STOCK MARKET WATCH, Friday April 10

[ozymandius]

Source: du

STOCK MARKET WATCH, Friday April 10, 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 9, 2009

Dow... 8,083.38 +246.27 (+3.05%)
Nasdaq... 1,652.54 +61.88 (+3.89%)
S&P 500... 856.56 +31.40 (+3.81%)
Gold future... 883.30 -2.60 (-0.29%)
30-Year Bond 3.76% +0.10 (+2.65%)
10-Yr Bond... 2.93% +0.08 (+2.77%)

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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

I've Got Friends In Low Places
BY BRIAN PRETTI

I have to admit that Fed actions announced at the last FOMC meeting very much took me by surprise. Point being, I did not expect the Fed to begin monetization so soon. But surprised I should not have been. Not by a long shot. To be honest, Fed monetization of Treasury debt was inevitable in the current cycle. The recent global capital flow and realized/expected Treasury issuance numbers over the last half-year really tell the whole story quite elegantly. So although there has been plenty of ranting and raving about Fed monetization, myself included, I think it’s much more important to our forward investment decision making to simply address this fact objectively and unemotionally. The Fed really had no other choice. Moreover, as we’ll discuss, this is the beginning of monetization actions by the Fed. They’re just getting warmed up. THE issue now is not the monetization itself, but rather how monetization will influence investment risk and opportunities. I'll divide up in sections the highlight points I believe tell the story of the need for the Fed to monetize and why they will not be able to stop any time soon.

....

Very quickly, as of right now, the OMB (Office of Management and Budget) has projected at worst an annualized $1.8 trillion deficit for the US later in the current year. From this alone we know Treasury issuance will be incredibly large. Well beyond what the foreign community would ever have the chance of soaking up. In the OMB’s view of life and under the Administration’s budget planning, expectations are for 3%+ GDP growth in 2010 and over 4% in 2011. Although we’ll have to see what happens ahead, I personally believe there is zero chance these GDP numbers will be hit. Zero. As such, the Administration’s belief/projection that the US budget deficit will fall back below $1 trillion in 2010 is wishful thinking at best and probably lunacy at worst. Point being Treasury issuance over the next few years at least should indeed be well beyond current “projections.” If anyone thinks the shortfall between projected Treasury issuance and the ability of the foreign community to soak up this issuance will somehow narrow any time soon, they are dreaming. Given the mosaic produced by putting all of these facts together, I see a picture of a US Fed who has just begun to monetize the Federal debt. Although I am absolutely guessing at this point, before the current cycle is over, Treasury monetization by the Fed may end up being five to six times what has already been announced and begun with the current $300 billion. That’s an appetizer. Don’t be surprised as this is exactly what the real numbers are pointing to dead ahead. And this of course assumes the foreign community at least keeps purchasing at levels we’ve experienced over the last year or so, which is no guarantee at all.

....

Quick one. You know full well by now that the US trade deficit has been shrinking very rapidly over the last five months. In good part the price of oil is a factor, but equally important has been the literal collapse in global trade. When a country like China tells us its year over year exports have fallen by 25%, is there really a need for further explanation? I didn’t think so. In short, a dramatic fall off in global trade means less dollars being “exported” and exchanged for goods and services, and ultimately less global foreign reserves that may potentially be recycled back into US financial assets. The trade related monetary “juice” the foreign community, and especially China, has in its pockets both now and ahead very simply argues for a lower level of foreign buying of total US assets, not just Treasuries. And this is exactly what we are experiencing right now and should continue to experience for some time to come.

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

[Demeter]

6. No Other Choice than Monetization, Eh?

Isn't taxation a choice? It would seem also inevitable. Those who don't like paying taxes would like inflation eating up their purchasing power even less.

And how about Peace? Getting the hell out of Iraq, and letting Afghanistan tear itself to pieces would cut the deficit significantly. We might do both countries a lot more good if we worked from the outside and had an economic base upon which to stand.

Wake me up when a measure of reason returns to US fiscal policy.

[ozymandius]

12. Make that forty years on the road to nowhere.

Forty years, plus since LBJ began the process of monetizing debt so he could pay for Vietnam without raising taxes. That's quite a legacy. It looks, to me, that Obama is trying to force his own hand to do something along the lines of your suggestion with his unvarnished budget.

[ozymandius]

2. Today's Report

14:00 Treasury Budget Mar
Briefing.com NA
Consensus -$160.0B
Prior -$48.2B

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

[ozymandius]

3. Oil prices rise sharply on hints of rebound

NEW YORK – Oil prices rose sharply Thursday despite more hints that energy use is way down, with traders focusing instead on a rising stock market and surprising news from retailers that suggests Americans are spending money.

If registers at the mall are ringing, that likely means people are driving.

Benchmark crude for May delivery rose nearly 6 percent, or $2.86 to settle at $52.24 a barrel on the New York Mercantile Exchange. Trading was very light on a shortened trading week. Nymex is closed for Good Friday.

....

The government reported Thursday that natural gas storage levels in the U.S. rose more than expected last week. Natural gas is a key energy source for many power plants and factories. Rising storage levels suggest that people are using less energy, and companies are making fewer products.

Workers in energy intense industries like metals or manufacturing have been hit especially hard in recent rounds of job cuts. That is reflected in the growing stocks of oil and natural gas in U.S. storage facilities. It is potential energy that is not being used, one side effect of a very bad recession.

....

In other Nymex trading, gasoline for May delivery rose 4.14 cents to settle at $1.4810 a gallon and heating oil gained just over 3 cents to settle at $1.4288 a gallon. Natural gas for May delivery lost cents to settle at $3.61 per 1,000 cubic feet.

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

[Demeter]

4. The Never File Is Getting Full and Overflowing

Morning, Ozy. Ready for more fresh hell?

Yesterday the forsythia was starting to bloom, my anemones burst into flower, and the daffodils were bravely rising through the snow that fell Monday, snow which is reduced to an occasional clump where the plows pushed it. The birds wake up the Kid too early now--she's finally stabilized. I hate when that kind of upset happens...I lose so much time, and I forget what I was doing, and why.

I've been trying to think of ways people like us could influence, or even just provide an opposing point of view to the White House. I don't see any sign of progressivity there, and I don't think it's my imagination. I guess it's the result of a truly inferior Congress--less GOP, but still too stuck in the fearful inertia of the last 8 years...It would seem that the next logical step (besides filling the public forum with factual information and activism and protest) is the Congressional elections: removing the fools and putting some people with good principles in public office.

Are there any such people?

[ozymandius]

10. Good morning, Demeter.

:donut: :donut: :donut:

Are there any such people? Yes. I honestly believe there are. I do not expect them all to be as progressive as Bernie Sanders - but all the same - they're active. One place, a favorite of mine, is the DailyKos sponsored candidates. Moulitsas gets it. The Kos editors and prominent diarists get it. We are not alone in our seething frustration with this Congress and this White House. I will also add that DailyKos is on the front lines of political activism inside individual campaigns nationwide.

The timeline for progressive change, as adopted by DailyKos, is long. We're looking at a populist electoral arc of change that is years long. We here do not quite feel that we have that amount of time. That sentiment reflects my own personal view.

The whole point of this Kos screed is that progressive candidates need encouragement to stand up in every community. They are present even among the most Bush-whacked areas of the country. Even if they are not running for public office they are still voices to be reckoned with. Case in point: who represents Tansy Gold in Congress?

Conservative ideas that rode into town with Reagan are dead. They have been proven to be the stuff of idiocy and selfishness. Thirty years on the road to our current disaster have emboldened progressive voices. Nuanced arguments, so often the weakness of progressive rhetoric, are no longer necessary. Thirty years of policy failure have built a towering soapbox for countering the warped and weak bullying of the conservative movement.

So we stand on the precipice of change. People like Geithner and Summers are holdovers from the discredited past. As I look forward, the question comes to mind: will these people have any credibility in ten years? Good gods no! Summers might be the president of some backwater community college, if he can manage to hold onto that job, in ten years. Geithner will probably still be "spending more time with his family" and working the lecture circuit at places like the Herbert Hoover Institute.

Keep heart. And I am very glad that your child is doing much better.

[Demeter]

13. It's the Vast Middle of Inertia and "Stay the Course" America that Alarms Me

There is still too much ignorance and denial, or frozen-in-terror voters. There are still too many real live crooks walking around, free to continue their crimes or at least muddy the public forum.

We haven't turned a political corner, yet. One election of one untried man isn't enough.

[ozymandius]

15. Ignorance weighs most heavily.

Too much do we hear the stock markets, especially the Dow, being equal with the health of the overall economy. The Dow 30 is not the economy at all. But that focus distorts the bigger picture. That's what worries me: Ignorance of aggregate factors that move both measurable value (and to some degree - notional equity) and the psychology of market movement.

Maybe we need a new standard measure of the gestalt of Dow, sentiment, confidence and components of GDP that effect everyone in a consumer based economy.

[Hugin]

19. We could put together a metric like you describe...

It wouldn't be that difficult. The SMW Economic Health Index! :D

In a way that's what the SMW already is, the OP charts and the posts throughout the day, when taken as a whole are a pretty good measure of the Economy in my opinion. That's why I read it. (Oh and the coffee is pretty good here.)

[ozymandius]

26. I like it.

This thread as an index. You're probably better at the math than I am. Is it possible to create an algorithm representative of that model?

[Hugin]

30. Yes, in fact it is.

By assigning 'weights' to various thread inputs in relation to how they represent the health of the Economy as a whole.

Some examples...

As you correctly point out, the Market Indexes are not really a reflection of the Economy as a whole. But, they do represent an aspect of the Economy. So, you assign a weight showing what part they do represent.

You have mentioned lately how there is little 'good news' to post. A weight is assigned to how many good news posts are available. I think there's an unemployment index that uses Classified Want Ads as one of it's inputs.

I shall ponder this and get back to you with a plan... Of course, I'll need some help assigning weights when we get to that point. I'm no Master of The Smartest Guys in the Universe. ;)

[Zenlitened]

74. But don't overlook a fact that, in retrospect, seems awfully sinister:

Millions of Americans today DO INDEED have a visceral, life-or-death link to the stock markets. Their 401(k) plans. Their variable annuities. Their "guaranteed" pensions, that turned out to have been tethered quite firmly to the market indexes.

To them (to us), like it or not, the stock indexes have been transformed into a frighteningly real part of the economy.

How else explain the cognitive dissonance of a populace fantasizing the destruction of Wall Street and all its psychopathic players... while simultaneously praying, pleading, YEARNING for the DOW to rise, the S&P to recover... their retirement accounts to re-inflate?

Quite a neat trick (if a trick it was) to invite the good folk of Main Street aboard the SS Wall Street for a berth or two in the steerage-class deck. Gives the Little People a healthy motivation to help with the bailing, when the mighty ship meets an iceberg.

They're not spectators anymore. They're part of the show. The picture's still distorted, sure. But now they're in it.

:(

[tclambert]

81. Good observation.

A great many retirement plans have suffered in this recession. A great many retirement plans have evaporated in this recession.

[Zenlitened]

87. And as a result, they are now "on Wall Street's side"...

... in a very real, measurable way -- whether they like it or not.

Nifty, huh? :scared:

[ozymandius]

90. That is the unfortunate aspect of the big picture we now face.

Someone I knew years ago said her parents had an income when the Dow was above 10k. I don't know the particulars. It sounds to me that they invested in an index fund. Anyway - how long has the Dow been below that figure? Unless they've changed their plan, they have had no income for a good long while from their investments. This return, BTW, was necessary for their survival.

That brutish side of the coin is clear. I lament it. We have been so firmly tethered to the stock market beast that its future is our future. Pension funds no longer have the pedigree they once used to have. To further the calamity: these pensions, too, have become involved with exotic investment products.

You describe a grand paradox: we have become reliant on a system designed to function like a casino. House rules, of course.

[radfringe]

39. We haven't turned a political corner, yet. One election of one untried man isn't enough.

I think much of the "disappointment" - after 8 years of smirkboy, we were eager for change - real change, immediate change and complete change. there was a build-up of hope, perhaps expectations were hyped too much?

Yet, in some respects the smirkboy status quo remains - hence the disappointment and perception of little/no real change. I think this "disappointment" will grow into a huge backlash if Obama's plans do not meet expectations.

People are wondering when they get to have their piece of pie, where is the accountability, where is holding people responsible.

Hope is good, it inspires, it lifts the spirits - but it doesn't pay the bills or put food on the table.

[Hugin]

16. I am continually struck by how in 8 to 12 years in the wilderness they learned NOTHING...

We elect them to power and the -first- thing they do is to extend the Bush tax-cuts and vote in a Regressive Tax on Tobacco (Note to would-be flamers: I am well aware that the money is said to be going to SCHIP... I'm not holding my breath, tho. The awards from the mass lawsuits were supposed to go to smoking cessation programs and never did. Also, I'm aware that smoking is bad for people's health. But, it's arguable that a Regressive Tax has a negative impact on the health of the masses of lower income people it affects. Two wrongs don't make a correct.)

I still get Wes Clark's e-mail newsletters and he is very busy promoting what I consider to be reasonably Progressive Congressional Candidates. I haven't heard much out of Wes Clark Jr. lately, but, I'm sure he is too.

[Dr.Phool]

42. Relentless, 24 hour a day propaganda will do that.

Throw in a sell yourself to the highest bidder campaign finance system, and this is what you wind up with. Just to be able to run for Congress, you have to lower yourself to calling people that you've never met, and begging them for money for 8 hours a day. And it doesn't stop if you're elected. It gets a little easier, but it doesn't stop.

Most incumbents are too busy raising funds for their next campaign, to bother with reading the actual proposed legislation they'll be voting on.

[Dr.Phool]

34. You're being too optimistic Oz.

We belong to a party that eats it's young. I've seen too many progressive candidates get screwed by the DCCC and the state parties. They'd rather recruit a Republican to run as a Dem, than back a progressive. And we wonder why we can't tell them apart?

[ozymandius]

41. An explanation and a bit of perspective are certainly warranted.

In terms of populism: I look back to the age of Charlemagne as the beginning of the current arc. Please stay with me. Others have found this timeline to be true as well. Martin Luther King, Jr. also said, "The arc of the universe is long but it bends toward justice." I wholeheartedly agree. It started around 800 C.E. Aberrations are expected.

The DCCC is a buddy organization that seeks to maintain sixty years of status-quo. I will not give any money to them because I have no confidence in their collective judgment. They can be tugged along, reluctantly however, with our individual contributions to progressive candidates.

My piece may be small but something needs to be done to jerk the institution out of its complacent idiocy.

[Dr.Phool]

45. I think it's much worse than complacent idiocy.

There's actual malice towards progressive candidates at the DCCC. Especially when Ford and Rahm ran it.

[ozymandius]

46. Alas, I agree.

I try to count that short-sighted brand of leadership as aberrant behavior. These two men certainly fall into the category of "who needs enemies with friends like these?"

[ozymandius]

5. Banks asked to keep quiet on stress tests

WASHINGTON (Reuters) – The U.S. Treasury Department is asking banks not to mention the regulatory "stress tests" as part of their first-quarter earnings results, according to a source familiar with government discussions.

Many of the top 19 U.S. banks who are undergoing regulatory stress tests have already completed internal versions of the examinations, which are designed to determine their capital needs under more adverse economic conditions.

However, the banks do not yet know the results of the government's version of the assessment, the source said.

U.S. President Barack Obama is meeting on Friday with top financial regulators to discuss the stress tests, the results of which are anxiously anticipated by financial markets. Officials have said they will release the results in some form by the end of April.

Most major U.S. banks will have reported their first-quarter results by April 24.

http://news.yahoo.com/s/nm/20090410/bs_nm/us_financial_banks_stresstests

[Demeter]

7. So, We Are Officially Embarrassed By the Phony Stress Tests?

Or is bank secrecy is now national security?

Does anybody even think about how it looks on the outside?

[tclambert]

17. Phony? Phony? I have it on good authority that they were on the treadmill for a full ten seconds

with the technician continually threatening to turn the treadmill on.

[Hugin]

21. Now... Now... They haven't been given their pie for their efforts yet!

They still need fattening up!

Eat! Eat!

[ozymandius]

57. Much is being discussed about this on the Econ blogs.

From Calculated Risk, the pat response is thus:

What ever happened to transparency? This suggests the results are very ugly for some banks.

It's amusing that the article mentions Citi - I doubt Citi wants the results released!

Edit: So the Goobermental assessment says they passed. They did not fail. So stop saying that!!

[Demeter]

8. Communities print their own currency to keep cash flowing

http://www.usatoday.com/money/economy/2009-04-05-scrip_N.htm?csp=34

A small but growing number of cash-strapped communities are printing their own money. Borrowing from a Depression-era idea, they are aiming to help consumers make ends meet and support struggling local businesses. The systems generally work like this: Businesses and individuals form a network to print currency. Shoppers buy it at a discount — say, 95 cents for $1 value — and spend the full value at stores that accept the currency.

VIDEO: Scrip: It's all the rage

Workers with dwindling wages are paying for groceries, yoga classes and fuel with Detroit Cheers, Ithaca Hours in New York, Plenty in North Carolina or BerkShares in Massachusetts.

Ed Collom, a University of Southern Maine sociologist who has studied local currencies, says they encourage people to buy locally. Merchants, hurting because customers have cut back on spending, benefit as consumers spend the local cash.

"We wanted to make new options available," says Jackie Smith of South Bend, Ind., who is working to launch a local currency. "It reinforces the message that having more control of the economy in local hands can help you cushion yourself from the blows of the marketplace."

About a dozen communities have local currencies, says Susan Witt, founder of BerkShares in the Berkshires region of western Massachusetts. She expects more to do it.

Under the BerkShares system, a buyer goes to one of 12 banks and pays $95 for $100 worth of BerkShares, which can be spent in 370 local businesses. Since its start in 2006, the system, the largest of its kind in the country, has circulated $2.3 million worth of BerkShares. In Detroit, three business owners are printing $4,500 worth of Detroit Cheers, which they are handing out to customers to spend in one of 12 shops.

During the Depression, local governments, businesses and individuals issued currency, known as scrip, to keep commerce flowing when bank closings led to a cash shortage.

By law, local money may not resemble federal bills or be promoted as legal tender of the United States, says Claudia Dickens of the Bureau of Engraving and Printing.

"We print the real thing," she says.

The IRS gets its share. When someone pays for goods or services with local money, the income to the business is taxable, says Tom Ochsenschlager of the American Institute of Certified Public Accountants. "It's not a way to avoid income taxes, or we'd all be paying in Detroit dollars," he says.

Pittsboro, N.C., is reviving the Plenty, a defunct local currency created in 2002. It is being printed in denominations of $1, $5, $20 and $50. A local bank will exchange $9 for $10 worth of Plenty.

"We're a wiped-out small town in America," says Lyle Estill, president of Piedmont Biofuels, which accepts the Plenty. "This will strengthen the local economy. ... The nice thing about the Plenty is that it can't leave here."

[philly_bob]

53. My schoolteacher parents got paid in scrip in Depression Detroit.

Years later, they told it as a funny story, but it worked. Apparently the scrip was accepted as currency at stores and utilities.

[ozymandius]

56. I've heard similar stories from around the country.

In Atlanta, city employees were paid in script. It was not happily received by store owners, though. Price paid with script carried with it a 20% surcharge over cash.

[Demeter]

9. Fighting Recklessness with Recklessness

http://www.hussmanfunds.com/wmc/wmc090406.htm


...Notably, the one thing policy-makers have not done is to address foreclosure abatement in any serious way. The only way to get through this crisis without enormous collateral damage to ordinary Americans is by restructuring mortgage obligations (ideally using property appreciation rights), restructuring the debt obligations of distressed financial companies (ideally by requiring bondholders to swap a portion of their debt for equity), and abandoning the idea of using public funds to purchase un-restructurable mortgage debt (“toxic assets”). See On the Urgency of Restructuring Bank and Mortgage Debt, and of Abandoning Toxic Asset Purchases.

Look. You can play hot potato with the toxic assets all day long, and only outcome will be that the public will suffer the losses that would otherwise have been properly taken by the banks' own bondholders. You can tinker with the accounting rules all you want, and it won't make the banks solvent. It may improve “reported” earnings for a spell, but as investors who care about the stream of future cash flows that will actually be delivered to us over time, it is clear that modifying the accounting rules doesn't create value. It simply increases the likelihood that financial institutions will quietly go insolvent. I recognize that the accounting changes may reduce the immediate need for regulatory action, since banks will be able to pad their Tier 1 capital with false hope. But we have done nothing to abate foreclosures, and we are just about to begin a huge reset cycle for Alt-A's and option-ARMs. As the underlying mortgages go into foreclosure, it will ultimately become impossible to argue that the toxic assets would be worth much even in an “orderly transaction.”

Meanwhile, in a bizarre convolution of reality reminiscent of Alice in Wonderland, the Financial Times reported last week: “US banks that have received government aid, including Citigroup, Goldman Sachs, Morgan Stanley and JPMorgan Chase, are considering buying toxic assets to be sold by rivals under the Treasury's $1,000bn plan to revive the financial system.” And why not? They can put up a few percent of their own money, and swap each other's toxic assets financed by a bewildered public suddenly bearing more than 90% of the downside risk. The “investors” in this happy “public-private partnership” keep half the upside while ordinary Americans take the downside off of their hands. Some partnership....

[ozymandius]

28. quietly go insolvent

Pay attention to this and all things being done quietly. Among other quiet items: Fannie and Freddie are quietly lifting the moratorium on foreclosures.

[Demeter]

11. (WSJ) Economists See a Rebound in September

http://online.wsj.com/article/SB123921340472201877.html

By PHIL IZZO

Economists in the latest Wall Street Journal forecasting survey expect the recession to end in September, though most say it won't be until the second half of 2010 that the economy recovers enough to bring down unemployment.


* See forecasts for growth, unemployment, housing and more. Plus, views on the auto industry, ranking Fed chairmen, grading policymakers and more. Survey conducted April 3-6. (Or download all data as .xls) SAMPLES OF THESE FORECASTS:

WSJ ECONOMIC FORECASTING SURVEY
April 2009
Q&A

Recession Trough
Now that the NBER has dated the start of the recession in December 2007, what month and year will it end?

Results from April survey
Second Quarter 2009 20%
Third Quarter 2009 43%
Fourth Quarter 2009 24%
First Quarter 2010 8%
Second Quarter 2010 2%
Second Half 2010 or Later 4%

Results from March survey
First Quarter 2009 0%
Second Quarter 2009 13%
Third Quarter 2009 41%
Fourth Quarter 2009 35%
Sometime in 2010 11%

Results from February survey
First Quarter 2009 2%
Second Quarter 2009 24%
Third Quarter 2009 39%
Fourth Quarter 2009 24%
Sometime in 2010 12%

Results from December survey
Fourth Quarter 2008 2%
First Quarter 2009 6%
Second Quarter 2009 47%
Third Quarter 2009 27%
Fourth Quarter 2009 14%
Sometime in 2010 4%


Jobs Recovery
When will the U.S. economy be growing fast enough to bring down the unemployment rate?
Q2 2009 2%
Q3 2009 4%
Q4 2009 6%
Q1 2010 14%
Q2 2010 24%
Q3 2010 35%
Q4 2010 12%
2011 or later 4%





* Complete Coverage: Forecasting Survey

Gross domestic product was predicted to contract in the first and second quarters of this year by 5.0% and 1.8%, respectively, on a seasonally adjusted annualized rate. A return to growth -- a modest 0.4% -- isn't expected until the third quarter. In the fourth quarter of 2008, the most recent period for which data are available, the economy contracted 6.3%.

"The end of the decline isn't the beginning of the recovery," said David Resler of Nomura Securities Inc. "It's like a boxing match. Even if you win the fight, it's not going to feel as good when you get out of the ring as when you went in."


Phil Izzo and Kelly Evans discuss the Wall Street Journal's most recent economic survey, which found that for the first time in a long time, things aren't getting worse. VIDEO AVAILABLE AT LINK

The economists' forecasts indicate that the peak in the unemployment rate is likely to coincide with the midterm elections -- possibly bad news for Democrats. Even if the economy is growing, Americans still will be feeling the effects of the recession and could blame the incumbent. For example, when George H.W. Bush lost the presidency in 1992, the economy had been out of a recession for more than a year, but the unemployment rate didn't peak until June, and there was slow growth through the election.

Even when the economy stops shedding jobs, the unemployment rate is likely to remain elevated for some time. "The unemployment rate isn't going to recover, because you have to get back everything you lost and then some," said Joseph Lavorgna of Deutsche Bank Securities Inc. He estimated that the economy would have to grow an average of about 4% for six years to get back to the sub-5% unemployment rates seen in 2007.


Despite the grim news for jobs, economists are seeing more signs of a recovery in the broader economy this year. On average, the 53 economists surveyed expect the recession to end in September, compared with the October forecast last month. It marked the first time since the recession began that the economists didn't push the date of recovery further into the future. The survey was conducted April 3-6, before the release of trade data this week that led some forecasters to revise upward their outlook for the first quarter.

Several factors are raising hopes, chief among them businesses' sharp cuts in production and inventory late last year. The economy may be reaching a point where even meeting subsistence demand requires an increase in output. Empty shelves need to be restocked, even if at lower levels than before....

[ozymandius]

14. I want to kick the ass of anyone who promotes a "jobless recovery".

Jobless recoveries do not exist. Period! Some were trumpeting the "jobless recovery" in 2003. Look what that "recovery" brought us. Nothing.

I am also dismayed that the economists mentioned here are warning the Democrats what could happen if thirty years of shitty policies are not rectified in the course of one election cycle.

There is a second reason to embed a shoe in somebody's rectum.

[Tansy_Gold]

20. I'd rather plant the kick somewhere far more sensitive.

[Dr.Phool]

49. WSJ is the Faux News of the financial world.

It was pretty bad before, but Murdoch is driving it over a cliff.

I know that their News Division was pretty good before, but Murdoch has found a way to blur the line with the editorial page.

[Joe Chi Minh]

71. I fear your country is facing its nemesis for all those years of wreaking imperial slaughter and

cruelty in South America and througout the underdeveloped world, in one short, sharp, ugly blow. In the UK, it's been very long and drawn out - and we're getting second helpings, for our collusion in it all.

[Hawkowl]

78. Bubble recovery

I agree completely. A "jobless recovery" is nothing but a gimmick. A byproduct of some "credit bubble" recovery. I think the Geithner/Obama plan in a nutshell, is to inflate the credit bubble just enough to keep the economy and the markets on life support to carry the midterm elections. No interest in either acknowledging or solving the structural problems of the economy. This is the Japanese approach and I think this is going to be a disaster.

[ozymandius]

18. Obama meets advisers, plans update on economy

WASHINGTON – Fresh off a foreign trip heavily focused on global economic troubles, President Barack Obama is getting together with his top economic advisers as the U.S. recession shows signs of abating.

Treasury Secretary Timothy Geithner, Federal Reserve Chairman Ben Bernanke and Federal Deposit Insurance Corp. Chairwoman Sheila Bair were heading to the White House for a morning of talks Friday. Also attending were Securities and Exchange Commission Chairwoman Mary Schapiro and Comptroller of the Currency John Dugan.

Obama advisers say the broad agenda was to include discussions on efforts to stimulate the economy as well as stabilize the financial sector, plus the rising unemployment rate, mortgage refinancing and the health of banks, including "stress tests" the administration is conducting.

....

The backdrop of his White House meeting is a still-fragile economy that's showing signs of possible turnaround, including a strong profit forecast from Wells Fargo & Co., a drop in unemployment benefit filings and predictions of solid April sales from several retailers.

....

But Summers, who spoke at the Economic Club of Washington, said it was too soon to forecast how strong the rebound would be and when it would take hold. He also refused to predict how high the unemployment rate will rise before a sustainable recovery begins.

http://news.yahoo.com/s/ap/20090410/ap_on_go_pr_wh/obama_economy

---

Operative word = Sustainable (whatever that means today)

[Demeter]

24. Operative Phrase = Delusional Denial

Economic physicians heal yourselves! Any doctor who ran his practice in this fashion would have his license lifted faster than lightning. Voodoo economics lives.

[Demeter]

22. Bernanke's Financial Rescue Plan: The glide-path to destitution By Mike Whitney

http://informationclearinghouse.info/article22367.htm


...Bernanke's zero-percent interest rates, multi-trillion dollar lending facilities and bank bailouts do not fit within the Fed's narrow mandate of "price stability and full employment". With unemployment soaring to 8.5 percent and increasing at a rate of 650,000 per month (with 15 percent under-employed) it is a wonder that Bernanke hasn't been fired already. There are also myriad problems with Bernanke's lending facilities which are nothing more than a crafty way of transferring wealth from the Fed to private industry via low interest loans. The Central Bank is not supposed to "pick winners" as it is blatantly doing through its market-distorting facilities. Businesses outside the financial sector cannot exchange their downgraded garbage with the Fed for semi-permanent, rotating loans; so why should underwater investment banks and hedge funds get special treatment? The facilities represent a gift to financial institutions giving them an unfair advantage in the marketplace.

Besides the $2 trillion for the Term Asset-Backed Lending Facility (TALF) and the Public-Private Investment Program (PPIP), the Fed will also provide a multi-billion dollar backstop for the FDIC as bank closures continue to snowball and more reserves are needed to shore up the system. That means that the Fed's balance sheet could mushroom to over $4 trillion by the end of 2010. The Treasury has already agreed in principle to assume full responsibility for the Fed's lending facilities (as well as the bailouts of AIG and Bear Stearns) as soon as the financial system stabilizes. By providing loans and US Treasurys to failing companies, instead of capital, Bernanke has sidestepped Congress, thus, undermining the spirit and the letter of the law. Congress has approved a mere $1.5 trillion of the nearly $13 trillion for which taxpayers are now responsible.

The recent 22 percent uptick in the stock market is a sign that Bernanke's monetary stimulus is beginning to kick in. Oil rose from $33 per barrel to over $50 in little more than a month. Other raw materials have followed oil. The dollar has plunged every time the stock market has gone up. These are all signs of nascent inflation which is likely to accelerate after the current period of deleveraging ends. Food and energy prices will rise sharply and the dollar will come under greater and greater pressure. This is Bernanke's nightmare scenario; a surge in inflation that forces him to raise rates and kill the recovery before it ever begins. The Fed's unwillingness to be proactive in dealing with credit bubbles has created a situation where there are no easy answers or pain-free solutions.

Bernanke's approach to the crisis has been wrongheaded from the get-go. It makes no sense to commit nearly $13 trillion to prop up a grossly oversized financial system while providing less than $900 billion stimulus for the real economy. The whole plan is upside-down. It's consumers, homeowners and workers that create demand (consumer spending is 72 percent of GDP) and yet, they've been left to twist in the wind while the bulk of the resources have been directed to financial speculators who are responsible for the mess. Middle class families have seen their retirements slashed in half and their home equity vanish, while their jobs become increasingly less secure. The Fed and the Treasury should be focused on debt relief, mortgage cram-downs, jobs programs and open-ended support for state and local governments. Rebuilding the financial infrastructure for extending more credit to people that are already underwater is beyond shortsighted; its cruel. The financial system needs to shrink to fit the new reality of a smaller economy. That means that Bernanke should aggressively mark-down the dodgy collateral he's been accepting (the collateral should reflect current market prices) and force many of the weaker institutions into bankruptcy. This is the fairest and fastest way to shake the deadwood from the financial system. Keeping asset prices artificially inflated only puts off the inevitable day of reckoning.

..............
"Globally, the dollar-denominated financial system has seen its equity market capitalization value fall by between 40-60% by February 2009....On October 31, 2007, the total market value of publicly-traded companies around the world was $62.6 trillion. By December 31, 2008, the value had dropped nearly half to $31.7 trillion. The gap of lost wealth, $30.9 trillion, is approximately the combined annual Gross Domestic Product of the US, Western Europe, and Japan.... Family net worth hit a record high of $64.36 trillion in 2nd quarter of 2007. By 4th quarter 2008, it fell to $51.48 trillion, a loss of $12.88 trillion.

To restore the wealth lost in the current financial crisis, the Treasury would have to monetize some $30 trillion of toxic assets, almost ten times what the Geithner Treasury is currently contemplating, and twice the size of current US annual GDP. Add to that about $10 trillion of value lost in the collapse of commodity prices and another $10 trillion in real property values, and we have a wealth loss of $50 trillion."
(Obama’s Politics of Change and US Policy on China, asia Times, Henry Liu)

Nearly half of the world's wealth has been consumed in one gigantic capital bonfire. No amount of "quantitative easing" will undo the damage to the economy. Here's a clip from Merrill Lynch's David Rosenberg adding more perspective to Liu's comments:

"Government cannot prevent nature from taking its course. While an additional $1.15 trillion expansion of the Fed’s balance sheet is large as a stand-alone event, it really is just a drop in the bucket when one considers that there is still almost $8 trillion of combined household and business sector credit that must be unwound in order to mean-revert the private sector-to-GDP ratio (which is still close to a record-high). Once again, the government is cushioning the blow, but cannot prevent nature from taking its course.

(We) feel much more confident that corporate earnings are going to slide again this year....The economy continues to contract … job losses, declining equity and housing wealth, and tight credit conditions have weighed on consumer sentiment and spending. Weaker sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories and fixed investment. US exports have slumped as a number of major trading partners have also fallen into recession”. This is with the Fed funds rate effectively at zero. It’s pretty clear that the Fed does not see any flicker of light at the end of the tunnel just yet. Mr. Market may be in for yet another surprise." (Interview with David Rosenberg, Tech Ticker)

The system-wide contraction can't be stopped by supporting financial institutions that made bad bets or took on perilous amounts of debt leaving them deep in the red. Fed lending should be aimed at companies that need temporary help only, like rolling over loans or getting through a rough patch while inventories are trimmed and consumers retrench. Similarly, the stimulus (monetary or fiscal) shouldn't be used to reflate assets or to try to reverse the market correction, but to maintain aggregate demand, take up slack in the sluggish economy, create jobs, and soften the blow for the victims of Wall Street's bubblenomics. Bernanke has used monetary stimulus in precisely the way it should not be used, to keep asset prices artificially high despite the cooling off in the stock market, falling corporate profits, and the steeply rising unemployment. There should be a sharp reduction in the amount lending to financial institutions, reflecting the decline in the value of the underlying assets which are now priced at roughly 30 cents on the dollar. Bernanke's job is to wind-down these positions, not perpetuate the problem at the taxpayer's expense.

According to Bloomberg: "The Federal Reserve’s top two officials assured that they will pull back their emergency- credit programs once the crisis fades, even as they prepare to flood the system further with an excess of $1 trillion.

Chairman Ben Bernanke said yesterday in Charlotte, North Carolina that the Fed must retain the flexibility to withdraw its record cash injections to restrain prices. Vice Chairman Donald Kohn said in Wooster, Ohio, “the trick will be unwinding this balance sheet in a timely way to avoid inflation.”

This is pure fiction. Bernanke has no exit strategy because the collateral the Fed now holds on its books will never regain anything near its original value. Securitization turned 80% of shaky subprime loans into AAA assets for which the Fed is now providing full value vis a vis its low interest loans. The Fed chief has made the same bad bet that the financial institutions made, and is now adding to that mistake by buying $750 billion in junk loans from Fannie and Freddie and $300 billion in US Treasurys to push investors out of the safety of cash back into the market. It's lunacy. All of this is putting more and more pressure on the dollar which could experience severe dislocation if Bernanke does not make a reasonable attempt to do what is necessary to resolve the banks, shore up consumer spending, shut down underwater financial institutions (auction their toxic assets through a RTC government-run facility) and stop trying to reassemble a broken system.

Bernanke is in way over his head. He has no plan for expanding conventional lending or strengthening the parts of the system that still work. All his efforts have been focused on salvaging insolvent banks and restarting securitization. Securitzation--transforming pools of loans into securities---was Wall Street's Golden Goose, a privately-owned credit-generating mechanism which created windfall profits by selling radioactive waste to over-trustful investors. Securitization is the epicenter of the shadow banking system, the mostly-unregulated universe of opaque debt-instruments, off balance sheet operations, and massively over-leveraged financial institutions. Securitization broke down after subprime mortgages began defaulting in record numbers sending risk-adverse investors scuttling for the exits. To illustrate how frozen the securitzation market is at present, here's a blurp from the Wall Street Journal:

"Outside the market where the Fed is a buyer for securities backed by mortgage loans that conform to Fannie and Freddie standards, there hasn't been a new deal since 2007, according to FTN Financial, a fixed-income broker dealer." (Wall Street Journal, Credit Markets Still Navigate in a Choppy Sea of Liquidity)

Repeat: "No new deals since 2007."

Again from the Wall Street Journal:

"Banks and other finance companies making loans for autos, credit cards and college tuition are having virtually no success in selling those loans to other investors, a potent sign of just how tight credit markets remain.

The market for selling such loans — by packaging, or securitizing, them into bonds — had just one $500 million deal for all of October, according to Barclays Capital. That compares with $50.7 billion worth of deals made one year earlier, according to market-research firm Dealogic.” (Bond Woes Choke off some Credit to Consumers, Wall Street Journal, Robin Sidel)

Securitzation is dead, and yet, Bernanke and Geithner want to shovel another $2 trillion into this black hole hoping to lure investors back to the market. Why? Because Wall Street financiers and bank mandarins see securitization as an efficient model that can be exported into any market around the world. The repackaging of debt into complex instruments, that can be stealthily created in off balance sheet operations requiring smaller and smaller slices of capital, is the essential flimflam product that Wall Street intends to use to dominate global financial markets. Keeping secutization alive is ultimately about power; pure, unalloyed economic power. That is why Bernanke will spare no expense trying to resuscitate this failed system.

What's so destructive about securitzation is that it allows the banks to create credit out of thin air through unregulated, clandestine operations, which eliminate transparency and makes it impossible for the Fed to control the money supply. David Roache explains how this works in an excerpt from his book "New Monetarism" which appeared in the Wall Street Journal:


"The reason for the exponential growth in credit, but not in broad money, was simply that banks didn't keep their loans on their books any more-and only loans on bank balance sheets get counted as money. Now, as soon as banks made a loan, they "securitized" it and moved it off their balance sheet.

There were two ways of doing this. One was to sell the securitized loan as a bond. The other was "synthetic" securitization: for example, using derivatives to get rid of the default risk (with credit default swaps) and lock in the interest rate due on the loan (with interest-rate swaps). Both forms of securitization meant that the lending bank was free to make new loans without using up any of its lending capacity once its existing loans had been "securitized."

So, to redefine liquidity under what I call New Monetarism, one must add, to the traditional definition of broad money, all the credit being created and moved off banks' balance sheets and onto the balance sheets of nonbank financial intermediaries. This new form of liquidity changed the very nature of the credit beast. What now determined credit growth was risk appetite: the readiness of companies and individuals to run their businesses with higher levels of debt. (Wall Street Journal)

The banks have been creating trillions of dollars of credit without maintaining adequate capital reserves to back them up. That explains why the banks were so eager to provide mortgages to millions of loan applicants who had no documentation, no income, no collateral and a bad credit history. They believed there was no risk, because they were making enormous profits without tying up any of their capital.

THE ECONOMY'S LIFE'S BLOOD IN PRIVATE HANDS

As Barak Obama says, "Credit is the economy's life's-blood". It should not be part of a secretive process which is kept off-book and controlled by men whose solitary goal is fattening the bottom line for short-term gain. The reason securitization failed is because the banks put profit above their responsibility to perform due diligence on their loans. In other words, securitization created incentives for fraud, which is why the system eventually collapsed. Still, Bernanke is determined to do Wall Street's bidding and spend another $2 trillion trying to rev up the securitization engine. A recent letter by the Federal Reserve Bank of Dallas, "Fed Confronts Financial Crisis by Expanding Its Role as Lender of Last Resort" helps to shed some light on the Fed's real intentions:

"In a modern financial system, securities-funded lending has replaced the banking system as the predominant credit source for households and nonfinancial firms. Because of this development, it can be appropriate to extend the lender of last resort role to temporarily support some nonbank credit sources....

It’s against this backdrop that the Fed has extended its role as lender of last resort beyond banks. Since late 2007, the central bank has supported key credit flows funded by securities, extending loans on nonfinancial corporations’ commercial paper, residential mortgage-backed securities and nonbank financial companies’ loans to consumers and businesses.

The Fed actions recognize the dramatic shift toward debt funded through securities markets. At the end of 1979, securities funded about 33 percent of household, nonfinancial corporate and nonfarm business debt. By the third quarter of 2008, that figure had risen to around 64 percent .

A closer look reveals that household debt became significantly more dependent on market funding, largely reflecting the increased importance of asset-backed securities (ABS) in funding mortgages and consumer loans. Even the share of nonfinancial corporate debt funded by securities rose considerably over the same period—from 57 percent to 76 percent."

76 percent! Is it any wonder why the global economy has been sucked into a bottomless abyss; why auto sales are down 40 percent or more, why global trade is down 35 percent or more, why unemployment is skyrocketing, manufacturing is stalling and consumer confidence is plunging?

The Fed has allowed an unregulated and untested privately-controlled "credit generating" shadow banking system to infect the broader economy and create a nation of credit addicts which are entirely at the mercy of unpredictable market fluctuations. Is this how the economy's "life's blood" should be distributed?

The only reason this occult system was allowed to flourish--with the tacit support of the Fed and the Treasury-- was because it threw open the profit-sluicegates for the banks and Wall Street speculators who made more money than anyone ever thought possible. Clearly, this is what motivates Bernanke and Geithner. These are their real constituents.

WILL THE U.S. DEFAULT AGAIN?

Meanwhile--as Bernanke fiddles--the prospect of a US default grows more and more likely. Spreads on credit default swaps (CDS) have progressively widened with every new Fed program and every new multi-billion dollar bailout. Here's journalist Greg Ip in The Washington Post:

"In its battle against the financial crisis, the U.S. government has extended its full faith and credit to an ever-growing swath of the private sector... (But) Can the United States pay the money back?..

The most important is the coming surge in the federal debt. At the end of the last fiscal year, in September, the total public debt held by the American people stood at $5.8 trillion, or 41 percent of gross domestic product -- about what the debt-to-GDP ratio has averaged since 1956. But the Congressional Budget Office projects deficits of $1.9 trillion over the next two years. Add almost $800 billion of stimulus spending, and U.S. debt soars to 60 percent of GDP by 2010 -- the highest level since the early 1950s, when the nation was working off its World War II and Korean War debts.
The federal government has taken on massive "contingent liabilities" -- loans and guarantees that don't become actual costs until the borrower defaults and the federal guarantee has to be honored." (Greg Ip, We're Borrowing Like Mad. Can the U.S. Pay It Back? Washington Post)

Keep in mind, the United States defaulted on its debt in 1933 when Roosevelt took office and pulled the country off the gold standard, thus, shrugging off the claims of foreign investors who were assured the US would honor its obligations in gold. The dollar plummeted. Bernanke's muddled strategy has the nation walking down that same path once again.

[ozymandius]

23. This column so eloquently explains the feelings behind my coarse desires.

See post #14.

[ozymandius]

25. This Wells Fargo report is starting to smell like that leaked Citi internal memo.

Wells Fargo boosts stocks

NEW YORK/SEOUL (Reuters) - U.S. bank Wells Fargo (WFC.N) forecast a record profit, South Korea steered clear of recession, and Chinese export data beat expectations, all offering hope that the worst of the financial crisis had passed.

....

Banks remained in focus. Sumitomo Mitsui Financial Group (8316.T), Japan's third largest, was flooded with sell orders after it said it faced a net loss of $3.9 billion for the financial year just ended and would raise as much as $8 billion through the sale of shares.

Chinese lender Shanghai Pudong Development Bank (600000.SS) said it planned to raise as much as $4.4 billion via a sale of shares and bonds to bolster capital as its annual profit more than doubled on rapid loan expansion.

Profits were also improving for Wells Fargo, which said it expected to report net income of about $3 billion for the first quarter, more than double what analysts on average expected. Wells Fargo shares soared more than 30 percent on the New York Stock Exchange on Thursday.

---

There's that word again: Hope. These people really need a different plan.

[Hugin]

31. Could it have been they jacked their ATM fees up to $3.00 a shot?

:shrug:

[Dr.Phool]

58. I also read that they started charging a fee, if you used a teller too much.

I'm still with Wachovia, and I haven't noticed any changes.

[Hugin]

62. What ever happened to that Russ Feingold guy?

He could'a been a contender.

[Dr.Phool]

66. He was my first choice, until he announced he wasn't going to run.

[Kip Humphrey]

59. The impact of relaxing mark-to-market reporting?

I think so. Let's see how "improved" other financials report this quarter.

[Danascot]

82. Haven't you heard? "The Banking Crisis is Over"

I want some of whatever this guy is on.

Investors find it disconcerting to see the stocks in the huge financial institutions that are at the foundation of the global capital system trading up and down 25% a day, and, in some cases trading in the pennies. Banks became the visible and ugly wound that reminded Wall St. each day that it had torn down what it spent decades building, which was a money-making machine driven by leverage and the cleverest synthetic financial instruments the world has ever seen.

But, the great banking crisis of 2008 is over. It began last September 15 when Lehman Brothers filed for bankruptcy and bottomed when Citigroup (C) traded below $1 last month. Most analysts believe that mortgage-backed securities which included packages of subprime home loans failed when mortgage default rates went up and housing prices raced down. That is only partially true. Banks made a tremendous series of ill-advised loans to private equity firms, hedge funds, commercial real estate holders, and the average man with a credit card balance which he cannot pay. (See pictures of the top 10 scared traders.)

When people look back on the near-collapse of the banking system they may say that the Congress and Henry Paulson threw enough money into the path of the oncoming failure of the credit system to slow it down so that the government could properly go through the process of guaranteeing parts of the balance sheets of firms including Citigroup (C) and Bank of America (BAC). The initial TARP may also have provided time for the new Administration to put together its widely hailed bank "stress test" program meant to determine which of the big financial institutions have dysentery and which do not. Finally, the hundreds of billions of dollars that went into the largest banks late last year allowed Secretary Geithner to produce his public/private partnership to buy toxic assets off of bank balance sheets.

All of those plans, no matter how well-intentioned they may seem, are unnecessary now. Wells Fargo (WFC) indicated that it made about $3 billion in the first quarter of the year and declared its buyout of the deeply troubled Wachovia to be a success. Wells Fargo (WFC) said that the low cost of money from the government combined with a surging demand for mortgages was all the medicine that it required.

http://www.time.com/time/business/article/0,8599,1890560,00.html

[Demeter]

27. Should We Kill the Fed? By Patrick J. Buchanan

http://informationclearinghouse.info/article22365.htm


April 07, 2009 "Human Events" --- For the financial crisis that has wiped out trillions in wealth, many have felt the lash of public outrage.

Fannie and Freddie. The idiot-bankers. The AIG bonus babies. The Bush Republicans and Barney Frank Democrats who bullied banks into making mortgages to minorities who could not afford the houses they were moving into.

But the Big Kahuna has escaped.

The Federal Reserve.

"(T)he very people who devised the policies that produced the mess are now posing as the wise public servants who will show us the way out," writes Thomas Woods in "Meltdown."

Already in its sixth week on the New York Times best-seller list, this eminently readable book traces the Fed's role in every financial crisis since this creature was spawned on Jekyl Island in 1913.

The "forgotten depression" of 1920-21 was caused by a huge increase in the money supply for President Wilson's war. When the Fed started to tighten at war's end, production fell 20 percent from mid-1920 to mid-1921, far more than today.

Why did we not read about that depression?

Because the much-maligned Warren Harding refused to intervene. He let businesses and banks fail and prices fall. Hence, the fever quickly broke, and we were off into "the Roaring Twenties."

But, the Fed reverted, expanding the money supply by 55 percent, an average of 7.3 percent a year, not through an expansion of the currency, but through loans to businesses.

Thus, when the Fed tightened in the overheated economy, the Crash came, as the stock market bubble the Fed had created burst.

Herbert Hoover, contrary to the myth that he was a small-government conservative, renounced laissez-faire, raised taxes, launched public works projects, extended emergency loans to failing businesses and lent money to the states for relief programs.

Hoover did what Obama is doing.

Indeed, in 1932, FDR lacerated Hoover for having presided over the "greatest spending administration in peacetime in all of history." His running mate, John Nance Garner, accused Hoover of "leading the country down the path to socialism." And "Cactus Jack" was right.

Terrified of the bogeyman that causes Ben Bernanke sleepless nights -- deflation, falling prices -- FDR ordered crops destroyed, pigs slaughtered, and business cartels to cut production and fix prices.

FDR mistook the consequences of the Depression -- falling prices -- for the cause of the depression. But prices were simply returning to where they belonged in a free market, the first step in any cure.

Obama is repeating the failed policies of Hoover and FDR, by refusing to let prices fall. Obama, with his intervention to prop up housing prices and Bernanke with his gushers of money to bail out bankrupt banks and businesses are creating a new bubble that will burst even more spectacularly.

The biggest myth, writes Woods, is that it was World War II that ended the Great Depression. He quotes Paul Krugman:

"What saved the economy and the New Deal was the enormous public works project known as World War II, which finally provided a fiscal stimulus adequate to the economy's needs."

This Nobel Prize winner's analysis, writes Woods, is a "stupefying and bizarre misunderstanding of what actually happened,"

Undoubtedly, with 29 percent of the labor force conscripted at one time or another into the armed forces, and their jobs taken by elderly men, women and teenagers with little work experience, unemployment will fall.

But how can an economy be truly growing 13 percent a year, as the economists claim, when there is rationing, shortages everywhere, declining product quality, an inability to buy homes and cars, and a longer work week? When the cream of the labor force is in boot camps or military bases, or storming beaches, sailing ships, flying planes and marching with rifles, how can your real economy be booming?

It was 1946, a year economists predicted would result in a postwar depression because government spending fell by two-thirds, that proved the biggest boom year in all of American history.

Why? Because the real economy was producing what people wanted: cars, TVs, homes. Businesses were responding to consumers, not the clamor of a government run by dollar-a-year men who wanted planes, tanks, guns and ships to blow things up.

"The Fed was the greatest single contributor to the crisis that unfolds before us," Woods writes of today, and "more dollars were created between 2000 and 2007 than in the rest of the republic's history."

After 9-11, the Fed kept interest rates low -- in one year as low as 1 percent. That money flooded into the housing and stock markets. And in 2008, as the Fed tightened, the bubble burst.

Now the money supply is again expanding, to rescue us from a crisis created by the previous expansion. Of Nicholas Biddle's Bank of the United States, the great Andrew Jackson was eloquent.

"It has tried to kill me," he said. "But I will kill it." And he did.

Should not this creature from Jekyl Island, for all its manifold crimes and sins against the republic, also be summarily put to death?

Mr. Buchanan is a nationally syndicated columnist and author of Churchill, Hitler, and "The Unnecessary War": How Britain Lost Its Empire and the West Lost the World, "The Death of the West,", "The Great Betrayal," "A Republic, Not an Empire" and "Where the Right Went Wrong."


YOU HAVE TO ADMIRE A POLITICIAN WHO IS WILLING TO PUT OUT OF BUSINESS THE INSTITUTION THAT'S KEPT HIS PARTY ALIVE WAY PAST ITS SELL DATE....

[Demeter]

29. The Crash of '09, The Collapse of '10 By Humayun Gauhar

http://informationclearinghouse.info/article22369.htm

MOST OF THIS ARTICLE IS SPECULATIVE FEAR-MONGERING, BUT THIS FACTUAL NUGGET IS WORTHY OF ATTENTION:


April 07, 2009 "The Nation" --- Many American analysts are saying that America's real economic collapse could come by the end of this year. "It will come to be known as 'The Crash of 09', they say. Others, especially a Russian political analyst, are predicting its physical collapse too. There's no doubt that the country is up the dirtiest of imaginable creeks without a paddle. But what's amazing is that America remains mired in stunning denial, continuing to make bad situations worse with useless bailout plans and messing around with the world instead of facing up to the reality that its time as a hyper-power is up, that's its economic system has failed and that its only recourse is to end its adversarial doctrine and get out of its lost wars as painlessly and honourably as possible. There's no point in going on flogging dead horses. The only sensible thing that survival demands is to craft a new moral economic and financial system and a moral foreign policy.

The deep recession verging on depression that we have seen so far was caused by the crash in the US housing market. Since other developed industrialised nations, especially of Europe, were aping the shenanigans of unchecked and poorly regulated American bankers and financiers, the collapse of their markets, banks and economies followed like dominoes. Iceland was the first to officially declare bankruptcy. Its GDP is only about $6.5 billion but its banks had lent something like $65 billion while its regulators were asleep on the wheel. Britain has not declared bankruptcy officially but we all know that it is bankrupt for all intents and purposes and none of its banks and financial institutions has any legs left.

However, this is only the aperitif. Wait for the crash of US commercial real estate, which analysts think will happen by autumn this year. Shops are closing down and there's no one to rent them. Companies are retrenching and freeing up a lot of office space or closing down entirely and vacating even more precious office space with no one to rent it again. Huge skyscrapers are becoming ghost-scrapers. All this expensive commercial real estate is mortgaged to the hilt. With no rental income coming in, the loans against them will become difficult to service and there will be fearsome default. There's insurance and re-insurance here also and the amounts involved are mind-boggling. No bailout plan would come even close to coping. When the commercial real estate collapse comes, all hell will break loose. And if multinationals like General Motors and Ford call it a day, it won't just be thousands upon thousands of people unemployed (though its heartless to use the word 'just' here). Two entire towns will be become ghost towns. That's terrible. If you count the number of people - wives, children and parents - who are dependent on those incomes, it becomes worse than terrible. It becomes absolutely and totally unconscionable, while corrupt and greedy bankers and the likes of Bernie Madoff have made off with billions - perhaps trillions - of dollars and are still doing so because "our contracts say so."

...............
It's not easy to comprehend the collapse of an empire or a superpower. When termites are eating away at their vitals for years one cannot see it. People are too much in thrall of their power, wealth and panoply. Thus when the collapse comes it seems sudden, and takes people by surprise. "I went to sleep last night and when I woke up next morning the Soviet Union was gone." The most powerful war machine ever built couldn't save it. Remember the British Empire on which "the sun would never set"? It set so firmly that only six decades later Britain is not only bankrupt, it has become America's appendage, a third rate power and could itself disintegrate soon with Scotland seceding. The history of the world is replete with the demise of civilisations, empires and superpowers. The graveyards of nations are full of their bones.

That there may be something to what Prof Panarin says is borne out by the fact that the late Bush Administration made contingency plans to impose martial law in case of economic collapse or massive and violent social unrest with blood on the streets. His predictions seem plausible, even probable, if all the dire scenarios come right, as they have thus far. According to Rand Clifford the US has already made plans to "round up insurgent US citizens" and detain them in what are called "Rex 84" camps. Plus they have made "safe facilities" for members of Congress and their families. A report by the Phoenix Business Journal says: "A new report by the US Army and War College talks about the possibility of Pentagon resources and troops being used should the economic crisis lead to civil unrest, such as protests against businesses and government or runs on beleaguered banks." The Journal's story quote from the War College report: "Widespread civil violence inside the United States would force the defence establishment to reorient priorities in extremist to defend basic domestic order and human security." It needs saying that the military regularly makes plans for the most dire of situations, however seemingly unlikely.

Let Zbigniew Brzezinski, former National Security Advisor to President Jimmy Carter and an early supporter of Barack Obama have the last word. The US is "going to have millions and millions of unemployed people really facing dire straits. And we're going to be having that for some period of time before things hopefully improve. And at the same time there's public awareness of this extraordinary wealth that was transferred to a few individuals at levels without historical precedent in America...hell there could even be riots."

The writer is a senior political analyst - E-mail:[e-mail]

[ozymandius]

35. Hey, wanna buy a really big building? (points to 3rd paragraph)

Downtown Atlanta’s Equitable building, an iconic 33-story office tower that once dominated the city’s skyline, has fallen into foreclosure.

A foreclosure notice published Wednesday said the 40-year-old skyscraper is scheduled to be auctioned on the Fulton County Courthouse steps on May 5.

....

The building’s owner, Equastone 100 Peachtree LLC, owes $52 million on the mortgage to Capmark Bank, a division of Horsham, Pa.-based Capmark Financial Group.

San Diego-based Equastone paid $56.8 million for the building in May 2007 at the height of the commercial real estate boom. According to Fulton County property tax records, the building is now worth about $44.8 million, including the land.

....

Before the economy collapsed, Equastone had big plans for the office tower. The company planned to expand the first two floors to bring them closer to the sidewalk and hoped to land a major tenant whose name might replace the “Equitable” at the top of the building. Equitable is no longer in the building.

http://www.ajc.com/services/content/2009/04/09/equitable0409.html

[Demeter]

37. We've Had Historical Buildings, Architectural Treasures

Standing vacant and growing trees inside them for 40 years, in Detroit.

[DemReadingDU]

61. It's going to get ugly, but

who really knows to what extent? I would like to think Obama has contingency plans to feed hungry people to deter civil unrest, but the way the banksters are looting the Treasury, not sure if there will be money to do that.

[Demeter]

32. Towards a Global Currency and World Government

http://informationclearinghouse.info/article22370.htm


...In 2007, Foreign Affairs, the journal of the Council on Foreign Relations, ran an article titled, The End of National Currency, in which it began by discussing the volatility of international currency markets, and that very few “real” solutions have been proposed to address successive currency crises. The author poses the question, “will restoring lost sovereignty to governments put an end to financial instability?” He answers by stating that, “This is a dangerous misdiagnosis,” and that, “The right course is not to return to a mythical past of monetary sovereignty, with governments controlling local interest and exchange rates in blissful ignorance of the rest of the world. Governments must let go of the fatal notion that nationhood requires them to make and control the money used in their territory. National currencies and global markets simply do not mix; together they make a deadly brew of currency crises and geopolitical tension and create ready pretexts for damaging protectionism. In order to globalize safely, countries should abandon monetary nationalism and abolish unwanted currencies, the source of much of today's instability.”


The author explains that, “Monetary nationalism is simply incompatible with globalization. It has always been, even if this has only become apparent since the 1970s, when all the world's governments rendered their currencies intrinsically worthless.” The author states that, “Since economic development outside the process of globalization is no longer possible, countries should abandon monetary nationalism. Governments should replace national currencies with the dollar or the euro or, in the case of Asia, collaborate to produce a new multinational currency over a comparably large and economically diversified area.” Essentially, according to the author, the solution lies in regional currencies.<5>


SAY RATHER THAT GLOBALISM IS INCOMPATIBLE WITH HUMAN SURVIVAL AND THE FRUITS OF DEMOCRACY: LIFE, LIBERTY AND THE PURSUIT OF HAPPINESS, SELF-DETERMINATION, AND ANY REASON TO CONTINUE TO LIVE AND WORK. GLOBALISM IS THE ULTIMATE IN UNSUSTAINABILITY. THERE IS NOTHING IN IT FOR PEOPLE


CORPORATIONS ARE MACHINES, BLACK BOXES. PEOPLE ARE NOT FODDER FOR MACHINES. IF SURVIVAL MEANS FOREVER ELIMINATING THE CORPORATION AS WE KNOW IT, THEN THAT IS WHAT WILL RESULT. THERE ARE NO CORPORATIONS WITHOUT HUMAN CONSENT. AND THAT CONSENT IS ABOUT TO BE WITHDRAWN. SOME UNSCRUPULOUS AND EVIL PEOPLE SEEK TO BLUDGEON THE REST OF US WITH THEIR CORPORATIONS. THEY WILL BE STOPPED--THEY MUST BE STOPPED, OR HUMAN LIFE WILL END.

MY GOD, IT'S 1984. AND BRAVE NEW WORLD, AT THE SAME TIME

[Demeter]

36. Some Thoughts About Socialism By William Blum

http://informationclearinghouse.info/article22368.htm




"History is littered with post-crisis regulations. If there are undue restrictions on the operations of businesses, they may view it to be their job to get around them, and you sow the seeds of the next crisis."
– Liz Ann Sonders, chief investment analyst, CharlesSchwab & Co., a leading US provider of investment services.1

April, 07 2009 "Information Clearing House" --- And so it goes. Corporations, whether financial or not, strive to maximize profit as inevitably as water seeks its own level. We've been trying to "regulate" them since the 19th century. Or is it the 18th? Nothing helps for long. You close one loophole and the slime oozes out of another hole. Wall Street has not only an army of lawyers and accountants, but a horde of mathematicians with advanced degrees searching for the perfect equations to separate people from their money. After all the stimulus money has come and gone, after all the speeches by our leaders condemning greed and swearing to reforms, after the last congressional hearing deploring the corporate executives to their faces, the boys of Wall Street, shrugging off a few bruises, will resume churning out their assortment of financial entities, documents, and packages that go by names like hedge funds, derivatives, collateralized debt obligations, index funds, credit default swaps, structured investment vehicles, subprime mortgages, and many other pieces of paper with exotic names, for which, it must be kept in mind, there had been no public need or strident demand. Speculation, bonuses, and scotch will flow again, and the boys will be all the wiser, perhaps shaken a bit that they're so reviled, but knowing better now what to flaunt and what to disguise.

This is another reminder that communism or socialism have almost always been given just one chance to work, if that much, while capitalism has been given numerous chances to do so following its perennial fiascos. Ralph Nader has observed: "Capitalism will never fail because socialism will always be there to bail it out."

..........
In 1994, Mark Brzezinski (son of Zbigniew) was a Fulbright Scholar teaching in Warsaw. He has written: "I asked my students to define democracy. Expecting a discussion on individual liberties and authentically elected institutions, I was surprised to hear my students respond that to them, democracy means a government obligation to maintain a certain standard of living and to provide health care, education and housing for all. In other words, socialism."3

Many Americans cannot go along with the notion of a planned, centralized society. To some extent it's the terminology that bothers them because they were raised to equate a planned society with the worst excesses of Stalinism. Okay, let's forget the scary labels; let's describe it as people sitting down to discuss a particular serious societal problem, what the available options there are to solve the problem, and what institutions and forces in the society have the best access, experience, and assets to deliver those options. So, the idea is to prepare these institutions and forces to deal with the problem in a highly organized, rational manner without having to worry about which corporation's profits might be adversely affected, without relying on "the magic of the marketplace". Now it happens that all this is usually called "planning" and if the organization and planning stem from a government body it can be called "centralized". There's no reason to assume that this has to result in some kind of very authoritarian regime. All of us over a certain age —individually and collectively — have learned a lot about such things from the past. We know the warning signs; that's why the Bush administration's authoritarianism was so early and so strongly condemned.

The overwhelming majority of people in the United States work for a salary. They don't need to be motivated by the quest for profit. It's not in our genes. Virtually everybody, if given the choice, would prefer to work at jobs where the main motivations are to produce goods and services that improve the quality of life of the society, to help others, and to provide themselves with meaningful and satisfying work. It's not natural to be primarily motivated by trying to win or steal "customers" from other people, no holds barred, survival of the fittest or the most ruthless.

A major war can be the supreme test of a nation, a time when it's put under the greatest stress. In World War 2, the US government commandeered the auto manufacturers to make tanks and jeeps instead of private cars. When a pressing need for an atom bomb was seen, Washington did not ask for bids from the private sector; it created the Manhattan Project to do it itself, with no concern for balance sheets or profit and loss statements. Women and blacks were given skilled factory jobs they had been traditionally denied. Hollywood was enlisted to make propaganda films. Indeed, much of the nation's activities, including farming, manufacturing, mining, communications, labor, education, and cultural undertakings were in some fashion brought under new and significant government control, with the war effort coming before private profit. In peacetime, we can think of socialism as putting people before profit, with all the basics guaranteed — health care, all education, decent housing, food, jobs. Those who swear by free enterprise argue that the "socialism" of World War 2 was instituted only because of the exigencies of the war. That's true, but it doesn't alter the key point that it had been immediately recognized by the government that the wasteful and inefficient capitalist system, always in need of proper financial care and feeding, was no way to run a country trying to win a war.

It's also no way to run a society of human beings with human needs. Most Americans agree with this but are not consciously aware that they hold such a belief. In 1987, nearly half of 1,004 Americans surveyed by the Hearst press believed Karl Marx's aphorism: "From each according to his ability, to each according to his need" was to be found in the US Constitution.4

Along these lines, I've written an essay entitled: "The United States invades, bombs, and kills for it, but do Americans really believe in free enterprise?"5

I cannot describe in detail what every nut and bolt of my socialist system would look like. That might appear rather pretentious on my part; most of it would evolve through trial and error anyway; the important thing is that the foundation — the crucial factors in making the important decisions — would rest on people's welfare and the common good coming before profit. Humankind's desperate need to halt environmental degradation regularly runs smack into the profit motive, as does the American health-care system. It's more than a matter of ideology; it's a matter of the quality of life, sustainability, and survival.
Notes

1. Washington Post, March 29, 2009
2. "Russia Now", in Washington Post, March 25, 2009↩
3. Los Angeles Times, September 2, 1994
4. Frank Bernack, Jr., Hearst Corp. President, address to the American Bar Association, early 1987, reported in In These Times magazine (Chicago), June 24 - July 7, 1987
5. William Blum, "Rogue State: A Guide to the World's Only Superpower", chapter 26

William Blum is the author of:

* Killing Hope: US Military and CIA Interventions Since World War 2
* Rogue State: A Guide to the World's Only Superpower
* West-Bloc Dissident: A Cold War Memoir
* Freeing the World to Death: Essays on the American Empire

Portions of the books can be read, and signed copies purchased, at www.killinghope.org

[Ghost Dog]

67. To which one might well add:

A people desperately struggling for survival, with no time or energy left during or after work and necessary and/or unnecessary consumption, with little or no education of any quality and without access to genuine information (other than propaganda put out by profit-motivated parties), has little or no chance of ever realising the dream of democracy.

[ozymandius]

33. BOJ Puts Damper On Tokyo Rally

apanese and South Korean stocks surged Friday morning following strong gains in U.S. markets, but the rally sputtered in Tokyo on downbeat commentary and actions by the Japanese central bank.

In the U.S., a surprise profit announcement by Wells Fargo ( WFC - news - people ), the giant San Francisco bank, sent financial shares up, and the broader market was boosted by news that new unemployment claims fell 3% last week. (See "Is Wells Fargo Out Of The Woods?") The Dow Jones industrial average climbed 3.1% and the S&P 500 gained 3.8%, while Treasury bonds and gold sank.

....

Japan's Nikkei 225 average pop over the 9,000 level for the first time since January on the positive lead-in from New York, as well as plans for a bigger than expected stimulus package and a proposal for the creation of a government entity to buy stocks. However, stocks pulled back as investors assessed sobering commentary from the Bank of Japan. The Nikkei 225 finished up 0.5%, or 48.05 points, to 8,964.11, a three-month closing high.

Minutes from the Bank of Japan's March meeting showed members of the central bank were leaning toward cutting the bank's economic forecast in April, and that they believed the BOJ would need to continue to provide substantial liquidity to financial markets that they see as still under substantial stress. The BOJ also reported that lending by Japanese banks grew at a slower pace for a third straight month in March, with business activity slowing amid the country's worst recession since World War II.

http://www.forbes.com/2009/04/10/briefing-asia-closer-markets-equity-sumitomo.html

[Ghost Dog]

68. Japan's record borrowing plan ups pressure on BOJ

TOKYO, April 10 (Reuters) - The Japanese government said it would sell more than $100 billion in debt in the next 12 months to finance a record economic stimulus plan, in a move that could put pressure on the Bank of Japan to buy more government bonds.

Prime Minister Taro Aso unveiled the stimulus plan on Friday, saying the world's second-largest economy was in crisis.

The plan, including 15.4 trillion yen ($154 billion) of new spending, would add two percentage points to GDP, he said.

"Japan's economy is worsening rapidly with exports and production tumbling. Job conditions are also deteriorating sharply," Aso told a media conference.

"Japan's economy can be described as being in a crisis."

Finance Minister Kaoru Yosano said the government would draw on reserves for about 4 trillion yen of the new spending and pay for the rest by selling bonds.

That would require about 11 trillion yen ($110 billion) of new issuance, raising total bond sales for the year to March 31 by at least a third to a record 44 trillion yen.

That exceeds the amount of tax revenue the government estimates it will collect in the middle of the worst recession since World War Two.

Japan's state debt exceeds 150 percent of GDP, making Tokyo the most indebted government in the industrialised world.

...

The BOJ has expanded purchases of government bonds twice since December and has repeatedly denied the moves have anything to do with government borrowing plans. But such purchases will depress bond yields and reduce the cost of government borrowing.

Governor Masaaki Shirakawa said last month that any suggestion the BOJ would was simply monetising government debt would eventually devalue the currency and threaten its credibility.

...

The scale of the new spending had spooked the JGB market, leading to a dramatic steepening of the yield curve this week as details dribbled out. The spread between the two- and 20-year yields reached 170.5 basis points earlier this week, its widest level in three years and has now narrowed to 165 basis points.

...

Japan's economy tumbled 3.2 percent in the last quarter of last year and plunging business confidence has raised fears the situation is getting worse.

The United States has announced a $787 billion stimulus package and European Union countries plan fiscal stimulus of 3 to 4 percent of GDP.

The government's stimulus efforts may yet face a rocky ride in a divided parliament, where the opposition controls the upper house and can delay legislation.

/... http://www.reuters.com/article/marketsNews/idINT1254320090410?rpc=44&sp=true

[Demeter]

38. House Preparing To Legalize Payday Loans With 391% APRs

http://consumerist.com/5198880/house-preparing-to-legalize-payday-loans-with-391-aprs


A House subcommittee wants to legalize payday loans with interest rates of up to 391%. Lobbyists from the payday industry bought Congress' support by showering influential members, including Chairman Luiz Gutierrez, with campaign cash. The Congressman is now playing good cop, bad cop with the payday industry, which is pretending to oppose his generous gift of a bill.

"While they may not be JP Morgan Chase or Bank of America, they're very powerful. Their influence should not be underestimated," Gutierrez, the top Democrat on the Financial Services subcommittee in charge of consumer credit issues, said in an interview this week.

Indeed, the payday lending industry is strenuously resisting Gutierrez's measure, which it says would devastate its business. The measure would cap the annual interest rate for a payday loan at 391 percent, ban so-called "rollovers" - where a borrower who can't afford to pay off the loan essentially renews it and pays large fees - and prevent lenders from suing borrowers or docking their wages to collect the debt.

A newer player representing Internet payday lenders - a growing segment of the market - also ramped up its lobbying and political giving efforts. The Online Lenders Alliance, formed in 2005, nearly quintupled, to $480,000, its lobbying expenditures from 2007 and 2008. It contributed $108,400 to candidates in advance of the 2008 elections compared to about $2,000 in the 2006 contests. Gutierrez was among the top House recipients, getting $4,600, while the top Senate recipient was Sen. Tim Johnson, D-S.D., a Banking Committee member who got $6,900.

After watching members of the military fall prey to exorbitant payday loans, Congress in 2006 capped the interest rates for military payday loans at 36%. Fifteen states have similar caps or outright bans.

Congressman Gutierrez is competing with Congressman Joe Baca to see who can author the biggest giveaway. Baca's legislation would allow rollovers, higher fees for online banks, and would pre-empt state laws banning payday loans.

Someone—maybe Carolyn Maloney, who did an excellent job with the Credit Card Bill of Rights—needs to step up and punch the payday lending lobbyists in the face.

[ozymandius]

47. follow the money

When you visit the poor areas of any urban environment the auto title pawn, traditional pawn shops, check cashing places (usually Western Union affiliates) and payday loan offices are everywhere. One may be surprised how many of these enterprises, most really, are owned outright by entities like HSBC, J.P. Morgan-Chase and Wells-Fargo.

[Hugin]

65. They also line the roads entering most major military installations.

:grr:

[Dr.Phool]

69. Can you believe people on DU are actually defending this shit!?!?

Just because they're "short term" loans. It's worse than loan sharking. And, it's being backed by Democrats.

And let me tell you. I used to know some loan sharks (and other assorted gangsters). And no, I never used one. You go to the "Juice Man", and you need $1000. He'll charge you 30% interest over a 10 week period. You pay him back $130 per week over the 10 weeks. Over a one year period, that would translate into just over 150% interest. These are real world numbers.

If these guys got caught charging that kind of interest, they were sent to prison!

But, these other guys can charge almost 400% legally because they have an office (the juice man did too), a couple of lobbyist's, and bought off a corrupt Congress. And a bunch of corrupt Democrats to boot.

[Ghost Dog]

70. Why not just call your lobbying and campaign financing system by its name:

Organised bribery and corruption; outlaw money in politics once and for all; and then ask yourselves again: How can (representative or, preferably, participatory) Democracy be made to work?

Edit: Yes, I know the answer: The current corrupt system precludes such a possibility.

Which, I submit, proves the point (Mr. Obama's campaign pledges notwithstanding).

[tclambert]

84. Goddam limey bastard, criticizing our gubbermint!

I'll have you know America has the best government money can buy!

Oh, that was your point, wasn't it?

[tclambert]

86. Seriously, outlawing the money isn't enough. Whoever owns the media gets an unfair

advantage in influence. Freedom of speech and freedom of press means some unscrupulous rich guy, maybe named Rupert, can buy a media empire and have his hired hands spew right wing talking points all day.

[Ghost Dog]

89. Absolutely right. Sure there are ways to take the corruption out of

the means of mass communication also, while avoiding simply allowing a totalitarian-or-not government monopoly on the media...

I suggest setting up some media run by (revolutionary) committees of self-electing citizens, financed for the common good out of the common purse... Same with schools.

;)

[Demeter]

40. Quarter of Companies Globally Plan to Freeze Pay

http://moneynews.newsmax.com/headlines/income/2009/04/07/200506.html


HONG KONG -- A quarter of the world's companies, and 40 percent in the United States, plan to freeze salaries this year, but employees in South America and India can look forward to robust rises, a global survey shows on Tuesday.

Employees in Japan, Lithuania and Ireland will see the lowest pay rises, according to the survey of 53 countries by London-based research company ECA International. In recession-hit Japan, half of companies plan to freeze salaries.

Globally, average salaries should increase 4.7 percent this year, down from a 6.2 percent rise in 2008, the survey shows.

"The economic upheaval since last September has prompted many firms to revise salary increases significantly from previous predictions," said Lee Quane, ECA's Asia director. "Our results show that, globally, companies have revised their forecasts down, on average, by more than a third."

Companies in Venezuela, in contrast, are set to hand out the biggest pay rises this year, averaging 24 percent and up from 22 percent last year, followed by Argentina where pay is set to increase by 12 percent. Pay hikes in Brazil and Chile meanwhile will be higher than last year.

While pay in India is rising because of a talent shortage, by an expected 10.8 percent this year, pay rises in Latin America, Vietnam and Indonesia are being spurred partly by rising inflation.

Salaries in Vietnam and Indonesia are set to rise by 10.6 percent and 9 percent respectively.

In the United States, pay is expected to rise by just 2.8 percent, down from forecasts for a 4 percent rise in a similar survey taken by ECA in September, and 40 percent of firms will freeze pay.

Salaries across the Asia-Pacific are likely to rise 4.8 percent, compared with a 6.9 percent rise last year, but a third of companies in the region will freeze salaries, the survey shows.

Salaries in mainland China will hold up because of a talent shortage whereas pay in Japan, Singapore, Taiwan and China's special autonomous region of Hong Kong, which are all in recession, will be marginal if at all, although the slowdown will be partly offset by receding inflation in Asia.

Salaries in Singapore and Hong Kong will increase by 2 percent, the same as in Western Europe, while in Eastern Europe they will increase by just under 5 percent. However, 29 percent of European companies plan to freeze salaries this year.

[Demeter]

43. After thoroughly depressing my spirits (and yours) It's time I became Useful

Have a good day folks; Don't let the bastards grind you down. See you on the Weekend Thread!

[ozymandius]

52. Bye Demeter.

On this last weekday of Spring Break, I too need to get useful. Catch you this evening! :hi:

[Tansy_Gold]

60. Have a good one.

I'm being useful, too useful. The day job has sucked up all my time this week.

But at least it keeps the dogs in food!


:hi:



TG

[Festivito]

44. Debt: 04/08/2009 11,145,352,700,191.57 (DOWN 7,420,133,644.32) (Up little, FICA down.)

(The public debt is up a small 50-million, the FICA side is down seven billion.)

= Held by the Public + Intragovernmental(FICA)
= 6,868,780,515,493.62 + 4,276,572,184,697.95
UP 50,639,456.95 + DOWN 7,470,773,101.27

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 306,128,315 people in America.
http://www.census.gov/population/www/popclockus.html
Currently, each of these American's owe $36,407.45.
A family of three owes $109,222.36. (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 8,073,932,972.19.
The average for the last 30 days would be 6,459,146,377.75.
The average for the last 33 days would be 5,871,951,252.50.
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$/day.
There were 55 reports in 78 days of Obama's part of FY2009 averaging 0.59B$ per report, 0.52B$/day so far.
There were 130 reports in 190 days of FY2009 averaging 8.62B$ per report, 5.90B$/day.

PROJECTION:
There are 1,383 days remaining in this Obama 1st term.
By that time the debt could be between 13.0 and 19.3T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
04/08/2009 11,145,352,700,191.57 BHO (UP 518,475,651,278.49 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: 1,120,627,803,279.10 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
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
04/07/2009 +000,123,552,400.07 ------------********
04/08/2009 +000,050,639,456.95 ------------*******

126,539,063,397.49 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,480,720,896,932.50 in last 202 days.
That's 1,481B$ in 202 days.
More than any year ever, including last year, and it's 146% of that highest year ever only in 202 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 202 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=3823060&mesg_id=3823083

[Festivito]

79. Debt: 04/09/2009 11,169,466,380,008.32 (UP 24,113,679,816.75) (Good size rise.)

(The public debt rises a good 24 billion, but it has not been a constantly rising thing. FICA side has a small move up.)

= Held by the Public + Intragovernmental(FICA)
= 6,892,835,801,149.21 + 4,276,630,578,859.11
UP 24,055,285,655.59 + UP 58,394,161.16

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 306,134,486 people in America.
http://www.census.gov/population/www/popclockus.html
Currently, each of these American's owe $36,485.49.
A family of three owes $109,456.47. (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 9,033,472,891.87.
The average for the last 30 days would be 7,226,778,313.50.
The average for the last 31 days would be 6,993,656,432.42.
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$/day.
There were 56 reports in 79 days of Obama's part of FY2009 averaging 0.71B$ per report, 0.61B$/day so far.
There were 131 reports in 191 days of FY2009 averaging 8.74B$ per report, 5.99B$/day.

PROJECTION:
There are 1,382 days remaining in this Obama 1st term.
By that time the debt could be between 13.1 and 20.8T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
04/09/2009 11,169,466,380,008.32 BHO (UP 542,589,331,095.24 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: 1,144,741,483,095.90 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
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
04/07/2009 +000,123,552,400.07 ------------********
04/08/2009 +000,050,639,456.95 ------------*******
04/09/2009 +024,055,285,655.59 ------------**********

146,507,214,092.31 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,504,834,576,749.25 in last 203 days.
That's 1,505B$ in 203 days.
More than any year ever, including last year, and it's 148% of that highest year ever only in 203 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 203 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=3824935&mesg_id=3825040

[radfringe]

48. Revolving Door, Bailout Edition

Revolving Door, Bailout Edition
Why won't key lawmakers disclose contacts with ex-aides lobbying for Big Finance?
—By Daniel Schulman and Jonathan Stein
Mother Jones
Thu April 9, 2009 10:06 AM PST
http://www.motherjones.com/politics/2009/04/revolving-door-bailout-edition

In late March, as public outrage over bonuses paid to executives of bailed-out financial firms exploded, Citigroup CEO Vikram Pandit met with Senate majority leader Harry Reid. Accompanying the under-fire CEO to the meeting was Jimmy Ryan, one of the banking conglomerate's top in-house lobbyists. Ryan was a familiar face to Reid and his staff. Up until 2003, he was the Nevada senator's chief counsel, and since then he has remained close to Reid. The senator, according to Reid spokesman Jim Manley, merely discussed with Pandit the financial state of Citigroup and the economy in general. If Pandit and Ryan had hoped that Reid would take action to benefit their company, Manley maintained, this effort was unsuccessful.

Whether or not Ryan was able to win any sympathy (or anything else) from his old boss, the episode highlights one aspect of Washington bailout politics: Financial firms seeking big bucks and favorable terms from Congress and the White House are deploying Capitol Hill aides turned lobbyists to win favorable treatment from the congressional lawmakers who are managing various aspects of the financial recovery—overseeing or appropriating nearly $3 trillion in spending and lending. And some lawmakers—including Sen. Chris Dodd (D-Conn.), the chairman of the Senate banking committee—have declined to disclose whether they have had contact with former aides now lobbying for the financial sector.

Corporations hiring departed congressional staffers as lobbyists is a ho-hum practice on K Street. But the stakes are particularly high when these Capitol Hill vets are sicced on programs and legislation that are crucial to the country's financial recovery and that involve massive amounts of government spending. In the past year, top bailout recipients, from Goldman Sachs to Bank of America to JPMorgan Chase, have dispatched more than 100 past congressional staffers and ex-government officials to shape the bailouts to their liking. This crew of well-connected lobbyists includes ex-employees of the congressional committees on banking, finance, and commerce; one-time aides to Democratic and Republican leaders; former Treasury officials; and a past aide to Rahm Emanuel, now the White House chief of staff.

At least one former lawmaker has also gotten in on the action. Goldman Sachs, which has more than 30 ex-government officials registered to lobby on its behalf, tapped one-time House Majority Leader Richard Gephardt (D-Mo.) to lobby his former colleagues in Congress on issues related to the Treasury Department's Troubled Assets Relief Program. Goldman, which paid Gephardt's firm $70,000 in the last quarter of 2008, received $10 billion in TARP funds. (As a counterparty to AIG's disastrous credit default swaps, Goldman pocketed an additional $12.9 billion in bailout money given to the insurance firm.) Other insiders lobbying for Goldman include former SEC commissioner Richard Roberts and Faryar Shirzad, once a top economic aide to President George W. Bush. Ex-staffers for at least 10 members of the Senate finance committee—including the committee's chairman, Sen. Max Baucus (D-Mont.), and senior Republican member Sen. Charles Grassley (R-Iowa)—have lobbied lawmakers on behalf of big financial firms receiving billions of dollars of government assistance. And at least five members of the Senate banking committee have former aides lobbying Congress on financial matters. These include Dodd and ranking Republican Sen. Richard Shelby of Alabama.

[Demeter]

50. They Either Don't Know, or They Don't Care

Not knowing is the convenient excuse, but I should think that even a year in office would pull the wool off the most naive eyes.

After that, it's pure cronyism.

[Amonester]

72. The more things change, the more they stay the same. n/t

[ozymandius]

51. A Game of Credit Cost Smoke at Mirrors at Wells Fargo? (someone else smells poo too)

Wells Fargo & Co. (WFC: 19.61 +31.70%) managed to bring some holiday cheer into financial markets Wednesday, just ahead of the Easter holiday, with its pronouncement that it expects to post a record quarterly net income of $3 billion — or 55 cents per share — when it officially reports Q1 2009 earnings later this month. But more than a few voices are already questioning the results, warning that this quarter’s big gain is more likely to be a flash in the pan than a market turning point.

In particular, Wells Fargo reported that they will absorb just $3.3 billion in charge-offs on bad loans for the quarter, and just $4.6 billion in loss provision expense; both numbers are well below most analyst estimates, and are the primary reason Wells will report earnings trumping earlier Street estimates.

“The shocker was that they only had only $3.3 billion (in) charge offs,” said Whitney Tilson of hedge fund manager T2 Partners, in a CNBC interview Wednesday afternoon. “It’s weird, because in Q4 Wachovia and Wells Fargo together had $6.1 billion in charge-offs, and then in a quarter in which things were terrible, those charge offs fell by 50 percent … They’re going to have a lot of losses over the next couple of years, (and) anyone baselining at $3.3 billion in charge offs per quarter is crazy.”

http://www.housingwire.com/2009/04/09/credit-cost-smoke-at-mirrors-at-wells-fargo/

[radfringe]

54. if it smells like poo - it probably is poo

all of a sudden these companies, on the brink of crashing and bringing us to total economic devestation are posting "record profits"?

[DemReadingDU]

63. They don't fool me

but the general public wants confidence. Besides it's Easter weekend. Eat chocolate, feel good.

[Demeter]

85. They Better Not Issue a Dividend!

They need that cash for losses, or debt repayment.

[UpInArms]

55. dollar watch

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

Last trade 85.774 Change +0.081 (+0.10%)

US Dollar Sees Net Gains Against Major Currencies Despite Surging Stock Prices

http://www.dailyfx.com/story/special_report/special_reports/US_Dollar_Sees_Net_Gains_1239334678886.html

The US Dollar moved higher in overnight trading despite a second consecutive day of gains across Asian stock exchanges. Price action is likely to be muted in European hours with and little event risk on the economic calendar and thinning liquidity ahead of the Good Friday holiday.

Key Overnight Developments

• Commodity Currencies Follow Stock Markets Higher
• Euro, British Pound Extend Losses Against US Dollar

Critical Levels



The Euro extended losses in overnight trading, slipping as much as -0.6% against the US Dollar. The British Pound followed suit, giving up as much as -0.4% to the greenback.

...more...

Traders Are Taking Greater Risk Despite Deteriorating Fundamentals

http://www.dailyfx.com/story/trading_reports/dynamic_carry_trade_basket/Traders_Are_Taking_Greater_Risk_1239320840344.html



• Traders Are Taking Greater Risk Despite Deteriorating Fundamentals
• The Financial Sector Makes Progress, But Crisis Not Over Yet
• Is The Market Finding Unwarranted Strength In The G20’s Promises?

It has been over six months since the financial markets last suffered a seizure that was born of panic selling or a collapse in liquidity; but does this mean the waters are once again safe for risk taking? Considering the timid recovery in equity markets and high yielding currencies through the past few months, it would seem so. Indeed, in the absence of immediate risk, foregone returns become too much for traders to bear. Looking at the broader gauges for investor sentiment, dormant threats haven’t held back the clear desire to reinvest in the speculative market. A recover in equities has been paced by the benchmark Dow’s 25 percent advance from its early March lows. The index is now pushing two month highs. Elsewhere, junk bond spreads are the lowest they have been since November, the CRB Commodity Index is attempting to break three months highs and credit default risk – the crux of market fears through the crisis – has making a steady recover to levels not seen this anytime this year. For the currency market, the carry strategy seems to have finally found a balance between risk reward that has allowed for speculative headway. Though yield differentials are pushing near-historical lows (and are expected to tighten even further), the extended period of calm has ellicted strength from the more prominent carry pairs – perhaps spurred by the hope of early entry on capital gains through the exchange rate. Despite all this however, caution will remain an indelible element of broader market sentiment for as long as economic recessions bear down on growth and the circulation of capital through the markets is curbed by the potential for another seismic event.

Gauging the balance of risk and reward that would draw investors back into the market is difficult; but given enough time, stable markets will stoke any traders appetite for return. This is the best way to sum up the steady recovery we have been seeing in so many different risk-loving assets. It isn’t that the potential for returns has been amplified or fundamental risk has largely disappeared; but rather, relative calm has opened the door to diversification away from Treasuries, money markets and other relatively low-risk instruments (that are themselves over-extended). On the other hand, considering the health of the credit markets and the outlook for global activity; it is clear that the natural course for investment is for a steady decline in a natural bear market. Recession is still a common label throughout the global market space; and forecasts are predicting conditions to worsen before they begin to improve. The more realistic forecast for traders would not be for a recovery to develop in the next few months or quarters; but rather the absence of economic accelerants that can lead to ‘feedback effects’ or tip a recession into a prolonged depression. These are the threats that theG20 objectives are attempting to head off – though confidence derived from their statement will quickly evaporate without clear evidence that major economies are treating the recession as a global one.

...more...

[ozymandius]

64. Slow collapse of the wage system is the underlying cause

From Angry Bear

Just a reminder of reality for the many:

But Mr. President what does real prosperity look like?

There is a fair amount of talk lately that the severity of the current economic downturn will produce new generation of depression-era babies, people terrified into thrift and frugality by the hard times. The Wall Street Journal noted earlier this year that, "U.S. household debt, which has been growing steadily since the Federal Reserve began tracking it in 1952, declined for the first time in the third quarter of 2008. In the same quarter, U.S. consumer spending growth declined for the first time in 17 years." And nothing gotten better since.

.....

So while we've been wracked with angst about the failures of the financial system, it is really the slow collapse of the wage economy that may be most responsible for getting us into the ugly position we now find ourselves. The coming fight over the Employee Free Choice Act in one obvious place to have this discussion, but that is likely not the way it’ll go down. Simply on the symbolic merits, EFCA should fly through the Congress; we know it won't. I sense -- and I could be wrong about this -- that the administration is presently more willing to spend its political capital trying to reassure Wall Street than passing the EFCA. But they should not let the political theatrics obscure the fact that there is another sector that is really too big to fail. The people who will rebuild the economy are workers with enough money in their pockets to take care of all their needs without going into huge debt. That is a sustainable standard for living that could drive support a sustainable economy.

[Pale Blue Dot]

73. Hey everyone: Please check out my post in GD.

I originally wrote it for the Skeptic's forum here on DU, but I spent a lot of time on it, and I thought it came out pretty well, so I wanted more people to see it.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x5428177

Thanks!

[Dr.Phool]

75. Good post.

I stuck my 2 cents in, but for now, I'm off to make sure my favorite barmaid doesn't lose her job. Plus, it's a beautiful day for a motorcycle ride.

:hi:

[ozymandius]

92. Happy to recommend.

I will comment tomorrow.

[truthisfreedom]

76. What's up with Bloomberg.com? Why are they still on yesterday's numbers?

Their chart says April 9 and has yesterday's closing number at the end of it. What gives?

[truthisfreedom]

77. Answered my own question. Sorry... I'm not a religious person.

http://wiki.answers.com/Q/Why_is_the_stock_market_closed_on_Good_Friday

[Hugin]

80. No problem!

Everyone :cough:Ozy:cough: has had that happen now and then. :D

Thanks for stopping by.

[ozymandius]

91. For me, I thought it was just the Nasdaq closed today.

But people seemed to get something out of the thread nonetheless. :hi: After so many years I guess this should be committed to memory.

[Pale Blue Dot]

83. We have our first Bank failure of the evening: Cape Fear Bank of Wilmington, NC

Cape Fear Bank, Wilmington, North Carolina, was closed today by the North Carolina Office of Commissioner of Banks, which then appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with First Federal Savings and Loan Association of Charleston (First Federal), Charleston, South Carolina, to assume all of the deposits of Cape Fear Bank.

Cape Fear Bank's eight offices will reopen on Monday as branches of First Federal. Depositors of Cape Fear Bank will automatically become depositors of First Federal. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers of both banks should continue to use their existing branches until First Federal can fully integrate the deposit records of Cape Fear Bank.

Over the weekend, depositors of Cape Fear Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of March 31, 2009, Cape Fear Bank had total assets of approximately $492 million and total deposits of $403 million. In addition to assuming all of the deposits of the failed bank, First Federal agreed to purchase approximately $468 million in assets. The FDIC will retain the remaining assets for later disposition.

The FDIC and First Federal entered into a loss-share transaction on approximately $395 million of Cape Fear Bank's assets. First Federal will share with the FDIC in the losses on the asset pools covered under the loss-share agreement. The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector. The agreement also is expected to minimize disruptions for loan customers as they will maintain a banking relationship.

http://www.fdic.gov/news/news/press/2009/pr09052.html

That's 22, I believe.

[Zenlitened]

88. Hmmm. Zero Hedge is sounding a little tinfoil-hat-ish.

Which, as a closet tinfoil-hatter myself, makes me a bit nervous! :D

http://zerohedge.blogspot.com/2009/04/incredibly-shrinking-market-liquidity.html

Key to note here is that Goldman's program trading principal to agency+customer facilitation ratio is a staggering 5x, which is multiples higher than both the second most active program trader and the average ratio of the NYSE, both at or below 1x. The implication is that Goldman Sachs, due to its preeminent position not only as one of the world's largest broker/dealers (pardon, Bank Holding Companies), but also as being on the top of the high-frequency trading/liquidity provision "food chain", trades much more often for its own (principal) benefit, likely in tandem with the other top dogs on the list: RenTec, Highbridge (JP Morgan), and GETCO. In this light, the program trading spike over the past week could be perceived as much more sinister. For conspiracy lovers, long searching for any circumstantial evidence to catch the mysterious "plunge protection team" in action, you should look no further than this.

and

As more and more quants focus on trading exclusively with themselves, and the slow and vanilla money piggy backs to low-vol market swings, the aberrations become self-fulfilling. What retail investors fail to acknowledge is that the quants close out a majority of their intraday positions at the end of each trading day, meaning that the vanilla money is stuck as a hot potato bagholder to what can only be classified as an unprecedented ponzi scheme. As the overall market volume is substantially lower now than it has been in the recent past, this strategy has in fact been working and will likely continue to do so... until it fails and we witness a repeat of the August 2007 quant failure events... at which point the market, just like Madoff, will become the emperor revealing its utter lack of clothing.

So what happens in a world where the very core of the capital markets system is gradually deleveraging to a point where maintaining a liquid and orderly market becomes impossible: large swings on low volume, massive bid-offer spreads, huge trading costs, inability to clear and numerous failed trades. When the quant deleveraging finally catches up with the market, the consequences will likely be unprecedented, with dramatic dislocations leading the market both higher and lower on record volatility.

Full post:
http://zerohedge.blogspot.com/2009/04/incredibly-shrinking-market-liquidity.html