STOCK MARKET WATCH, Friday May 23

[ozymandius]

Source: du

STOCK MARKET WATCH, Friday May 23, 2008

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 243
DAYS SINCE DEMOCRACY DIED (12/12/00) 2679 DAYS
WHERE'S OSAMA BIN-LADEN? 2404 DAYS
DAYS SINCE ENRON COLLAPSE = 2695
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 10
Enron execs conveniently deceased = 3
Other Arrests of Execs = 54

---

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

---

AT THE CLOSING BELL WHEN BUSH TOOK OFFICE on January 22, 2001
Dow - 10,578.24
Nasdaq - 2,757.91
S&P 500 - 1,342.90
Oil - $27.69/bbl
Gold - $266.70/oz.

AT THE CLOSING BELL ON May 22, 2008

Dow... 12,625.62 +24.43 (+0.19%)
Nasdaq... 2,464.58 +16.31 (+0.67%)
S&P 500... 1,394.35 +3.64 (+0.26%)
Gold future... 918.30 -10.30 (-1.12%)
30-Year Bond 4.63% +0.07 (+1.56%)
10-Yr Bond... 3.92% +0.10 (+2.59%)






GOLD,EURO, YEN, Loonie and Silver

---

PIEHOLE ALERT

Heads Up!
Preliminary info on appearances by Bush & Co. throughout the country. Details & links are added as they become available so check back. And if you know more, are organizing something, or would like to, contact [e-mail]

For information on protests and other actions Citizens For Legitimate Government

---

Read more: du

[ozymandius]

1. Market WrapUp: Bull Market in Trust, Bear Market in Dividend Yields

BY MARTIN GOLDBERG, CMT

In October of 2007 the S&P 500 made a marginal all time high, and almost immediately turned tail and headed downward. From peak to trough, the S&P 500 went from about 1550 to a temporary bottom of just above 1250 in March 2008. The trading volume over the last few months shows there was a climatic level of trading that occurred during the January and March market sell offs. Since March, the S&P staged a “V” shaped vertical rally; yet the trading volume was not nearly as great on the vertical rally as during the sell offs.

The apparent failure near an all time high suggests that the year 2000 high in the S&P 500 may have marked the beginning of a new secular bear market which, in spite of the eight year march to a marginal new high, has not ended. Remember, the 2000 high included contributions from a known and confirmed technology stock market bubble. So was the more recent S&P 500 high totally “clean” and supported by valuations? In my view, this new high is characterized by a general stock market bubble which is not getting any attention in the media or financial industry for several structural reasons, not the least of which are the more obvious bubbles that are taking place (and bursting) in real estate, US consumer debt, and also commodities (actually the commodity bubble is a legitimate one caused largely by central bank-created inflation). When was the last time you heard any serious discussion of dividend yields of stocks in comparison to those that occurred prior to the 1990s race to the 2000 high? Today’s stock market bubble is Wall Street and the financial industries’ “dirty little secret.” They’ll only tell you what they need you to know.

.....

Still, unless the market action warrants it, you don’t need to know that the average dividend yield of S&P 500 stocks is just under 1.9% and dividends of less than 3% used to be cause for valuation alarm. (There are 113 S&P 500 stocks that pay no dividends at all.) All you have to do is believe that today’s businesses don’t require that corporations share their profits in any meaningful way with its shareholders.

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

[TalkingDog]

28. define secular in this context please.

I understand the original context: The Catholic religion was once so pervasive, there was a need to define that which was "not".

How does that work in this quote: "the beginning of a new secular bear market "?

(sorry that my thinking today is literal and lacking in lateral)

[ozymandius]

2. Today's Report

10:00 Existing Home Sales Apr
Briefing.com 4.85M
Consensus 4.85M
Prior 4.93M

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

[UpInArms]

24. Existing Home Sales fall 1% to 4.89M pace - inventory rises 10.5%

01. U.S. April existing-home inventory rises 10.5%
10:00 AM ET, May 23, 2008

02. U.S. April existing-home median price down 8% in past year
10:00 AM ET, May 23, 2008

03. U.S. April single-family homes for sale highest in 23 years
10:00 AM ET, May 23, 2008

04. U.S. April existing-home sales stronger than 4.83M expected
10:00 AM ET, May 23, 2008

05. U.S. April existing-home sales fall 1% to 4.89M pace
10:00 AM ET, May 23, 2008

[UpInArms]

38. Gauge of U.S. economy lower in latest week: ECRI

http://www.reuters.com/article/bondsNews/idUSNAT00405920080523

NEW YORK (Reuters) - A gauge of future U.S. economic growth was slightly lower in the latest week due to higher interest rates and slower housing, while its annualized growth rate reached a four-month high, a research group said on Friday.

The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index slipped to 133.1 in the week to May 16 from 133.4 in the prior period, revised from 133.5.

The fall in the index was partly offset by higher stock prices and lower jobless claims, said Lakshman Achuthan, managing director at ECRI.

The index's annualized growth rate improved to negative 6.6 percent, its highest since the week to December 21, from minus 7.2 percent.

"The fact that WLI growth has recovered to its best reading since before Christmas is notable, but falls short of any recovery signal for the business cycle," said Achuthan. "Its uptick is fairly recent, and is not driven by a majority of index components."

...more...

[ozymandius]

3. Oil rebounds after tumbling overnight

BANGKOK, Thailand - Oil prices found support Friday in Asia in worries that supply can't keep up with growing global demand, after tumbling around $4 overnight from a record above $135 a barrel.

The July contract for light, sweet crude on the New York Mercantile Exchange rose to a record $135.09 a barrel in electronic trade on Thursday, but then fell back sharply to settle at $130.81 in the later floor session as the dollar strengthened and gave some investors reason to sell oil futures to lock in profits.

Midafternoon Friday in Singapore, oil was up $1.28 at $132.09 a barrel in electronic trading.

The concerns about falling supplies and rising demand are expected to keep propelling prices higher in the days and weeks to come.

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

[ozymandius]

4. Toyota building $192M green-car battery plant

TOKYO - Toyota is building a $192 million plant in Japan to produce batteries for gas-electric hybrid vehicles, as it seeks to keep its lead in an intensifying race for green cars among the world's automakers.

Toyota's joint venture with Matsushita Electric Industrial Co., which makes Panasonic brand products, is building the plant in Shizuoka prefecture, in central Japan, Toyota spokesman Paul Nolasco said Friday. He declined to give more details.

The plant will produce nickel-metal hydride batteries, now in the company's hit Prius hybrid.

.....

Rebecca Lindland, an industry research director at Global Insight, said hybrids are increasingly attractive in the U.S., which had in the past favored pickups and other gas guzzlers, as fuel prices surge, environmental concerns grow and tougher emission standards kick in.

http://news.yahoo.com/s/ap/20080523/ap_on_bi_ge/japan_toyota

[Ghost Dog]

39. "as fuel prices surge, environmental concerns grow and tougher emission standards kick in"

Not true (in fact the opposite) in the case of probably most US cits as far as I can see.

[ozymandius]

9. Stash some cash for gas money this weekend

Hitting the road for Memorial Day weekend? Pack an extra bag. You might need it to haul your gas money.

After breaking records almost daily in recent weeks, gas prices nationwide are closing in on $4 a gallon, and experts say they are likely to keep rising as record crude oil prices filter through to the pump.

National gasoline prices easily could reach $4.20 a gallon in coming days as Americans take to the roads in droves for Memorial Day weekend, said Kenneth Medlock III, a fellow in energy studies at Rice University's Baker Institute.

Even if the price doesn't hit that mark, crude prices are likely to drive gasoline prices at least slightly higher than they are now.

.....

On Thursday, the national average price for regular unleaded was $3.83 a gallon, up more than 2 cents from the day before and up 61 cents from a year ago, according to the Daily Fuel Gauge Report by AAA and the Oil Price Information Service. It was the 15th day in a row prices hit a record.

.....

Today, U.S. drivers are spending more than $1.5 billion a day on gasoline, almost triple what they spent in 2002, oil analyst Tom Kloza said.

http://www.chron.com/disp/story.mpl/front/5797659.html

[ozymandius]

13. 6 ways you're wasting gas

With all the worry over fuel prices, you'd think drivers would do whatever they can not to waste gas. But look around and you'll see lots of them tooling around as if they owned their own tanker fleet. One of them might be you.

Here are six ways drivers typically waste gas every on every trip:

1. Racing away from green lights

2. Racing up to red lights

3. Confusing the highway with a speedway

4. Bumper-buzzing

5. Driving standing still

6. Short hops

http://biz.yahoo.com/cnnm/080521/051908_gas_wasting_habits.html?.v=1&.pf=family-home

[TalkingDog]

31. But...those are all my favorite ways to drive...except # 5.....

How does that work?

I'm still utterly flabbergasted that my 10 year old Saturn stationwagon gets between 34 and 40 mpg.

A Mini Cooper gets 34 highway.

Smart Cars gets 33 city /41 highway and my wagon could pack a couple in the back.



It's obvious they can make a fuel efficient car. They simply choose not to.

To be totally honest, if I had 10K bucks to toss around. I'd be tempted to buy one of the little buggers.

[AnneD]

33. # 5 Drive standing still.......

waiting with your car in drive...at a drive thru, at a RR crossing, at a long light, bumper to bumper going nowhere fast traffic jam.:shrug:

[Ghost Dog]

40. From the way I've seen some of them driven around the city of Barcelona,

The (essentially, Mercedes-Benz) Smart is a pretty mean (fast) machine. One of them put my Peugeot 205 GT through a good test some years ago, up there.

I'm surprised it's not more fuel-efficient, though. And 10 thou of your bucks sounds very cheap to me, over here (ed. different spec., and taxes, of course).

I completely agree with the list. Even when I (used to) drive (almost) like a maniac, I always looked ahead and cruised up to predictable red lights, and pull away cautiously. I've seen people (almost) get squashed that way...

Manual gearbox of course (I've never driven an automatic. My father had one (a 'Chrysler'), briefly, back in the 'sxities. Never again.

What's a Saturn?

[TalkingDog]

55. Touted as the car company that thought outside the box

Basically a GM product. (with some of their minorly irritating glitches - like a heater that you can never REALLY shut completely off)

Saturn was supposed to rethink the "car" from the ground up. I knew there was a problem with the hype when they decided to stick with 4 wheels.

There is nothing in any engineering standard that suggests 4 wheels are inherently better except perhaps at very high speeds when stability is a REAL factor.

Then their campaign switched over to cult-like "family" memes. And to be honest, they do treat you better than other dealerships. More face time, less pressure and fixing minor things for free. But the Spousal Unit resisted considering one (being a recovering Catholic and all) for a long time until we got a deal on a used wagon with a stick (I've never had an automatic either).

Because of market pressures, they stopped making wagons, started making heavier SUV type vehicles and the gas mileage plummeted.

So, when my wagon gives up the ghost (so far I've got 300K miles) which I'm figuring will be about 750K miles, I'll have to see what's available in the market. By then, a mule and a cart might be the way to go.

When you mentioned Jarmusch yesterday this little ditty popped into my head. I'll share it in your honor:

I put a spell on you
Because you're mine

Stop the things you do
Watch out, I ain't lying

I can't stand
No runnin' around
I can't stand
you puttin' me down

I put a spell on you
Because you're mine

Stop the things you do
Watch out, I ain't lying

I love you, I love you
I love you anyhow
I don't care if you don't want me
I'm yours right now

I put a spell on you
Because you're mine, mine, mine
Oh you're mine

[Ghost Dog]

59. .

Love you too.

[Ghost Dog]

72. i'll just add this youtube link and I'm out of here

(for a while): http://www.youtube.com/watch?v=ORSzfw8FE-o

:-)

Dammit, I just have to add this one (in-context, i think): http://www.youtube.com/watch?v=GUcXI2BIUOQ&NR=1 (Ain't got no... I got life).

[UpInArms]

26. July crude gains $2.34, or 1.8%, to $133.15/brl in NY

02. July crude gains $2.34, or 1.8%, to $133.15/brl in NY
10:11 AM ET, May 23, 2008

[AnneD]

47. Halliburton makes $3.4 billion bid for Expro....

Halliburton offered $3.4 billion for Expro International Group, topping a bid by Candover Partners Ltd., as record crude prices spur exploration.

Halliburton's all-cash proposal of $30.14 per share is richer than the $28.36-per-share offer made in April by Candover and Goldman Sachs, valuing the company at $3.16 billion.

An Expro statement said the Halliburton proposal ``does not yet constitute a firm intention to make an offer'' and was subject to preconditions.


"This is not over as I think Candover will come back with another bid," Jane Coffey, head of equities at Royal London Asset Management which manages $63 billion, said in a phone interview. "I expect then Halliburton to top Candover's bid and become the winner, unless there's another industrial player."

Surging crude prices have driven companies to explore for oil and gas in harder-to-reach fields, boosting demand for technology that allows drilling offshore and in the Arctic. Buyout firms including First Reserve are also acquiring oil services companies, betting on increased competition for commodities

more.....

http://www.chron.com/disp/story.mpl/business/5797990.html

there is some good commentary too.

[UpInArms]

45. Think oil prices hurt now? Just wait

http://www.reuters.com/article/newsOne/idUSN2248967220080522?sp=true

DALLAS, Texas (Reuters) - Sky-high oil prices are causing pain at the pump, but bills for air conditioning this summer and heating next winter -- combined with rising food costs -- promise to squeeze U.S. consumers even more.

With gas at $4.00 a gallon, households already have less to spend on a new grill at Home Depot; a vacation at Walt Disney's Disney World; a new TV from Best Buy Co; or a new "hog" from Harley-Davidson Co.

And there are no signs things will get better soon for the consumer, long the driving force of U.S. economic growth.

"For the areas of the economy that rely on heating oil, high fuel prices are going to be another blow to the consumer this winter," said Jack Kyser, chief economist at the LA County Economic Development Corp.

"The hotter states will feel the pinch during the summer months but in the mid-America states where you get hot summers and cold winters, it's going to be very uncomfortable," he said.

<snip>

Heating oil, which cost $3.29 a gallon in January, will likely cost $3.83 in December, according to the government's Energy Information Administration.

<snip>

"The American consumer will continue to pay for fuel, food and heat," said University of Maryland economist Peter Morici.

"But they will give everything else up," he said. "That's going to make it harder to sell the average consumer a television, a suit, or even a meal at a restaurant."

...more...

[UpInArms]

46. "Our whole phony standard of living is imploding. We have borrowed and spent ourselves into oblivion

more from that link:

Peter Schiff, president of money manager Euro Pacific Capital, warns that after years of profligate spending, the "chickens are finally coming home to roost".

"Our whole phony standard of living is imploding," he said. "We have borrowed and spent ourselves into oblivion."

"It's amazing that people can't figure out that America is broke."

[Tansy_Gold]

77. I. T. Y. S.

And when we're broke, when we've maxed out all the credit cards and pulled all the equity out of the real estate and borrowed and borrowed and borrowed, we have to STOP SPENDING and START PAYING THE BILLS.

That means we have to stop buying "stuff" we don't need, stop taking expensive vacations, stop dropping $500 at the local casino as "entertainment," stop driving the 6 mpg SUV to the grocery store for a box of microwave pop corn. It means we have to stop blowing billions on wars and giving no-bid contracts to our friends.

It means we have to get in touch with reality.

For some people that is going to be very, very difficult.



Tansy Gold

[ozymandius]

5. Ford's trouble: $4 gas is here to stay

NEW YORK (CNNMoney.com) -- Ford Motor Co. executives say they believe that $4 gas is here to stay, resulting in a fundamental consumer shift away from gas-guzzling SUVs and pickups and causing continued losses at its core North American auto unit.

The company said it expects gas prices to remain in the range of $3.75 to $4.25 a gallon through the end of 2009. And that expectation prompted the nation's No. 3 automaker to announce deep production cuts for what has been its best selling and most profitable vehicles for several decades and could lead to more plant closings and job cuts down the road.

.....

Ford now believes that the change in vehicle choice is structural, not cyclical, Mulally said. Ford reduced its forecast for industrywide sales and said its own market share will now be about 14% of retail sales, at the low end of its earlier forecast.

.....

Mulally said the company in July will detail longer-term changes, including personnel reductions. Ford had already offered buyouts and early retirement to all of its U.S. hourly employees earlier this year. But that was done not so much to cut headcount but to replace high-paid senior employees with costly benefit packages with lower-paid new hires with less expensive heath and retirement plans. There are also targeted buyout offers at two plants slated for closure.

Ford said it will ramp up production of some other models such as cars and so called crossovers, a vehicle designed to bring a more car-like ride to SUVs. But the cuts in its pickup and SUV output will be greater than its increased car production.

http://money.cnn.com/2008/05/22/news/companies/ford/index.htm?postversion=2008052211

[ozymandius]

11. Ford's Mulally Calls Pickup Retreat `Fundamental'

May 23 (Bloomberg) -- Ford Motor Co., battling record gasoline prices, concluded in the past few days that a U.S. consumer shift away from trucks is ``fundamental,'' Chief Executive Officer Alan Mulally said.

Ford estimates that full-size pickups fell to 9 percent of the U.S. market compared with 14.1 percent in 2007, Mulally told reporters late yesterday after a speech in Detroit. Such figures don't include sales to corporate fleets or rental-car companies.

``We've never seen movement this fast,'' Mulally said. ``This is a fundamental change.''

.....

Ford plunged 8.2 percent to $7.16 yesterday in New York Stock Exchange trading. The Germany-traded shares declined an additional 1.1 percent to the equivalent of $7.08 as of 11:30 a.m. today in Frankfurt. Ford has advanced 6.4 percent this year, compared with a 26 percent drop at General Motors Corp.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aguN5ntR8k.I&refer=home

[Ghost Dog]

42. What amazingly sensitive 'antennae' Ford's top management must have.

:sarcasm:

[ozymandius]

60. Just like the barrel-chested nimrods who came up with this idea -

[TalkingDog]

73. That is AWESOME!!! if not aerodynamic.

I wonder what kind of chassis it's built on.

Obviously the pop-up is photoshpped in and probably the exaggerated length too.

In my next life I want to design cars. Only the bodies tho. Big Daddy Roth got nothin' on me.





*sigh*

[TalkingDog]

78. 80- 100 mpg not a hybrid

http://blogs.tampabay.com/energy/2008/05/the-axon---an-8.html
Axon:


Morgan Lifecar 150 mpg hydrogen car *drool*

[AnneD]

87. I heard about it on the radio (no pictures)

man, you can get a speeding ticket just looking at that bad boy.

[ozymandius]

6. American Axle workers vote to end 3-month strike

HAMTRAMCK, Mich. - Workers at American Axle and Manufacturing Holdings Inc. expect to return to their jobs early next week after overwhelmingly approving a new contract that contains steep pay cuts and other concessions.

United Auto Workers members at five American Axle sites in Michigan and New York voted 78 percent in favor of the four-year deal, while 22 percent voted against, the union said in a statement late Thursday. The UAW does not usually release vote totals.

The vote, finalized Thursday, ends a bitter strike that lasted nearly three months, crippling General Motors Corp.'s production of large sport utility vehicles and pickup trucks.

.....

The strike forced GM to cut production at or temporarily close more than 30 factories. It also caused thousands of layoffs at GM and other auto parts suppliers.

GM said it lost $800 million in the first quarter and produced 230,000 fewer vehicles due to the strike. But the strike also helped GM control its inventory, coming at a time when high gas prices and a slow economy reduced demand for trucks and SUVs.

http://news.yahoo.com/s/ap/20080523/ap_on_bi_ge/american_axle_labor

[ozymandius]

7. Home prices drop, jobless rolls at 4-year high

WASHINGTON (Reuters) - U.S. home prices fell a record 1.7 percent in the first quarter and the number of workers on jobless benefit rolls held at a four-year high, underscoring the economy's woes, data on Thursday showed.

The continued slump in housing prices in the first quarter pushed them 3.1 percent below their year-ago level, the Office of Federal Housing Enterprise Oversight said. Like the quarter-to-quarter drop, the decline was the biggest in the 17 years the housing regulator has tracked the data.

OFHEO said prices fell 0.4 percent in March from February and are now down 3.7 percent from their April 2007 peak. Other home price measures have shown even steeper declines.

A separate report from the Labor Department showed first-time claims for state unemployment benefits unexpectedly fell 9,000 last week to 365,000.

However, the number of workers still on the benefit rolls after drawing an initial week of aid held at 3.073 million in the week ended May 10, the latest for which figures were available. The last time so-called continued claims were higher was in March 2004.

http://news.yahoo.com/s/nm/20080523/bs_nm/usa_economy_dc

[ozymandius]

8. Barnes & Noble loss widens, weighing Borders bid

NEW YORK - Barnes & Noble Inc. appears to be getting more serious about buying chief rival Borders Group Inc., confirming Thursday that it put together a management team to study the "feasibility" of a combination.

The disclosure came as the nation's largest bookseller reported a wider loss in the first quarter on a tax-related charge and lowered its sales guidance for the year.

Speculation had been mounting about a possible Barnes & Noble-Border combination since Borders announced in March that it was putting itself up for sale and that it had lined up $42.5 million in financing to help it continue operations. At that time, Barnes & Noble said it would take a look at its rival.

.....

Barnes & Noble officials declined to elaborate further regarding its review of Borders. But industry analysts say that a potential combination of Borders and Barnes & Noble would face numerous obstacles, from the challenge of pairing back a long list of overlapping stores to antitrust concerns from federal regulators.

http://news.yahoo.com/s/ap/20080522/ap_on_bi_ge/earns_barnes___noble

[truthisfreedom]

10. Best comic ever.

[Ghost Dog]

29. Not bad, huh. n/t

[ozymandius]

12. Stocks in Europe, Asia Drop, Led by Materials Shares; BHP Falls

May 23 (Bloomberg) -- Stocks in Europe and Asia dropped, led by shares of raw-material producers that had reached the most expensive prices relative to profits since July. U.S. index futures retreated.

BHP Billiton Ltd., the world's largest mining company, extended its first weekly slump since March. Cnooc Ltd., China's biggest offshore oil explorer, plunged the most in two months after reaching the highest valuation this year. UBS AG's downgrade of ASML Holding NV sent technology shares lower in Europe. Ubisoft Entertainment SA, Europe's No. 2 video-game maker, fell the most in the Dow Jones Stoxx 600 Index after reporting less profit than analysts estimated.

Europe's Dow Jones Stoxx 600 Index lost 0.5 percent to 322.72 at 10:43 a.m. in London, giving it a 2.2 percent slump this week. The MSCI Asia Pacific Index declined 0.6 percent today and 2.2 percent this week. Futures on the Standard & Poor's 500 Index fell 0.4 percent.

.....

Raw-material producers in the MSCI World Index, the benchmark index of 23 developed markets, have surged 12 percent so far this year, the most among 10 industries. Their advance sent the average price-to-earnings ratio for companies in the MSCI World Materials Index to 17.8 on May 19, the highest in 10 months. Energy stocks in the MSCI World added 11 percent this year, the second-biggest gain in the index.

http://www.bloomberg.com/apps/news?pid=20601087&refer=home&sid=aE4XTl8jmsmA

[fasttense]

17. Is the commodities bubble starting to pop or is this just a bump? n/t

[AnneD]

20. THAT,

my friend is the million dollar question. If the economies slow in other parts of the world-we will let some air out of the bubble. But if some areas continue to have good growth (like China and India), there will still be upward pressure. That's why the Saudis can tell Bush to jack off. In the oil embargo days, the US market was the only game in town-now we are not. Saudis would try to keep the US addicted to oil by keeping the price low-now, they have more customers and can not only jack up the price but cut us off if they want-there is another buyer around the corner. We are pwnd when it comes to oil. We need to work on the demand end of this equation.

[Ghost Dog]

44. Yup. If this continues this week, I'll have to look at getting rid of this

(next to last) one, myself, sooner than I'd predicted: http://www.reuters.com/finance/stocks/overview?symbol=NESN.VX

[ozymandius]

14. 6:18 futures numbers

06:18 am : S&P futures vs fair value: -6.3.
Nasdaq futures vs fair value: -7.0.

[ozymandius]

15. "Power Failure on Wall Street"

I am overdue on a write-up of a great panel discussion hosted by the folks at RGE Monitor (Nouriel Roubini's blog/news service). It was all fundamentally oriented, so with the coming holiday weekend and lack of new news, you will not be any worse off for my delay (although I am annoyed that I haven't gotten round to it). Do check back for it.

In the meantime, a lovely post by Tim Price (of The Price of Everything) on the perversities of markets:

One of the innumerable problems with Wall Street and the City is that they never do seem to learn from their mistakes....Each generation seems obligated to re-experience the errors of its predecessors. There is little or no ‘race memory’ that might at least mean that this year’s crisis is brand new rather than a tired retread of past embarrassments.

And while Wall Street typically shies away from overly intrusive questions, it certainly seems to have all the answers. Where is the oil price headed ? $141 a barrel during the second half of 2008, according to Arjun Murti of Goldman Sachs. (Could Goldman Sachs possibly have any material interest in oil trading?) Because Mr. Murti was also behind a prediction for higher oil prices in 2005, his apparent ability to foresee the future has led to his universal resource market canonization in the financial press. Actually, the target is $150, says T. Boone Pickens, another presumably disinterested oil trader. The last time we saw this kind of easy momentum-chasing and price target leapfrogging was during the dotcom boom....and it did not end well. As the analysts at McCall, Aitken, McKenzie have suggested, welcome to “dot.oil”.

The difficulty with commodities prices, as Bloomberg’s Caroline Baum recently pointed out, is that unlike more traditional financial instruments such as stocks or bonds, there is no fundamental yardstick of value:

“..metrics that allow us to quantify the degree to which prices have strayed from their fundamental moorings. Stock prices have an historical relationship with underlying earnings. House prices don’t stray too far from their “earnings” stream, or rental value.. With commodities, no such quantifiable ratio exists.”

.....

What makes markets so intriguing today is that equities seem largely immune to a combination of $120+ oil, softening housing markets and a likely collapse in western consumer spending. Arguing that several trillion currently either sheltering in money market funds or rapidly accumulating thanks to petrodollar wealth in sovereign wealth funds will ride in to support stock markets (a.k.a. greater fool theory) only logically goes so far in the face of such sizeable challenges. But some confusing short-term resilience on the part of stock markets does not invalidate the need for caution, it rather reinforces the need for patience. On a separate note, James Ferguson of Pali asks whether it might be time to commit heresy and talk, not of $200 oil (or $1000 oil, has anyone on Wall Street tried that yet ?), but merely $100 oil ? “The last three times, in the 7-year bull run that West Texas Intermediate (crude) has enjoyed, that the oil price got more than two standard deviations above trend, it precipitated an almost immediate profit-taking that resulted in an average -28% drop.” Wall Street’s venal salesmanship and management of subprime goes some way to underpinning its credibility in other markets, so its bandwagon-chasing on oil can be largely discounted on fundamental trustworthiness. The bigger question is how long equity markets can hold their poise in the face of the world’s mounting unbalances, and that question touches on government bond valuations too in the face of the smoke of the battle around inflation.

http://www.nakedcapitalism.com/2008/05/power-failure-on-wall-street.html

[Ghost Dog]

48. I receive their newsletter, on request, after a phone call from them

and emails. But I found that I couldn't bring myself to sign their contract. So I am not a subscriber.

[ozymandius]

16. Good morning.

:donut: :donut: :donut:

I hope this morning is working out well for you. As unexpected as it has been - I must race away to school today as it's the last day for students and when I proctor final exams.

It's a short day for teachers and students. So I expect there will be some time to rejoin the discussion here before the close. See you then.

:hi:

[AnneD]

18. Morning Marketeers.....

:donut: and lurkers. I will be trying to make a Dr. appointment and still be a School Nurse today. I need to catch him before the long weekend, but I will be back also.

I don't think too many folks will be driving about this weekend, and frankly I am glad when school end as my car needs will severely drop. I went to the Dr. yesterday and hit rush hour traffic on the freeway....the first in over a year. It was very noticeably lighter than I have seen it in years. There were still some folks driving like fools but I think more drivers are getting the memo.

Well, I too must dash off....

Happy hunting and watch out for the bears.

[Ghost Dog]

53. The Monday bank holiday sounds like potential bad news to me.

I see it's UK too. What's with that (Corpus Christi?); anything but May 1, huh?

Wish you'd stick around with the rest of us. If I may speak for one moment from a purely selfish foreigner's (alien, for you) point of view: we need you and we (most of us, including plenty of 'radicals') know it.

But, what the f... hell: enjoy the break best you can.

[AnneD]

58. Nothing shady about Memorial Day....

It started out as a day to respect those that died in the Civil War by cleaning and decorating their graves-thus the origonal name of Decoration Day. It is a less morbid Dia de los Mueres but still with picnics and BBQ's.

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

It should make for interesting trading today and Tuesday though.

[Ghost Dog]

81. Deep ancestral respect. Yes. n/t.

[UpInArms]

19. dollar watch

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

Last trade 71.996 Change -0.151 (-0.21%)

How Does an Oil Crisis Impact the US Dollar?

http://www.dailyfx.com/story/topheadline/How_Does_an_Oil_Crisis_1211477248407.html

Oil prices are rising and the US dollar is falling, but is this the natural relationship between these two assets? Taking a look back at the two prominent oil shocks of the past four decades (1973 and 1979), we see that this is not necessarily the case.

1973 Oil Crisis: Initially Dollar Bullish, Eventually Dollar Bearish

In 1973, oil prices jumped 134% when the members of the OAPEC, which is OPEC plus Egypt and Syria, announced that they were no longer shipping oil to nations that supported Israel in its conflict with Syria and Egypt. This effectively shut down exports to the US, Western Europe and Japan. As a result, prices rose significantly to account for the sharp reduction in supply. At the same time, Saudi Arabia, Iran, Iraq, Abu Dhabi, Kuwait, and Qatar unilaterally raised prices by 17 percent and announced production cuts after negotiations with major oil companies.

In response to this oil shock, the trade weighted US dollar index* as measured against the major currencies first strengthened alongside oil and then sold off immediately. At that time, the Federal Reserve was combating inflationary pressures by raising interest rates. The jump in crude exacerbated the need for further rate hikes, forcing the central bank to bring the Fed Funds target rate from 7.5 percent in May 1973 to a high of 13 percent by the summer of 1974. The focus on inflation was initially dollar bullish but once the rate hikes started to have a serious impact on US growth, the trend turned dollar bearish. Between the third quarter of 1973 and the first quarter of 1975, GDP growth contracted five out of the seven quarters and in response to the deterioration in growth, the US dollar erased all of its gains.

*Data on the Dollar Index and Oil Prices are from the St Louis Federal Reserve



<snip>

1990 Oil Price Spike: Persistent Dollar Weakness

Between June and October of 1990, oil prices also jumped 113 percent as a result of the first Gulf War. Interestingly enough, the US dollar behaved very differently for two reasons. The first was the short-lived nature of the oil spike; prices started falling 6 months after the initial rise and the second was the Fed’s monetary policy cycle. Unlike the oil crisis of 1973 or 1979, the Federal Reserve started cutting interest rates before the spike and continued to reduce rates throughout 1990 and into 1991 and the dollar was already in a downtrend due to the loosening of monetary policy. The weakness continued as growth slowed with GDP remaining stagnant in third quarter of 1990, and then falling 3 and 2 percent respectively over the next two quarters.

2007 to 2008 Oil Rise

The characteristics surrounding the latest oil rise is more similar to the oil spike in 1990 than the shocks of 1973 and 1979. Therefore it is easy to understand why the US dollar has continued to weaken despite growing inflationary pressures. The Federal Reserve has been consistently cutting interest and these rate cuts have played a far more dominant role in the price action of the dollar than the rise in oil. The market basically doesn’t believe that the Fed will start raising interest rates – and they have good reason to feel this way because based upon the last 3 oil shocks, growth in coming quarters should contract. Back in the 1990s, the Fed took a break from cutting rates like they are expected to do in June, but they quickly resurrected their rate cuts as the economy slowed. Of course, interest rates were much higher then than they are now, but if growth does not pick up, more rate cuts may be right around the corner.



...more...

Fed Minutes Suggest An End To Rate Cuts, Yet Markets Still Unsure

http://www.dailyfx.com/story/special_report/special_reports/Fed_Minutes_Suggest_An_End_1211406831809.html

Conditions in the credit markets continue to improve; and the renewed sense of stability for the financial markets is certainly lending itself to speculation that the Fed is nearing the end of its dovish rate regime. This past week, there were few reports of major right downs or news that suggests major financial institutions are finding it more difficult to access liquidity. In fact, a report from the Federal Reserve reveals that direct loans to banks are the highest on record - supporting Governor Ben Bernanke’s reassurances that the central bank is ready and willing to increase its auctions should it be needed.



<snip>

U.S. CONSUMER: HOW ARE THEY DOING?


While the Federal Reserve deems the economic outlook strong enough that it no longer needs to be as accommodative with monetary policy, their outlook for growth hasn’t improved much. On the one hand, the minutes suggested growth would rebound in the second half of the year. However, the statement also noted more than a few policy members feel the economy has actually contracted through the second quarter. What’s more, the forecast for growth through 2008 was revised lower from 1.3 – 2.0 percent to 0.3 – 1.2 percent. Adding to the malaise, recent data suggests that the Fed’s outlook may be too optimistic. The University of Michigan’s consumer confidence survey plunged to a fresh 28-year low in May while inflation forecasts for the coming year were pushed to a 17-year high 5.2 percent. Even the Leading Indicators’ modest uptick was suspect with improvements in some of the worst performing components.



...more...

[54anickel]

36. UIA, did ya catch this one? Home parties to hawk your gold

Ichingcarpenter posted this over in GD

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x3330966

Sign of the times, from Tupperware Parties to Gold Parties

What seems to be going on in living rooms across America with mom’s overrun with daily chores, household duties and job expectations is a party bringing groups of curious neighbors to find out how much money is hiding in their closets, shelves and jewelry boxes. With gold prices on the rise and oil prices pushing prices further a neTupperware to Gold partiesw business is born in living rooms across America. The business was started by an innovator as brilliant as the Tupperware inventor himself. In early 2008, January Thomas decided to create a business around the famous Tupperware model that was focused on gold.

It was all back in the year 1946 that a famous inventor named Earl Silas Tupper came up with a ground breaking design and business plan that changed the face of America. The product was dubbed as Tupperware and gained it’s famous and patented, “burping seal” trademark that became well known throughout kitchens of the country. The business was built through women returning from jobs they had acquired during World War II. After returning from jobs that proved to women they had the skills to do business, they started forming “jubilee” celebrations honoring top sellers of Tupperware. Within 16 years Tupperware become an international brand known throughout the world. Now looking down the road in current affairs and the new face of the American economy, we see a new business built off the same core model of business fundamentals and viral opportunity.

This business is built in American homes and is modeled to be replicated throughout the American countryside and the world. This new business is not built off of burping Tupperware products, but comes from a raw material that is mined from the depths of the earth. Just as people rushed to the West for riches in the exploration of gold, people are rushing into living roGold Party collectionoms to hawk up their possessions of love, gifts, heirlooms and other possessions that are made of gold. In the hills of suburbia lies a mine deeper than was once realized, the overfilled or forgotten jewelry box or attic.

The business was not created from thin air, but festered from a marriage that brought Mrs. Thomas into a jewelry-dealing family that opened her eyes to what gold was worth, once it was liquidated into dollars. With rough times facing many lower and middle-class families in America, Mrs. Thomas decided to start a new business that played middleman to the gold refinery business and named it My Gold Party. Typically, it’s a tossup what you might get when liquidating a piece of jewelry, a watch or even coins that are made of gold but with this new business model, the value of the gold is told to the owner within minutes.

>>>>>snip


http://businessshrink.biz/psychologyofbusiness/2008/05/23/sign-of-the-times-from-tupperware-parties-to-gold-parties

[UpInArms]

43. I missed that one, 54anickel

but I think that it's probably not a bad thing - there has be some local market/barter system put in place and this sounds as good a any

:hi:

[54anickel]

65. Yeah, but in a barter I want something more "tangible" in return for my old jewelry than scraps of

paper representing a rapidly declining currency.

http://www.barterco.com/v4/aboutbarter.cfm

[Ghost Dog]

56. "Women doing business" (not to mention the vote

and all the rest), has to rank as the #1 achievement of the late nineteenth / early-mid twentieth century in the (so-called) "West", however many headaches and, like, self-questioning that may cause the rest of us.

As for the Gold Parties, if you'd consider, um, most of the rest of the world for one minute, I think you'll find this is a case of "nothing new under the sun".

:-)

[UpInArms]

21. Airlines ponder how far they can push customers

http://news.yahoo.com/s/ap/20080522/ap_on_bi_ge/airlines_outlook

DALLAS - Higher fares and new fees are irritating air travelers, but airlines still can't raise money or cut flights fast enough to cover ever-higher fuel prices.

In the view of airline executives and analysts, the industry is facing its toughest challenge yet, with little prospect that carriers can return to profits anytime soon.

Even though most of the big airline companies have large cash stockpiles, analysts suggest they could burn through their cash and go bankrupt by early next year. Already, several smaller airlines have filed for bankruptcy protection or simply shut down in recent months.

"This is worse than 9-11," said Ray Neidl, an analyst with Calyon Securities. After the 2001 terror attacks, "at least you knew passengers were coming back. Oil at $130 is unsolvable."

<snip>

Herb Kelleher, the iconic co-founder of Southwest Airlines who stepped down as chairman Wednesday, said flying could become something that only business travelers or the affluent can afford, much as it was in the 1950s and '60s.

...more...

[UpInArms]

22. Moody's shifts debt analysts as banks complain: WSJ (cozy relationships abound!)

http://news.yahoo.com/s/nm/20080523/bs_nm/moodys_dc

Reuters) - Moody's Corp's (MCO.N) credit rating unit Moody's Investors Service switched analysts from covering deals of particular investment banks after the banks requested changes, the Wall Street Journal said on Friday, citing people familiar with the matter.

An analyst in a group that rated collateralized debt obligations was moved off an investment bank's deals after bankers requested an analyst who raised fewer questions about their deals, the newspaper said.

Moody's also moved another investment banking official to its surveillance unit, which monitors the performance of deals already rated, after an official agreed with an investment banker's opinion that the analyst was too fussy, the newspaper added.

Moody's did not immediately return a call seeking comment.

According to the newspaper, Moody's and Fimalac SA's (LBCP.PA) Fitch Ratings acknowledge they have switched analysts who rate bonds after issuers or bankers asked that they do so.

...more...

[Tansy_Gold]

27. I've been waiting for someone to point this out

". . . flying could become something that only business travelers or the affluent can afford, much as it was in the 1950s and '60s.. . ."

When we talk about comparing the U.S. economy over the past 50 years and the currently emerging economies, there's usually some talk about how sustainable is that kind of growth when spread globally. If it's NOT sustainable, then we either have to maintain a status quo of grotesque inequality -- U.S. as affluent mega-consumer, rest of world in abject poverty supporting us -- or we have to reach for some kind of equilibrium. That means DECREASING our current level of U.S. (and other first world) consumption of all resources.

How much of our consumption, and especially our consumption of fossil fuels, is accounted for by what used to be called luxuries? Let's face it: Most of the Sun Belt (and I'm in Arizona) wouldn't have the outrageous population growth if it weren't for the development of effective and affordable air conditioning. It's a huge gobbler of electricity. For those who couldn't afford to move to the Sun Belt, there were longer and longer vacations, the growth of the cheap air fare (based on comparatively cheap oil), the growth of sun belt resorts, the snow-bird/sun-bird two-home economy, and so on. And ultimately, didn't this taste for luxuries then exacerbate the rift between the have-a-little-and-want-mores and the have-only-the-bare-necessities?

I remember taking my first airline flight in 1967, student stand-by half-price fare from O'Hare to LaGuardia. It was a Big Deal -- most members of my family had never been in a plane before. Now I have friends who think nothing of flying from Phoenix to Chicago for a week-end to celebrate a grandchild's birthday -- well, they think about the PRICE as it becomes more unaffordable, but they consider the ability to make the trip almost a necessity, rather than a luxury.

These are the things we may have to learn how to do without????

Tansy Gold, who has missed grandchildren's birthdays, her daughter's college graduation, her father's funeral. . . . . .

[AnneD]

37. I hear you....

My first flight, at age 17, was a long one 1972 Houston to Anchorage. I was the first one (save for AF Dad) that had flown-ever. And it was a very big deal, complete with friends seeing me off and everything. Flying was glamorous then and something you dressed up for. I was in regular class but we had a very nice meal complete with adult beverages. The stewardess' worn fashionable designer uniforms that looked nothing like a uniform.....sigh....

I remember being 17 and my friend that just got her car was happy that the stations in her neighborhood were having a gas war and selling gas at $0.25 per gallon, and that was full service, hood checked and all.

Suddenly I am feeling very old.:(

[UpInArms]

23. Moody's error aside, wrong to rate CPDOs -analyst

http://www.reuters.com/article/bondsNews/idUSL2380196920080523?sp=true

LONDON, May 23 (Reuters) - A report that computer error led Moody's to give too high a rating to a complex product battered by the credit crisis has overshadowed the fact that the products shouldn't have been rated at all, a CreditSights analyst said.

The Financial Times reported this week that a coding mistake in a computer model caused Moody's Investors Service (MCO.N: Quote, Profile, Research) to rate constant proportion debt obligations (CPDOs) at triple-A, four notches higher than they would otherwise have merited.

Internal Moody's documents obtained by the newspaper showed the agency had discovered the error early in 2007. It corrected the glitch at the time and made changes to its methodology, the FT reported. But CPDOs kept their triple-A rating until January 2008, when financial turmoil led to hefty downgrades.

"We think focusing on programming errors diverts attention away from the core issue here," wrote CreditSights analyst David Watts in a report. "Rating a CPDO requires predicting 11 different variables 10 years into the future with a high degree of accuracy. A skill we are not convinced that anyone possesses."

The implication of the FT piece is that without this accident, the rating would have been more accurate, he wrote, but that "leaves unexplained why Moody's ratings would have been so different for CPDOs from S&P's ratings, when their models and input assumptions are so similar".

Moody's and Standard & Poor's assigned triple-A ratings to roughly $5 billion of CPDOs in dozens of deals in 2006 and 2007.

...more...

[UpInArms]

25. 10:04 EST and the exits are crowded

Dow 12,528.65 96.97 (0.77%)
Nasdaq 2,448.18 16.40 (0.67%)
S&P 500 1,382.57 11.78 (0.84%)
10-Yr Bond 3.873% 0.048

NYSE Volume 411,936,718.75
Nasdaq Volume 210,277,765.625

09:45 am : Stocks opened in negative territory Friday. All of the major economic sectors are trading lower, save the energy sector (+0.5%).

Energy's early advance comes on the heels of a rebound in oil prices. After closing lower yesterday, oil is up roughly 1.7% to $133 per barrel.

Though it fell out of favor yesterday, the 10-year Treasury Note has attracted some buying interest early on. The benchmark Treasury Note is up 10 ticks and yielding 3.87%.DJ30 -50.81 NASDAQ -9.10 SP500 -5.42 NASDAQ Dec/Adv/Vol 1468/699/74 mln NYSE Dec/Adv/Vol 1774/805/62 mln

09:15 am : S&P futures vs fair value: -7.5. Nasdaq futures vs fair value: -8.0. The stock market remains on track for a start in negative ground. Stock futures in all three major indices lag fair value.

09:00 am : S&P futures vs fair value: -7.7. Nasdaq futures vs fair value: -7.8. Premarket sentiment remains predominately pessimistic as stock futures continue to trail fair value. Multiple sources are indicating that Yahoo! (YHOO) is delaying its annual shareholder meeting.

08:30 am : S&P futures vs fair value: -7.3. Nasdaq futures vs fair value: -7.0. Stock futures continue to indicate a decidedly downward start to Friday's trading. Crude oil is reclaiming part of yesterday's loss, currently trading electronically at roughly $132.35 per barrel. Crude has been unable to close two consecutive sessions lower since the beginning of May.

[Tansy_Gold]

30. Two part question --

1. What set or sets of circumstances would lead to a major decline in the DJIA? Meaning, how would the Dow go from 12,528 to, say, 10,430 in a single day? What are the mechanics -- financial and/or economic -- of such a drop? I understand the PPT would jumpin and stop it, trading would be halted, all that -- but what are the mechanisms behind the actual drop in prices?

2. What would be the domino effect(s) of such a decline? Even if it took several days or a couple of weeks to go from 12,500 to, hypothetically, 6,000, what would be the immediate/short term (12-month) effects be?

This came up in conversation last night and no one had any answers beyond "Good question! Scary, and I don't really know, but good question!" followed by slightly nervous silence.


Tansy Gold, rarely silent

[UpInArms]

34. answer to question 1

there are "speed bumps" set into the rate of change that is allowed on the market during any one period - these are the "curbs" that stop or start trading when the market falls a certain percentage during a trading session

here's a link to a clearer (?) explanation

http://www.programtrading.com/curbs.htm

Program Trading Curbs

Whenever CNBC runs a banner on your television screen that says CURBS IN or CURBS IN, we receive a ton of email from investors asking "What are curbs?" Here is the answer for you:

Program Trading "Circuit Breakers"
If the Dow Jones Industrial Average falls 10%, trading is halted on the New York Stock Exchange for 60 minutes. If the Dow Jones rallies 10%, there is no restriction. Why? Because program buying and the accompany rally is always perceived as "good".

If the Dow Jones Industrial Average falls 20%, trading is halted on the New York Stock Exchange for two hours. There is no trading halt if it rallies 20%, as that would be perceived as "very very good".

If the Dow Jones Industrial Average falls 30%, trading is halted on the New York Stock Exchange for the day. There is no trading halt if it rallies 30%, as that would be perceived as "the best thing that ever happened in the history of the world".

According to the NYSE the current 10, 20 and 30 percent decline levels, respectively, in the DJIA will be as follows: A 1,350 point drop in the DJIA will halt trading for one hour if the decline occurs before 2 p.m.; for 30 minutes if before 2:30 p.m.; and have no effect between 2:30 p.m. and 4 p.m. A 2,700 point drop will halt trading for two hours if the decline occurs before 1 p.m.; for one hour if before 2 p.m.; and for the remainder of the day if between 2 p.m. and 4 p.m. A 4,000 point drop will halt trading for the remainder of the day regardless of when the decline occurs. Point levels are set quarterly by using the DJIA average closing values of the previous month, rounded to the nearest 50 points. The percentage levels are adjusted quarterly.

Program Trading "Collars"
In the past, this was another type of NYSE Trading Curb. It was eliminated on Friday, October 26, 2007.

Program Trading "Sidecars"
In the past, this was another type of NYSE Trading Curb. It was eliminated on Tuesday, February 16, 1999.

[Tansy_Gold]

71. Great answer, but. . . .

not quite what I'm looking for.

As always, if any portion of my assumption is faulty, please correct! ;-)


I guess what I'm asking is what's the -- or a potential -- reason behind a drop in the DJIA/NYSE comparable to a drop in a single stock.

For instance: hypothetical XYQ Corp. trades at 31.20 in January, 33.15 in February, 33.40 in March. On 9 April, a product XYQ manufactures is found to be hazardous, and XYQ will be liable for millions in damages as a result of health claims. On 10 April, XYQ trades at 12.50, on 11 April for 9.75. On 12 April, XYQ reveals another product is similarly toxic, and now its shares drop to 50 cents. Investors can't get rid of them fast enough. On 13 April, XYQ files for bankruptcy.

Revelation that the company is no longer a viable enterprise shoots down the value of its stock. And we've seen this happen, such as with Enron.

My question really is, then, what kind of comparable revelation/occurence would do similar damage to the entire DJIA, or S&P, or NAsdaq, or NYSE in general, and what mechanism is involved to effect the drop? Would it be just mass panic selling by hundreds/thousands of investors? Is there something that would trigger such a panic? Is that really what happened in '29, people realized there was no there there and dumped worthless stock and lost fortunes and so on?

The casual conversation in which this question came up has been continued today, with similar shrugs and "I dunno" answers. But it has some people at least THINKING about the possibilities and the consequences.

Tansy Gold, who sometimes thinks of herself as a consequence. . . .

[UpInArms]

84. I'm not certain the following is a

response in any way - but

when any particular stock starts tanking, they take it off the DJIA and replace it with something else - it's just another part of the smoke and mirrors

(hiding 'cuz I'm not for sure that was even what you asked)

[Tansy_Gold]

97. LOL -- but no, that's not what I asked either -- ;-)

I'm not talking about a decline in an individual stock that results in its being replaced on the DJIA; I'm talking about precipitous drops, either one right after another domino fashion or multiple simultaneous meltdowns, that can't be hidden by putting different stocks on an index.

I guess maybe another way to put it is --

What would it take to crash the market?

And I mean that in a really sincere manner.

For instance, hypothetically -- The price of gas keeps going up and groceries keep going up to the point that hyperinflation is no longer covered up by gubmint number-fudging of the CPI. What used to be the middle class can no longer buy cars and trucks, not even fuel-efficient ones, to the point that GM and Ford resort to massive lay-offs. Their stocks fall precipitously as investors get out while the gettin's good. The lay-offs will obviously trickle down to suppliers, but also to retailers as the unemployed cut back on spending. (Following this to foreign manufacturers of shoddy plastic crap is just another line of inquiry.) Airlines are going bankrupt already on high jet fuel prices, so their stocks start to drop. Hotel and motel chains start to go down, as well as vacation/resort facilities like Disney World, Las Vegas, etc. Anything associated with "luxury" or even "non-necessity" starts to see steady drops, from franchise restaurants to expensive logo clothing. Real people are really unemployed and really strapped for cash, so the retail and service sectors are hit harder and harder and harder.

As investors pull their money out of stocks and into, say, commodities, will food and gas prices go higher, exacerbating the hypothetical crash?

(I'm not even considering all the derivative madness; I don't completely understand it, so I'm sticking with things I have at least some grasp on.)

I know it sounds like I'm being facetious, but I'm really not. I think the system as presently constructed is heading for an inevitable and probably unavoidable crash -- the money that's been "made" in the stock market is now moving into commodities because greed is the name of the game. But just the act of moving "investment" dollars into commodities exacerbates the problem that started it all. Doesn't it???

Enron seems to me to be a case study; it didn't take long for that giant to collapse once the dominoes started falling, and so I'm wondering if it will take long once the stock market(s) starts. And I'm not an expert by any means, so predicting when that "start" is is beyond me. Will it take a week? A month? A year?

But the second part of the question then is what happens AFTER the crash? What happens to the U.S. economy, or what's left of it? How long will it take for the effects of the stock market crash to be felt in average American homes? Or will it have any effect at all? Is the stock market so totally divorced from the working economy that the crash has no impact at all? But what if it does impact the real economy? We already know our economy has lost much of its manufacturing base in favor of services and financial services, so what happens if the rest of the manufacturing base melts away under the pressure of high oil prices? How does that then impact services?

I think we also have to look at the cost of high oil prices as reflected in the prices for necessities, with food at #1 priority: fertilizer, farm equipment fuel, transportation fuel, storage and preparation fuel. If crops are converted to biodiesel, will speculation as well as supply/demand push food prices higher and higher, again exacerbating the original spiral?

We're already getting stories about farmers reverting to animal-power for farming; I recall a tv documentary -- might have been 60 Minutes, but I'm not sure -- back in the 70s about a farmer in Minnesota IIRC who had sold off his equipment, sold off some acreage, and was able to show the same profit by farming fewer acres WITH DRAFT HORSES. There have been studies that show farm production is more efficient -- more production per acre -- on smaller farms than on huge corporation agri-operations; will we go back to that and actually be better for it?

I don't know. I just don't know. But as I watch gasoline prices rise daily, with no corresponding rise in my virtually non-existent income, as I cut back on my driving more and more and more -- to the point that I am not sure I could even afford to drive to a job interview if I got one -- and as I watch grocery prices rise subtly and quietly and without all the fanfare of pump prices but with all the more insidious malice, I really begin to wonder if there is any way whatsoever at all to stave off a complete and total collapse of what used to be the American economy.

What options are there for those of us who don't have financial cushions? What options are there for those of us who think we have financial cushions and then find out they're air mattresses and someone poked a hole in them?

I've comforted myself for a long time with the notion that we won't slide into another truly "dark" age because the knowledge needed to sustain and/or resurrect a viable economy won't be lost, but I'm wondering now if there won't be such a massive fight/war for scarce resources that even vital information/technology will be lost? Is it a doomsday mentality? I don't think so, because I firmly believe we need some doomsday thinkers who can address nightmare scenarios BEFORE they happen. I'm frequently accused of being one of those folks! ;-) And maybe that's just what I'm doing here.

Tansy Gold, who is often not sure what she's doing no matter where she is!

[UpInArms]

98. okay, I'm going to give another inadequate answer

and I think that it's only a part of the answer - it relates to the type of investors that are currently in the marketplace -

I always think of individual investors as those with the "weakest" hands - they will run first because the investment and its returns directly affects them. So, if the majority of investors in markets were individuals, that would happen rather quickly - but the type of investors in the markets are not using their own money - they are running on other people's money, so the affect on them is slight and they can stay and play until they run out of chips - and that may take a while

here's a chart (ignore basically the part on the left, 'cause we're not talking about Korea, so look to the chart on the right and see that only approximately 14 percent are individual investors



so there could be a long gap between reality and ker-thump

then there are the vast amounts of money that are sloshing around - the following excerpt gives a clue:

Changes in demography, accounting, and regulatory frameworks and windfall gains accruing to commodity producers have led to increased asset accumulation and changes in asset allocations. Assets under management by mature market institutional investors have more than doubled over the past decade, amounting to about $53 trillion in 2005 (see chart).



Institutional investors in the United States account for about half of this amount, with continental Europe accounting for one-fourth, followed by Japan and the United Kingdom. Within conventional investment management, pension fund assets managed by institutional investors have expanded significantly. There has also been an increasing reliance on hedge funds as a vehicle to achieve higher returns, with pension fund assets being invested in hedge funds.

New sources of capital

Emerging market countries have become net exporters of capital and an important investor class in mature markets over the past five years. Their outflows mirror the U.S. external financing gap. This notable shift, which casts a spotlight on global payments imbalances, is driven primarily by the official sector in emerging markets, particularly central banks and sovereign wealth funds.

Gross official reserves have more than doubled since 2002, reaching nearly $5 trillion in September 2006. Governments of countries producing commodities have become large investors in financial instruments, particularly in bonds and equities, through sovereign wealth funds. Market estimates indicate that these funds manage more than $1.4 trillion.

iow - I really don't have an adequate answer - I can only say that I know I am watching a slow motion trainwreck.

my cheapest opinion? the dollar will lead the way downward for this country - as the lights go out for us with the fewest dollars, you know, the third class cabins on the Titanic, the safety nets will collapse for those in first class.

Their security guards and fences will not keep them safe from the fact that they defunded the bottom and took it all home. They will still need to find food as their "servants" become less stable and they will have to go out into the communities that they pushed to the brink of disaster and collapse.

torches and pitchforks anyone?

[Tansy_Gold]

100. Oh, UIA, that is EXACTLY what I was looking for!

At least it's the KIND of information I wanted.

It makes me think that indeed the stock market is more detached from the economy than I had thought and in that sense The Market as an entity is protected in ways that we here in the bottom 80% of real people aren't.

But it also gives us a closer connection with reality, with the real economy, even if it is a micro-mini-economy of our own individual making.

The posts on off-the-grid housing and lifestyles on this thread therefore don't surprise me. The only thing I've regretted in the 23 years since leaving Indiana is that I couldn't bring my earth-sheltered house and its five acres of woods with me.

But I also think that I'd slightly revise your description of the train wreck. I think it's in slow motion now because it's chugging its way up a hill. The engineer is putting so much energy into moving forward, he isn't listening to the people behind him telling him -- screaming at him -- that he has no brakes. Once it gets over the top and starts down, it won't be slow motion any more.


Tansy Gold, reverting to writer mode

[DemReadingDU]

101. I have been wondering the same things

It has been good to read thru this exchange. Some things are making more sense, but there are still some unknown unknowns, which won't be known knowns until they actually occur.

BTW, what part of Indiana did you used to live? I lived in southern Indiana for 18 years until I moved to Ohio for college.

[Tansy_Gold]

103. NE Indiana, near Angola

Left because it was too cold, too gloomy. I truly love Arizona, but I do miss that almost-underground house. If I had the money, I'd build one here in a heartbeat.

[Ghost Dog]

106. "What would it take to (seriously) crash the market?"

Dishonesty. Seriously.

(Hope this helps).

[DemReadingDU]

102. Weakest hands

Yep that's me.

In my meager IRA, I moved out of the stock fund into a money market fund. It's not much, but it's mine, and I need to preserve all that's there. But as I mentioned below in #76, does anyone know what is really safe nowadays for us little savers? Everything seems to be toxic in some manner.

[Ghost Dog]

107. As for "moving into commodities", the way you describe and we're seeing,

I for one refuse at this time to do that. Because I believe it would be immoral.

Some things are even more important than money.

Like life (but then we're (we still feel) well-off enough (we are not at all super-rich, and we're thoroughly "leftist" (and realist)) here at this time to be able to take some (no doubt, heavy) losses, and we're prepared (and feel, probably, guilty enough) to share the pain. We also (try to, in the right circumstances) share wealth).

And we got some love.

[Tansy_Gold]

109. I agree completely, GD, on the immorality

Way back in 1968, I worked (briefly) for a commodities firm on the Chicago Board of Trade. Even at age 20, I found the whole concept . . . . disturbing. I've considered it just plain evil ever since.

And I hope I haven't given the wrong impression with this discussion: I'm not TRYING to crash the market(s). I just want to know what the mechanisms are that would bring it about. I do believe that the financial markets are grotesquely bubblized right now and that a crash is virtually inevitable. Understanding the processes is what I'm seeking.

As for the "dark ages" and Islam -- I'm not sure in this day and age I concur with you. While it's true that there was a great deal of scientific advancement in non-Christian (uppercase deliberately) cultures during the post-Roman collapse, I think we have a very different scenario right now. Cultures -- and especially religions -- have been identified with resources, to the point that "defeating Islamic extremists" has become the code phrase meaning "We gotta get their oil." (In the same way as "The only good Injun is a dead Injun" was the code phrase for "We want all that free land.")

Today, I think there's a very backward-looking element in Islam exactly as there is in fundamentalist Christianity, and the whole human race would do better if we minimize the political effects of religion as much as possible. While the beauties the Umayyads left us in al-Andalus may shine much brighter today than memories of the Inquisition and los reyes católicos, we also have to take into account the Taliban and the FLDS, both of which seem dedicated to creating their own dark ages in the here and now.

But I could be wrong.

Tansia de Oro, sin oro, sin plata

[Ghost Dog]

111. Yes, back then is not here now.

But what we call the "dark ages" had much more to do with "Northern European" mentalities than Southern, I think I have learned.

And we (here) maybe wouldn't even know who Greeks, or Jews (for example, not to mention Aristotle and the rest... (Averroes...)), were by now were it not for, um, real (and ongoing) history (which sometimes slips out of our tribe's control, to say the least).

I wish I could give you some clearer answers, of course. But then, who am I? You're all giving me plenty of fresh information and knowledge, thanks.

Couldn't we try, all of us, just doing (living, working) together, in common, (at last)?

...And, "Dead Injuns" was not, on the evidence, the Spanish approach to the Americas.

[Tansy_Gold]

112. The Spanish approach. . . . .

. . . . .as often as not was to convert the locals whether they wanted to be converted or not. As the name implies, the conquistadors were conquerors, not bringers of unalloyed peace and prosperity to their new-found friends.

Much history was undoubtedly lost with the fall of Rome, but much was preserved by others, true enough. But we have lost much history with the fall of Baghdad, which was as much a sacking as the Visigoths did to Rome, even if "we" didn't walk off with the portable plunder. We plundered in other ways, like good old fashioned barbarians. Was Dresden any different? Nanking? Tenochtitlan?

As for getting along, oh, yes, wouldn't it be nice, as the Beach Boys wished, but we are already on the verge of eating our own over misspoken, misunderstood words, over regrettable votes and pride and stubbornness and hope and fantasy and everything else.

We are human; we are imperfect.

And I am


Tansy Gold

[Ghost Dog]

113. I consider freedom of thought and speech to be of the utmost priority.

Yeah, shit like "True Faith" and stuff can be/is very problematic.

Spaniards made local alliances with local rebels to overthrow local aristocracies in America.

Arabs and Berbers, (not only), were invited into what became Al Andalus due to a split/feud in the then ruling Visigoth family(ies).

Do I have an "agenda"? Nope, I don't think so. I'm interested in knowing the truth. Certainly, nobody is paying me to do this.

We all feel pissed-off, Tansy. Take it easy (how old are you?)... (Damn, that sounds sexist already: I assure you I feel the opposite but it's in our language(s)).

So, you would prefer outright war and total destruction, huh? Or do you want peace?

I'm prepared to declare myself, because of where I come from, probably, beyond (but perhaps not beneath) my (I try, open-minded) secularism and knowing that the "Piper At The Gates Of Dawn" is for real, essentially (New Testament) Christian too.

Don't try to patronise me. It doesn't suit you.

Everybody in the world paying attention deeply regrets what has just been done to Baghdad, Basra, Karbala, ... And, if you check it out, I think you'll find much very original, and useful, Islamic thought (not to mention feeling).

Politics, economics and all is what's up, in (large) part, sure. But there is much that is much deeper. Switch off the TV and go read.

Sorry, Very sorry. Guess I need some vacation time too.

"Beach Girl" yourself.

[Tansy_Gold]

114. No, no, no, GD, I'm not patronizing you, not at all. Just

conversing. ;-)

Oh, definitely, I'm all for peace, for freedom of thought and ideas, for expression of art and all that. Most assuredly, and without sarcasm. And I happen to love the Beach Boys. I don't want war and/or total destruction; I'd much prefer to deconstruct the nightmare possibilities and then try to prevent them if at all possible. Wouldn't it be nice indeed.

If I sound cynical today, well, it's just one of those days, y'know?

The whole thing started because some friends were talking about the stock market and someone -- maybe even I -- wondered what it would take to make it crash. Not that WE would do it, or that WE wanted it to crash, just curious wondering that still hit home. But the conversation then led, and my own personal mental ramblings led, too, in the direction of what happens this time? What happens this time compared to last time? "Last time" meaning, last market crash, last Great Depression, last "dark ages." It's all just speculation of the most innocuous kind (if there is such a thing).

Whether it's the Visigoths or the Ostrogoths, the Vandals or the Huns, the Spartans or the Hittites, the Scythians or the Celts, the Iceni, the Crusaders, the Nazis, the Taliban, the boooshies, or anyone else, invariably it's the elites who start it, the elites who profit from it, and us po' folks laboring in the fields who pay. The gods rarely speak to us, though on occasion a girl like that poor Jeanne from Domremy hears their voices and comes to a sad end, unlike Portly.

Tansy Gold, just slightly younger than the Beach Boys but of the same generation

[Ghost Dog]

115. Alright, mate. n/t

[Ghost Dog]

108. ...Avoid so-called "dark ages"? Stop rejecting Islam (and many other "dark corners of the world")

...among other cultures and philosophies, for a start.

What they told me, up there in the British Isles, were "dark ages", now viewed from here in Iberia, were actually (post-Roman Empire) full of plenty of light.

[UpInArms]

35. a hypothetical answer to question 2 might be a look backward

http://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929

After an amazing five-year run when the world saw the Dow Jones Industrial Average (DJIA) increase in value fivefold, prices peaked at 381.17 on September 3, 1929. The market then fell sharply for a month, losing 17% of its value on the initial leg down. Prices then recovered more than half of the losses over the next week, only to turn back down immediately afterwards. The decline then accelerated into the so-called "Black Thursday", October 24, 1929. A record number of 12.9 million shares were traded on that day. At 1 p.m. on Friday, October 25, several leading Wall Street bankers met to find a solution to the panic and chaos on the trading floor. The meeting included Thomas W. Lamont, acting head of Morgan Bank; Albert Wiggin, head of the Chase National Bank; and Charles E. Mitchell, president of the National City Bank. They chose Richard Whitney, vice president of the Exchange, to act on their behalf. With the bankers' financial resources behind him, Whitney placed a bid to purchase a large block of shares in U.S. Steel at a price well above the current market. As amazed traders watched, Whitney then placed similar bids on other "blue chip" stocks. This tactic was similar to a tactic that ended the Panic of 1907, and succeeded in halting the slide that day. In this case, however, the respite was only temporary.

Over the weekend, the events were covered by the newspapers across the United States. On Monday, October 28, more investors decided to get out of the market, and the slide continued with a record loss in the Dow for the day of 13%. The next day, "Black Tuesday", October 29, 1929, 16.4 million shares were traded, a number that broke the record set five days earlier and that was not exceeded until 1969. Author Richard M. Salsman wrote that on October 29—amid rumors that U.S. President Herbert Hoover would not veto the pending Hawley-Smoot Tariff bill—stock prices crashed even further."<6> William C. Durant joined with members of the Rockefeller family and other financial giants to buy large quantities of stocks in order to demonstrate to the public their confidence in the market, but their efforts failed to stop the slide. The DJIA lost another 12% that day. The ticker did not stop running until about 7:45 that evening. The market lost $14 billion in value that day, bringing the loss for the week to $30 billion, ten times more than the annual budget of the federal government, far more than the U.S. had spent in all of World War I.<7>

An interim bottom occurred on November 13, with the Dow closing at 198.6 that day. The market recovered for several months from that point, with the Dow reaching a secondary peak at 294.0 in April 1930. The market embarked on a steady slide in April 1931 that did not end until 1932 when the Dow closed at 41.22 on July 8, concluding a shattering 89% decline from the peak. This was the lowest the stock market had been since the 19th century.<8>

Salsman observed that "As late as April 1942, U.S. stock prices were still 75% below their 1929 peak and would not revisit that level until November 1954—almost a quarter of a century later."<6>

[AnneD]

41. I imagine it will go a similar way.....

Remember that scene from the Titanic, where the pressure of the water on the outside of the hull became more intense. At first the water seeped slowly through the seems. It then exerted more pressure until the rivets popped off and the fate of the ship was sealed.

Those curbs are much like the rivets on the hull, trying to hold the inevitable at bay. They may work a good bit of the time-even if the rivets are a bit faulty (as we have learned as of late with the real Titanic). But what happened with the Titanic, and what will eventually happen with the stock market, is a perfect storm of events. It is not a question of if but when. And despite our protests that this is a Democracy, it has a class system as rigid as the dining rooms and the life boats WILL be seated according to class.

The best we can do at SWT is tell folks the truth as best we can glean and let them make their own decisions.

[DemReadingDU]

57. Titanic

good analogy

[AnneD]

64. The movie, like the analogy,

was accurate on so many levels. Remember, this was the gilded age. This is what these robber barons want to turn the calendar back to-1914 (the period before FDR-when women and lesser knew their place).

The only difference that I can tell is that at that time, folks were a bit more God fearing (or at least respectful). I doubt today it would be women and children first but every man for himself. By the way, that has it's basis in biology and the desire to preserve the species. We have become so numb to this rational anymore and I suspect TV and visual medias sensational coverage of war and disasters have numbed our souls to this kind of pain and suffering or any sense of order for that matter.

[Ghost Dog]

66. Good example of why it's important to read and understand History

(including often between the lines, the subtexts...).

[TrogL]

32. Loonie Watch

Highlights

Current:



30-day and 90-day vs.greenback:



30-day vs. Euro, Yen, UK Pound and Swiss Franc




Currency Comparison: http://members.shaw.ca/trogl/looniewatch.html

Detailed analysis: http://quotes.ino.com/exchanges/?r=CME_CD

Up-to-the-minute graph: http://quotes.ino.com/chart/?s=CME_CD.Y%24%24&v=s&w=5&t=l&a=1

Historical values http://www.x-rates.com/d/USD/CAD/data30.html

2008-04-11 Friday, April 11 0.978857 USD
2008-04-14 Monday, April 14 0.97972 USD
2008-04-15 Tuesday, April 15 0.982222 USD
2008-04-16 Wednesday, April 16 0.997904 USD
2008-04-17 Thursday, April 17 0.989413 USD
2008-04-18 Friday, April 18 0.99167 USD
2008-04-21 Monday, April 21 0.993443 USD
2008-04-22 Tuesday, April 22 0.996711 USD
2008-04-23 Wednesday, April 23 0.980969 USD
2008-04-24 Thursday, April 24 0.987069 USD
2008-04-25 Friday, April 25 0.983961 USD
2008-04-28 Monday, April 28 0.984446 USD
2008-04-29 Tuesday, April 29 0.987362 USD
2008-04-30 Wednesday, April 30 0.990884 USD
2008-05-01 Thursday, May 1 0.981643 USD
2008-05-02 Friday, May 2 0.982125 USD
2008-05-05 Monday, May 5 0.987654 USD
2008-05-06 Tuesday, May 6 0.996413 USD
2008-05-07 Wednesday, May 7 0.998004 USD
2008-05-08 Thursday, May 8 0.985319 USD
2008-05-09 Friday, May 9 0.993838 USD
2008-05-12 Monday, May 12 0.996314 USD
2008-05-13 Tuesday, May 13 1.0004 USD
2008-05-14 Wednesday, May 14 0.998203 USD
2008-05-15 Thursday, May 15 1.0004 USD
2008-05-16 Friday, May 16 1.00341 USD
2008-05-19 Monday, May 19 1.00867 USD
2008-05-20 Tuesday, May 20 1.00725 USD
2008-05-21 Wednesday, May 21 1.01626 USD
2008-05-22 Thursday, May 22 1.0141 USD


Current values

http://quotes.ino.com/exchanges/?r=CME_CD)

Market            Open   High    Low   Last  Change    Pct 
CD.Y$$ Cash     1.0138 1.0168 1.0132 1.0132 -0.0016 -0.16% 
CD.M08 Jun 2008 1.0134 1.0162 1.0120 1.0120 -0.0022 -0.22% 
CD.U08 Sep 2008 1.0137 1.0137 1.0137 1.0133 -0.0009 -0.09% 
CD.Z08 Dec 2008 0.9780 0.9780 0.9780 1.0129 -0.0009 -0.09% 
CD.H09 Mar 2009 0.9757 0.9757        1.0126 -0.0009 -0.09% 
CD.M09 Jun 2009 0.9995 0.9995        1.0127 -0.0009 -0.09% 
CD.U09 Sep 2009 0.9780 0.9780 0.9780 1.0128 -0.0009 -0.09% 
 

 

Other combinations: (http://quotes.ino.com/exchanges/?c=currencies)

Market          Open    High    Low     Last    Change   Pct 
AUSTRALIAN $/CANADIAN $ (CME:ACD)
ACD.M08 Jun 2008 0.9447 0.9447 0.9447 0.9447 -0.0032 -0.34%   
BRITISH POUND/US$ (SMALL) (NYBOT:MP)
MP.M08.E Jun 2008 (E) 1.9760 1.9809 1.9760 1.9787 +0.0054 +0.27% 
EURO/BRITISH POUND (NYBOT:GB)
GB.M08.E Jun 2008 (E) 0.7948 0.7948 0.7948 0.7948 +0.0004 +0.05%    
EURO/JAPANESE YEN (NYBOT:EJ)
EJ.M08.E Jun 2008 (E) 162.80 162.80 162.80 162.80 -0.45 -0.28%      
EURO/US$ (SMALL) (NYBOT:EO)
EO.M08.E Jun 2008 (E) 1.5713 1.5757 1.5713 1.5756 +0.0081 +0.52%    

Blather (from http://quotes.ino.com/exchanges/?r=CME_CD)

The June Canadian Dollar was lower overnight as it consolidates some of this week's rally. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near-term. If June extends this week's rally, March's high crossing at 102.38 is the next upside target. Closes below the 20-day moving average crossing at 99.63 would confirm that a short-term top has been posted. First resistance is Wednesday's high crossing at 101.80. Second resistance is March's high crossing at 102.38. First support is the 10-day moving average crossing at 100.43. Second support is the 20-day moving average crossing at 99.63.

Analysis

I think there's a few jitters about the automotive industry, which used to be the mainstay of the Ontario economy, triggered by Ford's announcement.

There's also concerns about the tourist industry, high gas prices and the towering loonie, that may make people stay home.

[AnneD]

49. Commodities Spike: Vote of No Confidence in Central Bankers?

Steve Waldman, in a colorful post, "A run on central banks?" contends that the rapid rise of commodities prices isn't the result of mundane factors like negative real interest rates, but a more fundamental cause: loss of faith in the monetary authorities:


Just as the fear of a bank's insolvency can precipitate a run that drives a bank to ruin, loss of confidence in a central bank can provoke a great inflation. The Federal Reserve, much I might criticize it, has not gone on a printing spree.... The Fed's actions are best described as antideflationary, not inflationary.

But confidence is a funny thing. Central bankers are supposed to be dour and dependable. The current crop is not... Japan's central bankers hand out Yen like free acid. China's guy will give you a microwave oven and a DVD player if you draw him a picture (and sign Henry Paulson's name to it). Our man Ben is an Amadeus-cum-Macguyver, he's brilliant, unpredictable, he'll improvise a Delaware company from paper clips and vacuum up your derivative book with a toenail clipper. Even the ECB's Trichet, who at first comes off like a sourpuss, turns out to be alright, when you've got some Spanish mortgages to pawn....

So, we lose faith. When we lost faith in Northern Rock, Bear Stearns, Citigroup, or Lehman, the central bankers stepped into the fray, and stood behind them. So, we ask, who stands behind the central bankers? We take a peek, and all we see is our own money. Which we quickly start exchanging for something else.

Although commodity prices have been increasing for years, you'll notice that the very sharp run-up began last summer, at roughly the same time as the credit crisis. Commodities soared when interest rates were still high, but predicted to fall. Commodities are soaring today, even though US interest rates are now predicted to rise. Commodities have soared in euro terms, despite the ECB's refusal to drop interest rates.

more....

http://www.nakedcapitalism.com/2008/05/commodities-spike-vote-of-no-confidence.html

I have a good reading list for this summer. Some folks read tabloids by the pool and some read tell alls. I love to read political, finance and if I really let my hair down read science and science fiction. God...I'm such a hopeless nerd.

[Ghost Dog]

70. Hang on, hang on, "Spanish mortgages" are certainly not junk.

Beautiful, tourist-attractive, environmentally-sensitive parts of Spain may be (they mostly are) waaay overbuilt (a bête noire of mine and of many others - I'm a qualified ecologist)) and overpriced at the moment; but the (Spanish) mortgages themselves are as sound as they could/should be. Unlike some others', the Spanish governments and central bank did not permit anything like subprime.

Having said that, the ECB has been, um, let's say, very accomodating, so far.

[AnneD]

50. Woman Loses Home Over $68 Dental Bill

Can you imagine losing your home over a $68 dental bill? That's what happened to one Utah woman.

Sonya Capri Ramos says her Salt Lake City home was sold out from under her in 1996 to pay a collections agency seeking payment for dental work performed on one of Ram os's daughters. And despite the fact that she had made three years of payments on a $51,000 mortgage, the title changed hands for just $1,550 at a sheriff's auction.

But the story doesn't end there: Ramos, 41, said she didn't find out that her home no longer belonged to her until two years after the sale. To date, she hasn't moved out.

Instead, she said she continues to make mortgage payments on the home and is fighting what has become a decade-long legal battle to reclaim ownership.

more.....

http://abcnews.go.com/Business/PersonalFinance/Story?id=4896048&page=1

We use to have homestead laws to protect against these shenanigans.

[Robbien]

51. Financed by UBS, BlackRock purchases UBS portfolio

Private equity firms and hedge funds are making some massive bets on distressed debts. The terms have been pretty good of late, though the leveraged loan market has rallied. The latest news, as noted by the Financial Times, is that UBS has closed on a deal to sell a portfolio of primarily Alt-A and subprime loans to a new fund managed by BlackRock. It sold securities with a nominal value of $22 billion for just $15 billion. But the real twist, the article notes, is that UBS provided the majority of financing for BlackRock via a collateralized term loan of approximately $11.25 billion. So as long as the securities don't absolutely crater, this looks to be a win-win.

http://www.fiercefinance.com/story/financed-by-ubs-blackrock-purchases-ubs-portfolio/2008-05-23

It appears UBS gets the worthless subprime junk off its books at about a 30% discount on face. Plus, of course, UBS gets a hefty fee for processing the transaction. In return it had to hand over a loan to BlackRock for about 50% of the worthless subprime junk face value. But of course now that loan is triple A rated.

BlackRock gets worthless junk face value of 22 billion in return for handing over net cash of about 6.5 billion. Risk now handed over to BlackRock who now has to figure out a profitable way to offload the risk.

[Ghost Dog]

67. Noticeable that there's been a change of, er, tillerman at UBS. n/t

[UpInArms]

52. Moody's cuts AIG rating; shares fall - outlook now "negative"

http://www.reuters.com/article/bondsNews/idUSN2320919320080523?sp=true

NEW YORK, May 23 (Reuters) - Moody's Investors Service has cut its rating of American International Group Inc (AIG.N: Quote, Profile, Research) debt, citing losses from the world's largest insurer's exposure to the U.S. mortgage market and credit derivatives.

AIG shares fell 2.5 percent and were the top drag on the market's leading indicators, the Dow Jones industrial average .DJI and Standard & Poor's 500 .SPX.

Moody's lowered AIG's rating to "Aa3" from "Aa2" and said the outlook was "negative."

The ratings agency had placed AIG under review for a possible downgrade earlier this month, after the insurer reported a first-quarter net loss of $7.8 billion. This was the second consecutive quarter of record losses for AIG.

The downgrade, which came hours after AIG said it had raised $20 billion with a sale of equity, debt and convertible securities, places the company three notches below the top credit rating.

"Today's one-notch downgrade reflects AIG's sizable mortgage-related losses and write-downs to date," Moody's said, citing market losses of $13 billion on credit default swaps and realized losses of more than $5 billion on residential mortgage-backed securities.

These losses, posted in the past two quarters, were in addition to a $9 billion write-down of investments, mostly related to RMBS.

...more...

[Robbien]

54. GMAC-RFC Sells Australia's First Subprime-Backed Debt

May 23 (Bloomberg) -- GMAC-RFC Australia Ltd., a unit of U.S. auto and home-loan lender GMAC LLC, raised A$302.8 million ($290 million) from the first subprime mortgage-backed bonds in Australia this year.

GMAC-RFC said in the statement it believed the sale is the first in the world this year of bonds backed by so-called ``non- conforming'' mortgages.

. . .

Residential Capital LLC, the mortgage unit of GMAC, invested A$22.3 million through a non-interest-bearing unrated note as part of the securitization, helping enhance the yield and credit profile of the deal, according to the lender's statement.

Standard & Poor's gives A$227 million of the deal the top investment grade of AAA. Another A$49.5 million was rated between AA, the third-highest investment grade, and B, five levels below investment grade, and the remainder carried no rating, the credit assessor said in a statement today.

The A$188.5 million of top-rated bonds in the deal pay 300 basis points above one-month Australian bank bill swap rate, according to a term sheet of the deal. The other AAA rated notes amounting to A$38.5 million were priced to pay 400 basis points above the swap rate. An A$7 million B rated part offers 1,100 basis points above the benchmark rate.

An unrated portion of A$4 million pays 1,350 basis points above the swap rate, according to the term sheet sent to investors. A basis point is 0.01 percentage point.

http://www.bloomberg.com/apps/news?pid=20601081&sid=a1eeOF7CXWhs&refer=australia

[ozymandius]

61. Redness abounds

1:49
Dow 12,499.74 Down 125.88 (1.00%)
Nasdaq 2,443.52 Down 21.06 (0.85%)
S&P 500 1,378.50 Down 15.85 (1.14%)
10-Yr Bond 3.831% Down 0.09
NYSE Volume 2,096,534,125
Nasdaq Volume 1,078,390,875

1:30 pm : The major indices are off their worst levels, but continue to post steep losses in light trading volume. Negative sentiment is widespread, with only nine of the 147 S&P 500 industry groups in positive territory -- only the brewers group (+5.6%) is posting a gain in excess of 1%.

The bearish bias has been prevalent for much of the week, with nine of the economic sectors posting a loss week-to-date. Financials have been hit the hardest with a drop of 6.0%, while the utilities sector is outperforming as it holds a slight 0.1% gain. The S&P 500 as a whole is down 3.5%, marking its worst week since the beginning of February.DJ30 -140.78 NASDAQ -26.89 SP500 -18.39 NASDAQ Dec/Adv/Vol 1947/795/1.02 bln NYSE Dec/Adv/Vol 2272/751/617 mln

1:00 pm : Friday's pessimistic tone has been evident since the start of the session. There are only a few select pockets of relative strength.

Each of the major indices continues to trade with hefty losses. Even the less popular indices have succumbed to strong selling efforts. The Russell 2000 is down 1.5%, the S&P 400 is also down 1.5%, and the Dow Jones World Index, excluding the U.S., is down 1.1%.DJ30 -156.00 NASDAQ -31.64 SP500 -20.34 NASDAQ Dec/Adv/Vol 1959/766/933 mln NYSE Dec/Adv/Vol 2286/714/566 mln

[KoKo]

62. Just wanted to do a Friday "Shout Out" to all the posters here and Ozy

:applause: Just wanted to let you know we "lurkers" do appreciate all invaluable info you all post.

[ozymandius]

63. It is truly amazing isn't it?

Because I am the originator of this thread and, therefore, have some parental duties, never do I worry that the thread will either devolve into an ugly fight or lose its quality. That's quite wonderful: knowing that this online venue with so many strong opinions shaped with a mountain of encyclopedic knowledge and life experience can be so self-regulating.

Take a bow, Everyone.

[AnneD]

68. It really has been getting ugly out there lately....

and while I have some strong views I can separate the view from the person, as I think most here can. We can alway agree to disagree and move on to the next point of interest. I don't like to alienate anyone because you never know who might have the next juicy tidbit. This is a wonderful oasis to nurture the mind and soul. Thanks Marketeers...

[54anickel]

69. KoKo01!!!!! I miss you! Where ya been hangin' out lately? n/t

[KoKo]

75. Nice to see ya '54'!

I'm reading here...and the links and around. This is about the only sane Forum here.. And, sometimes the Market News is enough to make one question one's sanity! :D Remember when we used to talk about that "money under the mattress?" Seems we were ahead of the crowd in our worries. Little interest to be made in anything formerly safe (like MM or SA)...and leaving it in the bank is enough to scare bejeebus out of me given the predictions for failures. I've got my pocket change, accumulated from the last six years, stored in the baggies. One day I need to go to the bank and exchange it for some lighter weight play money that doesn't take up so much space. Still I hear the value of the metal even in my devalued coins might eventually be worth more than the exchange value ....so I wait. :eyes:

:hi:

[TalkingDog]

74. We've become numb to the fugly. Waiting for the bleedout.

Dow... -147.05
Nasdaq... -23.13
S&P 500... -18.04

[DemReadingDU]

76. Yeh, it's been a bad week

The beginning of a bad summer?


So if everything is tanking, or going to be tanking soon, are there any safe investments?

Stocks? The sky is falling

Bonds? They're full of toxic waste

FDIC savings accounts or CDs? - well if many banks fail, there is not enough FDIC insurance for the bank runs to give everyone their money.

Treasury Bills? Who trusts the government

Gold? What goes up, will come back down

Under the mattress? Inflation will eat it up


It sure feels like the Titanic has hit the iceberg
:(

[kineneb]

79. frantic tourists

I live in what has been a tourist area for 150 years...and I am getting a sense of people almost frantically throwing themselves into this weekend holiday, as if it were the last (which it just might be)...people started arriving mid-week, I could tell by all the out-of-state license plates...I just have this odd sense that the tide is receding and a tsunami is about to hit...

[ozymandius]

95. I've seen the same.

It feels like a morass of forced jollity. Like a liquored-up vagrant wearing a 'Happy New Year' hat in May.

[Ghost Dog]

82. You forgot to mention the Biosphere itself.

Which must at any cost continue to live life.

Also :-(

[ozymandius]

80. Here's the closing roundup of today's melee.

Dow 12,479.63 Down 145.99 (1.16%)
Nasdaq 2,444.67 Down 19.91 (0.81%)
S&P 500 1,375.93 Down 18.42 (1.32%)
10-Yr Bond 3.831% Down 0.09
NYSE Volume 3,516,377,500
Nasdaq Volume 1,736,346,375

4:20 pm : The stock market closed 3.5% lower this week after losing 1.3% this session. Stocks declined in the face of persistently high oil prices and broad-based selling efforts ahead of the long weekend. Eight of the major economic sectors lost at least 1.0% this session.

Crude oil prices rebounded from yesterday’s drop and weighed on early morning sentiment. The commodity closed $1.31 higher on the New York Mercantile Exchange, finishing the session at $132.12 per barrel. Crude has not finished lower for two consecutive sessions since the beginning of May.

Investor pessimism persisted in the face of positive earnings announcements from retailers Gap (GPS 17.94, -0.35) and Aeropostale (ARO 32.67, -0.05). The pair announced after yesterday's close earnings results that surpassed the consensus earnings per share estimate. Meanwhile, department store Dillards (DDS 15.73, -0.63) reported this morning its first quarter net income slumped during the most recent quarter.

Brewers (+6.4%) performed exceptionally well in the face of the session’s broad-based selling. A report from FT Alphaville indicating Belgium beverage company InBev is interested in acquiring Anheuser-Busch (BUD 56.61, +4.03) helped give the group a lift.

Tech heavyweight Apple (AAPL 181.17, +4.12) helped the Nasdaq 100 (-0.3%) outperform the major indices on a relative basis. Apple had its price target elevated and was added to a buy list at a pair of Wall Street’s leading investment banks.

Separately, existing home sales for April declined 1.0% month-over-month to an annualized rate of 4.89 million units, according to the National Association of Realtors. Economists were expecting April sales to decline 1.6% from the prior month’s annualized sales rate.

The stock market will be closed for trading on Monday in observance of Memorial Day.DJ30 -145.99 NASDAQ -19.91 NQ100 -0.3% R2K -1.2% SP400 -1.2% SP500 -18.42 NASDAQ Dec/Adv/Vol 1944/872/1.73 bln NYSE Dec/Adv/Vol 2243/850/1.11 bln

[Birthmark]

83. A special thanks to...

...all those that post on the SMW thread. I read it every business day.

I am headed into the middle of nowhere for a few months, or perhaps years, and won't be here very often if I'm here at all. But I'd be classless to not thank all of you for your hard work, dedication, and interesting insights over the years I've been on this site. I've learned a good deal and laughed a lot. Thanks.

And so long!

Birthmark

[AnneD]

85. Well Birthmark.....

we'd be classless if we didn't wish you a bon voyage. Drop us a message when and where you can. We'll miss you. Aloha :hi:

[Birthmark]

88. Thanks, Anne! nt

[UpInArms]

86. best to you, Birthmark

and come back if and when you can.

:grouphug:

[Birthmark]

89. Thanks, UIA!

I'll drop in anytime I wander into a Wifi hotspot...and can wrest the computer away from the wife or son. :)

[ozymandius]

90. That really means so much for you to say that.

Whatever you have taken from our thread, we all appreciate.

Of course my interest is piqued. I wonder where the "middle of nowhere" is.

ozymandius

[Birthmark]

91. Middle of nowhere

As deep into the mountains of Western NC as I can go with a wife and a disabled son. We're just taking the summer off and camping. Come fall, we'll start looking to buy a small portion of nowhere and build an off-grid house (or have it built in the likely event that I screw it up.)

Once we get settled, I'll be back. I really hope this thread is still here. Of course, the way things are going, I hope the *internet* will still be accessible by mere drones like me. :)

[ozymandius]

92. I feel quite certain that the means of posting this thread will be here.

And more than certain that the ambition and enthusiasm to create this thread will survive.

Since you have announced such a cool project - I would like to share this with you: a Low Impact Woodland Home. This is a real treasure of a website and project. My family has property off-grid. Perhaps someday (before I get too old) my family and I can build this kind of home.

[Birthmark]

93. That IS cool

It's not all that different from what we plan. We're planning on building with cob ( http://en.wikipedia.org/wiki/Cob_(building) ). At least that's the plan this week. lol We waver a lot, but we have time to change our minds a hundred times and will probably continue to do so.

I probably won't have a very low impact roof, though. I don't like or trust any of the ones I've seen so far.

[ozymandius]

94. And THAT is cool.

It seems to be of the same architectural idiom of the link I gave you. The cob structure seems very stable given its use of aggregate and flexible material.

[Birthmark]

96. And the two-foot thick walls! lol

I just like the idea of sculpting a house. I won't do anything artistic since I don't have a drop of artistic blood in my body. But I could...theoretically.

[AnneD]

99. I didn't want to me nosy and ask...

(thanks Ozy)but congrats on your venture. And thanks for the great site Ozy and Birthmark. I book marked it. The simondale house looks like a hobbit house! Best of luck with the project and just remember-the Titanic was built by professionals-the Ark was built by an amateur.

[Ghost Dog]

105. I'm speechless with admiration.

Such intelligent beauty. But wait, we're over six thousand million now. Do we really have to cull ourselves?

(Don't reply here).

[Roland99]

104. ***wow*** China in Africa

http://www.fastcompany.com/magazine/126/special-report-china-in-africa.html


I just spent the last hour or so reading ALL of this. If this doesn't make you look at people like Cavuto, Cramer, or any bull market pundit as the freakin morons they are (not to mention the *horrifyingly* precarious economic position the U.S. is in), well, don't say you weren't warned.

One part at the end actually made the hairs on my neck stand on end as the fundamentals of the existing banking system are exposed.

[Ghost Dog]

110. Truth. Thanks Roland99.

:-(

(BTW, I felt, here, as much or more hurt by the consequences of the Sichuan earthquake as I did about New Orleans (and there have been plenty more such tragedies, recently). Non-Arab Africa?: As described, very hurt and very resource-rich terrain).

If honest economics don't work, Africa will require (from Africans themselves) a totally bottom-up very socialist Revolution.