STOCK MARKET WATCH, Tuesday April 7

[ozymandius]

Source: du

STOCK MARKET WATCH, Tuesday April 7, 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 6, 2009

Dow... 7,975.85 -41.74 (-0.52%)
Nasdaq... 1,606.71 -15.16 (-0.93%)
S&P 500... 835.48 -7.02 (-0.83%)
Gold future... 872.80 -24.50 (-2.81%)
30-Year Bond 3.76% +0.04 (+0.99%)
10-Yr Bond... 2.94% +0.03 (+1.10%)

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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

So how big is the credit derivatives market anyway? According to Reuters, the credit derivatives market is 55 Trillion in size at Oct. 7, 2008:

…AIG sold protection to banks on pools of risky mortgages and other assets in the $55 trillion credit derivatives market…

Now, let’s take a look at where the bulk of these derivatives are held,

-see table-

According to sworn testimony given by AIG chief Liddy, we know that insurer AIG currently possesses about 1.6 Trillion worth of credit derivatives (down from about 2.6 Trillion).

.....

So, the top six banking institutions that report to the OCC along with AIG (The Magnificent Seven) comprised approximately 18.5 Trillion worth (33.5%) of an industry reported to be 55 trillion in aggregate. The Federal Reserve’s proxy bank, J.P. Morgan Chase, possessed 8.39 Trillion worth of these derivatives or 15.25% of the global total of outstanding notional.

So folks, what do you suppose the odds are that the Federal Reserve’s proxy bank – J.P. Morgan, the most dominant player in this space - had more than a few trades on its books where AIG was their counterparty?

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

[ozymandius]

2. Today's Report

14:00 Consumer Credit Feb
Briefing.com unch
Consensus -$1.5B
Prior $1.8B

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

[UpInArms]

92. U.S. Feb. consumer credit falls $7.5 billion, or 3.5% annual - consensus was -$1.5B

33. U.S. Feb. consumer credit falls $7.5 billion, or 3.5% annual
3:01 PM ET, Apr 07, 2009

34. U.S. Feb. consumer credit card debt falls 9.7% annual rate
3:01 PM ET, Apr 07, 2009

[ozymandius]

3. Oil falls below $51 in Asia as rally loses steam

SINGAPORE – Oil fell below $51 a barrel Tuesday in Asia as doubts grew that crude's two-month rally can be sustained while global demand remains weak.

Benchmark crude for May delivery fell 31 cents to $50.74 a barrel by late afternoon in Singapore in electronic trading on the New York Mercantile Exchange. The contract fell $1.46 on Monday to settle at $51.05.

.....

Oil prices jumped from below $35 in February to above $54 last month as investors speculated that the U.S. will likely avoid a depression this year. But some analysts fear there hasn't been enough evidence of economic recovery to warrant the recent run-up in prices.

.....

In other Nymex trading, gasoline for May delivery rose 2.15 cents to $1.50 a gallon and heating oil gained 1.33 cents to $1.43 a gallon. Natural gas for May delivery was steady at $3.73 per 1,000 cubic feet.

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

[ozymandius]

4. Stock futures down, eyes on Alcoa earnings

(Reuters) – U.S. stock index futures pointed to a lower open on Wall Street on Tuesday as investors braced for aluminum producer Alcoa's (AA.N) quarterly results that will kick-start a keenly awaited U.S. earnings season.

....

* European shares surrendered initial gains and turned negative in morning trade on Tuesday, down 1.1 percent.

* On the macro side, the Bank of Japan unveiled further steps to ease credit strains on Tuesday, while Australia's central bank cut its key cash rate by 25 basis points to 3.00 percent, the sixth easing in eight months.

* Toxic debts racked up by banks and insurers could spiral to $4 trillion, new forecasts from the International Monetary Fund are set to suggest, British daily The Times reported on its website without citing sources. The IMF said in January that it expected the deterioration in U.S.-originated assets to reach $2.2 trillion by the end of next year.

* A half-dozen bidders have emerged for American International Group Inc's (AIG.N) asset-management unit, but the sale of the $100 billion portfolio has become complicated by client withdrawals and declines in asset prices.

http://news.yahoo.com/s/nm/20090407/bs_nm/us_markets_stocks

[ozymandius]

5. U.S. SEC to consider about 4 short sale proposals

WASHINGTON (Reuters) – U.S. securities regulators will consider about 4 proposals to restrict short selling, a type of investing blamed for accelerating the severe downturn in financial services stocks.

Proposals the SEC will consider at its Wednesday meeting include the restoration of the "uptick rule," which allowed short sales -- a bet that a stock's price will fall -- only when the last sale price was higher than the previous price, the chief of the Securities and Exchange Commission said on Monday.

....

The SEC also is crafting two circuit breaker proposals: One would temporarily halt short sales of a stock if the stock has already fallen by a certain percentage, the source said.

The other would trigger the application of an uptick rule or bid test after the price of a stock experienced a decline by a certain percentage, such as 10 percent, the source said. This version of the circuit breaker is similar to a suggestion put forth by the operators of the top U.S. exchanges, the New York Stock Exchange, the Nasdaq Stock Market and BATS exchange.

http://news.yahoo.com/s/nm/20090407/bs_nm/us_sec_shortselling

[ozymandius]

6. U.S. cracks down on housing scams

Consumers who want to avoid foreclosure or want help refinancing into an affordable mortgage are again being warned to watch out for the scam artists.
Advertisement

Treasury Secretary Timothy F. Geithner announced Monday a multiagency crackdown effort on loan-modification and foreclosure rescue scams.

....

The FTC is seeking or already obtained a temporary restraining order to halt alleged illegal conduct for the following outfits:

• Federal Loan Modification Law Center or FedMod, which charges consumers $1,000 to $3,000 in fees and fails in numerous instances to obtain loan modifications.

• Bailout.hud-gov.us and Bailout.dohgov.us. The sites give the false impression of being associated with the federal government, including HUD and the Treasury Department. The FTC alleges that the defendant misled consumers nationwide.

http://www.freep.com/article/20090407/COL07/904070365/1081/U.S.+cracks+down+on+housing+scams

[Demeter]

22. Better Late than Never, I Suppose

Of course, warning about scam mortgages would have been a better deal, but Geithner's livelihood depended upon them, didn't it?

[ozymandius]

26. I love making fun of the handwritten cardboard signs stapled to telephone poles

that I see around my neighborhood. They often read: "Avoid Foreclosure!!! Call 1-800-you-fool." Okay. I made up the telephone number. But I see these cardboard signs advertising mortgage rescue with barely legible marker scrawl. I wonder how many people call honestly seeking help. Quite frankly, I really don't want to know. My brain hurts enough from ambient stupid floating through the air.

[ozymandius]

7. Bank of Japan Widens Range of Collateral for Loans

April 7 (Bloomberg) -- The Bank of Japan will provide more funds to commercial banks by broadening the range of collateral it accepts in an effort to encourage lending to companies.

Governor Masaaki Shirakawa and his policy board today decided to accept municipal and central government bonds that are sold directly to investors to ease credit, the central bank said in a statement today in Tokyo. The board held the overnight lending rate at 0.1 percent by a unanimous vote.

Today’s move would free up funds at regional banks, who hold the securities and are the main lenders to small and medium-sized enterprises. Companies in the world’s second- largest economy say access to funds is the tightest in a decade, the central bank’s quarterly Tankan survey showed last week.

http://www.bloomberg.com/apps/news?pid=20601101&sid=aHB_vhXyuxKY&refer=japan

[ozymandius]

8. UPDATE 1-Merrill Lynch closes Japan private equity office

* Closed due to lack of deal flow in Japan - sources

* Closure follows similar moves by rivals

* Other regional/country offices operating normally - sources

HONG KONG/TOKYO, April 7 (Reuters) - Bank of America's (BAC.N: Quote, Profile, Research) Merrill Lynch has recently closed the Tokyo office of Merrill Lynch Global Private Equity (MLGPE), a major international investment arm of the U.S. bank.

Sources with direct knowledge of the matter told Reuters that the closure of its Tokyo office was mainly due to lack of deal flow in Japan's private equity markets.

....

More hedge funds and private equity firms are likely to trim or shut their Asian operations as the financial crisis forces a retreat back to their home markets in the West, industry experts told the Reuters Private Equity and Hedge Funds Summit in Hong Kong last month.

http://in.reuters.com/article/fundsNews/idINHKG35075220090407

[Festivito]

9. Debt: 04/03/2009 11,146,566,832,297.33 (UP 22,047,531,044.12) (Up 28B.)

(A reasonable rise today.)

= Held by the Public + Intragovernmental(FICA)
= 6,868,532,515,279.65 + 4,278,034,317,017.68
UP 28,967,677,130.84 + DOWN 6,920,146,086.72

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 306,097,458 people in America.
http://www.census.gov/population/www/popclockus.html
Currently, each of these American's owe $36,415.09.
A family of three owes $109,245.27. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 24 reports in the last 30 to 31 days.
The average for the last 24 reports is 8,446,995,952.60.
The average for the last 30 days would be 6,757,596,762.08.
The average for the last 31 days would be 6,539,609,769.75.
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$/day.
There were 52 reports in 73 days of Obama's part of FY2009 averaging 0.80B$ per report, 0.68B$/day so far.
There were 127 reports in 185 days of FY2009 averaging 8.83B$ per report, 6.06B$/day.

PROJECTION:
There are 1,388 days remaining in this Obama 1st term.
By that time the debt could be between 13.1 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)
04/03/2009 11,146,566,832,297.33 BHO (UP 519,689,783,384.25 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: 1,121,841,935,384.90 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
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 --
04/02/2009 +007,764,243,786.78 ------------*********
04/03/2009 +028,967,677,130.84 ------------**********

174,349,760,085.56 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,481,935,029,038.26 in last 197 days.
That's 1,482B$ in 197 days.
More than any year ever, including last year, and it's 146% of that highest year ever only in 197 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 197 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=3817407&mesg_id=3817457

[Festivito]

89. Debt: 04/06/2009 11,149,346,771,082.81 (UP 2,779,938,785.48) (Tiny up.)

(The public debt is up 7% of a billion, i.e. a tiny amount.)

= Held by the Public + Intragovernmental(FICA)
= 6,868,606,323,636.60 + 4,280,740,447,446.21
UP 73,808,356.95 + UP 2,706,130,428.53

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 306,115,972 people in America.
http://www.census.gov/population/www/popclockus.html
Currently, each of these American's owe $36,421.97.
A family of three owes $109,265.91. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 22 reports in the last 30 to 31 days.
The average for the last 22 reports is 8,989,475,555.63.
The average for the last 30 days would be 6,592,282,074.13.
The average for the last 31 days would be 6,379,627,813.67.
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$/day.
There were 53 reports in 76 days of Obama's part of FY2009 averaging 0.76B$ per report, 0.60B$/day so far.
There were 128 reports in 188 days of FY2009 averaging 8.79B$ per report, 5.98B$/day.

PROJECTION:
There are 1,385 days remaining in this Obama 1st term.
By that time the debt could be between 13.0 and 20.0T$.
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)
04/06/2009 11,149,346,771,082.81 BHO (UP 522,469,722,169.73 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: 1,124,621,874,170.40 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
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 --
04/02/2009 +007,764,243,786.78 ------------*********
04/03/2009 +028,967,677,130.84 ------------**********
04/06/2009 +000,073,808,356.95 ------------******* Mon

126,633,758,044.33 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,484,714,967,823.74 in last 200 days.
That's 1,485B$ in 200 days.
More than any year ever, including last year, and it's 146% of that highest year ever only in 200 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 200 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=3819476&mesg_id=3819498

[ozymandius]

10. The US Treasury requests volunteers for suicide; any takers?

According to today’s Financial Times, “Tim Geithner warned on Sunday that the US government would consider ousting board members at American banks as a condition for giving the institutions “exceptional” assistance in the future.”

The next time I teach Econ 101, Economic Principles - Microeconomics, I will use this as a school book example of how not to structure incentives.

When a bank is undercapitalised and new lending and borrowing are encumbered by an overhang of bad, dodgy or toxic assets, the one thing you should not do is offer public financial support to rectify this situation on terms that are very painful for the key decision makers in the banks, painful that is, for those who decide on whether to accept the state’s financial aid.

.....

This point has been made many times before, as has the point that if the state wants to recapitalise banks and clean up their balance sheets, it has two options. The first is to make acceptance of state money voluntary - at the discretion of (in order of importance) the management of the bank, the board of directors, the unsecured creditors and the shareholders. In that case, the terms have to be easy on those in a position to veto the deal. The state effectively gives the money away. This was the approach adopted thus far by the US authorities vis-à-vis its large banks. After the first, tough tranche of financial support, it was also the approach adopted by the US authorities vis-à-vis AIG, after the first tough tranche of financial support.

The second approach is to make the terms painful for the decision makers. In that case, acceptance of financial support has to be mandatory, not a choice of the incumbent management and board.

more..

http://blogs.ft.com/maverecon/2009/04/the-us-treasury-requests-volunteers-for-suicide-any-takers/

[tclambert]

15. The Subject line of that post made me think at first it was about reducing unemployment.

You know, a Jonathan Swift-style modest proposal for how to reduce the numbers of jobless Americans. Can't find a job? Here's your black capsule.

The unemployment rate proves America is overpopulated. Obviously, we need to decrease the population. Here are some choices: deportation, death, cannibalism, or freezing. I include the last one as compromise solution. We build a big cryogenic complex in Alaska (assuring Palin's support, and providing a few jobs) for freezing the poor. If we ever need to increase the population, we can defrost a few million. If we become convinced we'll never need some of them, well, there can be occasional "technical problems" that result in terminal freezer burn.

[Dr.Phool]

19. I like the cannibalism option.

A nice fat investment banker, or a hedge fund manager could probably replace prime rib or pork tenderloin on the menu. But first, you'd have to have stringent safety guidelines to check for toxins. Like they do for Blowfish.

Anybody have a good recipe for a nice Parasite Pie?

I'll bet Tansy does!

[AnneD]

21. Isn't it the gonads that you have to remove from blowfish.....

before you can enjoy fugu. :rofl: That is so karmic-ly funny on soooo many levels:evilgrin:

I may not have Tansy recipe for parasite pie but I have a Ginsu knife at the ready and am practicing my Bobbitt maneuver:hide:

[ozymandius]

23. Or dog food

Soylent Green does little for my appetite. But my darling dog is less discriminating. Already the corporate branding ideas flow through my head. Things like: Kibbles-n-Bits o' Bankers; Hedge Fund Gravy Train; Bilked-Jac (found in your grocer's freezer).

Good morning all. I am on Spring Break this week.

:donut: :donut: :donut:

[Tansy_Gold]

28. Oooh, and I've got FOUR hungry puppies just lickin' their chops

at the very idea!

Well, metaphorically speaking, of course.

[Danascot]

95. DUzy!

Have we ever had a DUzy come out of SMW?

[AnneD]

98. No and we have had plenty of DUzys....

folks just think economy wonks can't be funny.

[Demeter]

25. I Thank God Every Day that You are NOT Republicans

and I'm an atheist!

[Hugin]

71. I'm not touching this line of thought.

No way.

[Demeter]

24. Somebody Is Crazy--and I Don't Think It's Us

[InkAddict]

30. Know where these grow?

And now, my beauties, something with poison in it, I think. Something with poison in it, but attractive to the eye, and soothing to the smell. Poppies... Poppies. Poppies will put them to sleep. Sleep. Now they'll sleep!

[Demeter]

44. Afghanistan

That's why we invaded--to protect the poppy crop from the Taliban.

[InkAddict]

52. Some truth there, Demeter.

[tclambert]

59. I could while away the hours . . .

Conferrin' with the flowers
Consultin' with the rain
And my head I'd be scratchin'
While my thoughts were busy hatchin'
If Tim Geithner only had a brain

[antigop]

67. When a man's an empty kettle

When a man's an empty kettle
He should be on his mettle
And yet I'm torn apart
Just because I'm presumin'
Republicans could be human
If they only had a heart

[ozymandius]

11. Toxic debts could reach $4 trillion, IMF to warn

Toxic debts racked up by banks and insurers could spiral to $4 trillion (£2.7 trillion), new forecasts from the International Monetary Fund (IMF) are set to suggest.

The IMF said in January that it expected the deterioration in US-originated assets to reach $2.2 trillion by the end of next year, but it is understood to be looking at raising that to $3.1 trillion in its next assessment of the global economy, due to be published on April 21. In addition, it is likely to boost that total by $900 billion for toxic assets originated in Europe and Asia.

....

The IMF's jump will come as little surprise to economists who have suggested that the bad debts will be much higher than anticipated. Nouriel Roubini, chairman of RGE Monitor, expects bad debts from US-originated assets to reach $3.6 billion by the middle of next year. This figure is expected to rise when bad debts from assets elsewhere are calculated, he said.

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article6047929.ece

[ozymandius]

12. World Economy Falling Faster Than in 1929-1930

Barry Eichengreen, an expert on the Great Depression, and Kevin O'Rourke, take issue with the notion that the current downturn is less severe than the Great Depression. While the slump in the US is not as bad, that mis-states the global picture.

Note that many economists expect the US to suffer less than the big exporters, namely China, Germany, Japan. The reason is that the economic adjustment required of surplus nations is greater than that of debtors. Similarly, in the Great Depression, the US, then a major exporter, was harder hit than the overconsuming importers such as Britain, who defaulted on their debts.

The one bit of cheer is that this time around, government action is more aggressive, but it remains to be seen whether it is sufficient.

From VoxEU:

....

The parallels between the Great Depression of the 1930s and our current Great Recession have been widely remarked upon. Paul Krugman has compared the fall in US industrial production from its mid-1929 and late-2007 peaks, showing that it has been milder this time. On this basis he refers to the current situation, with characteristic black humour, as only “half a Great Depression.” The “Four Bad Bears” graph comparing the Dow in 1929-30 and S&P 500 in 2008-9 has similarly had wide circulation (Short 2009). It shows the US stock market since late 2007 falling just about as fast as in 1929-30.

Comparing the Great Depression to now for the world, not just the US

This and most other commentary contrasting the two episodes compares America then and now. This, however, is a misleading picture. The Great Depression was a global phenomenon. Even if it originated, in some sense, in the US, it was transmitted internationally by trade flows, capital flows and commodity prices. That said, different countries were affected differently. The US is not representative of their experiences.

....

In fact, when we look globally, as in Figure 1, the decline in industrial production in the last nine months has been at least as severe as in the nine months following the 1929 peak. (All graphs in this column track behaviour after the peaks in world industrial production, which occurred in June 1929 and April 2008.) Here, then, is a first illustration of how the global picture provides a very different and, indeed, more disturbing perspective than the US case considered by Krugman, which as noted earlier shows a smaller decline in manufacturing production now than then.

It’s a Depression alright

To sum up, globally we are tracking or doing even worse than the Great Depression, whether the metric is industrial production, exports or equity valuations. Focusing on the US causes one to minimize this alarming fact. The “Great Recession” label may turn out to be too optimistic. This is a Depression-sized event.

That said, we are only one year into the current crisis, whereas after 1929 the world economy continued to shrink for three successive years. What matters now is that policy makers arrest the decline. We therefore turn to the policy response.

http://www.nakedcapitalism.com/2009/04/world-economy-falling-faster-than-in.html

[ozymandius]

13. It’s 1930 time

Barry Eichengreen and Kevin O’Rourke have an alarming paper in Vox EU, showing that if you take a global view, the world slump since early 2008 is as bad or worse than the slump from 1929-30. It’s full of pictures like this one, showing monthly volume of world trade:

-see shocking chart (the onset of Great Depression was milder than what we see today)-

....

What Eichengreen-O’Rourke show, it seems to me, is that knowledge is the only thing standing between us and Great Depression 2.0. It’s only to the extent that we understand these things a bit better than our grandfathers — and that we act on that knowledge — that we have any real reason to think this time will be better.

http://krugman.blogs.nytimes.com/2009/04/06/its-1930-time/

[Tansy_Gold]

20. Are we going about our "recovery" the wrong way?

It seems to me that the mindset behind all the stimulus and bailout and other programs is to bring "us" back to where we were before it all began. But doesn't that just automatically set the stage for everything to happen again?

Shouldn't we be learning the lesson that the current system doesn't work and that we need to construct a whole new system?

Those of us both here on DU and out in the real world who have seen this coming for years have generally, I think, been champions of that whole new system alternative. Maybe our discomfort, shall we say, with the current system is what allowed us to be able to see not only its flaws but the effect of those flaws -- the greed, the lack of controls, the inevitable and inexorable decline in prosperity and the widening of the gap between haves and have nots, etc.

On the other hand, those who were and are ideologically opposed to even considering another system or simply unable to see the flaws in the one they have, rather like a mother with a favored child who cannot see that it has become a spoiled brat unfit to be taken out in public.

I suspect that there are "world leaders" or at least national leaders in other parts of the globe who would cheer a global plan to wean the so-called developed nations off their gluttonous consumption habits. Instead, we continue to have a "leader" whose imagination only goes as far as envisioning a return to the good ol' days of a new car every two or three years (so the stockholders get dividends) and easy credit (so the banks reap fat fees) and more and bigger houses (so the mortgage brokers can continue to buy their girlfriends new Jaguars) and so on.

There is never any criticism of the very system that devoured itself.

Therefore, the problems with the bonuses paid to the execs of the companies being bailed out, for example, stemmed not only from the public outrage or even the assininity of retaining people who had already left the company or been involved in its collapse -- and this applies to all the companies, whether auto maker or investment bank or hedge fund or whatever -- but from the failure of national leadership to understand that under the given system, those bonuses and the fat exec salaries and the diamond-encrusted 24-kt gold parachutes are fundamental to the system. To deny those would be to deny the system, and they are, so far at least, incapable of getting their minds around that concept.

Until we have a "world leader" who is able to articulate that concept, we're going to go nowhere except back to the 1930s and then the 1940s, and so on, in the sense that we will be repeating the same steps to "recovery" that led to the current collapse.

One of these days, we won't be able to do it.


Tansy Gold

[Demeter]

29. So, Obama Isn't FDR?

Not yet, anyway. My hopes are shrinking rapidly. I thought he had a better mind and ethics than that. Too provincial, too young and inexperienced, too naive, too indebted to the bankers, or all of these.

[Tansy_Gold]

33. All of the above.

The worst was inexperienced, too out of touch. Not like booosh pere was out of touch with not knowing what a grocery store scanner was, but out of touch in the sense of understanding the fundamentals of real world economies. Text book theory (one sided pro capitalism, of course) is one thing, but I think it's more important to understand how economies WORK rather than the way they're supposed to work.

That of course is what got the quants into trouble, too.

But Obama was and is a creation of the system, both the economic system and its parasitic twin, the political system. The DNC would never have allowed him to gain the nomination if they thought he was too progressive, much less a real left-wing radical with socialist leanings.


TG, who has no recipes for Financier Flambé

[Demeter]

35. Oooh! Financier Flambe`!

I bet I could invent one--I'm really good with desserts--just desserts!

[Tansy_Gold]

36. Exactly!

I'm sure, though, that if we give it enough thought, we can come up with at least a seven-course dinner. . . . soup to, um, nuts. :evilgrin:

[Demeter]

37. And They Say Guys Are Gross

I'm ashamed of us.

[Tansy_Gold]

47. Not to be sexist, but IMHO women are simply more pragmatic

Women have better survival instincts. We're physiologically -- and psychologically -- stronger. We have to be. . . . . . . .




































In order to put up with the male of the species.


(Now, now, don't get in a snit, guys. Tansy loves you all, too, you know! :hi:)


TG

[Dr.Phool]

72. .

[bread_and_roses]

74. We could start with the Stone Soup they're serving to rest of us (n/t)

[Dr.Phool]

46. This makes me want to open another restaurant.

Call it Sam and Ella's!

Where Toxic Triumphs!

[Tansy_Gold]

48. Golden Glob Winner for sure!

Good thing I don't allow drinks at the desk, or I'd have spewed on the monitor and keyboard for sure.


:yourock:


TG

[Hugin]

61. It's odd that...

I don't see where this has been entered in your Journal, Tansy_Gold. ;)

(Oh, and I agree)

[Tansy_Gold]

62. Well, you must just not be lookin' in the right, er left, places

:hi:

'Cause it's there now!





TG

[Hugin]

65. I've started using the word, 'correct'.

As I'm left handed and the 'right way' of doing things always ticked me off.

[Demeter]

76. I'm a Lefty, Too!

So I come by my politics naturally!

[tclambert]

77. I've always looked for the thesis, antithesis, synthesis kind of progress.

And I thought we settled this in the 1930s, that pure unadulterated capitalism doesn't work very well. George Soros recently said on the teevee, "Unregulated markets are prone to bubbles." And we proved in the late 1900s that pure Soviet-style socialism doesn't work very well. They used to brag that "in the Soviet Union, no one starves." And they boasted about how quickly they progressed from a primitive agricultural country into an industrial power. But they couldn't keep up with the progress the West was making in the 60s, 70s and on.

We need a synthesis of the two, capitalism with limits to encourage innovation and ambition, but socialism with limits to keep the poor from starving. We need government that regulates commerce in a way that sets boundaries, but allows great freedom within those boundaries; and that sets long term directions for our progress to counteract the short-sightedness of corporate executives focused on the quarterly bottom line.

In the last two or three decades Europe has done a better job of this. Many countries across the pond have universal health care and universal college education. They have done a better job promoting energy efficiency and alternative sources of energy. And CEOs over there make about a tenth what they do over here.

But I still think America could do it better. It's just nobody has bothered trying in thirty years.

[Demeter]

27. Boy, Ozy, You Are Just Full of Cheer

I still have that headache, and the Kid is having a psychotic breakdown, which seems to happen every year at this time. I am waiting for the shrink to get to the office....

[ozymandius]

32. I am really sorry.

The news is so rarely upbeat. This thread has a reputation for sucking the joy out of almost everything. People here are really really good at gallows humor, though.

I offer my sympathies for your child.

[Hugin]

53. I've noticed that happens to me this time of year, too.

Don't know why... Other than to speculate, it's because spring is in the air. Agitation caused by anticipation of the New Spring. In that light, maybe it's not necessarily a bad thing.

I'm sorry it's so extreme for your child that it causes her trouble in her life. :(

Also, I hope your headache fades.

[Demeter]

57. A Special Ed Teacher Friend Told Me

a lot of her kids are having major seizures--she thinks it's connected to the crazy weather we've been having.

[Hugin]

58. That and I'm sure the fact we're all under tremendous stress right now.

It has a pronounced effect on those who are the most susceptible.

I'm sorry to hear that statistic. But, not surprised.

[tama]

75. Strangely

Social scientists inform us (in Finland) that last time we had Depression, only less than 20 years ago, people where generally much happier than during the boom periods of blowing balloons.

[alterfurz]

88. April is the cruelest month...

...with the highest suicide rate. One theory: things are improving in the natural world, but not necessarily for the observer, and the contrast is hard to bear. I know I've sometimes felt that way.

[tama]

73. Colonialism

Looking from the bigger picture, WWI meant the (beginning of the) end of first wave of globalization - European colonialism / capitalistic expansion.

Second wave of started slow by slow after the WWII and gained real momentum after Washington Consensus and neoliberalistic (neo)colonialism of WTO, IMF and World Bank, which with Bush wars at latest turned out to be the same'o same'o paleocolonialism of blatant military force when other means fail (economic hitmen and black ops).

And no, there will be no third wave. Only death-struggle of capitalism as we know it and something else brewing at the bottom ground.

[Joe Chi Minh]

85. Funny to think of Einstein's warning that WWIV would be fought with sticks and stones,

when it might be WWIII, though due to a planetary, economic implosion, rather than nuclear explosions. But not too funny ha-ha.

[ozymandius]

14. Meredith Whitney: House Prices to Fall Another 30%

From CNBC: Banks' 1st-Quarter Results May Show Improvement: Whitney

"I think you’ll see a directional turn," Whitney said in a live interview. "Banks will make a little money, as little as a penny a share, but they won’t lose money."
...
She also said she expected home prices to fall another 30 percent ...

Whitney interview

Calculated Risk story

[UpInArms]

16. dollar watch

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

Last trade 85.439 Change +0.720 (+0.93%)

Currencies Offered Across the Board as Optimism Fades; USD and Yen Benefit

http://www.dailyfx.com/story/bio2/Currencies_Offered_Across_the_Board_1239103693652.html

Risk aversion continues to rise into Tuesday with the markets content on exiting higher yielding positions in favor of a flight to safer and lower yielding currencies. Massive liquidation of Yen cross positions has made the Yen the top performer on the day and the only currency to outperform the USD. Meanwhile the New Zealand Dollar has been the standout loser down over 2% against the USD with an escalation in market uncertainty, weaker overnight data and narrowing yield differentials all weighing on the antipodean. The Euro is not far behind though with the major showing well offered on the back of similar global macro themes along with weaker than expected GDP. In Japan, the news that the BOJ has announced that they will accept a greater range of collateral in its money supply operations has also been generating some attention, with the implication that the economy is even worse off than analysts had expected. In the UK, data continued to exceed expectations with industrial production coming in better than consensus estimates despite still being negative. This has helped to weigh on the Eur/Gbp cross rate on Tuesday which now eyes a test of 0.9000 barriers. Finally, comments overnight from ECB Stark have also been weighing on sentiment after the official was rather skeptical about G20 plans and the impact of extra liquidity. Looking ahead, the calendar in North America is light with economic optimism due at 14:00GMT followed by consumer credit (-$3B expected) at 19:00GMT and consumer confidence (-49 expected) at 21:00GMT. US equity futures are tracking down well over 1.0% with oil prices, while gold is up over 1.0%. We continue to recommend watching the credit markets, with recent gains in equities having done very little to improve optimism in credit.

...more...

Euro Breaks Below 1.3300 as 4Q GDP Falls More Than Expected, Pound Slips Below 1.4600 as Industrial Outputs Falter

http://www.dailyfx.com/story/bio1/Euro_Breaks_Below_1_3300_as_1239099830551.html

The Euro weakened against the U.S. dollar following the drop in risk appetite, and slipped below the 1.3300 level after the final GDP reading for the fourth quarter foreshadowed a deepening recession in the region. As a result, the single-currency slipped below the 20-Day SMA for the first time since 3/11 to reach an intraday low of 1.3263, and the lack of momentum to sustain the rally from March should lead the pair lower over the week, and may fall towards 1.3163, the 100-Day SMA, as investors curb their appetite for high-yielding assets.

The growth rate in the Euro-Zone fell 1.6% from the third quarter, which was higher than the 1.5% contraction seen in the preliminary reading, while the annual rate of growth slipped 1.5% to mark its first full-year decline on record. The breakdown of the report showed that business spending plunged 4.0% in the three-months to December, which was followed by a 0.3% drop in household consumption, and the data continues to reinforce a weakening outlook for growth and inflation as the region faces its worst economic downturn in over half a century. As growth prospects deteriorate at a record pace, the European Central Bank is likely to lower borrowing costs by another 25bp in the month ahead however, as President Trichet remains reluctant to overshoot the interest rate, the board may adopt additional tools to stimulate the ailing economy as

The British pound dropped 150+ pips to slip below 1.4600, and may continue to face increased selling pressures over the week as the economic calendar is expected to reinforce a dour outlook for growth and inflation. As a result, Cable is likely to fall below the 100-Day SMA at 1.4561, and may work its way towards 1.4344, the 50-Day SMA, over the remainder of the week to test for short-term support. Meanwhile, a report by the Office for National Statistics showed that industrial outputs dropped another 1.0% in February after falling 2.7% in the previous month, while the annualized rate plunged 12.5% from the previous year. At the same time, manufacturing production slipped 0.9% during the same period, which was less than the 1.5% contraction anticipated by economists, while outputs plunged 13.8% from the previous year, and the data foreshadows a dour outlook for the labor market as firms continue to cut back on production and employment in an effort to reduce costs.

The lack of tier-one data could leave the U.S. dollar at the mercy of risk trends, and as the futures market projects a lower open for equities today, a drop in market sentiment should boost demands for the greenback as the reserve currency continues to benefit from safe-haven flows. Nevertheless, the Federal Reserve is expected to report a $3.0B drop in consumer credit, while the ABC consumer confidence index is expected to hold near the record-low in the week ending April 5, fears of a deepening recession may weigh on the exchange rate as the economic docket continues to reinforce a dour outlook for household spending.

...more...

[ozymandius]

34. It seems imperative that the USD should, at some point, be anchored to something.

Something real - not this Bretton Woods crap. Quantitative Easing is already exacting a pull on cost of core items. This is on top of "price stickiness" left over from runaway oil prices reverberating through PPI and CPI in transportation costs.

I like the Gold Reserve Act that FDR enacted. But I do not know if this would even be possible today - considering globalized gold trading (all trading, really).

[Tansy_Gold]

39. Obviously I have no clue what I'm talking about, but.. . . . . .

it seems to me that no currency will ever be truly anchored in "something real" so long as we have the continued speculation in "the markets." Whether it's commodities or stocks or bonds or those venomous derivatives, the trading is in the paper, not the "stuff" and that removes the currency from the real world, doesn't it?

Maybe we need two currencies, one for everyday commerce and one for gambling?



TG

[UpInArms]

41. I'm thinking they can't even anchor it to copper

because it costs more than a penny to make a penny - and those are mostly aluminum now

:shrug:

[Demeter]

45. Colonial Scrip!

http://en.wikipedia.org/wiki/Colonial_Script

[tclambert]

66. Yellow rocks, red rocks, white rocks, bah, humbug!

We have, and always have had, a faith-based economy. Dollars are anchored to the trustworthiness of the United States of America. (Insert jokes here. I'll wait.)

Okay, done laughing? The value of anything, anything--gold, houses, even food--is purely subjective. Right after Thanksgiving dinner, I wouldn't pay two cents for a cheeseburger. But after a long diet, I'd pay ten bucks for a double bankerburger with special sauce, lettuce, cheese, pickles, onions on a sesame seed bun. Suppose a golden asteroid crashes into Manitoba and instantly triples the amount of accessible gold on Earth? Does that mean a dollar drops to 33 cents? Everything besides gold and dollars triples in price? And Canada owns the world?

Several contributors here have lamented how the stock market responds to emotional rumors, especially to hope. The truth, perhaps a sad truth, is that hope really is the foundation of the stock market--hope and faith that the future will be more prosperous than the past. When the zeitgeist of the investor community unites behind optimism, stocks go up. When pessimism rules, stocks plunge. Rapid fluctuations come from confusion.

The biological programming of human beings works like that when dealing with incomplete information on too many variables to allow logical calculations. We cheat by substituting intangible feelings. Then we often pretend to rationality by grasping at tangible trivia to try to justify those feelings after the fact.

As Ulysses Everett McGill said: "Pete, it's a fool that looks for logic in the chambers of the New York Stock Exchange."

[UpInArms]

17. US STOCKS - Futures falter on fresh toxic asset fears

http://www.reuters.com/article/bondsNews/idUSN0744290220090407

NEW YORK, April 7 (Reuters) - U.S. stock index futures pointed to a lower open on Tuesday after it was reported the International Monetary Fund was set to forecast toxic assets on the balance sheets of financial corporations could reach $4 trillion.

* Earnings season kicks off after the close as investors braced for aluminum producer Alcoa's (AA.N) quarterly results.

* Toxic debts racked up by banks and insurers could spiral to $4 trillion, new forecasts from the International Monetary Fund are set to suggest, British daily The Times reported on its website without citing sources. The IMF said in January that it expected the deterioration in U.S.-originated assets to reach $2.2 trillion by the end of next year.

* "The real jitters here for the market is the report from the IMF suggesting that toxic debts could actually spiral to $4 trillion," said Peter Cardillo, chief market economist at Avalon Partners in New York.

"You had some negative analyst reports yesterday on the banks and this IMF report certainly is not helping. It just basically is reopening old worries."

* S&P 500 futures SPc1 fell 13.80 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures DJc1 slid 116 points, and Nasdaq 100 NDc1 futures shed 19.25 points.

...more...

OMG - this piece of shit buffoon doesn't want anyone to "worry" about this?????

someone should kick his stupid arse to the curb and drop him off in a garbage can

:grr:

[Pale Blue Dot]

50. About three weeks ago Obama said that it was time to buy stocks again.

A day later, on NPR, I heard someone from the Obama administration (Summers?) say that what the markets really needed was some confidence. RIGHT AFTER THAT, we got all kinds of stories from the mainstream press turning all of the relentless bad news, somehow, into something positive.

I think these past few weeks have been a Peter Pan bounce: Just clap your hands and keep repeating "I do believe in faeries! I do! I do!" and everything will be all right.

After spending much of the weekend here on DU, I believe that this effect is beginning to fade. The apologists are either getting quieter or they're being drowned out by the realists.

[UpInArms]

18. Making The Markets Nervous: Annual Federal Deficit Already $1 Trillion

http://247wallst.com/2009/04/07/making-the-markets-nervous-annual-federal-deficit-already-1-trillion/

The Congressional Budget Office issued its estimate for the deficit created in the federal government’s fiscal first half, which ended on March 31. The number was $953 billion. Depending on how the TARP outlays are accounted for, the number could be less.

While most experts expected outlays for the period to be higher, what was an unpleasant surprise is that receipts to the Treasury fell $160 billion from the same period a year ago. Receipts from individuals were off by $76 billion and income from corporations was down $73 billion. Miscellaneous fees made up the balance.

The concern that springs from the numbers is not so much that spending will continue to increase because that will be a product of the new budget and stimulus packages and any additional TARP funds which Congress might approve. The really massive damage to the deficit will likely come on the income side of the ledger and that draws into question, once again, how much money the government can borrow.

At the current rate of attrition, income to the government will be off more than $300 billion in the fiscal period that ends in September. But, the effects of unemployment being close to 10% by then and corporate earnings continuing to fall could push that number up toward $500 billion or more and that can only be remedied if the economy turns on a dime in the next few weeks and begins a nearly miraculous recovery.

If the data continue to point to a ballooning deficit based on falling collections at the IRS, the need for the Treasury to accelerate borrowing becomes acute and interest rates almost certainly rise in concert with that. Of course, that forces almost all other borrowers whether they are sovereign nations, corporations, or individual consumers to pay higher rates for access to capital, which likely undermines any recovery.

...a bit more...

[DemReadingDU]

31. Charles Hugh Smith: SURVIVAL+ Chapter Nine

Survival+ 9: Squeezing the Middle Class (April 7, 2009)
Charles Hugh Smith

the Roman Empire's decline can be traced to a variety of causes. But we can summarize them collectively as the middle class being squeezed to death by the over-reach of the state and its Plutocracy/Elites rulers.

Stated another way: as the Elites' interests diverge from those of the society as a whole, the middle class is caught in an economic and political vice between the state and its "powers behind the throne" Plutocracy and the large (and politically dangerous) underclass dependent on the largesse of the state. As each class (the Plutocracy and the class of less productive citizenry) become ever more dependent on the state's power and revenues for their privileges and entitlements, they demand the state's share of national income expand at the expense of the middle class.

Since the Plutocracy and the underclass both need the state's power (to exclude the Elites from service or taxes) and revenues (to fund "rights to entitlements"), they will fight ferociously and ceaselessly for their share of the dwindling national income. The middle class, distracted by the pressures to remain productive in a declining economy, have neither the time, will, capital or organization to match the upper and lower classes' desperate squeezing.

As a result, the middle class loses the political battle and either opts out (what I call "Voluntary Poverty" ) or simply collapses into penury/poverty, joining the underclass.

It is important to refute one of the state's primary emotional points of leverage in demanding an ever-larger proportion of national income: we need this to help the poor. A close examination of the roughly $3 trillion Federal budget and the $1.5 trillion budgets of local government reveals that programs which directly alleviate the direct consequences of poverty such as hunger and lack of shelter (food stamps, now called SNAP and Section 8 housing vouchers, for example) are essentially trivial percentages of all government outlays.

For instance, the entire food stamp program (SNAP) serves approximately 30 million people at a cost of just over $30 billion—a mere 1% of Federal outlays. Section 8 Housing Vouchers costs about $16 billion—less than one-half percent of Federal outlays. The entire Housing and Urban Development department which also serves the homeless is about 1% of Federal outlays.

Add in programs with successful track records like Head Start and at most perhaps 5% of all tax revenues and government borrowing actually directly aid the poverty-stricken. So where does the rest of it go? To behemoth programs like Medicare $700 billion and rising at double-digit rates year after year), of which private analysis suggest 50% is waste and fraud, and a huge percentage of the balance either harms or does not improve patient health.

It is, however, very profitable for pharmaceutical companies and other vendors. Consider that approximately 1% of the citizenry control 2/3 of the productive assets of the U.S., and the question cui bono—to whose benefit are $4.5 trillion in taxes levied? Is quickly answered: not the poor. Sadly, the poverty-stricken are the "moral justification" marketed by various Elites to justify their own stupendous take of ever-rising state revenues and debt issues.

Continue reading Chapter Nine...
http://www.oftwominds.com/blogapr09/survival9-04-09.html


link backwards to previous chapters...
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3817407&mesg_id=3817763

[Demeter]

38. And We're Off! It's a Race to the Bottom (wherever that may be)

Down 145 already.

[Hugin]

51. Yup, pulling away from that 8,000 PISL.

Speaking of PISLs, I heard that expression "Psychologically Important Support Level" for the first time in ages yesterday morning on Bloomberg!

I almost fell out of my chair :rofl: !

Ah, the memories it brought back... Nostalgia for things gone by.

[tclambert]

68. And yet, people respond to that irrational crap.

Why should 8,000 mean anything special? It has three zeroes. So what? 10,000 has four zeroes and people will react even more strongly to that. It doesn't make sense. The space aliens with a base twelve numbering system will laugh at us for it.

Yet we foolish mortals WILL make a big deal out of it. It IS psychologically important. Earth humans are stupid. But like they always said on The Sopranos, Whaddaya gonna do?

[Hugin]

70. They'd laugh at us alright, but, when their Alien Markets hit SAISL 20736 the laughing would stop.

Is that what you're saying?

Damn Space Aliens.

[tclambert]

79. That's it, precisely!

Math jokes! I love 'em. 'Course, Tansy got all excited when the market hit 16. (She made a binary joke on SMW a few seeks back.)

OK, here's a math joke my son told me: An infinite number of mathematicians walk into a bar. The first one orders one mug of beer, the second orders half a beer, the third orders a quarter of a beer. At that point the bartender interrupts them and says, "You're all idiots!" and pours two beers.

[UpInArms]

40. CEO confidence falls to record low @ -5 vs 16.5 for 1Q

http://www.reuters.com/article/newsOne/idUSTRE5363BJ20090407

BOSTON (Reuters) - U.S. chief executives' confidence in the economy fell further in the first quarter, setting a second consecutive all-time low, according to a Business Roundtable survey released on Tuesday.

In a sign that businesses and workers have more worries ahead of them, more than two-thirds of CEOs surveyed said they planned more layoffs and cuts to capital spending in the next six months, as they brace for lower sales.

The quarterly CEO Economic Outlook Index fell to negative 5 -- the first negative reading in the survey's six-year history -- and down from a fourth-quarter reading of 16.5. A reading below 50 means CEOs expect contraction rather than growth.

The CEOs, who were polled between March 16 and March 27 -- during the recent rally in U.S. stocks -- said they now expect real U.S. gross domestic product to decline 1.9 percent this year. That is below their December forecast, which anticipated flat GDP.

...more bad news at link...

[Demeter]

42. The Bear Market Surprise By Bill Bonner

April 7 edition--not yet archived


“People in this country don’t realize how bad things can be,” said Richard Russell on Saturday night.

“I lived through the Great Depression. I remember people standing in bread lines. It was hard to get a job, any job, back then. But now, you see the restaurants are still full. People are still spending money. They may be worried and they may be beginning to save, but there’s no sense of urgency. And there’s a rally on Wall Street. You know, every bear market produces a rally. You can expect the market to retrace its steps by one- to two-thirds.

“And every bear market has a surprise. I think the surprise is that this is going to be a lot worse than people expect.”

Richard Russell is 84. He’s been writing his investment newsletter, Dow Theory Letters, for 50 years. This weekend a group of his admirers, including your editor, came together to say thanks.

There are a lot of people with opinions on the economy and the stock market. You can hardly turn on your computer without getting dozens of them. But there are not many opinions with the depth of experience and knowledge behind them as those of Richard Russell. He’s been studying “the language of the markets” for more than half a century. Though no one ever fully masters the language of the market, Richard can at least carry on a conversation with it.

“The primary trend is down,” says he. In the end, he continues, no matter what Obama and Bernanke do, the primary trend will have its way. The bear market will continue until it “has fully expressed itself.”

What does that mean? We don’t know...and no one else does either. But if this market has something to say, it’s probably something it’s wanted to get off its mind for a long time. And our guess is it’s not a message that people are going to want to hear.

Richard is probably right. After so many years of watching markets, he’s developed an instinct for what is really going on. This is going to be worse than people expect, he says. Because despite all the whining and bellyaching in the press, most people still do not expect the worst. Over the last quarter century, they’ve learned to look for bottoms...and buy. Every time it looked like real trouble was coming, the Fed cut rates...and soon, it was off to the races again. Now, they’re afraid of missing this opportunity for another boom.

But Richard is old enough to be able to look back much further than a quarter of a century. He’s seen the Great Depression…WWII…the bear market and stagflation of the ‘70s. He knows that sometimes it pays to be extra cautious. “Cash and gold,” says Richard, are the only investments you should be holding now; we’re a long way from the bottom.

One of the reasons we think that is because so many people are looking for the bottom. “Individual Investors Pile Into Citi,” says a headline from last week

“The old Wall Street adage about the dangers of catching a falling knife doesn’t seem to be scaring individual investors away from Citigroup Inc.

“Some discount-brokerage firms report a surge of individual, or retail, investors buying shares of Citigroup during the past five months, amid the New York bank’s stock-price slide.”

These investors think they see an opportunity. What we see is a trap....

......

...Rick provides finance capital to the mining sector — among other things. We asked him what he thought of the recent run-up in stock prices.

“I’m a lender, mostly. And as a lender, I’m primarily interested in the credit quality of the people I lend to. Am I lending now? No.”

Rick explains that stock prices in the mining sector are, generally, too high. Investors are betting that they go higher. That’s a bet a speculator may want to make, but not a lender. And it’s that kind of speculation that got people in trouble in the first place. Homeowners bet that their houses would go up in price. So did their lenders...and their lender’s lenders. They were so sure they were going to make speculative gains they forgot to pay attention to the quality of their credits.

But a rally is underway...and our guess it will destroy both the bulls and the bears.

The bulls will buy stocks believing that we have another bull market on our hands. After having lost 50% of their money since 2007, they’ll lose another 20%-30% when this rally collapses.

The bears, meanwhile, are convinced that there is worse to come. They think the stimulus spending programs will cause inflation. So they’re buying gold and commodity stocks — sure that when inflation comes, it will cause mining and oil stocks to soar. Maybe it will — eventually. But the first big move will probably be down. They, too, will lose big.

That could be the big surprise of this depression. It will kill the stock market bulls when the bear market rally collapses...then it will kill the stock market bears when the mining and commodity stocks collapse...and finally, it will wipe out the middle-class savers when inflation increases and the dollar collapses.

[Demeter]

43. Useless Currencies of the World Unite! By The Mogambo Guru

http://www.dailyreckoning.com/useless-currencies-of-the-world-unite/


My brain went into some kind of weird spasm when Zhou Xiaochaun, head of the People’s Bank of China, went on record as saying that he doesn’t trust the dollar to be the world’s reserve currency anymore, and wants, instead of gold, the International Monetary Fund to expand the supply of Special Drawing Rights (SDRs), which is just another stupid fiat currency, to use as the world’s reserve currency! Gaaahhhh!

I can tell by the way you are not screaming in fear and frantically clawing your way to the nearest exit in a generalized panic that you do not know what a Special Drawing Right is. So prepare to scream and claw when I tell you that — according to the Economist magazine, which I cite as a source since you never believe anything I say — an SDR is “a synthetic currency created by the IMF, whose value is determined as a weighted average of the dollar, euro, yen and pound”!

I deliberately put that exclamation point there at the end so that Junior Mogambo Rangers (JMRs) around the world and across this quadrant of the galaxy would not miss the salient fact that there is something Really, Really Weird (RRW) when these Chinese bastards are smart enough to reject an over-valued fiat dollar, but then being so stupid that they prefer, over gold, a basket of four fiat currencies, one of them being the damned dollar, along with their four corrupt governments, which collectively own the IMF by virtue of having funded the damned thing in the first place! Hahaha! Brilliant! Hahaha!

By this time I was laughing so hard that my stomach started hurting, which made me think that maybe I was hungry, and how maybe a taco would hit the spot right about now, which is Mexican food, as I suddenly suspected Chinese food for making them sound so ridiculous.

So my mind was whirling, whirling, whirling with many thoughts as Zhou went on to say, “Therefore, efforts should be made to push forward a SDR allocation. This will require political cooperation among member countries”, which (as I understand it) means that governments should stand ready with their armies to lend a hand to fellow governments around the world with the unpleasant task of killing rebellious civilians who will inevitably riot when they run out of food because they cannot afford to buy food because the damned American government is still deficit-spending, but now measured in the trillions of dollars per year, a demand met with excessive amounts of new money and credit created by the Federal Reserve, increasing the money supply, which in turn creates inflation in prices.
“Nothing has worked better as a long-term investment than gold, and so anything other than gold is a bad investment when the governments of the world are deficit-spending at record rates...”

As usual, I get no feedback from the Chinese, perhaps thanking me for saving their economic butts by pointing out where they have been so stupid as regards this “gold money” thing by, you know, sending me a couple of tons of it, or even a fruit basket would be nice, ya know?

So, I figure that their ignoring me means that maybe they have discovered, with their famed espionage networks, that I am not the world-famous guy I say I am (“They call me Big King Mogambo (BKM) back home!”), but am just some sort of mental case or something, usually described by the newspaper as “local lunatic.”

So I figure that maybe someone of the stature of Bill Bonner here at The Daily Reckoning would have the desired impact, and so I tell them how Mr. Bonner writes that “one way or another...sooner or later, a new money system is bound to emerge. Most likely, it will have gold at its base. Why? Because in thousands of years of human experience, nothing better has ever been found.”

Well, normally, you would expect someone being told that nothing better than gold has been found that could be used as a store of value to suddenly slap themselves on the forehead (“Ow!”), and say “Hey! You’re right! Nothing has worked better as a long-term investment than gold, and so anything other than gold is a bad investment when the governments of the world are deficit-spending at record rates and the money supplies are expanding at such preposterous rates that the sheer volume of money sloshing around allows interest rates to be temporarily lower than the real rate of consumer price inflation, which is a condition that is so freakishly insane that just thinking about it should make synapses in your brain burn to a freaking cinder with an audible ‘ssss!’ when you comprehend the enormity of it!”

So, suddenly, you know something is wrong, and a chill overcomes you, when, even more mysteriously and spookily, the Chinese central banker says, “The scope of using the SDR should be broadened, so as to enable it to fully satisfy the member countries’ demand for a reserve currency”!!!

The three exclamation points indicates that I am on Full Mogambo Alert (FMA), as I now know that Chinese bankers are as duplicitous as all the others; he is proposing to create as much SDR money (which is just another fiat money composed of the fiat dollar, the fiat euro, the fiat yen and the fiat pound) as anyone in the world wants! Which is the problem that got us into the mess we are in, for crying out loud!

Even more bizarrely, he states some ridiculous benefit of, “Compared with separate management of reserves by individual countries, the centralized management of part of the global reserve by a trustworthy international institution with a reasonable return to encourage participation will be more effective in deterring speculation and stabilizing financial markets”, which means that no country will have any reserves at all, and some mysterious “trustworthy country” acceptable to China means that China will hold all of the reserves, and therefore be calling the shots of the new currency, and since nobody has any reserves, they will be under complete control of the IMF, which will be under the control of China! Gaaaahhhh!

Well, you know I must have hit a nerve, because they don’t answer me and thus quell my howling outrage and fear from even contemplating such a scary thing, and instead, they go on “The participating countries can also save some reserve for domestic development and economic growth”, which makes you go, “Huh? What in the hell are you talking about keeping ‘some’ for our own use? What else would I be using it for, you stupid putz?”

Then I realized that this kind of crap leads directly to a pertinent lesson on why you should be buying gold, silver and oil so as to save your Fine Financial Fanny (FFF), but there are so many reasons that I groan with dismay at even listing them all.

Until next time,
The Mogambo Guru
For The Daily Reckoning

ACTUALLY, MOGAMBO, THE US COLONIES HAD THEIR OWN FORM OF CURRENCY THAT DID WORK, BECAUSE IT WAS STRICTLY CONTROLLED, AND TIED TO LAND AND VALUE PRODUCED...NOT GOLD. THERE WERE ALSO FEW PARASITES--EVEN THE RELIGIOUS SORTS HAD TO GROW THEIR OWN FOOD.

[Roland99]

49. A little first-hand comment from a small business owner this morning:

"This January was the worst in 26 years. Things are starting to pick up a little now, though."


This was from a muffler shop in the middle of suburbia. I had to stop by there as a muffler pipe snapped and my muffler is rattling around in its bracket and making my car sound like a fart-muffler-laden ricer-mobile. Cost to repair? $40.


After that, I went driving around a bit, I sure have plenty of time to kill anymore. I thought I'd go by a nearby Target and it was completely gutted. I guess being turned into a Super Target. I guess that's a good sign. But then heading back toward the mall and waiting for a Whole Foods to open, I saw where the Circuit City used to be and the now-empty Linen n Things next to it and down a bit further another big section totally empty. It's weird out there is all I can say.


Anyway...I've had a couple more phone interviews this week and should be having an in-person interview later this week as a result of one of those. A few other opportunities in the works but nothing solid still.

[Pale Blue Dot]

54. I used to be a General Manager at Staples

I left a couple of years ago to become a teacher. While I obviously don't have any numbers, my friends still with the company were slightly more upbeat the last time I spoke with them then they were in December. Two caveats, however:

1. Staples is a well-run company that is probably in the best position to survive a severe downturn (I would be terrified if I was Office Depot or OfficeMax);

2. The closing of Circuit City is going to inflate the numbers at stores like Staples and Best Buy for about a year.

As for the muffler shop, they are a store that I would expect to do relatively well during this downturn. People aren't buying new cars, so they're going to have to fix their old ones.

Good luck with your job hunt!

[Demeter]

55. Good Luck, Roland

(as if I had any to give!)

[Hugin]

56. Good luck on your opportunities, Roland99.

Yeah, it's pretty weird out there. I've been noticing it as well.

[AnneD]

81. I have been wondering about you....

glad to hear things are looking better. Thank goodness you are more prepared than most:pals:

[Roland99]

94. Yeah...I'm hanging in there. Was feeling down for a couple weeks but spring is helping

or it was...poured sleet earlier today. blah!

Got a 2-month extension on the car payment so that helps.

Crossing fingers one of these new possibilities turns into a bonafide job offer!

[AnneD]

96. That's why I love my old wreck....

It may be 15 years old but it rides well, is dependable, and is paid for. Hope things work out for you-it's scary. How is the kid holding up?

[Roland99]

99. My daughter's doing fine, thanks!

We've been to the gym the last two days. She's getting me going again. 3.33 miles today...400 calories burned. woo hoo

[Roland99]

100. OH! And in-person interview tomorrow. Sounds hopeful!

Meeting w/CIO and someone from HR.

[Tansy_Gold]

60. Good luck, Roland.

Keep us posted, and we'll keep you encouraged!

:hi:

[Dr.Phool]

64. Good luck, Roland.

I hope it all works out for you.

[antigop]

69. Hope you find something soon, Roland. Good luck. n/t

[Hugin]

63. RBS says to cut up to 9,000 jobs (Reuters)

"LONDON, April 7 (Reuters) - Part-nationalised British lender Royal Bank of Scotland (RBS.L) said it could shed up to 9,000 jobs over the next two years, including 4,500 in the UK, in an effort to cut costs.

The actual number of job losses is expected be "significantly lower than this," and compulsory redundancies will be used only as a last resort, RBS said in a statement on Tuesday.

"We have set a new strategy for RBS to restore the bank to standalone strength as soon as practicable," RBS Chief Executive Stephen Hester said in a statement.

"To do so we need to cut our costs, as in all businesses, given the current recession."

RBS, which has already announced 2,700 job cuts since the beginning of the year, warned on Friday that more positions would go in the UK and abroad as it strives to meet its target of eliminating 2.5 billion pounds ($3.73 billion) in costs over the next three years."

______________________________________________________________________________________________

Maybe this will get those 10 Pound notes back in their wallets. I hope they start with the guys betting on injuries and deaths during the G20... But, alas, this is the real world.

[Demeter]

78. News Flash! Franken Wins! AND It's 33.7F Outside--We're Above Freezing!

Maybe there's hope for this week after all.

[AnneD]

80. Now that's a vote...

to be proud of.:toast:

I some how heard about his Mom's battle with Alzheimer's. Have worked in an Alzheimer's unit- I sent him a condolence letter and talked to him about Alzheimer patients and families. It was just a sympathy note.

Imagine my surprise when he answered back. He joked about my name and distant relatives in a nice way and thanked me for the support in the family's time of grief. Now he didn't know me from Adam and didn't have to respond, but he took time to personally respond. That attest to his true nature in my book. Minnesota is in for a good Senator in Al and a gracious spokeswoman in Franni.

[Tansy_Gold]

93. Good Minnesotans

Several years ago when now-retired FBI agent Colleen Rowley was set to testify before congress regarding pre-9/11 (alleged) intelligence screw-ups, a few friends of mine and I located the Minneapolis/St. Paul FBI office and faxed her encouraging notes. Well, I did anyway; the others chickened out.

Since it was, after all, the FBI, I included my real name, phone number and address.

A few weeks later I got a very, very, very special, hand-made thank you card.


I still choke up about it.


YOU GO, AL!!!!! (AND FRANNI!)


Tansy Gold

[AnneD]

97. Never underestimate the power ....

of nice.

[tclambert]

82. Is it really, really official this time that Al won?

I heard that Kumar is joining the Obama administration, after escaping from Guantanamo with Harold.


Looked it up. Franken's lead went up to 312, from 225, after the court agreed to open a few more absentee ballots. But Coleman says he remains determined to obstruct democracy, um, challenge the election in court, until he runs out of courts.

[DemReadingDU]

83. Martin Weiss: Gov’t data fatally flawed! Real jobless rate hits 19.8%!

4/6/09 Gov’t data fatally flawed! Real jobless rate hits 19.8%! by Martin Weiss

we’re not the only ones finding fatal flaws in official numbers and conclusions. John Williams of ShadowStats.com has been persistently doing so with the government’s official data on inflation and unemployment, among other key measures.

His latest estimate of the true March unemployment rate in the United States: 19.8 percent!

Hard to believe? Then consider the facts:




Fact #1. Fatally Flawed Official Unemployment Number
read more...

Fact #2. Government Admits Some of the Flaws
read more...

Fact #3. Government Still Fails to Admit ALL of the Flaws
read more...



The peak unemployment rate in America’s First Great Depression was 25 percent. Trouble is, it’s hard to pinpoint how the measurements back then correspond to the various measures today.

My view: Although the tools of official deception may have been less developed, the real unemployment rate in the 1930s was probably higher in those days as well — with many among the unemployed falling through the cracks and simply never counted.

No matter what, the inescapable conclusions for today should be evident:

* We are already in a depression. Based on the government’s own admission, we have high, double-digit unemployment. That clinches it.

* The economy’s decline still has a long way to go. Yes, on the eve of the BLS release last Friday, some people were starting to talk about a “possible bottom” in the economy — “maybe.” But that talk ended abruptly as soon as economists took one look at the release and realized the utter speed of the decline. As The New York Times explained on Saturday,

“The severity and breadth of the job losses in March — which afflicted nearly every industry outside of health care — prompted economists to conclude that an agonizing plunge in employment prospects was still unfolding.”

* The Obama stimulus package is too little, too late for the economy.“When drafting plans in January to spend roughly $800 billion to stimulate the deteriorating economy,” continues The New York Times, “the Obama administration operated on the assumption that the unemployment rate would reach 8.9 percent by the end of the year — without the extra federal spending. Three months into the year, the unemployment rate has already soared to 8.5 percent, from 7.6 percent, the highest level in more than a quarter-century.”

* The Obama stimulus package is too much, too soon for the bond market. With the economy weaker than expected, you’d think bond investors, who traditionally see a falling economy as the best antidote to inflation, would rejoice. Instead, they’re doing precisely the opposite. They know that the stimulus package is driving the federal deficit to an unheard-of $2 trillion. They know the Fed cannot cut rates below zero. And so they’re using every opportunity to sell. Result: Even Friday, when the shocking jobless release hit the newswires, bond investors dumped bonds, driving prices lower and yields higher.

* Government bonds are the next big shoe to fall in this giant debt crisis. I don’t mean the government will default on its debt. What I’m referring to is the market prices of medium- and long-term government bonds. They’re already falling sharply, driving long-term rates higher. As the Treasury rushes to finance its recent bailout frenzy, expect that trend to accelerate.


Click to read recommendations...
http://www.moneyandmarkets.com/gov%e2%80%99t-data-fatally-flawed-real-jobless-rate-hits-198-33014

[DemReadingDU]

84. Tyler Durden: Bail Out For Dummies - Part 1

4/7/09
Zero Hedge believes it is a civic duty to represent the total melange of assorted concepts and alphabet soups in the ongoing debacle that is the Bail Out in a comprehensible and easily understandable context as the decisions the administration is making will have generational consequences. Therefore, I am presenting a view of the players, the mechanisms and the core of the Bail Out problem in a way that will be much easier to be comprehended by most interested parties.

The Players



The Core of the Problem



The Collateral



edit
The charts are a bit difficult to read, so click here for larger graphs
more to read...
http://zerohedge.blogspot.com/2009/04/bail-out-for-dummies-part-1.html

[Eugene]

86. GM in "intense" bankruptcy prep: source

Source: Reuters

GM in "intense" bankruptcy prep: source
Tue Apr 7, 2009 3:32pm EDT

By Chelsea Emery and Soyoung Kim

NEW YORK/DETROIT (Reuters) - General Motors Corp is in "intense" and "earnest" preparations for a possible bankruptcy filing, a source familiar with the company's plans told Reuters on Tuesday.

A plan to split the corporation into a "new" company made up of the most successful units, and an "old" one of its less-profitable units, is gaining momentum and is seen as the most sensible configuration, said another source familiar with the talks.

The sources requested anonymity because they were not authorized to speak on the record.

Shares of GM fell almost 14 percent on the New York Stock Exchange and its bond prices declined.

-snip-

Read more: http://www.reuters.com/article/newsOne/idUSTRE5363ZM20090407

[antigop]

87. Investment losses hit public sector pensions

http://www.ft.com/cms/s/0/1dde339c-23a4-11de-996a-00144feabdc0.html

The crisis facing pension plans for US state and municipal employees is deepening as investment losses deplete the resources of retirement funds for teachers, police officers, firefighters and other local government workers.

The largest state and municipal pension plans lost 9 per cent of their value of more than $2,000bn in the first two months of this year, according to data from Northern Trust. That followed a loss of 30 per cent in 2008, equal to about $900bn. Smaller funds, which underperform the larger ones, lost more, experts say.

The losses have left retirement plans about 50 per cent funded – that is, they have only half the money needed to cover commitments to 22m current and former workers, experts say. State governments typically put the funding figures closer to 60-70 per cent, although most experts use different calculations.

“There is a massive national underfunding problem,” said Orin Kramer, chairman of the New Jersey pension fund. ”

Unlike company pension plans, state and municipal retirement funds have no federal guarantee fund. This has led to predictions of benefit cuts and possible federal intervention.

[CatholicEdHead]

90. Seagate lost, Hutchinson Technology is on the ropes

http://www.startribune.com/business/42558972.html

Hutchinson Technology Inc., a company that carved out a piece of Minnesota's high-tech future out on the prairie, is on the ropes. As the skidding economy depressed demand at the end of last year, Hutch Tech cut more than 30 percent of its jobs and said it would close a plant in Sioux Falls, S.D.

If the recession was the left jab, the right cross arrived Friday. Seagate Technology, a customer that accounts for about one-fifth of Hutch Tech's revenue, said it will take its business elsewhere.

That could mean far more drastic cutbacks than the previously announced 1,755 layoffs, said Richard Kugele, an analyst at Needham & Co. in Boston.
.....
Analyst Christian Schwab of Craig-Hallum in Minneapolis sees another cause of Seagate's defection: Seagate's "longstanding frustrations" with Hutchinson Technology's unwillingness to move its facilities to Asia, where most disk drives are manufactured. He lowered his rating on Hutchinson's stock Monday from buy to neutral.


So a US company does the right thing and keeps jobs here (tech jobs too) and they get punished by not outsourcing. :puke:

[Demeter]

91. The PPT Took Their Foot Off the Gas A Half Hour Too Early

Dropping over 50 pts. from 4 to 4:30...

Think they are losing heart, or just interest in the game? Or has the well run dry already?

tomorrow it's supposed to reach 50F. Today I'm in long johns and boots and it's windchill of 23F.

Is it any wonder we are all crazed here? Still snowing, too, but just for show.

To continue today's musical bent:


Over The Rainbow

Somewhere over the rainbow, way up high

There's a land that I heard of, once in a lullaby

Somewhere over the rainbow, skies are blue

And the dreams that you dare to dream, really do come true

Someday I'll wish upon a star, and wake up where the clouds are far behind me

Where troubles melt like lemon drops, away above the chimney tops

That's where you'll find me

Somewhere over the rainbow, bluebirds fly

Birds fly over the rainbow, why then, oh why can't I

If happy little bluebirds fly beyond the rainbow, why, oh why can't I?