STOCK MARKET WATCH, Thursday December 11

[ozymandius]

Source: du

STOCK MARKET WATCH, Thursday December 11, 2008

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 40
WHERE'S OSAMA BIN-LADEN? 2598 DAYS
DAYS SINCE ENRON COLLAPSE = 2895
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 10
Enron execs conveniently deceased = 3
Other Arrests of Execs = 54

---

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

---

AT THE CLOSING BELL WHEN BUSH TOOK OFFICE on January 22, 2001
Dow - 10,578.24
Nasdaq - 2,757.91
S&P 500 - 1,342.90
Oil - $27.69/bbl
Gold - $266.70/oz.
$1 USD = EUR 1.06678
$1 USD = JPY 116.6200

In recognition of those prescient of the Dow's precipitous return of Bush values (9/29/08): JuneBourder and AnneD

AT THE CLOSING BELL ON December 9, 2008

Dow... 8,761.42 +70.09 (+0.80%)
Nasdaq... 1,565.48 +18.14 (+1.17%)
S&P 500... 899.24 +10.57 (+1.19%)
Gold future... 808.80 +34.60 (+4.28%)
30-Year Bond 3.10% +0.02 (+0.65%)
10-Yr Bond... 2.68% +0.02 (+0.56%)






GOLD,EURO, YEN, Loonie and Silver

---

PIEHOLE ALERT

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

For information on protests and other actions Citizens For Legitimate Government

---

Read more: du

[Dr.Phool]

1. Did Ayn Rand ruin the economy? Strong Kool-Aid here.

THE ECONOMY
Who Is To Blame?

Some point to Alan Greenspan. But his hands-off approach to the economy originated with Ayn Rand.
By Barrett Sheridan | Newsweek Web Exclusive
Dec 10, 2008



It's not easy being Alan Greenspan these days. As the former Federal Reserve chairman, he urged government regulators to take a light touch while banks like Bear Stearns and Lehman Brothers buried themselves—and the economy more generally—under a mountain of debt. Now that his reputation is plummeting faster than the stock market, he's been forced to admit a "flaw" in his hands-off ideology.

Of course, things look entirely different to members of "free-market advocacy groups," as they like to be called. One such group is the Ayn Rand Institute, named after the matriarch of the movement, whose antigovernment and anti-regulation views are embodied in her best-selling novels "Atlas Shrugged" and "The Fountainhead." Indeed, Greenspan himself was a friend of Rand's, and a devotee of her extreme free-market philosophy, known as Objectivism. NEWSWEEK's Barrett Sheridan spoke with the head of the Ayn Rand Institute, Dr. Yaron Brook, about why he defends free markets while much of the rest of the world has turned away from them, and what he thinks of Greenspan today. Excerpts:

NEWSWEEK: Lack of regulation is being blamed for our current crisis, and free markets are in disrepute. Has Objectivism been dealt a deathblow?
Yaron Brook: No, not at all. From a public-relations perspective, it's been hurt. But in the long term there will be a backlash against what's going on in the markets today—the heavy government involvement, the nationalizations and the move toward socialism. If the free-market advocacy groups position themselves correctly, they can benefit from it.

How can they do that?
What we need to do is really make the case to the American people—and I think it's an easy case to make—that this is not a failure of free markets, this is not a failure of capitalism, but this is a failure of the exact opposite. It's a failure of the regulatory state. It's a failure of all the government policies of the last eight years. Actually, the last 95 years.

Why do you say the last 95 years?
I believe that the No. 1 cause of the current crisis is Federal Reserve policy. The Federal Reserve, by necessity, creates economic problems; no matter how good a Federal Reserve chairman is, he's going to create cycles of booms and busts.

How did the Federal Reserve create today's mess?
The current crisis was caused by the housing bubble, and the primary cause of the housing bubble was the Federal Reserve keeping interest rates at 1 percent in 2003. They were asking people to borrow money, basically begging them. The financial problem we face today was a problem of overleverage, of too much debt—but that's exactly what Federal Reserve policy encouraged.

(snip) http://www.newsweek.com/id/173514

[ozymandius]

3. I sometimes guage Greenscam's clout by googling news articles

that cite him as a source of relevant information to illuminate current events. To the credit of many, there are nearly none. 99.99% of such are highly critical of his policies. Poor ol' Milton Friedman is afflicted with a similar plague.

But is Ayn Rand to blame? According to my anonymous sources, Ayn Rand was neither on the President's Council of Economic Advisers nor did she lead the Federal Reserve.

[Warpy]

48. She was, however, the author of his muzzy headed idealism

that stated the invisible market fairy combined with the inherent honesty of the average man would create a Utopia in which the able would succeed and money would flow like Niagara to us all.

It's funny, I was always dismissed as the idealist with my rock headed support of regulation and socialist redistribution of otherwise obscene wealth. It turns out all the real idealists were the Randorrhoids in service of the wealthy, men with their heads so far above the clouds they couldn't see they were being used.

I read both Marx and Rand in my teens and while I found Marx more nourishing, I realized even then they suffered from the same fatal flaw, that the perfection of humanity would have to precede any success of their respective philosophies.

These days, I find myself having (marginally) more in common with Joe the plumber than with most party movers and shakers. Joe at least realizes that we need pragmatists instead of ivory tower theorists, even though he's incapable of articulating the point clearly and hasn't a clue what's actually wrong with the theories and who's responsible.

Grand theories can be tried only when times are good enough that we can risk their failure. I sincerely hope we've seen the last of them for a while, now, because we aren't in any shape to survive more of them.

[Tansy_Gold]

53. My only argument with your statement, Warpy, is that I don't think

Rand believed in the "inherent honesty" of the "average" man, but only in the inherent and flawless integrity of the wealthy. And that's where her "fatal" flaw was: wealthy, elite men (and women) are no more inherently honest than the average, and all it takes is one bad apple to spoil the unregulated barrel. When greed is a measure of goodness, how does one identify excessive greed?

I think that's why I became so fixated on Eddie Willers several years ago when Atlas Shrugged came up in another discussion, long before my days on SMW. Rand didn't know what to do with Eddie. She couldn't kill him off, but she really couldn't let him live either. That's where she lost touch with reality.



Tansy Gold, who needs to get with her own reality program and get some work done

[Warpy]

58. Well, Eddie aside, remember she's got lots of

idiots and morally reprehensible characters at the top in her books, and being at the top they are presumed to be wealthy. I bring Toohey as an example.

In her alternate universe, however, humanity is perfected and art critics who can't create art themselves are marginalized and wealth is automatic for the competent and creative.

And that is where she falls flat on her face.

[Tansy_Gold]

65. Her main problem came from her basic premise

And I add the disclaimer that if I know little about economics, I know even less about Aristotelean philosophy.

But part of her basic premise was that there are absolutes and that ONLY absolutes have any reality. (example -- Tony, the "non-absolute" assigned to Rearden). Unfortunately, there are very few absolutes in the real world, and translating the fantasy to the reality just couldn't/can't/doesn't work.

But as with devout believers in religion, I think those who accept the Randian "philosophy" see in it a justification for the actions and attitudes they already have. It's all self reinforcing. And that's never (ha ha, absolutely!) a good thing.


Puns always intended by



Tansy Gold

[tclambert]

20. Albert Tucker and John Nash proved mathematically that Ayn Rand was incorrect

She probably was unaware of their work in game theory. But today, this should be well known.

There is also a serious misinterpretation of Adam Smith going on. Smith did not say businessmen should run national economies. He was vehemently opposed to that. His whole point was that in a competitive marketplace, the customers make the decisions that drive the market, and businessmen must serve the customers' wishes or go bankrupt. He opposed monopolies. Monopolies and cartels give businessmen too much power to dictate to the market rather than obeying the market's wishes.

[Tansy_Gold]

23. Common sense and any experience with reality prove Rand wrong

But that isn't the point.

Alan Greenspan swallowed her propaganda completely and achieved a position of power she didn't/couldn't. He was able to put her "theory" into practice, and because the essence of her philosophy had enough followers in the rest of the economy/administration (going back several administrations, you understand, not just the current one), Greenspan was able to get them implemented.

There is much in Rand's philosophy that meshes quite well with that Protestant faith that wealth is a sign of God's favor. Both ethos (ethi?) provide a justification for naked greed. How convenient!

But the other point is that Rand's philosophy, at least as embodied in Atlas Shrugged, only deals with the destruction of the existing socialist/collectivist economy. It only addresses the desires of the financial elites. It never offers solutions on a large scale for a national economy. Furthermore, the success of her destroyers is based on circumstances that do not and probably cannot exist in the real world (perpetual motion machines to produce energy, etc.).

But it's easy for people to get suckered in. We know there are lots of people who still believe in booosh. And some of them have managed to get themselves in positions of power.

Like any religion based on belief in things/beings/etc. that defy rational explanation, Objectivism defies rational examination of reality. That doesn't mean that its adherents can't do serious, serious damage if they're in positions of authority.



Tansy Gold

[AnneD]

55. Call me old fashioned....

but I like my philosophy straight up with the occasional parable chaser-not frappeed in a poorly written dime store novel.



But let me tell you how I really feel.....

[Tansy_Gold]

57. But the author's philosophy informs virtually ANY fiction, to a greater

or lesser extent.

I suppose the exception would be purely hack writing, but even if it's badly written (on many levels) Atlas Shrugged is not a dime store novel.

For starters:
http://www.amazon.com/Dangerous-Men-Adventurous-Women-Cultural/dp/0812214110



Been there, done that,



Tansy Gold, former romance novelist

[AnneD]

74. Forgot your background......

no insult intended...AS just didn't work for me. I tried to read it but it just seemed like a really bad romance novel with tidbits of philosophy thrown in. When I was younger, and thought I had time-I would wade through something like that (I tried but just didn't like it). Now that I am older and realize the value of my time.....I don't waste it on that crap. Sorry I have read better romance novels and better books on philosophy.

[Hugin]

28. Also, I have grave doubts about businessmen running government or the whole...

"Run the Government like a business" concept.

Government should be run like a government.

[specimenfred1984]

54. Criminals ruined the economy by committing crimes

The only long-term answer for the economy is therefore arresting a lot of criminals. Studies of real economies are worthless garbage just as studies of theoretical economic theories are, we live in a criminal economy where the crimes are so commonplace most aren't even seen as crimes.

[Dr.Phool]

60. I guess I'm getting more cynical by the day.

But, I'm feeling that the only punishment for most of their crimes, will be more monetary rewards.

[specimenfred1984]

63. That's the way it works in fascist countries

The only hope the U.S. has is to become a democracy again.

[Dr.Phool]

73. Key word.

Again. The illusion is coming off fast.

[ozymandius]

2. Market WrapUp

It's Gonna Take Time & Money
BY CHRIS PUPLAVA

Investors all over are looking for that Santa Claus/end-of-the-year rally, and it looks like they are going to get it. The CBOE options equity put/call ratio appears to be rolling over which has signaled market rebounds from oversold conditions in the past. Additionally, deleveraging of the Yen-Carry trade may also be taking a respite as the Euro has stabilized relative to the Yen and appears to be making an attempt to break out of the lower trading range between 116 and 121, with a likely move up to 126. Most currencies gained relative to the Yen today which is a positive sign.

....

While a market rebound is likely and overdue, it will probably prove short-lived. We appear to be entering a similar pattern as the 2002-2003 market bottoming action. The weekly RSI is showing positive divergence (black dashed line and green arrows) currently just as it did in 2002-2003. However, risk management indicators such as moving average cross overs and an RSI shift into positive territory (north of 50) have yet to occur and so the green light on stocks remains absent and the current environment still favors bonds over stocks. After the current market rally exhausts itself a retest of the November lows is likely and break below the November lows is still possible.

....

However, this recession is going to be one for the record books and last longer than previous recessions, with the lead time of the KRWI indicators more likely near the upper end of the lead time of 12-14 months, putting an end to the current recession in late Q3 or Q4 of next year. Further reasons for this time frame were given in a previous WrapUp, “Are We There Yet? (10.08.2008). I commented that there is a lag between fiscal and monetary policy and when they begin to stimulate the economy, and that the lag would not likely be felt until next year, but it will come.

There was just over a year lag between when the Fed began to increase the monetary base in late 1930 and when the market finally bottomed in 1932 during the Great Depression. Spikes in the monetary base growth rate (orange arrows) lead the market (blue arrows) as do peaks as shown below. With the Fed increasing the money supply as of August of this year, an equity market recovery occurring in late spring to early summer of next year (corresponding with the analysis above) is certainly reasonable and likely.

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

[ozymandius]

4. Today's Reports

08:30 Export Prices ex-ag. Nov
Briefing.com NA
Consensus NA
Prior -1.2%

08:30 Import Prices ex-oil Nov
Briefing.com NA
Consensus NA
Prior -0.9%

08:30 Initial Claims 12/06
Briefing.com 520K
Consensus 525K
Prior 509K

08:30 Trade Balance Oct
Briefing.com -$53.5B
Consensus -$53.5B
Prior -$56.5B

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

[ozymandius]

9. Wall Street expects jobless claims to rise

WASHINGTON – Wall Street expects the government to report that new claims for unemployment benefits increased last week as companies ramped-up layoffs amid the recession.

The jobless claims report comes a day after the federal government said the monthly budget deficit reached a record in November, in part because of increased spending on programs such as unemployment insurance and food stamps.

The number of new claims for jobless benefits is projected to increase to a seasonally adjusted 525,000, up from 509,000 the previous week, according to Wall Street economists surveyed by Thomson Reuters.

....

A number of large U.S. employers announced layoffs this week, including Dow Chemical Co., 3M Co., Anheuser-Busch InBev, National Public Radio and the National Football League.

http://news.yahoo.com/s/ap/20081211/ap_on_bi_ge/financial_meltdown

[Dr.Phool]

15. NFL layoffs?

I guess that explains the Browns season.

[ozymandius]

17. I heard a story.

Some teams are replacing high-dollar players with help from the day labor pool outside their local Home Depot.

Do you feel the Browns' situation supports this claim?

[Dr.Phool]

26. No, I think Randy Lerner got his teams mixed up.

He sent the NFL players to London to play soccer, and put the soccer players in Cleveland.

Further proof that inherited wealth does not equal inherited brains.

Now I know what it feels like to be a Bengals fan.

[AnneD]

52. Inherited political position...

does not equal true political leadership.

[Dr.Phool]

59. Why aren't you out throwing snowballs?

:hi:

[AnneD]

75. I am in the clubhouse looking at the snow falling....

It has been so many years-I wouldn't know what to do.......

[UpInArms]

25. Initial Claims in @ 573,000! last wk rev'd up 6k

02. U.S. Oct. trade gap with China record $28.0 bln
8:30 AM ET, Dec 11, 2008

03. U.S. exports fall more sharply than imports in Oct.
8:30 AM ET, Dec 11, 2008

04. U.S. Oct. gap above consensus of $54.5 bln
8:30 AM ET, Dec 11, 2008

05. U.S. Oct. trade gap widens 1.1% to $57.2 bln
8:30 AM ET, Dec 11, 2008

06. U.S. initial jobless claims rise 58,000 to 573,000
8:30 AM ET, Dec 11, 2008

07. U.S. weekly initial claims highest since Nov. 1982
8:30 AM ET, Dec 11, 2008

08. U.S. continuing jobless claims rise 338,000 to 4.4 million
8:30 AM ET, Dec 11, 2008

09. U.S. continuing claims highest since Dec. 1982
8:30 AM ET, Dec 11, 2008

10. Jump in continuing claims is most since 1974
8:30 AM ET, Dec 11, 2008

16. U.S. Nov. import prices fall record 6.7% vs. 5% expected
8:30 AM ET, Dec 11, 2008

17. U.S. Nov. nonfuel import prices fall record 1.8%
8:30 AM ET, Dec 11, 2008

18. U.S. Nov. imported crude oil prices fall record 25.8%
8:30 AM ET, Dec 11, 2008

19. U.S. Nov. export prices fall record 3.2%
8:30 AM ET, Dec 11, 2008

20. U.S. import prices down 4.4% in past year
8:30 AM ET, Dec 11, 2008

[UpInArms]

29. Weekly jobless claims jump to 26-year high

http://news.yahoo.com/s/nm/20081211/bs_nm/us_usa_economy_jobless

WASHINGTON (Reuters) – The number of U.S. workers filing new claims for jobless benefits surged to a 26-year high last week, Labor Department data showed on Thursday, as a deepening recession forced employers to cut back on hirings.

Initial claims for state unemployment insurance benefits jumped by 58,000, the biggest increase since September 2005, to a seasonally adjusted 573,000 in the week ended December 6 from an upwardly revised 515,000 the previous week. That was the highest print since November 1982, when 612,000 workers submitted new claims for unemployment benefits.

A Labor Department official said there were no special factors influencing the report. Analysts polled by Reuters had forecast 525,000 new claims versus a previously reported figure of 509,000 the week before.

The four-week moving average of new jobless claims, a better gauge of underlying labor trends because it smoothes out week-to-week volatility, rose to 540,500 from 526,250 the prior week, the highest since December 18, 1982 when a reading of 554,500 was recorded.

...more...

[UpInArms]

30. Trade deficit rises unexpectedly in October - exports fall dramatically

http://news.yahoo.com/s/ap/20081211/ap_on_bi_go_ec_fi/economy_trade

WASHINGTON – America's trade deficit rose unexpectedly in October as a spreading global recession dampened sales of U.S. products overseas and the volume of oil imports surged by a record amount. The deficit with China jumped to an all-time high.

The Commerce Department reported Thursday that the trade deficit rose to $57.2 billion October, 1.1 percent higher than the September imbalance of $56.6 billion. Analysts expected the deficit to decline to $53.5 billion on lower oil prices.

The average price for a barrel of crude oil did drop by a record amount but that was offset by a record surge in the volume of oil imports. That sent the total oil bill up by 3 percent to $37.7 billion.

The politically sensitive deficit with China jumped to a record $26 billion in October as imports of toys, computers and televisions surged. However, with the U.S. and much of the rest of the world now in a recession, China's export-led growth is beginning to falter, raising fears that rising job layoffs at Chinese factories could trigger political unrest among displaced workers in the world's fourth largest economy.

So far this year, the U.S. trade deficit is running at an annual rate of $709.1 billion, up slightly from last year's imbalance of $700.3 billion. Economists believe the deficit going forward will shrink slightly as a recession that began a year ago continues to dampen demand for imports. However, that expected improvement will be offset by lower U.S. exports as overseas demand slows, reflecting recessions in many of America's major markets.

...more...

[UpInArms]

31. Retail sales post big drop in November

http://news.yahoo.com/s/nm/20081211/bs_nm/us_usa_economy_spending_2

NEW YORK (Reuters) – U.S. retail sales excluding autos posted their biggest monthly drop in five years in November, as consumers, spooked by a deepening recession, pared spending for a third straight month, a private report released on Thursday showed.

The decline accelerated in November despite a sales spurt over the crucial "Black Friday" weekend -- the three days after the Thanksgiving holiday in late November -- according to SpendingPulse, the retail data service of MasterCard Advisors, a subsidiary of MasterCard Inc.

Consumer spending excluding autos fell 3.8 percent last month on a seasonally adjusted basis, steeper than the 1.5 percent decline in October, SpendingPulse said.

The November figure was the largest one-month drop in SpendingPulse history, which began in 2003, surpassing the prior record fall of 2.4 percent set two months ago.

The report was the latest evidence that U.S. retailers are facing one of the worst holiday retail seasons in recent memory. The year-end shopping period accounts for the bulk of the annual business of many retailers.

...more...

[UpInArms]

45. Q3 federal debt increases at 39% annual rate - U.S. households pay down debt for 1st time since 1952

05. U.S. households pay down debt for 1st time since 1952
12:00 PM ET, Dec 11, 2008

06. U.S. Q3 household net worth falls $2.8 trillion
12:00 PM ET, Dec 11, 2008

07. U.S. Q3 household debts fall at 0.8% annual rate
12:00 PM ET, Dec 11, 2008

08. U.S. Q3 federal debt increases at 39% annual rate
12:00 PM ET, Dec 11, 2008

09. U.S. Q3 household net worth falls at 18% annual rate
12:00 PM ET, Dec 11, 2008

[UpInArms]

47. U.S. households pay down debts for first time

http://www.marketwatch.com/news/story/US-households-pay-down-debts/story.aspx?guid=%7B823A97D3%2DECA6%2D4887%2DA70B%2D9425366E7473%7D

WASHINGTON (MarketWatch) -- Stung by the loss of more than $2.8 trillion in their net wealth, the nation's households paid down their debts in the third quarter for the first time since at least 1952, the Federal Reserve reported Thursday.

As of Sept. 30, households' total outstanding debt shrank at an annualized rate of 0.8% from $13.94 trillion to $13.91 trillion, the Fed said in its quarterly flow of funds report. It's the first decline in household debt ever recorded in the report.

Households paid off more mortgage debt than they took on for the first time on record. Mortgage debt fell at a 2.4% annual rate to $10.54 trillion.

Other consumer debts, such as credit cards and auto loans, increased at a 1.2% annual rate in the quarter to $2.6 trillion.

Total U.S. domestic nonfinancial debt increased at a 7.2% annual rate, boosted by a postwar record 39.2% increase in debt taken on by the federal government.

...more...

[Tansy_Gold]

64. Wre those mortgage debts actually paid down or did the

foreclosures have something to do with it?


Just askin'. :shrug:


TG

[ozymandius]

5. Oil prices edge up in Asia ahead of OPEC meeting

KUALA LUMPUR, Malaysia – Oil prices edged higher Thursday in Asia with investors hoping for a significant OPEC production cut next week to boost the market.

Light, sweet crude for January delivery was up 59 cents to $44.11 a barrel in electronic trading on the New York Mercantile Exchange by midafternoon in Singapore. The contract rose 3.4 percent, or $1.45, overnight to settle at $43.52.

...

OPEC's November production was well above quotas agreed to by members earlier this year that were intended to take 2 million barrels of oil off the market each day, according to Platts, the energy information arm of McGraw-Hill Cos.

...

In other Nymex trading, gasoline futures rose 1.63 cents to settle at 98.5 cents a gallon. Heating oil gained 1.5 cents to $1.42 a gallon and natural gas for January delivery rose 1.2 cents to $5.698 per 1,000 cubic feet.

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

[ozymandius]

6. European stocks slide on uncertainty over US auto rescue deal

LONDON (AFP) – European stock markets fell on Thursday after slim gains in Tokyo and Hong Kong as investors worried about the progress of a rescue plan for the troubled US auto sector, dealers said.

....

Frankfurt, London and Paris markets fell more than one percent each in morning European trade, accelerating initial losses.

Tokyo and Hong Kong rose 0.70 percent and 0.2 percent respectively in Asian trade after Wall Street, which reopens at 1430 GMT, had edged higher overnight.

....

House Speaker Nancy Pelosi said the legislation helping the Big Three automakers would serve as "a jumpstart for an industry and our country's economic health."

But the legislation now faces stiff opposition in the Senate from Republicans who consider it a quick fix.

http://news.yahoo.com/s/afp/20081211/bs_afp/stocksworld_081211102227

[ozymandius]

11. Swiss Central Bank Cuts Rate to 0.5%, Recession Looms (Update2)

Dec. 11 (Bloomberg) -- The Swiss central bank cut its interest rate to a four-year low of 0.5 percent and said further measures are possible as the economy faces a recession that may be the worst since 1982.

The Swiss National Bank’s Governing Board in Zurich, led by Jean-Pierre Roth, lowered the three-month Libor target by 50 basis points, matching the median of 18 estimates in a Bloomberg News survey. The rate for borrowing francs for three months in London was at 1.14 percent yesterday.

The SNB “will take all necessary steps to gradually bring the Libor down to the middle of the target range,” which now lies between zero and 1 percent, the central bank said in a statement. “The Swiss economy will be heavily affected” by slowing global growth and market turmoil.

....

Credit market turmoil is hurting Switzerland, where financial companies from insurers to mortgage lenders make up more than 20 percent of the economy. Credit Suisse Group AG, Switzerland’s second-largest bank, will eliminate 5,300 jobs and scrap bonuses for its top executives after about 3 billion francs ($2.5 billion) of losses in the past two months, the company said on Dec. 4.

http://www.bloomberg.com/apps/news?pid=20601085&sid=aFZi_ax_7ShU&refer=europe

[ozymandius]

7. World markets mostly down as dismal data weighed

SHANGHAI, China – World markets were mostly lower in choppy trading Thursday, as investors mulled dismal economic data from China and a hefty, recession-fighting interest rate cut by South Korea's central bank.

Highlighting signs that the world's fourth biggest economy is weakening much faster than expected, China said Wednesday that its exports fell in November for the first time in seven years, prompting some investors to cash in on recent gains.

...

Japan's benchmark Nikkei 225 stock average closed up 0.7 percent, or 60.31 points, at 8,720.55 and Hong Kong's Hang Seng edged up 0.2 percent to 15,613.90. South Korea's Kospi gained 0.8 percent to 1,154.43.

But markets in Australia, China, Singapore and India fell while major European bourses opened lower. Britain's FTSE-100 was down 1 percent at 4,325.92, Germany's DAX slipped 1.8 percent to 4,718.05 and France's CAC-40 fell 1.5 percent to 3,270.14.

...

A collapse of the U.S. auto industry would be catastrophic for exporting countries like Japan that rely heavily on American consumer spending, and investors were reassured despite the certainty of strong opposition from Republican senators.

http://news.yahoo.com/s/ap/20081211/ap_on_bi_ge/world_markets_42

[ozymandius]

8. Retail sales post big drop in November

NEW YORK (Reuters) – U.S. retail sales excluding autos posted their biggest monthly drop in five years November, as consumers, spooked by a deepening recession, pared spending for a third straight month, a private report released on Thursday showed.

The decline accelerated in November despite a sales spurt over the crucial "Black Friday" weekend -- the three days after the Thanksgiving holiday in late November -- according to SpendingPulse, the retail data service of MasterCard Advisors, a subsidiary of MasterCard Inc.

Consumer spending excluding autos fell 3.8 percent last month on a seasonally adjusted basis, steeper than the 1.5 percent decline in October, SpendingPulse said.

The November figure was the largest one-month drop in SpendingPulse history, which began in 2003, surpassing the prior record fall of 2.4 percent set two months ago.

http://news.yahoo.com/s/nm/20081211/bs_nm/us_usa_economy_spending

[ozymandius]

10. Foreclosures dip - but hold the applause

NEW YORK (CNNMoney.com) -- Foreclosure filings dropped 7% from October to November, according a report released Thursday. But don't break out the bubbly. The tide of foreclosures may be ebbing now, but the flood isn't over yet according to analysts.

....

November's decline in foreclosure filings is deceiving, according to Rick Sharga, RealtyTrac's vice president of marketing, because much of it is attributable to temporary foreclosure prevention efforts.

"The reduction is because Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500) both announced moratoriums on foreclosures, while major lenders also put the brakes on foreclosure proceedings," said Sharga. "State moratoriums are also delaying the onset of foreclosures. But all that will only delay, not avoid them."

Sharga expects to see another good report in December, but a significant spike in foreclosure filings come January.

....

The economic climate is rapidly deteriorating and job losses are soaring - factors that are sure to exacerbate the housing crisis. And various forward-looking indicators show more trouble ahead.

For instance, the number of homeowners who fell behind on their mortgages hit a record 6.99% in the third quarter, up from 5.59% a year ago, according to the Mortgage Bankers Association.

http://money.cnn.com/2008/12/11/real_estate/foreclosures_sink/?postversion=2008121104

[ozymandius]

13. Foreclosure Storm Will Hit U.S. in 2009 as Loan Changes Fail

Dec. 11 (Bloomberg) -- U.S. foreclosure filings climbed 28 percent in November from a year earlier and a brewing “storm” of new defaults and job losses may force 1 million homeowners from their properties next year, RealtyTrac Inc. said.

A total of 259,085 properties got a default notice, were warned of a pending auction or were foreclosed on last month, the seller of default data said in a report today. That’s the fewest since June. Filings fell 7 percent from October as state laws and lender programs designed to delay the foreclosure process allowed delinquent borrowers to stay in their homes.

“We’re going to see a pretty significant storm next year,” Rick Sharga, executive vice president of marketing for Irvine, California-based RealtyTrac, said in an interview. “There are two or three clouds that suggest a pretty heavy downpour.”

Rising unemployment, expiring foreclosure moratoriums and state efforts that “run out of steam” will push monthly filings toward the record of more than 303,000 set in August, Sharga said. The number of homes that revert to lenders, the last stage of foreclosure and known as “real estate owned” or REO properties, will increase to 1 million from as many as 880,000 this year, he said.

http://www.bloomberg.com/apps/news?pid=20601103&sid=au1wYjy9hoSE&refer=us

[ozymandius]

12. GM, Chrysler Short of Time as Senate Debates Rescue (Update1)

Dec. 11 (Bloomberg) -- The debate over the automaker bailout in Congress has become a race against the clock.

The U.S. House voted 237-170 last night to approve emergency loans for General Motors Corp. and Chrysler LLC, shifting the focus to the Senate, where Republican opposition threatens to delay or kill the legislation.

Democratic leaders and the Bush administration are trying to beat a deadline to save the companies and the millions of jobs dependent on the industry before GM and Chrysler burn through their remaining cash. For GM, that could be in three weeks.

....

The legislation would let GM and Chrysler draw on $14 billion of loans to keep operating while they develop restructuring plans required by March 31. Without the aid, the two companies would likely have to declare bankruptcy by the end of the year.

....

Senate Republicans emerged from a meeting yesterday with Vice President Dick Cheney and White House Chief of Staff Josh Bolten and said the measure doesn’t have enough support to clear a 60-vote legislative hurdle. Democrats control the chamber 50-49.

http://www.bloomberg.com/apps/news?pid=20601103&sid=aFHp8xmezjY4&refer=us

[Tansy_Gold]

27. Okay I have a question --

Let's assume GM and Chrysler are determined to be valuable enough to save. Money is found to bail them out for a few months, money that they will repay with govt ownership/whatever.

What are some things that could be done to cut their operating costs? I'm not talking about bringing them in line with other carmakers, but just where's the fat?

Top exec salaries/bonuses, etc. should be first thing. that goes without saying, even though I just said it.

But what else?

For example -- Could the cost of retiree health insurance be reduced by factoring in benefits of Medicare and other retirement plans? I have two friends who are both retired union autoworkers who have said they will NEVER use their insurance because they are also retired military and they get VA healthcare free. I suppose it would take some time to collect the info on which retirees have other health care benefits, but would it be worth the effort?

I guess I'm thinking along the lines of doing a serious audit of where the money is spent and what could be saved or spent more wisely? Is that even possible? Is it practicable?


Tansy Gold, who isn't sure we need all these cars and also isn't sure unnecessary jobs is the way to make the economy healthy.

[AnneD]

56. Tansy......

You have several things going babe...

While we may not need all this many cars, we will always need some to transport our loin cloths, spears, knapping equipment, and tent while we follow the buffalo. So Yes we need some vehicles and No these are not made up jobs.

They need a top to bottom impartial independent audit and come up with an extreme survival budget. People do it personally in order to survive.

[Tansy_Gold]

66. Well, I didn't say we didn't need ANY cars. ;-)

I just keep thinking that in between the extremes of "Let 'em die!" and "We gotta save all these jobs!" there must be a practical and practicable solution.

But I'm struggling with my own job right now. More thoughts later, maybe over the week-end.


Tansy Gold, who thanks the labor movement for giving us week-ends!

[ozymandius]

72. Weekends, vacations, eight-hour workdays, fewer severed limbs...

The labor movement has much to its credit. So much, in fact, that the furrows in my brow grow ever deeper when I hear my conservative relatives condemn the greed of labor unions while they take their aforementioned legacy benefits for granted.

In terms of practicality: the auto industry has a long history of stepping into the role of filling a need when one has arisen outside of automobile manufacture. The needs of the military during World War Two present a fine set of examples. But what about undoing the damage to the public transit system that GM inflicted? The company wanted to sell passenger cars that seat one to seven passengers. Why not get into the business of manufacturing light rail passenger cars?

My sensibilities say that we should see how many interpretations of "General Motors" we can conjure while we, The People, own their asses through this bailout (provided the opposition sway to benevolent reason).

Two pennies, right there.

[amandabeech]

61. The automakers thought that the 2007 UAW labor agreement would

do most of the trick.

In it, the automakers agreed to make large payments into a benefit trust by 2011, and the trust would be responsible for retiree health benefits from there on out. The defined benefit pension plan was closed and a defined contribution plan was put in place in its stead, although the DBP will continue to pay out for retirees and current workers (but they will get a reduced rate based on service).

New hires will be paid only $14 or $15 to start and their health benefits aren't of the Cadillac variety.

There have been lots of layoffs of blue and white collar employees, and the retiree health benefits of white collar employees have been cut.

GM admits that it needs to eliminate several lines. Hummer, Saab, Saturn and Pontiac are the likely victims.

Ford wants to bring over one or two of its small European cars and make them here. It also wants to offer mostly the same cars world-wide with fewer local variances. That will save them a lot of money.

Quality has improved as has styling, although that is in the eye of the beholder.

What really is killing them are the retiree costs. None of the transplants have them here--they apparently won't hire anyone over 45 and they simply won't be offering retirement benefits other than the 401(k).

I really hate to see otherwise good but older companies disappear because they've been generous to their retirees in the past and the new companies dump their retirees at the curb as is the current fashion.

[ozymandius]

14. Treasury Bubble Talk Grows as U.S. Gets Free Money

Dec. 11 (Bloomberg) -- The rally in Treasuries that pushed yields on bills below zero percent this week is adding to concerns that the $5.3 trillion market for government debt is a bubble waiting to burst.

Investors seeking safety from losses in equity and credit markets charged the Treasury zero percent interest when the government sold $30 billion of four-week bills on Dec. 9. A day later three-month bill rates turned negative for the first time since the U.S. began selling the debt in 1929. Yields on two-, 10- and 30-year securities touched record lows this month.

....

Rising supply of government debt to pay for the bailout of the economy and financial system has done little to damp demand. Treasury Assistant Secretary Karthik Ramanathan said in a speech yesterday in New York that the U.S. may introduce new financing methods to meet borrowing needs of $1.5 trillion to $2 trillion in the financial year that ends in September.

While supply has increased, rates on three-month bills fell 2.89 percentage points in the last year to 0.01 percent today, after trading as low as negative 0.05 percent on Dec. 9. The rate on four-week bills plummeted from a peak of 5.175 percent on Jan. 29, 2007. The three-month bill yield was unchanged today.

An investor who bought $1 million in three-month bills at the closing rate of negative 0.01 percent on Dec. 9 would realize a loss of $25.56 when the securities mature. Bills are sold at a discount and appreciate to par at maturity.

http://www.bloomberg.com/apps/news?pid=20601103&sid=at.e0xwtyWrk&refer=us

[ozymandius]

16. The Ten Trillion Dollar Man Update

Four years ago I predicted the Total Public Debt Outstanding would reach $10 trillion by the time Mr. Bush left office in Jan 2009. I jokingly called him the "$10 trillion man".

I was too optimistic.

The Total Public Debt Outstanding is now over $10.6 trillion. And the budget deficit has grown significantly.

From MarketWatch: U.S. Nov. budget deficit $164.4 bln vs $98.2 bln yr-ago

The U.S. federal government deficit soared again in November to $164.4 billion, the Treasury Department reported Wednesday. This is a record shortfall for the month of November.

.....

There was a clear trajectory change starting in late 2001, and then a huge amount of borrowing this year due to the credit crisis (hopefully some of this money will be returned).

Public Debt Outstanding The second graph shows the same data, but on a year-over-year basis. This clearly shows the two problems: 1) the Bush structural budget deficit, and 2) the heavy borrowing due to the credit crisis.

Even after the credit crisis is over, the U.S. will still have to address the ill-conceived Bush structural budget deficit (a much larger fiscal problem than any Social Security Insurance shortfall, and about the same size as the Medicare shortfall).

http://calculatedrisk.blogspot.com/2008/12/ten-trillion-dollar-man-update.html

[MilesColtrane]

22. Can Weimar Republic-like hyperinflation be in the offing?

Maybe I'll ask for a shiny, new wheelbarrow for Christmas.

[DemReadingDU]

37. Graph - change in public debt outstanding

from the above link

This graph shows the two problems: 1) the Bush structural budget deficit, and 2) the heavy borrowing due to the credit crisis.

[ozymandius]

18. Quelle Surprise! Banks Increase "Mark to Make-Believe" Assets to $610 Billion

Banks are, if nothing else, entirely predictable. If there is a way to game the system, they will avail themselves of it.

Readers may recall that the Financial Standards Accounting Board implemented Statement 157, which required financial firms to identify how they arrived at the "fair value" for their assets. Level 1 are ones where there is a market price. Level 2 are those where there may not be much of a market, but they can nevertheless be priced in reference to similar assets that have a market price.

Then we have Level 3. They are priced using "unobservable inputs." I have never understood this concept, because the use of sunspots, skirt lengths, the Mayan calendar, or a model using, say, a ratio of bullish versus bearish stories on Bloomberg would be an observable input. And fittingly, Level 3 is colloquially called "mark to make believe."

And there are indeed signs that indicate that financial firms have playes fast and loose with this rule:

1. In the first quarter of 2007, Wells Fargo created $1.21 billion of Level 3 gains. Without them, it would have posted a loss.

2. Lehman added more assets to the Level 3 category at a time when better trading conditions said it should have been lowering them

However, it is now completely kosher to play games. While the three-level hierarchy became effective on January 1 of this year (some firms chose to comply early), the SEC largely gutted it in the wake of the Bear collapse. From its March press release:

Fair value assumes the exchange of assets or liabilities in orderly transactions. Under SFAS 157, it is appropriate for you to consider actual market prices, or observable inputs, even when the market is less liquid than historical market volumes, unless those prices are the result of a forced liquidation or distress sale (boldface ours).

Fast forward to today. What do we see now? The financial services industry has a world-class bad quarter. So what does it do? increase the amount of assets it considers to be Level 3 so it can assign them more favorable prices.

And there is possibly a second reason for this move. Year end financials are audited. Accountants have been much less accommodating of late. Moving a lot of assets into the Level 3 bucket right before your auditor walks in might not pass the smell test (although once you have done that, they really cannot question how they are marked). Better to do it at least a quarter in advance.

http://www.nakedcapitalism.com/2008/12/quelle-surprise-banks-increase-mark-to.html

[Festivito]

19. Debt: 12/09/2008 10,656,119,227,403.00 (UP 2,188,864,115.10) (Mostly FICA)

(Mostly a FICA change again. Good day to all.)

= Held by the Public + Intragovernmental(FICA)
= 6,410,734,685,101.64 + 4,245,384,542,301.41
UP 31,558,514.41 + UP 2,157,305,600.73
(NOTE: Excel 2007 cannot handle ten-trillion plus to the penny. It zeroes the penny.)

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

THINKING IN BILLIONS: 3 or 4 dollars per billion in a 300-Million person America.
If every American, man, woman and child puts in $3.33 each THAT'S 1B$.
A family of three: Mom, Dad, Child: THEIR SHARE IS TEN BUCKS in a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is a federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)
(I hate those end to end dollars to the moon and back, or years to spend $100/second. Just say'n)
If you read this and have a suggestion or comment, good or bad, I'd love to see it.

ANALYSIS:
There were 21 reports in the last 30 to 32 days.
The average for the last 21 reports is 1,616,775,512.92.
The average for the last 30 days would be 1,131,742,859.05.
The average for the last 32 days would be 1,061,008,930.36.
There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 47 reports in 70 days of FY2009 averaging 13.43B$ per report, 9.02B$/day.

PROJECTION:
GWB** must relinquish the presidency in 42 days.
By that time the debt could be between 10.7 and 11.0T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
12/09/2008 10,656,119,227,403.00 GWB (UP 4,927,923,431,221.43 so far since Bush took office.)

Fiscal Year ends: Sep 30
Borrowed in FY1993: (Maybe later.)
Borrowed in FY1994: 281,261,026,873.94
Borrowed in FY1995: 281,232,990,696.07
Borrowed in FY1996: 250,828,038,426.34
Borrowed in FY1997: 188,335,072,261.61
Borrowed in FY1998: 113,046,997,500.28
Borrowed in FY1999: 130,077,892,735.81
Borrowed in FY2000: _17,907,308,253.43 Bill alone
Borrowed in FY2001: 133,285,202,313.20 Bill and George
Borrowed in FY2002: 420,772,553,397.10 All George
Borrowed in FY2003: 554,995,097,146.46
Borrowed in FY2004: 595,821,633,586.70
Borrowed in FY2005: 553,656,965,393.18
Borrowed in FY2006: 574,264,237,491.73
Borrowed in FY2007: 500,679,473,047.25
Borrowed in FY2008: 1,017,071,524,650.01
Borrowed in FY2009: 631,394,330,490.60 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
11/18/2008 +035,027,406,490.17 ------------**********
11/19/2008 -000,433,628,717.22 ---
11/20/2008 -000,189,695,810.14 ---
11/21/2008 -000,151,096,322.01 ---
11/24/2008 -000,086,920,504.20 ---- Mon
11/25/2008 +001,468,316,558.23 ------------*********
11/26/2008 +000,650,427,812.76 ------------********
11/28/2008 +000,783,239,406.89 ------------********
12/01/2008 +038,288,359,563.07 ------------********** Mon
12/02/2008 +000,199,375,927.74 ------------********
12/03/2008 -000,525,799,120.43 ---
12/04/2008 -022,902,653,130.86 -
12/05/2008 -000,187,074,568.06 ---
12/08/2008 -000,759,942,653.72 --- Mon
12/09/2008 +000,031,558,514.41 ------------*******

51,211,873,446.63 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $991,487,424,143.93 in last 82 days.
That's 991B$ in 82 days.
More than any year ever, except last year, and it's 97% of that highest year ever only in 82 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 82 DAYS NOT 365.

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

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3639015&mesg_id=3639295

[Festivito]

69. Debt: 12/10/2008 10,648,440,877,251.60 (DOWN 7,678,350,151.40) (Mostly FICA)

(Mostly FICA changing again. Good day all.)

= Held by the Public + Intragovernmental(FICA)
= 6,410,822,416,494.81 + 4,237,618,460,756.82
UP 87,731,393.17 + DOWN 7,766,081,544.59
(NOTE: Excel 2007 cannot handle ten-trillion plus to the penny. It zeroes the penny.)

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

THINKING IN BILLIONS: 3 or 4 dollars per billion in a 300-Million person America.
If every American, man, woman and child puts in $3.33 each THAT'S 1B$.
A family of three: Mom, Dad, Child: THEIR SHARE IS TEN BUCKS in a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is a federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)
(I hate those end to end dollars to the moon and back, or years to spend $100/second. Just say'n)
If you read this and have a suggestion or comment, good or bad, I'd love to see it.

ANALYSIS:
There were 21 reports in the last 30 days.
The average for the last 21 reports is 1,248,460,884.24.
The average for the last 30 days would be 873,922,618.97.

There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 48 reports in 71 days of FY2009 averaging 12.99B$ per report, 8.78B$/day.

PROJECTION:
GWB** must relinquish the presidency in 41 days.
By that time the debt could be between 10.7 and 11.0T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
12/10/2008 10,648,440,877,251.60 GWB (UP 4,920,245,081,070.03 so far since Bush took office.)

Fiscal Year ends: Sep 30
Borrowed in FY1993: (Maybe later.)
Borrowed in FY1994: 281,261,026,873.94
Borrowed in FY1995: 281,232,990,696.07
Borrowed in FY1996: 250,828,038,426.34
Borrowed in FY1997: 188,335,072,261.61
Borrowed in FY1998: 113,046,997,500.28
Borrowed in FY1999: 130,077,892,735.81
Borrowed in FY2000: _17,907,308,253.43 Bill alone
Borrowed in FY2001: 133,285,202,313.20 Bill and George
Borrowed in FY2002: 420,772,553,397.10 All George
Borrowed in FY2003: 554,995,097,146.46
Borrowed in FY2004: 595,821,633,586.70
Borrowed in FY2005: 553,656,965,393.18
Borrowed in FY2006: 574,264,237,491.73
Borrowed in FY2007: 500,679,473,047.25
Borrowed in FY2008: 1,017,071,524,650.01
Borrowed in FY2009: 623,715,980,339.20 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
11/19/2008 -000,433,628,717.22 ---
11/20/2008 -000,189,695,810.14 ---
11/21/2008 -000,151,096,322.01 ---
11/24/2008 -000,086,920,504.20 ---- Mon
11/25/2008 +001,468,316,558.23 ------------*********
11/26/2008 +000,650,427,812.76 ------------********
11/28/2008 +000,783,239,406.89 ------------********
12/01/2008 +038,288,359,563.07 ------------********** Mon
12/02/2008 +000,199,375,927.74 ------------********
12/03/2008 -000,525,799,120.43 ---
12/04/2008 -022,902,653,130.86 -
12/05/2008 -000,187,074,568.06 ---
12/08/2008 -000,759,942,653.72 --- Mon
12/09/2008 +000,031,558,514.41 ------------*******
12/10/2008 +000,087,731,393.17 ------------*******

16,272,198,349.63 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $983,809,073,992.53 in last 83 days.
That's 984B$ in 83 days.
More than any year ever, except last year, and it's 97% of that highest year ever only in 83 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 83 DAYS NOT 365.

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

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3640587&mesg_id=3640635

[DemReadingDU]

21. GMAC's bid to be a bank in danger

12/11/08 GMAC's bid to be a bank in danger
Bankruptcy fears grow; Friday deadline looms
BY CAROLINE SALAS and DAVE MILDENBERG • BLOOMBERG NEWS • December 11, 2008

GMAC LLC, an auto and home lender, has failed so far to raise enough capital to become a bank holding company and qualify for federal aid, intensifying concern it will seek bankruptcy protection if it cannot meet a new Friday deadline.

The lender's $38-billion debt exchange didn't lure enough bondholders, leaving GMAC shy of the $30 billion in regulatory capital demanded by the Federal Reserve for it to become a bank, GMAC said in a statement Wednesday. GMAC asked bondholders last month to tender their securities for as little as 55 cents in cash or a combination of new notes and preferred stock, which would count as regulatory capital.

But less than 25% of GMAC and mortgage unit Residential Capital's existing debt securities covered by the exchange offers have been tendered, the statement said. Detroit-based GMAC needs about 75% participation for the plan to work. If the goal isn't met by 5 p.m. Friday, GMAC said it intends to withdraw its Fed application.

GMAC, the primary lender to General Motors Corp. dealers, is trying to skirt a collapse by becoming a bank and gaining access to the Treasury's $700-billion rescue fund.

As a bank, GMAC also would be able to sell bonds backed by the Federal Deposit Insurance Corp., giving the finance company new funding after being shut out of the public market for bonds backed by auto loans for the past six months.

"Becoming a bank holding company was probably their last lifeline," said Mirko Mikelic, senior portfolio manager at Fifth Third Asset Management in Grand Rapids, in a Bloomberg Television interview. "There's an extremely high likelihood that they would have to file for bankruptcy" if they can't get access to the Treasury's rescue fund by year-end.

If GMAC files, the restructuring probably will take three to 12 months, according to Mikelic.

"This bond exchange is a critical piece to meeting our capital requirements for the bank holding company status," said Gina Proia, spokeswoman for GMAC.

Proia declined to comment on bankruptcy speculation.

http://www.freep.com/article/20081211/BUSINESS06/812110365

[Robbien]

36. SeekingAlpha is saying Bernanke may be playing games here

Bernanke doesn't want the Big3 bailout and is not happy.

It is noticeable that Helicopter Ben Bernanke was none too keen on the deal and got his revenge yesterday when the Federal Reserve turned down GMAC’s (GKM) application to become a bank. They didn’t have sufficient capital to access TARP by stealth.

http://seekingalpha.com/article/110258-preview-from-europe-return-of-the-boring-normal-market

[DemReadingDU]

39. turning down GMAC

That is really interesting, it seemed like anyone was becoming a bank holding company.

So GMAC fails on Bush's administration, the Senate probably won't pass the auto bailout so the autos fail on Bush's administration.

It's not good that Obama will have to start his administration with a recession, but we can look back and say these corporations all failed with Bush.


oops, spelling

[Robbien]

40. It is hard to understand how much of GM's troubles relate to its problems with GMAC

I expect most of GM exec's time was spent on the high roller game of finance in its GMAC branch . Making cars may or may not be profitable, but adding in losses of writedowns on GMAC bonds and CDOs could be a burden GM car manufacturing could not handle.

Same with Chrysler and Ford.

[DemReadingDU]

41. GMAC started having problems when they bought ResCap

ResCap is a mortgage company. Lots of bad loans.

I'm not sure how much of GMAC's problems are due to GM because GM only owns 49% of GMAC, Cerberus owns 51%. Cerberus also owns Chrysler.

[UpInArms]

24. dollar watch

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

Last trade 84.285 Change -1.183 (-1.52%)

Fed Expected To Cut Rates Near Zero Next Week, Will The Dollar Falter?

http://www.dailyfx.com/story/topheadline/Fed_Expected_To_Cut_Rates_1228956137513.html



The Economy And The Credit Market

The Federal Reserve Open Market Committee (FOMC) is scheduled to announce its final monetary policy decision for the year and almost certainly this cycle next Tuesday. According to the markets, the future is clear. Fed Funds futures are pricing in a 94 percent probability that Chairman Ben Bernanke and his fellow rate setters will cut the benchmark lending rate another 75 basis points to a mere 0.25 percent. This would be the lowest level for the overnight lending rate in more than 35 years and would force the policy authority to find an alternative means to encourage lending and revive economic growth. And, an alternative they will certainly have to find. With the central bank guaranteeing loans and providing near unlimited liquidity to the market, financial institutions are hesitant to take counterparty risk and lend to each other. What’s more, the worst of the global recession is still ahead; and frozen credit will not offset job losses and income deflation for consumers.



...more...

Euro Breaks Out As Dollar Under Assault, SNB Cut Rates Again

http://www.dailyfx.com/story/bio1/Euro_Breaks_Out_As_Dollar_1228992726107.html

The Euro broke above the 1.3100 price level for the first time since November 5th as a SNB rate cut improved the outlook for the global economy and the dollar saw broad based weakness. The Euro would reach as high as 1.3161 despite the ECB’s December report stating that the central bank sees risks to growth outlook are to the downside. The MPC would also state that the medium-term inflation will be in line with price stability targets leaving the door open for more rate cuts. However, subsequent comments from member Juergen Stark that the Euro-zone could see a recovery at the end of next year following a few more quarters of weakness signaled that the central bank may be reluctant to continue cutting interest rate aggressively following its biggest rate cut in its ten year history. Current momentum could lead the Euro to try and test 1.35000 before another turn lower.

The Swiss National Bank cut their target rate another 50 bps which brings the total easing to 225 bps since September and the rate down to a four year low of 0.50 percent. The governing board leader Jean-Pierre Roth stated that the financial crisi has spread to the real economy and that growth “will be negative” for 2009. Indeed, the Swiss economy saw produced a flat GDP reading last quarter and with its main trading partners already in a recession the export driven nation will soon follow. Despite, the easing the Swiss Franc would rally on the announcement sending the USD/CHF down to 1.1900. However, failure to break the support level has led to a slight retracement. Our Technical Strategist Jaime Saettele is forecasting more bullish momentum from the Swiss Franc with the previous rally from 1.1828 fully correcting

The Pound saw bullish momentum on the back of dollar weakness and comments from BoE committee member Kate Barker which would see the currency test the 1.500 price level. The MPC member in an interview with the Glasgow Herald Barker said "I anticipate there will be a recovery toward the end of next year - by which I mean there will come a point where I don't expect things to get worse". If the Sterling manages to break above the psychological level we could see a breakout similar to the Euro. However, if another test failures than a drop below 1.4900 is a strong possibility.

The bailout for U.S. automakers will be the focus for traders today as the package has been approved by the House and is now headed for the Senate. Markets may be paralyzed today as the aide for Detroit is expected to receive resistance from Senate Republicans which could postpone final approval til next week. The potential for failure still lingers which could spark risk aversion and dollar bullish sentiment. However, overnight the dollar has been under assault and didn’t benefit from safe haven flows that briefly sunk the Yen crosses which could signal that more weakness lies ahead. Fundamentally, jobless claims are expected to remain above 500,000 signaling that the labor will remain weak for sometime which will only add to the dour outlook for 2009 growth. The U.S. trade balance is expected to show the deficit shrank to $53.5 billion from $56.5 billion as Americans have curbed their purchases of foreign goods.

...more...

[UpInArms]

46. Dollar accelerates losses vs. rivals

http://www.marketwatch.com/news/story/Dollar-accelerates-losses-vs-rivals/story.aspx?guid=%7BE5C397F7%2D4B6F%2D4741%2DB11E%2D4861FF371C5D%7D

NEW YORK (MarketWatch) -- The U.S. dollar accelerated its losses against most other major currencies Thursday, with the dollar index (DXY: 83.84, -1.64, -1.9%) falling 1.1% to 83.74 after the latest batch of negative economic data from the United States, including jobless claims at a 26-year high. The euro soared 2.3% to $1.3316 and the British pound rose 1.2% to $1.4974. The dollar fell 1.2% to 91.67 Japanese yen.

very interesting post in the comments section

[Ghost Dog]

50. Greenback’s haven status in doubt

The dollar staged a broad retreat on Thursday in spite of subdued performances by global equity markets as investors digested further unsettling news on the US economy.

Oil rose strongly amid hopes of a rebound in demand next year, with the gains underpinned by the dollar’s softer tone.

In the currency markets, the greenback touched its lowest level for six weeks against the euro and for seven weeks against the yen as investors digested data showing US initial jobless claims at a 26-year high and the trade deficit’s widening unexpectedly in October.

The dollar’s retreat over the past few days has prompted some analysts to question whether haven demand for the US currency was waning.

Steve Malyon, currency strategist at Scotia Capital, said the dollar’s weakness on Thursday did not appear to be a function of a significant increase in risk appetite. “It no longer appears that soaring gains in the equity market are required to put the dollar under pressure,” he said.

Analysts also pointed to a strong rally in gold this week as reflecting the notion of broad dollar weakness.

Even the ailing pound managed to gain ground against the dollar on Thursday, although it slid to a record low against the euro. However, analysts remained unconvinced that the single currency warranted its burst of strength.

“It is difficult to believe that the rebound in the euro is being driven by relative growth expectations,” said John Higgins at Capital Economics. “Admittedly, the US and UK are in dire straits, but activity in the eurozone is falling off a cliff.”

/... http://www.ft.com/cms/s/0/e07e799e-c7b4-11dd-b611-000077b07658.html

[UpInArms]

32. 9:37 EST red numbers and blather

Dow 8,648.80 112.62 (1.29%)
Nasdaq 1,541.30 24.18 (1.54%)
S&P 500 888.50 10.74 (1.19%)
10-Yr Bond 2.646% 0.038

NYSE Volume 220,239,031.25
Nasdaq Volume 80,446,648.438

09:15 am : S&P futures vs fair value: -8.20. Nasdaq futures vs fair value: -12.00. Stock futures continue to lag fair value. Meanwhile, oil futures are extending the prior session's rebound. Crude futures are currently indicated roughly 3.7% higher at $45.10 per barrel.

09:00 am : S&P futures vs fair value: -7.70. Nasdaq futures vs fair value: -12.50. Stock futures continue to lag fair value, suggesting a downward start. However, light volume in premarket action often means stock futures cannot perfectly predict the direction of trading, let alone how the session will finish. Such is especially true given current volatility. Separately, Boeing (BA) announced it is planning to put its highly anticipated and long delayed 787 Dreamliner into flight in the second quarter of 2009, then make the first deliveries of the plane in the first quarter of 2010.

08:35 am : S&P futures vs fair value: -11.20. Nasdaq futures vs fair value: -13.00. The October trade deficit totaled $57.2 billion. It was expected to total $53.5 billion. The prior reading showed a deficit of $56.6 billion. November import prices were down 6.7% month-over-month, and down 4.4% year-over-year. The consensus estimate called for declines of 4.9% and 2.0%, respectively. The prior reading showed a month-over-month decline of 5.4% and a year-over-year increase of 5.7%. Weekly jobless claims totaled 573,000. The consensus called for 525,000 initial claims. The prior week's jobless claims were upwardly revised to 515,000. Continuing claims now stand at 4.43 million, up from the prior week's 4.09 million and above the 4.10 million continued claims that were expected.

08:00 am : S&P futures vs fair value: -3.40. Nasdaq futures vs fair value: -3.00. Stock futures indicate a downward start to the session. According to Dow Jones, the U.S. House of Representatives voted Wednesday to approve a $14 billion aid package for the Big Three automakers, consisting of Ford (F), General Motors (GM), and Chrysler. However, support remains unclear in the Senate, which is expected to vote Friday, according to the article. Financial Times reported AIG (AIG) is planning $15 billion in asset and business disposals by year end. Wholesaler Costco (COST) posted better-than-expected first quarter earnings per share results, despite coming a bit short of the consensus revenue forecast. Consumer staples giant Procter & Gamble (PG) will confirm its earnings per share outlook for the company's second fiscal quarter and for fiscal 2009 at its analyst meeting today. Drug manufacturer and marketer Eli Lilly (LLY) reaffirmed its outlook for fiscal 2008, and issued upside guidance for fiscal 2009.

[UpInArms]

33. Fed to cut rates again, maybe all the way to zero

http://www.marketwatch.com/news/story/Bound-zero/story.aspx?guid=%7BCED80127%2DF8AF%2D4809%2DB8C7%2D6CFCC09F455D%7D

WASHINGTON (MarketWatch) -- The Federal Reserve is expected to cut rates again at the end of a two-day policy meeting next Tuesday and could be on the road to zero.

"Our view is that the Fed will continue pulling out all the stops" to fight the downturn, said Jonathan Basile, an economist at Credit Suisse Holdings Inc.

At the moment, the federal funds rate stands at 1%. Since October, the Fed has slashed target lending rates by 50%. That followed a series of earlier rate cuts that brought the funds rate down from 5.25% in September 2007.Video: Starting a business in a tough economy

Economic weakness is now feeding on itself, creating a more severe downturn, and hope that the economy will rebound in the second half of 2009 is quickly fading.

In a key speech on Dec. 1, Fed chief Ben Bernanke promised vigorous action to combat the downturn.

For Fed watchers, "vigorous" action translates into policy actions that include cutting the funds rate to the lowest feasible level and more "nontraditional" steps like buying more debt to lower interest rates and unclog markets.
Analysts believe it means a minimum cut on Dec. 16 of a half-a percentage point to 0.5%.

Economists at the top government dealers agree with the half-point call.
"One has to assume is going to cut rates by 50 basis points. They have been talking about the fact they can do more -- I don't see why they shouldn't," said Bill Cheney, chief economist at John Hancock Financial in Boston. "Anything less will be viewed as inadequate."

...more...

[CatholicEdHead]

38. With this there are not many tools to work with

It seems to me they are going to exhaust all options before Obama can take office to really hand-tie him.

[Robbien]

34. SEC Cox: There should be a separation between govt and business

"Maintaining the arm's length relationship between government, as the regulator, and business, as the regulated, is essential," Cox added.

He is not talking about the SEC and its vigorous support for business profits.

He wants the government to stop taking ownership rights when it hands out bailouts.

Government must exit private enterprise

[UpInArms]

35. this POS needs to be shown the door to his prison cell tomorrow morning

:banghead:

[specimenfred1984]

62. Cox had a history of insider trading before he was even appointed

He's a 100% corrupt criminal who's only advanced by means of cover-ups, pay-offs and threats of retaliation: aka a (R)epublican.

[ozymandius]

71. I'd like him to live outside in NYC in a cardboard box for about twenty years.

After that, I'd be willing to give a shit about what he says. He has no credibility with me. He is filth.

[Robbien]

42. MarcAmbinder: It's quite unsettling to talk to members of Obama's transition teams these days

especially those who are helping with the economics portfolio. Without going into details, the sense I get from them is that they are very worried that the economy will get a lot worse before it gets better. Not just worse... a lot worse. As in -- double digit unemployment without the wiggle factors. Huge declines in aggregate demand. Significant, persistent deficits. That's one reason why the Obama administration seems to be open to listening to every economist with an idea and is stocking the staff with the leading lights of the field. In one sense, the general level of concern among Obama advisers and transition staffers is reassuring; they get the magnitude of the problems, and they're not going to assume that, just because the bottom has never dropped out before -- certainly not in the lifetimes of most people doing policy these days, the bottom will never drop out.

Where the discussion isn't going, at least in public, (or the PR level), is the possibility that the first foreign policy crisis the administration will face will be the complete economic collapse of a large, unstable nation. To be sure, Pakistan is nearly broke, and U.S. policy makers seem to be aware of that; but a worldwide demand crisis could lead to social unrest in countries like Indonesia and Malaysia, Singapore, the Ukraine, Japan, Turkey or Egypt (which is facing an internal political crisis of epic proportions already). The U.S. won't have the resources to, say, engineer the rescue of the peso again, or intervene in Asia as in 1997.

The public rhetoric from Team Obama seems to treat history as having ended in early October

more
http://marcambinder.theatlantic.com/archives/2008/12/its_quite_unsettling_to_talk.php

Well, this is a lot better than the last eight years of denial.

[antigop]

43. Businesses breathe life into options

http://financialweek.com/apps/pbcs.dll/article?AID=/20081210/REG/812099965/1036

With the stock market in Palookaville, more companies are quietly bailing out executives holding “underwater” stock options. The moves are aimed at keeping executives motivated and their pay packages from being dinged.

Maxim Integrated Products, a technology company in Sunnyvale, Calif., for example, recently filed plans with regulators to exchange employees’ underwater stock options for cash. Meanwhile, casino operator MGM Mirage of Las Vegas exchanged underwater options for restricted stock, and United Therapeutics Corp. of Silver Spring, Md., repriced underwater options for its executive officers.

“The big comp issue for this proxy season is not say on pay; it’s R&R—repricings and resetting the bar,” said Patrick McGurn, special counsel at shareholder advisory firm RiskMetrics Group. “Those are the twin plagues of an economic downturn.”

Executives at scores of companies hold stock options—which give them the right to buy shares at a preset price—that are essentially worthless. The problem with underwater stock options is that they provide little incentive for executives to meet performance goals or even to stay with the company.

To change that, many companies are replacing those options with new ones at a lower exercise price or with restricted stock, or simply exchanging them for cash. excerpts from articles)

[Tansy_Gold]

67. If the stock price tanked, doesn't that mean they didn't do their job?

Why should these execs be rewarded for failure?

:grr:

[TrogL]

44. Loonie Watch

Highlights

Current:

Loonie: Toronto Stock Exchange:

30-day and 90-day vs.greenback:



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




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

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

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

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

2008-10-30 Thursday, October 30 0.817728 USD
2008-10-31 Friday, October 31 0.817728 USD
2008-11-03 Monday, November 3 0.842744 USD
2008-11-04 Tuesday, November 4 0.869414 USD
2008-11-05 Wednesday, November 5 0.862813 USD
2008-11-06 Thursday, November 6 0.84631 USD
2008-11-07 Friday, November 7 0.845309 USD
2008-11-10 Monday, November 10 0.83696 USD
2008-11-11 Tuesday, November 11 0.83696 USD
2008-11-12 Wednesday, November 12 0.813273 USD
2008-11-13 Thursday, November 13 0.812282 USD
2008-11-14 Friday, November 14 0.816927 USD
2008-11-17 Monday, November 17 0.8188 USD
2008-11-18 Tuesday, November 18 0.817194 USD
2008-11-19 Wednesday, November 19 0.808407 USD
2008-11-20 Thursday, November 20 0.77821 USD
2008-11-21 Friday, November 21 0.778271 USD
2008-11-24 Monday, November 24 0.816593 USD
2008-11-25 Tuesday, November 25 0.818733 USD
2008-11-26 Wednesday, November 26 0.810504 USD
2008-11-27 Thursday, November 27 0.810504 USD
2008-11-28 Friday, November 28 0.809061 USD
2008-12-01 Monday, December 1 0.808407 USD
2008-12-02 Tuesday, December 2 0.805023 USD
2008-12-03 Wednesday, December 3 0.795355 USD
2008-12-04 Thursday, December 4 0.797448 USD
2008-12-05 Friday, December 5 0.770951 USD
2008-12-08 Monday, December 8 0.795545 USD
2008-12-09 Tuesday, December 9 0.793525 USD
2008-12-10 Wednesday, December 10 0.796622 USD


Current values

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

Market            Open   High    Low   Last  Change    Pct Time
CD.Y$$ Cash     0.8066 0.8210 0.8066 0.8210 +0.0278 +3.50% 12:01 
CD.Z08 Dec 2008 0.8103 0.8135 0.8103 0.8135 +0.0208 +2.62% 09:32 
CD.H09 Mar 2009 0.8170 0.8206 0.8135 0.8185 +0.0255 +3.21% 11:24 
CD.M09 Jun 2009 0.7792 0.7792 0.7792 0.7943 +0.0013 +0.16% set 15:07 
CD.U09 Sep 2009 0.8207 0.8207        0.8207 +0.0245 +3.08% 11:21 
CD.Z09 Dec 2009 0.8040 0.8040 0.8040 0.7964 +0.0008 +0.10% set 15:07 
CD.H10 Mar 2010 0.8800 0.8800 0.8800 0.7966 +0.0006 +0.08% set 15:07 
 

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

Market          Open    High    Low     Last    Change   Pct 
AUSTRALIAN $/CANADIAN $ (CME:ACD)
ACD.Z08 Dec 2008 0.8254 0.8254 0.8254 0.8254 -0.0074 -0.90%   
BRITISH POUND/US$ (SMALL) (NYBOT:MP)
MP.Z08.E Dec 2008 (E) 1.4927 1.4983 1.4920 1.4952 +0.0175 +1.18%   
EURO/BRITISH POUND (NYBOT:GB)
GB.Z08.E Dec 2008 (E) 0.8860 0.8860 0.8860 0.8860 +0.0055 +0.63%     
EURO/JAPANESE YEN (NYBOT:EJ)
EJ.Z08.E Dec 2008 (E) 120.75 120.77 120.75 120.77 +0.30 +0.25%      
EURO/US$ (SMALL) (NYBOT:EO)
EO.Z08.E Dec 2008 (E) 1.3214 1.3326 1.3208 1.3305 +0.0302 +2.32%   

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

The March Canadian Dollar was higher overnight due to short covering as it extends the rebound off last week's low. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near-term. Closes above the 20-day moving average crossing at 80.06 are needed to confirm that a short-term low has been posted. Closes below November's low crossing at 77.00 would renew this fall's decline while opening the door for additional weakness into early- December. First resistance is the 20-day moving average crossing at 80.06. Second resistance is the reaction high crossing at 82.54 First support is November's low crossing at 77.00. Second support is last Friday's low crossing at 76.93.

Analysis

Haven't posted in awhile. I'm trying to break DU addiction but it's not going well. I'm going to be AFK most of the next two weeks this may be the last loonie watch for awhile.

I wasn't going to post this one except I saw the loonie magically gain 3 cents from where it's been sitting for the last week and half so as usually I wondered :wtf:

Looks like it may be something horrible happened to the greenback.

[sam kane]

70. it is not an addiction...

it is public service!

I love Loonie Watch.

[UpInArms]

49. Treasury sells 10-yr bonds at lowest yield on record

http://www.marketwatch.com/news/story/Treasury-sells-10-yr-bonds/story.aspx?guid=%7BEF5A2B74%2D6958%2D4B85%2D9EC0%2D875C3A9B0E84%7D

NEW YORK (MarketWatch) -- The Treasury on Thursday sold nearly $16 billion of 10-year bonds at a high yield at 2.67%, the lowest-yield ever offered by the government in an auction. The bid to cover ratio stood at 2.44, an indication of firm demand. In the bond market, benchmark 10-year bonds rose, sending the yields on 10-year bonds down 4 basis point to 2.643%.

[Hugin]

51. KB Toys Files Bankruptcy, Citing ‘Sudden’ Sales Drop (Update2) via Bloomberg

By Steven Church and Heather Burke

"Dec. 11 (Bloomberg) -- KB Toys Inc., the 86-year-old toy retailer, filed for bankruptcy with plans to shut its 277 stores, citing a “sudden drop” in sales.

The Chapter 11 filing comes three years after KB Toys exited bankruptcy by closing almost half of its 1,200 stores. The chain has shut hundreds more since then amid increased competition from Wal-Mart Stores Inc., Toys “R” Us Inc. and Target Corp., which together control about two-thirds of the U.S. toy market, according to industry analyst Sean McGowan.

“Just about everyone I’ve talked to in the toy industry has been concerned about their survival for years,” McGowan, who is with Needham & Co. in New York, said in an interview.

KB Toys, based in Pittsfield, Massachusetts, also will try to sell its wholesale distribution business, according to papers filed today in U.S. Bankruptcy Court in Wilmington, Delaware. The company is controlled by Prentice Capital Management Inc., which acquired a majority stake when KB Toys left bankruptcy three years ago.

KB Toys owes as much as $500 million to creditors and has assets valued at the same amount, according to the court filing. The debt includes $190 million owed to lenders and $27.2 million owed to a toy company in Hong Kong.

2 Percent

Of KB Toys’ almost 11,000 employees, about 6,500 are temporary workers brought in for the holidays, Controller Raymond Borst said in court documents. The company holds no more than 2 percent of the U.S. toy market, and most of those sales will be absorbed by its three biggest rivals, McGowan said.

Sales were little changed from Feb. 3 until Oct. 4, KB Toys said. Since then, sales have dropped almost 20 percent, the company said."

More... http://www.bloomberg.com/apps/news?pid=20601087&sid=awF9nHheY7qw&refer=home

_____________________________________________________________________________________________________

If you ask me, KB was on borrowed time since the Great North American Video Game Crash of 1983.

http://en.wikipedia.org/wiki/North_American_video_game_crash_of_1983

[ozymandius]

68. Time to call it a day.

Dow 8,565.09 Down 196.33 (2.24%)
Nasdaq 1,507.88 Down 57.60 (3.68%)
S&P 500 873.59 Down 25.65 (2.85%)
10-Yr Bond 2.648% Down 0.036
NYSE Volume 6,153,597,000
Nasdaq Volume 2,076,718,250

4:45 pm : Investor skittishness kept stocks in check before selling pressure gained momentum and sent the major indices tumbling. Ongoing economic weakness and uncertainty surrounding a bailout for automakers weakened equities, while commodities advanced on rising oil prices and a weaker dollar.

The U.S. House of Representatives approved yesterday a $14 billion plan to aid Ford (F 2.90, -0.35), General Motors (GM 4.12, -0.48), and Chrysler, but the plan is encountering resistance in the Senate. Failure to secure Senate support will prolong the process of getting automakers funds, leaving them to continue burning through cash.

Cash burn has been problematic for automakers as they contend with softer sales. Sales are expected to remain pressured as consumers battle job losses. Initial jobless claims for the week ended December 6 increased 58,000 to 573,000. Continuing claims increased to 4.43 million from 4.09 million. Both levels were worse than expected and are similar to what are typically seen in recessions.

In other economic data, the October trade deficit climbed to $57.2 billion from $56.6 billion. According to the data, exports dropped significantly. Exports had been a point of notable strength earlier this year, yet with weakness spreading overseas economic activity will encounter further pressure in the fourth quarter.

Exports have also been challenged by a strengthening dollar, which makes dollar-denominated goods more expensive to foreign buyers. However, the dollar dipped nearly 2% this session, giving way to gains in commodities. In turn, the CRB Commodity Index advanced 4.3% this session.

However, crude was the real gainer, climbing more than 12% for a time. It finished with an advance closer to 9%, around $47.40 per barrel. Oil's gains come on the belief that OPEC will cut production when it meets December 17 as the cartel aims to realign supply with demand.

Softer demand has the International Energy Agency forecasting a drop in global oil demand for 2008, which would be the first time demand has shrunk in 25 years. Assuming economic conditions improve, the IEA expects a slight increase in demand in the back half of 2009.

Oil's advance made energy (-0.4%) a strong performer for much of the session. It gained more than 3% before finishing lower.

Financials (-8.5%) were the worst performers of the session, led lower by the likes of Bank of America (BAC 14.91, -1.78) and JPMorgan Chase (JPM 29.94, -3.58). Financials continue to encounter pressure as investors assess the sector's earnings prospects.

Meanwhile, wholesaler Costco (COST 52.06, -1.63) announced better-than-expected earnings per share results for the latest quarter, and Dow component Procter & Gamble (PG 58.58, -0.54) confirmed its second quarter and fiscal 2009 outlook. Eli Lilly (LLY 35.62, +0.61) reaffirmed its outlook for fiscal 2008, and issued upside guidance for fiscal 2009.

GlaxoSmithKline (GSK 36.08, +0.64) traded higher after receiving unanimous approval from the FDA for the company to market Advair for adult use. Its strength, along with Lilly's, helped the health care sector (+0.2%) outperform. Health care was the only sector to close higher.DJ30 -196.33 NASDAQ -57.60 SP500 -25.65 NASDAQ Adv/Vol/Dec 676/2.07 bln/2082 NYSE Adv/Vol/Dec 709/1.47 bln/2420