STOCK MARKET WATCH, Tuesday May 25

[ozymandius]

Source: du

STOCK MARKET WATCH, Tuesday May 25, 2010

AT THE CLOSING BELL ON May 24, 2010

Dow... 10,066.57 -126.82 (-1.26%)
Nasdaq... 2,213.55 -15.49 (-0.70%)
S&P 500... 1,073.65 -14.04 (-1.31%)
Gold future... 1,190 -4.40 (-0.37%)
10-Yr Bond... 3.11 -0.09 (-2.82%)
30-Year Bond 4.01 -0.09 (-2.08%)

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Market Conditions During Trading Hours

Euro, Yen, Loonie, Silver and Gold

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Handy Links - Market Data and News:Economic Calendar    Marketwatch Data    Bloomberg Economic News    Yahoo! Finance    Google Finance    Bank Tracker    
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Handy Links - Videos:
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    William Black: This Economic Disaster    Bill Moyers with Kevin Drum and David Corn

Bush Administration Officials Convicted = 2
Names: David Safavian, James Fondren

Bush Administration Officials Charged = 1
Name(s): Richard Lopez Razo

Financial Sector Officials Convicted since 1/20/09 = 11

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This thread contains opinions and observations. Individuals may post their experiences, inferences and opinions on this thread. However, it should not be construed as advice. It is unethical (and probably illegal) for financial recommendations to be given here.

Read more: du

[ozymandius]

1. Today's Reports

09:00 Case-Shiller 20-city Index Mar
Briefing.com 3.0%
Consensus 3.0%
Prior 0.6%

10:00 Consumer Confidence May
Briefing.com 57.8
Consensus 58.3
Prior 57.9

10:00 FHFA Housing Price Index Mar
Briefing.com NA
Consensus NA
Prior -0.2%

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

[ozymandius]

2. Oil drops to near $68 as stock markets, euro fall

SINGAPORE – Oil prices fell to near $68 a barrel Tuesday in Asia as plunging regional stock markets and a weaker euro rattled the confidence of commodity investors.

Benchmark crude for July delivery was down $1.85 to $68.36 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract advanced 17 cents to settle at $70.21 on Monday.

Oil has plummeted 22 percent from $87.15 a barrel earlier this month as a falling euro made dollar-based crude more expensive for investors holding the European currency.

In other Nymex trading in June contracts, heating oil fell 3.8 cents to $1.861 a gallon, and gasoline dropped 3.95 cents to $1.931 a gallon. Natural gas was off 0.1 cent at $4.016 per 1,000 cubic feet.

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

[Demeter]

12. Gas Is Below $2.70 Here, down 20 Cents or more

So much for the Memorial Day premium!

The gas refiners really ought to stop buying at low contract prices and selling at spot prices....

[Roland99]

38. some currency numbers

10-yr T-bond 3.13 -0.07
Euro /$1US 1.2224 -0.0118
$1US / Yen 89.5000 -0.7200
Pound / $1US 1.4338 -0.0062

[ozymandius]

3. World stocks sink on renewed Europe fears

SINGAPORE – World stock markets tumbled Tuesday, extending Wall Street's sell-off as the sliding euro fueled a new wave of pessimism about the global economy's health.

In early trading in Europe, Britain's FTSE 100 fell 2.3 percent, Germany's DAX dropped 2.6 percent, and France's CAC-40 sank 3.1 percent. Futures pointed to losses of 2 percent or more for major U.S. stock indexes on Tuesday.

Earlier in Asia, Japan's Nikkei 225 stock average shed 3.1 percent to 9,459.89 as the yen's strength against the common European currency hammered exporters.
Hong Kong's Hang Seng index slid 3.5 percent to 18,985.50 while benchmarks in Australia, Indonesia, Thailand, Taiwan and Malaysia lost 3 percent or more. Stock markets in India and Singapore were down more than 2 percent while China dropped 1.9 percent.

The weekend rescue of a small Spanish bank exacerbated investor pessimism about Europe's financial health. The Bank of Spain stepped in to rescue Cajasur after it failed to complete a merger. It was only the second time Spain's central bank had saved a regional lender.

http://news.yahoo.com/s/ap/20100525/ap_on_bi_ge/world_markets

[ozymandius]

4. U.S. cities face deepening fiscal problems

WASHINGTON (Reuters) – Most U.S. cities face worsening economies, and local governments will have to cut personnel or stop construction over the next few years, according to a survey released by the National League of Cities on Monday.

Three in four city officials reported that overall economic and fiscal conditions have worsened over the past year, the league reported, and more than six in 10 said poverty has intensified.

Almost all -- 90 percent -- said unemployment was a problem for their communities and that joblessness has mounted over the last year.

The worsening picture at the local level is the mirror opposite of what has been happening nationally, where gross domestic product, the broadest measure of the country's economy, was up 3.2 percent in the first quarter of the year and thousands of jobs have been added in the last three months.

Local and state economies take more time to recover from a recession than the national economy because demands for public assistance rise just as tax revenue falls.

http://news.yahoo.com/s/nm/20100524/us_nm/us_usa_economy_cities

[ozymandius]

5. Tax credit boosts home sales, but supply also up

WASHINGTON (Reuters) – Sales of previously owned U.S. homes touched a five-month high in April amid a late rush to take advantage of a homebuyer tax credit, but a jump in houses on the market pointed to a slow recovery.

While analysts generally expect a lull in homebuying over the next few months, they stressed that a strengthening economy and improving labor market should prop up the housing sector in the absence of more government aid.

To qualify for the federal tax credit, buyers had to sign contracts by April 30 and close on the home by the end of June. Since existing home sales are measured at the time of closing, sales are likely to remain high through next month.

Despite the surge in sales last month, the inventory of existing homes for sale in April jumped 11.5 percent to 4.04 million units, the highest since July. At April's sales pace, that represented a supply of 8.4 months, compared with March's 8.1 months.

http://news.yahoo.com/s/nm/20100524/bs_nm/us_usa_economy

[ozymandius]

6. Rising home sales likely to cool despite low rates

WASHINGTON – A now-expired homebuyer tax credit and low mortgage rates helped boost sales of previously occupied homes in April. The improvements aren't likely to last.

The tax credit is now gone. And economists caution that Americans are facing so many financial obstacles that falling rates alone won't be enough to lift the housing market.

Mortgage rates fell last week to the lowest level for the year. The average rate on a 30-year loan ticked up slightly to 4.87 on Monday, according to financial publisher HSH Associates. That was just above the record low of 4.83 percent last December.

In a healthier economy, extraordinarily low mortgage rates would pump up demand for homes. But economists say the job market is too weak and credit too tight.

http://news.yahoo.com/s/ap/20100524/ap_on_bi_ge/us_home_sales_15

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Now that we are entering peak selling season (May through September) - a glut of homes gathers to over an eight month's supply in inventory. Under ideal circumstances concerning credit accessibility, sufficient income levels and interest rates - a six month's supply is supposed to be ideal.

[AnneD]

55. Still waiting for the prices to go down.....

to something we can realistically afford. :eyes:

[Demeter]

7. Conclusion: A Possible Silver Lining (UNHINGED FROM REALITY)

http://www.oftwominds.com/blogmay10/market-unhinged-from-reality05-10.html

How can a world-wide economy unhinged from concrete reality perhaps result in positive changes (after, no doubt, a lot of pain)? The answer is fairly brief. Part of the problem involves mooring our own notions of the good life to our material subsistence and/or success. The notion that living luxuriously equals the epitome of the good life has stunted our development and kept us infantilized, even with the many technological, artistic, social, and cultural advances we have made.

We still spend a vast majority of our time grinding out a living in so-so jobs that do not challenge us intellectually or creatively and that displace quality energy and time we could be spending with family, friends, community, and world.

We can make things, even necessities, cheaper than we ever have, yet we are spending more time working. In the 1990’s and 2000’s, productivity skyrocketed in the U.S., but real wages remained flat or declined. Now we see why. We have become debts serfs to financializers and market manipulators, who don’t even bother having a material stake in the game.

We can see two things from this if we are prepared to mature:

1) The good life, and even the economy itself, do not have to be primarily tied to material existence, and 2) We can do most if not all the things for ourselves that “experts” are being paid to do. We can decide to rent or share housing and watch each other’s kids. We can decide to drastically reduce our consumption, thus saving the environment and de-polluting our daily life. We can move our money to community banks, directly invest into microfinance, or lend to each other through “circle lending,” cutting out the big banks and brokerages.

We can help each other fortify and maintain our health through community programs and “medical tourism”, cutting out health insurance and medical industry parasites. We can set up or join intellectually and socially edifying cultural groups. In short we can exercise civil disobedience, refuse to be stooges, create our own spaces, and and recommit to spend time and energy where our true heart lies, free from the delusional temptations of a corporate-driven reason for life that has shown itself to be both conclusively abusive and unfulfilling.

In the end, they need us, and we don’t need them. This is the only “this life” we are going to have. It’s a lot more adventurous and enhancing to be a cultural creative then a debt slave. So, what are we waiting for?

copyright 2010 Zeus Yiamouyiannis. Permission to link to this essay is hereby granted to anyone who includes the author's name, copyright and the URL to this site.

[ozymandius]

14. Ridding oneself of debt is a huge favor.

Debt is practically unavoidable, however, as basic necessities such as transportation, housing and education often incur debt. But still there are great values expressed in this missive.

[AnneD]

64. Ozy.....

getting rid of debt AND living within or below our means has been the key for us. I recommend cash when ever possible, even for transportation, and education.

We have paid cash for our vehicles (graduating from a 1K car to a 2K). We are in a debate about our next vehicle right now. I want to pay cash but it will take a bit longer before we can get up enough cash. This is both for the business and daily commuting for me.

The good news is that we have paid off the loan that we borrowed in March (7K for taxes), thus little saved for the car. We will be able to pay about 1K per month toward the loan, so we think we can go ahead and spend a bit more for a newer used car from a dealer via a credit union loan.

We have an emergency fund for both the business and our household so we feel like we can go on the hook for a newer car. I am waiting to see if my job is secure for next year (we have a 'commitment meeting' this Thursday). Once I get that nailed down-we probably will get the car on a loan and try to pay it off before the year's end.

The only debt we currently have is the buy back for my retirement with the state. After that comes the saving for a house.

We are well to the point that we can see that the money saved by avoiding interest payments really adds to our household bottom line. Avoid it at all cost Marketeers.

[TalkingDog]

47. We came to this conclusion years ago. Of course we both have MFAs so....

we have always understood that unless we wanted to go "corporate" that we would never keep up with the Jones'. University jobs were the other alternative and the chances of both of us landing one at the same time, well, let's put it this way: The chances of either one of us landing a University position was pretty slim.

It was never a point of contention. Our discussions have always been open and frank, even with our friends. By American standards I grew up in abysmal poverty. Hell, living a shabby middle class existence is like being granted my own kingdom compared to my childhood. And while material things are nice, I'm glad to say I was fortunate to be raised in such a way that they never came to define me.

The Spousal Unit comes from a solidly middle-class Irish Catholic family. Skepticism and a sense of irony run deep through that tribe. So he never bought into the "this is how adults are supposed to live" meme, either. And there is something about the eldest boy in those Irish Catholic families....they tend to have that "I'll completely invert your expectations and be utterly engaging while I do it". So, unlike Protestant families where an eldest boy becomes the respectable one, the Irish lads tend to become the wanderers, the wastrels, bards of the common man.

If we win the lottery, fine. We know what foundations we will set up and what charities we will support.

If we live out our days eating figs and plums from our trees and making "do", as we always have, then I say we will have lived a pretty good life.



pffft...typos...

[Demeter]

8. Case Said to Conclude Against Head of A.I.G. Unit

http://www.nytimes.com/2010/05/23/business/23aig.html?dbk

Federal prosecutors investigating the events leading up to the collapse of the American International Group in 2008 will not bring charges against Joseph Cassano, the chief executive of the unit that insured mortgage-related securities with calamitous results, according to two people briefed on the matter, Gretchen Morgenson reports in The New York Times....

Mr. Cassano, who ran the company’s Financial Products unit from London, resigned in late February 2008 after A.I.G. wrote down $11 billion on the insurance it had underwritten on the mortgage securities. Mr. Cassano also came under pressure in late 2007 when auditors began questioning how the unit valued its holdings.

A former executive with Drexel Burnham Lambert — the investment bank made famous in the 1980s by Michael Milken, the junk bond impresario — Mr. Cassano helped start A.I.G.’s London unit in 1987. Amid taxpayer anger over the rising cost of bailouts orchestrated in 2008, Mr. Cassano was portrayed as the principal architect of A.I.G.’s demise.

But as more information has emerged about Wall Street’s role in the sale of the mortgage-related securities that A.I.G. insured, the view of Mr. Cassano has become more nuanced. Now regulators are examining whether the Wall Street banks that sold these securities may have misled investors.

[ozymandius]

11. Dang! I had hoped Cassano would be tarred and feathered.

But if the banksters who colluded with Mr. Cassano are damaged then all the better.

[Demeter]

13. As I Said Yesterday, It's Depressing (Pun intended)

Kassandra never had any GOOD news to tell the Trojans...there ought to be a way to claw back some of his ill-gotten loot. Maybe he lost a fortune in AIG stock, though....

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

"The dismal science" is a derogatory alternative name for economics devised by the Victorian historian Thomas Carlyle in the 19th century. The term is an inversion of the phrase "gay science," meaning "life-enhancing knowledge", a reference to the technical skills of song and verse writing. This was a familiar expression at the time, and was later adopted as the title of a book by Nietzsche (see The Gay Science).

It is often stated that Carlyle gave economics the nickname "the dismal science" as a response to the late 18th century writings of The Reverend Thomas Robert Malthus, who grimly predicted that starvation would result as projected population growth exceeded the rate of increase in the food supply. Carlyle did indeed use the word 'dismal' in relation to Malthus' theory in his essay Chartism (1839):

The controversies on Malthus and the 'Population Principle', 'Preventative Check' and so forth, with which the public ear has been deafened for a long while, are indeed sufficiently mournful. Dreary, stolid, dismal, without hope for this world or the next, is all that of the preventative check and the denial of the preventative check.

However, the full phrase "the dismal science" first occurs in Carlyle's 1849 tract entitled Occasional Discourse on the Negro Question, in which he was arguing for the reintroduction of slavery as a means to regulate the labor market in the West Indies:

Not a "gay science," I should say, like some we have heard of; no, a dreary, desolate and, indeed, quite abject and distressing one; what we might call, by way of eminence, the dismal science.

Developing a deliberately paradoxical position, Carlyle argued that slavery was actually morally superior to the market forces of supply and demand promoted by economists, since, in his view, the freeing up of the labor market by the liberation of slaves had actually led to a moral and economic decline in the lives of the former slaves themselves.

Carlyle's view was attacked by John Stuart Mill and other liberal economists.

The teachings of Malthus eventually became known under the umbrella phrase "Malthus' Dismal Theorem". His predictions were forestalled by dramatic improvements in the efficiency of food production in the 20th century during the Green Revolution; yet the bleak end he proposed remains as a disputed future possibility.

After a 2005 survey in which only 21.6% of professional economists gave the correct answer to a question on opportunity cost, surveyors Paul J. Ferraro and Laura O. Taylor of Georgia State University described it as "a dismal performance from the dismal science."<1>

[ozymandius]

18. About the term "Economist":

There is no certifying institution for one to be granted the title "Economist". Anyone can call himself an Economist. Therefore this measure dilutes the Economist pool with many incompetent practitioners.

[Dr.Phool]

26. Scientific American on Economists. Failed Science.

From the April 2008 Scientific American Magazine | 75 comments
The Economist Has No Clothes
Unscientific assumptions in economic theory are undermining efforts to solve environmental problems

By Robert Nadeau

The 19th-century creators of neoclassical economics—the theory that now serves as the basis for coordinating activities in the global market system—are credited with transforming their field into a scientific discipline. But what is not widely known is that these now legendary economists—William Stanley Jevons, Léon Walras, Maria Edgeworth and Vilfredo Pareto—developed their theories by adapting equations from 19th-century physics that eventually became obsolete. Unfortunately, it is clear that neoclassical economics has also become outdated. The theory is based on unscientific assumptions that are hindering the implementation of viable economic solutions for global warming and other menacing environmental problems.

The physical theory that the creators of neoclassical economics used as a template was conceived in response to the inability of Newtonian physics to account for the phenomena of heat, light and electricity. In 1847 German physicist Hermann von Helmholtz formulated the conservation of energy principle and postulated the existence of a field of conserved energy that fills all space and unifies these phenomena. Later in the century James Maxwell, Ludwig Boltzmann and other physicists devised better explanations for electromagnetism and thermodynamics, but in the meantime, the economists had borrowed and altered Helmholtz’s equations.

The strategy the economists used was as simple as it was absurd—they substituted economic variables for physical ones. Utility (a measure of economic well-being) took the place of energy; the sum of utility and expenditure replaced potential and kinetic energy. A number of well-known mathematicians and physicists told the economists that there was absolutely no basis for making these substitutions. But the economists ignored such criticisms and proceeded to claim that they had transformed their field of study into a rigorously mathematical scientific discipline.

Strangely enough, the origins of neoclassical economics in mid-19th century physics were forgotten. Subsequent generations of mainstream economists accepted the claim that this theory is scientific. These curious developments explain why the mathematical theories used by mainstream economists are predicated on the following unscientific assumptions:

* The market system is a closed circular flow between production and consumption, with no inlets or outlets.
* Natural resources exist in a domain that is separate and distinct from a closed market system, and the economic value of these resources can be determined only by the dynamics that operate within this system.
* The costs of damage to the external natural environment by economic activities must be treated as costs that lie outside the closed market system or as costs that cannot be included in the pricing mechanisms that operate within the system.
* The external resources of nature are largely inexhaustible, and those that are not can be replaced by other resources or by technologies that minimize the use of the exhaustible resources or that rely on other resources.
* There are no biophysical limits to the growth of market systems.

If the environmental crisis did not exist, the fact that neoclassical economic theory provides a coherent basis for managing economic activities in market systems could be viewed as sufficient justification for its widespread applications. But because the crisis does exist, this theory can no longer be regarded as useful even in pragmatic or utilitarian terms because it fails to meet what must now be viewed as a fundamental requirement of any economic theory—the extent to which this theory allows economic activities to be coordinated in environmentally responsible ways on a worldwide scale. Because neoclassical economics does not even acknowledge the costs of environmental problems and the limits to economic growth, it constitutes one of the greatest barriers to combating climate change and other threats to the planet. It is imperative that economists devise new theories that will take all the realities of our global system into account.

http://www.scientificamerican.com/article.cfm?id=the-economist-has-no-clothes

[mrdmk]

31. Excess me for drooping in when the market is down, down, and more down i.e. kicking a corpse

Having your models based on unlimited resources should be a one-way ticket to the funny farm. Of course people are going to be coming up with new ways of doing things, but unlimited just did not make sense to me. To say the least, it did lead to some heavy conversations in the classroom while doing my studies.

[ozymandius]

9. U.S. stock index futures signal sharply lower open

* Futures for the Dow Jones industrial average DJc1, the S&P 500 SPc1 and the Nasdaq 100 NDc1 were down 2.2 to 2.5 percent at 0915 GMT on Tuesday, pointing to a steep decline on Wall Street.

* World stocks tumbled on Tuesday, with Japan's Nikkei losing 3.1 percent and European shares down 2.8 percent in morning trade, hit by renewed worries over the euro zone banking sector after the Bank of Spain's rescue of a savings bank over the weekend, and by a report that North Korean leader Kim Jong-il has ordered his military to be on a combat footing.

* U.S. two-year swap spreads pushed out to their widest levels in 13 months on Tuesday, with traders expecting benchmark dollar LIBOR to keep ratcheting higher as the euro zone debt crisis makes banks wary of lending to European institutions. Analysts said the combined sell-off in equity and credit markets, along with the relentless rise in dollar funding costs, was threatening to hobble the financial system a little more than a year after pulling out of the subprime mortgage crisis.

http://www.reuters.com/article/idUSLDE64O0EK20100525

[Demeter]

30. C'mon, 10 K! Come to Mama!

I got a bet riding on you!

[Demeter]

70. Darn!

Does staying below 10K for nearly the entire day count?

[Roland99]

37. Index Futures - holy crap!

S&P 500 1,044 -27.00 -2.52%
DOW 9,833 -210.00 -2.09%
NASDAQ 1,773 -39.25 -2.17%

Not far away from a sub-1,000 S&P now on top of the sub-10,000 DJIA

[Demeter]

10. When Fragile becomes Friable: Endemic Control Fraud as a Cause of Economic Stagnation and Collapse

http://www.networkideas.org/feathm/may2006/william_k_black.pdf

12 page PDF from May--of 2005! Presented in India, no doubt because no one would listen here. Shades of Deming! No wonder that India did not suffer from CDOs!

[Dr.Phool]

15. What the hell is going on now?

I've been pretty much pre- occupied the last week or so, but I see this morning's futures are down ore than 200 points already. The Nikkei is way below 10,000 now, around the 9,500 mark.

It seems that the Powers That Be can't decide whether to shit or go blind. As I've caught up on the action belatedly the last few days, it can't be more obvious that EVERYTHING is manipulated to the high heavens. Stocks, metals, oil, currency. They're all crazy. And the Friedmanites talk about the rationality and efficiency of the markets?

I really think the world economy is getting ready to blow a gasket in a major way. Soon.

[Demeter]

17. Sell in May and Go Away?

All that pumping and dumping should be just about over. Take the cash and run, come back in October and buy up cheap....whatever is left of the bustling US economy.

They do none of us any favors by inflating a bubble in the stock market for the speculators.

[ozymandius]

23. Well, Dr. Phool, people love myths.

From that angle, that's where the Efficient (Rational) Market Theory took hold. Thank Eugene Fama at the Chicago School for propelling this drivel forward. We are stuck dealing with this shit long after its credibility has been shredded.

I will bet that automated buying algorithms have some piece of EMT in their code.

If anything at all rings true here - market volatility makes betting at the roulette table look like child's play. Good luck to anyone who owns index funds right now.

[Festivito]

16. Debt: 05/21/2010 12,987,796,841,336.51 (DOWN 25,831,092.51) (Fri)

(Up a little. Good morning.)

(Debt under Obama seems to jump up big then drop slowly maybe up a little and down a little for days--repeat.)
= Held by the Public + Intragovernmental(FICA)
= 8,477,106,002,143.38 + 4,510,690,839,193.13
UP 263,393,058.28 + DOWN 289,224,150.79

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 309-Million person America.
If every American, man, woman and child puts in $3.23 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.7, ABOUT TEN BUCKS for a 1B$ 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 13 seconds we net gain another American, so at the end of the workday of the report, there should be 309,314,208 people in America.
http://www.census.gov/population/www/popclockus.html ON 04/09/2010 15:49 -> 309,034,742
Currently, each of these Americans owe $41,989.01.
A family of three owes $125,967.02. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 22 reports in the last 30 days.
The average for the last 22 reports is 5,558,305,493.17.
The average for the last 30 days would be 4,076,090,694.99.

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$/day.
There were 174 reports in 253 days of Obama's part of FY2009 averaging 7.33B$ per report, 5.07B$/day so far.
There were 249 reports in 365 days of FY2009 averaging 7.57B$ per report, 5.16B$/day.
There were 160 reports in 233 days of FY2010 averaging 6.74B$ per report, 4.63B$/day.
Above line should be okay

PROJECTION:
There are 975 days remaining in this Obama 1st term.
By that time the debt could be between 14.3 and 18.0T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
05/21/2010 12,987,796,841,336.51 BHO (UP 2,360,919,792,423.43 so far since Obama took office.)

FISCAL YEAR DEBT CHANGE, Sep 30 prior year to Sep 30 named year:
(One "* " for each 40B$ reached)
FY1994 +0,281,261,026,873.94 ------------* * * * * * * WJC
FY1995 +0,281,232,990,696.07 ------------* * * * * * * WJC
FY1996 +0,250,828,038,426.34 ------------* * * * * * WJC
FY1997 +0,188,335,072,261.61 ------------* * * * WJC
FY1998 +0,113,046,997,500.28 ------------* * WJC
FY1999 +0,130,077,892,735.81 ------------* * * WJC
FY2000 +0,017,907,308,253.43 ------------WJC
FY2001 +0,133,285,202,313.20 ------------* * * C&B
01-WJC +0,053,598,528,417.78 ------------* WJC 31% of FY, 40% of FY-Debt
01-GWB +0,079,686,673,895.42 ------------* GWB 69% of FY, 60% of FY-Debt
FY2002 +0,420,772,553,397.10 ------------* * * * * * * * * * GWB
FY2003 +0,554,995,097,146.46 ------------* * * * * * * * * * * * * GWB
FY2004 +0,595,821,633,586.70 ------------* * * * * * * * * * * * * * GWB
FY2005 +0,553,656,965,393.18 ------------* * * * * * * * * * * * * GWB
FY2006 +0,574,264,237,491.73 ------------* * * * * * * * * * * * * * GWB
FY2007 +0,500,679,473,047.25 ------------* * * * * * * * * * * * GWB
FY2008 +1,017,071,524,649.92 ------------* * * * * * * * * * * * * * * * * * * * * * * * * GWB
FY2009 +1,885,104,106,599.30 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * B&O
09GWB +0,602,152,152,000.60 ------------* * * * * * * * * * * * * * * GWB 31% of FY, 32% of FY-Debt
09-BHO +1,282,951,954,598.70 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * BHO 69% of FY, 68% of FY-Debt
FY2010 +1,077,967,837,824.80 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * BHO
Endof10 +1,688,662,063,545.29 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Linear Projection

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
04/30/2010 +098,427,087,705.17 ------------**********
05/03/2010 -004,329,381,263.93 -- Mon
05/04/2010 +000,043,170,775.25 ------------*******
05/05/2010 +000,598,834,211.91 ------------********
05/06/2010 -014,947,673,650.95 -
05/07/2010 +000,000,195,077.74 ------------*****
05/10/2010 +000,804,647,162.22 ------------******** Mon
05/11/2010 -000,148,047,510.67 ---
05/12/2010 +000,782,970,242.92 ------------********
05/13/2010 +003,301,759,550.17 ------------*********
05/14/2010 -000,440,383,687.55 ---
05/18/2010 +000,360,533,772.20 ------------******** Tue
05/19/2010 +000,208,812,715.15 ------------********
05/20/2010 +010,103,129,083.31 ------------**********
05/21/2010 +000,263,393,058.28 ------------********

95,029,047,241.22 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008 while Bush was in power JUST BEFORE fiscal year end.
Bush admin borrowed $962,245,245,654.01 in those last 124 days in office crossing two fiscal years.
$360,093,093,653.42 in last 12 days of FY2008, and $602,152,152,000.59 in subsequent 112 days before leaving office.

For a prettier and more explanatory view of our nation's debt:
http://www.brillig.com/debt_clock
http://www.usdebtclock.org/
DUer primer on National debt

(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=4395200&mesg_id=4395217

[Festivito]

77. Debt: 05/24/2010 12,989,095,409,531.09 (UP 1,298,568,194.58) (Mon)

(Up a little. Good day.)

(Debt under Obama seems to jump up big then drop slowly maybe up a little and down a little for days--repeat.)
= Held by the Public + Intragovernmental(FICA)
= 8,477,477,676,539.93 + 4,511,617,732,991.16
UP 371,674,396.55 + UP 926,893,798.03

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 309-Million person America.
If every American, man, woman and child puts in $3.23 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.7, ABOUT TEN BUCKS for a 1B$ 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 13 seconds we net gain another American, so at the end of the workday of the report, there should be 309,334,147 people in America.
http://www.census.gov/population/www/popclockus.html ON 04/09/2010 15:49 -> 309,034,742
Currently, each of these Americans owe $41,990.5.
A family of three owes $125,971.5. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 21 reports in the last 30 to 31 days.
The average for the last 21 reports is 5,328,547,007.43.
The average for the last 30 days would be 3,729,982,905.20.
The average for the last 31 days would be 3,609,660,876.00.
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$/day.
There were 174 reports in 253 days of Obama's part of FY2009 averaging 7.33B$ per report, 5.07B$/day so far.
There were 249 reports in 365 days of FY2009 averaging 7.57B$ per report, 5.16B$/day.
There were 161 reports in 236 days of FY2010 averaging 6.70B$ per report, 4.57B$/day.
Above line should be okay

PROJECTION:
There are 972 days remaining in this Obama 1st term.
By that time the debt could be between 14.3 and 18.0T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
05/24/2010 12,989,095,409,531.09 BHO (UP 2,362,218,360,618.01 so far since Obama took office.)

FISCAL YEAR DEBT CHANGE, Sep 30 prior year to Sep 30 named year:
(One "* " for each 40B$ reached)
FY1994 +0,281,261,026,873.94 ------------* * * * * * * WJC
FY1995 +0,281,232,990,696.07 ------------* * * * * * * WJC
FY1996 +0,250,828,038,426.34 ------------* * * * * * WJC
FY1997 +0,188,335,072,261.61 ------------* * * * WJC
FY1998 +0,113,046,997,500.28 ------------* * WJC
FY1999 +0,130,077,892,735.81 ------------* * * WJC
FY2000 +0,017,907,308,253.43 ------------WJC
FY2001 +0,133,285,202,313.20 ------------* * * C&B
01-WJC +0,053,598,528,417.78 ------------* WJC 31% of FY, 40% of FY-Debt
01-GWB +0,079,686,673,895.42 ------------* GWB 69% of FY, 60% of FY-Debt
FY2002 +0,420,772,553,397.10 ------------* * * * * * * * * * GWB
FY2003 +0,554,995,097,146.46 ------------* * * * * * * * * * * * * GWB
FY2004 +0,595,821,633,586.70 ------------* * * * * * * * * * * * * * GWB
FY2005 +0,553,656,965,393.18 ------------* * * * * * * * * * * * * GWB
FY2006 +0,574,264,237,491.73 ------------* * * * * * * * * * * * * * GWB
FY2007 +0,500,679,473,047.25 ------------* * * * * * * * * * * * GWB
FY2008 +1,017,071,524,649.92 ------------* * * * * * * * * * * * * * * * * * * * * * * * * GWB
FY2009 +1,885,104,106,599.30 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * B&O
09GWB +0,602,152,152,000.60 ------------* * * * * * * * * * * * * * * GWB 31% of FY, 32% of FY-Debt
09-BHO +1,282,951,954,598.70 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * BHO 69% of FY, 68% of FY-Debt
FY2010 +1,079,266,406,019.30 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * BHO
Endof10 +1,669,204,399,140.02 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Linear Projection

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
05/03/2010 -004,329,381,263.93 -- Mon
05/04/2010 +000,043,170,775.25 ------------*******
05/05/2010 +000,598,834,211.91 ------------********
05/06/2010 -014,947,673,650.95 -
05/07/2010 +000,000,195,077.74 ------------*****
05/10/2010 +000,804,647,162.22 ------------******** Mon
05/11/2010 -000,148,047,510.67 ---
05/12/2010 +000,782,970,242.92 ------------********
05/13/2010 +003,301,759,550.17 ------------*********
05/14/2010 -000,440,383,687.55 ---
05/18/2010 +000,360,533,772.20 ------------******** Tue
05/19/2010 +000,208,812,715.15 ------------********
05/20/2010 +010,103,129,083.31 ------------**********
05/21/2010 +000,263,393,058.28 ------------********
05/24/2010 +000,371,674,396.55 ------------******** Mon

-3,026,366,067.40 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008 while Bush was in power JUST BEFORE fiscal year end.
Bush admin borrowed $962,245,245,654.01 in those last 124 days in office crossing two fiscal years.
$360,093,093,653.42 in last 12 days of FY2008, and $602,152,152,000.59 in subsequent 112 days before leaving office.

For a prettier and more explanatory view of our nation's debt:
http://www.brillig.com/debt_clock
http://www.usdebtclock.org/
DUer primer on National debt

(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=4396952&mesg_id=4396978

[Demeter]

19. How Much Did the "Secret" Part Cost Us?

X-37B SIGHTINGS: Amateur satellite watchers have spotted a US Air Force space plane similar in appearance to NASA's space shuttle circling Earth in a heretofore secret orbit. Known as the "X-37B," it can be seen in the night sky shining about as brightly as the stars of the Big Dipper. Flyby predictions and more information may be found at http://spaceweather.com

[Dr.Phool]

24. That's the secret.

[Demeter]

20. The Plan Always Comes Down To This:

[Dr.Phool]

22. BP talking to Obama?

[Demeter]

21. For Your Holiday Travel Pleasure: The Unfriendly Skies BY DAVE BARRY

http://www.miamiherald.com/2010/05/23/1627953/the-unfriendly-skies.html



(This classic Dave Barry column was originally published Sunday, June 14, 1998)

For those of you planning to travel by air, here are some amazing statistics about the U.S. airline industry (motto: "We're Hoping To Have A Motto Announcement In About An Hour"). This year, U.S. airlines will carry a record 143 million passengers, who will be in the air for 382 million hours, during which they will be fed an estimated total of four peanuts.

Yes, the airlines are cutting back on food service, as was dramatically demonstrated on a recent New-York-to-London flight wherein nine first-class passengers were eaten by raiders from coach. But despite the cutbacks, the U.S. airline industry is still one of the safest on Earth; the only nation with a better safety record is the Republic of Kyrgyzstan, which has only one airplane and can't figure out how to start it.

Read more: http://www.miamiherald.com/2010/05/23/1627953/the-unfriendly-skies.html#ixzz0ow4R50LG

[ozymandius]

25. Chicago Fed: Economic Activity increased in April

From Calculated Risk:

Note: This is a composite index based on a number of economic releases. This shows that growth in April was still slightly below trend (weak for a recovery).

From the Chicago Fed: Index shows economic activity continued to improve in April

Led by continued improvements in production- and employment-related indicators, the Chicago Fed National Activity Index increased to +0.29 in April, up from +0.13 in March. April marked the highest level of the index since December 2006 and the third time in the past four months that the index indicated above-average economic activity. Three of the four broad categories of indicators that make up the index made positive contributions in April, while the consumption and housing category made the lone negative contribution.

The index’s three-month moving average, CFNAI-MA3, increased to –0.03 in April from –0.09 in March, reaching its highest level since February 2007. April’s CFNAI-MA3 suggests that growth in national economic activity was very near its historical trend. With the index still slightly below trend, there remains some economic slack, suggesting subdued inflationary pressure from economic activity over the coming year.

http://www.calculatedriskblog.com/2010/05/chicago-fed-economic-activity-increased.html

More at link...

[ozymandius]

27. Have a nice day, everyone.

:donut: :donut: :donut: I will catch up with you when today's fugliness is over. :hi:

[DemReadingDU]

28. Great toon!

It's all in there - oil leak, debt, Wall Street, EU, the PIIGS
and it's all going over the cliff

[muriel_volestrangler]

29. Global stock markets see sharp falls

In morning trade in Europe the FTSE 100 in London was down by 2.92%, Germany's Dax index was 2.99% lower, while in France the Cac 40 index slid 3.59%.

It came after shares in Asia had seen sharp falls. Stocks in South Korea and Japan had been affected as North Korea reportedly went on to military alert.

Japanese stocks fell by 3.1%, and shares in South Korea fell by 2.7%.

In London, the FTSE 100 has fallen by more than 10% in little more than a month after hitting a 22-month high in April.

http://news.bbc.co.uk/1/hi/business/10151772.stm

[Demeter]

32. Can this be for real?

http://modelsagents.blogspot.com/2010/05/can-this-be-for-real.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+ModelsAgents+%28Models+%26+Agents%29

I don’t know if it’s just me, but there is something disturbing about the recent market behavior. If one were to proxy the state of the (real) world with the stock market index, one would have to conclude that consumers, businesses and governments have turned into schizophrenics.

Surely, that’s not the case (though I’ll reserve my judgment about the latter group for later). News regarding the economic outlook has been by no means commensurate to the vertical moves we saw in the market last week. But since many have already thrown the “efficient market hypothesis” out of the window, here I’ll focus on a somewhat different question:

Is it possible to get a...feedback loop, from volatile—or declining—markets to the real economy (and back to the markets) and turn the sudden shift in investor mood into a self-fulfilling “prophecy”?

To answer that, let’s first see what the possible channels of transmission are.

First, we have the good old wealth effects—declines in household wealth as a result of falling stock prices would tend to be associated with a drop in consumer demand. However, typical literature estimates for wealth effects are small, implying a tiny impact, unless we see the kind of drawdown we saw back in 2008/early-09.

Second, we have the “Tobin-q” link between stock prices and corporate investment, which conjectures that whenever the market value of a firm exceeds the replacement cost of its capital stock, firms will tend to invest more. Empirical support for this theory is very weak, however. One reason is that firms tend to view internally generated cashflow as the cheapest source of financing and equity as the most expensive one—so that cashflow is empirically more important in explaining investment than the equity cost of capital.

In addition, corporate investment is also tied to the outlook for final demand. Not only does a robust demand outlook generate new investment opportunities; demand also generates cashflow, which in turn means additional stocks of cheap corporate financing. This does not mean that equity capital is unimportant—only that the cost of issuance is sufficiently high that it usually is not the primary source of finance.

The same cannot be told of credit though, and here is where things can get tricky. Corporate spreads saw similarly vertical moves as equities last week, only upwards. Here it’s worth recalling Bernanke’s financial accelerator effect, whereby higher risk premia (due to higher volatility) lead to higher required rates of return, a deterioration in the perceived health of borrowers balance sheet, and a drop in bank credit. On top of that, market indicators of stress in bank-funding markets (LIBOR-OIS, bank CDS spreads and so on) have also been moving in the wrong direction, raising concerns about a credit-crunch “encore” accentuated by poor bank funding conditions.

Starting from the former—the general carnage notwithstanding, credit markets were not exactly closed last week. Corporate issuance did go ahead in many cases, only that investors demanded higher yields and were more selective, depending on the name. In addition, much of the negative focus has been on financials: Indicatively, commercial paper funding for non-financial corporates has remained virtually flat throughout May (including last week), while that for financials (domestic, as well as foreign) has declined by $50 billion—some 9% of the outstanding stock.

Turning to financials: Here I want to first make a distinction between cash and liquidity. Some have argued that, since financial institutions have tons of cash sitting at their respective central banks, surely funding problems can’t be the issue here. Even European institutions, which have been the focus of strains recently, can’t really be said to have funding problems, since the ECB has gone all the way in helping them: Not only with unlimited long-term refinancing operations at fixed rates, but also with purchases of “toxic” ClubMed bonds. All that is true. In other words, I would personally ignore the LIBOR-OIS spread, which became very fashionable during the 2008 crisis, as a signal of an impending credit crunch.

However... cash does not equal liquidity. As Pimco’s Paul McCulley said a few years back, liquidity is a state of mind. Banks’ holdings of large piles of cash reserves say little about their willingness to lend. One source where information about the latter can be found is the latest Senior Loan Officer Opinion Survey (SLOOS). This suggests that credit conditions remain tight for reasons including reduced tolerance for risk and a still uncertain macroeconomic outlook.

Importantly, the cash sitting around says little about demand for credit. Here, the SLOOS points to mostly unchanged conditions in the demand for credit for non-financial firms, with the balance towards a still weakening demand. In addition, only a fraction of reporting banks believed that, for those cases where credit did actually expand, the reason was a rise in investment.

The bottom line here is that, while market indicators may point to stress in the financial sector, (a) the stress is only theoretical, given the effective backstop by the ECB and the Fed; and (b) any spillovers to the real sector are limited. This is because, given the backstop, changes in the supply of credit have not been driven by banks’ theoretical ability to lend but by their tolerance for risk, a lukewarm credit demand and ongoing uncertainty about the economic outlook.

So unless the momentum of improvement of the global economy (especially that of private sector demand) turns negative, it will be difficult to see a spillover from the markets alone to the real sector. Note that this is what makes the current case different from 2008: At that time, there was a clear negative momentum underway in the real sector, starting from a collapsing housing market that fed through to labor markets, credit markets and, eventually, the global financial system.

Still—I said it will be difficult, but not impossible. The one channel of transmission I have not mentioned is confidence. I would have personally dismissed it as significant a while back, especially since at least one study that I’ve seen fails to find a significant impact of (transitory) bouts of market volatility on consumer confidence.

But I would say that 2008 changed the picture. The drawdowns we saw in labor markets or in consumer spending were considerably larger than what standard economic models of consumption or unemployment would have predicted. This tells me that we can not entirely discard the impact of sharp market drawdowns on the attitudes of households and businesses. And here, one can only hope that these guys have better things to do than checking their stocks, while the markets work through their schizophrenia—alone!

[Roland99]

36. wait...wait....what??

"declines in household wealth as a result of falling stock prices would tend to be associated with a drop in consumer demand."

Yeah, because SO many households are involved in regular trading of stocks, even daytrading.

Why, just the other day I was talking to a cashier at a Subway who'd just lost $2500 when he went short the other day but the markets closed up higher.

Oh oh oh! And that girl working at the Magic Kingdom telling everyone to watch their step when they get off the Haunted Mansion, well, she was all set to buy a condo and then was going to trade in her old clunker for a new Ford Focus. But, as luck would have it, the drop in capitalization of Goldman Sachs hit her hard, man....hard.


Some of these people have been up in their ivory towers for so long they have completely forgotten (perhaps some never even knew) what it's like to be an average working stiff in America.

[DemReadingDU]

41. in their ivory towers

ain't that the truth!

Wait, there are my siblings. They have excellent jobs, make lots of money, drive status cars, take exotic vacations, and have expensive hobbies. They also have professional financial planners who tell them the market goes up and down, but it always recovers. One sibling even told me that they would never get out of the markets now, because they would miss the gains when it recovers. So while they don't actively trade and invest, they have put their faith and trust in the 'professionals' to do the investing for them. (rather than heeding their sister who read blogs!)

:wtf:


edit: This ties in with a late posting by TalkingDog yesterday, about cognitive biases
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=4395200&mesg_id=4396394

[TalkingDog]

51. Oh god Roland...please...do NOT get me started.....

I'll just say about them what my mamma always said about me when I was a ultra-geeky teen: She's book smart, but she ain't got a lick of common sense.

[Po_d Mainiac]

59. +1

:spray:

[Po_d Mainiac]

40. More blah-blah-blah

The models effectively became less than worthless when our economy became that driven by leveraged consumption.

The service industry cannot make "a dollar spent" into a stable economic model without farming and manufacturing.

The current condition is a combination of too much borrowing (on all fronts) and the trade imbalance working in tandem.

YMMV

[Demeter]

33. China overhauls natural-resource tax

http://www.marketwatch.com/story/china-municipalities-to-get-resource-tax-windfall-2010-05-24?siteid=rss&rss=1

For many years, China's oil prices and natural-resource taxes were based on volume. In 2009, oil companies paid 28 yuan ($4.10) per ton of crude oil, and total tax revenues from crude oil on a nationwide basis last year was 5.3 billion yuan. But figures of this size are about to be considered miniscule.

If the overhaul is implemented across the country, tax revenues from crude oil are estimated by industry insiders to hit 47.3 billion yuan per year.

The State Council -- the Cabinet -- has decided to levy natural resource taxes on crude oil and natural gas based on price. Sources say that current proposals would set the tax at 5% initially.

All revenues from natural resources, with the exception of offshore oil resource taxes, belong to local governments, and the reform could substantially boost the incomes of local governments.

The Xinjiang Uygur Autonomous Region, abundant in oil resources, will be the first region to implement the reform.

During the May 17-19 Xinjiang work meeting, Premier Wen Jiabao announced the decision. The government has been seeking window for the reform since 2007.

The Ministry of Finance submitted a report on natural-resource tax reforms in 2007. However, in May 2007, consumer prices soared in China, and the government was reluctant to start the reform as it would result in fuel-price hikes.

In 2008, the financial crisis led to an economic slowdown in China, preventing the government from reforming natural-resource taxes.

In 2009, the central government raised export-tax rebates seven times to stimulate the economy. In the third quarter of 2009, China witnessed an economic recovery, creating a suitable environment for updating the natural resource tax policy.

In 2010, a government report delivered by Premier Wen Jiabao in March, stated the inflation target for the year would be 3%, leaving space for the resource-tax reform, according to several industry analysts.

Wang Jirong, deputy director of the Environment and Natural Resources Protection Committee of the National People's Congress, stated that the inflation target made room for the natural-resource tax. Liu Kegu, an advisor to the China Development Bank, said 2010 was a good time to reform natural-resource taxes.

Resource-rich regions will benefit from the overhaul, while resource-consuming provinces will have to spend more on energy and raw materials. As the reform will boost the prices of natural resources such as crude oil, natural gas, coal, non-ferrous metals and salt, governments will have to raise the minimum income for welfare, and fiscal spending is expected to be boosted.

[Demeter]

34. More Fed Swap Lines for Europe and the End of Globalization

http://us1.institutionalriskanalytics.com/pub/IRAMain.asp


It is not merely that inflation breeds dishonesty in a nation. Inflation is itself a dishonest act on the part of government, and sets the example for private citizens. When modern governments inflate by increasing the paper-money supply, directly or indirectly, they do in principle what kings once did when they clipped coins. Diluting the money supply with paper is the moral equivalent of diluting the milk supply with water. Notwithstanding all the pious pretenses of governments that inflation is some evil visitation from without, inflation is practically always the result of deliberate governmental policy.

Henry Hazlitt
What You Should Know About Inflation
Funk & Wagnalls (1968)

First an update on the Q1 2010 bank ratings results. As we mentioned last week, visible financial stress in the US banking industry fell dramatically, with the overall levels of stress falling from 25 on the IRA Bank Stress Index as of Q4 2009 to just 2 as of Q1 2010 (1995=1). Illustrating the trend, Citigroup has improved to a "C" rating from "F" over the past two years. There is clearly a turn visible in the downward migration of bank ratings across the industry, this even as the number of troubled institutions continues to rise. Go to www.irabankratings.com to view the new Q1 2010 report on your bank.

....The legislative process in Washington with respect to financial reform is thankfully at an end and the result is even less impressive than the breathless news reports indicate. Most of the supposed reform is actually window dressing, especially those portions of the legislation that afford regulators "discretion" in terms of changes in the behavior of the largest banks and markets....

The engine of future inflation in the US is readily apparent in the Fed's reckless zero rate stance and $2 trillion in "quantitative easing" or QE as the Fed's latest bailout operation is labeled. QE is a direct subsidy to Wall Street and the very banks that the Congress now pretends to reform. But markets do not yet understand that the next leg of the road to global hyperinflation is the refusal of the US central bank to allow financial deflation in Europe.

As we did in WW I, WW II and with the Marshall Plan, the US is once again coming to the financial rescue of what we now call the European Union. The Fed's last stand as the defender of the post-Bretton Woods system for the dollar is to rescue Europe from a deflationary collapse -- but the debt load of the EU makes that an insurmountable task. Readers of The IRA may have noticed that the EU nations have stated that defaults by any member nation will not be allowed -- a sure sign that that is what will probably happen, with or without a bailout from the US.

The mechanism for the bailout of Europe is the Fed's provision of dollar credit in virtually unlimited amounts via central bank swaps lines. As in the case of QE in the US, the Fed swap lines help the bankrupt nations of the EU ignore their mounting fiscal problems. While the Fed officially ended the swap line program in February, as the Wall Street Journal reports, the US central bank recently restarted the program to provide liquidity to the EU. In the same way that the Fed, through QE, gave America's political class in 2009 a pass on dealing with the banks, the housing crisis and the $1 trillion sinkhole forming around Fannie Mae and Freddie Mac, Fed Chairman Ben Bernanke is engaged in a little geopolitical engineering in Europe -- and the people of the EU do not yet realize that a political change in control has occurred.

And just as both American political parties in the US, and the banks too, have become willing subsidiaries of the Fed through QE, the leaders of Europe now find themselves beholden to the Fed for their continued political existence. Whether you are Angela Merkel in Germany or Barack Obama in the US, when you speak to Chairman Bernanke you do so from a subordinate position, kneeling preferably. After all, Chairman Bernanke and the FOMC have but to terminate the Fed's swap lines with the various central banks of Europe or start selling the MBS portfolio in the US, and governments from Washington to Berlin will start to fall....

When the dollar gradually loses its position as the global means of exchange and other nations of the world assume a more balanced share of the benefits and responsibilities of living in a common marketplace, we suspect that national treatment and national markets will become the new focus on the 21st Century. The change process will start in the US as early as this year, when the Obama Administration plans to float the idea of a national sales tax to help close chronic US fiscal deficits.

We suspect that the tax raising discussion in the US will eventually come down to this basic choice: higher taxes on shrinking American incomes or tariffs on imports. And we suspect that the answer to the question from a far more populist and nationalist Congress will be "both." Even with the Fed's printing presses running night and day, America's vast fiscal profligacy will require all available sources of revenue....

[Ghost Dog]

71. Uh huh.(UK) Inflation is up - and the next stop will be down (Phillip Inman)

If you think inflation is a cause for panic, wait till you see deflation.

Inflation is on the up. To anyone with savings it is a menace. They are forced to watch their wealth being eroded. People on a fixed income can do little about the effect, which is to eat into their living standards.

City firms report their clients are in a panic about inflation. After last week's 5.3% retail price rise shocker, they ask where next for prices.

Final salary pension schemes, under pressure to fill ballooning deficits, have formed an orderly queue outside their fund managers' offices to demand an answer.

Consistent underestimates of rising inflation by economists across the Square Mile and the Bank of England's monetary policy committee have added to the sense of panic. If the people who spend all day estimating the effects of falling pounds, rising VAT bills and cauliflower prices cannot get near the published figure, what hope is there for pension funds and other institutional groups, let alone individual savers.

The question is why, when prices are static or falling across Europe and the US, is Britain's inflation so high? Even core inflation stands at 2%.

It can be explained by the falling pound, which has increased import prices. The VAT rise had more of an effect than expected. Then there is the previous government's fiscal stimulus, which artificially raised demand. The Bank of England's £200bn of quantitative easing, which eased liquidity fears and bolstered confidence, has also played an indirect part.

The next stop must be down. Labour stripped about £12bn out of the economy this year and George Osborne pressed ahead with his extra £6.25bn of cuts, though the Institute of Fiscal Studies put the real figure at nearer £5bn for 2010/2011 after a bit of recycling into projects for the unemployed and delays in some areas to next year.

With no more QE and the effects of steep cuts in spending, it looks like the UK will quickly join those countries with falling prices. As the cuts bite deeper and more jobs are lost, demand in the economy will decline further. Falling demand will drag prices lower again. Consumers in a deflationary spiral wait before buying goods because next month they might cost less. Delayed purchasing decisions hit shops and businesses already suffering from a spending squeeze. More jobs will be lost. By next year the economy could be flat on its back.

How will the government react? It must delay the cuts and stimulate the economy or face strikes and social unrest. But why wait until the economy is tottering on another precipice, when another rescue operation appears more desperate than the last and shows the country is weak? Why not do it now. Tell the investors who threaten to sell UK government bonds they can wait. They'll get their loans back, and their structural reforms, just not now.

We have the flexibility of floating exchange rates and our own central bank to dodge and weave a way out of the crisis, but not if the deputy prime minister Nick Clegg and Osborne go back to the rhetoric of "broken Britain". We need growth and a modest dose of rising prices to cancel out our debts. Ministers should turn a deaf ear to pension funds worried about inflation.

/. http://www.guardian.co.uk/business/2010/may/24/viewpoint-inflation-panic

(cf. Guardian International dead-tree edition, as contemplated in beautiful, calm, sunny, non-cathartic neighborhood Geneva first thing this morning (in the end, I delayed, time-picked and flew)).

[Demeter]

35. Derivatives sour Wall St. on Obama

http://www.politico.com/news/stories/0510/37625.html

Wall Street executives say language in the Senate financial reform bill dealing with derivatives is like a horror movie slasher — repeatedly left for dead, only to rise again and again.

The move to force banks to spin off their derivatives desks could slice 20 percent off Wall Street profits by some estimates. Now, some executives say that if the language survives, there will almost certainly be consequences in terms of Wall Street support for Democrats in the midterms and President Barack Obama’s reelection campaign.

Already, contributions to Republicans have picked up this year as financial firms are souring on Obama.

The derivatives push was supposed to die in the Senate Agriculture Committee. It didn’t.

Assurances were then whispered from Washington to Wall Street that it would be quickly excised by Senate Banking Committee Chairman Chris Dodd (D-Conn.). It wasn’t.

Then, it was just a matter of Sen. Blanche Lincoln (D-Ark.), author of the measure, winning her primary outright and tacking back to the middle. She didn’t.

Now, Wall Street officials have been told that conference committee members who will begin trying to meld the Senate and House versions of financial reform this week will finally administer last rites, probably just after Lincoln’s June 8 runoff. But given the track record thus far, bank officials are not so sure.

And even if the derivatives language finally goes away, some on Wall Street who supported Obama and other Democrats say they may not do so again, frustrated by months of what they view as relentless bashing and punitive policymaking.

“It’s not just derivatives. That’s just a symptom of the larger issue,” said one Wall Street lobbyist who declined to be named out of concern for angering the administration. “It’s general frustration with lack of rationality, principles and the unending uncertainty. feels re-traded between Obama’s vision during the campaign and the execution of the policies.” The phrase “re-traded” is a Wall Street term for bad-faith renegotiation of a previously agreed-upon deal.

“This will have an impact on fundraising,” the executive said, “not out of retribution but out of deep disappointment in the irrationality of policies/rhetoric and a determination not to fall into Stockholm syndrome.”

Obama was a big crossover hit in 2008 in usually GOP-leaning Wall Street. He raised nearly $15 million from securities and investment firms during his presidential campaign, according to the Center for Responsive Politics, almost doubling the $8.7 million for his Republican rival, Arizona Sen. John McCain.

Part of that was a distinct lack of enthusiasm for McCain and fatigue with the GOP after eight years of the Bush administration. But a great deal of it was enthusiasm for Obama, who won support from longtime Republicans such as then-Morgan Stanley Chief Executive John Mack, as well as backing from lifelong Democrats such as Goldman Sachs CEO Lloyd Blankfein.

Obama also became close with Jamie Dimon, chief executive of JPMorgan Chase. That relationship has been strained, though, and Dimon has increasingly voiced his unhappiness with rhetoric and policy out of Washington.

“It’s unfair to talk about us as one,” Dimon said recently, after some critical comments from the White House. “Not every company was responsible. ... Pay got a little exuberant, and there were some legitimate complaints. ... But I don’t think the president of the United States should paint everyone with the same brush.”

More recently, Dimon went on the record criticizing the way derivatives were handled in the Senate, arguing that the chaotic process added to the market’s wild swings.

Of course, Wall Street knew reform was coming in the wake of the 2008 financial crisis, and much of what passed the Senate is viewed as palatable, especially if final language signed by the president does not curtail all proprietary trading.

The derivatives piece, which Wall Street executives believe would both hurt their profits and damage the broader economy, is different. Persistence over assurances that it would go away has eroded confidence among Wall Street executives, even though they do believe the language will still come out.

Congressional Democrats and the party committees that support their campaigns are already suffering from Wall Street’s sense of betrayal. According to a center study done for RealClearPolitics, Republicans collected about three-quarters of the political contributions from New York financial services companies in March. About two-thirds went to Republicans in February.

That’s a big change. According to the study, the industry gave at least three-quarters of its political contributions to Democrats during the same period in 2009 and 2008, and two-thirds to Democrats in 2007.

Democrats still enjoy an overall fundraising lead over Republicans for the 2010 cycle, according to the center. But the gap is shrinking in some areas, especially when it comes to campaigns for Senate.

The Democratic Senatorial Campaign Committee has raised $58.8 million so far this cycle, according to the center. And the National Republican Senatorial Committee has raised $56 million — near parity. By contrast, in 2008, the DSCC raised $162.8 million, compared with $94.4 million for the NRSC.

Several Wall Street executives said they believed the Obama administration and congressional Democrats can contain the damage by pushing for changes to the reform legislation in conference and toning down the bank-bashing rhetoric.

“The money people are going to be a problem, certainly in the short term,” said a senior executive at a large Wall Street bank. “The reality is there is a general sense that this administration and Democrats in general are anti-business, not just anti-Wall Street. But they understand that. It doesn’t mean they have to be the protectors of Big Oil or Wall Street, but they have to address the general sense that the focus has moved to the left.”

[bread_and_roses]

39. Well this is cheerful: "Warning: Crash dead ahead"

http://www.marketwatch.com/story/crash-is-dead-ahead-sell-get-liquid-now-2010-05-25

Warning: Crash dead ahead. Sell. Get liquid. Now.
Commentary: 'Game's in the refrigerator.' Power's turning off. Dow sinking below 6,470

By Paul Elliott, Motley Fool Hidden Gems
ARROYO GRANDE, Calif. (MarketWatch)

... Correction? New crash imminent, worse than 2008
More proof: Earlier economist Gary Shilling said price-to-earnings ratios are at a "nosebleed 22.5 level." The Dow was around 11,000. Money manager Jeremy Grantham recently said the market's overvalued 40%. That could mean a collapse to 6,600. Last week in Reuters' "Markets Could Be Derailed Again," George Soros echoed a "game over" warning with a "stark warning ... that the financial world is on the wrong track and that we may be hurtling towards an even bigger boom and bust than in the credit crisis."

Now Dow Theory's Richard Russell is warning the public of an imminent crash: "Sell ... get liquid ... by the end of this year they won't recognize the country."

... Yes, the game may be "in the refrigerator," the lights will go out, but as Soros hints, the electricity may get turned off too. Get it? This may not be a correction. Not even a bear. What's coming could be worse than the 2000 dot-com crash and the 2008 meltdown combined, a "Super-Bubble" says Soros. And the biggest reason, Nouriel Roubini and Stephen Mihm tell Newsweek, is that "the president's half-measures won't fix our failed financial system" because he refuses to "bust up the too-big-to-fail banks."

Thanks to a poster nick "marmar" for this - s/he posted it over in editorials, I didnt' find it myself - I don't read MarketWatch or understand even 1/10 the technicalities posted here. Posting it because it seems to echo much of what I've read here over the past year (and if I'm wrong, and it doesn't, and I've completely misunderstood, that's OK - wouldn't be the first time - but it does echo my own dark fears for my lovely g'dtr's future - as a "generalist" who reads widely if not well every trend I see is converging on disaster).

[DemReadingDU]

42. Paul Farrell

I've been reading him since the beginning of the year, every Tuesday. He's had some quite interesting articles

http://www.marketwatch.com/Journalists/Paul_B_Farrell

[Tansy_Gold]

44. Ditto. I was gonna crosspost this, too. Glad you did!

Like the posts upthread aboutthe now-disproved physics theories being used as models for economic theory, my own thinking tends toward the gut variety, based on personal experience and common (or not so common) logic. Cause and effect. The real world. That sort of thing.

And for the past decade or so, I have simply not been able to put The Economy into anything resembling a rational reality.

I know exactly when it happened, too, or at least what event it was that started my thinking about The Economy as something not firing on all cylinders: The building of the Wildflower Ranch housing development in Goodyear, Arizona. Nice new homes built on former cotton/alfalfa fields, shoddy construction, no jobs anywhere around. Who would buy them? Where would they work? What kind of surface transportation infrastructure was in place for them?

Wildflower Ranch was the first of what would become over the next 10 years dozens of housing developements in the far West Valley of the Phoenix metro area. Sleepy little rural towns like Buckeye -- where I lived -- would grow from 3,500 population to 35,000(or more) in just a couple of years. House sprang up like virtual mushrooms, were bought as soon as the last coat of paint dried, and then were used as ATMs. Jobs came to the West Valley, but they were retail and other service jobs. Walmart, Home Depot, Cracker Barrel.

It made no sense to me, none at all. I didn't know economic theory, but I knew reality. And one interesting reality was that we went from a desperate shortage of public school teachers to a glut in about two years. It wasn't because the universities were turning out too many fledgling teachers -- it was because companies were downsizing or moving to China, and there were suddenly a lot of college-educated people desperate for jobs. Teaching didn't pay much, but it paid something.

I knew what supply and demand was, and this whole notion of "supply side economics" made no sense to me. Just because something is out there doesn't mean people have the resources to "demand" it. I wondered if I had got it wrong all my adult life. "Demand" isn't the same as "desire" or at least that's what I thought. In economics terms, "demand" is the financial ability to buy. When there is "demand" for something, there are dollars available in the economy to buy it. "Desire" is not an economic fource. Or at least I didn't think it was.

But then I realized how the workings of the economy had been manipulated -- through advertising, through government regulation and/or deregulation, through "free market" forces -- to make "demand" and "desire" essentially one and the same. Create sufficient desire, and you create a demand for the financial resources to satisfy that desire. So the whole home ownership thing, the whole liar loan thing, the whole housing bubble, was never one of demand and supply; it was of desire driving the creation of $$$ to demand what was being supplied. That's not real economics. That's fraud.

And that's how I saw it. Nothing I've seen or read or heard since then has changed my mind. I've often wondered, when the Loud Voices in the public fora insist otherwise, if I screwed up somewhere and the Right is actually correct about this shit. But so far, I haven't seen any evidence to make me change my mind.

Eventually there will be a "correction." I thought it was coming a couple years ago, but it hasn't yet. There still aren't enough people in hurting shape to force the correction. They've got unemployment for now, and they've moved back in with the folks or with friends and they've got a little business on the side to bring in enough to stay afloat. They're workin' out a deal with a neighbor to swap day care responsibilities for the kids so they can keep some semblance of a job. They've cut back on the new car every other year, the fancy clothes, the expensive shoes (well except for that pair of wine-red boots that were on sale for only $74. . . . and the Coach purse at the outlet that was originally $1500 but marked down to $99 and who can pass up a deal like that?). Or the older folks who saw their retirement nest egg vanish and are having to live on social security that won't pay the property taxes on the fre-and-clear house, well, they're goin' back to work sellin' Mary Kay or Pampered Chef, or they're workin' with an out-of-work daughter-in-law sellin' stuff on craigslist or eBay or just havin' a yard sale every other week-end to try to make ends meet.

And all of that is the reality, which is totally divorced from the stock markets. It's like the difference between me goin' home after coffee to do my little work-from-home-but-it-pays-the-grocery-bill gig while my more well-to-do friends head to the casino in Globe to throw away $500 for a day's entertainment.

We don't need to know the technicalities, but they don't pertain. They aren't real. The algorithms and the alphabet soup that are thrown out there as "explanations" for what's happening in "the markets" are the magician's distractions. While we're watching the markets, they're picking our pockets.

Or at least, that's my theory.



Theoretically,

Tansy Gold

[bread_and_roses]

46. "While we're watching the markets, they're picking our pockets."

Exactly. A long time ago I complained to someone about NPR having a "daily Market report" or whatever they called it and nothing on Labor, working people. Whomever it was said, "Oh, but "everyone" has their 401Ks and etc in the market, so it matters to all of them." I said, "not the "everyone" I know.

Roland's satiric post #36 above (which made me laugh out loud, thanks, Roland!) is about how I've always felt about "the market" being the be-all and end-all of our prosperity, and that ignoring the state of "labor" "working people" whatever term you like - was a road to nowhere, eventually.

We'll see. I don't like suffering. I don't like to see others suffer. I hope we can find a way out of this - but for sure, that way is not to keep lining the pockets of the plutocracy while the rest of us beg for scraps.

[proudohioan]

48. Interesting that you mention Wildflower Ranch subdivision....

I also wondered about the huge surge of 'Mc Mansion' subdivisions being slapped together when I lived in Denver. "Who the hell can afford those things?" and "Who the hell is buying 'em?", I thought.

Then I ran across a book at the library called "Next Stop, Reloville", by Peter T. Kilborn that shed light on a whole sub-culture that I never knew existed.

It's pretty interesting reading, and very easy to form your own conclusions about 'bubbles within bubbles' created by these extremely 'ambitious' and material-driven folks.

This book was written prior to the 'collapse' of '08', and I would love to see a follow-up as to where these 'Relovillers' are now.

Have a great day,

T.

[Tansy_Gold]

53. Wildflower Ranch, IIRC

Without taking the time to look it up, Wildflower Ranch was built in the early 1990s on land that had been cotton and/or alfalfa fields in Van Burn Street west of Goodyear, Arizona. The houses were listed as "all on cul-de-sac lots," but no one mentioned that the cul-de-sacs were half a mile long! For people living in the West Valley at the time, there were few affordable nice new homes being built -- you either bought a resale home or you had one custom-built (which does not mean McMansion) on a lot you bought. There were very very very few traditional housing developments in the area; Wildflower Ranch was the first of what eventually would be many: Sundance, Quail Run, Canyon Trails, Verrado, Pebble Creek, Palm Valley.

Most of these houses were not McMansions. They were built 10, 12, and sometimes 14 to the acre. Construction tended toward the shoddy. But the developers made bazillions.

I haven't been through the area since I moved to the East Valley four years ago. I know that at one time Buckeye, Arizona, had one of the highest mortgage delinquency/foreclosure rates in the entire country. And I wasn't surprised.

There's a hefty "preview" of Reloville on google. Thanks for the referral. I'll try to read some of it when I get time; my degree is in sociology, so this stuff fascinates me.


TG

[proudohioan]

54. I didn't mean to imply that Wildflower Ranch was a Reloville..

development, and I apologize. It wasn't mentioned in the book. Highlands Ranch, outside of Denver, was mentioned, and that's what sprang to mind. Douglas County, CO has a huge amount of what I consider McMansions, but they are still shoddy construction.

If you have a degree is Sociology, this book will definitely be of interest to you. It's a pretty light read, and will raise all kinds of interesting questions.


T.

[Tansy_Gold]

56. Oh, no apology necessary.

i was just kinda blabbing on, sort of thinking aloud.

Even without looking for the book on google, I figured it was about relocations, and the West Valley was never a reloville because there were no industries/businesses for people to be relocating to out there. Even now, what jobs there are are all in service/retail, a lot of health care-related stuff.

I think Wildflower Ranch may have been intended to be on the leading edge of a reloboom, to coin a word, that never really materialized until 7-10 years later. When the big West Valley actual boom started, in 2000-2001 with the infrastructure for Sundance, I think the only objective was make money. There was no consideration of why people would move there. But they did. For a while.

As I've mentioned here before, I sold my Buckeye house ("custom" built in '88 for $87K) in Feb '06 for $340K. By January '08 it was in foreclosure and sold at auction -- after some remodeling and improvements -- for $126k. Talk about boom and bust. . . .



TG

[proudohioan]

57. Glad to hear that you saw the writing on the wall

back in'06' and sold. Yes, the boom and bust cycles..... IMO, we are doing nothing to stop that vicious cycle, either. Just propping up more bubbles to appease the Wall Street investor class; you are right, it's all about the money, and everything else be damned! I hope that no one reading this takes that personally, as I don't mean offense to everyone who invests (I do realize that this is a stock market thread).

So, before I put my foot back in my mouth, I will head out to Sears to pick up a portable A/C unit as today is supposed to be hot and muggy.

Have a great day!

T.

[DemReadingDU]

61. From a SW Buckeye, Ohio

It was probably about 10 years ago, the latest concept in 'malls' was the small-town. These shopping centers were springing up everywhere created like a village with streets and upscale stores. It made you feel like you were walking in a 'downtown'.

But who could be buying stuff there when people were losing jobs?
Who would want to go in-and-out of stores situated on the streets when people had been used to shopping in malls where everything was indoors, without dealing with the rain and snow, hot and cold.

Who could have envisioned such a concept? Well, the people whose objective was to make more money, for themselves!

[proudohioan]

65. You know, I thought it was just me...

who felt that concept of those 'small town' malls were just less practical than the 'out-dated' indoor malls. I'm not much of a shopper, but honestly, I did enjoy being able to do my rare shopping excursions without dealing with inclement weather. And it was nice for me to let the kids run around in those open public areas when they were little.

Now those trendy outdoor malls have put all the old ones out of business. Hell, there's one right here in Euclid that is just sitting there, vacant except for 1 or 2 Gospel churches and a Dillard's 'seconds' store. There's a whole website dedicated to Dead Malls (www.deadmall.com). They become either a vacant eye-sore, or torn down and replaced by something upscale that most folks that I know can't afford, and by now, have their share of vacant retail space. What a waste.

Yes, to make money for themselves. It's all a sales pitch for us consumers. Hey, we're not making enough huge, short-term profits right now, and our shareholders are getting pissed - people don't seem to be consuming at their usual rate, what can we do to make them consume?

So since they have effectively stripped away our towns and regional identity in lieu of 'The Big Box', they have figured out a way to 'soothe' us into purchasing again. Let's give people a false sense of community (that we once had) and make them feel that they are 'home' again. Let's make the consumers forget that beneath the facade, they are still the same homogeneous chains, found in every sizable town near you. The concept of 'home' seems to sell almost as well as sex these days.

It seems to have worked. And I have to admit that they look pretty nice, for now. But again, I have a practical nature, and I don't see those outdoor malls as being very practical. But that's OK, we live in a disposable society, and I'm sure that the corporations are already spending huge amounts of money to study the next psychologically trendy (and profitable) wave....

Thanks for giving me the op to rant.

It's always nice chatting with a fellow Buckeye! :hi:

*edit to add a smiley.

[closeupready]

68. If the banks can continue to make commissions on moving money around,

even if the end result is bad for the economy, it doesn't matter to them; if the bank loses money, the government will give them taxpayers money to make up for their losses. Double-dip, if you will.

[Demeter]

43. Perks unchecked for some Wall Street CEOs

http://www.washingtonpost.com/wp-dyn/content/article/2010/05/22/AR2010052200331.html?hpid=moreheadlines

Some of the nation's biggest financial firms have increased the perks and benefits they pay their chief executives, despite the glaring spotlight from a public fed up with handsome bonuses at bailed-out Wall Street banks.

The lavish fringe benefits included country club dues, chauffeured drivers, personal financial planning services, home security systems and parking. Some increases were in perks that Obama administration officials consider among the most egregious, such as corporate aircrafts for personal travel.

J.P. Morgan Chase awarded its chairman and chief executive, Jamie Dimon, $91,000 in personal travel on the company jet in 2009, up from about $54,000 the previous year. His total perks increased 19 percent, to $266,000. Dimon, along with Goldman Sachs chief executive Lloyd Blankfein and McLean-based Capital One chief executive Richard Fairbank, also received sharply higher perks related to personal and home security.

"Marie Antoinette could fit into this crowd without missing a beat," said Nell Minow, co-founder of the Corporate Library, which found in recent studies of several thousand U.S. companies that more chief executives received club memberships than a year earlier, and companies paid more to cover executives' personal use of corporate planes. "Many people would think the solution would be not to be so provocative of unrest and unhappiness, but no, they're saying, 'Go ahead and do that, just build bigger walls around your house.' "

A review of the 29 largest publicly traded financial companies that received federal aid found that nearly one in three increased fringe benefits for their chief executives. Those raises contrast with the belt-tightening that many Americans have experienced during the recession.

They also occurred as 20 of the firms cut perks last year, after an increase in 2008, according to figures in corporate securities filings provided by Equilar, a compensation data services firm.

Last year, executives at the firms surveyed received perks and benefits worth more than $140,000 on average, compared with $380,000 in 2008. Individually, chief executives at nine of the banks received total fringe benefits worth more than the previous year. The analysis does not include relocation costs and related taxes, typically one-time fees that can skew year-over-year comparisons. All of the banks were operating with taxpayer funding for at least part of last year, although 14 had returned the money by year's end.

The overall decline took place in part because of strict limits on perks imposed by the Obama administration for 2009 at companies receiving the most assistance. For example, at Ally Financial, the financing arm of General Motors formerly known as GMAC Financial Services, chief executive Michael A. Carpenter received perks worth just $35, compared with the $4.8 million awarded to his predecessor, Alvaro G. De Molina, in 2008.

While the sweeteners translate to a drop in the pool of money that could have gone to shareholders or been reinvested in the business, activist stockholders and corporate governance groups argue that they are symptomatic of a larger problem.

"It's a very powerful indicator of something we are learning to care about more and more, and that is the board's ability to say no to the CEO," Minow said. "If it can't say no to the CEO on a club membership, then how can we expect them to say no to an acquisition or some other decision that is not in the interest of shareholders? We have found over and over again that it is a leading indicator of a board that is not providing effective oversight." .....

Meanwhile, Kenneth R. Feinberg, President Obama's pay czar, who ruled last year that perks at firms receiving the most taxpayer assistance should not exceed $25,000 per executive, is reviewing pay practices at the more than 400 financial institutions that received Troubled Assets Relief Program funds. The principles guiding his review, to be made public within weeks, are similar to those he used with the most troubled firms, according to people familiar with the matter.

Although Feinberg does not have authority to impose changes at the broader group of firms receiving TARP money, the powers granted to Feinberg through legislation allow him to review compensation, and "where appropriate, negotiate appropriate reimbursements."

"The significance is greater than the dollar value alone," said Brandon Rees, deputy director of AFL-CIO's office of investment. "It illustrates the power of CEOs to dictate every term in their compensation agreement . . . If the CEO wants to go to Aspen, or the South of France for his vacation, and wants to fly on the corporate jet, well then, he should expend the vast sums of compensation shareholders have given him to do that."

[Demeter]

45. Iceland's Eyjafjallajokull volcano reduces activity

The Icelandic volcano which has been disrupting air traffic for more than a month is showing a marked drop in activity, new measurements suggest.

Experts say the temperature in Eyjafjallajokull's crater appears to have fallen to 100C, meaning it is now producing steam, not magma.

But officials warned that it was too early to say whether the eruption was over completely.

Ash clouds from the volcano grounded thousands of flights last month.

Steinunn Jakobsdottir, a geophysicist from the Icelandic Meteorological Office, told the BBC that the volcano was "kind of dormant for the moment".

"The history of the volcano is such that it calms down and then it gets energy again," she said.

"There are still earthquakes under the volcano, and the tremor is still not quite down to what it was before the eruption."

'Difficult to say'

Magnus Gudmundsson, of Iceland University, flew over the volcano on Sunday and said evidence from heat cameras indicated the temperatures at the crater had fallen below 100C.

But he told the AFP news agency that nothing was guaranteed and that the previous eruption at the volcano had lasted 13 months, from 1821-23.

"It stopped and started again several times with different intervals, so it's difficult to say, difficult to give a timeline," he said.

He also said it was impossible to say whether the neighbouring Katla volcano - a much larger mountain - might also erupt...



http://news.bbc.co.uk/2/hi/world/europe/10144911.stm

[TalkingDog]

52. Neighboring Katla

There have been low magnitude earthquakes (nothing unusual, they say) but the earthquakes have started swarming a bit. And while it's no cause for alarm, it seems ears pricked up a bit.....

[Ghost Dog]

72. My bones tell me Katla is going to blow, soon.

And, mostly unrelated, Korea and/or Middle East too...

[TalkingDog]

78. Our bones resonate.

[Tansy_Gold]

79. See my post #76 below n/t

[TalkingDog]

49. Holy G*d!

It's obvious that today's cartoon caused this to happen.

[Dappleganger]

50. Hammer time.

Time for a healthy correction.

[DemReadingDU]

58. Followers of Matt Taibbi

5/24/10
Announcement
By MATT TAIBBI

So it is with some sadness that I have to announce that I’m going to be leaving True/Slant. Starting in a few days I will be back blogging exclusively at www.rollingstone.com.

I say with sadness because I thought and still think that True/Slant is a great organization, one that is innovative and well-run and and whose founders have been a genuine pleasure to work with. Folks like Coates Bateman, Michael Roston and Lewis Dvorkin have taught me a lot about how the internet business works and have convinced me that there may actually be a future universe in which writers will be able to carve out some sort of dignified employment amid the wreckage of the print journalism business, and will not have to hook or boost cars for food. I think they have a great idea with this site and I’m sure they will continue their success.

I have a story on the Financial Regulatory Reform bill coming out in this week’s Rolling Stone and will be posting on the new RS site for about a week after that; then I will be going away on vacation until late June. Thanks to everyone who has visited this site since its inception, and I hope to see you at my new blog on RS.com soon.
http://trueslant.com/matttaibbi/2010/05/24/announcement/

[Roland99]

60. Get this guy at the AP or UPI or something.

but, hey, can't have the establishment rocking its own boat.

[Demeter]

62. Germany set to extend short-selling ban

The German government is planning to ban the naked short-selling of all German stocks listed on the country’s exchanges in a sweeping enlargement of last week’s contentious bar on the naked short-selling of key financial stocks.

The move is part of a national crackdown on financial-market speculation, which Berlin thinks has gone unregulated for too long as European Union and G20 members search for agreement about new rules at an international level.

Read more >>
http://link.ft.com/r/OZMCDD/IYFZAK/Z87P0/EWR0R1/OJ3B9M/4O/t

[Demeter]

63. Fannie Mae Needs $8.4 Billion More

http://online.wsj.com/article/SB10001424052748703880304575236030191182938.html?mod=WSJ_Commodities_RIGHTMoreInMarkets



Fannie Mae asked the U.S. government for an additional $8.4 billion in aid after posting an $11.5 billion net loss for the first quarter, the latest sign that the bailout of the mortgage investor and its main rival, Freddie Mac, is likely to be the most expensive legacy of the U.S. housing-market bust.

Fannie's losses reflected continuing weakness in the housing market and would have been worse without accounting changes that reduced its deficit. The quarterly loss was an improvement from the $23.5 billion loss for the year-ago quarter and marked the 11th consecutive quarterly loss for the Washington-based firm.

The company has now racked up losses of nearly $145 billion, or nearly double its profits for the previous 35 years. While many of the nation's biggest banks have repaid their government loans and some are back to racking up big profits, Fannie and Freddie are still suffering from the housing-market crisis.

In recent weeks, the Treasury pointed out how private-sector banks, insurers and even auto makers have repaid loans under the Troubled Asset Relief Program. But red ink continues to gush from Fannie and Freddie because of their huge exposure to home loans.

"Everyone's trying to sweep it under the rug, but there's a very large embedded loss that hasn't been fully realized yet," says Kenneth Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley. "Someone's going to have to write a check, and it's very large."

The government's tab for Fannie will climb to $84 billion, while Freddie's stands at $61 billion. The government took control of both companies in 2008 through a legal process known as conservatorship as rising losses threatened to wipe out their thin capital reserves.

Fannie's losses have surpassed Freddie's because its $3 trillion book of loan guarantees is nearly one-third larger than Freddie's. Delinquencies are higher at Fannie because the firm more aggressively dialed up its appetite for riskier loans at the peak of the housing boom.

Despite their losses, the firms are helping to stabilize the housing market. Fannie, Freddie and the Federal Housing Administration provided guarantees or insurance for 96.5% of the home mortgages that originated in the first quarter, according to Inside Mortgage Finance, a trade publication. The companies also play a central role in the Obama administration's loan-modification effort designed to avert foreclosures.

Losses at Fannie and Freddie continue to grow because the firms must set aside more capital to cover anticipated losses as mortgage delinquencies rise. The Treasury kicks in more capital every quarter if revenues can't meet those financial needs. Unlike many financial companies, the firms are exposed to a single asset class, holding nearly $5.5 trillion in mortgages and loan guarantees.

Fannie's capital hole would have risen by $3.3 billion without new accounting rules that took effect Jan. 1. The firm's losses were driven by deterioration in its $3 trillion book of loan guarantees, which accounted for a $12.5 billion loss.

One possible signal that losses will slow in the coming months: Fannie said 5.47% of its loans were 90 days or more past due at the end of March, down from 5.59% in February and the first monthly decline in nearly three years. That has stemmed in part from efforts to modify loans and from an uptick in liquidating delinquent loans through foreclosure. The company said Monday that credit losses could decline this year from record highs last year as delinquencies begin to level out.

The company's loan-loss reserves fell to $61 billion from $64 billion three months ago, even as its pool of nonperforming loans grew to $224 billion from $217 billion. "If I was the government, I would plead with Fannie or Freddie to reserve far more than they are right now," given the prospect of future home-price declines, said Anthony Sanders, a real-estate finance professor at George Mason University in Fairfax, Va.

But the terms of the government conservatorship, which require Fannie and Freddie to pay an annual 10% dividend on their Treasury draw, could create an incentive to reserve more conservatively. Fannie had to pay the government $1.5 billion in dividends last quarter. "They don't want to raise the reserve levels because in a sense it doesn't matter and it could be perversely damaging to them," says Mr. Sanders.

In its filings Monday, in the coming months Fannie said it wasn't likely to repay that its debt to the Treasury for the "indefinite future."

[Roland99]

66. Guess we're all Alfred E. Newman, eh?

Back over 10k!! woo hoo!!

[notesdev]

69. It's like, magic, man

Almost makes me wish I placed a bet or two, I just know that if I did the pattern would disappear immediately. Only banks are allowed to win this game.

[RUMMYisFROSTED]

67. Le Psychological Barrier.

Pretty funny.

[TheWatcher]

73. Robbing Peter To Pay Paul?

Not much commentary on what happened today.

With all that's going on in the World, it's pretty irrelevant to focus on a Casino that has nothing to do with 90% of the country's economic reality.

Something interesting to note though.

Check out these Two Charts.

http://quotes.ino.com/chart/index.html?s=CBOT_YM.M10.E&t=&a=&w=&v=i

http://quotes.ino.com/chart/index.html?s=NYBOT_DX&t=&a=&w=&v=i

Pay Particular attention to last night's implosion of the Dow, and Meteoric Ramp in the Dollar Futures.

Now, note today's Miracle Ramp in the Dow.

See what happened to the Dollar?

It's all just a coincidence, I'm sure.

At any rate, the country seems to be feeling pretty good and relaxed about it's current state of slow collapse. The unaffected are entertained, waddling around sucking their thumbs, numb, and completely oblivious or willfully ignorant, and those who are directly affected are ignored, forgotten, and told to "get used to it."

I'm just glad there are a few sane people left to watch it all end. :)

We had a great run for 234 years.

All Good Things.....

Cheers.

[ozymandius]

75. That action at noon is really something.

The decline/incline ranges are a nice match.

[ozymandius]

74. Here I go. Kicking my own thread.

I wish you all a good evening and would like to express my profound wonder over the indexes clawing their way almost to even. :shrug: It must have been the gin at lunch.

[Tansy_Gold]

76. I was just lookin' at the chart and thinkin' there was a whole lotta

up and down all day.

Reminded me of a seismograph reading. . . . . . .




Just sayin'



Tansy Gold