STOCK MARKET WATCH, Thursday April 23

[ozymandius]

Source: du

STOCK MARKET WATCH, Thursday April 23, 2009

Bush Administration Officials Under Indictment = 2
Financial Sector Officials Under Indictment = 0
Financial Sector Officials In Prison = 2

AT THE CLOSING BELL ON April 22, 2009

Dow... 7,886.57 -82.99 (-1.05%)
Nasdaq... 1,646.12 +2.27 (+0.14%)
S&P 500... 843.55 -6.53 (-0.77%)
Gold future... 892.50 +9.80 (+1.10%)
30-Year Bond 3.83% +0.09 (+2.35%)
10-Yr Bond... 2.96% +0.06 (+2.14%)

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

Market Conditions During Trading Hours

GOLD, EURO, YEN, Loonie and Silver

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Read more: du

[ozymandius]

1. Market Observation

What's Behind Us Is No Longer Important
Paradigm Shift: Fundamental unperceived change in an individual's or a society's view of how things work
by JAIME E. CARRASCO CFP

The bears were out in full form two weeks ago in Toronto. Papa Bear himself, Eric Sprott, gathered Meredith Whitney of Meredith Whitney Advisory Group, Nouriel Roubini of New York University and Ian Gordon, author of The Long Wave Analyst newsletters, to tell us how the world we know is over and of how from the resulting Armageddon a new reality will reshape our world. As a friend commented, the message was so gloomy that if they had passed out guns we would have had another Georgetown Suicide in Toronto that night. As much as I would agree with many of these bearish projections, I must also warn you that it serves no productive purpose to dwell on the half empty bottle and fight the inevitable change. My experience in this business has taught me that the direction of the change does not matter as long you are positioned in a way to benefit from the change. The main obstacle that the average investor will have to overcome is the recognition that change is afoot so that he can reposition his assets in a beneficial tack as soon as possible. This is particularly important in view of the "rear view" mentality of the investment industry.

.....

On the political front the new US Administration does not seem to understand that you do not cure a hangover with more alcohol, or the fact that you do not make the fox the foreman of the chicken coop. As President of the Federal Bank of New York, Secretary Geithner would have been an integral player in developing the regulatory environment that got us in this mess, and we should not expect much change from him. Here is a man who was delinquent on his taxes for many years until he was offered the job. He denied in congress having any say on regulatory measures while at his post with FBNY which is highly unlikely regarding his position. In my opinion integrity is not part of his character. Furthermore, he has not even hired anybody for the 12 positions under him; he is doing it all himself. Look up Bill Moyer's interview of William Black, former S&L regulator, on You Tube to get a true picture of the banking regulatory environment and Mr. Geithner. Not only are we witnessing increasing concerns from outside the US but also internally. Look up Tea Party on You Tube and witness the increasing level of frustration being felt by American tax payers being asked to mortgage their unborn grandchildren for the sake of the financial institutions. Concerns are even being raised at the State level, as witnessed by Texas Governor, Rick Perry, backing a resolution affirming the sovereignty of the State as guaranteed under the 10th Amendment. As stated in the resolution, "our federal government has become oppressive in its size, its intrusion into the lives of our citizens, and its interference with the affairs of our state." Again, not a good sign for the $US.

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

[lostnotforgotten]

6. This Man Is Not Credible - He Is A Neocon Based On This Quote

"I urge you to read Atlas Shrugged written by Ayn Rand in 1957; she nailed it. Highly recommend it to anybody that wants to understand the economic and political environment the US is embarking on."

[ozymandius]

9. He's another reason I considered dropping the WrapUp.

He's written the WrapUp maybe four times so far. Already he's annoyed the shit out of me. Most among Financial Sense guest writer crowd trends toward the Ayn Rand nihilist wing of Libertarianism.

[Ghost Dog]

29. Reading that book does help one to understand

the Shruggers' mentality, though.

I'd recommend it, but not to children, on the ancient and very practical principle of "Know the Enemy".

Edit: I do certainly agree with this fairly poetic although anthropomorphic paragraph from the above wrapup (cryptograms included!) - understanding that human population/society and water and other environmental issues are largely subsumed under agriculture and energy:

"The years ahead can be best described by the two Chinese symbols which when used together make the word danger; crisis and opportunity. Three trends will greatly influence investment considerations during the next decade; the current financial mess, agriculture, and energy. It is essential to understand how they are interconnected in order to position your portfolios to benefit. I must also note that of these three themes only the current financial mess has an immediate solution, and that solution is inflation."

[tclambert]

39. These people don't keep up. Ayn Rand was proven wrong MATHEMATICALLY.

The game theory wing of math started becoming prominent about the time she was writing. Albert Tucker's Prisoner's Dilemma, the Snow Bank Game, and the work of John Nash proved her core assertions were incorrect. John Nash was the subject of the movie "A Beautiful Mind." His big breakthrough in the bar was: "Adam Smith needs revision!" That was in response to his colleague saying, "According to Adam Smith, if every man acts in his own self interest, it will be best for all." Studies of traffic flow in the real world have repeatedly proven that selfish behavior leads to traffic jams and that a little selfless cooperation can alleviate them.

Rand was basing her economic theories on Adam Smith. She can be forgiven for not knowing what was on the cutting edge of mathematical thinking at the time. But Game Theory is commonly used in economics these days. The educated should know to not take Rand or Smith as holy writ.

[Demeter]

46. And Adam Smith was Talking About 17th century Markets

an entirely different kettle of fish from today's. His work became outdated even as he wrote it, for the Corporation was on the rise.

[Ghost Dog]

58. Also reading Peter Kropotkin is a healthy antidote. n/t

[amandabeech]

94. On the other hand, his paragraphs addressing agriculture and energy are worth reading.

I've been following those two issues for some time (I used to post frequently in the Energy & Environment forum here), and he is spot on.

We rely heavily on aging oil fields. Depletion on those fields is high, particularly the main Mexican field, although I think that net depletion is around 4-5%. Recently speculation beyond anything considered in the left-leaning energy community shot oil up to $150 and now, world recession has taken oil down to the $40-50. Once the world economy starts to recover, that price will go up. Perhaps there will be an interim balance point in the $80-100 range. That will still cause problems here and in many 3rd world countries.

Increasing population combined with stable or decreasing arable land and water supplies is not a recipe for a wonderful world. Don't forget, natural gas is the feed stock and energy source in the manufacture of the nitrogen fertilizer necessary for the level of current grain stocks, particularly corn (maize). There is very little nitrogen fertilizer made here--folks, a lot of it comes from the natgas powers of Russia and the middle east.

Eventually, energy and agriculture prices will be a major factor in overall economic activity.

This guy does sound like a right-winger in his final paragraphs, but his energy and agriculture ideas would fit in quite well here on DU.

[lostnotforgotten]

2. How Much Worse CanThings Get?

Article Here:

http://www.calculatedriskblog.com/2009/04/imf-global-synchronized-cliff-diving.html

[truthisfreedom]

5. The dunk box?

[ozymandius]

31. from the article

IMF: Global Synchronized Cliff Diving

From the IMF report: Global Prospects and Policies

The global economy is in a severe recession inflicted by a massive financial crisis and an acute loss of confidence. Wide-ranging and often unorthodox policy responses have made some progress in stabilizing financial markets but have not yet restored confidence nor arrested negative feedback between weakening activity and intense financial strains. While the rate of contraction is expected to moderate from the second quarter onward, global activity is projected to decline by 1.3 percent in 2009 as a whole before rising modestly during the course of 2010.

....

On page 11 is a note about Global Business Cycles:

In 2009, almost all the advanced economies are expected to be in recession. The degree of synchronicity of the current recession is the highest to date over the past 50 years. Although it is clearly driven by declines in activity in the advanced economies, recessions in a number of emerging and developing economies are contributing to its depth and synchronicity.

To summarize, the 2009 forecasts of economic activity, if realized, would qualify this year as the most severe global recession during the postwar period. Most indicators are expected to register sharper declines than in previous episodes of global recession. In addition to its severity, this global recession also qualifies as the most synchronized, as virtually all the advanced economies and many emerging and developing economies are in recession.

The forecasts re: real GDP are worth reading too.

[lostnotforgotten]

32. Translation - Don't Expect Improvement Anytime Soon

eom

[DemReadingDU]

41. very telling graphs

Yet some people believe the propaganda that recovery is soon, and the stock market always comes back. They don't actually to any thinking.

[burf]

42. Another item that

was reported last night on Bloomberg TV was the Chinese Overseas Shipping Co was canceling contracts for the building of new ships. My guess is this is more bad news that will not be reported. They also mentioned on how the Baltic Dry Index has been pretty flat lately.

[wordpix]

50. Mad Money Cramer's solution: buy stock in companies that pollute

Seriously, he said that last night on his Mad $ college tour at Ohio State and not one college student confronted him about it.

When corporate polluters get away with pollution-without-cleanup, they leave the mess to the taxpaying public to clean up while the corporate greedmongers get richer. I guess to Cramer, that's the beauty of capitalism.

:sarcasm: :puke:

[Demeter]

3. Excellent Cartoon, Ozy!

Top of the Morning to you!

Yesterday barely made it to 50F, it's 30F right now, and the weathermen predict 80F on Saturday. I think they're full of it.

Yes, the public is getting riled beyond the rather narrow confines of DU. The GOP can't even try to protect Wall St. (not that I'm certain they ever did. They supported deregulation and tax cuts because St. Ronnie told them to, not because they knew what they were doing, IMO.) For knowingly protecting the Rich, one has to turn the blame on Democrats...

[ozymandius]

7. Good morning, Demeter.

:donut: :donut: :donut:

The Republican party is looking for any leverage they can get. So seeing the GOP sharpening its pitchforks to skewer some bankers is not a surprise. If acting like a pirate would help them win elections then I'd wager Washington, D.C. would experience the biggest congregation of Long John Silver imitators ever.

We will see temperatures near 70 today. The weather has been a bit wild lately - even dropping into the 30s just last week.

[ozymandius]

4. Today's Reports

08:30 Initial Claims 04/18
Briefing.com 620K
Consensus 639K
Prior 610K

10:00 Existing Home Sales Mar
Briefing.com 4.70M
Consensus 4.65M
Prior 4.72M

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

[UpInArms]

71. US weekly initial jobless claims up 27K to 640K - last wk rev'd up 3k

26. US weekly initial jobless claims up 27K to 640K
8:30 AM ET, Apr 23, 2009

27. US 4-wk avg initial claims fall 4,250 to 646,750
8:30 AM ET, Apr 23, 2009

28. US ongoing claims up 93K to record 6.14M
8:30 AM ET, Apr 23, 2009

29. US 4-wk avg ongoing claims up 143K to record 5.94M
8:30 AM ET, Apr 23, 2009

[UpInArms]

81. Existing-home sales fall 3% in March

http://www.marketwatch.com/news/story/US-existing-home-sales-fall/story.aspx?guid=%7B7804993C%2DE499%2D46ED%2DB650%2D89F6E4840D69%7D

WASHINGTON (MarketWatch) -- Sales of existing homes and condos fell 3% in March to a seasonally adjusted annual rate of 4.57 million units, with distressed sales now accounting for half of all sales, a trade group reported Thursday.

Sales are down 7.1% in the past year, the National Association of Realtors said in its monthly sales report.

First-time buyers accounted for more than half of buyers in March, the group said. First-time buyers are eligible for a federal tax credit if they purchase a home this year and many states and municipalities also offer mortgage and other incentives.

Sales were weaker than the 4.63 million pace expected by economists surveyed by MarketWatch. February's sales pace was revised lower to 4.71 million from 4.72 million. Sales had risen 4.9%, sparking faint hopes in some quarters that the housing market might be recovering.

Median sales prices have fallen 12.4% in the past year, the group said Thursday. Distressed sales typically go for 20% less, the real estate trade group said.

...more...

[Ghost Dog]

8. Investors lift global stocks, look past banking worry

LONDON (Reuters) - Investors generally put aside recent worries about the world economy and banking industry woes on Thursday, sending global stocks higher and reversing safety flows into the Japanese yen.

Mixed earnings plagued European markets, however, with Credit Suisse (VTX:CSGN.VX - News) posting better-than-expected profits and engineering group ABB (VTX:ABBN.VX - News) missing forecasts and giving a cautious outlook.

Euro zone purchasing managers provided the latest "green shoots" data to suggest some economic recovery. They signaled stabilization in their sectors but also record job losses.

"It's another mixed bag," said Chris Hossain, senior sales manager at ODL Securities Ltd in a note.

"Only history will tell us if the doom-mongers are correct, but what can't be denied is that we haven't seen a wide-ranging bout of optimism spread across the investing public."

Globally, equities as measured by MSCI's benchmark (^MIWD00000PUS - News) were up 0.3 percent while its emerging market counterpart gained 0.8 percent.

The latter reflected an increasing belief among global investors that growth is likely to return sooner in many non-developed economies.

/... http://finance.yahoo.com/news/Investors-lift-global-stocks-rb-15007225.html?.v=4

[Ghost Dog]

11. Nikkei up 1.4 pct; Pioneer races ahead, autos gain

TOKYO, April 23 (Reuters) - Japan's Nikkei stock average rose 1.4 percent after early losses on Thursday, gaining ground as electronics makers rose on reports that Honda Motor Co (7267.T) plans to invest in electronics company Pioneer (6773.T).

Pioneer jumped 23.3 percent after a company source said Honda Motor Co was finalising plans to invest several billion yen in the struggling electronics maker.

"The market has become very sensitive to company news in the short-term, buying on good news and selling on bad," said Hiroaki Osakabe, a fund manager at Chibagin Asset Management. "Today, it's really half and half, with cars and techs up, while financials and trading houses are down."

The benchmark Nikkei .N225 gained 119.71 points to 8,847.01, while the broader Topix climbed 1.2 percent to 839.50.

Canon Inc (7751.T) rose 3.1 percent to 2,975 yen after the Nikkei business daily said that it was likely to beat analysts' estimates by reporting an operating profit for the latest quarter, and that it may lift its annual forecast by nearly 13 percent.

Car makers gained, buoyed by signs the U.S. market may have bottomed out. Honda rose 1.7 percent to 2,760 yen.

Toyota Motor Co (7203.T) climbed 3.5 percent to 3,890 yen after Goldman Sachs upgraded it to "buy" from "neutral" and raised its 12-month price target to 4,400 yen from 2,800 yen, citing the company's product range and potential for an increased share of the U.S. market.

/... http://www.reuters.com/article/marketsNews/idCAT21381320090423?rpc=44

[Ghost Dog]

19. BOJ Nishimura: must avoid monetising govt debt

TOKYO, April 23 (Reuters) - Bank of Japan Deputy Governor Kiyohiko Nishimura on Thursday said the central bank should avoid monetising government debt to maintain market confidence in the country's fiscal policy.

Nishimura said recent rises in long-term interest rates partly reflected the market view that the economy's sharp deterioration may be nearing an end.

/.. http://www.reuters.com/article/marketsNews/idINTKF10435020090423?rpc=44

[Demeter]

22. Japan reportedly to slash GDP outlook to 3% fall

http://www.marketwatch.com/news/story/story.aspx?guid={22287969-B2DF-4A46-ABCE-87C11D6AA8D8}&siteid=rss

LOS ANGELES (MarketWatch) -- Japan plans to cut its economic growth outlook down to a contraction of around 3% to reflect the global economic downturn, according to a Kyodo News report Tuesday citing government sources.

In December, the government projected zero growth in real gross domestic product for the year that began April 1, but it is making the rare move to revise the initial outlook to negative growth amid the continued U.S. economic downturn, the report said.

Japan's real GDP growth rate is expected to fall below zero for the second straight fiscal year, and the revised projection will be the worst real GDP growth rate since the end of World War II, going below the 1.5% contraction in fiscal 1998, it said. End of Story

[Ghost Dog]

13. Europe shares turn positive; commods, C.Suisse help

LONDON, April 23 (Reuters) - European stocks turned positive by mid-morning on Thursday as a rise in crude and metal prices supported commodity shares, while Credit Suisse (CSGN.VX) and Novartis (NOVN.VX) gained after results pleased investors.

At 0932 GMT, the FTSEurofirst 300 index of top European shares was up 0.2 percent at 796.51 points after falling as low as 787.56 points. It rose 1 percent in the previous session.

/.. http://www.reuters.com/article/marketsNews/idUKLN71998020090423?rpc=44

[Ghost Dog]

17. Credit Suisse flies above forecast on big trading gain

ZURICH - Credit Suisse's first-quarter net profit far exceeded forecasts thanks to surprisingly robust trading gains and healthy rich client inflows, making it upbeat about its future while other banks still struggle.

Credit Suisse <CSGN.VX> on Thursday posted a net profit of 2 billion Swiss francs after its investment bank recorded trading revenues of 4.9 billion Swiss francs, triggering a 5-percent share rally.

News that Switzerland's second-largest bank had swung back to profit after a record annual loss in 2008 adds to optimism about the banking sector sparked by forecast-beating results from Goldman Sachs <GS.N> and JP Morgan Chase <JPM.N> and contrasts with the problems still faced by Swiss rival UBS <UBSN.VX>.

"Credit Suisse was right not to disinvest in fixed income and equities trading as it recovered," said Alain Tchibozo, a Paris-based bank analyst with ING Wholesale Banking. "UBS and all those banks that have completely closed down certain segments could not benefit from this."

Shares in Credit Suisse were up 6.8 percent at 42.30 francs at 0703 GMT, outperforming the Dow Jones index of European banks <.SX7P>, which was down 0.91 percent.

"We remain optimistic about the prospects for Credit Suisse, particularly in the context of the overall industry," Chief Executive Brady Dougan said in a statement.

The bank continued to cut risky positions and was able to boost its capital base to a tier 1 ratio of 14.1 percent of risk-weighted assets, making it one of Europe's best capitalized banks with capital well above strict Swiss requirements.

Asset management remained unprofitable.

Analysts polled by Reuters had expected Credit Suisse to post a net profit of 948 million Swiss francs. Credit Suisse's bottom line beat the highest forecasts thanks to hefty trading profits and gains it made on its own debt.

ONE SHINES, THE OTHER STRUGGLES

Credit Suisse's net profit shone compared with a forecast of a 2 billion franc loss in the first quarter by larger Swiss competitor UBS <UBS.N>, which has been hit harder in the crisis and is still struggling to recover.

...

Credit Suisse reported 1.4 billion francs of writedowns as it cut its most illiquid assets by a further 31 percent and said its private banking division had net new inflows of 11.4 billion francs, an indication the bank is still attracting wealthy clients despite global pressure on Swiss bank secrecy.

...

Credit Suisse, which reports under U.S. Generally Accepted Accounting Principles , said it had not taken advantage of a new U.S. accounting rule that allows banks to mark to model certain illiquid assets.

It said it would use it from the second quarter but does not expect a significant impact on fair value from the rule.

Unlike UBS, Credit Suisse has managed to survive the crisis without state aid and was able to raise 10 billion Swiss francs from investors at the end of 2008 to boost its capital base.

...

It serves about 700,000 wealthy individuals globally, managing assets worth 646 billion francs at the end of 2008. It gathered 42.2 billion francs of new wealth management assets last year.

/... http://asia.news.yahoo.com/rtrs/20090423/tbs-business-us-creditsuisse-7318940.html

Plus ça change, donc.

[Dr.Phool]

43. "Healthy rich client inflows".

Rats deserting rats at UBS?

Too late fellas, They've already got your records.

[Ghost Dog]

55. Absolutely. One wonders who's with Goldmnan Sachs (Switzerland), also:

(Yes, I am attempting to spread this information around, for those not in the know) http://www2.goldmansachs.com/worldwide/switzerland/index.html

http://journals.democraticunderground.com/Ghost%20Dog/201

I'm expecting to see more interesting information emerging from the http://www.goldmansachs666.com/ site, also. Said http://www.goldmansachs666.com/ site being disapproved of by the subject of said http://www.goldmansachs666.com/ site.

[ozymandius]

10. Oil lingers below $49 as recovery hopes wane

SINGAPORE – Oil prices lingered below $49 a barrel Thursday in Asia as rising U.S. crude inventories and a stark demand forecast by the IMF doused investor optimism for a near-term recovery from the global recession.

Benchmark crude for June delivery rose 8 cents to $48.93 a barrel by late afternoon in Singapore in electronic trading on the New York Mercantile Exchange. The contract rose 30 cents Wednesday to settle at $48.85.

....

The Energy Information Administration said Wednesday that U.S. crude inventories for the week ended April 17 rose by 3.9 million barrels to the highest level since 1990. Analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos, expected a build of 3 million barrels.

Gasoline inventories rose by 800,000 barrels, which is 1 percent above year-earlier levels. Analysts expected stockpiles of the motor fuel to fall by 860,000 barrels.

....

In other Nymex trading, gasoline for May delivery fell 1.34 cents to $1.38 a gallon and heating oil slid 0.46 cent to $1.33 a gallon. Natural gas for May delivery dropped 1.9 cents to $3.51 per 1,000 cubic feet.

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

[wordpix]

51. amazing the thinking: $49/barrel won't fuel a recovery, whereas $149/barrel will

:crazy: how terrible people might be able to heat their homes and afford transportation now :sarcasm:

[Festivito]

12. Debt: 04/21/2009 11,193,459,542,379.92 (UP 4,077,024,147.17) (Mostly FICA.)

(Debt down .363B$, i.e. small amount, FICA made up most of the total. I think that things are about to become interesting, yet slowly.)

= Held by the Public + Intragovernmental(FICA)
= 6,898,703,339,762.18 + 4,294,756,202,617.74
DOWN 363,758,089.93 + UP 4,440,782,237.10

Source: Debt to the penny:
http://www.treasurydirect.gov/NP/BPDLogin?application=np

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 306-Million person America.
If every American, man, woman and child puts in $3.27 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.8, ABOUT TEN BUCKS for a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is the federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)

PERSONALIZED DEBT:
Every 14 seconds we net gain a another American, so at the end of the workday of this report, there should be 306,208,543 people in America.
http://www.census.gov/population/www/popclockus.html
Currently, each of these American's owe $36,555.02.
A family of three owes $109,665.06. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 22 reports in the last 30 to 32 days.
The average for the last 22 reports is 6,938,750,673.72.
The average for the last 30 days would be 5,088,417,160.73.
The average for the last 32 days would be 4,770,391,088.18.
There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 75 reports in 112 days of GWB's part of FY2009 averaging 8.03B$ per report, 5.38B$/day.
There were 63 reports in 91 days of Obama's part of FY2009 averaging 0.44B$ per report, 0.38B$/day so far.
There were 138 reports in 203 days of FY2009 averaging 8.47B$ per report, 5.76B$/day.

PROJECTION:
There are 1,370 days remaining in this Obama 1st term.
By that time the debt could be between 13.1 and 19.1T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
04/21/2009 11,193,459,542,379.92 BHO (UP 566,582,493,466.84 so far since Obama took office.)

Fiscal Year ends: Sep 30
Borrowed in FY1993: (Maybe later.)
Borrowed in FY1994: 281,261,026,873.94
Borrowed in FY1995: 281,232,990,696.07
Borrowed in FY1996: 250,828,038,426.34
Borrowed in FY1997: 188,335,072,261.61
Borrowed in FY1998: 113,046,997,500.28
Borrowed in FY1999: 130,077,892,735.81
Borrowed in FY2000: _17,907,308,253.43 Bill alone
Borrowed in FY2001: 133,285,202,313.20 Bill and George
Borrowed in FY2002: 420,772,553,397.10 All George
Borrowed in FY2003: 554,995,097,146.46
Borrowed in FY2004: 595,821,633,586.70
Borrowed in FY2005: 553,656,965,393.18
Borrowed in FY2006: 574,264,237,491.73
Borrowed in FY2007: 500,679,473,047.25
Borrowed in FY2008: 1,017,071,524,650.01
Borrowed in FY2009: 1,168,734,645,467.50 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
03/31/2009 +079,841,314,678.25 ------------**********
04/01/2009 -001,742,860,350.87 --
04/02/2009 +007,764,243,786.78 ------------*********
04/03/2009 +028,967,677,130.84 ------------**********
04/06/2009 +000,073,808,356.95 ------------******* Mon
04/07/2009 +000,123,552,400.07 ------------********
04/08/2009 +000,050,639,456.95 ------------*******
04/09/2009 +024,055,285,655.59 ------------**********
04/10/2009 +000,051,156,797.54 ------------*******
04/13/2009 +000,309,440,014.97 ------------******** Mon
04/14/2009 +000,167,862,523.71 ------------********
04/15/2009 +044,205,591,028.33 ------------**********
04/17/2009 -038,696,374,097.81 -
04/20/2009 +000,193,620,436.16 ------------******** Mon
04/21/2009 -000,363,758,089.93 ---

145,001,199,727.53 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,528,827,739,120.85 in last 215 days.
That's 1,529B$ in 215 days.
More than any year ever, including last year, and it's 150% of that highest year ever only in 215 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 215 DAYS NOT 365.

For a prettier and more explanatory view of our nation's debt:
http://www.brillig.com/debt_clock

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3843315&mesg_id=3843330

[Ghost Dog]

38. A touch on the tiller there, yes. You could be right. n/t

[Festivito]

105. Debt: 04/22/2009 11,191,057,364,056.82 (DOWN 2,402,178,323.10) (Mostly FICA.)

(Debt up .051B$, i.e. tiny amount, FICA made up most of it.)

= Held by the Public + Intragovernmental(FICA)
= 6,898,755,078,442.32 + 4,292,302,285,614.50
UP 51,738,680.14 + DOWN 2,453,917,003.24

Source: Debt to the penny:
http://www.treasurydirect.gov/NP/BPDLogin?application=np

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 306-Million person America.
If every American, man, woman and child puts in $3.27 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.8, ABOUT TEN BUCKS for a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is the federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)

PERSONALIZED DEBT:
Every 14 seconds we net gain a another American, so at the end of the workday of this report, there should be 306,214,715 people in America.
http://www.census.gov/population/www/popclockus.html
Currently, each of these American's owe $36,546.44.
A family of three owes $109,639.32. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 23 reports in the last 30 to 33 days.
The average for the last 23 reports is 6,532,623,326.03.
The average for the last 30 days would be 5,008,344,549.96.
The average for the last 33 days would be 4,553,040,499.96.
There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 75 reports in 112 days of GWB's part of FY2009 averaging 8.03B$ per report, 5.38B$/day.
There were 64 reports in 92 days of Obama's part of FY2009 averaging 0.36B$ per report, 0.34B$/day so far.
There were 139 reports in 204 days of FY2009 averaging 8.39B$ per report, 5.72B$/day.

PROJECTION:
There are 1,369 days remaining in this Obama 1st term.
By that time the debt could be between 13.1 and 19.0T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
04/22/2009 11,191,057,364,056.82 BHO (UP 564,180,315,143.74 so far since Obama took office.)

Fiscal Year ends: Sep 30
Borrowed in FY1993: (Maybe later.)
Borrowed in FY1994: 281,261,026,873.94
Borrowed in FY1995: 281,232,990,696.07
Borrowed in FY1996: 250,828,038,426.34
Borrowed in FY1997: 188,335,072,261.61
Borrowed in FY1998: 113,046,997,500.28
Borrowed in FY1999: 130,077,892,735.81
Borrowed in FY2000: _17,907,308,253.43 Bill alone
Borrowed in FY2001: 133,285,202,313.20 Bill and George
Borrowed in FY2002: 420,772,553,397.10 All George
Borrowed in FY2003: 554,995,097,146.46
Borrowed in FY2004: 595,821,633,586.70
Borrowed in FY2005: 553,656,965,393.18
Borrowed in FY2006: 574,264,237,491.73
Borrowed in FY2007: 500,679,473,047.25
Borrowed in FY2008: 1,017,071,524,650.01
Borrowed in FY2009: 1,166,332,467,144.40 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
04/01/2009 -001,742,860,350.87 --
04/02/2009 +007,764,243,786.78 ------------*********
04/03/2009 +028,967,677,130.84 ------------**********
04/06/2009 +000,073,808,356.95 ------------******* Mon
04/07/2009 +000,123,552,400.07 ------------********
04/08/2009 +000,050,639,456.95 ------------*******
04/09/2009 +024,055,285,655.59 ------------**********
04/10/2009 +000,051,156,797.54 ------------*******
04/13/2009 +000,309,440,014.97 ------------******** Mon
04/14/2009 +000,167,862,523.71 ------------********
04/15/2009 +044,205,591,028.33 ------------**********
04/17/2009 -038,696,374,097.81 -
04/20/2009 +000,193,620,436.16 ------------******** Mon
04/21/2009 -000,363,758,089.93 ---
04/22/2009 +000,051,738,680.14 ------------*******

65,211,623,729.42 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,526,425,560,797.75 in last 216 days.
That's 1,526B$ in 216 days.
More than any year ever, including last year, and it's 150% of that highest year ever only in 216 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 216 DAYS NOT 365.

For a prettier and more explanatory view of our nation's debt:
http://www.brillig.com/debt_clock

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3845160&mesg_id=3845181

[ozymandius]

14. Lewis testified that U.S. urged silence on Merrill deal: report

(Reuters) – Bank of America Corp Chief Executive Kenneth Lewis testified under oath that U.S. Federal Reserve Chairman Ben Bernanke and then-Treasury Secretary Henry Paulson pressured the bank to not discuss its plan to buy Merrill Lynch & Co, the Wall Street Journal said.

In a testimony before New York's attorney general Andrew Cuomo in February, Lewis told prosecutors that he believed Paulson and Bernanke were instructing him to keep silent about deepening financial difficulties at Merrill, which BofA acquired in January.

Lewis testified that the government wanted him to remain silent while the two sides negotiated government funding to help BofA absorb Merrill and its losses, the paper said, citing transcripts of the testimony.

A representative of Cuomo questioned Lewis about his failure to disclose Merrill's fourth-quarter losses, which eventually totaled $15.84 billion, according to the paper.

http://news.yahoo.com/s/nm/20090423/bs_nm/us_lewis_testimony

[Demeter]

15. AIG Mystery Trades - Who Knew?

http://brucekrasting.blogspot.com/2009/04/mystery-aig-trades-who-knew.html

I follow AIG stories. On March 11th I read an interesting piece regarding AIG in blog called Zero Hedge.

The essence of this blog was that AIG went to a number of big Street players and unwound significant amounts of outstanding CDS swaps. The suggestion was that these ‘unwinds’ were done at fire sale prices and that the banks involved got fat on the trades.

There were aspects to this story that I found to be very ‘plausible’. It occurred to me that if this were true it might give the bank stocks an opportunity for a dead cat bounce. I checked around with a few journalists and some friends in Town. Several had heard the same thing, but no one that I talked to could confirm it. I let it slide. Too bad for me, The BKX is up 50% since then.

This weekend, no less than the Barron, Alan Ableson brought up this story in his weekly column. Here are Mr. Ableson’s words:

As Zero Hedge explains, AIG, desperate to hit up the Treasury for more moola, decided to throw in the towel and unwind its considerable portfolio of default-credit protection. In the process, the badly impaired insurer, unwittingly or not, "gifted the major bank counterparties with trades which were egregiously profitable to the banks."

If Mr. Ableson is comfortable with this story then so am I. Unfortunately it does not matter any longer. The move in the BKX is over. I missed it. Now that the confirmation on this story is out, the market will finish the cycle and ‘sell on the news’.

Assume for the sake of discussion that the story is true. There is some related information. Mr. Liddy, the AIG CEO said before Congress in mid March, "The CDS book is at $1.6T, and it will take four more years to unwind." That struck me odd at the time. At one point the CDS book was reported to be as large at $2.7 trillion. Did Liddy confirm that as much as $1 trillion of the CDS book was eliminated?

In the absence of facts let me speculate. These large unwinds must have taken place early in the year. Probably January, possibly it started in December. If this took place it happened on direct orders from Washington. If my sense of timing is correct then Paulson was still involved. His role was transitional however. The decision makers on this had to have been Geithner, Bernanke and Summers. It is not possible that AIG would have done something this significant without the advice and consent of the Federal Reserve.

It is possibly that the DC foursome were looking at an AIG black hole. AIG was ‘too big to fail’ but its CDS book was sucking up huge amounts of liquidity. Potentially an amount greater than Congress was prepared to pay. A choice was made. The order to AIG was given: “Reduce the portfolio by 40%”.

One can imagine the conversations that must have taken place between AIG and its CDS counterparties:

AIG: “We need a price to close $150 billion of CDS on your books”

Counterparty: “Gulp. I will call back shortly with a very stinky price.”

If this story is true it will explain some of those mystery profits the banks have been reporting. There is a broader context in which this should be considered.

The credit markets have been contracting for nearly eighteen months now. The contractions have come in waves. Each wave has been more destructive then the last. It started with something relatively minor called Sub Prime loans. The subsequent waves caused by BST, FNM, FRE, LEH and AIG each caused another contraction of credit and an associate drop in equity values.

The CDS market facilitated the expansion of credit in the good times. CDS created the opportunity for low risk investors to fund high-risk pools of mortgages. Unwinding the large AIG CDS positions had to have a contractionary impact on the total market capacity to absorb credit risk. At its peak in 2007, the shadow banking system was $10 trillion. If it is correct that the AIG unwinds totaled as much as $1 trillion it would constitute a significant portion of the off balance sheet debt market. A contraction of this magnitude in a short period of time would, by itself, result in significant market volatility as the underling ‘risk’ is repositioned. Yet another wave.

If the AIG unwinds were responsible for the great ‘sucking’ noise of credit that we heard in January and February then it is also likely that the big swoon in equities prices during that period were a consequence as well. The move down in stocks during this period caused a drop in values of $2.5 Trillion in less than 60 days. No one factor was responsible for that decline. However, it is possible that an unintended consequence of the AIG unwind was that it caused/contributed to/accelerated the broad decline in global equity prices.

At this point there are a handful of people out there who have the answers on this. They know if this happened, when it happened, what assets were involved and how big this was. There are large group of folks, including Mr. Abelson, and myself that do not have these facts.

It makes sense that the Fed and Treasury keep some of their activities out of the public domain. Tipping their hand would just cost the taxpayers more money. At this point the deals are done. The quarter has passed. The story in Barrons makes it half public. The Fed and or Treasury should clarify the facts on this matter. I, for one, would like to know if our leaders in DC inadvertently triggered a 20% hiccup in the global equities markets.

[ozymandius]

23. This speculation makes a lot of sense.

The timing works out. The statements from Bernanke and Paulson also make sense in that they aggressively obfuscated details in AIG's counterparties like Goldman and BoA.

[Demeter]

27. I Know, That's Why It's So Frightening

they are all in collusion, and they really don't know or don't care what they do.

[DemReadingDU]

52. anything to keep the boat afloat

They don't want an implosion of the financial industry

[Demeter]

54. Then They are a day late and a dollar short

or rather, several years and several trillions...

[Ghost Dog]

76. For sure. IMHO. But "inadvertently", no way.

There were some percetible signals, I thought (and gambled a little late Feb/early March (in Asia and Europe)).

[ozymandius]

16. GM employees may get shutdown details this week

DETROIT – Thousands of GM workers could learn as early as Thursday that they will be idle for up to nine weeks this summer as the automaker's plants stop making all but its most popular cars and trucks.

The move is a result of slumping sales and growing inventories of unsold vehicles, but some analysts and dealers fear the plant closings could further scare car buyers already made nervous by talk of a GM bankruptcy.

General Motors Corp. is planning to temporarily close most of its U.S. factories for up to nine weeks, three people briefed on the plan said Wednesday. The exact dates of the closures are not known, but the people said they will occur around the normal two-week shutdown in July when changes are made from one model year to the next. None of the people wanted to be identified because workers have not yet been told of the shutdowns.

GM spokesman Chris Lee would not comment other than to say the company notifies employees before making any production cuts public. But UAW officials will likely raise questions about the move during meetings they have scheduled at several factories Thursday and Friday with plant managers and GM human resource officials to discuss production changes.

....

But the shutdown could be catastrophic to many auto parts suppliers that already are near bankruptcy due to previous production cuts. During the shutdown, suppliers couldn't ship parts to GM and would lose critical revenue.

http://news.yahoo.com/s/ap/20090423/ap_on_bi_ge/us_gm_factories

[tclambert]

40. Oh, yeah, suppliers. They will feel the ouch.

Employees may temporarily swell the numbers seeking unemployment benefits. The rumor is that's how GM expects the workers to make ends meet for the nine weeks.

GM intends to cut production by 170,000 cars. They hope to sell some of their stockpiled surplus and thereby retroactively get back to a level of production more closely matching market demand. But this will probably happen after the June 1 deadline. That makes everything uncertain.

[Demeter]

18. Why Self-Regulation of the Financial System Won’t Work, by Mark Thoma

http://moneywatch.bnet.com/economic-news/blog/blog-war/why-self-regulation-of-the-financial-system-wont-work/352/

I want to finish up by broadening the discussion beyond the regulation of hedge funds to the more general topic ofWhy Self-Regulation of the Financial System Won’t Work, by Mark Thoma how attitudes toward regulation have changed in recent years, how that helped to set the stage for the crisis we are in, and what we need to do to prevent it from happening again. In the process, I also want to take on Houman's point that regulators fell down on the job and let this crisis happen, so we cannot trust them in the future.

As I described in my first post, after decades and decades of instability in the 1800s and early 1900s, followed by the massive bank failures of the early 1930s, regulations were imposed to stabilize the banking system. The result was sixty years of calm in the financial sector. That's hardly a failure of regulation. It wasn't until the shadow banking system began growing outside of the regulatory umbrella that problems began to reemerge. A central theme of the posts this week has been that bringing about another decades long period of relative stability will require the regulatory umbrella to be extended to cover all firms within both the traditional and non-traditional (or shadow) banking system, hedge funds included.

I believe we made two regulatory mistakes that contributed to the present financial crisis. First, there was a push for deregulation beginning in the 1970s based upon the belief that markets are self-regulating - even to the extent of self-repairing market failures - and that caused us to go too far toward deregulation. Even the regulation that was left in place was, in many cases, not enforced vigorously, and there was little chance of new, substantial regulatory changes being put in place to match the changes in the financial marketplace brought about by rapid financial innovation. In some cases, deregulation was needed, but in many other cases the deregulation went much too far.

Second, we didn’t focus enough on macroeconomic stability. I think we came to believe that a large crash of the economy was extremely unlikely, particularly one driven by problems in the financial sector. Several factors were responsible for this. The transformative financial innovation of recent decades - particularly the slicing and dicing (securitization) of mortgages and other assets into many complex financial products - was supposed to distribute risk broadly and prevent collapse. We had the "Great Moderation" after the mid 1980s when the variability of output fell significantly and inflation stabilized at low levels, and this was widely attributed to the skill of policymakers and the deregulation of the economy. Because policy had improved, and because we believed the economy was more stable due to deregulation, we let our guard down. We continued to recognize that garden variety fluctuations in output were still possible, though we thought the Fed could mostly handle those, but big crashes were a thing of the past. Or so we thought.

Hopefully, we have been adequately reminded that large recessions can still happen, and that will motivate us to take the regulatory steps needed to bring more stability to the financial system. Some people argue that any new regulation needs to wait until the financial sector has re-stabilized to avoid creating another source of uncertainty, a view that has merit. But the will and hence our ability to impose new regulation tends to diminish when the economy recovers, and if we wait too long to get started, the opposition to any new regulation may carry the day and we'll fail to get the measures we need put into place. The time to start is now.

But what of the charge that regulators blew it and caused this crisis, and therefore we are foolish to rely upon them for stability in the future? First, as I've said, I don't think decades of stability is a failure by any definition, and the recent failure was driven by an ideological belief that markets are self-regulating and hence best left alone. Most markets can be left alone, but as Alan Greenspan has recently acknowledged, financial markets are not among them. Second, I believe the recent failure did not happen because regulators were incapable of doing better than they did, it was their belief in the self-healing power of markets - their belief that what just happened was next to impossible - that stopped them from intervening as needed. With different beliefs and a different framework for approaching the problem, the outcome is much different.

So I am not ready to throw up my hands and say this is too hard, either the private sector finds a way to take care of itself, or it doesn't get done at all. We have the capacity to learn from our mistakes, to drop ideologies and theoretical constructs that led us astray, and I have faith we will do just that (Alan Greenspan's conversion is a prime example). With comprehensive regulation to prevent the excesses that caused the problems we are having, with the flexibility for regulations to evolve as new innovations come to the financial marketplace, and with regulators who have learned the lessons of the past, we can look forward to another decades long period of stability. But if we fail to take the steps that are needed and rely too much on private markets to regulate themselves, we are setting ourselves up for this to happen again.

[Demeter]

20. Important Principles for a New Financial Regulatory System By Houman Shadab

http://moneywatch.bnet.com/economic-news/blog/blog-war/important-principles-for-a-new-financial-regulatory-system/355/

Now that the Wall Street we all once knew is over, the key question for financial regulators becomes how best to regulate the financial world of the future, especially in light of concerns about large risks to the system that Mark identifies. To answer that question, here are three principles that I believe regulators should keep in mind.
1. Small is beautiful

Regulators should embrace the fact that, going forward, smaller and more nimble financial services boutiques will increasingly provide some of the services provided by Wall Street. Right now, many smaller firms are taking employees and business from the investment banking and mergers and acquisitions units of the big banks.

Although these companies are often private and not as transparent as public companies, we needn’t worry. Private partnerships have their own style of governance that may be stronger than those of publicly listed financial corporations. For one thing, employees of these companies stand to lose more of their own money and therefore may be more responsible.

The beauty of these types of firms is that not only are they smaller, but that they also borrow less — meaning that they pose much less of a risk to the financial system that than the overleveraged big banks did.
2. Overdependence breeds disaster

Mark says that the interconnectedness of financial companies is a major danger because if one fails, losses will be felt throughout the economy. But interdependence is the real problem. Our economy became too dependent on banks to make loans and supply credit, so when they ran into trouble, we all did. To reduce overdependence on banks, regulators should help to facilitate the creation of nontraditional companies that make business and consumer loans. So long as they are properly regulated for safety and soundness, companies like Wal-Mart should be welcomed to the loan-making business as a way to reduce our dependence on traditional banks.

Another way to reduce dependence on banks is to encourage more peer-to-peer lending, which uses on-line networking to allow small loans to be made. Peer lenders have facilitated hundreds of millions in dollars in small loans and often at better rates than traditional banks or credit cards. Currently, this type of lending falls outside the traditional regulatory framework applicable to securities or to banks, and in November 2008 the SEC ordered one peer lending company to cease and desist its activities. Regulators should act to ensure that peer lending does not hurt small lender or borrowers, but they should act quickly as the need for small loans has probably never been greater than it is now.

3. Derivatives do work

A problem underlying the financial crisis was that banks could earn large fees from securitizing and selling mortgage-backed bonds without necessarily exposing themselves to risk. And because these bonds were labeled as “investment grade” by credit ratings agencies, investors were unduly attracted to them. Over time, these bonds were used not only to transfer risk, but to hide it.

Instead of transferring risk through securitization, risk can be transferred using non-exchange-traded derivatives. With buyers and sellers each exposed to risk for the life of the contract, each side has an incentive to be prudent. Derivatives also do not receive credit ratings and so don’t create an illusion of safety. As a result, the vast majority of derivatives obligations were met in recent years. By contrast, the securitization market nearly came to a complete halt, and toxic structured securities continue to plague banks.

Regulators should continue their productive role in encouraging derivatives market participants to increase transparency and improve other aspects of derivatives market stability. A more developed market for credit derivatives could also help investors better price bonds, including the type of structured bonds underlying the crisis. This process would be assisted, too, if regulators see to it that the role of credit rating agencies is diminished greatly so that parties don’t rely as much on structured securities to transfer risk.

[Demeter]

21. Two Blogs Above From the Blog Wars--See links!

[Tansy_Gold]

49. "Now that the Wall Street we all once knew is over" -- IDFTS

1. We didn't "all" know it.

2. It ain't over.

[ozymandius]

24. Credit companies brace for W.H. visit

Excerpt:

The CEOs from Visa, Mastercard, American Express and the credit card divisions at about a dozen of the largest banks will get their meeting Thursday, but it will be at the White House, and President Barack Obama and Treasury Secretary Timothy Geithner will join Summers as not-so-happy hosts.

On the Sunday show circuit last weekend, Summers made it clear that the administration wants to talk with the companies about high fees and predatory lending practices.

“If you are the chairman of Citibank, you don’t want your card guy going in there, because you know, having been there, that the companies will get the s—- beat out of them by the president and Summers,” a Republican credit card lobbyist told POLITICO. “You don’t meet with the president to talk about substance. You do that with lower-level guys at the Fed or Treasury — not with Geithner and Summers.”

The meeting is particularly ill-timed for the card industry. On Wednesday, the House Financial Services Committee approved legislation cracking down on credit card billing practices, frequently derided as abusive by consumer advocates. A bill has also passed the Senate Banking Committee but faces a tougher fight on the floor.

http://www.politico.com/news/stories/0409/21612.html

---

What say they? Credit card companies are going to get the shit beat out of them? That's just too bad. :nopity:

[ozymandius]

25. U.S. Stock Futures Advance as Apple, EBay Surpass Forecasts

April 23 (Bloomberg) -- U.S. stock futures rose after Apple Inc. and EBay Inc. topped analysts’ sales and profit estimates last quarter, fueling expectations a consumer-spending slowdown may have eased.

Apple, maker of the iPod, climbed 3.1 percent in Germany while EBay advanced 6.6 percent. United Parcel Service Inc., the world’s largest package-delivery company, and ConocoPhillips may be active before reporting earnings today. Investors will also be looking at home sales and jobless claims reports today for more signs on the state of the world’s largest economy.

June futures on the Standard & Poor’s 500 Index added 1 percent to 845.5 as of 10:54 a.m. in London. Dow Jones Industrial Average futures rose 0.9 percent to 7,884. Nasdaq-100 Index futures advanced 1.5 percent to 1,343.

http://www.bloomberg.com/apps/news?pid=20601103&sid=aKCdobsfS0LA&refer=news

[Demeter]

26. Student Loans: Default Rates Are Soaring

http://online.wsj.com/article/SB124027600001437467.html

As Job Market Tightens, Graduates Are Squeezed; the 'Forbearance' Option

By ANNE MARIE CHAKER

Defaults on student loans are skyrocketing amid a weak job market for graduates and steadily rising tuition costs.

According to new numbers from the U.S. Department of Education, default rates for federally guaranteed student loans are expected to reach 6.9% for fiscal year 2007. That's up from 4.6% two years earlier and would be the highest rate since 1998.

The situation is mirrored in the smaller private student-loan market. In 2008, SLM Corp. also known as Sallie Mae, wrote off 3.4% of its private loans that were already considered troubled, according to its latest annual report -- more than double the figure in 2006. Student Loan Corp., a unit of Citigroup Inc., wrote off 2.3% of those loans in 2008, compared with 1.5% a year earlier.
Getting Relief

Here are some options for student borrowers who find themselves in trouble:

* Forbearance. This allows borrowers to put payments on hold, though they are on the hook for the interest that accrues.
* Interest-only payments. Borrowers can defer other payments until a later date.
* Increase the borrowing period. Allows borrowers to lower their monthly payments.
...

Lenders say they are hearing more pleas for help as the unemployment rate worsens and debt levels soar among graduates.
...

Borrowers having trouble repaying their federally backed loans can call their lender to request that their payments be put on hold until they get back on their feet. Most types of federal loans qualify for "forbearance" -- meaning the borrower can suspend payments temporarily but is still on the hook for the interest that continues to build while payments are on hold, which is then amortized over the life of the loan.

Certain need-based loans qualify for "deferment," which means the government will cover any interest payments for a set period. Deferments and forbearances can each be used for a maximum of three years per loan.

There are fewer options for borrowers with private loans, which have soared in recent years as limits on federal borrowing failed to keep up with rising college costs. Students borrowed $19 billion in private loans in the 2007-2008 school year, six times the amount they borrowed a decade earlier, after factoring in inflation, according to the College Board, a New York-based nonprofit.

In the past, it was relatively easy to get a forbearance on a private loan, says Ms. Loonin. The lenders "gave these loans to a lot of people that couldn't afford them," she says. "To mask the problem, they kept giving forbearances." But as more borrowers are running into trouble, lenders are becoming stricter, she says.

Some major lenders, such as First Marblehead Corp. and J.P. Morgan Chase & Co., declined to say how many forbearances they've been granting. Others, including Wells Fargo & Co. and the nonprofit Vermont Student Assistance Corp., said they are granting more lately.

For private borrowers, finding what assistance programs are available is often a chore; information on Web sites can be sparse and hard to find. Here's how some private lenders are working with students who are having trouble paying back their loans:

Sallie Mae. The lending giant, which makes both federally backed and private loans, says it grants private borrowers forbearances in increments of up to three months, and may be extended several times, typically up to a total of 24 months. There's a forbearance fee of $50 per loan, up to a maximum of $150. Another option may be to extend the repayment period by several years, which in turn lessens monthly payments, though the minimum balance must be at least $20,000.

Key Corp. Key says it grants forbearances in six-month increments, with conditions depending on individual circumstances. For instance, someone struggling with a job loss may have greater need than someone else whose pay was cut. While some borrowers may qualify for a full forbearance, others may qualify only for reduced payments. Either way, Key says it doesn't charge any additional fees.

Student Loan Corp. Borrowers in trouble can make interest-only payments for a period of either two or four years. They might also qualify for a forbearance, generally up to a maximum of 12 months. There are no fees for either option.

Wells Fargo. Borrowers can apply for forbearance, granted "generally in cases of extreme financial hardship," a spokeswoman says. There are no fees, and length of time is based on individual circumstances.

Write to Anne Marie Chaker at [e-mail]

[ozymandius]

28. U.S. May Reveal Each Bank’s Capital Needs After Tests

http://www.bloomberg.com/apps/news?pid=20601103&sid=arbRCDskvGEI

The Obama administration may direct banks that are judged to be short of capital after stress tests to disclose how they are going to get additional funds when the government reveals the results on May 4, according to a person familiar with the matter.

The government would release a bank-by-bank assessment, while the lenders would say how they plan to shore up their finances.

Regulators conducting the stress tests are increasingly focusing on the quality of loans banks made after finding wide variations in underwriting standards.

[Demeter]

30. Right Wing Turns on Elizabeth Warren, Congressional Oversight Panel Head

http://www.nakedcapitalism.com/2009/04/right-wing-turns-on-elizabeth-warren.html

The move to clip the wings of TARP overseer Elizabeth Warren was predictiable. The fact that it took so long, and the angle is that she is anti-industry (as opposed to anti-industry-bad-behavior, a distinction that will hopefully be lost on the masses) and it took comparatively long to mount the salvo (Warren has been a critic of predatory lending for a long time, and hasn't been too happy with the Treasury's handling of the TARP since she first took an official look) suggests that attempts to find real dirt on her did not pan out.

Given that banks have an increasingly bad name in mainstream America, this effort to denigrate her may not stick. But the attempt to paint her as biased is nevertheless a nasty bit of work.

From Poltico (hat tip reader Matt).

While the bubbly and brilliant 59-year-old professor is a darling of Democrats, Warren has become the scourge of conservative Republicans, who question her panel’s exploration of more-liberal approaches such as nationalization and bank liquidation.

Financial services lobbyists, who’ve long disliked Warren for highlighting predatory lending and abusive credit card fees, argue that she’s using her post to push her own, anti-industry agenda.

“A number of people wonder if this is the new Warren commission or the congressional oversight panel,” said Wayne Abernathy, executive director for financial institutions policy at the American Bankers Association. “It’s looking more like the former than the latter.”....

“The role of congressional oversight is to ask the tough questions, to push back on the decisions, to request additional information and to recheck the numbers,” Warren said in an interview with POLITICO. “It’s our job to be cranky.”

But some of that crankiness has wormed its way into the panel itself. Two members, AFL-CIO associate council Damon Silvers and New York State Superintendent of Banks Richard Neiman, signed on to the tepid six-month review of the Troubled Asset Relief Program released by the group last month. The two other members - former Sen. John Sununu (R-N.H.) AND Republican Rep. Jeb Hensarling - voted against the entire report.

"The panel did not reach an agreement on either the economic assumptions underlying strategic choices or on the optimal strategy to pursue," wrote Sununu and Neiman, in a dissenting opinion that raised questions about the report.

The dissenters worried that the alternative approaches presented in the report, including nationalization, management changes and the liquidation of failed banks, implied that the banking system was insolvent and that the current plan was already a failure.

Warren says that the report is the product of interviews with dozens of experts across the political and intellectual spectrum.

“That majority report was based on an understanding that came from many different voices,” Warren said. “I think we write panel reports that reflect a broad spectrum of ideas.”

The lack of consensus has fueled Republican criticisms that Warren is reaching far beyond the original intent of the panel by suggesting regulatory changes.

In private conversations, even some Democrats complain that Warren’s role as a constant Cassandra could undermine already tenuous public support for the bank, auto industry and other financial rescue programs.

The panel specializes in calculating the kinds of scary numbers that the Obama administration would rather not broadcast too loudly.

Like $4 trillion. That’s the amount the Treasury Department, Federal Reserve and Federal Deposit Insurance Corp. have spent on financial stability efforts so far, according to the panel’s most recent report.

And that huge number may not address some smaller — but no less worrisome — statistics, like the 29.1 percent that national housing prices have fallen since their peak in the second quarter of 2006, according to the report.

Warren, who proudly calls herself an “outsider’s outsider,” is comfortable announcing those kinds of very uncomfortable figures, even if that means taking some political punches.

“I’ve never held a government job, and I’m not looking for a government job after this,” she said. “I’m not out there trying to go and find my next landing spot.”


The last statement makes Warren very threatening, needless to say. But Politico may be spot on in deeming her a Cassandra. Remember, her curse was to have her prophecies, which all were accurate, be ignored.

[ozymandius]

I'll say it again.

Elizabeth Warren should be Treasury Secretary. She is not afraid of making the tough decisions about "pulling the plug" on dead institutions. Unlike our current host of 'leaders' - she is not concerned with finding a cushy post-government job with the companies her counterparts pretend to regulate.

[wordpix]

53. I am totally in agreement with you

[DemReadingDU]

66. She'd make a great Treasury Secretary, n/t

[antigop]

78. I wholeheartedly agree. n/t

[AnneD]

91. The more I see of her...

the better I like. She was on the Daily Show and Jon asked her some tough questions. She did well and explained thing clearly.

That is her problem-she seems hard pressed to bull shit. Now SHE could solve some problems.

[mbperrin]

93. Yes, she would be great. I use a Frontline program on credit cards

in which she is featured prominently in my high school classes - she is clear and spot on!

[Demeter]

33. Funds try to spot the great oil rebound

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/5183177/Funds-try-to-spot-the-great-oil-rebound.html

Oil is too cheap. At around $50 a barrel, it is trading far below the production costs of almost all new sources of crude and energy substitutes.

A sustained price above $70 is needed to cover investments in Canada's tar sands, the deep-water fields off Brazil, and Russia's "High North" above the Arctic Circle.

Much the same goes for biofuels from grains (sugar is cheaper). They matter. Bioethanol swings the global crude price. It accounted for 60pc of extra oil supply worldwide from 2007-2008......

[Demeter]

34. How to really scare China

http://www.economist.com/blogs/freeexchange/2009/04/how_to_really_scare_china.cfm

GREG MANKIW outlines his plan to relieve America of the onerous burden of supplying the world’s reserve currency. His proposal would have the added benefit of stimulating borrowing and consumption. The solution: negative interest rates.

The problem with negative interest rates, however, is quickly apparent: nobody would lend on those terms. Rather than giving your money to a borrower who promises a negative return, it would be better to stick the cash in your mattress. Because holding money promises a return of exactly zero, lenders cannot offer less.

Unless, that is, we figure out a way to make holding money less attractive.

At one of my recent Harvard seminars, a graduate student proposed a clever scheme to do exactly that. (I will let the student remain anonymous. In case he ever wants to pursue a career as a central banker, having his name associated with this idea probably won’t help.)

Imagine that the Fed were to announce that, a year from today, it would pick a digit from zero to 9 out of a hat. All currency with a serial number ending in that digit would no longer be legal tender. Suddenly, the expected return to holding currency would become negative 10 percent.

That move would free the Fed to cut interest rates below zero. People would be delighted to lend money at negative 3 percent, since losing 3 percent is better than losing 10.

Of course, some people might decide that at those rates, they would rather spend the money — for example, by buying a new car. But because expanding aggregate demand is precisely the goal of the interest rate cut, such an incentive isn’t a flaw — it’s a benefit.

FULL ARTICLE AT

http://www.nytimes.com/2009/04/19/business/economy/19view.html?ref=business

It is an interesting theoretical curiosity and would almost be compelling if the US were a closed economy. It would be one way to stick it to China (assuming that's what the US wants to do), and it would fulfil the ECB’s dream of the Euro replacing the dollar.

[Demeter]

35. Does China Expect the United States to Keep an Over-valued Currency?

http://www.prospect.org/csnc/blogs/beat_the_press_archive?month=04&year=2009&base_name=does_china_expect_the_united_s

That would seem to be the implication of a quote from China's former vice premier Zeng Peiyan, which appeared in the Washington Post today. According to the Post, Mr. Zeng wants the United States to guarantee the value of its currency.

This is a bizarre request. The United States has publicly been pressing the Chinese government to reduce its purchases of dollars, which maintain the dollar at its current value relative to the yuan and other currencies. The implied threat in Mr. Zeng's comment, that China would stop buying dollars, is exactly what both the Bush and Obama administrations claim that they want China to do.

The Post should have pointed out that China appears to be threatening to do exactly what the United States government has been pressuring it to do, stop "manipulating" its currency by depressing its value against the dollar.

--Dean Baker

[Demeter]

36. For the Realists, the Patriots, and Tansy Gold: Economists Who Know Arithmetic Know that Manufacturi

Economists Who Know Arithmetic Know that Manufacturing Will Return to the United States

Unfortunately most economists don't have a very good grasp of arithmetic. The NYT found one of those numerically challenged economists who told readers: "Only an outbreak of protectionist policies or a sharp rise in international shipping costs could slow or temporarily reverse manufacturing’s declining share of employment in the United States."

Actually, unless someone believes that the United States can run large trade deficits forever, and in effect foreigners will always give us more money for nothing, it is almost inconceivable that manufacturing will not grow as a share of GDP in future years. It's just arithmetic.

--Dean Baker

http://www.prospect.org/csnc/blogs/beat_the_press_archive?month=04&year=2009&base_name=economists_who_know_arithmetic

[Tansy_Gold]

44. Well, I mean, DUH, Dean. Of course. But don't fall into the "quant" trap

Disclaimer -- I haven't read the whole article yet. My analysis therefore may be refuted totally by Baker, or affirmed. I don't know. But I wanted to put it out here untainted (?) by his.

Mathematically, yes, eventually the costs of importing will rise to a level that will make domestic manufacturing "profitable" again. Wages in China and Guatemala will rise, the oil used to transport goods back to American markets will raise that cost, wages will be forced down in the US as more and more workers are out of work and will take anything at any rate of pay just to stay alive. That's the beauty, if you want to call it that, of a mathematical model of pure, unadulterated capitalism.

The problem is, that's not what we're dealing with. This is not Ayn Rand's perfect world, where all the capitalists are honest, and no one ever gets pregnant from having unprotected sex.

Nor does a mathematical model establish a time frame. I suppose it CAN calculate one, but what human variables does it take into consideration? How long does a mathematical formula say it will take for UX workers to accept serfdom on a 19th C Russian peasant level? How long does it say the masses of Chinese will remain factory slaves before they revolt? Will it be before the Americans raise their torches and pitchforks, or after?

Human beings are NOT numbers, and all the mathematical formulas created to predict our collective behavior are easily destroyed by far too many variables to even begin a list. That's why math is a "perfect" science, and all the rest, even physics and chemistry, have their anomalies. Humanity has bazillions of them.

What would happen to the model if there were a sudden pandemic, of bird flu, say, that wiped out 1/3 of the global population? What if it surfaced in, say, Japan and there were a sudden world-wide quarantine of all Japanese goods, even for a week, in an attempt to contain the spread? What if someone discovered that an extract of a common garden plant provided safe, effective, and virtually free birth control to women around the world?

A mathematical model also doesn't describe what the human suffering will be during the time that the "free" market shifts things back. If it takes a century or two, what will the resulting geo-econo-political map look like? Will China and Russia have so polluted themselves with industrial output that they take over North America to use as one huge granary?

Again, I haven't read Baker's essay, but I would say, just from the snippet posted, that it's not that economists don't know math, it's that they don't know people. Get them away from the "hard" science of numbers and back into the "soft" science of human beings.


But what do I know?



Tansy Gold

[Demeter]

45. That's The Whole Posting, Tansy

And hunger sets in after about 24 hours, except for the depressed. It won't take long...just a spark or two of real anger, a bright idea, and some summary dismissals from public office.

I think that within the next 6 years, Congress won't have any of the current members in it, with the exception of lion-hearts like Kucinich.

[Tansy_Gold]

56. THAT'S IT????????? THAT'S IT????

I'm almost tempted to say Baker doesn't know his ass from a tin cup, but. . . . .

Even your suggestions aren't mathematical, they're human.

But I think your prediction of a 6-year wholesale change in Congress (I'm assuming you mean just the House) is overly optimistic. There will be retrenchment of some of the diehards, and there will be focused opposition to those on the margins.

More than likely, the real spark will come in the shape of tragedy. As we all know, fear is the great motivator, whether it's rational fear or irrational. And our response to that fear can be either rational or irrational.

We'll just have to wait and see what happens.


Tansy Gold, lookin' out the window

[Demeter]

60. I Mean the Senate --The House Is Halfway There Already

Look at the ages of those dinosaurs, and the scandals bubbling under them.

And it's a blog, not a scholarly essay.

I don't think this nation can take any more tragedy without armed violence resulting, and I do not jest.

[Tansy_Gold]

68. Yes, there will be changes in the Senate, surely

but that's to be expected.

And to a certain extent I agree with you that another huge tragedy could lead to armed insurrection. But it may come to that.

The story going around right now about Bayer and its stockpile of MIC is an example. We've been lucky here. We haven't had a Chernobyl or a Bhopal. We haven't had a major earthquake. Our response to Katrina, however, was both political and long-lasting, in that it is still used as a rallying cry. But the long-term and wide-spread damage to the national economy and national infrastructure was limited. And as sad as it is to say, the reality is that our MSM and our national attitude in 2005 was such that the suffering and deaths of poor people of color in New Orleans is treated with very little difference from the suffering and deaths of poor people of color in Indonesia.

But if we look at the difference in the response to 9/11 and to Katrina, there's almost no comparison. Is it because 9/11 was overtly done by invading foreigners and the tragedy of Katrina was home-grown and therefore we have to go into collective denial or else take collective responsibility? That may be part of it.

But I do think that national inertia being what it is, until something comes along that's big enough to either move the unmoveable or stop the unstoppable, nothing will really change.

I also think that such something WILL come along. Sooner or later. And depending on the leadership at the time, it might indeed get very ugly.


Tansy Gold

[Demeter]

37. Handy List of Economic Blogs with Links

http://realpropertyalpha.com/2009/04/18/calculated-risk-undisputed-champion-of-the-econofinancialbusiness-blogosphere/

[DemReadingDU]

57. 61 blogs!

I barely have time to read the dozen that I look at now.
:P


my favorite should be listed
http://theautomaticearth.blogspot.com/

and my 2nd favorite
http://www.chrismartenson.com/


edit, and why isn't the SMW listed!


and sometimes Denninger's market ticker
http://market-ticker.denninger.net/

[Demeter]

61. They Have NO Idea We Exist

These are economists (the professional kind that get paid) not hobbyists and amateurs and dilettantes.

[DemReadingDU]

67. That's it, it's the paid economists

I guess it's the hobbyists and amateurs that do the actual thinking and connecting the dots.
:shrug:

[Demeter]

85. No, we're the Ones Who Want to Overthrow the "Masters of the Universe"

The others just want a job and bennies.

[bread_and_roses]

47. Self-delete

Will save it for WE - doesnt' really belong here today

[DemReadingDU]

48. Continuation NPR Michigan series

NPR Series (all segments): Remaking Michigan, Retooling Detroit
http://www.npr.org/templates/story/story.php?storyId=103321042

Current NPR segments

Chat: What Can We Learn From Michigan?
Join The Discussion At Noon EDT Thursday
Steve Inskeep, host of Morning Edition
Richard Florida, author of Who's Your City?
Luther Keith, executive director of ARISE Detroit!
http://www.npr.org/templates/story/story.php?storyId=103376102

Detroit Auto Suppliers Look To Other Industries
http://www.npr.org/templates/story/story.php?storyId=103368045

Why Can't Detroit Cash In On Its Music Scene?
http://www.npr.org/templates/story/story.php?storyId=103385436
Photo gallery of Detroit musicians
http://www.npr.org/multimedia/2009/04/detroitmusic/gallery/index.html

Venture Capitalists, Entrepreneurs Bet On Detroit
http://www.npr.org/templates/story/story.php?storyId=103374643

Michigan Gov. Reflects On Region's Recovery Efforts
http://www.npr.org/templates/story/story.php?storyId=103380040


link back to Wednesday's NPR segments
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3843315&mesg_id=3843404

[Demeter]

59. What CAN One Learn From Michigan?

Well, Michigan always had its own fiscal calendar. It was regulated by the Big Three's schedules of layoffs, retooling breaks, year-end clearances, and the like. And the Auto Show, the Boat Show, the Garden Show..

Up until recently, one paid cash for restaurants. They did not take plastic, period. Credit was suspect. Sometime after Reagan, things started to loosen up, and credit usage grew.

Even so, the mortgage crisis in Michigan is much more due to 12.6% unemployment (after massive emigration) than to mortgage fraud--although I know people who were trapped into ARMs and other crappy plans and lost their homes and land and farms and businesses. But the Brick Banks were very conservative, which is why they were all bought by out-of-state bank holding companies. We don't have any truly local banks of any size left. And the small ones are struggling.

Michigan had two faces. There was the educated, upwardly striving immigrant (internal from the South and external) Populist Southeast, and the Red(neck), Very White, and Blue-in-the-face North and West.

The liberal religions are present and active, but a drop in the big sea of fundamental evangelical fervor. There's a large White Supremacist movement, too.

The state government was situated too far into the NW part of the state to do much good when Detroit went up in flames. But the Big Three had a lot to do with the decline of a metropolis that once ranked 4th in the nation (1950) but has since declined to 11th. The stranglehold that Ford Motor had on the state cannot be fully documented or overestimated.

Did you know that vast tracts of the state were until recently held in the endowment of a private school in Hawaii? That's why there is so much wilderness.

Coming as I did from Detroit's Golden Age, I have my bias. But the engine that was Detroit has sputtered and died, and nothing has come along to replace it.

America's cities were the economic engines, and the riots from the Long Hot Summers blew up those engines. We have never been the same country since. One cannot expect California to carry the whole nation, but that's pretty much what happened after the Space Race and the Vietnam War ended the Military Industrial Complex's domination of the economy.

[DemReadingDU]

64. Michigan is important because

Well, it's been the center, the hub, of the auto industry. And the auto industry was what ran this country. It's being dismantled, and there is no major manufacturing industry to take its place. I think people in Michigan are getting a preview to what the rest of us can expect in the coming years.

[Demeter]

86. Michigan Had a Lot More Than Just Autos Going For It

There were all kinds of manufacturing, mining, agriculture: Michigan was a productive place. Nearly all of it is gone, stripped out by multinationals, killed off by the GOP governors, dying of neglect and "fair Trade".

It can all come back, if the multinational corporations go.

[Demeter]

62. Google is accused of UK tax avoidance

http://www.guardian.co.uk/technology/2009/apr/20/google-uk-tax-avoidance

[Demeter]

63. America close to the tipping point

http://animalspiritspage.blogspot.com/2009/04/america-close-to-tipping-point.html

Recently released IMF analysis (via Telegraph) indicates that federal debt/GDP ratios in excess of 60 percent tend to become deflationary black holes.

"The impact becomes negative for debt levels that exceed 60pc of GDP," said the Fund.

While no countries were named, this would raise questions about Japan, Germany, France, Italy and ultimately Britain and the US after their bank rescues.

The IMF said the US is at the epicentre of this crisis just as it was in the Depression, setting the two episodes apart from normal downturns. However, the risks are greater this time. "While the credit boom in the 1920s was largely spec­ific to the US, the boom during 2004-2007 was global, with increased leverage and risk-taking in advanced economies and many emerging economies. Levels of integration are now much higher than during the inter-war period, so US financial shocks have a larger impact," it said.

The IMF said the global financial system is still under acute stress, with output tumbling and inflation falling towards zero in key nations. "The risks of debt deflation have increased," it said.

Abrupt halts in capital flows can have "dire consequences" for emerging economies, it said. Eastern Europe has already suffered the effects, with a 17.6pc fall in industrial production in February. The region is highly vulnerable to the credit crunch since it owes more than 50pc of its GDP to Western banks.

The U.S. nominal GDP is about $14 trillion, the gross federal debt is $10 trillion, or 71 percent (the ratio is 46 percent if debt held by the public is used. (I am not going to go into the issue of which number is “correct,” but the latter is most commonly used.) Neither of these debt figures, both from fourth quarter 2008, include any of the multifarious bailout commitments. Just adding a projected $2 trillion fiscal deficit for 2009 to the debt and assuming no growth in GDP takes the ratio using debt held by the public squarely to 60 percent.

Obama’s budget will tip America into a debt-deflationary downward spiral if the IMF is right. No wonder the American public is slow to warm up to the stimulus plan—and why the public views the banking bailouts as throwing good money after bad.

The American people have a low opinion of government spending and contracting programs. We read creditable stories about missing billions in Iraq and missing trillions throughout the federal budget. We have seen how this administration has furthered Wall Street’s class warfare on the American people in its handling of the banking “bailout.” President Obama looks more and more like a fiscal Manchurian candidate.

So, again, I propose a “middle way”: let the objective be to take care of the American people, not to achieve some figment of “potential output.” The Democrats may have good intentions, but they’re listening to the wrong economists, Keynesians who have been out of power for too long and who now are listening to a scribbler of 70 years ago (that they read in their halcyon graduate school days), a Keynes, most of them seem not to realize, who was preaching to an America that was the largest creditor nation in the world, not the greatest debtor.

Let the economists go yell at China, today’s great creditor nation. China seems to be listening.

COMMENTS AT LINK

[Demeter]

65. The Fed's Cash Machine By Timothy Lavin

http://www.theatlantic.com/doc/200905/map-federal-reserve

As the housing collapse has turned into a financial crisis, and the financial crisis into an economic calamity, the government has tried furiously to keep the country free of breadlines and trash-can fires. Two of its interventions ...—the $700 billion bank bailout known as TARP and the $787 billion stimulus package—have inspired levels of partisan acrimony and journalistic scrutiny befitting a war vote. But neither of those initiatives, expensive as they are, approach the civic munificence displayed by the Federal Reserve.

In the past year, the Fed has undertaken interventions in the economy broader and deeper than anything attempted since its founding in 1913. And with the credit system paralyzed, the central bank increasingly looks like the lender of both first and last resort. But the Fed’s actions have stirred nothing like the debate surrounding TARP or the stimulus (pictured in detail below). And the particulars of its schemes remain almost entirely obscure.

Through a dozen programs introduced since the crisis began, the Fed will be on the hook for trillions of dollars in loans, bailouts, and asset purchases. The government expects to be repaid for most of these commitments, of course, with interest. But that’s the tricky part. Largely unencumbered by congressional meddling, the Fed has in most cases refused to reveal the beneficiaries of its largesse—or what assets they’ve used as collateral—lest panicky investors and depositors lose faith. As a result, outside the walls of the Eccles Building, almost no one knows how sound those loans really are.

[54anickel]

70. Ahhh, pie!! The interactive piechart that is.

http://www.theatlantic.com/slideshows/feds/

So where is the auto-makers piece of the pie? Surely it must be HUGH!!! to be demanding so many concessions from workers?

[DemReadingDU]

75. That's a great chart!

You can click on one of the slices, and it brings up more slices to click on. Still looking for the auto-makers piece.

[54anickel]

77. Lotsa purple-dazzle-berry pie! We get the raspberries, a much smaller piece

divided up into a pie of it's own.

I'm thinking the scale is a bit off though. Notice that all but one slice of the purple-dazzle-berry section is talking about TRillions, while the blueberry section slices are all about Billions.

[Demeter]

84. Truly a Find!

What an appalling mess we're in.

[54anickel]

87. It was in the article you posted that I replied to. Yes, it was a great find. Thanks much for

posting it!

[Pale Blue Dot]

69. It looks like www.layoffdaily.com is no more.

It's become a GoDaddy ad. :-(

[Hugin]

73. Wow... I was just by there last weekend.

Everything info wise was current.

I wonder if they got spoofed?

[Dr.Phool]

74. They got laid off?

[MattSh]

82. Try, try again...

It's there now...

[UpInArms]

72. dollar watch

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

Last trade 86.113 Change -0.162 (-0.21%)

Dollar's Safe Haven Role Under Pressure From Growth, Earnings

http://www.dailyfx.com/story/special_report/special_reports/Dollar_s_Safe_Haven_Role_Under_1240443941689.html



The Economy And The Credit Market

What is the primary, fundamental theme driving the US dollar? Is the currency still following the whims of risk appetite or is the concern for the greenback turning to more domestic matters? This is a complex question which will likely require considerable time to answer. However, considering the scheduled and unscheduled event risk over the next few weeks, we can be assured that this market quandary will be answered one way or the other. The first concern for the currency (as it has been the leading economic factor for the past 18 months) is its correlation to broader market sentiment. Investors will take measure of the earnings data that is still crossing the wires as well as the G20 meeting taking place on Friday in Washington. Should this play out as a productive follow up on the April summit in London, the possibility of a global bailout will look far more realistic. Without clear direction on risk, the dollar could still find direction from the advanced, first quarter GDP reading due next week. With the IMF lowering its forecast for growth and raising the projected financial crisis losses, there will be increased focus on grading each economy for its position on the recession scale.



...more...

Euro Finds Support As Improving PMI Survey Generates Optimism

http://www.dailyfx.com/story/bio1/Euro_Finds_Support_As_Improving_1240481588243.html

Improving fundamental data has helped provide a bid tone for the Euro as it reached as high as 1.3067 during European trading on the back of the PMI composite and industrial new orders releases posted better than expected results. The April survey of business executives rose to 40.5 from 38.3 as both the manufacturing and service sectors rose. The forward looking gauge improved for a second month led by Germany the regions largest economy which saw its manufacturing reading rise to 35.0 from 32.4. Meanwhile, February industrial new orders fell by 0.6% which was far better than the 2.2% decline that was expected. A reversal in capital goods from -2.7% to 2.9% led the advancement. An improvement in French business confidence to 71 from 68 rounded out a day of improving data from the region.

Despite today’s positive results, expectations are that the region’s economy will continue to contract with the IMF forecasting a 4% decline in growth for 2009. Indeed, although the PMI reading improved it remained in contraction for the eleventh straight month. The ECB’s measured approach to monetary policy is expected to prolong the current downturn and the reason that it will lag other developed nations in emerging from the crisis. Yet, committee member Jürgen Stark defended the central bank’s actions stating that they have taken “unprecedented steps” to address the crisis and that he expects a “gradual” recovery next year. The EUR/USD has pushed back above the 50-Day SMA at 1.3043 which could lead to a test of the 100-Day SAM at 1.3211before another turn lower.

The pound rose to as high as 1.4596 during overnight trading as it was able to erase most of its losses form yesterday that followed the budget report as it finds support from improving risk appetite. Indeed, in his annual budget statement, UK Chancellor Darling forecasted that the treasury is expecting to borrow GBP606 billion by the 2013 fiscal year, which was an increase of GBP226 billion from last November's pre-budget report. He also announced an increase in taxes on Britons earning above 150,000 pounds to 50%. This only raised expectations that consumers will be facing increasing taxes going forward making future growth difficult to sustain. However, the Chancellor’s expectation that growth will start to return by the end of 2009 despite the fact that he cut the growth forecast to -3.5% for the year could provide short-term sterling support.

The dollar has been under pressure during overnight trading as we have seen a pick up in risk appetite as Asian stock markets took their cue from the U.S rising over 1%. However, we haven’t seen that sentiment carry through into European markets which are trading flat and have slowed greenback losses. Apple’s better than expected results after the bell help build upon growing optimism and we could see that continue today if more companies report positive earnings. UPS and Microsoft highlight the schedule as earnings continue to garner traders focus. Initial jobless claims and existing home sales dot the economic calendar and both are expected to deteriorate from their prior readings. New claims are forecasted to rise to 639K which will keep traders cautious as markets are looking for the coincident indictor to start to show consistent improvement to validate that a bottom has been reached in the current downturn. Meanwhile, the 1.5% decline that is expected in existing home sales will end a trend of improving housing data and should also help to temper optimism. The weak fundamental data and corresponding earnings reports could bring back dollar support as traders come to the realization that the economy is still far from a recovery.

...more...

[antigop]

79. Outsource your offshoring

http://www.fool.com/investing/international/2009/04/16/outsource-your-offshoring.aspx

As investors we need to be nimble enough to deploy our capital wherever profit can be made, and for the future, that includes investing in the massive boom of offshoring. At least, that's what professor Robert E. Kennedy argues in his latest book, The Services Shift: Seizing the Ultimate Offshore Opportunity.

Although it really started in earnest in the 1990s, offshoring has been a well-publicized issue in recent years, with many notable companies such as IBM (NYSE: IBM), GE (NYSE: GE), and GM (NYSE: GM) already deeply engaged in it. In fact, IBM has some 18% of its workforce in India. Despite much public furor over the practice, it's still set to continue, says Kennedy, since the benefits are simply too economically advantageous to ignore.

A game you have to play
For good or ill, offshoring is here to stay, and Kennedy provides investors with several future trends that they can take advantage of. Despite rapid growth heretofore, offshoring still presents a very compelling investment opportunity. The author cites a study from McKinsey/NASSCOM that says offshoring has reached only one-ninth of its potential. Given the hyper-competitiveness of business these days, forward-thinking investors could do well by following the lead of global sourcers.
...
But it's not simply your stereotypical call center job that is being offshored; the trend is shifting increasingly up the value chain. Kennedy points to the increasing number of white-collar jobs being moved offshore as a major trend. Wall Street firms have embraced offshoring high-priced jobs that used to be reserved for MBAs. Other multinationals moving high-value-added positions abroad include Microsoft (Nasdaq: MSFT), which is performing graphics research in China, and Pfizer, which is conducting genomics research in India.

The move up the value chain is part of a wider trend in offshoring, the shift from cost as a primary driver to high-quality talent as the key focus. Drawing from a larger sea of labor means you catch more smart fish. Large organizations have realized that few nations have all the talent that they need at the price that they want. "It’s about gaining to access to the best combination of talent, resources, and local markets," Kennedy argues.

CAN YOU BELIEVE THIS?? I wonder if the guy writing the article for Motley Fool realizes that his job can easily be offshored.

[Tansy_Gold]

80. Well, even if he does realize, he shouldn't complain if it happens

After all, it's just someone's capital nimbling off to find profit.


What a wanker.




Tansy Gold

[Hugin]

83. And who was the former Director of McKinsey?

Let's connect the dots now, kids!

Diana "Offshoring is a win-win!" Farrell, now of Obama's National Economic Council!

http://www.mckinsey.com/mgi/perspective/biography/index.asp

[antigop]

95. And Lou Gerstner, former CEO of IBM, former CEO of Carlyle, came from McKinsey, too

http://www.answers.com/topic/louis-v-gerstner-jr

[antigop]

96. I found this book interesting...has a chapter on McKinsey

http://www.amazon.com/Dangerous-Company-Management-Consultants-Businesses/dp/0140276858/ref=ed_oe_p

Chapter 8. The Gold Boys' Network
Power and Glory at McKinsey

<edit> I read it a while ago.

[skoalyman]

106. he left one out

"It’s about gaining to access to the best combination of talent, resources, and local markets (while paying the workers in ;-) peanuts)," Kennedy argues.

[Demeter]

88. US to Impose Conditions on TARP Repayment

http://www.nakedcapitalism.com/2009/04/us-to-impose-conditions-on-tarp.html

The Administration is trying to look like it is not rolling over to banks' demands on the issue of repayment of TARP money. But despite the tough-ish talk, the problem described by John Gapper remains. Whether the bank pay back the TARP or not, they and the wider world clearly know that they will not be permitted to fail, at least in their current (big and interconnected) incarnations. That in turn means they should be kept on a short leash until industry reforms and/or restructuring has taken place, since they are in effect gambling with house money, no matter what the formal balance sheet arrangements are. Keeping them in TARP is one way of addressing this conundrum; imposing other sorts of interim restrictions on "too big to fail" concerns is another approach. But Team Obama seems determined to try to restore status quo ante and not deal with any remedies that might prove inconvenient to the moneyed classes...

This crowd is fond of tests as being objective measures, when in fact they are being run by the industry on data not independently verified, through risk models shown to be unreliable in the face of extreme events... conveniently ignores the problem that the system we have in place... may be diametrically opposed to our collective best interest.


Mr Obama told a press conference at a summit in Trinidad on Sunday, while promising: “I’m not going to simply put taxpayer money into a black hole.”

Yves here. Ooh, and pray tell what is AIG? Oh, because it is not a bank, merely a back channel to recapitalize bank, it's exempt from the black hole consideration...

The banks are ALREADY adding to pressures to delever by cutting consumer credit lines, In fact, if you buy Tyler Durden, banks are squeezing shorts by cutting credit even further to prime brokers, which is leading to less stock market liquidity and makes it (and other markets) more vulnerable to downturns. One of the big impetuses to goose the market would be for banks like Goldman to sell stock at more favorable prices to get out of the TARP. So if you buy argument #2, you wouldn't let any bank who is a major prime broker (Goldman, Morgan Stanley, JP Morgan) pay back TARP proceeds,

And how much capital is needed to provide for recovery very much depends on your view of the future of securitization. Right now, it's on government life support. Without fundamental reform, that market will not come back in a meaningful way (at least until the lessons of this disaster are forgotten and people make the same mistakes all over again). And the economics will not be anywhere near as favorable under a new regime that fixed incentives properly. For instance, requiring banks to hold enough of the paper they originate would increase costs and require better capitalized intermediaries all along the food chain. And even that didn't succeed last go round; recall Merrill held a lot of the risky late vintage CDOs on its books when the market turned.

If the private securitization market does not come back in a meaningful way, that means either phony government diddled credit markets indefinitely, or vastly bigger balances sheets in the financial sector, since banks will originate and hold loans (probably trading some loans among themselves to create better diversification). That too argues against returning TARP funds.

[DemReadingDU]

89. For a laugh: Stress Test Evaluation

4/23/09 Stress Test Scores ‘C’ If Name Ends in ‘itigroup’: Mark Gilbert

April 23 (Bloomberg) -- Tomorrow, the U.S. authorities are scheduled to disclose the methodology for the stress tests that will gauge the creditworthiness of the 19 largest U.S. banks. Below are a few examples of the kinds of searching, penetrating questions the Treasury Department should ask. Some sections have point scores. Others will be judged more subjectively.

(1) Award your institution five points for every ex-Goldman Sachs Group Inc. manager on your board. Double that tally if former Federal Reserve Chairman Alan Greenspan ever took part in a private conference call for your favorite clients. Lose all points if the head of your executive compensation committee has a worse golf handicap than your chief executive officer.

(2) This week, an anonymously sourced blog entry said the government’s stress test would show that 16 of the 19 banks in the study are technically insolvent, with none of the 16 able to survive a disruption of their cash flow or additional defaults on their loans. On hearing this, your first reaction was:

(a) Please, please, please let me be in the threesome. I’ve worked like a dog selling assets and raising capital.

(b) Please, please, please let me be in the 16. I’m tired and I’d like to spend more time with my money.

(c) Only 16? Surely some mistake . . .

(3) Your accounts are audited by:

(a) Pricewaterhouse Coopers LLP.

(b) Ernst & Young LLP.

(c) Deloitte & Touche LLP.

(d) Moe, Larry and Curly in Rockland County, New York.

(4) A mob gathers at the doors of your institution. Your instinctive reaction is that:

(a) Barbarian rioters, led by Naomi Klein, are at the gates demanding the end of capitalism.

(b) Your customers have finally lost patience with counting their losses and are demanding your head on a plate.

(c) All those derivatives specialists you fired last month have finally found their collective spines and want to reclaim the portion of your previous bonuses that their spreadsheet- shuffling was responsible for generating.

(5) Gather your board members around the executive table, and make them bare their wrists. Lose 2 points for every wristwatch with a retail price of more than $5,000. Lose 50 points for any board member who owns the Breitling Emergency model that claims to summon the international rescue services at the push of a button. Lose 100 points if he has ever accidentally pressed the button and had to pay for the helicopter.

(6) Gain 10 points if you, the current CEO, have been asked to be or already are:

(a) a member of the U.S. Treasury.

(b) an employee of the Federal Reserve.

(c) Bo’s pooper-scooper.

(7) Your current company vehicle is:

(a) a Cessna Citation X jet.

(b) a Maybach limousine.

(c) a Toyota Prius

(d) a Segway scooter.

(e) a rusty bicycle.

(8) Which best describes your ability to sell bonds on the international capital markets without the benefit of a U.S. government guarantee?

(a) Bill Gross backs up the truck and says “fill ‘er up.”

(b) Bill Gross laughs so hard that he snorts coffee out of his nose and down the front of his shirt.

(9) Timothy Geithner says the “vast majority” of the nation’s banks have more capital than they need. Your response is:

(a) Which nation is he talking about? ‘Cos it certainly isn’t the U.S. of A.

(b) What is he smoking and where can I get some?

(c) You laugh so hard you snort coffee out of your nose.

(10) Your institution is positioned to remain solvent in a world economy resembling that of:

(a) the past decade.

(b) Japan.

(c) Cuba.

(d) Zimbabwe.

(11) Lose 10 points if your CEO plays bridge. Lose another 10 points if he’s up to tournament standard.

(12) Lose five points for each of the following:

(a) The words “never sleeps” feature in your slogan.

(b) There’s an umbrella in your logo.

(c) The name of your institution begins with “C” and ends with “itigroup.”

(Mark Gilbert is a Bloomberg News columnist. The opinions expressed are his own.)

To contact the reporter on this story: Mark Gilbert in London at [e-mail]
Last Updated: April 22, 2009 19:00 EDT

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aMUsbB7BswMM

[DemReadingDU]

90. Chicago Lou Carlozo "Recession Diarist" Laid Off

4/23/09
Lou Carlozo thought he was being pretty nimble at a time the economy was wreaking havoc on his employer and the larger world. The veteran Chicago Tribune arts reporter was asked by editors to chronicle how the recession affected families in his region. In recent months, he blogged under "The Recession Diaries" about his own family's pocketbook concerns.

On Wednesday, the Tribune laid him off. And, according to a piece he wrote for a blog called True/Slant to which he contributes, the Trib told him to pull an account he had put online of the firing, part of wider job losses there. I heard about it from a friend who saw a Facebook posting yesterday -- so the news was already out.

Also on Wednesday, the parent Tribune Co., which has bankruptcy protection, asked the court to allow it to award more than $13 million in bonuses to 700 execuives, director and managers. (The top 10 execs would not be included.)

We've asked Gerould Kern, the editor of the Chicago Tribune, for comment, and we'll let you know what he says.
http://www.npr.org/blogs/money/2009/04/tribune_recession_diarist_laid.html


Update


As we reported earlier today, Chicago Tribune "Recession Diarist" Lou Carlozo was told Wednesday he was among those being laid off at the newspaper in the latest round of cuts. Carlozo says when he learned the news editors forced him to remove an entry telling readers that he was out of work too.

The entire "Recession Diaries" blog was removed from the paper's web site. But Carlozo agreed to share his spiked posting for "Recession Diaries" with Planet Money so others could learn what it was like for him to confront the economy, first hand.

"At a time when the newspaper I love needs every reader it can possibly hold onto, no story is more timely than that of a man covering the recession and telling people how to survive it," Carlozo writes in an email to Planet Money. "Yesterday, I became a casualty of that recession, but as much as I'm licking my wounds, I feel more sad for the readers who grew to love this resource, then had it taken away from them without any explanation whatsoever. That I am part of the news makes this all the more awkward, but as one deadline ends, another begins."
http://www.npr.org/blogs/money/2009/04/update_final_suppressed_recess.html


4/23/09 The final ‘Recession Diaries’ blog the Chicago Tribune does not want you to read
click to read 'Goodbye from Lou Carlozo"
http://trueslant.com/loucarlozo/2009/04/23/the-final-recession-diaries-blog-the-chicago-tribune-does-not-want-you-to-read/

[Robbien]

98. Trib is asking bankruptcy court for permission to pay execs $13.3 mil in bonuses

These are probably the same execs who made out like a bandit in the deal when Zell "bought" the Trib by dumping billions of dollars of debt on the paper.



Another report out by Crains says the Trib wants to hire new people to expand its consumer coverage:

The paper will expand its local news operation and establish a new "watchdog unit to increase our consumer and investigative coverage," Mr. Kern told his staff.


So looks like they are firing this long time employee of twenty years and hiring some minimum wage newbies in his place. More profit for the bottom line so that the execs get their bonuses for next year.

[Demeter]

101. I Hope The Court Turns Them Down With A Threat of Contempt

[Dr.Phool]

103. Sadly, the court ALWAYS approves this shit.

[TheMachineWins]

92. Great article on our culture of corruption and its widespread tentacles

http://www.chris-floyd.com/component/content/article/3/1746-the-fatal-thread-torture-war-and-the-imperial-project.html

"...This is one reason why Barack Obama is so obviously reluctant to tug on the torture thread too hard. If you tear it out, with full-scale prosecutions and top officials locked up behind bars, the whole rotten skein would fall apart. Once you start genuinely subjecting government officials – including security apparatchiks and military brass – to the full extent of the law, there would be no end to the unraveling: senators, contractors, representatives, bureaucrats, generals, lobbyists, judges, corporate chiefs – the whole edifice of Establishment power would be shaken to the core as its leading lights went down, one after the other."

[Dr.Phool]

99. Ain't that the truth.

He was chosen to protect the status quo.

Republicans rarely deliver on much of anything to their right-wing base. Democrats rarely deliver to their base. We had lot of talk about ending the war in Iraq. About card check. About banking and bankruptcy reform. They'll deliver a little on the edges, and blame the Republicans for not playing nice, and blocking everything. In a few years, when the repukes are back in charge, the roles will be reversed... again...and again.

And welcome to DU and SMW.

:hi:

[Demeter]

100. And This Would Be a Bad Thing How?

such cowardice in the face of gross illegality!

[antigop]

97. WSJ: Freddie Mac's acting CFO was told to take time off from work

http://online.wsj.com/article/SB124050115077748369.html

A human-resources executive at Freddie Mac advised David B. Kellermann, the mortgage giant's acting chief financial officer, to take time off from work earlier this week, shortly before he was found dead in his basement in an apparent suicide, according to people familiar with the situation.

These people say that Freddie's human-resources chief, Paul George, expressed concern at a meeting Tuesday with Mr. Kellermann that he was spending too much time at work and needed a break.

Mr. Kellermann's duties were temporarily assigned to Denny Fox, acting principal accounting officer, and Rob Mailloux, acting corporate controller, these people say.

Meanwhile, medical examiners completed an autopsy, but said a final determination on Mr. Kellermann's cause of death could be weeks away. Authorities recovered the Mr. Kellermann's body Wednesday morning in the Vienna, Va., home he shared with his wife and young daughter.

Mr. Kellermann's motive remains unclear. The meeting with Freddie Mac's human-resources chief provides a glimmer to what might have been going through the executive's mind.

[Demeter]

102. Well, When an Accountant Spends Too Much Time at the Office

Embezzlement is presumed.

[skoalyman]

107. or all that work conjuring up the devil to help cook the books lol

:evilgrin:

[CatholicEdHead]

104. Former employees still struggling after Hutchinson Tech layoffs

http://minnesota.publicradio.org/display/web/2009/04/23/hutchinson_struggle/

Hutchinson, Minn. — Bill worked for Hutchinson Technology for a total of 14 years during two different stints with the company; once for a decade, and then again for the last four years. He asked MPR News not to use his last name because he doesn't want his family to be in the spotlight in the town of about 15,000. Bill said HTI notified employees that layoffs were coming, but he thought his position was safe.

"I had been told by a number of people in management that my position there with the company was stable and so the day when the actual layoffs happened, that kind of blindsighted me," Bill said. "I was ready for it, but ... I wasn't."
...
Bill's severance check was less than $100. And the check was delayed. He didn't know he couldn't collect unemployment until he received the check.

"The first week, I went to sign up for unemployment benefits my account was on hold because of this severance pay," Bill said. "So in a sense, I went basically four weeks with absolutely no income whatsoever. No unemployment. No severance. Nothing."