STOCK MARKET WATCH, Thursday 16 December

[ozymandius]

Thursday December 16, 2004

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 4 YEARS, 35 DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 4 YEARS, 5 DAYS
WHERE'S OSAMA BIN-LADEN? 3 YEARS, 59 DAYS
DAYS SINCE ENRON COLLAPSE = 1120
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 2
Other Arrests of Execs = 54

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

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AT THE CLOSING BELL ON December 15, 2004

Dow... 10,691.45 +15.00 (+0.14%)
Nasdaq... 2,162.55 +2.71 (+0.13%)
S&P 500... 1,205.72 +2.34 (+0.19%)
10-Yr Bond... 4.08% -0.06 (-1.36%)
Gold future... 442.20 +4.90 (+1.11%)





GOLD, EURO, YEN, Dollars and Loonie

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PIEHOLE ALERT

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

For information on protests and other actions Citizens For Legitimate Government

---

[ozymandius]

1. WrapUp by Mike Hartman - with a nod to UIA's gig

U.S. DOLLAR TAKES ANOTHER TUMBLE

The biggest surprise for the markets today was a government report showing foreign purchases of U.S. assets slowed to $48.1 billion in October, the slowest rate of purchases in the last year. In September, foreign investors bought $67.5 billion and October was expected to be lower, but none of the analysts expected to see a number below $50 billion. In a Bloomberg article, Carsten Fritsch, a currency strategist at Commerzbank AG was quoted before the data was released by saying, “A number of about $50 billion would be significantly negative for the dollar.” This comes on the heels of yet another record trade deficit that widened more than expected to $55.5 billion in October. When the Commerce Department released the record trade deficit yesterday, the markets just yawned and said, “Let’s see what Mr. Greenspan has to say later today.”

After Greenspan spoke the markets yawned again. It was all about waiting for nothing to happen. They raised Fed Funds 25 basis points as everyone expected and left the text of their comments virtually unchanged. Of course Mr. Greenspan made a point to say that “inflation is well contained” and the bond market followed-up today by pushing interest rates lower. The spin in one of the Bloomberg headlines reads, “U.S. 10-year Treasury Gains on Optimism Inflation is contained.” Now you can go back to last Friday with inflation being reported higher than expected and the markets yawned. The actual numbers came out showing inflation increasing at a faster rate than expected, but don’t worry because even though the data shows increasing inflation, the Fed says it’s well contained…must be a good reason to go out and buy Treasuries. I am still of the belief that all the money crowding into U.S. government debt is a flight to the “perceived” safety of Treasuries, especially the shorter maturities.

Another item in the news had the Empire State manufacturing index higher than expected with its strongest report since July. New orders and shipments had very strong gains, but the warning comes from seeing the prices paid component rising and the prices received falling. This implies a lack of pricing power and should put a pinch on corporate profit margins if the trend persists. This report should have influenced bond prices lower causing interest rates to rise depicting the economic improvement. Instead, bond prices are telling us the economic improvements are not enough to write home about. For now bond investors appear to be listening to Mr. Greenspan’s inflation containment rhetoric, or simply have nowhere else to go with their investment dollars.

-cut-

More on Currencies

The situation for global currencies is incredibly complex. The dollar decline will have a number of negative effects here in the U.S. and for our overseas suppliers, who are also the owners of U.S. debt paper. The devaluation of the dollar is being orchestrated to inflate-away our current account deficits, but I have now read two excellent analyses that demonstrate the dollar devaluation will not be enough to correct the imbalances unless changes occur in U.S. consumption along with an increase in savings and investment. I’ve also been looking for historical precedent for prior dollar devaluations.

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

Mr. Hartman goes on to describe how the wolves may decide to eat us.

[UpInArms]

12. hopefully Mr. Hartman will get the attention of a larger

audience and focus them on the problems that are growing with each incredibly stupid move of this maladministration.

http://news.ft.com/cms/s/9585e4b2-4ec4-11d9-9488-00000e2511c8.html

Fears for dollar as foreign inflows slow

Fresh concerns over the dollar and the ability of the US to finance its current account deficit arose on Wednesday after foreign portfolio inflows for the first time in a year fell below the liabilities implied by the trade deficit.

Data from the Treasury show net inflows to the US totalled $48.1bn in October, down from $67.4bn in September and less than the record $55.46bn trade deficit for the month revealed on Tuesday. The US relies on foreign purchases of US portfolio assets to finance its current account deficit by covering the outflows in trade. It was the first time in a year that portfolio investment had fallen below the level necessary to cover that gap.

Data on the current account deficit in the third quarter are due on Thursday, and the three-month deficit is estimated to have been about $170bn, implying the US needs inflows of $57bn a month to cover the gap.

The dollar slid on the news on Wednesday, pushing the euro to $1.3430 in New York trade. A fall in the dollar - until US goods cheapen to a level where exports rise, eroding the trade gap - is considered necessary to curb the current account deficit. But analysts have warned that a weakening dollar could in the meantime affect appetite for US assets if investors fear the falling currency will erode the value of their holdings.

"Were foreign investors to reduce the pace of investment into the US as expected, the erosion in the data could become even more severe," said Michael Woolfolk, senior currency strategist at Bank of New York.

...more...

[ozymandius]

2. Stocks Are Lower but Earnings Loom

NEW YORK - U.S. stock futures were marginally lower early Thursday, but a rush of earnings and economic data due before the bell means all bets are off for calling an open.

Dow Jones futures slipped 2 points recently, while Nasdaq futures were down 1 point and S&P futures slipped 0.20 of a point.

-cut-

The Labor Department (news - web sites) is due to release the jobless claims data at 8:30 a.m. EST Thursday. Economists expect jobless claims to decrease by 17,000 to 340,000 in the week ended Dec. 11.

The Department of Commerce will release the housing start report at 8:30 a.m. EST Thursday. Economists' estimates for housing starts in November is for a 2.3 percent fall to an annual rate of 1.98 million. Commerce is also scheduled to issue the current account report for the third quarter at 8:30 a.m. Economists look for a widening in the current account deficit to $170.6 billion from $166.2 billion in the second quarter.

http://story.news.yahoo.com/news?tmpl=story&ncid=1196&e=6&u=/ap/20041216/ap_on_bi_st_ma_re/wall_street&sid=95609876

[ozymandius]

3. Have a wonderful day everyone!

I have to dash out the door yet again. More errands to do and letters to be written will fill up my day.

I received an informal offer of employent yesterday afternoon. After my paperwork is processed, the offer will be formalized and accepted, pending my approval of the salary offered. :bounce:

Have fun at the Casino!

Ozy :hi:

[UpInArms]

13. Congrats Ozy!

That is great grand news! :bounce:

Their gain will be our (DU's) loss :(

but....

:yourock:

Keep us apprised, okay?

[Maeve]

4. Jobless claims down...so are housing starts

Housing starts down 13.1% to 1.77 million annual rate; jobless claims fall to 317,000 in latest week from revised 360,000.
http://money.cnn.com/

Details soon.

Hi, folks! It's been a long three months, and I probably won't be back regularly until sometime in the new year, but I had to make a Thursday appearance!

[ze_dscherman]

6. Hi Maeve!

:hi:

[MrUnderhill]

7. Everything ok?

Or are you just going to be busy?

[Maeve]

9. Busy and recovering from the last mod term

Thanks for asking--I've got to get my life back a bit, step away from the computer and pull back from obsessing over the news, etc.

[MrUnderhill]

10. Enjoy!

But know that this stuff is addicting. Feel free to jump in any time you need a "fix"!

Thanks for your service as a moderator. This last couple months must have been pretty rough.

[UpInArms]

16. Good Morning Maeve!

:hi:

So glad you joined us this MaeveDay morning!

Did you notice the upward revision to last week's claims?

Can never seem to get a handle on which way the claims machine is running - still lots of layoffs in the works.

Glad you can spend more time with us - have missed you here at the SMW :hug:

[Maeve]

5. Jobless claims plunge in latest week

Initial claims for state unemployment benefits dropped 43,000 to 317,000 in the week ended Dec. 11.

This is the largest decline in jobless claims since Dec. 2001. The department could identify no special factors behind the decrease. Jobless claims are at their lowest level since the week ended July 3, 2004.

Economists were expecting only a modest drop in initial claims to about 342,000.

Claims in the previous week were revised to a gain of 10,000 to 360,000 compared with the initial estimate of an 8,000 rise to 357,000.

The four-week moving average of new claims fell by 4,500 to 337,750.
http://cbs.marketwatch.com/news/story.asp?guid={56E22387-ABFA-463F-AF7D-B2B176954BB5}&siteid=

Note: "largest decline" is a rather meaningless bit of spin--claims have been lower in specific weeks. Not that this isn't good news, just noting the spin being put on it to make it sound even better!

[MrUnderhill]

8. Good point.

I suspect the last three reports have been the results of somewhat inaccurate seasonal adjustments. So the last couple weeks were slightly high and this one (and probably next week as well) look a little low.

I guess that's why we look at the 4 wk average, eh?

Not bad. No great... but not too bad.

[54anickel]

27. Wonder if we'll see a big jump in the first couple of weeks of the new

year. That's what has normally happened in the past. From my old bean-counting days, management would usually hold off on lay-offs over the holidays if it wouldn't improve the books for the year. Lay-offs during the holidays are bad publicity and a morale buster for the remaining workforce.

Of course these days most companies seem pretty heartless, but I would think that still plays into the decision making process. We'll have to keep an eye on the first couple weeks in January.

Any wagers? :evilgrin:

[UpInArms]

11. daily dollar watch

http://quotes.ino.com/chart/?s=NYBOT_DXY0

Last trade 81.53 Change -0.10 (-0.12%)

http://futures.fxstreet.com/Futures/news/afx/singleNew.asp?menu=economicnews&pv_noticia=MTFH09321_2004-12-16_13-16-23_N16163308

U.S. stocks set for flat open; data, mergers eyed

NEW YORK, Dec 16 (Reuters) - U.S. stock futures pointed to a flat-to-lower start on Thursday before a batch of economic data and results from investment bank Goldman Sachs Group <GS.N>, although announcements of two multibillion-dollar deals could fuel optimism for additional mergers.

Health-care products company Johnson & Johnson <JNJ.N> sealed its $25.4 billion deal to buy medical device maker Guidant Corp. <GDT.N> late on Wednesday.

Security software maker Symantec Corp. <SYMC.O> on Thursday said it would buy Veritas Software Corp. <VRTS.O> for $13.5 billion, expanding into the backup and recovery software market. Symantec fell 3.5 percent on the Inet electronic exchange while Veritas rose 4 percent to $29.22.

The acquisitions came on the heels of wireless carrier Sprint Corp.'s <FON.N> $36 billion announcement of plans to acquire Nextel Communications Inc. <NXTL.O>.

But investors were cautious ahead of economic reports, including the Philadelphia Federal Reserve's business activity survey, due at noon (1700 GMT), as well as results from Goldman Sachs.

<snip>

Traders said they expect volatility ahead of Friday's quadruple witching -- a term used by pros to describe the quarterly expiration of four different types of options and futures.

...more...

Have a Great Day Marketeers!

[UpInArms]

14. Today's Reports

Dec 16 8:30 AM
Building Permits Nov
report 1988K
briefing.com 1990K
marktet 2010K
last report 2018K
revised 1984K

Dec 16 8:30 AM
Current Account Q3
report -$164.7B
briefing.com -$172.0B
market -$171.0B
last report -$164.4B
revised -$166.2B

Dec 16 8:30 AM
Housing Starts Nov
report 1771K
briefing.com 2000K
market 1980K
last report 2039K
revised 2027K

Dec 16 8:30 AM
Initial Claims 12/11
report 317K
briefing.com 340K
market 342K
last report 360K
revised 357K

Dec 16 12:00 PM
Philadelphia Fed Dec
report -
briefing.com 19.0
market 20.5
last report 20.7
revised -

[54anickel]

15. US flying on empty...(Great dig on Greenspin)

The summary at the beginning of this article is bizarre, but ya gotta love his statements on Greenspin.

http://www.321gold.com/editorials/george/george121604.html

snip>

"Greenspan has now joined the chorus of concern... that US current account deficits are simply unviable. But current account deficits don't just happen, they are CAUSED. They are caused by artificially lowered internal rates of interest which generate in their turn much higher rates of borrowing and debts. Then, as this new stream of BORROWED PURCHASING POWER joins existing quantities of cash and deposits in banks, it leads to increased CONSUMPTION followed by climbing IMPORTS. The trade balance swings into deficit, followed by EXTERNAL DEBTS piling ever higher."

"The wonder of it all is that Greenspan now stands forth in Frankfurt and identifies the assured OUTCOME of precisely the monetary and credit policies which he himself has been the initiator and sustainer of for so long!"

"How Greenspan will be greeted when he returns to the USA is anybody's guess."

"If there is justice - then based on Patriot Acts 1 and 11 - he ought to be arrested as a financial terrorist."

"Greenspan has, by deceit, placed the US in a position where the credit expansions he originated have left the US exposed to a "debt maelstrom" which can arrive anytime the rest of the world decides not to lend."

more...

[UpInArms]

20. I couldn't agree more

"If there is justice - then based on Patriot Acts 1 and 11 - he ought to be arrested as a financial terrorist."

"Greenspan has, by deceit, placed the US in a position where the credit expansions he originated have left the US exposed to a "debt maelstrom" which can arrive anytime the rest of the world decides not to lend."

Well said!

[UpInArms]

9:46 EST numbers and blather

Dow 10,690.27 -1.18 (-0.01%)
Nasdaq 2,162.87 +0.32 (+0.01%)
S&P 500 1,204.82 -0.90 (-0.07%)
10-Yr Bond 4.101% +0.025

NYSE Volume 113,348,000
Nasdaq Volume 257,741,000

9:40AM: Stocks open a bit lower as investors sift through a slew of mixed economic data... Initial jobless claims, which had hit a 10-week high of 357K last week, showed a significant decline, falling sharply to 317K (consensus 342K)... Strong employment data, however, has done little to offset a 13% decline in November Housing Starts to an adjusted rate of 1.77 mln (consensus 1.98 mln), which was the lowest level since May of 2003 and showed the sharpest drop in more than a decade...

Other economic news includes November Building Permits, which fell only 1.5% to 1988K (consensus 2010K), suggesting that starts will bounce back in December, while the Current Account deficit came in at -$164.7 bln, not widening to the -$171.0 bln level most economists had anticipated...

9:15AM: S&P futures vs fair value: -1.8. Nasdaq futures vs fair value: -0.5. Cash market still poised for a relatively flat open as futures indications continue to stall at current levels... One issue arguably lending little support to early buying interest is added supply from a large number of new offerings debuting this week acting as an overhang... Eight IPOs will come to market this morning... Separately, Goldman Sachs (GS) beat expectations by six cents while FedEx (FDX) tripled profits in Q2 and raised its FY05 (May) outlook, but missed analysts' forecasts

9:00AM: S&P futures vs fair value: -1.5. Nasdaq futures vs fair value: +0.5. Futures trade now denotes a slightly mixed bias, possibly signaling a flat open for the indices... It's not surprising to see little conviction in pre-market trading following confirmation of the JNJ/GDT deal and Symantec's (SYMC) $13.5 bln offer for Veritas (VRTS), as both deals had been widely anticipated...

[UpInArms]

21. 10:11 EST numbers and blather

Dow 10,675.93 -15.52 (-0.15%)
Nasdaq 2,157.57 -4.98 (-0.23%)
S&P 500 1,202.55 -3.17 (-0.26%)
10-Yr Bond 4.128% +0.052

NYSE Volume 261,868,000
Nasdaq Volume 459,671,000

10:00AM: Major indices continue to trade near the unchanged mark as ongoing merger speculation comes to fruition... Increased M&A activity, which is expected to continue into 2005, has fueled investor confidence all week, with rumors of several large deals helping the market record three straight days of gains...

That said, much of the activity surrounding the deals has already been made ahead of Johnson & Johnson (JNJ 62.32 +1.42) finally confirming it will buy Guidant (GDT 71.95 -0.10) for $25 bln and Symantec (SYMC 25.69 -1.69) officially agreeing to acquire Veritas (VRTS 28.36 +0.25) for $13.5 bln...NYSE Adv/Dec 959/1515, Nasdaq Adv/Dec 1171/1248

[54anickel]

17. Current Account Gap Widens to Record

http://biz.yahoo.com/rb/041216/economy_currentaccount_1.html

WASHINGTON (Reuters) - The U.S. current account deficit widened slightly to a record $164.71 billion in the third quarter as the goods trade shortfall grew and the services surplus shrank, the government said on Thursday.
ADVERTISEMENT


While it hit a record, the gap -- running at a hefty 5.6 percent of the size of the U.S. economy -- still came in a good bit below the $170 billion reading Wall Street had braced for.

The deficit in the U.S. current account, the broadest measure of the nation's trade with the rest of the world since it includes investment flows, grew by just $318 million in the July-September period from a revised second-quarter reading of $164.39 billion, the Commerce Department said.

Since the third-quarter reading came in narrower than expectations and was slimmer than the previously reported second-quarter gap of $166.18 billion, the report could actually temper worries over the willingness of foreign investors to finance the huge U.S. trade shortfall.

The dollar has fallen roughly 5 percent against the euro this year and some 4 percent against a basket of major currencies in part on worries about the trade gap, and some economists have warned of the potential for a steep dollar drop if foreigners loose their appetite for U.S. assets.

more...

[54anickel]

18. GREENSPAN IS BAFFLED BY ECONOMIC STATS ON INFLATION

http://www.nypost.com/business/36528.htm

snip>

In previous parts of this series, I showed how Washington gets creative with its economic numbers.

This column is about how this creativity can have a huge effect on monetary and fiscal policy — even making the Fed look out of step with reality.

On Tuesday I explained hedonics — a way the government artificially reduces inflation by claiming that items as mundane as clothes dryers aren't really rising as much in price as you think because technological upgrades are giving you more pleasure and more value for the dollar.

It isn't that the idea of hedonics lacks academic credentials. Each product that is hedonically adjusted has its own painfully long research report on the Bureau of Labor Statistics Web site.

The CPI has long been criticized for failing to properly account for major household budget items like health care and educational expenses.

And hedonics is one of the reasons.

more...

[UpInArms]

19. Fannie Mae postpones mortgage outlook conference - possible $9B loss

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38337.4146352431-829961099&siteID=mktw&scid=0&doctype=806&

WASHINGTON (CBS.MW) -- Fannie Mae (FNM) rescheduled a mortgage and economic outlook press conference Thursday morning after the Securities and Exchange Commission told the mortgage giant to restate four years' worth of earnings. The restatement could force Fannie to take a loss of $9 billion. The conference is now scheduled for Dec. 29. Shares of Fannie Mae were down 3.6 percent, or $2.53, to $68.16 Thursday morning.

[54anickel]

22. Bush's 'strong dollar policy' comments fall on deaf ears

Let's hope it's the start of a new trend and everyone starts to ignore what the little Beezlebush has to say. I think the world would be a helluva lot better off.

http://www.usatoday.com/money/economy/trade/2004-12-15-dollar-bush_x.htm

WASHINGTON — President Bush said Wednesday that the White House will shore up the sliding dollar by working to cut record budget and trade deficits and overhaul Social Security. But his words fell flat on currency markets as a new Treasury report showed the United States is having trouble financing its current huge debt.

"The policy of my government is a strong dollar policy," Bush said during a meeting with Italian Prime Minister Silvio Berlusconi, who is worried that the fall of the dollar against the euro has made European exports more expensive. The dollar has weakened about 13% against the euro since spring.

Bush said the Federal Reserve's decision Tuesday to raise key short-term interest rates a quarter-percentage point to 2.25%, the fifth rise since June, shows that Fed Chairman Alan Greenspan "is also aware of the relative currency valuations" between the dollar and the euro. But Bush added that "markets should make the decision about the relationship between the dollar and the euro."

The president's comments did little to reassure currency traders, who pushed the dollar lower against the yen and euro, the currency of 12 European nations. The euro rose to $1.3412 Wednesday, from $1.3307 Tuesday. The dollar was weaker against the Japanese yen, at 104.23 yen, down from 105.40 late Tuesday.

Traders were worried about a report Wednesday from the Treasury Department tracking foreign purchases of such U.S. assets as stocks and bonds, and U.S. investment abroad. The report showed a slowdown in net capital inflows, casting doubt on the nation's ability to finance its trade deficit. That could erode confidence in the dollar.

more...

[Maeve]

28. The "strong dollar policy" has been all talk

It has been repeated, but no action has been taken. Shoot, Dubya says he's going to get the deficit spending down and the SAME DAY Cheney talks of making the tax cuts permanent. :eyes:

Buy a shovel; we're getting more snow.

[54anickel]

23. Will Merger Mania Extend to 2005?

http://www.cfo.com/article.cfm/3499951/c_3499959?f=home_todayinfinance

''Pressures to demonstrate growth coupled with abundant financing and cash reserves'' should keep deals humming next year, says one analysis.

Stephen Taub, CFO.com
December 16, 2004

While we're not witnessing the delirious flurry of mega-transactions of the late 1990s, the volume of mergers and acquisitions is on the rise.

So far this year, there have been 9,837 deals, up more than 15 percent from the total of 8,525 at this time last year, reported Mergerstat. The dollar value of deals so far this year stands at $789 billion, 43 percent higher than the $552 billion at this time last year, added the research company.

No surprise, then, that this revival is boosting Wall Street's fortunes. Lehman, which on Wednesday became the first investment bank to report 2004 results, announced that its revenues from mergers-and-acquisitions advice nearly doubled to $179 million. The firm is currently advising Sprint Corp. on its agreement to buy Nextel Communications Inc. for about $35 billion, and Kmart Holding Corp. regarding its $11 billion agreement to buy Sears Roebuck & Co.

snip>

Will this momentum continue into 2005?

It all depends. If the economy continues to strengthen and the stock market continues to rise, then you can certainly expect increased merger activity next year.

snip>

The firm pointed out that companies will be more active across the board because they have a lot of cash and there's a lot of debt financing available. As proof, in a little less than a year, financing sources have moved from financing acquisitions at 2.25 times EBITDA to 5-plus times EBITDA.

more...

[MrUnderhill]

26. Yes. Especially if the Dollar continues to decline.

Any foreign company considering expansion in to the US is going to find prices a lot more attractive with a weakened dollar. Assuming, of course, they have any capital available.

[54anickel]

24. China's Nov. Fixed-Asset Investment Growth Slows to 24.9%

http://www.bloomberg.com/apps/news?pid=10000080&sid=aUqcJzT4gY7Y&refer=asia

Dec. 16 (Bloomberg) -- Investment in China's factories, roads and other fixed assets grew at a slower pace in November as the government reined in spending and ordered banks to curb lending.

Fixed-asset investment in urban areas rose 24.9 percent in November from a year earlier after climbing 26.4 percent in October, according to Beijing-based Mainland Marketing Research Co. (China), which releases figures on behalf of the National Bureau of Statistics.

Construction of factories and office buildings in China has contributed to a 30 percent rise in global prices of copper and lead this year. Slower investment growth eases pressure on authorities to impose harsher restrictions that would risk triggering a slump in the world's fastest-growing economy.

``They don't want to do anything too drastic, because they want to avoid a big slowdown,'' Dariusz Kowalczyk, senior investment strategist at CFC Securities in Hong Kong, said before the report. ``They will still keep a tight grip on fixed asset investment for a while yet -- you don't change these things quickly.''

snip>

Consumer Spending

Consumer spending may help sustain growth as investment cools. Retail sales grew 13.9 percent to the second-highest level on record in November, a government report on Dec. 13 showed.

``The probability of a hard landing for the economy has decreased as the gap between investment growth and consumer demand has narrowed,'' Kowalczyk said.

more...


Wasn't it Snow that said China's plans to slow their economy wouldn't work? That they HAD to unpeg their currency to avoid over-heating? I can't remember which side the IMF took on their decision, though...I'm pretty sure they wanted the yuan to float ASAP as well. Looks to me like China is doing quite well on their own, as Malaysia did when they told the IMF and US to butt out.

[54anickel]

25. ECB´s Padoa-Schioppa sees US deficits weighing on world economy in long-te

http://www.fxstreet.com/nou/noticies/afx/noticia.asp?pv_noticia=1103186725-9e32d306-13402

2004-12-16 08:45:28 ECB's Padoa-Schioppa sees US deficits weighing on world economy in long-term MILAN (AFX) - European Central Bank board member Tommaso Padoa-Schioppa said the US' large current account and public sector deficits are likely to weigh on the development of the world economy for years

In an interview in La Repubblica, Padoa-Schioppa said the high oil price, caused by strong demand from China and India, will be another factor affecting growth in the long-term

On the US' wide current account deficit, he said: "We see the phenomenon of the richest country in the world taking a loan, not so as to invest but in order to fuel consumption

"The process of correction of this phenomenon will take years," he said

The US current account deficit goes against traditional economic theory that rich countries export their capital to poorer economies, he said

The weakening dollar cannot on its own correct the US imbalances, he added

more...

[54anickel]

29. Situations That Cannot Last (Mogambo)

http://www.321gold.com/editorials/daughty/daughty121604.html

snip>

It's not that they probably don't deserve the money, because I have seen the TV show "Cops" enough to know that dealing with the low-IQ, horse's-ass, gutter-dwelling idiot segment of the American population is NOT something I want to do, and if you wanted the cowardly Mogambo to do the police's job you would have to pay me a HELL of a lot more than some stinking $45,000 or so (the newspaper article only mentioned the starting salaries of about $36,000, and of course did not mention the rest of the wage scale, which is obviously significantly higher). But as for economics, it is bad, bad policy, and will have an effect on the economy, and it will almost certainly not be good, as I have never, ever read where it is a good thing to be increasing the salaries of government employees when the general population is not seeing their wages and salaries going up, although the latest statistic is that aggregate wages and salaries are going up by 2.6%. But when you strip out the wage and salary increases being granted to government employees (one out of every seven workers), this means that the rest of us are not seeing squat, as far as fatter paychecks is concerned. Government employees making more money than the rest of the taxpayers is one of those Situations That Cannot Last (STCL).

In a related vein, nonfarm payrolls are still down from where they were in 2002, but government payrolls have gone up 2.4% in that time. So government grew in size, and everybody else shrank. This is another of those famous Situations That Cannot Last (STCL).

Even Kurt Richebächer is taking a look at this crap, and says "We come to the worst part of the poor U.S. employment performance: the dismal growth of aggregate wage and salary income. Wage rates have continued to rise, but taking job losses, shorter working hours, a considerable shift from high-paying manufacturing jobs into low-paying temp work in services and rising inflation rates into account, overall wage and salary income in real terms remains below its December 2000 level."

But the whole point is that the stinking Federal Reserve is still pulling out all the stops, and is creating money at a suicidal clip. Doug Noland, who has a particular fetish about this, as do I, and I therefore thank Mr. Noland for having it, because that means that there are now at least TWO of us out here who are mesmerized by it, "Bank Credit has expanded $517.1 billion during the first 48 weeks of the year, or 8.9% annualized."

snip>

- I saw Abby Joseph Cohen on TV, and I am sure that I got a few more demerits on Santa's "Naughty or Nice" list from the terrible things I said about her, although she was on TV, but you could tell by the look on her face that she knew The Mogambo was out here bad-mouthing her. She says that the 30% drop in the dollar makes our stocks and bonds more attractive, since foreigners with nice, strong currencies can buy them for a lower price, in terms of their own currencies! What a selling point! "Crud for sale! Crud for sale! Hey! Buddy! Come over here! Buy this bucket of crud for a dollar! It was two dollars last week, so it is a real bargain today!"

snip>

He adds, "It is a disastrous decision to create an additional forced savings program that is wholly unnecessary, and will bring about vast distortions in the stock market." To that I add; distortions, yes. But also higher stock prices for a while longer, and that will forestall the imminent collapse of the stock market. THAT is the whole freaking point of it. That this is just another transparent and slimy little scam perpetuated by government and their little playmates in the financial industry, necessitated by hitching the economy of the USA to inflation in assets, goes without saying.

snip>

I will go even farther than that. I will say that this coordinated action could possibly explain why it is that almost everybody involved in the oversight of the last Presidential election was so gung-ho on having balloting machines that had no paper trail, so that the results could not be verified. Only a real first-class bozo could possibly believe that the election could not be "fixed," and only a nation as full of morons as the United States would roll over for such a thing without even a whimper. And if the American people are so incredibly naïve and stupid as to allow such a transparent fraud in something as simple as an election, then pulling the wool over their eyes as far as economics is concerned is going to be a breeze!

more...

[54anickel]

30. War funding request may hit $100 billion

http://www.boston.com/news/politics/president/bush/articles/2004/12/15/war_funding_request_may_hit_100_billion?mode=PF

WASHINGTON -- The Bush administration plans to ask for between $80 billion and $100 billion to fund military operations in Iraq and Afghanistan next year, rather than the $70 billion to $75 billion the White House privately told members of Congress before the election, according to Pentagon and White House officials.

Administration officials said yesterday they have not concluded how much money they will request in a "supplemental" spending package that is scheduled to go to Congress in January.

"There's work going on inside the department to understand what's needed, and there's work going on with the Office of Management and Budget," the Defense Department's chief spokesman, Lawrence Di Rita, told reporters yesterday.

But some analysts and government officials said the request is expected to run as high as $100 billion, bringing the total cost of operations in Iraq alone to well over $200 billion since the March 2003 invasion.

Earlier this fall, members of Congress said the Defense Department told them in private briefings the supplemental package would be between $70 billion and $75 billion. The budget request will be higher, sources said, because of the greater number of soldiers -- temporarily boosted to 150,000 -- needed to provide security around the time of the Jan. 30 Iraqi elections, and the loss of equipment due to the vigorous insurgency there.

In June, the nonpartisan Congressional Budget Office estimated that the 2005 supplemental to be submitted this January for Iraq and Afghanistan would be between $55 billion and $60 billion.

more...

And of course, no one would dare vote against it for fear of being labeled unpatriotic and not supporting the troops. :eyes:

[54anickel]

31. 12:34 numbers and yada

Dow 10,717.62 +26.17 (+0.24%)
Nasdaq 2,162.03 -0.52 (-0.02%)
S&P 500 1,206.45 +0.73 (+0.06%)
10-yr Bond 4.170% +0.094
30-yr Bond 4.804% +0.096
NYSE Volume 861,461,000
Nasdaq Volume 1,203,170,000

12:05PM : Major indices turn positive, as merger activity offsets mixed economic data and disappointing earnings reports... An official statement from Johnson & Johnson (JNJ 62.32 +1.42) that it will acquire Guidant (GDT 71.95 -0.10) for $25 bln and final confirmation from Symantec (SYMC 25.69 -1.69) regarding its plans to buy Veritas (VRTS 28.36 +0.25) for $13.5 bln has provided conviction that M&A activity is alive and well... But as both deals were widely anticipated, broad-based buying interest has stalled for the most part...
A significant 43K drop in weekly jobless claims to 317K (consensus 342K), however, has helped offset a 13% decline in November housing starts data, which came in at adjusted rate of 1.77 mln (consensus 1.98 mln)... November Building Permits came in at 1988K, just shy of expectations (2010K) while the Q3 current account deficit of -$164.7 bln came in lower than expected (consensus -$171.0 bln)... Strength in the pharmaceutical sector (1.5%) has helped health care - the worst performing S&P 500 constituent group - surge 1.0%, while networking and telecom service have recovered lost ground...

Homebuilding remains the biggest laggard, showing losses of 1.6%, while energy, retail, and materials have traded lower... Financial has also been under pressure following disappointing results from Goldman Sachs (GS 106.06 -3.19) while an earnings miss from FedEx (FDX 96.04 -2.71) has kept transportation underwater...NYSE Adv/Dec 1184/1914, Nasdaq Adv/Dec 1289/1670

11:30AM : Market improves its stance somewhat, lifting modestly above the unchanged mark, but market breadth remains slightly bearish... Decliners on the NYSE outpace advancers by an 19 to 11 margin while declining issues on the Nasdaq hold a 16 to 12 edge over advancing issues... With all eight of today's IPOs now trading and crude oil ($44.40/bbl +$0.21) spiking to new session highs over the last half hour, however, broad-based gains have been minimal... The December Philadelphia Fed manufacturing index (consensus 20.5) will be released around 12:00 ET...NYSE Adv/Dec 1112/1910, Nasdaq Adv/Dec 1233/1655

11:00AM : Equities continue to trade in split fashion as the bulk of sector leadership remains negative... Keeping a lid on early buying interest in the financial and transportation sectors have been mixed quarterly results from Goldman Sachs (GS 106.22 -3.03) and FedEx (FDX 95.89 -2.86)... Goldman, despite beating analysts' earnings forecasts of $2.30 per share, showed year-over-year declines in equity trading and underwriting revenue... Meanwhile, FedEx reported solid profits of $354 mln in Q2 (Nov) and even raised its FY05 (May) outlook, but results missed street expectations...

With FDX shares up nearly 50% so far this year, nearly doubling the performance in the Dow Jones Transportation Index, investors appear to have found an opportune time to book profits... DJTA -0.84, NYSE Adv/Dec 1076/1908, Nasdaq Adv/Dec 1210/1591

10:30AM : Still not much conviction this morning as stocks continue to trade in narrow range in negative territory... Profit taking and disappointing housing starts data has left homebuilding showing the most weakness (-2.0%) while energy (-0.6%) has sold off following yesterday's run on the heels of a surge in oil prices... Financial, retail, software, utility, transportation and consumer staples have also traded lower... Posting modest gains have been health care, networking, biotech and telecom service... NYSE Adv/Dec 1162/1675, Nasdaq Adv/Dec 1179/1498

10:00AM : Major indices continue to trade near the unchanged mark as ongoing merger speculation comes to fruition... Increased M&A activity, which is expected to continue into 2005, has fueled investor confidence all week, with rumors of several large deals helping the market record three straight days of gains...

That said, much of the activity surrounding the deals has already been made ahead of Johnson & Johnson (JNJ 62.32 +1.42) finally confirming it will buy Guidant (GDT 71.95 -0.10) for $25 bln and Symantec (SYMC 25.69 -1.69) officially agreeing to acquire Veritas (VRTS 28.36 +0.25) for $13.5 bln...NYSE Adv/Dec 959/1515, Nasdaq Adv/Dec 1171/1248

[54anickel]

32. Bush to tackle Social Security issues (Right on cue)

http://money.cnn.com/2004/12/16/news/economy/bush_economy/?cnn=yes

President says he looks forward to working with Congress on economic issues, 'fiscal restraint.'
December 16, 2004: 10:53 AM EST



WASHINGTON (CNN) - The nation's economy is growing, President Bush told attendees on the second day of a White House economic conference, but work remains to be done on Social Security, the deficit and what the president called "fiscal restraint."

"One thing's for certain: In all we do, we have to make sure the economy grows," Bush said. "One of the reasons why we have a deficit is because the economy stopped growing. As you can tell from the previous four years, I've strongly believed that the role of government is to create an environment that encourages capital flows and job creation through wise fiscal policy. And as a result of the tax relief we passed, the economy's growing."

The president said he recognizes the challenges facing America's economy. "The first step in Washington, if you're interested in helping, is to convince people that there is a problem that needs to be addressed."

The economic conference, which ends Thursday, also has focused on including lawsuit reforms and the federal tax code.

more...

[54anickel]

37. Groups Line Up to Oppose Bush Social Security Plan

http://www.reuters.com/newsArticle.jhtml?type=topNews&storyID=7116099

WASHINGTON (Reuters) - As President Bush begins a big campaign to restructure Social Security, Democrats and a host of interest groups are mobilizing to fight his private account plan and protect the traditional retirement system.

Opponents hope to counter Bush's arguments that the current program faces financing problems that make it unsustainable and that allowing workers to invest some Social Security taxes in stocks and bonds will secure the system for younger workers.

"This is a manageable problem," said Rep. Robert Matsui of California, the top Democrat on the House Ways and Means Social Security subcommittee. "He is trying to create a crisis."

Matsui and other private account opponents say the shortfall is a more manageable $3.7 trillion over the next 75 years, the normal time span used to measure the system's financial health. Bush says Social Security faces an indefinite shortfall of about $11 trillion.

snip>

A number of groups opposed to restructuring Social Security, including advocates for the disabled, senior citizen groups and AFL-CIO unions, announced on Thursday they are forming a coalition to counter what is expected to be a major White House's push to promote private investment accounts.

Roger Hickey, co-director of the liberal Campaign for America's Future, called it a "broad coalition of organizations, many of them representing millions and millions of people who are going to fight the president and defeat him on Social Security privatization. We think it is a bad idea and even shocking to many Republican legislators."

WHITE HOUSE STRATEGY Build a case based on lies and FUD, of course - what else is new? :eyes:

more...

[54anickel]

33. Media should brush up on monetary policy

http://www.twincities.com/mld/twincities/news/columnists/10426382.htm

wish more journalists who write about the Federal Reserve would read Gary Stern's columns. They would gain insights that might keep them from egregious misinterpretations of monetary policy after Federal Open Market Committee meetings such as the one this week. The public would better understand just what is going on and what tradeoffs our society faces.

Stern is president of the Federal Reserve Bank of Minneapolis. As head of a district bank, he has participated in these committee meetings for nearly 20 years and attended as the Minneapolis director of research for three years before that.

No one else, including Fed Chairman Alan Greenspan, has as much experience on this key policy body. Moreover, Stern has a Ph.D. in economics and years of experience at the New York Fed before coming to Minneapolis.

The September issue of The Region, a quarterly magazine published by the Minneapolis Fed, contains the text of a speech by Stern on various economic issues. In a section headed "Inflation Confusion," he corrects commonly held misconceptions about the nature and causes of inflation. The text of the speech is at http://www.min neapolisfed.org/pubs/region/04-09/top9.cfm.

Stern argues that the idea there is a tradeoff between inflation and unemployment is "deceptively seductive."

more...

[54anickel]

34. Treasurys cave on jobless claims drop

http://cbs.marketwatch.com/news/story.asp?guid=%7B0086CB15-A09B-451C-AABE-27849214F499%7D&siteid=google&dist=google&dist=

CHICAGO (CBS.MW) - Already lower on early profit-taking, the Treasury market plunged Thursday after a mix of data that included an unexpectedly sharp drop in weekly jobless claims.

Light trading volume contributed to the market's volatility, market watchers said.

Nearing 10:30 a.m. Eastern, the benchmark 10-year note was down 22/32 at 100 22/32, its yield ($TNX: news, chart, profile) raised to 4.17 percent from a more than five-week low of 4.07 percent in late U.S. trade on Wednesday.

"The mix of data has succeeded in driving yields slightly higher, in line with their modest rebound in overseas trade. The root cause is likely the focus on the steep drop in claims," said Action Economics analysts. "The record current account deficit and housing starts slump had less traction on the fixed income side."

more...

[54anickel]

35. Fannie Mae May Have to Restate Earnings By $9 Billion

http://www.bloomberg.com/apps/news?pid=10000103&sid=aN7LPkvKdR.Y&refer=us

Dec. 16 (Bloomberg) -- Fannie Mae, the biggest source of money for U.S. home mortgages, may have to restate earnings by as much as $9 billion after the Securities and Exchange Commission said it broke accounting rules.

The amount is what the Washington-based, government- chartered company last month estimated would be the cumulative after-tax loss of the last three years if the SEC determined it erred in recording financial contracts designed to cushion against shifts in interests rates.

The SEC's ruling may be a setback to gains Fannie Mae and Chief Executive Officer Franklin Raines have made in recovering investor confidence after its federal regulator first accused the company of accounting errors in September. It may also strengthen efforts in Congress to create a stricter regulator for the company and the smaller Freddie Mac.

``I'm sure the market will look for excuses to penalize the company,'' said Eric Schoenstein, an analyst at Jensen Investment Management in Portland, Oregon. ``But the question for investors is, is there something that is a long-term fundamental problem?'' Jensen owns about 1.5 million Fannie Mae shares valued at about $100 million.

Fannie Mae stock fell 4.2 percent to $67.71 in Germany today. The shares have risen 7.1 percent in New York since Raines denied in Congressional testimony on Oct. 6 that the company made accounting errors.

more...

[54anickel]

36. International Flows Fail to Cover US Deficit

http://www.forexnews.com/AI/default.asp

Capital flows into the US tumbled 29% to a 12-month low of $48.1 billion in October after a revised $67.5 billion in September. This was the 7th monthly decline in net flows into the US out of the 10 months of data on hand. MORE IMPORTANTLY, the $48.4 billion in flows FELL BELOW THE TRADE DEFICIT OF $55 billion for the same month, an ominous sign of the US’ inability to finance the swelling deficit.

NEGATIVES
· The main reason to the decline was the 57% drop in net foreign purchases of US corporate bonds to $19 billion. The other main reason to the drop was the $12 billion in net purchases of foreign stocks by US residents, which was the highest since January. This suggests a new emerging source in the erosion of overall capital flows, underlining the quest by US residents to seek foreign alternatives to US assets.


· Underlining the unreliability of private purchases (hot money from hedge funds), these flows fell 48% to $3 billion in October, leaving central bank purchases to assume 81% of total net foreign purchases of US treasuries, certainly an ominous sign of sector concentration of buyers.

· Despite the return of foreign purchases of US stocks to the green after 2 straight months of net selling, there is a deteriorating trend of waning foreign interest in US stocks as highlighted by the fact that foreign holdings of US equities make up 0.42% of total holdings in Jan-Oct, compared to 42% for Treasuries, 32% for corporate bonds and 35% for Agencies. This contrasts to holdings of as much as 38% in equities in 2000. (See chart below).

POSITIVES

more...

[JNelson6563]

38. 2:41 Update

Hi Marketeers!

Just checking in, things are getting a bit guesome.

Dow 10,685.69 -5.76 (-0.05%)
Nasdaq 2,143.05 -19.50 (-0.90%)
S&P 500 1,201.05 -4.67 (-0.39%)
10-Yr Bond 4.178% +0.102

10 basis point jump in the 10 yr? Ouch!

I note as the trained chimp has blathered on things have headed south in the markets. Nasdaq looking especially bruised and battered.

I'm off to take the young Miss to violin. Hope everyone's got a good position about now. You're going to need it.

Cheers-
Julie

[54anickel]

39. 2:38 numbers & yada

Dow 10,685.17 -6.28 (-0.06%)
Nasdaq 2,143.48 -19.07 (-0.88%)
S&P 500 1,201.07 -4.65 (-0.39%)
10-yr Bond 4.18% +0.104
30-yr Bond 4.819% +0.111
NYSE Volume 1,280,160,000
Nasdaq Volume 1,778,416,000

2:00PM : Little change over the past half an hour, despite a renewed buying interest in drugs that has pushed the health care to new heights... Of the ten S&P 500 constituent groups, health care (+1.3%) had been the only one showing losses in 2004... But validation from the JNJ deal and more attractive valuations at depressed levels has prompted aggressive buying interest throughout the group all day and pushed the sector into positive territory for the year... Notable winners include Schering-Plough (SGP 20.68 +0.73), Merck (MRK 31.62 +1.14) and Bristol Myers (BMY 25.61 +0.58)...
Drug maker Abbott Labs (ABT 45.44 +1.09) has also surged after it reaffirmed Q4 (Dec) earnings guidance and issued FY05 estimates in line with analysts' forecasts...NYSE Adv/Dec 1190/2026, Nasdaq Adv/Dec 1226/1827

1:30PM : Market still showing little vigor as bond yields continue to climb... A significant decline in weekly jobless claims to 317K prompted early selling interest in treasuries while a surge in the dollar (up 1% against the euro), due to an overflow from unconfirmed rumors of ECB intervention on the euro, has exacerbated the sell off... The 10-year note, which has been under pressure throughout the session, continues to hover near its lows of the day, off 29 ticks to yield 4.18%...NYSE Adv/Dec 1219/1978, Nasdaq Adv/Dec 1201/1841

1:00PM : The broader averages remain mixed, with the Nasdaq trailing its blue chip counterparts... The Dow and the S&P 500 have maintained modest gains, recently pushing above yesterday's highs on the heels of strong manufacturing data... The Nasdaq, however, has failed to veer far from the flat line, being held down primarily by Internet (-1.3%) and software (-1.1%) issues... The Composite remains more than 20% above its August lows, with initial resistance lingering near its Wednesday high of 2171...NYSE Adv/Dec 1244/1923, Nasdaq Adv/Dec 1297/1716

12:30PM : Stocks continue to show little direction, bouncing around the flat line, despite better than expected manufacturing data... The December Philadelphia Fed manufacturing index came out at the top of the hour with a reading of 29.6, the highest level since June, versus expectations of 20.5... The nearly nine-point improvement over last month's 20.7 figure, which was consistent with yesterday's strong NY Empire State manufacturing survey reading of 29.9, could provide upward potential for upcoming Chicago PMI data (out December 30) and the early 2005 release of the December national ISM index...NYSE Adv/Dec 1221/1912, Nasdaq Adv/Dec 1251/1736

Advances & Declines
NYSE Nasdaq
Advances 1129 (33%) 1074 (33%)
Declines 2121 (62%) 2009 (62%)
Unchanged 148 (4%) 155 (4%)

--------------------------------------------------------------------------------

Up Vol* 552 (46%) 492 (29%)
Down Vol* 624 (52%) 1176 (69%)
Unch. Vol* 18 (1%) 21 (1%)

--------------------------------------------------------------------------------

New Hi's 231 128
New Lo's 15 16

The buck is having a grand time though

Last trade 82.61 Change +0.98 (+1.20%)

Settle 81.63 Settle Time 23:33

Open 81.62 Previous Close 81.63

High 82.67 Low 81.38

Last tick: 2004-12-16 14:09:23 ET
30-min delayed quote.


Didn't hit gold all that badly - I was hoping to see more of a "big B little argain" day.

NY gold ends below $440, palladium hits 16-mo. low

http://www.fxstreet.com/nou/noticies/afx/noticia.asp?font=Reuters&pv_noticia=MTFH17267_2004-12-16_19-34-52_N16517357

NEW YORK, Dec 16 (Reuters) - Gold futures ended lower on Thursday, as the beleaguered dollar rallied on data showing the third-quarter U.S. current account deficit was narrower that many had feared.

snip>

Gold tumbled in light trading but stayed within its broad $435-$445 range, as the dollar climbed across the board.

February gold futures <GCG5> at the NYMEX's COMEX division lost $4.00 to end at $438.20 an ounce, after moving between $444.40 and $437.

The yellow metal has a role in financial markets as an alternative investment to the greenback.

"This is just dollar-related. It's thin conditions in gold," said a bullion trader at a bank.

Midafternoon in New York, the euro dropped to $1.3215 <EUR=>, sharply lower from $1.3413 late on Wednesday.

Gold would be vulnerable to more long liquidation if the dollar kept rising or if the funds decided to take further profits after the rally to a 16-year high at $458.70 last month.

more...

[54anickel]

40. Bush presses Social Security changes (treat 'em like a mushroom -

keep 'em in the dark and feed 'em lotsa BS)

http://cbs.marketwatch.com/news/story.asp?guid=%7B43089488-9D16-4F93-B0FE-C056BEEBC889%7D&siteid=google&dist=google&dist=

WASHINGTON (CBS.MW) -- President Bush pushed for massive changes to the Social Security retirement system Thursday during the final day of a White House conference called to highlight the administration's still-developing economic agenda for Bush's second term.

But he didn't offer a specific new proposal for overhauling the retirement scheme created in 1935 as part of Franklin Delano Roosevelt's New Deal.

The president reiterated his opposition to raising payroll taxes for his ambitious agenda, and pledged that "nothing will change" for those already retired or "near retirement" as he sought to create private accounts for "younger" workers.

"With those principles in mind, I'm open-minded," Bush said to laughter from the audience.

snip>

Bush and his aides have not defined "near retirement." Several Social Security proposals have been floated, many of which would preserve current retirement benefits for those 55 and older.

Outside experts have estimated that transition costs associated with adding private accounts could total as much as $2 trillion over the first 10 years. Critics say borrowing $2 trillion or so to finance the creation of individual Social Security investment accounts would likely become a fiscal disaster. Read the full story.

snip>

Tooting his own horn

Bush also pledged to make difficult political decisions to cut the federal deficit in half by 2009 and credited his policies with keeping the economy from entering into a depression.

more :puke:...

[54anickel]

41. Social Security: Crisis? What crisis?

http://money.cnn.com/2004/12/15/retirement/what_crisis/

Some experts say the urgency to reform Social Security is manufactured -- and very troubling.
December 16, 2004: 2:11 PM EST
By Jeanne Sahadi, CNN/Money senior writer



NEW YORK (CNN/Money) - The debate over Social Security is well under way, with President Bush Thursday giving guidelines for addressing what most acknowledge will be a shortfall in the program's funding in 40 or so years.

The president and some others support overhauling the system by partially privatizing it by giving younger workers the option of creating personal accounts and diverting some of their Social Security taxes to fund them.

But critics say the current proposals are dangerous. And some argue that it's wrong to characterize the eventual shortfall as a crisis.


CNN/Money will be covering the Social Security debate on an ongoing basis. This week, we're mapping out some of those critics' arguments.

Crisis? Check the calendar
Not only is Social Security not in crisis, it is as financially sound as ever, according to the liberal Center for Economic and Policy Research, run by Mark Weisbrot and Dean Baker, coauthors of "Social Security: The Phony Crisis."

more...


Think Again: Selling Social Security (Down the River)

http://www.americanprogress.org/site/pp.asp?c=biJRJ8OVF&b=272724

As Center for American Progress Senior Fellow Matthew Miller argued in his syndicated column, recently, the mainstream media's willingness to cede the power to define the political agenda to the Bush administration constitutes a shameful dereliction of duty, particularly when it involves swallowing the phony scare tactics currently being employed to undermine the solvency of the Social Security program. It is on issues just like this that the public most relies on a free and open press to do some of the digging necessary to flesh out the parts of the story that are relevant to their lives, and it is exactly this point, as well on the related issue of providing true "balance" in its reporting, which the media has come up short time and again.

In its coverage of what is sure to be the Bush administration's signature program for 2005, the media has largely been content to rely on the interested commentary of government spokespeople and its partisans in conservative think tanks. On a "NewsNight with Aaron Brown," report recently misleadingly entitled "Social Security is in Trouble," CNN's Bruce Morton quoted Republican Senator Lindsey Graham together with pro-privatization activists from the Concord Coalition and the Cato Institute. Notably, no anti-privatization voices were aired during his report. Graham was also trotted out as the voice of privatization (or "reform" in the language of its supporters and a compliant press) by CNN anchor, Lou Dobbs, during which he claimed—unchallenged— "Social Security is going bankrupt, it's coming apart at the seams…We're short of money to pay the benefits. If we do nothing, the cost will be trillions, if we do something progressive, the cost can be managed. But to do nothing is a death blow to Social Security."

Instead of questioning the truth of Graham's statements, which are wholly unsupported by either CBO or Social Security's own data, Republican political contributor, Dobbs simply walked Graham right into his next talking point, saying "Let's talk about the idea of private accounts…" If Dobbs had done his homework, he would know that in fact the nation is not short on "money to pay the benefits." Those journalists who have done their homework on this issue are not so easily taken in. It's not as if the administration's misinformation campaign is not easy to debunk. In a news analysis, The Los Angeles Times's Joel Havermann did so with a simple rational examination of the facts. Blogger Kevin Drum of the Washington Monthly also points out that projections in 1994 held that Social Security would go bankrupt in 2029, while current projections say that the point at which full benefits can no longer be paid will come 38 years from now, in 2042. There is no evidence that the program will go bankrupt, as Graham and others insist, but only that benefits will be cut so retirees receive 73 percent of full benefits after 2042.

Even so, the march of misinformation continues unimpeded. On December 9, the CBS Evening News profiled one Tad DeHaven, identified as a member of the "National Taxpayers Union." Presumptive anchor John Roberts reported that DeHaven, a 28 year old college graduate who is due to be married next year, plans to retire in 2042, "the year Social Security goes broke." As noted above, these assumptions are incorrect. Roberts nevertheless invited a conservative ideologue to make his case for privatization untroubled by the intervention of real-world calculations. (DeHaven's personal website indicates previous work stints at both the Cato Institute and the Heritage Foundation.) Where was the balance? Where was the objective data such as the Center for Economic & Policy Research's contention that "projections show that will always be able to pay a higher real benefit than that received by current retirees." Not on the so-called liberal CBS News, that's for sure.

snip>

As with the Iraq war, proponents of the Bush plan seek to tar their better-informed opposition as irresponsible and not to be trusted...

more...

[DoBotherMe]

42. Oh, yes, his enronization of the

economy has kept us from falling into a depression. I for one will not get fooled again: I continue to hoard my cash and reduce my overhead. It may not be what ** wants me to do but I must do what I think is right for me. I will no longer drink the economic pundits' koolaid that tries to tell me an economy WITH NO MANUFACTURING BASE, NO RAW MATERIALS BASE, AND NO INDUSTRIAL INNOVATION is viable. All of them are crazy. D ; )

[54anickel]

43. Closin' time! Nasdaq took quite a hit today

Dow 10,705.64 +14.19 (+0.13%)
Nasdaq 2,146.15 -16.40 (-0.76%)
S&P 500 1,203.21 -2.51 (-0.21%)
10-yr Bond 4.184% +0.108
30-yr Bond 4.824% +0.116
NYSE Volume 1,790,794,000
Nasdaq Volume 2,391,903,000

Close Dow +14.19 at 10705.64, S&P -2.62 at 1203.20, Nasdaq -16.40 at 2146.15: Major indices open lower but finish in split fashion, as blue chips utilize confirmed merger news to keep the Dow positive while profit taking and mixed economic and earnings news pressure the rest of the indices... Johnson & Johnson's (JNJ 63.45 +2.55) official announcement that it will acquire Guidant (GDT 71.70 -0.35) for $25 bln provided enough investor confidence early on to sustain buying interest throughout the health care sector...
Shares of Dow component JNJ, which hit a new 52-week high surging more than 4%, restored awareness in depressed drug stocks and helped push the S&P health care index (+1.5%) into positive territory for the year... Symantec's (SYMC 25.13 -2.25) official plan to buy Veritas (VRTS 27.99 -0.12) for $13.5 bln, however, had already been factored into the market, as profit taking in software stocks sent the sector down 2.0%... SYMC and VRTS were two of the top three volume leaders on the Nasdaq... Volatile action in crude oil prices ($44.18/bbl -$0.01) late in the day also pressured the indices...

In economic news, weekly jobless claims, which fell sharply to 317K (consensus 342K) helped offset a 13% decline in November Housing Starts (1.77 mln versus consensus of 1.98 mln), but prompted investors to book profits in the homebuilding sector, which had surged more than 5% yesterday as homebuilders hit new 52-week highs... Transportation (-0.7%) also fell, after an earnings miss from FedEx (FDX 96.04 -2.71), while financial (-0.5%) also fell after Goldman Sachs (GS 104.92 -4.33), despite beating analyts' forecasts by six cents, failed to do so as persuasively as competitor Lehman (LEH 87.01) did a day earlier...

Virtually every other sector closed lower, with technology stocks under pressure from profit taking as the Nasdaq has surged more than 20% from its August lows... Separately, the 10-year note sold off more than 29 ticks to yield 4.18% due to an overflow from unconfirmed rumors of ECB intervention on the euro which pushed the dollar 1% higher... Other economic news included November Building Permits, which fell only 1.5% to 1988K (consensus 2010K), suggesting that starts will bounce back in December, while the Current Account deficit came in at -$164.7 bln, not widening to the -$171.0 bln level most economists had anticipated...NYSE Adv/Dec 1146/2174, Nasdaq Adv/Dec 1201/1930

3:30PM : Market shows some resilience heading into the close as late-day profit taking subsides and renewed buying interest helps the indices bounce off their lows of the session... Investors will get an update about underlying inflation concerns when the Department of Labor releases November Consumer Price Index data at 8:30 ET tomorrow morning... Economists expect both the CPI and the Core CPI to come at 0.2%... With regards to earnings, S&P 500 constituents Circuit City (CC 15.27 +0.22) and Family Dollar (FDO 29.51 -0.21) will report quarterly results before the bell...NYSE Adv/Dec 1023/2249, Nasdaq Adv/Dec 1082/2037

3:00PM : Equities remain on the defensive heading into the last hour of trading as a bearish bias remains firmly intact... Decliners now outpace advancers by a more than 2 to 1 margin on both the NYSE and the Nasdaq... Volumes have been above average as tomorrow's triple witching options expiration has added to the increased level of trading activity (NYSE 1.3 bln, Nasdaq 1.8 bln)... Separately, shares of Fannie Mae (FNM 68.97 -1.72) remain underwater after the SEC ordered the company to restate four years worth of earnings...

The decision would force the mortgage giant to recognize an estimate $9 bln of hedge-related losses...NYSE Adv/Dec 1050/2223, Nasdaq Adv/Dec 1067/2036

2:30PM : Sellers show some resolve as the major indices quickly retreat on the heels of a recent spike in oil... With a rally of more than 2% in crude oil over the last half hour, heading into the close of trading for commodities, broad-based selling has pushed the major indices into negative territory... Semiconductor has been hit the hardest, as the SOX (-1.7%), which for the third day in a row has failied to break/hold above technical resistance at its 200 day simple moving average (434.20), continues to fall... NYSE Adv/Dec 1111/2133, Nasdaq Adv/Dec 1164/1915

2:00PM : Little change over the past half an hour, despite a renewed buying interest in drugs that has pushed the health care to new heights... Of the ten S&P 500 constituent groups, health care (+1.3%) had been the only one showing losses in 2004... But validation from the JNJ deal and more attractive valuations at depressed levels has prompted aggressive buying interest throughout the group all day and pushed the sector into positive territory for the year... Notable winners include Schering-Plough (SGP 20.68 +0.73), Merck (MRK 31.62 +1.14) and Bristol Myers (BMY 25.61 +0.58)...

Drug maker Abbott Labs (ABT 45.44 +1.09) has also surged after it reaffirmed Q4 (Dec) earnings guidance and issued FY05 estimates in line with analysts' forecasts...NYSE Adv/Dec 1190/2026, Nasdaq Adv/Dec 1226/1827

1:30PM : Market still showing little vigor as bond yields continue to climb... A significant decline in weekly jobless claims to 317K prompted early selling interest in treasuries while a surge in the dollar (up 1% against the euro), due to an overflow from unconfirmed rumors of ECB intervention on the euro, has exacerbated the sell off... The 10-year note, which has been under pressure throughout the session, continues to hover near its lows of the day, off 29 ticks to yield 4.18%...NYSE Adv/Dec 1219/1978, Nasdaq Adv/Dec 1201/1841

1:00PM : The broader averages remain mixed, with the Nasdaq trailing its blue chip counterparts... The Dow and the S&P 500 have maintained modest gains, recently pushing above yesterday's highs on the heels of strong manufacturing data... The Nasdaq, however, has failed to veer far from the flat line, being held down primarily by Internet (-1.3%) and software (-1.1%) issues... The Composite remains more than 20% above its August lows, with initial resistance lingering near its Wednesday high of 2171...NYSE Adv/Dec 1244/1923, Nasdaq Adv/Dec 1297/1716

Advances & Declines
NYSE Nasdaq
Advances 1149 (33%) 1201 (36%)
Declines 2170 (62%) 1930 (58%)
Unchanged 145 (4%) 164 (4%)

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Up Vol* 790 (44%) 755 (31%)
Down Vol* 982 (54%) 1455 (61%)
Unch. Vol* 19 (1%) 172 (7%)

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New Hi's 248 143
New Lo's 17 16


Look at that buck run!

Last trade 82.47 Change +0.87 (+1.07%)

Settle 82.50 Settle Time 16:31

Open 81.62 Previous Close 81.63

High 82.67 Low 81.38

Last tick: 2004-12-16 16:49:07 ET
30-min delayed quote.

Have a great evening everyone :hi: