STOCK MARKET WATCH, Tuesday September 2

[ozymandius]

Source: du

STOCK MARKET WATCH, Tuesday September 2, 2008

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 141
DAYS SINCE DEMOCRACY DIED (12/12/00) 2781 DAYS
WHERE'S OSAMA BIN-LADEN? 2506 DAYS
DAYS SINCE ENRON COLLAPSE = 2797
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 10
Enron execs conveniently deceased = 3
Other Arrests of Execs = 54

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

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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.
$1 USD = EUR 1.06678
$1 USD = JPY 116.6200

AT THE CLOSING BELL ON August 29, 2008

Dow... 11,543.55 -171.63 (-1.47%)
Nasdaq... 2,367.52 -44.12 (-1.83%)
S&P 500... 1,282.83 -17.85 (-1.37%)
Gold future... 835.20 -2.00 (-0.24%)
30-Year Bond 4.41% +0.02 (+0.52%)
10-Yr Bond... 3.81% +0.02 (+0.47%)






GOLD,EURO, YEN, Loonie and Silver

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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

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Read more: du

[Dr.Phool]

1. Economic Hurricane Edition?

Or does Wall Street have a baby?

All that and more, on the next episode of "Soap".

[Ghost Dog]

16. Ha. Oil-state secession's the thing.

:evilgrin:

[UpInArms]

2. dollar watch

dollar chart



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

Last trade 78.177 Change +0.373 (+0.48%)

Which Way For The Dollar?

http://www.bktraderfx.com/site/fx-weekly-reports/fx-weekly-0829-090508-which-way-for-the-dollar#more-650

Pity the poor breakout traders, the volatility in the EURUSD compressed massively this week as chasing price became a very expensive proposition as every buy quickly turned into a sell and every sell turned into short covering rally. On the economic front the edge clearly went to the dollar as US GDP, Durable Goods and U of M sentiment all printed far better than forecast while IFO results were dreadful dropping to a 5 year low of 94 vs 97 projected. Still most of the ECB members resolutely hawkish with Weber and Bini Smaghi still sounding very “Bundesbanker” like warning that inflation risk is far from over.

While an argument can be made that the generals at ECB are be fighting the last war as economic conditions on the continent clearly deteriorate, they did find support in German unemployment data which showed surprising strength reducing rolls by -40K vs. -10K expected. Indeed we noted for a very long time now that until and unless labor conditions worsen the policy makers in Frankfurt will be quite content to remain stubbornly stationary.

Meanwhile upon closer inspection the news for the US was not nearly as sunny it first appeared.The GDP numbers received nearly all of their strength from exports as many analysts pointed our that the headline number which is always adjusted for inflation benefited from a ridiculously low GDP Deflator reading of just 1.2% at a time when any average US citizen saw minimum price increases of 10% on more on everything from a gallon of milk to the cost of the Wall Street Journal. In short, there is a good case to be made that the books of the US government are more cooked than an Enron balance sheet, suggesting that both US and the EZ are in fact in a recession.

The micro landscape did not matter much however as last week was all Gustav, all the time with crude controlled the fate of currencies nearly tick for tick. Indeed, we stated midweek that because US is the least energy efficient economy member amongst the G-3, it is therefore also the most leveraged to the price of crude. In fact the only real stimulative effect that could rescue the US economy in Q4 would be a sharp decline in the price of oil. A drop below $100/bbl could provide critical relief to the consumer just ahead of the Christmas shopping season and could in turn push the EURUSD to 1.4000 as result. That’s why this developments in the Gulf of Mexico over the weekend could make or break the dollar rally next week.

...more...

Euro Falls Below 1.45 While PPI Hits 18 Year High

http://www.dailyfx.com/story/dailyfx_reports/daily_brief/Euro_Falls_Below_1_45_While_1220350368402.html

The Euro came under heaving selling pressure as the US dollar strengthen across the majors on the back of falling oil prices. Oil futures slipped to a five month low - breaking below $107 a barrel - and helped to spur bullish sentiment for the greenback. On the economic front, Euro-Zone producer prices peaked to a new record high, but did little to help the Euro recover after falling for four consecutive trading sessions.

The Euro-Zone producer price index rose to 9.0% from 8.0%, which was the biggest increase since record keeping began in 1990. Despite hitting a new high, the release failed to meet expectations of a rise to 9.1%. The increase was driven primarily by record high commodity prices as crude oil peaked to $147.27 a barrel in July. Commodity prices have fallen from their record high in the past few weeks, and should help to ease price inflation throughout the 15 European nations. Meanwhile, consumer price inflation has leveled off in recent months as the index held steady at 4.0%, missing expectations of a rise to 4.1%. Conversely, the core CPI fell for the first time in three months as the index inched lower to 1.7% from 1.8% in July. Cooling inflation paired with stagnant growth may lead the ECB to soften their hawkish outlook, which may spark bearish sentiment for the Euro in the following months. The central bank is widely expected to hold rates steady at 4.25% for the rest of the year, but may move to cut the benchmark interest rate ahead of schedule as growth prospects steadily deteriorate.

The ISM Manufacturing index tends to spur increased volatility in the forex market, and will be the main event risk to follow during the US session. Manufacturing activity is expected to hold at the borderline reading of 50.0, but may cross the wires weaker than expected as foreign and domestic demands lose steam. US consumers continue to grapple with higher living costs amid fading labor demands which may limit economic activity well through the second half of 2008. As the US and Canada comeback online from the holiday weekend, a fall in manufacturing could spark bearish sentiment for the US dollar.

...more...

[UpInArms]

3. SEC Moves to Pull Plug On U.S. Accounting Standards (buh-bye GAAP!)

http://online.wsj.com/article/SB121985665095476825.html?mod=hpp_us_pageone

WASHINGTON -- The Securities and Exchange Commission signaled the demise of U.S. accounting standards, kicking off a process Wednesday that could ultimately require all publicly listed American companies to follow an international model instead.

Introduced in two steps, the shift could eventually cut costs for companies and smooth cross-border investing. At the same time, investors worry it will create confusion, especially during the transition. Other critics worry that the international system offers too much wiggle room for companies, compared with the more precise rules enshrined in U.S. standards.

The SEC's proposal would allow some large multinational companies to report earnings according to international accounting beginning in 2010. The SEC estimates at least 110 U.S. companies would qualify based on their market capitalization, among other factors. The agency also laid out a road map by which all U.S. companies would switch to International Financial Reporting Standards, or IFRS, beginning in 2014, at the expense of U.S. Generally Accepted Accounting Principles, the guiding light of accountants for decades.

The proposals will be open for public comment for 60 days and could be finalized later this year.

U.S. corporations gave the news a qualified welcome. Margaret Smyth, controller at aerospace and building-services conglomerate United Technologies Corp., said the possibility of having one set of books around the world, though still years away, would result in "tremendous savings." In the short term, Ms. Smyth said the shift would be expensive and added that "there are some issues that still need to be worked out," particularly in the realm of tax accounting.

The SEC says the change will help the U.S. to compete globally because many other nations use the international standards or plan to do so. Larger companies, especially those with overseas subsidiaries, have urged the SEC to move in this direction. They hope a single accounting standard will enable U.S. investors to more easily compare a retailer in the U.S. with one in France, for example.

...more...

[Demeter]

31. They Have Got to Be Crazy!

There goes sarbanes-oxley. and any hope of stopping the next Enron.

[UpInArms]

4. How much banking does America need?

http://www.reuters.com/article/reutersComService4/idUSLM1742620080827?sp=true

LONDON (Reuters) - Few will argue with the idea that the U.S. financial services industry is shrinking; the big question is whether the credit crisis marks a cyclical downturn or a long-term change.

By most measures, the growth and profitability of banking and financial services in the United States has been astounding in recent years. Through most of the post World War 2 period profits by financial firms averaged about 0.75 percent of gross domestic product (GDP), but tripled to as much as about 2.5 percent as banks moved away from old-fashioned portfolio lending and remade themselves into intermediaries that made loans and sold them on, often to bank-controlled entities.

Bank profits have been hit badly in 2008 as house prices tumble, but in the first quarter financial profits were still around 2 percent of GDP, a figure far higher than anything seen between 1947 and the turn of the century.

How far that falls and where it settles will have a huge influence on how many people work in the financial industry, what they are paid, what shares in their companies will fetch and even conceivably on the long-term capacity of the U.S. economy to grow.

The answers at this point are simply unknowable.

...more...

[DemReadingDU]

18. Christopher Laird: Credit crisis II - Central Banks

Reposting from The Weekend Economist--August 30-September 1, 2008

8/25/08
Credit crisis II
A world financial Armageddon?
by Christopher Laird

Where are we now in the credit crisis, and why isn’t the massive Fed and ECB weekly lending working to loosen interbank lending? Why is the credit crisis not really improving? Where is this going next? We describe what may happen next as Credit Crisis II in this article.

Now that the credit crisis that started in 2007 is a year old, there has been a debate about whether the financial system will recover, or will the Western/world financial system end up like the Japanese financial system after the stock and real estate crashes in the 1990’s. In that case, the Japanese banks more or less carried their tremendous losses for ten years, and Japan entered a mild but painful decade of deflation. To this day, Japan is battling some of the deflationary forces from that time.

The question now becomes, will the Western financial system recover some normalcy, or are things merely going to get worse and the world end up with a financial malaise lasting ten years like Japan’s?

If the second alternative is the case, then the central banks which are merely propping up the financial institutions with their ‘temporary’ lending will find they are taking the losses off the banks hands, taking them on to their balance sheets, and effectively monetizing the losses.
The ECB and the Fed are both hoping to find a way out of having to keep the bad assets they took as collateral. They have lent hugely to financial institutions, taking their bad mortgage bonds, securities, derivatives as collateral. And at the same time, the financial institutions in question are carrying a sum total of $500 billion of losses on their books, the losses they admit so far, while estimates of ongoing losses from these bad assets runs well over $1 trillion. In effect, the Western credit industry is still crippled. Why is it so crippled still?

Either the financial industry earns its way out (will take ten or more years) and drastically pull back credit, or they find enough new investors to pony up new capital infusions, perhaps through stock sales. And new such investors are becoming increasingly hard to find. Hence, the central banks are the only alternative.

A theme now arises where it is becoming apparent that it is impossible to actually purge the escalating losses from the financial system, and that even big public bailouts don’t purge the losses because of interlinkages between stocks, bonds and derivatives. If one class or institution is bailed out, the losses of capital merely move to the other class. And the losses are clearly so huge as of now, that they weigh on the currencies themselves and cause a fall in their exchange rates.

It is estimated that the USTreasury/Fed/FHLB has infused a total of $2 trillion and counting since Aug 07 to the various credit infusions to the US financial system, and that the ECB is in at similar levels. And even after $ 4 trillion worth of infusions over the last year has been thrown out by the Fed and ECB, the world credit/financial system is actually getting worse. What will be the outcomes into 09?

Bankrupt en masse

In effect, this means the Western banks, etc are bankrupt en masse. The only thing propping up the entire Western financial system, and its respective stock markets has been massive ‘temporary’ lending, on an ongoing basis, by the Fed and ECB. Both central banks are beginning to balk at this situation. Even as they are starting to have second thoughts, the Western financial institutions continue to borrow more money than ever on a weekly basis. Why aren’t things loosening up?

Can’t stop or else

And, if the ECB or the Fed stops the emergency infusions, or even admit who the borrowers are, another round of collapsing banks/bank runs ensues as investors flee and pull their money out. In other words, the central banks have no choice but to continue the weekly $30-50 billion or so of infusions each for the Fed and the ECB, or else face a cascade of bank runs around the world.
…And each week the Fed and the ECB are effectively taking on another $30 or $50 billion of the bad assets from the various and sundry financial institutions scattered across the EU and the US. So, week after grueling week, the Fed and the ECB keep adding another $50 to $100 billion of bad assets to their balance sheets, as ‘collateral’ and making ‘temporary’ loans they keep having to roll over and extend the repayment on. Ie, the junk stuff is becoming a permanent resident on the central bank’s balance sheets. If either the Fed or the ECB stop the weekly infusions, quite possibly the entire Western financial system stops dead. And we get a massive world stock crash.

The question now becomes, what happens when these two central banks finally decide they have to let go? You are not going to tell me they are going to keep infusing a combined $50 to $100 billion worth of financial bailouts each week forever? This massive temporary lending certainly has to end at some point.

lots more...
http://www.financialsense.com/fsu/editorials/laird/2008/0825.html

[DemReadingDU]

19. Patrick Hosking: Scramble for cash as central banks dry up

9/2/08
British banks soon could be scrambling for short-term funding once more amid reports that supplies from Threadneedle Street and from Frankfurt may be drying up.

The Bank of England explicitly ruled out extending its Special Liquidity Scheme (SLS), while the European Central Bank is reportedly considering tightening its lending criteria.

The two central banks have been huge suppliers of liquidity to British banks. The SLS is thought to have provided £50 billion or more, while the ECB has lent banks €467 billion (£378 billion) - much of it thought to have gone to UK institutions.

Despite pressure from some British banks for an extension, the SLS will be closed to new applications from the week of October 20, the Bank said. UK banks have been campaigning for an extension to the scheme, under which the Bank provides banks with highly liquid government bonds in return for illiquid AAA-rated mortgage-backed securities.

As recently as Friday, Rod Kent, the chairman of Bradford & Bingley, called the SLS “a good idea” and contrasted its temporary nature with the permanence of the ECB liquidity window.

The ECB declined to comment on reports that it would change its rules soon, accepting only higher-quality collateral from borrower banks in exchange for cash. At present it accepts securities with credit ratings as low as A-. It also accepts private securities - instruments created by the banks and not traded on any public market. Some ECB officials are concerned that it has become a “dumping ground” for inferior mortgage-backed securities, according to The Wall Street Journal. The reform could come as early as Thursday, when the governing council meets and the ECB makes its monthly interest-rate decision.

While money market conditions have improved modestly in the past few months, banks are still hoarding cash. Three-month sterling Libor has been trading at 5.75 per cent, three quarters of a per cent above base rate, indicating continuing stress in the money markets. Before the crunch the margin was 0.1 or 0.2 of a per cent.

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article4656321.ece


edit: added author

[Demeter]

32. Better Question: WHAT KIND of Banking Does America Need?

Asking the right question generates its own answer.

[DemReadingDU]

42. Here's yet a third posting about those central banks

From the blog at http://theautomaticearth.blogspot.com/

Ilargi: I'm not a fan of expressions such as 'next shoe to drop' or 'next phase to enter', which are far too popular popular among reporters with limited imaginations and language skills.

But I do think that we are seeing a number of developments that herald a time of increased awareness of our economic reality. Not that it makes any difference to what The Automatic Earth has been saying all along. The funny virtual money will have to vanish, and we will then have to make do with what's left, which will be very precious little.

The main driver behind the global financial news in September and October, even though it may not be recognized as such, will be the central banks and their emergency lending windows and liquidity schemes.

A large percentage of the world’s main commercial and investment banks has been held above water through loans collateralized with essentially worthless securities of one kind or another.

The ECB has until now accepted paper with an A- rating, the pennies-on-the-dollar variety, a practice that has reportedly been the only thing standing between English and Spanish banks and their maker.

Now, both the ECB and the Bank of England are about to withdraw that level of support. In the meantime, what value was left in these securities has dropped further.

Long story short: we are about to see bank failures all over the world’s main financial centers. The only thing that can now prevent this from happening, and in some cases will, is consolidation: the left over "worth" of many financial stocks will be bought by stronger institutions for next to nothing, wiping out shareholders’ value in the process.

The OECD reports today that Britain will be the only major rich country to go into a recession this year. While that is an unbelievably silly statement, it does once more make clear how bad things are in Albion. It’s silly because many others are in recession as well; it just depends on the definition you use.

And I guess it’s nice for the other economic basket cases to have people focus on Britain. Which in turn is not so nice for the English government. The ministers’ position may well become untenable, and force them to step down, much sooner than you would have thought only a few weeks ago.

Even before Arnold Schwarzenegger?! California, the world's 8th largest economy, doesn't even have a budget... What a mess he's made in a few years, and it's just starting. Well, at least, Arnie know the proper pronunciation of "Schadenfreude".

Among the G7 list used in the OECD report, I'd say the US and Italy are now also certainly 'smack in recession', if not depression, while France, Germany and Japan will soon follow. That leaves only Canada, which gets a ridiculously high 2% growth number for Q4, but will see revenues plunge along with oil prices, as well as the US economic downfall. Canada’s rescession: Q1 2009 at the latest.

For the Americans, we can add that with stimulus checks gone and spent, US consumer spending will nosedive. And with the US dollar rising, American exports, the one thing that was up until recently, will dive right along.

Among countries not on the OECD list, Korea, Australia and Thailand -just to name a few- are in deep doodoo, and Spain is covered in quicksand, as is the entire Club Med region: we may not see much news from Greece and Portugal, but that’s not because they are doing so well; it’s because they're not.

PS: a little note on Fannie and Freddie, who escape the headlines today: their preferred stock was cut by Fitch this morning. Their debt is now estimated at $9 trillion, while the whole US public debt stands at $5.5 trillion. $9 trillion in debt, with only $5.3 trillion in mortgages insured, and a market cap of just over $10 billion. Just to let you think for a moment about the potential effects of nationalization.

http://theautomaticearth.blogspot.com/2008/09/debt-rattle-september-2-2008.html

[Demeter]

61. "At Least Arnie Knows the Proper Pronounciation of "Schadenfreude""

Hasta la vista, baby!

[Dr.Phool]

5. RPT-GLOBAL MARKETS-US dollar jumps on oil slide, political risk

By Kevin Plumberg

HONG KONG, Sept 2 (Reuters) - The U.S. dollar hit a 7-month high against the euro on Tuesday, boosted by a slide in oil prices to below $109 after a storm threat weakened and rife political and economic uncertainty in Thailand and South Korea.

Asian stocks fell to a 2-year low, led by sharp losses in Japanese stocks, where confusion reigned about the country's leadership. European stocks opened weaker.

Deteriorating economic growth prospects and public unrest in parts of Asia continued to take a toll on the region's political establishment. Japan's unpopular prime minister resigned late on Monday and a state of emergency was declared in Bangkok, which weighed on the baht currency.

The South Korean won dropped to a 4-year low against the dollar, even though the government warned it had the ability to stem the currency weakness, with investors concerned about a flight of capital from Asia's fourth-largest economy. Equity markets fell to an 18-month low amid talk of a looming crisis. Continued...

http://www.reuters.com/article/marketsNews/idINSP14000020080902?rpc=44

[Ghost Dog]

11. Asian Stocks Decline for Second Day; Cnooc, Bangkok Bank Drop

Sept. 2 (Bloomberg) -- Asian stocks declined for a second day, dragging the region's benchmark index to the lowest in more than two years, after crude oil prices slumped and on signs of political turmoil in Japan and Thailand.

Inpex Holdings Inc., Japan's biggest oil explorer, and Cnooc Ltd. both dropped more than 5 percent. Canon Inc. lost 2.7 percent in Tokyo as Japan's Prime Minister Yasuo Fukuda resigned after less than a year in office. Bangkok Bank Pcl retreated 4.3 percent after Prime Minister Samak Sundaravej declared a state of emergency. Woori Finance Holdings Co. fell 6.3 percent as South Korea's government failed to allay fears of an economic slowdown.

``It's been a painful last couple of months,'' said Ivan Leung, Hong Kong-based chief investment strategist at JPMorgan Private Bank, which oversees $400 billion in assets globally. ``The economic uncertainty means there'll be massive pressure on commodity stocks in the short term.''

The MSCI Asia Pacific Index declined 1.3 percent to 121.09 as of 5:15 p.m. in Tokyo, set for its lowest close since July 24, 2006. The measure lost 2.1 percent yesterday and has tumbled 23 percent this year as global growth slowed and the world's largest financial companies reported credit-related writedowns and losses of more than $500 billion.

Japan's Nikkei 225 Stock Average fell 1.8 percent to 12,609.47, the lowest since March 31. Thailand's SET Index slumped 2.4 percent, while South Korea's Kospi index lost 0.5 percent, extending yesterday's 4.1 percent drop.

Australia's S&P/ASX 200 Index erased gains of as much as 1.2 percent after the central bank cut its benchmark interest rate for the first time since 2001. Most stock indexes fell in Asia.

...

Thailand's SET Index dropped to the lowest since Feb. 1, 2007 after the prime minister declared a state of emergency following clashes in Bangkok between pro- and anti-government factions that left one dead and 43 injured.

...

The Kospi index yesterday lost 4.1 percent and the won weakened below 1,100 a dollar for the first time in almost four years on concern Asia's fourth-biggest economy will weaken. The won fell to its weakest since 2005 today.

`Teetering' Economies

Stock and currency declines prompted Vice Finance Minister Kim Dong Soo to say that the nation will take ``stern action'' to arrest the slump in the won.

``Korea is considered as a global, cyclical economy and as the world economies are teetering toward a recession scenario, that causes concern for investors,'' said Khiem Do, who helps oversee about $11 billion of Asian equities at Baring Asset Management (Asia) Ltd. in Hong Kong. ``We have been underweight Korea in our regional funds.''

...

Hon Hai, which makes iPods for Apple Inc. and Wii game consoles for Nintendo Co., fell 5.4 percent to NT$141. UBS analysts cut their recommendation to ``neutral'' from ``buy'' after Hon Hai said on Aug. 29 that second-quarter profit slipped 24 percent, its first decline in seven years.

/... http://www.bloomberg.com/apps/news?pid=20601080&sid=aJ84vUSIHbrI&refer=asia

[Ghost Dog]

12. BOJ chief says global slowdown a needed adjustment

NAGOYA, Japan, Sept 2 (Reuters) - A slowdown in the world economy is a part of necessary adjustment to achieve sustainable growth and stability in resource prices in the future, Bank of Japan Governor Masaaki Shirakawa said on Tuesday.

Once the world's economy has gone through such a process, the Japanese economy will return to a moderate growth path from the current stagnation, Shirakawa said.

"The world's economy is in a transitional phase to more sustainable growth. Although it's painful to every country ... a certain pace of adjustment in the world economy seems necessary," he told business leaders in Nagoya, central Japan.

/... http://www.reuters.com/article/marketsNews/idINT8473220080902?rpc=44 (Tell it like it is).

[Ghost Dog]

13. Europe economy hardhit, Britain shrinking, US feeble -OECD

PARIS, Sept 2 (Reuters) - Europe's economy is slowing harder than predicted and Britain is nearer recession than the other big countries of a region where the economy is close to flat on its back, according to OECD forecasts published on Tuesday.

The U.S. economy, where the current economic downturn in the industrialised world began, did better in the second quarter but is also seriously weakened by a housing downturn that is still unfolding, the Organisation for Economic Co-operation and Development said.

"Financial market turmoil, housing market downturns and high commodity prices continue to bear down on global growth while at the same time evolving rapidly," the Paris-based agency, one of the world's main public forecasters, said in a statement.

"OECD short-term forecasting models point to weak activity through the end of the year," said the OECD, which nonetheless chose not to use the word 'recession' to describe the situation in any of the countries it spoke of.

The OECD raised its annual forecast for U.S. growth from one it had published in June, to 1.8 percent from 1.2 percent, while it cut a previous prediction for the euro zone to 1.3 percent from 1.7 percent, and for Japan to 1.2 percent from 1.7 percent.

...

For the second half of 2008, Britain was the only one of the G7 industrial powers forecast to contract in both the third and fourth quarters -- the general benchmark in economics being that a two consecutive quarters of shrinkage is a recession.

OECD chief economist Jorgen Elmeskov said that, recession or not, Britain was basically stagnating, mainland Europe was doing only marginally better and the United States was also looking sickly even if it got a mid-year lift from the pump-priming efforts of the government and central bank, which has cut interest rates.

"I think the distinction between being or not being in recession is a bit for the birds," Elmeskov told Reuters in an interview.

...

Elmeskov said that the basic message as far as the OECD was concerned was that the economy of the G7 club of industrialised nations was very weak.

"Continued financial turmoil appears to reflect increasingly signs of weakness in the real economy, itself partly a product of lower credit supply and asset prices," he said in a statement accompanying the new forecasts.

/Worth reading it all... http://www.reuters.com/article/marketsNews/idCAL254193520080902?rpc=44&sp=true

[Ghost Dog]

14. Crude fall lifts Europe shares; euro boosts autos

LONDON, Sept 2 (Reuters) - European shares rose early on Tuesday as a sharp fall in the oil price took the edge off inflation concerns and lifted airlines and travel stocks, while autos gained from a weakening euro.

At 0845 GMT, the FTSEurofirst 300 index of top European shares was 0.7 percent higher at 1,198.16, recovering from a low of 1,182.72 points.

...

Airline stocks gained on the lower oil price, with Lufthansa (LHAG.DE: Quote, Profile, Research, Stock Buzz) up 3 percent, British Airways (BAY.L: Quote, Profile, Research, Stock Buzz) up 5.2 percent and Air France KLM (AIRF.PA: Quote, Profile, Research, Stock Buzz) up 3 percent.

Travel operators were also helped by the lower oil price, Thomas Cook Group (TCG.L: Quote, Profile, Research, Stock Buzz) and Carnival CCCL.L both up over 5 percent.

Automobiles notched up strong gains, benefiting from a weaker euro. German car maker Daimler (DAIGn.DE: Quote, Profile, Research, Stock Buzz) ticked up 4.3 percent, while peer BMW (BMWG.DE: Quote, Profile, Research, Stock Buzz) rose 5 percent, and France's Renault (RENA.PA: Quote, Profile, Research, Stock Buzz) edged up 4.2 percent.

...

Across Europe, Britain's FTSE .FTSE rose 0.4 percent, Germany's DAX .GDAXI gained 1.1 percent, and France's CAC .FCHI rose 0.9 percent.

/... http://www.reuters.com/article/marketsNews/idCAL265471320080902?rpc=44&sp=true

[Ghost Dog]

15. Euro zone PPI jumps, lowers chance of any rate cut

BRUSSELS, Sept 2 (Reuters) - Euro zone producer prices jumped in July as oil prices hit a record high, an increase which is likely to worry the European Central Bank and reduce the chances of any near-term easing of interest rates.

The EU's statistics office said on Tuesday prices at factory gates in the 15 countries using the euro rose 1.1 percent month-on-month and 9.0 percent year-on-year -- an acceleration from the 8.0 percent annual growth in June and 7.1 percent in May.

Economists polled by Reuters had expected a 1.3 percent monthly rise and a 9.1 percent year-on-year increase.

But economists said that more importantly for the ECB, core producer prices, which exclude energy and construction, rose 0.5 percent month-on-month and 4.3 percent year-on-year.

"This will reinforce the ECB's concerns that inflationary pressures currently remain potent down the supply chain, and increased second round effects from persistently elevated energy and food prices are still a risk," said Howard Archer, economist at Global Insight.

...

The ECB aims to keep consumer price inflation below, but close to 2 percent, but it was 3.8 percent in August, down from 4.0 percent in July.

"While lower energy and commodity prices should increasingly feed through to bring inflation down, the significant rise in core producer prices in July reinforces belief that the ECB will not be cutting interest rates anytime soon, despite the growing risk that the euro zone is headed for recession," Archer said.

/... http://www.reuters.com/article/marketsNews/idINL268820920080902?rpc=44&sp=true

[ozymandius]

6. Market WrapUp

Stool Pigeons
BY BRIAN PRETTI

Bull markets are always a lot of fun. No question about it. But amidst all the high fiving and backslapping, especially among the Wall Street community, few stop to count the cards, if you will, during these periods and fully realize just how many support mechanisms to equity prices show up at the party to help levitate prices. In every bull market, there are many legs to the proverbial bull market stool. Yet in bear markets, I also believe too, few stop to think about how many of these legs to the greater price support stool are summarily pulled away, one leg at a time. After all, asset prices any point in time are essentially determined by the “weight” and direction of money. This applies to everything from equities to real estate. Human beings make similar emotional decisions, really regardless of asset class. I want to spend just a few minutes quickly covering a number of the “legs” to the equity market stool of the moment that have been and are being pulled out from under the market as we speak. No big mysteries. No magic thoughts that aren’t in plain sight anyway. Just a quick review of some of the components that essentially help drive that weight and movement of money equation.

CORPORATE EQUITY BUYBACKS

For now, we only have numbers through the first quarter of this year. It will be a few weeks until 2Q numbers hit the tape. Right to the point, first quarter 2008 data show us that corporate equity retirement is falling relative to the magnitude of buybacks over the last few years. (Negative equity issuance numbers represent equity retired for the period.) Please be aware that in the chart below, the 2008 number is annualized. Is what we see below yet another equity price support that is fading along with the dual influence of slowing corporate earnings growth and heightened inflationary pressures causing valuations to contract? You bet. For now, this reduction in equity retirement is being driven by a multiplicity of factors. First, the private equity industry is relatively dead in the water, related directly to funding issues, hence their ability to acquire public equity has been diminished greatly. But this is nothing new as the continued constriction in funding available to the private equity industry has been going on since last summer. The second driver is a slowdown in direct equity buybacks by corporations themselves, completely outside of M&A related equity retirement. Clearly a slowing in earnings is restricting free cash flow availability to firms. Free cash flow that could easily be used to retire equity. Secondly, a general tightening in the credit environment means that corporations must allocate their credit available with a bit sharper set of eyes. Both capital and credit availability have become quite the precious corporate assets at the moment. As you know, plenty of equity retirement over the last few years was indeed driven by debt financed buybacks. This is slowing. Stool leg number one is being seen partially pulled away below.

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

[UpInArms]

7. The Market and Presidents

You have to go to the link to see a wonderful java graph

http://www.realclearmarkets.com/charts/the_market_and_presidents-34.html

Chart Data	S&P 500 percent gain/loss 

JFK/LBJ		68 %
Nixon/Ford	4 %
Carter		33 %
Reagan		91 %
Bush I		57 %
Clinton		201 %
Bush II		-7 %

Recently, fluctating Gross Domestic Product numbers have sparked a debate about whether GDP accurately and adequately measures national economic performance. Another way of looking at economic performance is via the stock market. Above is the performance of the S&P 500 for presidential administrations going back to 1960.

[ozymandius]

8. Today's Reports

10:00 Construction Spending Jul
Briefing.com -0.3%
Consensus -0.4%
Prior -0.4%

10:00 ISM Index Aug
Briefing.com 50.2
Consensus 49.5
Prior 50.0

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

[UpInArms]

57. U.S. Aug. ISM manufacturing index 49.9% vs 50% in July

33. U.S. Aug. ISM new orders 48.3% vs 45.0% in July
10:01 AM ET, Sep 02, 2008

34. U.S. Aug. ISM manufacturing index just below 50% consensus
10:00 AM ET, Sep 02, 2008

35. U.S. Aug. ISM manufacturing index 49.9% vs 50% in July
10:00 AM ET, Sep 02, 2008

[UpInArms]

58. July Construction Spending @ -0.6% (a 7 year low)

http://www.reuters.com/article/bondsNews/idUSN0239498120080902

WASHINGTON, Sept 2 (Reuters) - U.S. construction spending fell a steeper-than-expected 0.6 percent in July as private home building reached a more than seven year low, a Commerce Department report showed on Tuesday.

Spending on construction in July fell to a seasonally adjusted annual rate of $1.084 trillion, the lowest since February.

However, spending for June was revised to an increase of 0.3 percent from the 0.4 percent decline originally reported. Analysts polled by Reuters before the report were expecting a 0.4 percent decrease in construction spending in July from June's initial reading.

Private home building was off 2.3 percent in July, the 16th consecutive decrease, bringing private residential construction to the lowest level since March 2001.

...more...

[Dr.Phool]

9. Oil falls to $108 as Gustav fades

By Jane Merriman

LONDON (Reuters) - Oil slid to around $108 a barrel on Tuesday after early reports showed Hurricane Gustav had spared major U.S. Gulf oil facilities.

U.S. crude was $107.96 a barrel by 6:51 a.m. EDT, down $7.50 from Friday's close. It touched a session low of $105.46, its lowest since April 2.

A U.S. public holiday on Monday meant the New York Mercantile Exchange did not issue an official settlement price for U.S. crude on Monday.

London Brent crude was down $2.56 at $106.85.

As the hurricane was downgraded to a tropical storm, the market refocused on bearish factors including a softer global economy, weaker demand for oil and a stronger U.S. dollar.

These had already begun to drive prices down from a peak of $147.27 a barrel hit on July 11.

Hurricane Gustav, combined with Russia's conflict with Georgia, which disrupted flows of oil and gas, had halted the slide.

"If it were not for these threats, we would have been testing $100 already," said Mike Wittner of Societe Generale. Continued...

http://www.reuters.com/article/hotStocksNews/idUST14048520080902


Mission almost accomplished. Getting closer to that $100 before the election mark.

[Roland99]

20. Oil at $106.63... RBOB Gas down $0.22/gal to $2.63... DJIA fut. up 123

[Hugin]

28. I'm calling it the...

"Obama Rally".

Sure, it's probably just cash dislodged from the oil/gold bubbles pushing into the security of the Stock Market...
Hahaha! Did I just say that? It's indeed a crazy world. :crazy:

Anyhow, I'd like to think it's something different. :D

[Demeter]

33. The Obama Rally Is Scheduled for March of 2009

It's hard to get it off the ground before the man and his posse are in office.

[ozymandius]

10. Oil falls as global demand concerns resurface

Oil prices tumbled below $108 a barrel Tuesday — down nearly $8 from Friday's close before the U.S. Labor Day weekend — as investors shifted their focus to slowing global demand after worries about Hurricane Gustav subsided.

By midday in Europe, light, sweet crude for October delivery was down $7.85 a barrel to $107.61 in electronic trading on the New York Mercantile Exchange. Earlier in the session it had dropped as low as $105.46.

On Friday, the contract settled at $115.46 a barrel as Gustav approached the U.S. Gulf coast, a key region for oil drilling and refining. But traders were relieved that Gustav weakened as it neared the offshore oil rigs and Louisiana refineries, and appeared to have caused less damage than expected in New Orleans and surrounding areas.

Traders quickly turned their attention to slowing global economic growth, speculating that will dampen demand for crude oil, even in developing countries such as China and India.

...

In other Nymex trading, heating oil futures fell 20.8 cents to $3.9839 a gallon, while gasoline prices lost 21.63 cents to $2.6379 a gallon. Natural gas for October delivery fell 68.7 cents to $7.256 per 1,000 cubic feet.

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

[Ghost Dog]

17. Gold falls more than 2 percent on oil, dollar

Tue Sep 2, 2008 7:35am EDT

LONDON (Reuters) - Gold dropped over two percent towards $800 an ounce on Tuesday, after a steep drop in oil prices and a rally in the dollar reduced the precious metal's appeal.

Platinum and palladium also fell heavily, losing three and five percent respectively due to poor demand and the dollar's strength.

Gold fell to a low of $800.50 an ounce from $817.15/818.75 an ounce late in London, before recovering slightly to $805.00/806.00 an ounce at 6:23 a.m. EDT.

"The reverse correlation between the dollar's recovery against the euro and the gold price has been quite impressive lately," said Standard Chartered analyst Daniel Smith.

"Gold investors are watching the oil price very closely and with oil coming down, prices have come off."

/... http://www.reuters.com/article/hotStocksNews/idUSSP18515620080902?rpc=401&

Metals complex falling more now...

[AnneD]

21. Morning Marketeers........

:donut: and lurkers. Well, here it is. My daughter made it to California and registered herself. She called me last night and forgot the time difference (after midnight our time), but when she remembered-she wanted to be the first to wish me a happy birthday. She sounded very happy. She finally opened her footlocker. She said it had everything in it that she needed. In fact she was going to enjoy some of the Raman noodles before she went to bed and gee Mom,..."it was like you were reading my mind...everything I needed was in there, popcorn, Raman, tea, coffee, Red Bull, a power strip, and even a can opener. I'll call and e-mail you a lot this week..No I don't mind-you're one of the cool moms...I promise I'll let you know how I did in my advanced placement tests-music theory is a piece of cake (this was the child that railed and cried during the first semester of music theory when I put my foot down)....I want to test out in several other areas too...I'll call Grandma and Dad too but I wanted to talk to you first...It's so beautiful, the weather is great...Gee Mom, I can't wait til you come up here and visit...."

She has a Koren roommate and a Japanese American roommate and both a cartoonists. They should be quite. She is buying a dorm fridge from the guy that she car pooled with-he's living off campus.

So here I am, hubby out of town visiting his sister, my baby's left the nest....What to do what to do. Think I might visit a local pub on the way home and hoist a pint. It's been a good year.

And if we win in November...it will be an even better year. If I were half superstitious, I'd say God was trying to tell us something.

Happy hunting and watch out for the bears.

[Ghost Dog]

22. Happy birthday AnneD.

Sure sounds like your kid picked up some real good 'family values' from her mom, and will soon need no coop. :hug:

[TalkingDog]

23. Happy day! You are 20? Right?

[AnneD]

29. How did you ever guess.....

:rofl: When my daughter was little she asked my age. I was truthful, but she looked so hurt that she wasn't older...so I was a year younger than her til first grade. Then, I became 5 years older than her. By the time third grade rolled around...the gig was up-but she had to figure it out. She eventually did.:eyes: Mom celebrates the anniversary of her 29th birthday. Sound good to me.

I was out pounding nails at a Habitat for Humanity site yesterday. THAT was a lot of fun. I had some friends call me and wish me well and check on my daughter's progress, which was sweet of them. The kids had a nice uneventful trip and that is birthday gift enough for me. I am looking forward to that pint tonight.:toast:

[Dr.Phool]

30. Did the chimp bring you a birthday cake?

Happy Birthday.

Here's wishes for many more.

:toast: :party: :toast:

[Demeter]

34. Happy Happy, AnneD!

I belong to the Jack Benny school of age: 39 forever!

[Karenina]

25. Happy Birthday, AnneD!!!

:party: Congratulations!!! :toast: :party:

[Hugin]

26. Morning AnneD...

:hangover:

Oh, YEAH!

HAPPY BIRTHDAY! :party:

[Roland99]

39. Huzzah to the 'cool mom's bday!

[MsLeopard]

59. Happy Birthday AnneD

Best wishes!

[Tandalayo_Scheisskopf]

24. Wheee!

I love it when the energy market starts to track Dear Leader's approval ratings:

CLV08.NYM Crude Oil Oct 08 108.24 10:33am ET Down 2.98 (2.68%)<--==1.
HOV08.NYM Heating Oil Oct 08 3.017 10:33am ET Down 0.067 (2.17%)<--==2.
NGV08.NYM Natural Gas Oct 08 7.448 10:33am ET Down 0.052 (0.69%)<--==3.
PNV08.NYM Propane Gas Oct 08 1.74 9:25am ET 0.00 (0.00%)
RBV08.NYM RBOB Gasoline Oct 08 2.6864 10:33am ET Down 0.0616 (2.24%)<--==4.

1. Will it break $100 this week? I would think next week, if trends hold. Of course, the super-guerillas in Nigeria or some other convenient thingy might "surprisingly" occur.

2. That also encompasses Diesel Fuel, and they have been trying as hard as they can to keep that price up above 3. Oh well, sucks to be them. Look for a sudden and "unexpected" supply shortage.

3. Around here, a lot of the electricity is generated with NG. The generating utilities and suppliers have been petitioning the states for rate hikes based upon NG costs. Of course, many of them are reporting the highest levels of profitability in their histories. Funny how you'll have that. Another data point in favor of energy deregulation as an Epic Fail for consumers.

4. P-Lummet. Definitely getting into the below $3.00 at the pump level. Of course, I am sure that will happen RSN.

[Hugin]

27. And all without a single drop of oil from...

ANWR.

Gee-willikers!

[Demeter]

35. That 200 Point pump in the Morning Really Got It Off to a Start

Too bad it isn't holding....Was it just for Gustave, or just for the RNC? Or both? Or something else entirely that hasn't come to our attention yet, or....:crazy: :nuke: :tinfoilhat: :hide:

[Demeter]

36. I've Got It! I've Got It!

Today's theme, in honor of that great dice-rolling fool, John McCain, is:



They call you Lady Luck.
But there is room for doubt
At times you have a very unladylike way of running out
You're on this a date with me
The pickings have been lush
And yet before this evening is over you might give me the brush
You might forget your manners
You might refuse to stay and So the best that I can do is pray.

Luck be a lady tonight
Luck be a lady tonight
Luck if you've ever been a lady to begin with
Luck be a lady tonight.

Luck let a gentleman see
How nice a dame you can be
I've seen the way you've treated other guys you've been with
Luck be a lady with me.

A lady doesn't leave her escort
It isn't fair, it isn't nice
A lady doesn't wander all over the room
And blow on some other guy's dice.
So let's keep the party polite
Never get out of my sight
Stick with me baby, I'm the fellow you came in with
Luck be a lady
Luck be a lady
Luck be a lady tonight.

Luck be a lady tonight.
Luck be a lady tonight.
Luck, if you've ever been a lady to begin with
Luck be a lady tonight.

Luck let a gentleman see

Luck let a gentleman see

How nice a dame you can be

How nice a dame you can be

I know the way you've treated other guys you've been with

Luck me a lady, a lady, be a lady with me.

Luck be a lady with me

A Lady wouldn't flirt with strangers
She'd have a heart, she'd have a soul
A lady wouldn't make little snake eyes at me
When I've got my life on this roll.

Roll 'em, roll 'em, roll 'em, snake eyes
Roll 'em, roll 'em, roll 'em!

So let's keep the party polite

Let's keep the party polite

Never get out of my sight

CRAPSHOTERS

Never get out of my sight.
Stick here, baby, stick here, baby.

Stick with me, baby, I'm the fellow you came in with
Luck be a lady

Luck be a lady

Luck be a lady tonight.

Coming out, coming out, coming out
Right!

[TalkingDog]

37. Nice

too bad the markets started throwing snake eyes

[AnneD]

38. Bitching.....

:thumbsup: Frankie adds class to any situation.

[Roland99]

40. Dow -57. Near 300pt drop from today's peak

but the fundamentals are strong?

[Dr.Phool]

41. Maybe it's the fundamentalists?

Call it the Palin effect. Destroyed government stocks and fire and brimstone futures can only take you so far.

[Pale Blue Dot]

44. Palin in combination with DemReadingDU's post #18 has me a little terrified.

I haven't been around much today to see the news, but could there be concern on Wall Street that McCain has botched the election - meaning that the Bush administration may let the whole thing collapse now and declare martial law, a la The Shock Doctrine?

That's my biggest fear, and it's the only thing keeping me from fully enjoying McCain's total collapse.

[DemReadingDU]

55. Here's a video: The Playbook

After watching this video, I am truly frightened. Finnfan, I too sense this collapse is coming sooner than later.

8/28/08 A four quarter strategy for orchestrating an economic collapse. A review of plays from the PPT and investment bank playbook, specifically, how they plan to to turn your money into their money.

The Playbook
http://www.youtube.com/watch?v=BNlZ3W-PejA


Here's another video

1929 Stock Market Crash
http://www.youtube.com/watch?v=TQUcoSy1yMA

[DemReadingDU]

43. Ok, so what does the polictical toon say today?

:shrug:

[Hugin]

45. I was wondering that myself.

Whatever it is... Looks dangerous.

Stilts and roller-skates.

Something Mom would be yelling, "No! Wait! Stop! Don't!" out the window at me, if I had tried it. I'm sure.

Must be an expression I'm not familiar with.

:shrug:

[DemReadingDU]

46. I asked my spouse, a native Buckeye, and he didn't know either

:eyes:

[Hugin]

47. Ohhh... No, I'm still not sure I understand.

I don't feel so bad. Bugs Bunny didn't get it when Elmer Fudd asked the riddle either.

From the comments section over at Toles area of the WashingtonPost.com site:

"gary4books wrote:
I got to give Mr. Toles credit. If you are going to steal a line make sure it is from a good source.

Elmer asks Bugs "Why is the state of Ohio different?", Bugs answers, "I give up, Mr. Fudd," and Elmer laughs "Because it's HIGH in the middle and ROUND on both ends!"

What's Up Doc? is a 1949 Looney Tunes cartoon directed by Robert McKimson and released by Warner Bros. Pictures in 1950.

Now if one wants to know what it means, that is above my pay grade. I don't have a clue.
9/2/2008 5:16 AM EDT"

http://www.washingtonpost.com/wp-srv/opinions/cartoonsandvideos/toles_comments.html?name=Toles&type=c&date=

___________________________________________________________

So, I'm guessing Toles is saying Ohio is going to be as difficult as rollerskating on stilts over mud.

[AnneD]

48. Pickens: OPEC unlikely to let oil fall much more

Oil prices are unlikely to drop below $100 a barrel because OPEC will cut production to support the price, billionaire hedge-fund manager Boone Pickens told CNBC today.

"OPEC likes it up here," Pickens said in a televised interview from the New York Mercantile Exchange. "I think they'll support it and cut production."

The 13 members of the Organization of Petroleum Exporting Countries meet Sept. 9 in Vienna to review production targets.

Oil futures dropped to a five-month low on the Nymex as energy companies prepared to resume output at platforms in the Gulf of Mexico closed by Hurricane Gustav. Crude oil for October delivery fell $6.42, or 5.6 percent, to $109.04 a barrel at 1:09 p.m. Futures are down 26 percent from July's record $147.27.

Today's move "was a little heavier than I thought, but I figured it would go down," Pickens said. "It's the attitude of the market, and a little bit of news, bad or good, just takes us down further."

more.....

http://www.chron.com/disp/story.mpl/business/5979250.html

[depakid]

51. If that heppened, it would get in the way of Pickens' new scams

[AnneD]

54. Na....

Means he'll have to work harder to pull off his next scam.

[AnneD]

49. The "Real Economic Numbers"......

Remittances to Mexico take sharpest drop on record
MEXICO CITY — The amount of money Mexicans sent home suffered its sharpest drop on record in July as the U.S. economy slowed and the dollar fell, Mexico's central bank reported Monday.

Remittances — Mexico's second-largest legal source of foreign income after oil — dropped by 6.9 percent in July compared with the year before.

"This is the sharpest drop we have seen," said Jesus Cervantes, director of economic measurement for Mexico's central bank. The worst previous year-over-year monthly decline was 6.3 percent in January.

Cervantes said that more than 20 percent of Mexican migrants work in construction in the United States, a sector hit particularly hard by the U.S. mortgage crisis. "Basically, the job situation for Mexican migrants in the United States has become complicated," he said.

http://www.chron.com/disp/story.mpl/business/5978127.html#

If THEY can't find a job for dirt wages and send something home....the shit is already hitting the fan.

[Dr.Phool]

63. In Dade City, Florida, here in Pasco County, home to a lot of immigrants.

The St. Pete Crimes reported on Sunday, that one-way bus ticket sales to Mexico are way up. It used to be the buses were filled only on week-ends, and a lot of round trip tickets.

Now the buses are filled every day of the week, and almost all are one way tickets.

[AnneD]

50. Report: Workers worse off on pay, employment

updated 11:22 p.m. CT, Sun., Aug. 31, 2008
NEW YORK - This Labor Day finds workers in worse shape than they’ve been in years, according to a scorecard released Monday by Rutgers University.

In its first national labor scorecard, the Rutgers School of Management and Labor Relations said more than 10 percent of Americans are unemployed, discouraged from seeking work or underemployed. That is a nearly 25-percent increase from one year earlier.

Professor Douglas Kruse, a labor economist who created the scorecard, said a sharp decline in the number of Americans able to find full-time jobs, along with growing consumer debt and health care costs, were causes for concern.

“But there are some bright spots long term,” Kruse said, including improvements in workplace safety, a small but growing percentage of employers offering support for childcare and employee wellness programs, and more Americans who are completely satisfied with their jobs.

more...
http://www.msnbc.msn.com/id/26485812/

[AnneD]

52. A Nightmare on Wall Street

LIKE a Hollywood monster that is impervious to bullets, the credit crisis refuses to lie down and die. The authorities have bombarded it with interest-rate reductions, tax cuts, special liquidity schemes and bank bail-outs, but still the creature lumbers forward, threatening new victims with every step. Global stockmarkets are suffering double-digit losses this year, and credit markets are once again gummed up.

For investors who cut their teeth in the 1980s and 1990s, the persistence of the crisis must be a surprise. Prompt action by central banks, after Black Monday in 1987 (when America's stockmarket fell by almost 23%), or following the collapse of Long-Term Capital Management, a hedge fund, in 1998, suggested it was always worthwhile to "buy on the dips".

Credit Crisis Finds New Victims

One reason why things are different this time is that there has been a double shock. On top of the decline in house prices and the associated drop in the prices of asset-backed securities, the markets have also had to face a surge in commodity prices. That has constrained central banks from easing monetary policy as much as they might have done, particularly in Britain and the euro zone. Even in America, rates might now perhaps be 1% (as they were in 2003) without the commodity boom.

In addition, the combination of the two shocks has created uncertainty about the direction of monetary and regulatory policy. Will the central banks be forced to "do a Turkey" and adjust their inflation targets upward (implicitly or explicitly) to reflect reality? Alternatively, will they crack down so hard on inflation that they force their economies into recession? And will the price of investment-bank rescues be a harsh new regulatory regime that restricts the scope for future credit (and economic) growth? In the face of all this uncertainty, investors can hardly be blamed for being cautious.

more....

http://www.cfo.com/article.cfm/12031159/?f=rsspage

a good read....

[AnneD]

53. The Death of the Credit Card Economy

The most revolutionary notion in commerce today is one of the oldest. If you want to buy something, you may actually have to pay for it. We are reverting from a "borrow and buy" economy to the "cash and carry" model of our grandparents.

The Olesons may have extended store credit to Ma and Pa Ingalls in Little House on the Prairie, but widespread consumer credit is a very recent phenomenon. It began in the 1920s, when expensive consumer durables—cars, refrigerators—were first produced in mass quantities. It wasn't until Bank of America began carpet-bombing California with credit-card applications in the 1960s that the debt wave started in earnest.

In the decades since, consumer credit became so pervasive that paying cash became passé. Want a new $32,530 Dodge Ram Crew pickup? Take a lease. Sick of your old house? Get a 100 percent mortgage and trade up. Face lift? Round-the-world cruise? New PC? Three-hundred dollar sushi dinner at Nobu? Whip out that plastic. It was this behavior—the endless willingness of lenders to lend and borrowers to borrow—that kept the consumer economy humming uninterrupted from the early 1990s, straight through the brief recession of 2001, until the credit meltdown of 2007.

more.....

http://www.slate.com/id/2198942/?from=rss

[DemReadingDU]

56. I see credit disappearing for businesses too

P.S. Happy Birthday!

:party:

[skoalyman]

60. me too seems like credit was used more in place of the jobs we bled out over the years

if they would bring back higher paying jobs we wouldn't be so reliant on credit as much
happy birthday too
:party: :party: :toast:

[AnneD]

62. I think it was used ...

to make up for the fact that wages really were flat.