touting are pretty much already spoken for.

[Demeter]

85. The Worst Part: School Isn't Even Over Yet

[Name removed]

103. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Hugin]

48. This is probably the explanation for the current bounce. They've laid everyone off. nt

[burf]

42. Not a goobermint report,

but another indicator of the current situation. From Marketwatch: Delinquency rates increased in the fourth quarter for almost every category of consumer loans, the American Bankers Association said Thursday. The composite ratio of eight loan categories rose 32 basis points to a record 3.22% of accounts, the ABA said. "The wheels just fell off the economy in the fourth quarter of 2008," said James Chessen, chief economist for the trade group.

Link : http://www.marketwatch.com/news/story/Delinquency-rate-consumer-loans-rises/story.aspx?guid=%7BF9A87EF5%2D35B5%2D467F%2D871F%2D7149A3091BA8%7D

I didn't know I this should be posted near the reports or maybe with the Willie Coyote post downthread. Now just where did we put that damned umbrella?

[Wednesdays]

45. This one's big enough, I'm sure

http://4.bp.blogspot.com/_olmokblAOOM/SPb8w3iw7hI/AAAAAAAAAL4/RQl9Wlh9k84/s400/wile+e+coyote.jpg

[UpInArms]

53. U.S. Jan. factory orders revised down to -3.5% vs. -1.9% - Feb's liar report in at 1.8% gain

30. U.S. Feb. factory orders rise 1.8%, first gain in 7 months
10:00 AM ET, Apr 02, 2009

31. U.S. Feb. factory orders ex-transportation up 1.6%
10:00 AM ET, Apr 02, 2009

32. U.S. Feb. durable-goods orders revised to 3.5% gain vs. 3.4%
10:00 AM ET, Apr 02, 2009

33. U.S. Feb. core capital equipment orders revised up to 7.1%
10:00 AM ET, Apr 02, 2009

34. U.S. Jan. factory orders revised down to -3.5% vs. -1.9%
10:00 AM ET, Apr 02, 2009

[ozymandius]

3. Oil rises above $49 in Asia

SINGAPORE – Oil rose above $49 a barrel Thursday in Asia as glimmers of hope that the U.S. economy may be stabilizing were weighed against concerns that global demand remains weak.

Benchmark crude for May delivery rose 94 cents to $49.33 a barrel by afternoon in Singapore in electronic trading on the New York Mercantile Exchange. The contract fell $1.27 on Wednesday to settle at $48.39.

....

The Energy Department reported Wednesday that crude inventories continued to rise last week, and gasoline stockpiles jumped despite predictions for a steep drop.

...

Worsening jobs data is also dimming hope that crude demand could rebound soon. The ADP National Employment Report said Wednesday that private sector employment dropped by 742,000 in March, higher than anticipated.

....

In other Nymex trading, gasoline for May delivery rose 0.85 cent to $1.38 a gallon and heating oil gained 1.67 cents to $1.36 a gallon. Natural gas for May delivery was steady at $3.70 per 1,000 cubic feet.

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

[ozymandius]

4. Crude, gasoline supplies rise as demand falls

NEW YORK – Crude inventories rose more than expected last week and gasoline stockpiles increased despite analysts' predictions for a steep drop, as demand for motor fuel fell slightly, according to government data released Wednesday.

For the week ended March 27 crude inventories rose by 2.8 million barrels, or 0.8 percent, to 359.4 million barrels, which is 15.5 percent above year-ago levels, the Energy Department's Energy Information Administration said in its weekly report.

Analysts expected a boost of 3.2 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

http://news.yahoo.com/s/ap/20090401/ap_on_bi_ge/crude_oil_inventories_1

[UpInArms]

34. May crude up $2.36 at $50.70 a barrel on Globex

06. May crude up $2.36 at $50.70 a barrel on Globex
7:51 AM ET, Apr 02, 2009

[54anickel]

40. You know, that 1st line sounds so foolish at first....

Oil rose above $49 a barrel Thursday in Asia as glimmers of hope that the U.S. economy may be stabilizing were weighed against concerns that global demand remains weak.


It's like oil traders are betting on our usually not so bright, gluttonous behaviors returning. They certainly can't be going by inventories. But I was talking to a friend in Chicago last night and he said auto sales have picked up again and it's the gas guzzlers that are moving the most. It could be that they're discounted more and people just can't pass up a perceived bargain, but I can't help but think it's more "stupid is as stupid does". It seems to be rampant these days. :shrug:

[Demeter]

47. No Child Left Behind--We're All Gona Be Like W!

Unfortunately, Poppy won't adopt us and bail us all out.

[ozymandius]

5. Analysis: Global leaders try not to rattle markets

LONDON – Global leaders are keeping a nervous eye on world markets as they try to fix their ailing economies. From New York to Tokyo, investors stand ready to instantly grade the summit of the world's 20 biggest economic powers.

As leaders gathered, the U.S. recession that triggered the global crisis entered its 17th month on Wednesday, making it the longest downturn since the decade-long Great Depression. It has now surpassed two previous postwar U.S. recessions that each lasted 16 months, in 1973-75 and 1981-82.

After the Dow Jones industrials' worst first quarter in 70 years, Wall Street finished higher in trading on Wednesday and major indexes closed higher in Europe. But markets could sink fast if world leaders fail to present a united front at their meeting on Thursday.

http://news.yahoo.com/s/ap/20090401/ap_on_bi_ge/eu_g20_market_is_watching_analysis

[ozymandius]

11. At Summit, Obama Faces Calls for Finance Rules

LONDON — In his first full day in Europe before the Group of 20 summit started on Thursday, President Obama conceded that the United States had “some accounting to do” for failures that led to the world’s financial crisis, even as he tried to brush past heavy pressure from Germany and France to accept global financial regulations that could reach well inside American borders.

Speaking on the eve of the summit meeting, called to address the financial crisis, Mr. Obama acknowledged Wednesday that regulatory failures in the United States had a role in the meltdown, but he urged world leaders to focus on solutions rather than on placing blame. He also cautioned that the United States was unlikely to return to its role as a “voracious consumer market,” and he urged other nations to do more to revive growth in their home markets.

.....

For all the smiles at the waterfront Excel conference center, and despite calls for unity from Mr. Obama and Mr. Brown on Wednesday, a rift intensified over Anglo-American calls for greater fiscal stimulus spending and French and German demands for more intrusive global regulation of financial institutions. While President Nicolas Sarkozy of France did not repeat an earlier threat to walk out of the conference — “I just got here,” he joked — he made it clear he would reject an agreement that puts off stringent new regulations on banks, tax havens, and hedge funds.
...
Mr. Sarkozy added that tougher regulation — he has called for a “global regulator” that would be able to reach inside the borders of the United States and other large nations to deal with international financial firms — is “nonnegotiable.”

http://www.nytimes.com/2009/04/03/world/europe/03summit.html?ref=global-home

---

Bold type: President Obama is offering some unsolicited advice to Germany egging Merkel on to abandon Germany's export economic model. That aspect of the German economy, the largest among the E.U, has been a troublesome bottleneck for reviving economic growth there.

[Demeter]

18. Not Gonna Play Nice, Is He?

Charm will only get a person so far. And since that was what Shrub was trying to do (when not resorting to threats or blackmail) it won't be very far with this audience!

[54anickel]

43. Looks like we're going to be changing our standard of living. Not that

it's a bad thing, but it's going to be painful for quite a few in a country where 3/4 of the economy is based on consumption.

[Demeter]

6. First Rec!

This insomnia is good for something--I've been sorting through emails from the Co-op/Condo from 2007. Thankfully most of them can now be deleted....Only about 800 more to go....

Ozy, I've never felt the country was more imperiled...it's even worse than when Bush was in office. Of course, the fact that Bush was squatting in the White House has a lot to do with today's peril, although Reagan started it, building on Nixon's tentative takeover moves...peril is cumulative, and the longer the delay in turning back from the edge of the cliff, the more likely one is to go over it.

I don't see the Obama administration turning back! This is the most aggravating part of the exercise. Is the cliff not visible from DC? Or are Constitutional scholars particularly blind?

Should we all embrace the cliff, and do Niagara Falls with (or without) a barrel?

I think I understand WHY I have the insomnia, now. And the insomnia is probably why I can't make sense of events or figure out how to counter them...other than full Survivor mode.

I think CHRIS PUPLAVA is reporting that people are ignoring the cliff--but that doesn't make it go away!

[ozymandius]

8. Chris Puplava is an astute guy. I like his wonkishness.

He is sometimes a bit too much of a gold bug for me. However, his reasoned warnings on where we stand in proximity to the 400 foot drop are worth the read.

I remember Nixon's policy that asserted wage and price controls. The factors that were in play then make me wonder if we are in for a repeat performance caused by the Fed's Quantitative Easing policies.

As for Obama - I'll repeat my assertion from many days ago: Obama operates with bad advice from others who suffer from cognitive capture. "Save the banks," they say. Then all will be well. Of course, I am speaking of Geithner and Summers.

I dunno what to do. I signed the petition at democrats.org calling for the breakup of the Big Banks. Congressman John Lewis (Democrat-GA 5th) and Senators Isakson and Chambliss (Worthless-GA) have heard from me several times. Yet here we are.

It feels like we are on our own. No one in my Congressional delegation appears willing to strike at the heart of how we arrived at this great catastrophe. How can one not understand that greater harm comes from trying to keep the system as it has been for thirty years?

[Hissyspit]

9. Same for health care reform.

We are squandering a huge historical opportunity.

[ozymandius]

14. I assert that our expanding unemployed population will force this issue

to the very front of our national conscience. Consider how we will look as a nation if the current economic situation continues to worsen for another year. The time for this national healthcare system to be remade has not passed. But it will force its way through everything else.

[Demeter]

15. For All Our Sakes, I Hope So, and Work Diligently To Make It So

It may come down to pitchforks, though. Which would be a crying shame. If Obama wants a legacy, he's aiming for a Dubya-style one.

[Tansy_Gold]

31. I'm with you guys

I fear pitchforks may end up being the only solution and at the same time I hope not. I don't think we've reached the depths of the '30s yet and that makes me think there's still a chance to avoid the catastrophe.

But then I think about yesterday's thread and the chatter about the aristos in their castles and I wonder just what chance we really have.

Goddess, enough gloom already.




TG

[Demeter]

38. Good Morning, Tansy

That's a sign of hope right there--after all, it's 3.25 hours until noon, so maybe something will turn up before then!

Yesterday I had 9 hours of sleep. It did nothing for me. Today I had 5. I feel just the same level of turmoil and grouchiness. Of course, it could have a lot more to do with the outside world than the inner one...

[Demeter]

10. Remember My Question About Deflation and Japan?

I think I have the scenario now. Japan has been pumping up the tire without fixing the big hole in it first. So they get a little inflation, wipe the sweat off their forehead, and all the air runs out again....

I'm not sure WHY Japan has such a big hole in its economy, but it seems that they had a massive asset bubble before us, and kept their zombie banks and companies alive, and it's drained the vitality from their local economy. If they lose the export market, they sink. And with the US not buying anything, Japan is in trouble. Looks like China cannot fill the gap that the disappearing American consumer left.

And we can end up in the same scenario, with much less going for us than Japan has.

[ozymandius]

12. Japan is in a horrible fix.

China cannot fill the void left from an atrophied Japanese export market. China simply does not have the technical innovation of Japan. As for the mistakes of the past - Japanese economic policy also suffers from tunnel thinking which, as has been stated here many times, is the very definition of insanity. How many economic stimulus packages directed at the Big Banks has Japan instituted in the past twenty five years? Too many to count. Yet, there they are again.

[AnneD]

66. Morning Marketeers.........

:donut: and lurkers. We had a big District Nurses Meeting yesterday-oy vey. We had a lot of new hires this year. I don't know why-they do everything in their power to drive these Nurses off. We are changing our head lice from a no nit to no lice. Great-that will get rid of them.:eyes::sarcasm: It's just more angry parents and more work for me.

Even in Houston, the Nursing community is small. I heard from my sources that many hospitals are starting a hiring freeze. These unemployed, uninsured folks are starting to take a toll on the system-that's not good.

And folks are sharpening their pitchforks. I saw a lot of simmering anger when I visited Bradah over Spring Break. Just go in to a local coffee shop and listen. The anger Right, Left, and Center is just under the surface. And these numb nut are going to be surprised because (all together now class)-THEY DIDN'T SEE IT COMING. :eyes: Congress will have to get off their ass and solve this on because public displays of righteous indignation won't cut it.

Happy hunting and watch out for the bears and remember-pass the ord and praise the ammunition;)

[saigon68]

28. "Save the banks," they say

Bullshit

[Demeter]

37. Exactly! Moreover, Save the Banks And the Incompetents Who Operate Them

and that's where Japan is stuck. They are saving their past and as a result, condemning the entire population to a shrinking lifestyle, where suicide and despair thin out the working population and the old get older and more isolated.

If you don't mind just sitting tight--if you have no goals or pressing problems--if you are one of the haves, not one of the "deferred" stuck in a ladderless society, then it's good enough.

If you have a dream somewhat larger than eating and breathing, then it's not so fine.

Do we as a nation want to follow Japan's program? I sure don't! The Fundies do, though.

[Hugin]

49. I'm embracing the cliff.

Hanging on for dear life.

In fact, if you look up the cliff you can trace how far we've fallen by tracing my fingernail scratches.

[Demeter]

60. Be One With the Cliff, Hugin!

Obscure Star Trek Reference--anybody care to cite speaker and episode?

[Dr.Phool]

65. Hi, my name is Cliff.

Why don't you drop over some time.
:evilgrin:

[Demeter]

84. You're such a card, Dr. Phoole!

:rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl:

[AnneD]

67. Spock to Kirk

Star Trek V also-Gravity is formost on my mind.

Is that it?

[Demeter]

83. AnneD Groks Spock!

Excellent! Full points to you!

[ozymandius]

7. Economy contracting at slower pace, no bottom yet

WASHINGTON – New economic reports on construction spending, manufacturing and pending home sales suggest the recession may be moving closer to a bottom.

But most analysts think the low point is still months away, with more bad news likely before the economy stabilizes and begins to rebound.

"I think the best that can be said right now is that the pace of decline has slowed, but we are still heading down," said David Wyss, chief economist at Standard & Poor's in New York. "Any recovery is still a work in progress."

Wyss predicted that the recession, already the longest in a quarter-century, will last until September. But he said the decline in the gross domestic product in the current April-June quarter will probably be just half the 6.3 percent drop that was recorded in the final three months of last year.

....

The Institute for Supply Management said its manufacturing index rose to 36.3 last month from 35.8 in February. Even with the small increase, the index is stuck well below the reading of 50 that is the dividing line between growth and recession. The index hit a 28-year low of 32.9 in December.

http://news.yahoo.com/s/ap/20090401/ap_on_bi_ge/economy

[Festivito]

13. Debt: 03/31/2009 11,126,941,485,713.37 (UP 83,352,505,034.47) (Big day.)

(Debt and FICA debts rise. Could be just ordinary bills so far.)

= Held by the Public + Intragovernmental(FICA)
= 6,833,543,454,712.90 + 4,293,398,031,000.47
UP 79,841,314,678.25 + UP 3,511,190,356.22

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 306,078,943 people in America.
http://www.census.gov/population/www/popclockus.html
Currently, each of these American's owe $36,353.18.
A family of three owes $109,059.53. (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 8,719,169,346.59.
The average for the last 30 days would be 6,103,418,542.61.
The average for the last 28 days would be 6,539,377,009.94.
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$/day.
There were 49 reports in 70 days of Obama's part of FY2009 averaging 0.86B$ per report, 0.68B$/day so far.
There were 124 reports in 182 days of FY2009 averaging 8.89B$ per report, 6.06B$/day.

PROJECTION:
There are 1,391 days remaining in this Obama 1st term.
By that time the debt could be between 13.0 and 20.2T$.
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)
03/31/2009 11,126,941,485,713.37 BHO (UP 500,064,436,800.29 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: 1,102,216,588,800.90 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
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 ------------********
03/19/2009 +004,087,134,960.77 ------------*********
03/20/2009 +000,429,200,142.60 ------------********
03/23/2009 -000,116,003,157.82 --- Mon
03/24/2009 +000,222,913,900.31 ------------********
03/25/2009 +000,059,898,960.86 ------------*******
03/26/2009 +007,175,786,187.90 ------------*********
03/27/2009 -000,468,145,936.78 ---
03/30/2009 +000,069,902,880.68 ------------******* Mon
03/31/2009 +079,841,314,678.25 ------------**********

170,886,614,086.71 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,462,309,682,454.30 in last 194 days.
That's 1,462B$ in 194 days.
More than any year ever, including last year, and it's 144% of that highest year ever only in 194 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 194 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=3809884&mesg_id=3809908

[Festivito]

78. Debt: 04/01/2009 11,110,654,357,209.33 (DOWN 16,287,128,504.04) (Down a little to 11.11B$.)

(Up yesterday, down today. FICA down by more. Ending to an easy to remember 11.11B$ debt.)

= Held by the Public + Intragovernmental(FICA)
= 6,831,800,594,362.03 + 4,278,853,762,847.30
DOWN 1,742,860,350.87 + DOWN 14,544,268,153.17

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 306,085,115 people in America.
http://www.census.gov/population/www/popclockus.html
Currently, each of these American's owe $36,299.23.
A family of three owes $108,897.69. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 24 reports in the last 30 to 33 days.
The average for the last 24 reports is 9,729,577,332.16.
The average for the last 30 days would be 7,783,661,865.73.
The average for the last 33 days would be 7,076,056,241.57.
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$/day.
There were 50 reports in 71 days of Obama's part of FY2009 averaging 0.66B$ per report, 0.55B$/day so far.
There were 125 reports in 183 days of FY2009 averaging 8.69B$ per report, 5.93B$/day.

PROJECTION:
There are 1,390 days remaining in this Obama 1st term.
By that time the debt could be between 13.0 and 20.9T$.
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)
04/01/2009 11,110,654,357,209.33 BHO (UP 483,777,308,296.25 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: 1,085,929,460,296.90 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
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 ------------********
03/19/2009 +004,087,134,960.77 ------------*********
03/20/2009 +000,429,200,142.60 ------------********
03/23/2009 -000,116,003,157.82 --- Mon
03/24/2009 +000,222,913,900.31 ------------********
03/25/2009 +000,059,898,960.86 ------------*******
03/26/2009 +007,175,786,187.90 ------------*********
03/27/2009 -000,468,145,936.78 ---
03/30/2009 +000,069,902,880.68 ------------******* Mon
03/31/2009 +079,841,314,678.25 ------------**********
04/01/2009 -001,742,860,350.87 --

168,955,978,519.29 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,446,022,553,950.26 in last 195 days.
That's 1,446B$ in 195 days.
More than any year ever, including last year, and it's 142% of that highest year ever only in 195 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 195 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=3811317&mesg_id=3811345

[ozymandius]

16. Wile E. Coyote Indicator

I found this at Calculated Risk

Throughout the last two years the worldwide economy has deteriorated significantly; whatever caused this, and who, is most likely of less concern to the animation community than the impact on the future of our particular bailiwick. Will the macro economy stabilize without too much more extreme pain and soon return to rosy health? Will the Obama stimulus package work as hoped? And as Treasury Secretary Timothy Geithner's latest plan goes forward, have we saved the banking system from itself, or is PPIP (Public Private Investment Program -- released last month) just another acronym on the road to something else (like BRIR -- Banks Really In Receivership), and soon to be consigned to the ash heap of history like the too-late, too-unfocused, too-much-in-favor-of-the-bankers programs from his Bush-appointed predecessor Hank Paulson? Most important, will the animation industry thrive and prosper?

....

The World as We Knew It floats on a sea of U.S. domestic credit, tens of trillions of dollars of it ($50,000,000,000,000 plus), approximately four times larger than our yearly GDP -- an amount of debt nearly uncountable (and to many, unimaginable in size): mortgages and home equity loans, car loans, credit cards, student loans, business loans, municipal and corporate bonds and other familiar debt obligations, some governmental, but overwhelmingly private. The swirling foam on this sea of debt is asset-backed securities (ABS include CDOs, CLOs, CMBSs, CMOs, RMBSs, ad infinitum, a you-don't-want-to-know-what-they-are alphabet soup), which are now called "legacy assets" by the Treasury but were known until recently as "toxic assets" -- as toxic they indeed are, having poisoned the banking system and bringing it to near paralysis.

http://mag.awn.com/index.php?ltype=pageone&article_no=3947

---

"Economists and commentators are increasingly citing Wile E. Coyote to explain the macro economy, with Nobel-laureate Paul Krugman first hoisting the anvil in 2007. Cartoon image courtesy of Warner Bros. Animation. Graphs courtesy of Project X."

[ozymandius]

17. Thornburg Mortgage (Prime Jumbo Specialists) to File for Bankruptcy, Liquidate

April 1 (Bloomberg) -- Thornburg Mortgage Inc., the “jumbo” home lender racked by the collapse of U.S. mortgage markets, said it plans to file for bankruptcy protection and shut down.

Remaining assets will be sold or liquidated to pay bondholders and creditors, according to a statement today from the Santa Fe, New Mexico-based company.

Thornburg specialized in mortgages of more than $417,000, typically used to buy more-expensive homes, and invested in mortgage-backed securities. It started running short of cash in August 2007 as foreclosures nationwide headed toward new highs and investors became leery of assets backed by home loans. A bailout in March 2008 from buyout firm MatlinPatterson Global Advisers LLC failed to revive the company as lenders demanded payments to cover the plunging value of mortgage assets.

....

Thornburg had $7.3 billion of mortgage-backed securities and owed its lenders $4.7 billion against those assets, according to company presentations. Thornburg today also agreed to transfer its mortgage-servicing rights to the investment firms.

http://www.bloomberg.com/apps/news?pid=20601103&sid=acP.oPOVP3VI

[Demeter]

19. Decline in UK manufacturing slows in March

http://www.ft.com/cms/s/0/10b923cc-1e98-11de-b244-00144feabdc0.html


The UK manufacturing sector declined at a slower pace in March, adding to signs that the recession may be near its deepest point, data published on Wednesday suggested.

The manufacturing purchasing managers’ index rose to its highest level since last October and has now risen for three out of the last four months.

But the reading of 39.1, up from 34.9 in February, is still close to the lowest levels that the index has recorded since collection of the data began in 1992. Any figure below 50 indicates contraction in the sector.

Economists said that although it added to recent glimmers of hope that a trough in the downturn may have been reached in the first quarter, the manufacturing sector and the economy as a whole are still in deep distress.

“The substantial gains in the output and new orders indexes are heartening and, if these can be sustained during the coming months, raise hopes that manufacturers are past the worst,” said Rob Dobson of Markit Economics. “However, we are still a long way off levels associated with an outright recovery and conditions remain fragile overall.”

Colin Ellis, an economist at Daiwa Securities SMBC, said the data “lends support to our view that may turn out to be the nadir of the recession, with growth slowly heading back up to zero over the rest of this year.”

The manufacturing survey showed that stock levels fell sharply and reached a new record low - suggesting that companies have sold off many of the widgets sitting on their shelves and may soon have to increase production to meet orders.

New orders fell at a notably slower pace, as did output. Manufacturers also shed jobs at a slower pace - with 20,000 to 25,000 jobs being lost in March compared to 30,000 in January, according to the Chartered Institute for Purchasing Suppliers and Markit, which produce the report.

The sharp fall in sterling may have been responsible in part for the slowing decline in new orders, economists said, pointing to a smaller drop in export orders. The UK PMI is now also at its highest compared to eurozone PMI since 1997.

Nevertheless the index suggests manufacturing has now been in recession for a full year.

Separately, Bank of England data showed that homeowners ploughed more money into paying off their mortgages at a record pace in the final quarter of last year. Homeowners paid back a net total of £8bn of their mortgages between October and December, which made up 3.3 per cent of their post tax income. In contrast, net housing equity withdrawal was 6.2 per cent income after tax in the first quarter of 2007.

Both figures were the highest since records began in 1970, and confirm the sharp rise in the household savings rate seen in the quarter. Some see the rapid pace in which consumers are paying back debts and increasing savings as a sign that the economy is closer to rebalancing. But there is also a risk that consumers retrench too quickly, reducing the effectiveness of quantitative easing and deepening the recession.

“Given the structurally impaired nature of the UK economy - an impairment centred firmly upon an absence of domestic savings - such a development is to be welcomed, said Richard McGuire, fixed income strategist at RBC Capital Markets. “The pace with which this rebalancing is occurring, however, will be of some considerable concern for policy makers owing to the threat of this process both limiting the effectiveness of the QE project and prolonging the current slowdown. “


COULD IT BE THAT SINCE BRITAIN NATIONALIZED AND RESOLVED ITS PROBLEM BANKS, THAT IT WILL COME OUT OF THIS CYCLE---AND WE WON'T, SINCE WE DIDN'T?

[Demeter]

20. UK Fund manager loses bid to scrap divorce deal

http://www.ft.com/cms/s/0/398c3b22-1eac-11de-b244-00144feabdc0.html


Credit-crunched financiers have been warned that they will not be able to renegotiate hefty divorce payouts because of their depleted bank balances.

Brian Myerson, the South African fund manager, on Wednesday lost a legal bid to scrap his £11m divorce settlement with his ex-wife on the grounds that the value of his investment company had collapsed over the past year.

Family lawyers said the case would head off a deluge of similar applications from recently divorced bankers and traders who had been hit hard by the economic downturn.

It has been a tough month for Mr Myerson, a veteran activist investor who made his name in the late 1990s by taking stakes in a series of underperforming British companies, including Liberty, the department store, and Pilkington, the glass producer. Angry shareholders last week ousted him as chief executive of Principle Capital, the investment trust he founded four years ago, after the share price tumbled by more than 90 per cent over the past year.

Case is a warning on division of spoils

The Myerson case is a cautionary tale about the wisdom of choosing investments over cash when dividing the spoils of a failed marriage, writes Megan Murphy .

Divorce settlements, like other court orders, are enforceable debts. In boom times, businesspeople frequently prefer to retain riskier assets, confident that their value will increase over the longer term.

However, senior judges have confirmed that they will not be able to look to the courts for redistribution, should the value of those investments plunge. If Wednesday’s decision is upheld, Brian Myerson will be unable to claw back the £7m lump sum payment he has made to his ex-wife. He is still trying, however, to cancel or reduce the £2.5m he owes in additional instalment payments.

The high court is due to hear that application in June. Experts suggest that, while the court may allow him to delay payment until the financial climate improves, it is unlikely to allow him to avoid paying altogether.

Should he fail to make those payments, Ingrid Myerson has several options, says Kate Landells, a lawyer at Withers, including asking for a court summons against him or trying to force her ex-husband into bankruptcy.

His decision to retain his shares in his company while paying his former wife a multi-million pound sum when they split after 26 years of marriage has now come back to haunt him as well.

Under the terms of their original deal, struck in February 2008, Mr Myerson agreed to pay his sculptor ex-wife, Ingrid, £9.5m in cash and to transfer a £1.5m beach house in South Africa to her name. In return, he was allowed to keep Principle Capital shares worth more than £15m at the time.

The company’s share price, however, has since slumped from 299p to close at just 17½p on Wednesday, leaving him with a stake valued at less than £2m. Taking into account his obligations under the settlement in addition to other debts, Mr Myerson’s net worth is estimated at minus £540,000.

Mrs Myerson is still due four instalment payments totalling £2.5m from their original bargain. Should the settlement be paid in full, she would walk away with about 105 per cent of the couple’s total assets.

However, three senior judges on Wednesday warned that even a dramatic “financial eclipse” would not justify reopening settled deals, voluntarily reached by both sides. Mr Myerson, the Court of Appeal emphasised, had knowingly taken a “speculative position” on Principle Capital’s fortunes.

“Why should the court subsequently relieve him of the consequences of his speculation by rewriting the bargain at his behest?” said Lord Justice Thorpe, one of the most senior family judges.

Mr Myerson, who has a separate application to cancel the outstanding payments due pending before the high court, said he was “disappointed” by the decision and would take his case to the House of Lords.

Lawyers who specialise in big-money divorce cases, however, said he would struggle to overturn the maxim that settlements could be renegotiated only in exceptional circumstances.

“The Court of Appeal has stuck by its guns in refusing to allow long-established divorce law to be rewritten by Brian Myerson,” said Joe Vaitilingam, a partner at Hughes Fowler Carruthers.

“This decision has averted the turmoil in the Family Court that would have resulted from the mad scrum of others seeking to piggy-back on this case, if it had gone with him.”

Regardless of Wednesday’s result, the Myersons’ scrap seems unlikely to go away quietly. Mrs Myerson is understood to have hired a forensic accountant to troll through his finances, should he claim he does not have the money to meet his obligations. It was revealed last month that Mr Myerson bought an £8m house in Geneva last year, albeit on a 100 per cent mortgage.

PROOF AGAIN THAT GREED AND FAMILY LIFE DON'T MIX

[Demeter]

21. G20 leaders accused over toxic assets

http://www.ft.com/cms/s/0/0cbc2f74-1eea-11de-a748-00144feabdc0.html

World leaders meeting at the G20 summit on Thursday must act more decisively to clean up the toxic assets poisoning the global banking system or risk prolonging the worst global recession in generations, the head of the International Monetary Fund warned.

His comments came as the leaders of the world’s most powerful economies last night struggled to bridge divisions over the summit’s priorities amid violent anti-capitalist demonstrations in London. Protesters besieged the Bank of England and smashed their way into a Royal Bank of Scotland branch, sparking clashes with riot police. One man died after apparently collapsing, police said last night.
On the eve of the summit called to agree a ”global plan for recovery and reform”, Dominique Strauss-Kahn, IMF managing director, told the Financial Times the fund’s experience from 122 banking crises suggested ”that you never recover before the cleaning up of the banking sector has been done. The US . . . is rightly insisting on stimulus and the EU rightly insisting on regulation. They are not yet moving quickly enough in doing the cleaning up of the financial system.”

In tense pre-summit manoeuvring, France and Germany threatened to block a deal today if their ”red lines” on tougher financial regulation were not met, raising the prospect of a clash with China over tax havens.

Nicolas Sarkozy, French president, and Angela Merkel, German chancellor, laid down explicit conditions for a deal, including tough regulation of hedge funds, tax havens and bankers’ pay.

Speaking at a joint press conference, Mr Sarkozy said: ”The time for pointless summits is behind us.” Ms Merkel said it was no longer acceptable to ”sweep things under the carpet”.Although Gordon Brown, the UK prime minister, remains confident today’s summit will end with smiles, the surprisingly tough Franco-German stance left him trying to broker a deal last night. Mr Sarkozy said he feared China was an obstacle to a clampdown on tax havens and that he suspected that ”the interests of Hong Kong and Macao” lay behind it.

Mr Brown sat the French president next to Hu Jintao, the Chinese president, at last night’s official G20 banquet in an attempt to forge a compromise over dinner.

[Demeter]

22. US banks stand to benefit from rules change

http://www.ft.com/cms/s/0/717bd926-1ee7-11de-a748-00144feabdc0.html

By Francesco Guerrera and Joanna Chung in New York, and Jennifer Hughes in London

Published: April 1 2009 19:20 | Last updated: April 1 2009 19:20

Large US banks like Citigroup, Bank of America and Wells Fargo stand to receive a surprise first-quarter earnings boost from Thursday’s expected loosening of controversial accounting rules by the Financial Accounting Standards Board.

Wall Street executives and auditors say the accounting watchdog’s likely approval of changes to “mark-to-market” rules could lead to increases of up to 20 per cent in quarterly profits of large commercial banks.

Rushed through by FASB after lender and political pressure, the changes have been strongly opposed by investment banks, investors, auditors and analysts.

The changes will make it easier for companies, including banks, to value assets using their own internal models rather than market prices. They will also only have to recognise a part of any impairment in their profits.

Proponents of the changes, such as Citi, BofA, Wells and their political allies, argue the current regime unfairly magnifies losses by requiring banks to use market prices even though those prices are illiquid and often from fire sales.

Critics say changing the rules would further undermine investor confidence in the battered sector by reducing the transparency of banks’ balance sheets.

The accounting overhaul, they add, counters the US government’s bid to create a liquid market for troubled assets through private/public partnerships.

In comments sent to FASB, the CFA Institute, trade body for more than 80,000 analysts and fund managers, said the new rules would damage the credibility of the rulemaker and US accounting standards generally.

The rules are also being considered by the International Accounting Standards Board which had promised to work with its US counterpart. The IASB softened its own fair value rules last October under pressure from the European Union. Opponents of the change fear Brussels will exert new pressure to get the IASB to follow FASB’s lead.

In a letter in Thursday’s Financial Times, Dutch securities regulator chief Hans Hoogervorst calls political meddling in accounting a “dangerous development”.

If accounting standard-setting is seen as a political process “confidence in the markets will be further undermined”, he said.


SEE MY SIGNATURE LINE--IT SAYS IT ALL!

[Demeter]

23. New Century liquidators sue KPMG for $1bn

http://www.ft.com/cms/s/0/05ef6a40-1ee9-11de-a748-00144feabdc0.html

By Jennifer Hughes in London

Published: April 1 2009 19:47 | Last updated: April 1 2009 19:47

KPMG is being sued for $1bn by the liquidators of New Century, the collapsed subprime lender, in the first big case against an auditor arising from the current financial crisis.

In a court filing on Wednesday, lawyers for New Century’s liquidators claimed that KPMG “assisted in the misstatements and certified the materially misleading financial statements” filed by the lender. They claim KPMG was responsible for its collapse because it allowed the lender to use inappropriate accounting that led it to underestimate the provisions it needed to cover bad loans. This made its position look better and gave it access to more funds...

A KPMG spokeswoman said the firm had not yet seen the complaint but that it would “vigorously defend” its audit work.

“Any claim that we acquiesced to client demands is unsupportable,” she said. Any implication that the collapse of New Century was related to accounting issues ignores the reality of the global credit crisis. This was a business failure not an accounting issue.”

New Century’s collapse in April 2007 was considered a harbinger of the current economic crisis. The lender, which grew rapidly in the boom years, made home loans then sold them on. It ran into trouble over a spike in problem loans which led it to struggle with funding.

Prior to its collapse, New Century warned it was investigating accounting irregularities that would result in a need to restate its 2006 earnings. It then warned in May 2007 that it might need to restate 2005 numbers too...

[tclambert]

24. Up to 50 schools could close in Detroit - Detroit Free Press

http://www.freep.com/article/20090402/NEWS01/904020357

After months of financial projections, independent audits and declarations of financial emergency, the state-appointed financial manager for Detroit Public Schools submitted a report to the state Wednesday that paints a historically dire problem.

DPS will have to cut thousands of jobs and close as many as 50 schools over the next two years because the district has accumulated a $305-million deficit. And it should have seen the problem coming months ago, said Robert Bobb, the financial manager.

------

Similar problems probably face many school districts in Michigan. Schools are primarily financed by property taxes. Property values have plummeted. Detroit is not just talking about laying off teachers, but closing 50 schools.

This pattern will likely affect many school districts across the country, as well. Tax bases have fallen, aid from the states is hard to come by. Many states have to slash their budgets, too. Will the federal government help? Well, schools aren't Wall Street banks.

-----

In Novi, a Detroit suburb (second or third ring), friends have noticed an interesting economic effect. A lot of Japanese car company people come there for temporary duty, usually a couple of years at a time. Certain apartment complexes and hotels cater specifically to the large Japanese transplant community. Normally, when they return home it is in April. This year, many began leaving a month or more early, often Toyota employees.

----

These are secondary effects of the financial crisis, but I find these symptoms interesting. The ripples have spread very far.

[Demeter]

27. Carmakers see hope amid sales slump

http://www.ft.com/cms/s/0/b2e67bbe-1f14-11de-a748-00144feabdc0.html

By Bernard Simon in Toronto

Published: April 2 2009 01:35 | Last updated: April 2 2009 01:35

US new vehicle sales slumped again in March, but carmakers expressed cautious optimism that the market is at or close to its bottom.

All major carmakers reported steep declines compared with a year ago, with General Motors down 45 per cent, Ford 41 per cent, and Toyota and Chrysler each down 39 per cent.

Total sales dropped to an annual rate of 9.9m units from 15.1m in March 2008, but were unexpectedly above the 9.1m units posted in February, according to Autodata, a market research business.

Several carmakers reported that demand improved markedly in the final week of the month. GM’s sales were 23 per cent higher than February.

......

Meanwhile, GMAC, the financial services group with close ties to GM, said it was again dipping its toes into the subprime car loan market. It also unveiled plans to lower finance charges to dealers and to earmark $5bn for consumer car loans over the next two months.

The industry is also banking on the introduction of scrappage incentives now making their way through Congress. Mr DiGiovanni estimated these “cash-for-clunkers” schemes could boost new vehicle sales by 1m units a year. Buyers continue to move away from sports utility vehicles and pick-up trucks towards cars and crossover vehicles.

[Demeter]

25. Madoff feeder fund accused of turning blind eye

http://www.ft.com/cms/s/0/14bdffec-1ee3-11de-a748-00144feabdc0.html

By Joanna Chung in New York

Published: April 1 2009 18:40 | Last updated: April 1 2009 21:27

In the first regulatory action against one of the big so-called “feeder” funds that channelled money to Bernard Madoff, the top securities authority in Massachusetts on Wednesday accused Fairfield Greenwich of deliberately turning a blind eye to the former broker’s Ponzi scheme.

In a civil complaint, William Galvin, the Massachusetts regulator, claimed that there was a “profound disparity’’ between the due diligence Fairfield told investors it was conducting in relation to investments with Mr Madoff and what it actually did.

Separately, US marshals in Florida seized two boats – including a 55ft yacht owned in the name of Mr Madoff’s wife, Ruth – and the Madoffs’ Palm Beach estate. They are among the assets US federal prosecutors have said they intended to confiscate. as part of efforts to recover money for investors. His wife has not been accused of any wrongdoing....

[Demeter]

26. Banks see capital in paying off junior debt

http://www.ft.com/cms/s/0/725a2e42-1ef6-11de-a748-00144feabdc0.html

By Scheherazade Daneshkhu in Paris and Paul J Davies in London
(IMAGINE TRYING TO BE A FACTUAL REPORTER WITH A NAME OF SCHEHERAZADE!)

Published: April 1 2009 23:29 | Last updated: April 1 2009 23:29

European banks are boosting their capital bases by repaying billions of euros worth of junior bonds at hefty discounts to face value and booking the difference as profits that can be added directly to core equity.

Crédit Agricole offered to buy back £750m of junior debt at a 28 per cent discount on Wednesday, becoming the fourth large European bank in less than a fortnight to exploit the distressed prices of such bonds.

UBS has completed a similar deal and Lloyds Banking Group and Royal Bank of Scotland last week both offered to buy back or exchange junior debt with a face values of up to £7.5bn and £15bn respectively.

Junior bank debt has been under huge pressure due to concerns about the financial strength and viability of many institutions. The poor outlook for the market was highlighted on Wednesday when Standard & Poor’s downgraded such bonds issued by more than 60 different European banks, citing their weak financial performance and eroding earnings prospects.

Bankers and analysts expect similar deals to follow as investors and regulators focus on so-called “high-quality capital”– tangible common equity, or core Tier 1 capital.

Both groups give less credence to so-called hybrid capital instruments, which occupy a grey area between equity and debt. Many think the market for such instruments is dying a slow death.

“The hybrid capital model is broken and no one is going to fix it,” said Gary Jenkins, head of credit research at Evolution Securities. “The market is in a zombie-like run-off state.”

Regulators in the UK have been encouraging the process. Lord Turner, chairman of the Financial Services Authority, wrote in his recent review of the banking system that the crisis had “revealed the crucial importance” of focusing on banks having a higher level of core, high-quality capital and not other junior bonds, so-called Tier 2 issues.

“The FSA . . . believes that required capital ratios for banks should be expressed entirely in terms of high quality capital . . . and should not count dated subordinated debt as providing relevant support,” he said.

[Ghost Dog]

29. Equities soar as G20, ECB meet

LONDON (Reuters) – World stocks powered higher on Thursday as hopes grew that the U.S. economic decline was reaching a bottom while the euro gained despite expectations of an interest rate cut from the European Central Bank.

Investors were also closely tracking the meeting of G20 leaders in London, looking for confirmation that governments will continue to take action to bolster the world economy and shore up the ailing financial system.

"Market participants are becoming more convinced of a global recovery and that is causing risk appetite to increase," said Toru Umemoto, chief FX strategist Japan at Barclays Capital.

MSCI's all-country world stock index, a leading benchmark for global equities, was up 1.9 percent for a 22 percent gain since early March. It was driven higher by strong gains in both Europe and Asia.

The FTSEurofirst 300 (.FTEU3) index of top European shares was up 2.6 percent, on track for its third straight day of gains, helped by better-than-feared U.S. home sales and factory data.

The index has risen 18.4 percent since hitting a lifetime low on March 9, but is still down 8.1 percent in 2009.

"We think the (global) policy effort will work," said Bernard McAlinden, strategist at NCB Stockbrokers in London. "But there will continue to be volatility in markets." The ECB is to meet later in the day and is widely expected to cut interest rates by 50 basis points to 1.0 percent. Focus is also on whether the bank will announce any unconventional policy measures.

Earlier, Japan's Nikkei average (.N225) gained 4.4 percent, with volume jumping to a four-month high.

/... http://news.yahoo.com/s/nm/20090402/bs_nm/us_markets_global;_ylt=AoXGv2N6zxm9zuqzMp8cldK573QA

[Demeter]

30. Hedge funds are back in the game

http://www.ft.com/cms/s/0/96a1d5aa-1ef3-11de-a748-00144feabdc0.html



Hedge funds are back in the game. After a dismal 2008 that saw record losses and record withdrawals, investors are tentatively returning to the sector, prompted by signs that funds made money even as markets plunged this year.

Highbridge Capital Management, once the world’s biggest hedge fund, was a big winner, with $1bn (€757m) of net inflows this year, including $225m from majority owner JPMorgan, according to people familiar with the fund. It ended the quarter with $20bn under management.


Many hedge funds have seen investor panic recede as they record positive returns, according to managers and investors.

Large amounts of withdrawal requests by investors have been cancelled at some of the biggest funds, including DE Shaw, the New York manager, although overall the industry remains likely to see outflows, investors and analysts said, and more lossmaking funds will shut.

[DemReadingDU]

32. Charles Hugh Smith: SURVIVAL+ Chapter Six

Survival+ 6: The Politics of Experience (April 2, 2009)
Charles Hugh Smith

What Is "The Politics of Experience"?

The human mind makes sense of the chaotic jumble of sensory experiences and internal mental states by assembling explanatory narratives—what we also call "stories." To the believer, the "story" "explains" how things work. In pre-scientific cultures, many such stories were not simply wrong but injurious. Thus we have cultures in which it is believed that pregnant women shouldn't eat much. While we in advanced economies like to think of ourselves as above this sort of "superstition-passing-as-causal explanation," we also have cultures today in which living animals are considered "things" more or less equivalent to inanimate rocks and economies which believe "the market" is always efficient and rational.

What if those narratives also contain hefty doses of injurious superstition? To those who see living animals as commodities, then extirpating them for financial gain is "obvious" and indeed "natural." To those who believe in the ontological (i.e. inherent or a priori) efficacy and rationality of "the market," then the pricing of the last ten wild tuna on Earth via the auction block is entirely "obvious" and "natural." The notion that the eradication of a species might have some value not calculated by "the market" is sacrilege and suppressed with the same fanatic fervor as any interfaith challenge to religious authority.

Politics is consent, persuasion and power.

Humans are social animals because banding together by consent and bloodlines provides significant survival benefits over "going it alone." In its essence, politics is the granting of power to leaders for some benefit to those consenting to be led. The leaders must persuade consent or compliance, either by touting a persuasive narrative or creating a coercive system of punishment/terror.

The ultimate summary of politics is power. In lower animals, this boils down to power over reproduction (i.e. being able to improve one's chances of passing along one's genes via choice or coercion) and food. In humans, reproduction remains key (hence every despot acquires a harem and every official a mistress) but power also includes the various fruits of civilization such as wealth and wide-ranging political powers expressed through institutions such as religion, the state, etc.

Just as matter of economics, imposing one's will via coercion/terror is a costly affair. Maintaining a vast gulag of prisons, secret police, domestic armies, etc. drains off a tremendous share of the national wealth, and the coercive state/Empire has a nasty habit of destroying or driving away many if not most of its most productive citizenry.

Thus the "natural selection" process of the coercive state (be it monarchy, oligarchy, state or Empire) weeds out the rebellious, the skeptical and the most productive, leaving the cowed unproductive or the sullenly, consciously unproductive and a huge class of dependent drones ruled by a class of overlords with few limits on what they can skim from what remains of their economy.

The better choice is to persuade the people you wish to skim from to freely offer their consent and their compliance. This is best accomplished by creating a series of narratives in which your power (and the power of your class) is "obvious," "natural" and "beneficial." Thus we have cultures of caste in which the "high-borns'" privileges and power have been accepted as the "natural order of things." All the Powers That Be need do is maintain this narrative via whatever mediums are available (the pulpit, the media, etc.) and suppress or marginalize any challenging narratives as irrational, unnatural, representing the forces of Evil, counter to our sacred way of life, etc.

As an example in the U.S., we might consider the entire narrative of debt/credit. The idea of credit has been sold as a "benefit" for the average citizen; with credit, one needn't save up for five years to buy an auto, one can drive a new car out of the lot today and enjoy it for the five years it takes to pay it off in installments (debt/credit).

All narratives with political and thus economic consequences can be best untangled by this simple question: cui bono, to whose benefit? While credit "obviously" has some visible benefits to the borrower, the line between a borrower and a debt-serf can be thin indeed.

If we examine the profits generated by auto sales, we find that the profits generated by the credit/debt used to purchase the vehicle far exceed the profits made by manufacturing the vehicle. The same is true of housing and virtually all other goods.

So who benefits from an economy based on credit? Everyone, we are told; but it seems some benefit more than others.

Continue reading Chapter Six...
http://www.oftwominds.com/blogapr09/survival6-04-09.html


link backwards to previous chapters...
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3809884&mesg_id=3810033

[UpInArms]

33. dollar watch

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

Last trade 85.150 Change -0.810 (-0.94%)

ECB Cuts Rates By 25 bps, Less Than Expected

http://www.dailyfx.com/story/topheadline/ECB_Expected_to_Cut1238672300967.html

The European Central Bank (ECB) cut its benchmark interest rate by 25 bps to 1.25 percent, a new historical low. The EUR/USD rallied after the rate announcement since most investors were expecting a 50 bps rate cut. All eyes are now in the ECB press conference hosted by Jean-Claude Trichet in Frankfurt at 8:30 ET.

The ECB risks running out of options to boost liquidity

The Euro zone economy is gradually succumbing to tight credit conditions and a slowing global economy. Recent data on business sentiment, consumer spending and industrial production continues to point towards a sharp contraction in economic activity in the euro zone and lower interest rates combined with some sort of quantitative easing are certainly needed to prevent the region from falling into a long-term recession. However, as we approach a zero-interest-rate-policy (ZIRP), some investors are becoming increasingly concerned that the ECB will run out of options to boost liquidity and minimize the impact of this financial crisis. In fact, unlike the United States Federal Reserve, the ECB cannot simply implement quantitative easing by buying government bonds because the European Union does not have a common government bond.

...more...

Dollar Settles In The Calm Before G20 Meeting And NFP Release

http://www.dailyfx.com/story/strategy_pieces/watch_what_the_fed_watches/Dollar_Settles_In_The_Calm_1238624701948.html

Investor sentiment the world over has drifted between panic and moderate pessimism for the past five months as the market tries to discern the future of the global recession and financial turmoil. And, though conditions are not likely to see a dramatic recover anytime soon, we may finally move out of this limbo tomorrow – for better or worse – as leaders from the world’s largest economies work towards a definitive solution at the G20 summit in London.



The Economy And The Credit Market

Investor sentiment the world over has drifted between panic and moderate pessimism for the past five months as the market tries to discern the future of the global recession and financial turmoil. And, though conditions are not likely to see a dramatic recover anytime soon, we may finally move out of this limbo tomorrow – for better or worse – as leaders from the world’s largest economies work towards a definitive solution at the G20 summit in London. This gathering will have particular influence over the US dollar. The United States is suffering one of the worst recessions among its global counterparts and is considered the epicenter to the ongoing financial crisis. At the same time, its policy makers have taken among the most aggressive steps to solving its pervasive problems. However, over time, it has become quite clear that the dilemma is a global one; and the US cannot shoulder the burden alone. Dollar traders will be looking for an outcome that involves an active commitment from many or all of the G20 members which can promote better and lasting results. Through this event, the market will further have to define the currency’s role as a safe haven and monitor the progress of calls for replacing the greenback as the world’s reserve currency.



The health of the US economy is a matter of concern, not only for Americans and those that invest in the country, but for everyone. The old adage that when the US catches a cold, the world sneezes is as true now as it was when the global economy first started to follow its largest economy into economic trouble. Thursday’s G20 meeting could have a significant impact on the growth forecasts for the US as it could allow the US to throttle back on costly bailout and stimulus efforts. The real benchmark for growth trends though will be Friday’s NFPs. Another 660K in lost jobs would bring the total to over 5 million since January of 2007 – a dour sign.



...more...

[Ghost Dog]

51. .

Euro pares gains; Trichet says rates may go lower Thu Apr 2, 2009 9:01am EDT NEW YORK, April 2 (Reuters) - The euro pared some gains against the dollar on Thursday after European Central Bank President Jean-Claude Trichet said officials would decide on and detail non-standard policy measures at its next meeting.

The ECB cut rates by 25 basis points to 1.25 percent, surprising the market, which expected a deeper cut to 1 percent.

But Trichet followed that by saying the ECB would still decide on non-standard policy measures and intended to offer details at its next meeting. He also did not rule out that interest rates, already at record lows, could fall further.

The euro fell to $1.3420 EUR after those remarks from levels around $1.3475. Before Trichet mentioned non-standard policies, the euro hit a session high around $1.3489. It was still up 1.4 percent on the day.

Investors are on alert for any sign the ECB intends to follow other central banks by purchasing government or corporate debt to increase the money supply.

/. http://www.reuters.com/article/marketsNews/idINN0254718920090402?rpc=44


Euro jumps vs Swiss franc on Hildebrand FX comments Thu Apr 2, 2009 4:45am EDT LONDON, April 2 (Reuters) - The euro jumped to session highs against the Swiss franc on Thursday after SNB Vice-President Philipp Hildebrand said the bank would use all means to prevent a further appreciation of the Swiss franc.

By 0840 GMT, the euro was up almost half a percent on the day at a session high of 1.5247 francs <EURCHF=>, while the dollar also rose to 1.1480 <CHF=>.

"The SNB's rhetoric supports expectations of further FX intervention if the franc strengthens. We are already short Swissie intraday and would expect some profit taking to emerge," a London-based analyst said.

/.. http://www.reuters.com/article/marketsNews/idINL251869420090402?rpc=44


Sterling gains broadly on G20 optimism, better UK data Thu Apr 2, 2009 12:34pm BST LONDON, April 2 (Reuters) - Sterling gained broadly on Thursday, jumping over one and a half percent against the dollar on optimism about the prospects for coordinated steps by Group of 20 leaders and solid UK house price data.

Investors were encouraged to buy assets perceived to be risky, including sterling, after sources said the latest draft of the G20 communique calls for an increase of International Monetary Fund resources of $500 billion. .

In tandem with stock markets across the globe, UK shares jumped by 3 percent .FTSE, boosted by optimism ahead of the G20 summit and as recent solid U.S. data offered a glimmer of hope for a recovery in the world's largest economy.

This helped push the euro to its lowest level against the pound in three and a half weeks and the pound to a 4 month high against the Japanese yen.

/... http://uk.reuters.com/article/ukPoundRpt/idUKL228581720090402?sp=true
____

[Ghost Dog]

58. China Economist: Dollar to be shook in post-crisis period

BEIJING, April 2 (Xinhua) -- China Everbright Group chairman Tang Shuangning expected the international monetary system to diversify as other currencies would challenge the currently dominant dollar after the U.S. economy was dragged into recession by the financial crisis.

The financial crisis had exposed flaws of the current U.S. dollar-based global reserve system, and thus needed overhaul, he told Xinhua Thursday.

The emerging economies, such as Brazil, Russia, India and China, are voicing their demand for higher status of their own currencies as the recent rapid economic growth have lifted their international positions, he added.

He expected the international monetary system would first have dollar as dominant and other currencies as subsidiary after the crisis and finally have a global currency, or a super-sovereign reserve currency.

The super-sovereign reserve currency would be issued and managed under regulations jointly made by countries, which would reduce risks of currency crisis and financial crisis, he said.

...

Tang also mapped a track for the development of the Chinese currency, yuan, which would go from peripheral to regional and global, or settlement currency to investment currency to reserve currency. He said the country had to strengthen its power, improve its financial market and realize currency convertibility to go along the route.

/.. http://news.xinhuanet.com/english/2009-04/02/content_11122300.htm

[Demeter]

41. China extends banks lock-up (SOMEBODY GOT BURNED WITH HOT MONEY!)

http://www.ft.com/cms/s/0/4944060e-1ee2-11de-a748-00144feabdc0.html

By Jamil Anderlini in Beijing

Published: April 1 2009 18:40 | Last updated: April 1 2009 18:40

Foreign investors in Chinese banks will in future be forced to accept a lock-up period of at least five years, China’s top banking regulator said, after a series of share sales by US and European financial institutions.

In recent months, companies such as Bank of America, UBS and Royal Bank of Scotland have sold down all or part of their stakes in China’s largest state-owned banks immediately after lock-up periods of three years expired...

[Demeter]

44. ‘Tarp cop’ launches probes into bail-out fraud

http://www.ft.com/cms/s/0/275f67ba-1e31-11de-830b-00144feabdc0.html


By Tom Braithwaite in Washington

Published: March 31 2009 21:30 | Last updated: March 31 2009 21:30

US authorities have launched more than a dozen criminal investigations into possible fraud involving bank bail-out funds, the special inspector-general for the troubled assets relief programme told Congress on Tuesday.

Neil Barofsky – described at a Senate finance committee hearing as the “Tarp cop” – estimated the US had spent or lent almost $3,000bn of taxpayers’ money to aid banks and other companies, which would “inevitably attract those seeking to profit criminally”.

He said his investigators were already working with law enforcement officials on potential cases. “We actually have probably more than a dozen ongoing criminal investigations based on fraud related to the Tarp programme,” he said. A spokeswoman for Mr Barofsky said the office could not provide more detail as the probes were active.

The total amount of federal money by his estimate includes the $700bn Tarp fund and other programmes operated by the Federal Reserve and the Federal Deposit Insurance Corporation.

Mr Barofsky, a former federal prosecutor in New York , said his role was to prevent the money being diverted illegally. He noted there was a “potential exposure of hundreds of billions of dollars in taxpayer money” if the bail-out efforts were to suffer from the average rate of fraud in federal programmes.

He said if his oversight efforts dissuaded institutions from taking Tarp money, “some might take this as a criticism. I do not”.

“If a bank or financial institution doesn’t want to participate in the Tarp programme because it’s unwilling to disclose how it’s using taxpayer money or because it’s afraid of the vigorous detection programmes that we are establishing for fraud, it means we’re doing our job,” he said.

“Keeping such participants out of the Tarp will only benefit the American taxpayer.”

The approach of the inspector-general differs from that of the Treasury, which has suggested it would not be useful to require banks to disclose exactly how they use the Tarp money.

Mr Barofsky also said he was to prepare an audit of the decision to repay in full counterparties of AIG, the insurance group bailed out with $173bn of government aid.

The Government Accountability Office on Tuesday recommended the Treasury should demand “concessions” from AIG’s counterparties and executives “including seeking to renegotiate existing contracts”.


ZINGER!

[Hugin]

50. "The approach of the inspector-general differs from that of the Treasury"

Needed more emphasis.

[Demeter]

59. It's that dry, nutty Brit Humor

I'm becoming an Anglophile, when it's the least popular thing on the planet. Talk about contrarian investing!

[Demeter]

46. Obama faces lonely struggle (THERE'S A CURE FOR THAT--IT'S CALLED YOUR BASE!)

http://www.ft.com/cms/s/0/4568c7e2-1e22-11de-830b-00144feabdc0.html

By Edward Luce in London and Krishna Guha in Washington

Published: March 31 2009 19:46 | Last updated: March 31 2009 19:46


THIS PIECE IS SO DELICIOUSLY IRONIC IN THE CLASSIC, STIFF UPPER LIP BRIT STYLE, WITH THE DEVASTATING DEADPAN, THAT I FEEL COMPELLED TO INTERPOLATE WITH TRANSLATIONS. PLEASE INDULGE MY CREATIVITY, OR NOT.

Barack Obama enters his first real moment of global diplomacy in London on Wednesday with a paradox: he is the most popular US president in a generation, but you would have to go back more than two generations to find one with fewer cards to play.

BECAUSE HE DISCARDED THEM AT THE BEGINNING OF THE DEAL (SOME POKER PLAYER!)

Many outside the US accept that the country is not solely to blame for the global meltdown.
YEAH, RIGHT! NAME ONE!

None would point the finger at Mr Obama personally.
THE GOP HAD THAT FRANCHISE, BUT NOW THAT THERE'S A TRACK RECORD, THIS IS CHANGING. NOW EVERYBODY CAN PLAY!

But it is he who will be the target of long pent-up resentment at the US’s evangelical approach now that its belief in self-regulating markets has been discredited.
MAINLY BECAUSE HE HASN'T REPUDIATED IT AND PROSECUTED THE PURVEYORS OF THE FRAUDS, NOR INSTITUTED ANY REGULATIONS.

Thursday’s G20 summit, and Wednesday’s meetings between Mr Obama and Dmitry Medvedev and Hu Jintao, his Russian and ­Chinese counterparts, will focus on the future rather than the past. But it is in shaping the future that Mr Obama is likely to find his greatest difficulties. TRYING TO GO BACK TO THE PAST WILL DO THAT TO YOU!

Unlike his predecessors who created the Bretton Woods currency system in 1945 and then brought it to a close in 1973 by going off the gold standard, Mr Obama can only achieve the changes he wants through persuasion. BECAUSE LEADING BY EXAMPLE WOULD MEAN SHUTTING DOWN ZOMBIE BANKS.

Even then, he is unlikely to get everything he desires. In each of the four areas that Mr Obama wants to see progress, the president is likely to bump up against the realities of reduced US power. THAT ONE YOU CAN THANK GEORGE "W" BUSH FOR.

Mr Obama has said he wants four things from the summit. First, he has called for a “robust” co-ordinated stimulus, most recently in an interview with the Financial Times. Countries such as Germany and France resent being told to run up large public debts in order to shield the world economy from the consequences of what they see as US mistakes. AND RIGHTLY SO! STIMULUS IS A DRUG. THIS OLD ECONOMY IS DEAD. WE NEED A NEW ECONOMY, NOT A DRUGGED DEAD ONE.

Mr Obama has already indicated he would accept a form of words pledging “to do what is necessary”, rather than concrete new commitments to more spending. “This is not a pledging conference,” Michael Froman, the US senior official, for the G20, said on Tuesday. CHECK IF HIS FINGERS ARE CROSSED.

Second, Mr Obama has called for an expanded scope of regulation. Here, he is likely to make more progress. Most developed economies, particularly in Europe, agree to the proposals that Tim Geithner, the US Treasury secretary, unveiled in Washington last week for an overhaul of US domestic regulation. MOST DEVELOPED ECONOMIES WANT TO GO A LOT FARTHER.

THERE'S MORE, BUT I CAN'T KEEP UP WITH THE INANITY.

[Tansy_Gold]

52. Keep it going, and then send your "revised" version to

Messrs. Luce and Guha.

It's superb!

:yourock:

[Demeter]

57. I Don't Know, Tansy. It All Seems So Pointless

I had to laugh about yesterday's posting on the Black Swan guy, who got no attention from TPTB until he was proved right. And I'll bet he now thinks twice about small planes, too.

Thank you for appreciating my very weird sense of humor. Some days are like that.

[Tansy_Gold]

63. I also possess a weird sense of humor

That's why I like it here?????? ;-)



Have a good one. I'm struggling with a nasty workload today, may spill over to tomorrow and I'm gonna be chained to the desk (figuratively) when I would much rather be doing other things.

Will check in frequently, maybe leave some drive-by posts.




TG

[Demeter]

64. Went Out and Bought Me a Pitchfork Today

Actually, it's a cultivator, but it's the right shape, and small enough for me to carry. And nice and sharp. I have to go out now and do a neighbor's garden. Carry on, Marketeers!

[specimenfred1984]

54. The "hope bubble" continues: Wall Street extends rally as economic hopes rise

http://finance.yahoo.com/news/Wall-Street-extends-rally-as-apf-14828419.html

--- NEW YORK (AP) -- Wall Street is extending its rally as it grows more optimistic that the economy is on the mend.

The major indexes jumped more than 2 percent Thursday, and the Dow Jones industrials rose more than 200 points, as the world's finance leaders met in London to discuss efforts to fix the global economy. The G-20 ministers plan to give the International Monetary Fund $500 billion, and create stricter rules for hedge funds.

Bank stocks got an especially big boost when the Financial Accounting Standards Board relaxed rules forcing banks to value their assets at current prices. The change should help banks reduce losses.---


All a person has to do is ignore everything and have hope! Surreal...

[rfranklin]

55. Does that mean that I can value my house at 2006 prices?

Can I mortgage it for 150% of current value?

[specimenfred1984]

56. Certainly does, you can also get paid for not having a job...

invest all the money you don't have saved and buy into a corrupt stock market based solely on hope!

[Demeter]

61. There's A Rumor of a Bunch of Ponies Under All That Manure Pile

buy on the rumor, Sell on the fact? Is that how it goes?

Methinks it's the guys with facts that are creating all the rumors.....

[54anickel]

69. Wall St rallies on G20, accounting-rule changes

http://finance.yahoo.com/news/Wall-Street-jumps-on-G20-hope-rb-14829282.html?sec=topStories&pos=main&asset=TBD&ccode=TBD

NEW YORK (Reuters) - U.S. stocks jumped 4 percent on Thursday after world leaders agreed to pump an additional trillion dollars into the economy to fight the financial crisis and on rule changes aimed at giving banks flexibility when dealing with toxic assets.

Leaders of the G20 announced an additional $500 billion for the International Monetary Fund, plus $250 billion in IMF Special Drawing Rights and $250 billion to boost trade, to fight the worst economic crisis since the 1930s.

Adding to the positive tone, shares of large manufacturers such as Caterpillar Inc (NYSE:CAT - News) rose on hopes the economy may be stabilizing. Government data showed U.S. factory orders rose in February for the first time in seven months.

Financial shares, a key driver of the recent rally, surged on bets for an improving global economy and relaxation of accounting rules that have resulted in sharp hits to their balance sheets.

more....

[Tansy_Gold]

81. And all this money is coming from where??????????????

Am I the only one asking this question?











I didn't think so.



Tansy Gold

[Demeter]

100. There was a discussion of Where IMF Would Get these Funds

Special Drawing rights--can't remember the details, but it was very much a high-tech kind of thing. i f I see it again, I'll post it with a shout out.

[Tansy_Gold]

101. "special drawing rights"

means they get to draw up their own? Like Capitol One? With crayons or pen-and-ink or can they upload their own personal favorite photos of Uncle Al Greenscum and Auntie Ayn?

Always thought we oughta have a woman on the currency, but NOT HER.



TG

[Demeter]

62. Blatantly Stolen from Kpete: THEY KNEW! - AIG was a Ponzi scheme plain and simple

They knew: http://www.ritholtz.com/blog/200...as-reinsurance /

"In fact, our investigation suggests that by the time AIG had entered the CDS fray in a serious way more than five years ago, the firm was already doomed. No longer able to prop up its earnings using reinsurance because of growing scrutiny from state insurance regulators and federal law enforcement agencies, AIG’s foray into CDS was really the grand finale. AIG was a Ponzi scheme plain and simple, yet the Obama Administration still thinks of AIG as a real company that simply took excessive risks. No, to us what the fraud Bernard Madoff is to individual investors, AIG is to the global financial community.

"As with the phony reinsurance contracts that AIG and other insurers wrote for decades, when AIG wrote hundreds of billions of dollars in CDS contracts, neither AIG nor the counterparties believed that the CDS would ever be paid. Indeed, one source with personal knowledge of the matter suggests that there may be emails and actual side letters between AIG and its counterparties that could prove conclusively that AIG never intended to pay out on any of its CDS contracts.

"...These were not valid contracts as Fed Chairman Ben Bernanke, Treasury Secretary Geithner and Economic policy guru Larry Summers claim, but rather acts of criminal fraud meant to manipulate the capital positions and earnings of financial companies around the world.

"...Seen in this context, the payments made to AIG by the Fed and Treasury, which were then passed-through to dealers such as Goldman Sachs (NYSE:GS), can only be viewed as an illegal taking that must be reversed once the US Trustee for the Federal Bankruptcy Court for the Southern District of New York is in control of AIG’s operations."

much more at:
http://us1.institutionalriskanalytics.com/pub/IRAstory....

[DemReadingDU]

72. I feel sick

:puke:


Sorry I did not see this thread earlier before I also posted it downward, also with Denninger's commentary.

[AnneD]

68. More consumers save with do-it-yourself approach

Tasha Woods wants shiny red toenails and stylish hair.

But in these tough economic times, she’s holding on to her disposable income by doing things the old-fashioned way — getting out bottles of fiery red nail polish, a curling iron and hair rollers to beautify herself.

The mail clerk hasn’t visited a nail salon in six months.

“I’ve been pretty much busy doing it myself to save money,” Woods said as she shopped at the Sally Beauty Supply on Kirby Drive. “And I don’t go to the beauty salon as often. I’m just cutting back.” Like many Houstonians, Woods is cutting costs by joining the do-it-yourself movement that began when the economy took a nosedive last fall.

In another sign that the tough economy is changing consumers’ buying habits, more people are becoming their own mechanics, gardeners, maids and hair stylists. Much the way our grandparents or parents did things for themselves in the days before such services proliferated in strip malls and shopping centers, Americans are becoming more self-sufficient instead of outsourcing chores.

more......

http://www.chron.com/disp/story.mpl/business/6354739.html

I think this may be a permanent change.

[Tansy_Gold]

82. Permanent change?

“And I don’t go to the beauty salon as often."


:rofl:


Tansy Gold, finding amusement wherever she can

[AnneD]

104. Always happy ....

to provide amusement to those that can get it;)

[DemReadingDU]

70. AIG = PONZI

4/2/09 AIG: Before CDS, There Was Reinsurance by Chris Whalen

Below is the latest issue of The Institutional Risk Analyst. We did a lot of work on this one. Look forward to your comments. — Chris
“What do many corporate buyers of insurance have in common with American International Group? Perhaps more than they would like to admit. Like AIG, many companies in the past few years have bought finite insurance, which transfers a prescribed amount of risk for a particular liability. What regulators now want to know is, how many companies, like AIG, have used finite insurance to artificially inflate their financial results?”

Infinite Risk?

CFO Magazine

June 1, 2005

“In the regulatory world, a ’side letter’ is perhaps the most insidious and destructive weapon in the white-collar criminal’s arsenal. With the flick of a pen, underhanded executives can cook the books in enormous amounts and render a regulator helpless.”
Fraud Magazine

July/August 2006
PRMIA Event: Market & Liquidity Risk Management for Financial Institutions

First, a housekeeping item. On Monday, May 4, 2009, in partnership with the Federal Deposit Insurance Corporation (FDIC) & the Office of Thrift Supervision (OTS), the Washington DC chapter of Professional Risk Managers’ International Association (PRMIA) is presenting an important day-long conference on managing liquidity and market risk for financial institutions. Speakers include some of the leading risk practitioners, investors, researchers, bank executives and regulators in the US financial community. PRMIA free and sustaining members may register on the PRMIA web site. Members of the regulatory community may register via the FDIC University. IRA co-founder Christopher Whalen will participate in the conference and serve as MC. See the PRMIA web site for more information on the program and speakers.

And yes, our favorite bank regulator is making the opening remarks. ;)

For some time now, we have been trying to reconcile the apparent paradox of American International Group (NYSE:AIG) walking away from the highly profitable, double-digit RAROC business of underwriting property and casualty (P&C) risk and diving into the rancid cesspool of credit default swaps (”CDS”) contracts and other types of “high beta” risks, business lines that are highly correlated with the financial markets.

In our interview with Robert Arvanitis last year, “‘Bailout: It’s About Capital, Not Liquidity; Seeking Beta: Interview with Robert Arvanitis’, September 29, 2008,” we discussed the difference between high and low beta. We also learned from Arvanitis, who worked for AIG during much of the relevant period, that the decision by Hank Greenberg and the AIG board to enter the CDS market was, at best, chasing revenue. No rational examination of the business opportunity, assuming that Greenberg and his directors were acting based on a reasoned analysis, could have resulted in a favorable decision to pursue CDS and other “high beta” risks, at least from our perspective.

In an effort to resolve this conundrum, over the past several months The IRA has interviewed a number of forensic experts, insurance regulators and members of the law enforcement community focused on financial fraud. The picture we have assembled is frightening and suggests that, far from just AIG, much of the insurance industry has been drawn into the world of financial engineering and has thus become part of the problem. Below we present our preliminary findings and invite your comments.

One of the first things we learned about the insurance world is that the concept of “shifting risk” for a variety of business and regulatory reasons has been ongoing in the insurance world for decades. Finite insurance and other scams have been at least visible to the investment community for years and have been documented in the media, but what is less understood is that firms like AIG took the risk shifting shell game to a whole new level long before the firm’s entry into the CDS market.

In fact, our investigation suggests that by the time AIG had entered the CDS fray in a serious way more than five years ago, the firm was already doomed. No longer able to prop up its earnings using reinsurance because of growing scrutiny from state insurance regulators and federal law enforcement agencies, AIG’s foray into CDS was really the grand finale. AIG was a Ponzi scheme plain and simple, yet the Obama Administration still thinks of AIG as a real company that simply took excessive risks. No, to us what the fraud Bernard Madoff is to individual investors, AIG is to the global financial community.

As with the phony reinsurance contracts that AIG and other insurers wrote for decades, when AIG wrote hundreds of billions of dollars in CDS contracts, neither AIG nor the counterparties believed that the CDS would ever be paid. Indeed, one source with personal knowledge of the matter suggests that there may be emails and actual side letters between AIG and its counterparties that could prove conclusively that AIG never intended to pay out on any of its CDS contracts.

The significance of this for the US bailout of AIG is profound. If our surmise is correct, the position of Feb Chairman Ben Bernanke and Treasury Secretary Tim Geithner that the AIG credit default contracts are “valid legal contracts” is ridiculous and reveals a level of ignorance by the Fed and Treasury about the true goings on inside AIG and the reinsurance industry that is truly staggering.

lots more...
http://www.ritholtz.com/blog/2009/04/aig-before-cds-there-was-reinsurance/

[DemReadingDU]

71. Denninger: FLASH: AIG CALLED CRIMINAL SCAM!

4/2/09
(Credit Barry Ritholtz and Institutional Risk Analytics, the original source)

WHOAH!

In fact, our investigation suggests that by the time AIG had entered the CDS fray in a serious way more than five years ago, the firm was already doomed. No longer able to prop up its earnings using reinsurance because of growing scrutiny from state insurance regulators and federal law enforcement agencies, AIG’s foray into CDS was really the grand finale. AIG was a Ponzi scheme plain and simple, yet the Obama Administration still thinks of AIG as a real company that simply took excessive risks. No, to us what the fraud Bernard Madoff is to individual investors, AIG is to the global financial community.

As with the phony reinsurance contracts that AIG and other insurers wrote for decades, when AIG wrote hundreds of billions of dollars in CDS contracts, neither AIG nor the counterparties believed that the CDS would ever be paid. Indeed, one source with personal knowledge of the matter suggests that there may be emails and actual side letters between AIG and its counterparties that could prove conclusively that AIG never intended to pay out on any of its CDS contracts.

Read that folks.

Then read it again.

Then read it AGAIN.

More excerpts:

There are two basic problems with side letters. First, they are a criminal act, a fraud that usually carries the full weight of an “A” felony in many jurisdictions. Second, once the side letter is discovered by a persistent auditor or regulator examining the buyer of protection, the transaction becomes worthless. You paid $6 million to AIG to shift risk via the reinsurance, but the side letter makes clear that the transaction is a fraud and you lose any benefit that the apparent risk shifting might have provided.

And finally, the last nail in the coffin:

The key point is that neither the public, the Fed nor the Treasury seem to understand is that the CDS contracts written by AIG with these various non-insurers around the world were shams - with no correlation between “fees” paid and the risk assumed. These were not valid contracts as Fed Chairman Ben Bernanke, Treasury Secretary Geithner and Economic policy guru Larry Summers claim, but rather acts of criminal fraud meant to manipulate the capital positions and earnings of financial companies around the world.

Indeed, our sources as well as press reports suggest that the CDS contracts written by AIG may have included side letters, often in the form of emails rather than formal letters, that essentially violated the ISDA agreements and show that the true, economic reality of these contracts was fraud plain and simple. Unfortunately, by not moving to seize AIG immediately last year when the scandal broke, the Fed and Treasury may have given the AIG managers time to destroy much of the evidence of criminal wrongdoing.

Only when we understand how AIG came to be involved in CDS and the fact that this seemingly illegal activity was simply an extension of the reinsurance/side letter shell game scam that AIG, Gen Re and others conducted for many years before will we understand what needs to be done with AIG, namely liquidation. Seen in this context, the payments made to AIG by the Fed and Treasury, which were then passed-through to dealers such as Goldman Sachs (NYSE:GS), can only be viewed as an illegal taking that must be reversed once the US Trustee for the Federal Bankruptcy Court for the Southern District of New York is in control of AIG’s operations.

Thank you Timmy, thank you Ben Bernanke, thank you Henry Paulson, thank you George Bush and thank you President Obama.

If this is true every one of you needs to go to prison.

After those of you still in your positions are impeached.

Again, for the simple who need it in one sentence:

AIG was a Ponzi scheme plain and simple, yet the Obama Administration still thinks of AIG as a real company that simply took excessive risks. No, to us what the fraud Bernard Madoff is to individual investors, AIG is to the global financial community.

Distilled to one sentence: The bailout of AIG is equivalent to the US Taxpayer bailing out Madoff's admitted (and now convicted) Ponzi Scheme.

PS: This isn't MY analysis, this is the analysis of Institutional Risk Analytics. If you don't understand who they are, you should - they're one of the most-respected groups out there when it comes to banking system analysis. If they're willing to print something this damning....
http://market-ticker.org/archives/923-FLASH-AIG-CALLED-CRIMINAL-SCAM!.html

[ozymandius]

86. Fvck! Has anyone thought what this implies?

While AIG was writing scams instead of insurance policies, AIG was bleeding their clients. When it is discovered that this was an intentional scam then every insurance package will be void, leaving every company exposed to any losses. This represents the potential catalyst for a domino effect. They are fucked. Everything is fucked.

[Hugin]

87. Am I clear on the fact they were only doing it for the commissions?

Like on Bonuses?

[ozymandius]

88. I am trying to apply occam's razor to this one.

Consider the incentives. If one wished to run a fraud scheme, wouldn't the use of a vehicle deemed "too big to fail" be the perfect mechanism?

[Hugin]

90. Oh sure, one which could conceivably be backed up by a deep pocket.

The implications of this are staggering. I'm still reeling from it...

[ozymandius]

92. The implications make me ill.

Anything insured by this worthless paper is, conversely, worthless.

[Robbien]

97. Wait a minute, there may be emails stating they knew it was a fraud

From DemReadingDU's link:

As with the phony reinsurance contracts that AIG and other insurers wrote for decades, when AIG wrote hundreds of billions of dollars in CDS contracts, neither AIG nor the counterparties believed that the CDS would ever be paid. Indeed, one source with personal knowledge of the matter suggests that there may be emails and actual side letters between AIG and its counterparties that could prove conclusively that AIG never intended to pay out on any of its CDS contracts.

The significance of this for the US bailout of AIG is profound. If our surmise is correct, the position of Feb Chairman Ben Bernanke and Treasury Secretary Tim Geithner that the AIG credit default contracts are "valid legal contracts" is ridiculous and reveals a level of ignorance by the Fed and Treasury about the true goings on inside AIG and the reinsurance industry that is truly staggering.


----------------------


If these emails/side letters became public, all that money that AIG paid out the banksters should be clawed back if there was a wink-nod-email agreement that it was never to be paid out in the first place.

Keeping these emails/side letters secret is going to be a major priority of the Obama administration.

[Tansy_Gold]

96. How 'bout if you apply it to someone's throat instead?

n/t

[Dr.Phool]

93. And why are the taxpayers liable for intentional fraud?

And, were Goldman, Paulson, JP Morgan in on the scheme? They seem to be the biggest beneficiaries, and AIG was the vehicle.

[ozymandius]

95. They, these companies, have made no secret of their ambition to gain

access to "dumb public money". Jamie Dimon is probably rehearsing his testimony in front of a mirror right now.

[Robbien]

98. Because the intentional fraud is a secret

outlined in emails and side letters to which the public does not have privy.

As long as no one can prove we are paying out on fraudulent contracts, the Obama Admin, the banksters and AIG are safe.

[antigop]

74. DAMN IT! I WANT NAMES! What companies were doing this to hide losses?

What executives at those companies benefited from compensation agreements that tied their bonuses to these increased earnings?
Which companies were doing this to help prop up the stock price?

WHO? WHICH ONES? I WANT NAMES! DAMN IT!

AND I WANT OUR MONEY BACK!
:mad: :mad: :mad:

[Hugin]

77. I'm guessing just about every enterprise that had a financial arm...

GE... GMAC... Countrywide... Citi... Oh, and of course all of the big Investment Banks. Starting off with Goldman Sachs, Lehman, Bear Stearns... Also, probably all of the major Hedge funds. Insurance companies. etc.

:freak:

[Dr.Phool]

94. Don't forget the big property insurance companies.

They're big on re-insurance.

[Hugin]

76. It took them this long to realize that?

How long have we been saying the whole thing is a giant Ponzi Scheme? Years?

Nice find Demeter & DRDU... Very nice. :D

Anyway, my extension to this is that Madoff was outed as cover for this much larger scheme. They do stuff like that to each other... Look at Elliot Spitzer.

When do you think something will be done about it? I for one, am not going to hold my breath.

[DemReadingDU]

99. Chris Whalen: AIG: Before CDS, There Was Reinsurance (Part 2)

4/2/09 more from Chris Whalen
By the way, further to the post this AM, check out some of the work by my friend Lucy Komisar. She actually covered some of the ground in my post years ago, when doing so was very unpopular. Lucy is a very gutsy lady who is not afraid to challenge seeming authority. We need to all do more of that.

http://thekomisarscoop.com/2008/12/19/aigs-past-could-return-to-haunt/

http://thekomisarscoop.com/2005/03/17/the-fall-of-a-titan/

http://thekomisarscoop.com/2004/12/22/take-the-money-and-run-offshore/

http://thekomisarscoop.com/2004/11/17/cooking-the-insurance-books-a-decade-of-lax-regulation-lays-groundwork-for-scandal/

http://thekomisarscoop.com/2004/11/01/cooking-the-insurance-books/


AIG: Before CDS, There Was Reinsurance (Part 2)
http://www.ritholtz.com/blog/2009/04/aig-before-cds-there-was-reinsurance-part-2/

[Ghost Dog]

73. G20 Communiqué Summary

G20 world leaders have revealed their communiqué to tackle the global economic crisis. UK Prime Minister Gordon Brown announced the $1.1 trillion deal as he closed the G20 summit. Here is a summary of the key points:

FINANCIAL REGULATION

* A new Financial Stability Board, with a strengthened mandate, will replace the Financial Stability Forum
* Financial regulation and oversight will be extended to all financial institutions, instruments and markets
* This includes bringing hedge funds within the global regulatory net for the first time
* Members are committed to implementing tough new rules on pay and bonuses at a global level
* International accounting standards will be set
* Credit rating agencies will be regulated in order to remove their conflicts of interest
* A common approach to cleaning up banks' toxic assets has been agreed

TAX HAVENS

* There will be sanctions against tax havens that do not transfer information on request
* The Organisation for Economic Co-operation and Development has published a list of countries assessed by the Global Forum against the international standard for exchange of tax information

IMF

* Resources available to the International Monetary Fund will be trebled to $750bn
* This includes a new overdraft facility, or special drawing rights allocation, of $250bn
* Additional resources of $6bn from agreed IMF gold sales will be made available for lending to the poorest countries
* The G20 also supports increased lending to the world's poorest countries of at least $100bn by the multilateral development banks

GLOBAL TRADE

* There will be a commitment of $250bn of support for trade finance made over the next two years
* This will be made available through export credit and investment agencies, as well as through multilateral development banks
* National regulators will be asked to make use of available flexibility in capital requirements for trade finance

PROTECTIONISM

* The G20 has pledged to resist protectionism
* There will be a commitment to naming and shaming countries that breach free trade rules
* The G20 will notify the World Trade Organization (WTO) of any measures that constrain worldwide capital flows
* The G20 has called on the WTO to monitor and report publicly on these undertakings on a quarterly basis

FISCAL STIMULUS

* Although there is no new fiscal stimulus, Gordon Brown said G20 countries are already implementing "the biggest macroeconomic stimulus the world has ever seen" - an injection of $5tn by the end of next year

/.. http://news.bbc.co.uk/2/hi/business/7979682.stm

See also (video):

Brown's statement: http://news.bbc.co.uk/2/hi/in_depth/business/2009/g20/7979746.stm
Obama's statement: http://news.bbc.co.uk/2/hi/7979483.stm
Sarzozy press conf: http://news.bbc.co.uk/2/hi/business/7979831.stm

Bloomberg report: http://www.bloomberg.com/apps/news?pid=20601085&sid=ax.wOCovMGqE&refer=europe

Global plan for recovery and reform (02/04/2009) The official communique issued at the close of the G20 London Summit: http://www.londonsummit.gov.uk/en/media-centre/latest-news/?view=News&id=15766937

[Ghost Dog]

75. G20 "Strengthening financial supervision and regulation"

From the communiqué:

14. We each agree to ensure our domestic regulatory systems are strong. But we also agree to establish the much greater consistency and systematic cooperation between countries, and the framework of internationally agreed high standards, that a global financial system requires. Strengthened regulation and supervision must promote propriety, integrity and transparency; guard against risk across the financial system; dampen rather than amplify the financial and economic cycle; reduce reliance on inappropriately risky sources of financing; and discourage excessive risk-taking. Regulators and supervisors must protect consumers and investors, support market discipline, avoid adverse impacts on other countries, reduce the scope for regulatory arbitrage, support competition and dynamism, and keep pace with innovation in the marketplace.

15. To this end we are implementing the Action Plan agreed at our last meeting, as set out in the attached progress report. We have today also issued a Declaration, Strengthening the Financial System. In particular we agree:

- to establish a new Financial Stability Board (FSB) with a strengthened mandate, as a successor to the Financial Stability Forum (FSF), including all G20 countries, FSF members, Spain, and the European Commission;

- that the FSB should collaborate with the IMF to provide early warning of macroeconomic and financial risks and the actions needed to address them;

- to reshape our regulatory systems so that our authorities are able to identify and take account of macro-prudential risks;

- to extend regulation and oversight to all systemically important financial institutions, instruments and markets. This will include, for the first time, systemically important hedge funds;

- to endorse and implement the FSF’s tough new principles on pay and compensation and to support sustainable compensation schemes and the corporate social responsibility of all firms;

- to take action, once recovery is assured, to improve the quality, quantity, and international consistency of capital in the banking system. In future, regulation must prevent excessive leverage and require buffers of resources to be built up in good times;

- to take action against non-cooperative jurisdictions, including tax havens. We stand ready to deploy sanctions to protect our public finances and financial systems. The era of banking secrecy is over. We note that the OECD has today published a list of countries assessed by the Global Forum against the international standard for exchange of tax information;

- to call on the accounting standard setters to work urgently with supervisors and regulators to improve standards on valuation and provisioning and achieve a single set of high-quality global accounting standards; and

- to extend regulatory oversight and registration to Credit Rating Agencies to ensure they meet the international code of good practice, particularly to prevent unacceptable conflicts of interest.

...

[RUMMYisFROSTED]

79. "Look at Chimp's stock market go!"

:D

[Hugin]

80. US banks' direct borrowings rise in week (Reuters)

NEW YORK, April 2 (Reuters) - The Federal Reserve made more direct loans to banks and financial companies at the discount window in the latest week, Fed data showed on Thursday.

Banks' overall borrowings averaged $135.29 billion per day in the week ended Apr. 1, up from an average $134.34 billion per day the week before.

The Federal Reserve's balance sheet -- a broad gauge of the central bank's lending to the financial system -- rose to $2.060 trillion on Apr. 1 from $2.055 trillion on Mar. 25.

Banks' primary credit discount window borrowings averaged $59.74 billion per day in the latest week, down from $62.78 billion the previous week.

Net portfolio holdings of the Fed's Commercial Paper Funding Facility, which is buying three-month top-rated CP to free up this key area of short term lending, were $249.73 billion as of Apr. 1, up from $241.31 billion on Mar. 25.

The Fed's holdings of mortgage-backed securities rose to $236.64 billion on Apr. 1 from $236.16 billion on Mar. 25.

Primary dealer and other broker-dealer borrowings fell to $18.30 billion from $20.18 billion, while credit extended to insurer AIG totaled $45.97 billion on Apr. 1 from $43.19 billion on Mar. 25.

The Fed's Term Asset-Backed Securities Loan Facility (TALF) eased to $4.69 billion on Apr. 1 from $4.71 billion on Mar. 25. (Reporting by Chris Reese and Richard Leong: Editing by Chizu Nomiyama )

http://www.reuters.com/article/bondsNews/idUSNYE00055120090402

_________________________________________________________________________________________________________

If anyone's interested... Here's your bounce.

[tclambert]

89. Okay, what happened?

DJIA: 7978.08 +216.48 (+2.79%)
Nasdaq: 1602.63 +51.03 (+3.29%)
S&P 500: 834.38 +23.30 (+2.87%)


DJIA cracked 8000 for a few hours. Where did the dollars come from to buy these securities? Has someone been sitting on a hoard of cash? Or did the Wall Street firms use our bailout money to buy stocks?

GM went up 16 cents today (+8.29%), closed at 2.09. Still, it was 3.62 last Friday. Ford went up 17 cents (+6.2%). Toyota went up 3.83 (+5.64%).

[ozymandius]

91. If I had an unlimited supply of funds that remained, conveniently, off-balance sheet

I would have a whole of of fun. Where is there a law that says the Federal Reserve must divulge its balance sheet? I don't think there is one.

Edit: Quantitative Easing = unlimited supply of funds, btw

[politicallore]

102. I did alright today...

I did alright today...

Sirius went up, so that helped

Keep these threads going mate!