STOCK MARKET WATCH, Thursday, October 6, 2011

[Pale Blue Dot]

Source: du

STOCK MARKET WATCH, Thursday, October 6, 2011

AT THE CLOSING BELL ON October 5, 2011

Dow 10,939.95 +131.24 (+1.20%)
Nasdaq 2,460.51 +55.69 (+2.26%)
S&P 500 1,144.04 +20.09 (+1.76%)
10-Yr Bond... 1.91 +0.02 (+0.79%)
30-Year Bond 2.88 +0.02 (+0.67%)

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Market Conditions During Trading Hours

Euro, Yen, Loonie, Silver and Gold

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    William Black: This Economic Disaster    Bill Moyers with Kevin Drum and David Corn

Bush Administration Officials Convicted = 2
Names: David Safavian, James Fondren
Dishonorable Mention: former House majority leader, Tom DeLay

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

Financial Sector Officials Convicted since 1/20/09 = 12

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

Read more: du

[Pale Blue Dot]

1. Today's Reports

Oct 06 08:30 Initial Claims 10/01 400K 402K 391K
Oct 06 08:30 Continuing Claims 09/24 3700K 3725K 3729K

Read more: http://www.briefing.com/investor/calendars/economic/2011/10/03-07/#ixzz1ZzwJU7CS

[xchrom]

42. U.S. Initial Jobless Claims Rise Less Than Expected

http://www.bloomberg.com/news/2011-10-06/initial-jobless-claims-in-u-s-rose-6-000-last-week-to-401-000.html

Claims for U.S. unemployment benefits rose less than forecast last week to a level that shows companies may be starting to slow the pace of dismissals.

Applications for jobless benefits increased by 6,000 in the week ended Oct. 1 to 401,000, Labor Department figures showed today. Economists projected 410,000 claims, according to the median estimate in a Bloomberg News survey. The monthly average dropped to the lowest level since the end of August.

Reductions in firings may set the stage for bigger gains in payrolls needed to bring down the unemployment rate, signaling more confidence among companies that demand will hold up. Employers added 59,000 workers to payrolls in September and the unemployment rate held at 9.1 percent, according to the median forecast of economists before tomorrow’s jobs report.

[Pale Blue Dot]

2. Oil above $80 on hopes of Europe action on banks

BANGKOK – Oil rose above $80 a barrel Thursday in Asia, continuing a rebound from 12-month lows on signs that European finance officials are moving to bolster the region's banks.

Benchmark crude was up 49 cents to $80.17 a barrel at midafternoon Bangkok time in electronic trading on the New York Mercantile Exchange. The contract jumped $4.01, or 5.3 percent, to finish at $79.68 per barrel in New York on Wednesday.

Brent crude was up 63 cents to $103.38 on the ICE Futures Exchange in London.

Earlier in the week, oil dropped to the lowest level since September 2010 as Europe's financial crisis dragged on.

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

[Demeter]

30. Oil Rises a Second Day After U.S. Stockpile Drop, Jobs Increase

http://www.businessweek.com/news/2011-10-06/oil-rises-a-second-day-after-u-s-stockpile-drop-jobs-increase.html

Oil rose for a second day in New York as shrinking U.S. crude supplies, better-than-expected economic data and signs Europe can control its debt crisis allayed concerns that fuel consumption will suffer.

Futures gained as much as 1.8 percent after rising the most in almost five months yesterday. Crude inventories fell 4.7 million barrels, the Energy Department reported yesterday. The Labor Department may say tomorrow employment growth in the U.S. resumed last month after stagnating in August. European officials are working on plans to boost bank capital, an International Monetary Fund official said.

“Oil prices have been quite resistant to the turbulence in the U.S. and Europe,” said Thina Saltvedt, an analyst at Nordea Bank AB in Oslo who expects Brent to remain at $100 a barrel for the next few weeks and average $110 this quarter. “The latest macro figures have not been as disappointing. It’ll take something worse to bring prices down.”

Crude for November delivery rose as much as $1.47 to $80.82 a barrel in electronic trading on the New York Mercantile Exchange. It was at $80.80 at 11:34 a.m. London time. The contract gained 5.3 percent yesterday. Prices are down 12 percent this year...Brent oil for November settlement rose 0.5 percent to $103.28 on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $22.48 to New York crude, compared with a record of $26.87 on Sept. 6.

[xchrom]

49. Oil Industry Slump May Herald Takeover Wave

http://www.bloomberg.com/news/2011-10-05/oil-industry-s-worst-slump-since-lehman-may-herald-takeover-wave.html

The oil and gas industry’s worst slump since the financial crisis heralds a surge of takeovers for Goldman Sachs Group Inc. and Sanford C. Bernstein Co. as Asia buyers put $150 billion in cash to work.

The market valuation of U.K. and North American exploration company reserves has dropped 23 percent this year to the lowest since 2008, Bloomberg data shows, while Brent crude prices gained 8 percent to $102 a barrel. The dislocation between crude and company valuations is “extreme” and may lead to twice as many deals as usual, Goldman said last month.

Asian buyers may spend $150 billion by 2016 to secure energy resources for their faster-growing economies and targets could include Tullow Oil Plc (TLW), Canadian Oil Sands Ltd. and Kosmos Energy Ltd., according to Bernstein. London-listed Premier Oil Plc (PMO) said it will seek more acquisitions after buying EnCore Oil Plc for $340 million yesterday.

[Pale Blue Dot]

3. U.S. stock futures higher on Europe hopes

MADRID (MarketWatch) — U.S. stock-market futures traded higher on Thursday, amid optimism surrounding Europe and reports officials may seek to shore up euro-area banks, and on hopes for more upbeat job news later.

Paring earlier gains, futures for the Dow Jones Industrial Average DJ1Z +0.73% rose 76 points to 10,914, while those for the S&P 500 index SP1Z +0.76% rose 6.9 points to 1,142. Futures for the Nasdaq 100 index ND1Z +0.44% added 9.5 points to 2,177.

European stock markets were in rally mode with the Stoxx Europe 600 index XX:SXXP +1.88% up 1.6%. Investors mulled reports that the European Banking Authority may be planning a new round of stress tests for banks to see if they may need more capital.

“Although as we have seen so many times in recent weeks this optimism may quickly turn sour as investors will now focus on the detail of the plan to recapitalize the banks,” said Jordan Lambert, trader at Spreadex Ltd., in emailed comments.

http://www.marketwatch.com/story/us-stock-futures-higher-on-europe-hopes-2011-10-06

[Po_d Mainiac]

4. bazaar n/t

[Demeter]

5. Don't you believe in fairies, Po?

It's all sweetness and light, because absolutely nothing has improved since 2008...

[Po_d Mainiac]

Obviously everything is A-OK

Banks (like Dexia) survived the stress tests, so the additional money printing (QE) now by BOE and soon to be followed by the ECB is just for shits and giggles :sarcasm:

[Demeter]

6. 'Lord' Edward Davenport jailed for multimillion-pound fraud

http://www.guardian.co.uk/uk/2011/oct/05/lord-edward-davenport-jailed-fraud

An entrepreneur whose lavish home was used in scenes from the Oscar-winning film The King's Speech and for a less mainstream "porn disco" has been jailed for a multimillion-pound fraud. Self-styled "Lord" Edward Davenport, 45, was the mastermind of an "advanced fee fraud" scheme in which scores of businesses were ripped off. Davenport – who owns Sierra Leone's former High Commission in west London – set up Gresham Ltd in 2005 and pretended it was a respectable business with 50 years' experience of sourcing huge commercial loans...."To outward appearances it was long-established, wealthy and prestigious," said Simon Mayo QC, for the prosecution at Southwark crown court. "It operated from expensive London premises and had a balance sheet showing significant assets...It had a flattering corporate brochure and used headed notepaper that lent an image of corporate credibility...That image, however, deliberately cultivated by these defendants, was entirely false...In truth it was a company which had only been set up by Edward Davenport in late 2005...It was essentially worthless. Its only business was fraud."

Davenport, of Portland Place, central London, was jailed last month for seven years and eight months along with his lieutenant, Peter Riley, 64, of The Old Bakery, Brentwood, Essex. They were convicted of a single count of conspiracy to defraud along with Borge Andersen, 66, of Roland Gardens, south Kensington, south-west London. Andersen was jailed for 39 months at the same court on 12 September. He was also disqualified from being a company director for seven years under Section 2 of the Directors Disqualification Act...Their convictions, following a three-month trial, can be reported for the first time after a judge lifted an order.

...the Serious Fraud Office arrested him in December 2009 after gathering evidence that Gresham had promised to fund loans worth £500m. From 2007 to 2009 Gresham Ltd had received more than £4.5m from unsuspecting clients. The fraudsters made their money by fooling clients into paying tens of thousands of pounds for due diligence and deposit fees... Across the world businesses were collapsing after entering into big deals on the false promise from Gresham that their money was only days away. In Austria, two victims had contractors waiting to start work with diggers after Gresham promised to find €32m (£27.4m) to fund a leisure resort. No money materialised. In India a businessman from Bellary Steels paid Gresham £285,000 to finance €183m. Nothing materialised and the victim "suffered crippling losses" of £825,000 and now owes €11m, the court heard. There were at least 51 victims.

Davenport, known as "Fast Eddie" and pictured on his website with dozens of celebrities including Simon Cowell, the actor Hugh Grant, Sarah Ferguson and the justice secretary, Kenneth Clarke, kept his distance from the legwork and operated under a false name, James Stewart or Stuart. He launched the fraud, remained in overall charge and did not "leave many footprints in the snow for himself", not wanting to risk his champagne lifestyle which included parties with the stars and a property in Monaco.

[Demeter]

7. Microsoft to win approval for Skype deal

Microsoft is set to win Brussels approval for its planned $8.5bn (€5.9bn) acquisition of online telephone service Skype, highlighting the turnround in its long-strained relations with European competition authorities

Read more >>
http://link.ft.com/r/WDI4RR/OR1P8T/1O51V/JEI21V/XHOTTP/4O/t?a1=2011&a2=10&a3=5

[Demeter]

8. China sees surge in CDS on slowdown fears

Fears of an economic slowdown in China have fuelled a trading surge in instruments that insure investors against sovereign bond defaults, making the country a new focal point for the widely used financial products

Read more >>
http://link.ft.com/r/4RNQTT/C4ID9W/4VXHZ/2O6FWJ/IIJYY9/N9/t?a1=2011&a2=10&a3=5

[DemReadingDU]

13. So weird all this bad economic news, yet stock markets are rallying

:crazy:

[Demeter]

15. Uncle Sucker Must Have Made Some Very Profitable Promises

otherwise, they are all delusional.

[Tansy_Gold]

58. That's why "the markets" are irrelevant

More money is printed, more money buys higher priced stocks, but none of it affects the real lives and the real economy. It ALL flows to the same already overflowing cup. What wealth is actually produced by the workers is extracted, regardless where they live and toil, and put into the same coffers.

The likelihood of a market "crash," I think, is minimal. The market(s) is so carefully controlled that it won't crash unless and until such a crash benefits the aristos. When they have extracted virtually everything they can, they will walk away and let the ponzis fall where they will.

No one will ever be forced to pay off on the CDS or other derivatives because the ponzi will just increase as long as the presses run.

Would electing true liberals make a difference? At this point, I don't think so. I don't think the electorate would ever elect enough of them. A token here or there, but they would be carefully controlled and marginalized.

But I understand how the process works. Our own Roland99 is a good example. We are given enough comfort to keep us afraid of losing it. I'm not immune. I have my little property and my little bit of security and I'm not eager to sacrifice it. We have our own Fuddnik, who has his own anger and IS willing -- or so he said -- to risk everything.

We aren't angry enough. Maybe some of the OWSers are angry, but are they ready to take the kind of risks people like Fred Shuttleworth and MLK and Medgar Evers and Mickey Schwerner took in the interest of civil rights? Do I think it will take that kind of sacrifice? Probably it will. The banksters are NOT going to give up what they have willingly. If it's not taken from them by force, they will do whatever they can to hold onto it. They will mock the OWSers -- they already have - because they know they can do so without consequences.

Understand this -- the Far Right is not a new movement but it has always been a subtle one, and through that subtlety it has achieved much. Much of what it has accomplished has been through the medium of popular culture, including religion, education, etc.

The Left has been less willing to go that route, but when it has, it has been remarkably successful.

We know that the majority of "the people" agree with the aims and ideals of the OWSers. Most people beleive the banksters are too greedy, that they have harmed "the economy," that they need to be reined in. But the Left has not been able to capitalize (pun intended) on that sentiment.

We know that the media will side with the Right Wing because the media IS the Right Wing. We have lost our Cronkites and our Murrows; Moyers and Olbermann have been effectively silenced. We had what we thought was a leader when millions of us followed Obama, but the results have been nothing like what we hoped for.

So what do we do now? Do we take to the streets and hold up signs that say "Jump, you fuckers!" when we know they aren't going to? Do we praise Steve Jobs because he gave us cool toys (technological drugs) in place of real jobs and incomes? Do we support a president who has not delivered because to NOT support him reflects badly on us for the bad judgment we showed?

I've said before, including elsewhere in this thread, that we need to pay more attention to history than to economics, more attention to Zinn than to Krugman, to Chomsky than Stiglitz. More important, however, we need to learn the lesson of the 1960s -- that the power is in popular culture.

One of the great fears expressed here on DU is that public education is being gutted and will be detroyed if right wing policies prevail. Understand this -- those policies are not new. They go back at least to the 1960s when the right wing began taking control of local school boards, of state boards of education, or public colleges and universities. Education is the wise older sister of propaganda, and when education is weakened, propaganda takes over.

We've been distracted by the markets, by watching the graph go up and down on a daily basis, wondering when the crash will come (it probably won't), and we've failed to see what the man behind the curtain is doing. The man behind the curtain is Alex P. Keaton, cute and endearing and funny and clever . . . and greedy and ruthless and able to bully and defeat the generosity of his hippie parents. Archie Bunker always won out over the Meathead. The Jeffersons moved on up. Seinfeld waa about nothing. And now reality is unreal.

We've lost the culture war, and it has nothing to do with Janet Jackson's costume malfunction but everything to do with how many coffee shop converations and facebook statuses and twitter tweets are dedicated to Chaz and DWTS versus how many are addressing the disparity in education funding and what skills kids are really coming out of public schools with.

But it also means that those of us who attempt to communicate do not fall into a malaise. We must be willing to risk. . .. .something. Otherwise, we have given the enemy nothing to fear.


Tansy Gold

[Demeter]

59. When the Obscenely Wealthy Start Eating Eat Other

the Markets will crash.

Or when the 99% start eating the OW...

[Tansy_Gold]

61. And that's the scary part

The 1% won't do anything until they are frightened enough to do it, and they have the power to do a lot of bad stuff.

The 99% are starting to do something, but what they're doing is basically ineffective because it isn't enough to frighten the 1%.

When the situation reaches critical mass, it will be too late to avoid the one thing that will make real change -- violence.

[Demeter]

63. Oh, Trust Me, They ARE Frightened

They just don't know how to tighten the leash without getting their arms bit off.

Killing the attack geese would stop the golden eggs, you know.

[Tansy_Gold]

66. No, they aren't. They aren't frightened at all

They know they are in control. They control the courts, the media, the congress, the parties, the schools, the military, and of course the economy. They might be a little concerned, but they're not frightened.

[DemReadingDU]

75. The perception is that they are in control of everything

Until they aren't. There are too many things swirling around, and something (I don't know what), but something will happen. It's Stein's law... "If something cannot go on forever, it will stop"

[Tansy_Gold]

78. At the moment, they are in control.

Certainly OWS is not in control, and since we do not have chaos, **someone** is in control.

The banksters control the congress. There is no indication that OWSx (= OWS plus its local extensions) has any control of congress or has intentions of taking over, taking control of, or abolishing the legislative government.

The banksters control the state and local governments. There is no indication that OWSx is capable of taking control of state and local governments.

The banksters control the economy.

The banksters control the media. Speaking a half sentence at a time with no microphone is not exactly going to take over the radio and tv and cable and satellite and internet and international media.

The banksters control the courts, from SCOTUS on down, because they control the state and local governments as well as the congress. Whether judges are elected or appointed-and-confirmed, they are determined by the governmental/legislative process. If the banksters control that, they control the courts.

Just because things are swirling around does not mean something is going to happen. Nothing much happened in Wisconsin -- a couple of state senators got recalled but the majority stayed in charge, thanks to right wing banksters being in control of who counted the ballots.

In another thread someone posted that all available options had been tried, or something to that effect, and I disagreed. Seriously, seriously folks, OWSx is really only trying a very limited number of options, and ignoring many many many more. The left needs to take some lessons from the right -- as has been said many times before -- and understand how to change hearts and minds. It's not through marches and anger alone.

Howard Dean, of all people, knew this. Whether we agreed with his politics or not, he developed a very effect organization that, in many ways, resembled what the right wing had been doing for half a century or more.

[Ghost Dog]

67. I believe you are right about the power of popular culture, Tansy.

When radical change becomes cool, there will be change.

But the 1%'s action/reaction is on the cards to then be devastating, and the groundwork has already been laid, the trial run run: What can be more popular in your US culture, at least for a while and under ferocious propaganda control, than WAR.

There will be war, unless we the people can be very, very foresighted and clever.

[Tansy_Gold]

70. Exactly.

The brown people were so easily designated the enemy, and now it is even "legal" to target "Americans" for expedient political assassination. The media says nothing, the churches say nothing, the economy says nothing.

How far are we from, well, you know Godwin's law as well as I do.


TG

[AnneD]

64. Great cogent thoughts.....

Tansy. Every time I listen to that George Carlin monologue (it was from New York I think), I get sad and find it hard to laugh. The truth really hurts.

That was the monologue where he famously said "why do you think they call it the American Dream...you have to be asleep to believe it."

[Demeter]

9. Hedge fund bears win bets in euro crisis

Bearish hedge fund managers have reaped some of their biggest gains since the collapse of Lehman Brothers amid the market turmoil triggered by the eurozone debt crisis

Read more >>
http://link.ft.com/r/6NPSBB/0820HI/YGZ3O/7A21I3/U1GUPV/9A/t?a1=2011&a2=10&a3=5

[Demeter]

12. Rambourg plans new hedge fund in Paris

Guillaume Rambourg, the star trader whose run-in with UK market regulators led to the fall of asset management group Gartmore as an independent company, is poised to launch his own hedge fund venture in Paris

Read more >>
http://link.ft.com/r/9ULF66/TUGUE2/7ZY85/ORJ5B9/PFU984/D5/t?a1=2011&a2=10&a3=4

[Demeter]

10. EU banks face new ‘Greek’ stress test

European Union finance ministers have asked the bloc’s leading bank regulator to test the strength of Europe’s banks on the assumption of a big writedown on Greek sovereign debt

Read more >>
http://link.ft.com/r/XYEWFF/7AW5ZI/VTVRG/168R7P/GD9XWG/1G/t?a1=2011&a2=10&a3=5

ONE WONDERS WHAT THEY HAD BEEN DOING BEFORE? TESTING FOR MITES?

[Demeter]

14. EU ministers look at bank aid plans

European Union finance ministers are examining ways of co-ordinating recapitalisations of financial institutions after they agreed that additional measures were urgently needed to shore up the region’s banks

Read more >>
http://link.ft.com/r/6NPSBB/XH0HQ0/GYN7Q/SP3KOR/MSNITY/HK/t?a1=2011&a2=10&a3=4

[Demeter]

11. BlackRock joins call for action on ETFs

The world’s leading provider of exchange traded funds has backed calls for tougher safeguards for the investment products to deflect the rising tide of regulatory concerns about the systemic risk posed by the fast-growing market

Read more >>
http://link.ft.com/r/A1TNOO/8ZXZ3P/LSLXF/AM7HID/2O2BXY/AZ/t?a1=2011&a2=10&a3=4

THE FIREBUG IS CALLING THE FIRE DEPARTMENT? SOUNDS LIKE WE FOUND THE FLASHPOINT

[burf]

26. Heaven forbid

BlackRock coming out with a policy such as: "We will no longer deal in products of financial fraud". Wouldn't that take care of the concerns mentioned in the gobbledgook statement you quoted?
But, I don't see that happening in the near future.

[Demeter]

16. Yukon Huang: US-China trade war: Congress beware what you wish for

Once again the US Congress is finding it more convenient to play the China currency card as the panacea for America’s economic woes, rather than deal with the difficult issues in President Barack Obama’s recent employment bill.

China’s response to the proposed bill pressuring it into allowing the renminbi to appreciate was predictable, with simultaneous protests from all the relevant agencies. Given the threat to the global economy from the problems in the eurozone and the US, China’s leadership regards the currency bill as a distraction from the real issues that need to be resolved.

Read more >>
http://link.ft.com/r/S4XZQQ/4CMMF9/EKRAI/DW48FS/PF1NU8/1G/t?a1=2011&a2=10&a3=6

[Demeter]

17. Mohamed El-Erian: Untreated, the Greek infection now threatens Europe’s core

Europeans, and with them the rest of the world, are discovering what all doctors know – a persistently misdiagnosed and incorrectly treated infection can eventually threaten even the healthiest part of the body, thus requiring more drastic medical intervention whose effectiveness is less assured.

This is what is happening in Europe today. A debt and growth crisis in the outer periphery of the eurozone (Greece) has been allowed to destabilise the inner periphery and the outer core (Ireland, Italy, Portugal and Spain). In addition, signs of dislocations are now visible in the inner core
– both through the banking system and directly.

Read more >>
http://link.ft.com/r/IOCBMM/WTOGOK/B49CK/FKXOJC/JERY6F/AZ/t?a1=2011&a2=10&a3=5

[Demeter]

18. Dexia déjà vu: the parallels with Bear Stearns

News that troubled Franco-Belgian bank Dexia is once again being supported by the state should prompt déjà vu. We have indeed seen it before: Dexia was one of the first banks to need a rescue after Lehman’s collapse.

Perhaps, though, Dexia – being given loan guarantees and state support for a “bad bank” – is more important. Like Bear Stearns, it may be sending a warning that we should be more worried.

Read more >>
http://link.ft.com/r/DHGUVV/GDSDRW/ULCJB/5VCPW7/16VH28/ZH/t?a1=2011&a2=10&a3=4

[Roland99]

38. De Tijd Reports Dexia To Be Nationalized

http://www.zerohedge.com/news/de-tijd-reports-dexia-be-nationalized

As predicted, the Dexia "bad bank" rumor lasted all of, oh, 24 hours. After exhausting all talking points, French and Belgian politicians took out the abacus and were horrified to learn, as we suggested, that any implicit backstop would cost them dearly, and in France's case, at least one A of those critical AAAs that continue to keep Europe afloat. So implicit moves to explicit and as Belgian De Tijd reports, "the Belgian government will nationalize Dexia Bank Belgium." From the article: "the federal government came together this morning to rule on the future of Dexia Bank Belgium. There were several scenarios on the table. One was the nationalization of Dexia Bank Belgium (DBB) . This means that the Belgian state will buy DBB to quickly resell in the future. The disadvantage of this scenario is that the shareholders suffer most because they are left with the unhealthy parts of the group (the bad bank)." It also means that Belgium can kiss its sterling credit rating goodbye, and its CDS will continue going up until it meets that of Dexia, which will now have the same implied risk as that of the government about to consume it. Two questions arise next: will the website of Dexia be down indefinitely as locals decide that keeping their money in an insolvent bank may not be the best option, and, secondly, who will nationalize a governmentless Belgium next?

translated version of article at the link.

[Demeter]

40. The Questionable Balance Sheet Of Dexia Bank

http://firedoglake.com/2011/10/05/the-questionable-balance-sheet-of-dexia-bank/

It looks like Dexia Bank will be the first large European bank to fall to speculation about losses on its loans to Greece, and as David Dayen notes, this may be a sign of things to come. Dexia is partly owned by the Belgian Government and partly by the French Government, the result of a 2008 bailout. Private investors own the rest of the shares. The two governments issued a statement saying they “… will take all necessary measures to ensure the safety of depositors and creditors. To this end, they undertake to guarantee to bring their financing raised by Dexia.”

The current plan is that the Belgian government will take on the retail bank, which is largely in Belgium, perhaps with a view to selling it. The French Government will fold the French bank into La Banque Postale and the Caisse des Depots et Consignations, both of which are owned by the French government. There will be nothing for shareholders, according to one analyst. The current price for the stock values the equity at about €1.96 billion, compared to the stated net worth of €6.9 billion. The worrisome part is that the bank wrote off 20 percent of its Greek debt, but still has about €3.4 billion on its books, and the expected losses now look like 60 percent instead of the 20 percent that Dexia took, implying another €2.55 billion loss. That should leave an large equity cushion of €4.35 billion, but at least one analyst thinks that there is no money for shareholders. A note from Nomura Securities, quoted extensively by Zerohedge, says that while the senior debt may be paid in full, lower-ranking debt may not.

If there is no money for minority shareholders or lower-ranking creditors, the current balance sheet is really wrong. That has a strong flavor of Lehman Brothers, which showed an enormous net worth immediately before filing bankruptcy. This is another sign that no one trusts reports from accountants any more. It is also a sign that the European stress tests were weak. Dexia passed in the most recent round of tests...Weaknesses in financial regulation were not repaired, either here or in Europe. We continue to rely on the accounting profession and its interpretation of a set of rules created by a mish-mash of legislative intrusion and captured regulators. Those rules are not working, and investors don’t have any reason to trust them. That is a particular problem for small investors, the ones Fed Chair Ben Bernanke is trying to force into the stock market, because they really don’t have any way to guess just how wrong financial statements are.


That explains why the press is fixated on whether this will affect France’s AAA rating. Remember, if France has to make good on a guarantee, it has to borrow the money in Euros, and pay interest. That is a burden on French taxpayers. French bonds are falling against German bonds already...There are no painless solutions. The only question is who will bear the pain. The US government is dominated by a financial oligarchy, (see Thirteen Bankers, by Simon Johnson and James Kwak) so we can assume it will be taxpayers who get slashed. At least in Europe, it looks like equity investors and maybe even some bondholders will take losses.

[AnneD]

46. I don't know about you guys.....

but I hear the klaxons sounding now. I think the fresh flop is about to hit the fan. It is time to duck or close your mouth.

[Demeter]

19. Steven Rattner: The rage of the citizenry demands tough bank rules

Let’s agree that a lot of bad stuff happened along the way to the 2008 financial meltdown and that a good portion of the responsibility can justifiably be laid at the feet of the Wall Street community.

Whether or not laws were broken, the lack of discipline and inadequate controls around many lending and risk taking practices certainly merit some version of the vigorous rethink of the regulatory apparatus that is now in process.

Read more >>
http://link.ft.com/r/BLH300/5V5CSV/WH2F8/5VCPKP/FKEM23/B7/t?a1=2011&a2=10&a3=4

[xchrom]

20. mmmm --- this morning i can catch the faintest smell of revolution in the crisp air.

:donut:

[Demeter]

23. It's just your imagination

[xchrom]

25. well -- like tennessee williams -- i have a vivid one! nt

[AnneD]

47. Well it is after all...

October the sixth.

[xchrom]

21. Why Hunger Is Still With Us

http://www.thenation.com/article/163402/why-hunger-still-us

Amid the joy of local, seasonal ingredients and tides of young people with dirt freshly lodged under their fingernails, it feels unkind to point to the bigger problems within the food system. But it’s worth tempering an optimism of the will with a pessimism of the intellect. Despite the food movement’s gains over the past decade, it’s hard not to feel the latter outweighing the former.

For every White House organic garden, there’s an appointee to the US Trade Representative’s office from the pesticide industry. Sasha and Malia may be getting good grub, but the global South still gets stuck with chemicals.

Harvests remain strong, and people still go hungry. This isn’t because of population growth—there’s enough produced to feed everyone on a Small Planet’s diet. But the economics of crop production have increasingly left concerns about human eating in the dust.

First, we’re growing more crops than ever before not for direct human consumption, or even animal feed, but as biofuels, to keep cars on the road. Already, more than a tenth of the world’s total coarse grain output is used for fuel, and the OECD predicts that within a decade a third of all sugar cane grown on earth will be used not for sweetening but for combustion.

[Demeter]

22. IMF Says Latin America Must Be Ready to Inject Stimulus

http://www.bloomberg.com/news/2011-10-05/imf-says-latin-america-must-be-ready-to-adopt-stimulus-measures.html

Latin American policy makers must be prepared to use interest rate cuts and consider fiscal measures to protect their economies in the event that the global economy stalls, the International Monetary Fund said. Should recessions in Europe and the U.S. materialize and spill over to Asia, commodity producers in the region may face a “triple shock” from weaker terms of trade, declining exports and tighter global credit markets, the Washington-based lender said in a report released today. Fiscal easing should only be utilized if the “severe downside risks” of lower crude oil and metal prices is induced by a slowdown in Asia, and Europe’s debt woes unleash a credit crunch similar to that which followed the 2008 bankruptcy of Lehman Brothers Holdings Inc., the report said. “Given the complexity and uncertainties surrounding the global economy, policy makers must stand ready to adjust policies should downside risks materialize,” according to the 93-page report. “In countries with credible monetary frameworks, where inflation pressures have abated, monetary policy can be more flexible, serving as a first line of defense.”

Increased risk aversion, which wiped $10 trillion off global equities in the third quarter, has had a limited effect on the region’s growth prospects so far, and it’s premature for governments to loosen policies, as fiscal positions weakened by the 2008 crisis need to be rebuilt, the IMF said. The fund predicts Latin American economic growth will slow to 4.5 percent this year and 4 percent in 2012, compared with a 5 percent expansion in the first half of this year...The economies of Mexico and Brazil will each grow 3.8 percent this year, down from forecasts of 4.5 percent and 4.6 percent in the fund’s April report. Mexico, Brazil and Venezuela will lag behind the rest of the region in 2012, with 3.6 percent growth each, while Panama will post the fastest expansion of 7.2 percent. Venezuela will probably have inflation of 24 percent next year, more than four times the regional average, while in Argentina prices will rise 11 percent. Peru and Belize will have the lowest inflation at 2.5 percent each. “Strong” growth in Latin America and “relatively high” commodity prices are likely provided Europe contains its debt crisis, the U.S resolves its budget problems and Asia avoids a slowdown, Nicolas Eyzaguirre, director of the International Monetary Fund’s Western Hemisphere department.
.................

Latin America would be among regions most affected by the spillover from a banking crisis in Europe, the IMF said. Chile would be the most affected if Europe’s banks take higher-than- expected losses on loans from the European periphery, followed by Brazil and Mexico, the report said. The IMF urged governments to maintain their guard against overheating. While slower global growth has reduced such a risk, there’s still danger that near-zero interest rates in advanced economies could spur capital flows to Latin America if the European debt crisis is contained...Credit expansion in the region is showing little sign of slowing, with 12 percent average annual growth in June, while banks rely increasingly on wholesale operations to finance lending. “Although these trends are not an immediate threat to stability, they need to be closely monitored to avoid problems down the road,” the report said. Macroprudential measures such as changes to reserve requirements should remain part of the region’s armory against destabilizing capital flows, although the IMF found they result in a “moderate” slowdown in credit growth that lasts only four months. “Despite their increasing use, the effectiveness of macroprudential policies in leaning against credit growth and protecting financial stability remains an open question,” the report said.


Commodity exports represented 10 percent of South America’s gross domestic product in 2010, up from 6 percent in 1970, according to the report. Though the region is better placed to withstand a decline in commodity prices than in the past, the outlook for Mexico and much of Central America is bleaker because of their dependence on U.S. activity. “A sustained crisis of sovereign and financial confidence in Europe could disrupt global credit markets and lead to a sudden stop of trade and bank financing,” the report said. “Another recession in the United States, triggered by woes in Europe or persistent weaknesses in private domestic demand coupled with an overly large up-front fiscal adjustment, could lead to a considerable slowdown in emerging Asia and much lower oil and metal prices.”

[tama]

57. And What did Latin America say to IMF? Go Away. n/t

[Demeter]

60. Vivan Americanos Latinos.

[xchrom]

24. europe: European banks Holey grail

http://www.economist.com/node/21530994

THE fire raging in Europe’s financial system is growing fiercer by the day. Banks across the region have been unable to sell any long-term unsecured bonds since early July. Short-term markets have also been closing to some banks. A few large corporations prescient enough to have their own banking licences are depositing their cash directly with the European Central Bank rather than entrusting it to banks. An obvious step to douse the flames would be to recapitalise European banks. Yet by how much and with what capital?

Global regulations are already forcing banks to plump up their cushions significantly. Nomura reckons that simply getting banks to comply with the new Basel 3 rules, plus an additional surcharge on globally important banks, could leave European lenders, Britain’s included, needing to raise more than €100 billion ($136 billion). In theory banks have until 2019 to raise this amount, and much of it could come from profits over the next few years. But investors are impatient and are pressing banks to reach those levels sooner.

On top of this requirement is the extra capital that banks would need to absorb losses from a recession or the debt crisis. Such calculations depend on lots of assumptions, from the amount of capital that banks ought to hold to the precise nature of any euro-zone write-downs. “The key issue is what scenario the banks would need to be recapped for,” says Huw van Steenis of Morgan Stanley. “A soft restructuring in just Greece? Or restructuring in multiple peripheral countries?”

Start with a Greek write-down and the numbers look quite manageable. Even assuming a 50% reduction in the value of Greek government bonds, the total hit to the capital of non-Greek banks in Europe would probably not exceed €10 billion. Simply buffering the system against a Greek default may not be enough, however. Investors now fret about the solvency of bigger countries. If banks were to undergo a recession and mark to market their holdings of bonds issued by Greece, Ireland, Portugal, Spain and Italy, they would need more than €300 billion in capital (see chart).

[Demeter]

28. Now THAT'S News!

And not good news, either.

[xchrom]

32. no, indeed not. nt

[xchrom]

31. Spanish treasury places nearly five billion € of debt

http://www.typicallyspanish.com/news/publish/article_32217.shtml

The Spanish Treasury has today managed to place 4.498 billion € in three and four year bonds, and doing so paying an interest rate which was far lower than it was obliged to offer on the markets last August.

2.39 billion was placed in debt until April 2014 at 3.589% compared to the 4.813% offered in August, but demand slipped slightly down to 1.8 times oversubscribed.

981 million was also placed until October 2014 at 3.495% compared to 4.291% offered in July, and this offer was twice oversubscribed.
A third auction placed 1.1 billion in debt until April 2015 at 3.639% compared to 4.23% in June.

Read more: http://www.typicallyspanish.com/news/publish/article_32217.shtml#ixzz1a0GjWNrU

[xchrom]

34. King Juan Carlos opens new Solar Farm in Andalucía

http://www.typicallyspanish.com/news/publish/article_32201.shtml

The number of solar farms continues to increase across Andalucía, and the new ‘Gemasolar’ plant which was opened by King Juan Carlos on Tuesday in Fuentes de Andalucía, Sevilla, can still provide power 15 hours after the sun has gone.

The King was joined by Sheik Mohamed bin Zayed Al Nahyan from Abu Dhabi, Minister for Industry, Miguel Sebastian, and the President of the Junta de Andalucía, José Antonio Griñán.

The ‘Gemasolar’ plant has been built by Torresol Energy, a joint venture between the Spanish Sener group which has 60% and Masdar from Abu Dhabi. It has 2,650 mirrors which are GPS controlled to follow the sun, and has cost 171 million €.

Read more: http://www.typicallyspanish.com/news/publish/article_32201.shtml#ixzz1a0HU2skD

[Ghost Dog]

69. Fine technology there. Stores the energy using molten salt.

Further finance required for properly managed expansion, of course. Ideally, given political stability and decent business practices, across North Africa and the Sahara region.

[xchrom]

36. Gold pares gains after ECB holds rates

http://www.guardian.co.uk/business/feedarticle/9881909

* Rising stocks cut distressed selling of gold
* Guidance awaited from ECB on possible rate cuts
* Chinese appetite for platinum lacking, says UBS
By Jan Harvey
LONDON, Oct 6 (Reuters) - Gold pared gains on Thursday after the European Central Bank held interest rates steady despite speculation in some quarters for a growth-boosting cut, but was supported by a stock market rally which cut selling of the metal to cover losses elsewhere.
Spot gold was at $1,640.59 an ounce at 1209 GMT, little changed from the level it traded at late in New York on Wednesday, but off an earlier high of $1,654.55. Trade is expected to be cautious before the ECB press conference later.
"In the short term, the gold price is consolidating after the recent correction," said BNP Paribas analyst Anne-Laure Tremblay. "Another sharp downside move would be most likely triggered by another episode of extreme risk aversion." She said gold's longer-term fundamentals remained supportive.
Gold saw its biggest decline in nearly three years last month as pressurised selling to cover heavy stock market losses pulled prices more than 20 percent from record highs and prompted a period of intense volatility.

[xchrom]

37. Serbia Cuts Main Interest Rate as Debt Crisis Weakens Growth

http://www.bloomberg.com/news/2011-10-06/serbia-cuts-main-interest-rate-to-year-low-as-debt-crisis-weakens-growth.html

Serbia’s central bank cut its benchmark interest rate for the fourth time since June after an easing of inflationary pressures created room for lower borrowing costs amid an economic slowdown and high unemployment.

The Belgrade-based Narodna Banka Srbije decreased its two- week repurchase rate by a half-point to 10.75 percent, the lowest in a year, matching the expectations of four of 23 economists in a Bloomberg survey. Ten forecast a quarter-point decline while one saw a three-quarter point cut and eight no change.

“Recent signals are strongly pointing to slowing inflation, negative economic trends in the third quarter, high financing costs for the real sector and that’s why we expect a cut,” Aleksandra Vukosavljevic, the head of research unit at Raiffeisenbank a.d. in Belgrade, said before the decision. She predicted a quarter-point rate reduction, adding a half-point cut couldn’t be ruled out.

Europe’s slowing economy and the ongoing debt crisis have already weighed on demand for the Serbian exports. Growth in the Balkan nation, which aspires to become a European Union candidate this year, slowed to 2.2 percent in the second quarter after a revised 3.7 percent growth in the first three months of 2011.

[Demeter]

27. HO! HO! HO! Retail Industry Trade Group Sees Holiday Sales Up 2.8%

SOMEBODY CRACKED OPEN THE EGGNOG A LITTLE TOO EARLY--I AM GOING TO BE CONSERVATIVE, AND PREDICT A 5% FALL IN PURCHASES, UNLESS THERE'S LOTS OF LOSS-LEADERS AND PRICE RESTRAINT--UNLESS THE WORLD ENDS AGAIN, AS IT DID IN 2008. THEN, ALL BETS ARE OFF--DEMETER

http://www.cnbc.com/id/44626385

Ho-ho-hum. That may sum up the sentiment this holiday season, as retailers — and consumers — proceed with caution, according to a forecast released Thursday by the retail industry trade group the National Retail Federation. Holiday retail sales are expected to rise 2.8 percent to $465.6 billion, the NRF predicts. This growth, while far slower than last year’s 5.2 percent gain, is slightly higher than the 10-year average holiday sales gain of 2.6 percent, the group said.

“Retailers are optimistic that a combination of strong promotions and lean inventory levels will help them address consumer caution this holiday season,” said Matthew Shay, NRF’s president and CEO. “While businesses remain concerned over the viability of the economic recovery, there is no doubt that the retail industry is in a better position this year to handle consumer uncertainty than it was in 2008 and 2009.” During that period, retailers were caught with large levels of excess inventories as the financial crisis prompted consumers to cut spending, reduce their household debt levels and get their budgets under control...Since then, retailers too have learned to do more with less. One sign of that is reflected in the NRF's first-ever seasonal hiring forecast, which said retailers will hire about the same number of workers this year as they did last year.

Since the financial crisis and the recession, there has been persistently high unemployment, and there is no telling when the labor market will strengthen. At the same time, consumers have seen only modest income growth, while prices for many things they buy — gasoline, groceries, clothes to name a few — have risen. More recently, there are signs of potential pressure on another front: the wild swings in the stock market. That could be bad news for luxury goods, which have been a bright spot, as high-income consumers tend to spend less in a down market, and may more guarded about their spending in this climate. Still for the moment, consumers have been trucking along. Retail sales have grown for 14 consecutive months and household debt levels have fallen. But with consumer confidence remaining at depressed levels, it is unclear how sustainable this is.

“How Americans will react to shaky economic data is the question, but the good news for retailers is that shoppers have not yet thrown in the towel,” said NRF Chief Economist Jack Kleinhenz. The NRF’s forecast is very much in line with other sales estimates issued by other industry analysts and consultants. Deloitte, ShopperTrack, Kantar Retail and the International Council of Shopping Centers all have predicted holiday sales gains in the 2 percent to 3 percent range. Although different methods of calculating retail sales mean that these numbers are not directly comparable, they all translate the same tone: Sales will good, but not great.

[AnneD]

54. I see the potential ....

for our next great betting pool. Sales up or down and the %.

[Demeter]

77. If I thought Anyone Would be Honest About the Numbers

but I don't.

[AnneD]

79. A lot can happen ...

between now and Christmas. I think we will see more red than green but that is IMHO, YMMV.

[xchrom]

29. Emerging markets One more such victory

http://www.economist.com/node/21530992

A YEAR ago Brazil’s finance minister, Guido Mantega, declared that the world had entered into a “currency war”. He worried that in a depressed global economy, without enough spending to go around, countries would sally forth and grab a bit of extra demand for themselves by weakening their currencies. The dollar, for example, fell by 11% against Brazil’s real in the year to August 2011, much to the chagrin of Brazil’s manufacturers. Like other emerging economies it fought back by imposing taxes and other restrictions on foreign purchases of local securities.

But the invasion of foreign capital that so worried Mr Mantega has now turned into a shambolic retreat. The outflows have dragged down the exchange rates of almost every emerging economy since the beginning of August (see chart 1). Having spent much of the past year fretting about their currencies’ rise, central banks across the emerging world have now intervened in the markets to slow their currencies’ fall. In a currency war, where each side fights to gain competitiveness against the others, these tumbling exchange rates presumably count as victories. But they are Pyrrhic.

That term originates with the Greeks—Pyrrhus was a Hellenistic general whose victories against Rome came at a grievous cost to his own side. The Greeks are also partly responsible for more recent reversals. As the government in Athens teeters on the brink of default, investors have begun to doubt the creditworthiness of other euro-zone governments, as well as the banks that lent to them. The gathering unease has left global investors less willing to tolerate the risks associated with volatile emerging economies.

[Demeter]

33. Ireland stakes claim to eurozone rescue fund

Deputy prime minister says Dublin should be allowed to tap the European financial stability facility to cut the cost of Ireland’s bank bail-out and boost its chances of becoming Europe’s recovery success story


Read more >>
http://link.ft.com/r/R5WAEE/PFL1YM/52KB7/WTLEZL/KQFEGR/E4/t?a1=2011&a2=10&a3=6

THAT SHOULD BE AN INTERESTING BIT OF THEATER...

[Demeter]

35. US banks defer 60% of executive bonuses ALERT! ALERT!

Compensation schemes move away from short-term rewards after financial regulators around the world initiate a crackdown

Read more >>
http://link.ft.com/r/IOCBMM/GDS9FN/YGZ3O/MS97HX/QNLFVW/7V/t?a1=2011&a2=10&a3=6

HOPE THERE'S WEASEL WORDS IN THOSE CONTRACTS, SO THAT DEFERRED BONUSES CAN BE DENIED WHEN THE WORLD GOES BOOM...

[Demeter]

39. The U.S. approved to grant 400 M1A1 Abrams to Greece

AS YVES SMITH NOTED: Per Mark Ames: “More signs that Greece is preparing for the eventual coup: so there’s no money to pay public sector workers, but somehow the bankers are allowing Greece to put another 400 M1A1 Abrams tanks on the credit card. ”

http://www.defencegreece.com/index.php/2011/10/the-u-s-approved-to-grant-400-m1a1-abrams-to-greece

According to information of the “Hellenic Defence & Technology” magazine, the U.S. authorities approved to grant 400 M1A1 Abrams tanks to the Greek Army, which will include options between simple refurbishment – worth tens of millions dollars for all the tanks- and upgrading to a higher level of operational capability, with a higher corresponding cost. The relative Letter of Offer and Acceptance (LOA) is expected soon.

Also according to exclusive information of the 'Hellenic Defence & Technology' magazine, a Price and Availability letter was sent to U.S. authorities regarding 20 AAV7A1 and a low cost upgrade program for them. This is the first step to cover an operational requirement for 75-100 vehicles.

Additional exclusive details on these requirements as well as for Bradley IFVs, in a forthcoming issue of the 'Hellenic Defence & Technology' magazine.

[xchrom]

41. Keynes and Hayek, the Great Debate (Part 1): Nicholas Wapshott

http://www.bloomberg.com/news/2011-10-06/keynes-and-hayek-s-great-debate-part-1-commentary-by-nicholas-wapshott.html

The greatest debate in the history of economics began with a simple request for a book. In the early weeks of 1927, Friedrich Hayek, a young Viennese economist, wrote to John Maynard Keynes at King’s College, Cambridge, in England, asking for an economic textbook written 50 years before: Francis Ysidro Edgeworth’s exotically titled “Mathematical Psychics.” Keynes replied with a single line on a plain postcard: “I am sorry to say that my stock of ’Mathematical Psychics’ is exhausted.”

Why did Hayek, an unknown economist with little experience, approach, of all people, Keynes, perhaps the best-known economist in the world? For Keynes, Hayek’s request was just another item in his bulging postbag. Cambridge’s economics prodigy retained no record of Hayek’s request, even though he was so conscious of the contribution he was making to posterity through his daring approach to the study of political economy that he had taken to hoarding each scribbled note and every last letter. His posthumously published papers, even when edited, fill dozens of volumes.

Hayek, meanwhile, seemed fully aware of the significance of his request. He treasured Keynes’s bald reply and preserved it for the next 65 years as a personal memento and professional trophy. The postcard sits today in the Hayek archive at the Hoover Institution on the Stanford University campus in California -- tangible evidence that Hayek had instigated the first contact in what would become an intense duel over the role of government in society and the fate of the world economy.
Scarce Resources

Edgeworth interested Hayek because one of the subjects he explored at length was a topic that would come to engage both Keynes and Hayek: how scarce resources can best maximize the “capacity for pleasure.” The forbiddingly titled “Mathematical Psychics: An Essay on the Application of Mathematics to the Moral Sciences,” published in 1881, was Edgeworth’s best-known work. It anticipated a great number of the debates that would entangle economists over the next century, including notions of “perfect competition,” “game theory” and, most important for the impending battle between Keynes and Hayek, the belief that an economy will reach a state of “equilibrium” with every able- bodied adult fully employed. Edgeworth was also an early expounder of theories about money and the monetary system, which by 1927 both Keynes and Hayek had already addressed at length.




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

the author

After joining the Scotsman as a graduate trainee in 1973, based in Edinburgh, in 1976 he moved to London to join the staff of The Times, working first in editor William Rees-Mogg's department as a letters page editor, then became a features editor during which time he wrote a series of long form profiles of politicians and artistic figures, among them the Labour leader Michael Foot, the heir apparent to the Labour leadership, Peter Shore, the leader of the Liberal Democrats, Paddy Ashdown, playwrights Alan Bennett and Dennis Potter, and actors Dirk Bogarde and Alec Guinness.<3><4> When Kenneth Thomson sold the paper to Rupert Murdoch, who installed Harold Evans as editor, Wapshott set up a weekly listings section, Preview.

In 1983 he moved to The Observer as features editor and founded a new weekly color magazine, Section 5. In 1987 he succeeded the novelist Robert Harris as political editor and reported the final days of Margaret Thatcher as Conservative leader. He was the first to report on the early life of John Major, the surprise successor to Thatcher, and correctly predicted his unlikely rise with a timely profile that revealed that the family of the new prime minister had shared a landing with prostitutes, that his father had been a tight rope walker and latterly a maker of concrete garden gnomes, and that, during an extended period of unemployment, he had been beaten to a job as a bus conductor by a West Indian woman.<5>

In 1992, Wapshott returned to The Times to transform the lacklustre Saturday Review section into The Times Magazine, published each Saturday. On the strength of its success and a sharp improvement in Saturday sales he was made Saturday editor of the paper and added a number of separate sections that rivalled the heavyweight Sunday newspapers. As other papers were quick to follow suit, Wapshott is credited with transforming the Saturday newspaper market.

In 2001, he was appointed North America Correspondent of The Times, based in New York.<6> He arrived three weeks before the terrorist attacks of 11 September 2001, but had returned briefly to London and was aboard the QE2 en route to New York when the Twin Towers fell. In 2005 he began writing business features and news stories for The Sunday Telegraph and the following year joined The New York Sun as national and foreign editor, writing a well regarded weekly political column.<7>
Current Work

He is a regular guest on CNN,<8> MSNBC,<9> Fox News,<10> ABC<11> and the Charlie Rose Show<12> and contributed on American matters to The New Statesman.<13><14> In 2008 he was invited by Tina Brown to help launch The Daily Beast and was appointed Senior Editor.<15> In 2009 he became an adjunct professor at The New School, New York, teaching short biographies and profiles. The same year he became a consultant to Oprah Winfrey's website Oprah.com. He now writes a column for Thomson Reuters.

[Demeter]

43. Italy and the UK PAUL KRUGMAN

http://krugman.blogs.nytimes.com/2011/10/05/italy-and-the-uk/

FT Alphaville quotes an economist at an Italian bank, Erik Nielsen, wondering why Britain can borrow so much more cheaply than Italy. It’s a useful piece, largely because it illustrates how hard it apparently is to grasp the advantages of having your own currency. The writer dismisses the notion that the ability to depreciate the pound gives Britain extra flexibility:

Repeatedly, I am told by investors that the UK is more creditworthy than Italy because the UK can depreciate the sterling, which is supposed to boost UK growth and taxable income. Only problem is that that’s theory while it hasn’t really worked that well in practice. Since the end of 2007, UK GDP has contracted cumulatively by 3.4% in spite of the great sterling depreciation as exports failed to recover, while Italian GDP has contracted by a bit more at 4.4%. Since late 2007, UK unit labour costs have increased by 9.5%; Italy’s by a more modest 7.6%. Most importantly, the weaker sterling has lowered imports as the UK got poorer through higher inflation. In 2007, the average Brit was 30% richer than the average Italian. This year (on Eurostat estimates), the average Brit will be just 5% richer than the average Italian.

It’s true that Britain has suffered a nasty recession — but it had a housing bubble and was highly dependent on earnings from the financial sector, neither of which were true for Italy. As for the rest, Nielsen is apparently using unit labor costs measured in domestic currency — which misses the whole point, which is that depreciation reduces your costs in other peoples’ currency. Here’s the real effective exchange rates of Britain and Italy on a ULC basis — that’s a weighted average of the exchange rate against trading partners, adjusted for changes in unit labor costs:



Britain has achieved a 15 percent relative deflation via depreciation; it would take incredibly painful deflation for Italy to achieve the same. Oh, and Nielsen is looking at GDP per capita at market exchange rates; of course that has fallen. On a purchasing power basis, no way has British income fallen 25 percent relative to Italy’s....And a final point: using the Bank of England to buy British debt in a liquidity crunch would not be inflationary. I guess that three years into the liquidity trap, people still can’t grasp the point that the size of the monetary base really, really doesn’t matter. So there are in fact very good reasons why Britain is in better shape than Italy, although the difference wouldn’t be as great if the ECB were able and willing to do its part.

[xchrom]

44. Volcker Rule Draft Puts Short-Term Trades Under More Scrutiny

http://www.bloomberg.com/news/2011-10-06/volcker-rule-draft-puts-short-term-bank-securities-trading-under-scrutiny.html

U.S. banks seeking to gain from or hedge against short-term price movements in securities and derivatives markets would face restrictions under a proprietary- trading ban, according to a draft of the so-called Volcker rule.

The 205-page document, dated Sept. 30 and obtained yesterday by Bloomberg News, is the latest version of the rule to emerge as it’s being written by four federal banking regulators and is scheduled to be released on Oct. 11 by the Federal Deposit Insurance Corp.

The financial regulators didn’t define short-term in the draft, writing that “it is often difficult to clearly identify the purpose for which a position is acquired or taken and whether that purpose is short-term in nature.”

The Volcker rule, which is named for its original champion, former Federal Reserve Chairman Paul Volcker, is intended to reduce the chance that banks will make risky investments with their own capital that put their deposits at risk. The provision was part of the Dodd-Frank financial overhaul enacted last year, and policy makers are drafting regulations to enforce it.

[AnneD]

45. Morning Marketeers....

:donut: and lurkers.

It has really hit home. Many of my good friends have said I have always seemed to march to a different drummer or to my own beat. While most of the world is mourning the death of Steve Jobs, and yes I am sad that we have lost an innovative thinker, I find myself broken hearted at the loss of Bert Jansch (guitarist extraordinary with the group Pentangle). While I have trouble connecting to Bob Dylan, I never had that problem with Bert. He may not have been that well known to most Americans but he influenced a number of our musicians.

"Of all the guitarists to emerge from the early days of the British folk music revival, it was Bert Jansch, who has died aged 67, who had the most sustained influence, not only within folk circles, but also on the wider music scene. To Led Zeppelin's Jimmy Page, Jansch was "the innovator of the time … so far ahead of what anyone else was doing". Johnny Marr of the Smiths described Jansch's effect on his musicianship as "massive … one of the most influential and intriguing musicians to have come out of the British music scene". Other artists he influenced included Paul Simon, Donovan and Neil Young, with whom Jansch toured in the US in 2010.

On stage, he was an introverted, shy, yet riveting solo performer. In his early days especially, he was often unkempt on stage and unconventional off it – a non-conformist who cared little for personal possessions and who often had no fixed address. It was as a member of the groundbreaking folk band Pentangle that he first achieved recognition beyond the folk scene. Formed in 1967, the band toured extensively until 1972, and although all the original members reunited in 1982, it was only Jansch and Jacqui McShee who stayed the course until the band folded in 1995.

His finger-picking playing style included a good deal of improvisation, bending the strings and varying the time signatures to fit the natural rhythm of the words of a song."

<more>

"In the early 1960s, Jansch graduated from playing for his own pleasure to performing for an audience. He was one of the first guitarists to understand and then interpret and popularise Davy Graham's guitar solo Anji. At the time, his personal, self-composed songs contrasted with the usual traditional or political repertoire of folk singers."

http://www.guardian.co.uk/music/2011/oct/05/bert-jansch



I am at work and cannot access you tube otherwise I would post a sample of his work, but I recommend you check him out.


Happy hunting watch out for the bears and OWS supporters.

[xchrom]

48. morning miss anne -- & may peace be with mr jansch's family & friends. nt

[Ghost Dog]

71. Thanks AnneD. Your heart's in the same place as mine.

http://www.youtube.com/watch?v=lD03hcvyL54

...

[AnneD]

73. In the dark ages...

before the internet, I remember ordering Pentangle albums from my local record store and waiting for what seemed like an eternity for them to come in. But when they did...I invited all my like minded friends over and we would have a concert of sorts. Ahh the sweet smells of sandalwood, patchuli, wine and munchies. Really great times. I must have worn those LPS out.

I never realized I liked guitarists so much...duh, I named my daughter Leila. But I do, guess I can be thick sometimes. Love Leo Kottke, Hendrix, Harrison, etc. Guess I will shave my head and wear black when Clapton buys the farm. On second thought, I think not. I know he will be reunited with his son. I think that I'll smile....and I'll wear yellow or some other happy color.

[Ghost Dog]

80. Ah, re. guitarists, hear (remember) this: Bert & John

(Note the sitar-like effect) http://www.youtube.com/watch?v=b--_wj1JSeg

:cry:

[xchrom]

50. Soaring Farmland Prices in U.S. Midwest Bring Fed Scrutiny of Rural Banks

http://www.bloomberg.com/news/2011-10-06/soaring-farmland-prices-in-u-s-midwest-bring-fed-scrutiny-of-rural-banks.html

When regulators come knocking at the Bank of Newman Grove, Nebraska, inquiring about loan risks, Chairman Jeffrey Gerhart has a “stress test” ready to show how his portfolio would fare if rural land prices dropped 25 percent. Or 50 percent. Or 75 percent.

“I hope it’s not going to go to heck in a handbag out here, but this allows us to look at those worst-case scenarios,” said Gerhart, a fourth-generation banker in the 800-person town two hours west of Omaha, deep in the heart of Nebraska’s corn and soybean belt. He began stress testing his bank’s assets, about 90 percent of which are agricultural, in the last two years after prodding from staffers at the Federal Reserve Bank of Kansas City.

Farmland prices in Nebraska rose 30 percent in the second quarter from a year earlier, according to a survey by the Kansas City Fed, driven by soaring farm income from elevated agriculture commodity prices and record-low interest rates. That’s the high end of increases in cropland valuations of 8 percent or more throughout the region stretching from Oklahoma to North Dakota and from Nebraska to Michigan, according to surveys by three Federal Reserve banks. The Fed banks -- Kansas City, Chicago and Minneapolis -- oversee about three-quarters of the nation’s farm banks.

[xchrom]

51. asia: Asia stocks rally, with financials strong

http://www.marketwatch.com/story/asia-stocks-rally-with-financials-strong-2011-10-06

MUMBAI (MarketWatch) — Asian stocks rallied Thursday, helped by short covering in Hong Kong and positive cues from Wall Street after better-than-expected U.S. jobs figures.

Hong Kong was among the leading advancers as the market returned from a holiday Wednesday, with the Hang Seng Index /quotes/zigman/2622475 HK:HSI +5.67% jumping 5.7%.

Japan’s Nikkei Stocks Average /quotes/zigman/5986735 JP:NIK +1.63% ended the day up 1.7%, while Australia’s S&P/ASX 200 /quotes/zigman/1653884 AU:XJO +3.65% traded 3.7% higher, and South Korea’s Kospi KR:0100 +2.63% climbed 2.6%. Mainland Chinese markets remained closed for a week-long holiday.

The Asia share moves followed a 1.2% gain for the Dow Jones Industrial Average /quotes/zigman/627449/delayed DJIA -0.24% and a 1.8% rise for the S&P 500 /quotes/zigman/3870025 SPX +0.08% , helped by upbeat economic data, including a better-than-expected gain in private-sector payrolls. See more on Wednesday’s U.S. stock moves in Market Snapshot .

[xchrom]

52. China lending not like U.S. subprime debt: analyst

http://www.marketwatch.com/story/china-lending-not-like-us-subprime-debt-analyst-2011-10-06

HONG KONG (MarketWatch) — China’s 4-trillion-yuan ($627 billion) unofficial lending market doesn’t pose a threat equal to that of pre-crisis subprime lending in the U.S., according to Bank of America-Merrill Lynch.

Merrill analyst Ting Lu said growing media attention to a wave of bankruptcies in Wenzhou, a city on China’s eastern seaboard, is being seen too negatively.

Wenzhou became a poster child for the problem of unregulated loans recently, as the city’s residents pooled their savings into what became a national lending syndicate, underwriting a significant portion of China’s informal or “shadow” banking system, but then leading to financial instability. Read more on China’s Wenzhou crisis.



***prelude to an official expression of SURPRISE?

[xchrom]

53. south asia: Skilled Indians face a 70-year green card wait

http://timesofindia.indiatimes.com/business/india-business/Skilled-Indians-face-a-70-year-green-card-wait/articleshow/10256684.cms

WASHINGTON: A highly skilled Indian national sponsored today for the most common skilled employment-based immigrant visa could wait 70 years to receive a green card, conclude two new reports by a US policy research group.

The reports by the National Foundation for American Policy conclude that exempting from green card quotas international students with an advanced degree in science, technology, engineering or mathematics (STEM) would keep talented individuals from leaving the United States.

This would "reap significant benefits to the competitiveness of US companies and to the economy overall" suggests the reports - "Keeping Talent in America" and "Waiting and More Waiting: America's Family and Employment-Based Immigration System."

The majority of employer-sponsored immigrants tend to be from India and China, but the wait times are longest for such foreign nationals because of the per country limit, which restricts the number of green cards awarded to any one country to 7 percent of a preference category.

[AnneD]

55. I smell fresh flop.....

again, they are exporting our jobs on American soil. Maybe we should train our own. It certainly will not take 70 years.

I call meadow muffins, and a stale one at that. SSDD

[Tansy_Gold]

56. As I've posted elsewhere this morning --

Todd Gitlin's analysis of his generation's (and mine) revolt against the machine in "The Sixties" reads quite eerily today.

I do not think OWS will succeed unless it changes its strategy as well as its tactics. The banksters do not have any need to give in. . .. yet. And the greater culture -- if not hte populace -- supports them.


Listen less to Krugman, and more to history.



TG

[Demeter]

62. Matt Stoller: The Anti-Politics of #OccupyWallStreet

http://www.nakedcapitalism.com/2011/10/matt-stoller-the-anti-politics-of-occupywallstreet.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

What do the people at #OccupyWallStreet actually want? What are their demands? For many people, this is THE question.

So let me answer it. What they want… is to do exactly what they are doing. They want to occupy Wall Street. They have built a campsite full of life, where power is exercised according to their voices. It’s a small space, it’s a relatively modest group of people at any one time, and the resources they command are few. But they are practicing the politics of place, the politics of building a truly public space. They are explicitly rejecting the politics of narrow media, the politics of the shopping mall. To understand #OccupyWallStreet, you have to get that it is not a media object or a march. It is first and foremost, a church of dissent, a space made sacred by a community. But like Medieval churches, it is also now the physical center of that community. It has become many things. Public square. Carnival. Place to get news. Daycare center. Health care center. Concert venue. Library. Performance space. School.

Few people, though an increasing number daily, have actually taken the time to go through a general assembly, to listen to what the people at #OccupyWallStreet actually want. General assemblies are the consensus-oriented group conversations at the heart of the occupations, where endlessly repeating the speaking of others is the painstaking and frustrating way that the group comes to make decisions. I spoke with a very experienced older DC hand who told me that he hasn’t been because he doesn’t have the patience of the young. This is as different a way of doing politics as distributed computing was to the old world of mainframes. So it isn’t surprising that the traditionalists are reacting as perplexed and dismissive of this new style of politics as the big iron types were with the rise of PCs.

I have been through a few general assemblies now, and they are remarkable because the point of the assembly is to truly put listening at the heart of decision-making. There’s no electronic amplification allowed in Zuccotti Square. So the organizers have figured out an organic microphone system. A speaker says a half a sentence, everyone in earshot repeats, until the whole park can hear that half a sentence. Then the speaker says another half a sentence. People use hand signals to indicate approval, disapproval, get a move on, or various forms of objections and clarifications. During these speeches, speakers often explicitly ask for more gender and racial diversity, which is known as “progressive stacking”.

At first it’s extremely… annoying. And time-consuming. But after a few hours, it’s oddly refreshing. I felt completely included as part of a community forum even though I had not been a speaker. But what I realized is that the act of listening, embedded in the active reflecting of what the speaker was saying, created a far richer conversational space. Actually reflecting back to one another what someone just said is a technique used by therapists, and by pandering politicians. There is nothing so euphoric in a community sense as truly feeling heard. That’s what the general assembly was about, not a democracy in the sense of voting, but a democracy in the sense of truly respecting the humanity of everyone in the forum. It took work. It took patience. But it created a communal sense of power...

[bread_and_roses]

65. link, Tansy? I'm not familiar

with Todd Gitlin - but being a graduate of that era, sounds interesting.

[Tansy_Gold]

72. link

www.toddgitlin.net

Most of his writing isn't online, though a lot of his essays and shorter commentaries are. Frequent contributor to NPR, HuffPo, etc.

Two seminal books -- The Sixties: Years of Hope, Days of Rage published in 1987, chronicles the age as well as his involvement in the times. I read it about 10 years ago but not closely; reading just the Introduction again yesterday was chilling.

The Twilight of Common Dreams: Why America is Wracked by Culture Wars (c) 1995. I never had time to finish this one; my bookmark is a piece of scrap paper on which is written: Jesus was a community organizer; Pontius Pilate was a governor.

Gitlin (b. 1943) was a president of SDS, thus active in all the movement politics of the era, stayed in academia.

My day job is screaming at me. I need to get to it, even though this discussion is much more attractive.


TG

(edited to fix some glitch or other. .. . )

[RUMMYisFROSTED]

68. Damn straight!

:patriot:

[tclambert]

74. So what's gonna happen with Occupy Wall Street?

Anybody care to predict the end of this story? Will the politicians listen to them and take some action to reign in the excesses of Wall Street? Will the police and National Guard swoop in and forcibly evict all the protestors? Will the protestors just get tired and bored and dwindle away? Will OWS spawn a political movement, kinda like a reverse Tea Party, that elects many really progressive Congress people?

I don't know. I don't see a violent revolution coming out of it, like the "Arab Spring" uprisings. Who would they be trying to overthrow?

[Tansy_Gold]

81. I don't see violence either

People are angry, but not desperate. There won't be violence unless/until enough people are desperate and believe they have nothing left to lose.

A political movement? Maybe, but for that you need individuals who are willing to run for office, who are unafraid to have the opposition snoop into every detail of their lives and spread it out in the media. Had an affair? The world will know. Cheated on your taxes? The world will know. Understand that if you are a right winger, all of this is okay, because the right wing authoritarian follower accepts a double standard -- "the rich are different" -- applied to right wing leaders.

A political movement requires money, however, and I'm not sure where an OWS party would get it.

Will they get tired and bored -- and cold -- and dwindle away? A lot of them will. It takes a lot of fortitude to live on the street for months at a time.

Will the establishment call out the enforcers? Probably.

[Demeter]

76. Gavyn Davies: Conventional QE from the Bank of England

The Bank of England relaunched QE in much larger size than anyone expected. While this is consistent with Plan A, there do seem to be differences between the Treasury and the Bank over the nature of the quantitative easing which the Bank is pursuing.

Read more >>
http://link.ft.com/r/P75VYY/2OZ7W3/B49CK/U1UY06/4C72O7/UP/t?a1=2011&a2=10&a3=6