STOCK MARKET WATCH, Friday January 23

[ozymandius]

Source: du

STOCK MARKET WATCH, Friday January 23, 2009

AT THE CLOSING BELL ON January 22, 2009

Dow... 8,122.80 -105.30 (-1.30%)
Nasdaq... 1,465.49 -41.58 (-2.76%)
S&P 500... 827.50 -12.74 (-1.52%)
Gold future... 858.80 +8.70 (+1.01%)
30-Year Bond 3.25% +0.11 (+3.57%)
10-Yr Bond... 2.59% +0.07 (+2.69%)

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

Market Conditions During Trading Hours

GOLD,EURO, YEN, Loonie and Silver

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Read more: du

[ozymandius]

1. Market Observations (formerly WrapUp)

Brink of Debt Disaster
BY MIKE SHEDLOCK

John Kemp at the Guardian is making a case that the US and UK are on the brink of a debt disaster. Let's investigate the discussion and charts.

The United States and the United Kingdom stand on the brink of the largest debt crisis in history.

While both governments experiment with quantitative easing, bad banks to absorb non-performing loans, and state guarantees to restart bank lending, the only real way out is some combination of widespread corporate default, debt write-downs and inflation to reduce the burden of debt to more manageable levels. Everything else is window-dressing.

....

Despite acres of newsprint devoted to the federal budget deficit over the last thirty years, public debt at all levels has risen only 11.5 times since 1975. This is slightly faster than the eight-fold increase in nominal GDP over the same period, but government debt has still only risen from 37 percent of GDP to 52 percent.
Instead, the real debt explosion has come from the private sector.

Private debt outstanding has risen an enormous 22 times, three times faster than the economy as a whole, and fast enough to take the ratio of private debt to GDP from 117 percent to 303 percent in a little over thirty years.

The charts strongly suggest the necessary condition for resolving the debt crisis is a reduction in the outstanding volume of debt, an increase in nominal GDP, or some combination of the two, to reduce the debt-to-GDP ratio to a more sustainable level.

The key point is the path that Central banks are taking cannot possibly work. Buying distressed debt or playing shell games with good and bad banks will not resolve the basic problem which is too much private sector debt that cannot possibly be paid back.

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

[Demeter]

22. And Looky Where the Credit Bubble Started!

Can you say Morning in America? Yeah, I bet. and it isn't Government Debt, either.

[ozymandius]

2. no goobermental reports today n/t

[ozymandius]

3. Oil falls to near $42 as US crude demand weakens

SINGAPORE – Oil prices fell to near $42 a barrel in Asia on Friday as a jump in U.S. crude inventories underlined that slumping consumer demand is unlikely to recover anytime soon.

Light, sweet crude for March delivery fell $1.37 to $42.30 a barrel by late afternoon in Singapore in electronic trading on the New York Mercantile Exchange. The contract rose overnight 12 cents settle at $43.67.

Oil inventories in the U.S. soared by 6.1 million barrels last week, the Energy Department's Energy Information Administration said Thursday. Analysts had expected a boost of only 1.9 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

....

Gasoline inventories rose by 6.5 million barrels, three times more than what was expected by analysts, underscoring the collapse in demand as U.S. drivers cut back on trips.

....

In other Nymex trading, gasoline futures fell 1.34 cents to $1.08 a gallon. Heating oil dropped 1.18 cents to $1.34 a gallon while natural gas for February delivery slid 6.6 cents to $4.62 per 1,000 cubic feet.

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

[Imagevision]

95. Crude drops but not pump prices continue to rise - supply & Demand, whether

the demand is high or low the gas prices continue to rise because now it seems, gas demand isn't there so that's reason for Chevron to keep jacking the prices, it seems their entitled to lost profits? when the prices made it down to $1.56 per gallon. Winds profit tax, something like that should be in play as we speak...

[ozymandius]

4. World markets retreat amid growing corporate woes

HONG KONG – Asian stocks fell Friday, with Japan's benchmark tumbling almost 4 percent, as grim news about major companies like Microsoft and Sony underscored the depth of the worst global slowdown in decades. European markets fell in early trade amid news the British economy had officially slid into recession.

Every major market in Asia retreated, giving up most of the gains from the previous session when investors shrugged off gloomy economic data about China and Japan and sent stocks higher.

....

In Europe, Britain's FTSE 100 shed 1.5 percent, Germany's DAX lost 2.4 percent and France's CAC-40 was down 2.4 percent.

Earlier in the day, Japan's Nikkei 225 stock average dropped 306.49 points, or 3.8 percent, to 7,745.25. Hong Kong's Hang Seng Index eased 0.6 percent to 12,578.60, while South Korea's Kospi sank 2.1 percent to 1,093.40 points.

Elsewhere, Australia's main index dived more than 4 percent, Shanghai's benchmark was down 0.7 percent and Singapore's stock measure lost 0.6 percent.

http://news.yahoo.com/s/ap/20090123/ap_on_bi_ge/world_markets

[ozymandius]

5. futures at this early hour = ugly

S&P 500 -21.40 804.10 1/23 5:35am

NASDAQ -27.50 1144.75 1/23 5:08am

Dow Jones -191.00 7901.00 1/23 5:31am

[Ghost Dog]

6. Asia stocks dip on poor earnings

Friday January 23, 1:59 am ET HONG KONG (Reuters) - Asian stocks fell 2 percent to a 1-1/2-month low on Friday, weighed by poor corporate results in the technology sector, while the U.S. dollar drifted higher as investors sought refuge from the deteriorating global economy.

Major European stock markets were expected to open mixed, according to UK financial bookmakers, after slipping for four straight days. Britain's FTSE (FTSE:^FTSE - News) was seen starting as much as 0.4 percent lower, while Germany's DAX (XETRA:^GDAXI - News) was expected to rise 0.6 percent.

Government bonds edged higher, with investors parking their money in havens over long holiday weekends throughout Asia. The five-year Japanese government bond yield plumbed three-year lows.

Oil prices slipped to $43 a barrel as a buildup in U.S. inventories reflected a lack of energy demand from struggling consumers and businesses.

Samsung Electronics (005930.KS) reported up its first ever quarterly loss on Friday, following stark warnings from tech giants like Microsoft (NasdaqGS:MSFT - News), Nokia (Helsinki:NOK1V.HE - News) and Sony, as consumers pull back severely on their spending on gadgets in the face of recessions in Britain, much of Europe, Japan and the United States.

The MSCI index of Asia-Pacific stocks outside Japan (^MIAPJ0000PUS - News) fell 2.2 percent to the lowest since Dec 5. Traders were reluctant to take any risks ahead of long Lunar New Year holidays throughout Asia next week.

Japan's Nikkei share average (Osaka:^N225 - News) finished at a two-month low, down 3.8 percent. Shares of Sony Corp (Tokyo:6758.T - News) dropped 7 percent after saying on Thursday it would post a record $2.9 billion loss.

"With Sony the way it is, it's easy to imagine how other electronics makers are faring. On top of that, many companies haven't yet priced in the recent strength in the yen into their earnings forecasts," said Fumiyuki Nakanishi, manager at SMBC Friend Securities in Tokyo.

Hong Kong's Hang Seng index (HKSE:^HSI - News) was one of the relative outperformers in the region, slipping only 0.2 percent. Shares in index heavyweight HSBC (HKSE:0005.HK - News) rose 2.6 percent but were down for the third consecutive week.

In Australia, the benchmark S&P/ASX 200 (ASX:^AXJO - News) dropped 4 percent, dragged down by banks and mining stocks. Rapidly slowing growth in China, a big consumer of raw materials, has been devastating for commodity producers.

/... http://biz.yahoo.com/rb/090123/business_us_markets_global.html?.v=2

[Ghost Dog]

9. Nikkei at 2-mth closing low, Sony fans earnings fears

Fri Jan 23, 2009 2:05am EST TOKYO, Jan 23 (Reuters) - Japan's Nikkei average slid 3.8 percent on Friday to hit its lowest close in two months, after Sony Corp's (6758.T) warning of a massive loss fuelled fears about the electronics sector amid growing economic gloom.

The benchmark lost 5.9 percent for the week, its third consecutive negative week and the longest such streak in nearly four months. It has fallen 12.6 percent this year.

Steel shares tumbled after Nippon Steel Corp (5401.T) announced production cuts, consumer lenders plunged on an unfavourable court ruling and oil-linked firms slid as oil fell towards $43 a barrel.

Sony's forecast of a record $2.9 billion annual loss on sliding demand and a stronger yen cast a long shadow, market players said.

"Even though you knew the sector was in bad shape, this has been underscored by Sony, giving rise to fears about firms in the sector which share a lot of the same problems," said Hiroaki Osakabe, a fund manager at Chibagin Asset Management.

"This is not simply a matter of a stronger yen. If it was, electronic firms wouldn't have fallen so much." The yen was trading at around 88.41 yen <JPY=> to the dollar, not far from a 13-½ year high. It was also near a seven-year peak against the euro hit earlier this week.

But others said the impact of the Sony news was starting to wear thin and that investors were homing in on poor economic conditions in Japan and the United States.

"There's still no real sense of when (U.S. President Barack) Obama's economic policies will actually be enacted, and this vagueness about the course of the U.S. economy has investors worried," said Hideyuki Ishiguro, a supervisor in the investment advisory section of Okasan Securities. "I wouldn't term the Sony news a 'Sony shock'. Actually, I think this might be a rather good chance to buy."

The benchmark Nikkei .N225 shed 3.8 percent to 7,745.25, its lowest close since Nov. 20. Its three-week losing streak was the first such period since Sept-Oct 2008. The broader Topix lost 2.8 percent to 773.55.

...

The Bank of Japan also cut its economic growth forecast, predicting the world's No.2 economy would contract for two full years through March 2010.

/... http://www.reuters.com/article/marketsNews/idCAT749820090123?rpc=44&sp=true

[ozymandius]

8. Britain officially slips into recession

LONDON (Reuters) – Britain went into recession at the end of last year for the first time since 1991, with the economy contracting at its fastest pace in nearly 30 years.

The Office for National Statistics said the economy shrank by 1.5 percent in the fourth quarter of last year, the biggest drop since the deep recession of 1980. The economy contracted by 1.8 percent compared with a year ago.

....

The services sector, which accounts for three-quarters of economic output shrank by 1.0 percent in the fourth quarter, the fastest pace since 1979.

Manufacturing output fell by 4.6 percent in the fourth quarter. The broader measure of production, which includes power generation, fell by 3.9 percent in the quarter, the biggest fall since 1980.

http://news.yahoo.com/s/nm/20090123/ts_nm/us_britain_economy

[Ghost Dog]

19. Sterling plunges as U.K. recession steepens

Last update: 6:40 a.m. EST Jan. 23, 2009 LONDON (MarketWatch) -- The British pound plunged to a 23-year low Friday against the dollar, undermined as government data confirmed the U.K. economy fell into a deep and potentially long-lasting recession in the final three months of 2008.

The Office for National Statistics said gross domestic product contracted by 1.5% in the October-through-December period compared to the previous quarter, marking the steepest quarterly drop since 1980. That follows a 0.6% third-quarter contraction. One widely used definition of a recession is consecutive quarters of shrinking GDP. What's more, the data showed GDP shrank 1.8% compared to the final quarter of 2007. Economists had forecast a 1.3% quarterly decline and 1.4% annualized contraction.

"Today's figure will put further downward pressure on sterling and equity markets, as it becomes increasingly clear that the United Kingdom is set for a steep recession," said Charles Davis, economist at the Center for Economic and Business Research. "This supports our view that the economy is set for the steepest contraction in the post-war era in 2009," Davis said. He pegged the year-on-year drop in GDP as "in the region of 3%."

In recent foreign-exchange action, the pound changed hands at $1.3577 after stumbling to its lowest level against the greenback since 1985. Sterling was trading near $1.3881 in late North American activity on Thursday. The euro gained ground on the pound as well, rising 0.7% to 94.36 pence. Meanwhile, London's FTSE 100 stock index dropped below 4,000 for the first time since December.

The GDP figures reinforce expectations the Bank of England will continue to cut official interest rates toward zero and follow through on indications its prepared to embark on a policy of "quantitative easing" -- effectively printing money -- in an effort to stave off deflation, said Simon Derrick, currency strategist at Bank of New York Mellon.

/... http://www.marketwatch.com/news/story/story.aspx?guid={CA3B3979-F4C5-433E-BC26-A10F8B1155EF}&siteid=rss
____

[Ghost Dog]

11. Europe shares fall to 6-year low; financials slide

Fri Jan 23, 2009 5:29am EST LONDON, Jan 23 (Reuters) - European shares fell to a six-year low early on Friday as investors worried about further losses in the financial sector and data showed the British economy went into recession at the end of last year.

At 1010 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was down 2.3 percent at 745.39 points, and had been as low as 742.53, its lowest since April 2003. The index is heading for its 12th session of decline in thirteen sessions. Insurers fell on worries they will be hit by losses. Swiss Re (RUKN.VX) fell 13.9 percent, extending the previous day's heavy losses, on worries it could make further writedowns when it reports full-year results due Feb. 19, traders said.

...

Allianz (ALVG.DE), Aviva (AV.L) and AXA (AXAF.PA) were down between 7.3 percent and 10.4 percent.

Banks, one of the worst performing sectors in 2008, took most points off the index. The sector has been hit by huge writedowns and worries that some banks may be nationalised.

BNP Paribas (BNPP.PA), Banco Santander (SAN.MC), Barclays (BARC.L), Credit Suisse (CSGN.VX), Deutsche Bank DBGKn.DE, Lloyds (LLOY.L), and Societe Generale (SOGN.PA) fell between 1.9 percent and 13.9 percent.

...

Across Europe, Britain's FTSE .FTSE fell 1.6 percent, Germany's DAX .GDAXI lost 2.6 percent and France's CAC .FCHI slipped 2.4 percent.

...

The FTSEurofirst 300 benchmark index is already down 9 percent this year after a 45 percent fall in 2008, hit by a credit crisis that has helped to tip several major economies into recession.

This includes the UK, where recession is now official, data showed on Friday. Its economy shrunk 1.5 percent in the fourth quarter, the second successive quarter of contraction, the technical definition of recession.

Germany, Europe's biggest economy, is also in recession and is showing further signs of weakness in 2009. Germany's private sector contracted sharply at the start of the year, weakened by a steep decline in manufacturing sector output, polls showed on Friday.

/... http://www.reuters.com/article/marketsNews/idCALN11192120090123?rpc=44&sp=true

[Ghost Dog]

70. Europe stocks hit 6-yr closing low, financials fall

LONDON, Jan 23 (Reuters) - European shares ended weaker on Friday, retreating for the 12th time over the past 13 sessions to hit their lowest close in six years, dragged down by financials as fears of more hefty losses in the sector deepened. The pan-European FTSEurofirst 300 .FTEU3 index of top European shares ended down 0.3 percent at 760.54 points falling to its lowest close since April 2003.

Banks took the most points off the index. Barclays (BARC.L) fell 13.5 percent as concerns grew that the bank may require further capital or be nationalised.

...

BNP Paribas (BNPP.PA), Standard Chartered (STAN.L) and Societe Generale (SOGN.PA) were down 5.75 percent to 7.8 percent.

Insurers were in the doldrums. Swiss Re (RUKN.VX) lost 19.2 percent on worries it could make further writedowns when it reports full-year results on Feb. 19.

"Swiss Re is coming under pressure because of fears its has critical amounts of CDS (credit default swaps) on its balance sheet and that its hedges might not work," a trader said.

...

Across Europe, the FTSE 100 .FTSE index was up 0.01 percent, Germany's DAX .GDAXI was down 1 percent and France's CAC 40 .FCHI was down 0.7 percent.

/... http://www.reuters.com/article/marketsNews/idCALN74878220090123?rpc=44&sp=true

[Ghost Dog]

77. AP propaganda piece: Crisis weighs ever heavier in Europe

By PAN PYLAS, AP Business Writer Pan Pylas, Ap Business Writer

LONDON – The European economy sank further Friday, with figures confirming Britain is officially experiencing its worst recession in nearly 30 years, 3.2 million unemployed in Spain, and Iceland's government succumbing to pressure and calling early elections.

With exports and industrial production falling off a cliff and the banks, particularly in Britain, embroiled in a battle for survival, the prospects for 2009 — when some once thought a turnaround might start — are simply looking grimmer and grimmer.

And Europe's people know it, with rioting and civil disturbances on the rise and Iceland's government falling victim in part to public anger over the financial crisis.

...

Latvia, Lithuania and Bulgaria have suffered street clashes amid a toxic brew of sagging economies and local concerns in recent days. In Greece, Athens was rocked again Thursday by another riot following a protest against an attack on a trade unionist.

...

So far, Europe's major economies have escaped unrest, but the European Commission has indicated that it is keeping a close eye on developments. The International Monetary Fund's managing director Dominque Strauss-Kahn of France told the BBC earlier this week that more unrest could occur almost anywhere.

"It can be in my own country (France), it can be in U.K., it can be Germany, it can be in eastern Europe," he said.

...

Fourth quarter figures due by the middle of next month will likely show that the rate of decline has gathered pace in the countries that use the euro currency, especially as the slides being recorded in high-debt countries like Britain and the United States, will inevitably impact on the export-heavy economies such as Germany's.

"Now this source of demand has collapsed, euro zone exports are in free fall," said Dominic Bryant, euro zone economist at BNP Paribas. "This has a knock on impact on investment and leaves euro zone growth dependent on consumption, which was lacklustre even at the best of times," he added.

Most analysts think that Germany's economy may have contracted by more than Britain's in the fourth quarter of 2008, possibly by up to 2 percent, as sliding global demand hit exports. Germany's economy minister Michael Glos has predicted that exports would slump by 8.9 percent in 2009.

The situation in countries like Spain and Greece could be worse. Without a rich source of exports their governments will have to rein in domestic spending to bring their massive trade deficits more into balance. For Spain, which saw unemployment rise by 1.3 million in 2008 to 3.2 million, or 13.9 percent of the working population, that makes for an unappetizing policy dilemma for the government.

While investor worries in Britain have focused on the depth of the recession and the future of the banking sector, which earlier this week received another government bailout, the spotlight on the continent has been on whether countries like Italy, Greece and Spain can meet their debt obligations.

Ratings agency Standard & Poor's recently downgraded ratings for Spanish and Greek debt, stoking speculation that wrecked government finances could knock countries such as Italy out of the euro — talk that has been dismissed by European officials, but the very fact it even comes up has significance.

...

Though the British pound has been plunging against all its major competitors, which would put the economy in a more competitive position once a recovery in world demand picks up, the euro has held its own, denying those hard-pressed countries in the euro area the possible beneficial effect from a falling currency, which should eventually boost exports once global demand starts to pick up.

The European Central Bank's president Jean-Claude Trichet has dismissed any suggestions that the financial turmoil is threatening the euro area even though he recognizes that the 16-nation currency zone is in a "substantial downturn" through to 2010.

"Adjustment in the overvalued euro economies (Italy grossly, Spain moderately) will be much more painful, and Italy's possible exit from the euro augurs for years of crisis," said Charles Dumas, an analyst at Lombard Street Research.

/... http://news.yahoo.com/s/ap/20090123/ap_on_bi_ge/eu_europe_economy

[ozymandius]

7. Former Merrill chief Thain out at Bank of America (re-post from yesterday)

NEW YORK – John Thain resigned under pressure from Bank of America on Thursday after reports he rushed out billions of dollars in bonuses to Merrill Lynch employees in his final days as CEO there, while the brokerage was suffering huge losses and just before Bank of America took it over.

The bonuses were paid before Bank of America's acquisition of Merrill became final on Jan. 1, and while Bank of America was privately telling the government that Merrill was losing so much money that the deal might fall through unless it could get more federal bailout money.

Bank of America later received an additional $20 billion from the government, in part to offset the unexpected Merrill losses. The brokerage lost $15 billion in the fourth quarter and more than $27 billion for the year.

....

Bank of America stock has been among the hardest hit in the financial sector. It has lost almost 60 percent of its value since the Merrill deal went through. The stock is down 85 percent from one year ago.

http://news.yahoo.com/s/ap/20090123/ap_on_bi_ge/bank_of_america_merrill_lynch

[Demeter]

20. The Inmates Are Running the Asylum--What Do They Expect?

And this won't improve until somebody sane starts making the decisions.

Paulson is gone, isn't he?

[tclambert]

27. Yes, Paulson is gone. But new Treasury secretary not confirmed yet.

Who's in charge? Power vacuum! Auugh!

[ozymandius]

10. Newly unemployed need help to stay insured: report

CHICAGO (Reuters) – Few laid off workers can afford to take advantage of a U.S. program that helps people keep their health benefits, and many low-income workers are not eligible, a report released on Friday said.

The report by the Commonwealth Fund found only 9 percent of people who are eligible for COBRA -- a program that allows people to keep their employer-sponsored health insurance -- actually sign up.

The group urged policymakers to spend money to help newly unemployed workers keep company health benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985, or COBRA, and expand insurance coverage options for low-wage workers who are not eligible.

....

Single coverage under COBRA costs nearly $5,000 a year and family coverage costs almost $13,000, putting it out of reach of many families. Earlier this month, the nonprofit group Families USA reported that COBRA payments took up three-quarters of a worker's unemployment insurance payment.

http://news.yahoo.com/s/nm/20090123/us_nm/us_unemployment_cobra

[natrat]

12. gold going vertical

[Ghost Dog]

24. Gold jumps 2 pct, forex volatility prompts buying

LONDON, Jan 23 (Reuters) - Gold jumped 2 percent on Friday to a near three-week high as volatility on the currency markets drove investors to opt for buying bullion. The precious metal reached new record highs in both sterling and euro terms. Spot gold was at $873.30/874.90 an ounce at 1050 GMT, against $855.55 late in New York on Thursday. It rose to an all-time high of 685.70 in euro terms, and a record 648.51 pounds when priced in sterling.

"Investors are getting out of currencies and getting into gold," said Simon Weeks, director of precious metals at the Bank of Nova Scotia.

...

"The relationship between gold and the U.S. dollar appears to be broken at present," said Fairfax analyst John Meyer. "Normally a stronger dollar pushes down gold. Clearly there is investment money flooding in due to the perceived security of gold," he said. The other main external driver of gold, oil prices, softened on Friday, falling below $43 a barrel after a larger than expected rise in U.S. crude stocks, and with bearish economic data dampening hopes for a resurgence in demand.

...

Demand for investment products such as coins and bars and physically-backed vehicles such as exchange-traded funds has been strong this week. "The physical premia seen on the gold market have been very strong in recent weeks, suggesting there is relatively healthy demand," said BNP Paribas analyst Michael Widmer.

The world's largest bullion-backed exchange-traded fund, New York's SPDR Gold Trust, said its holdings rose to a record for the fourth consecutive session on Thursday, climbing 1.6 percent or 13.15 tonnes to a 819.11 tonnes. SPDR took over from the Bank of Japan as the world's seventh largest holder of gold in December.

However, demand for gold jewellery in traditionally key markets such as India and the Middle East is slack as prices remained high.

Silver climbed to $11.53/11.61 an ounce from $11.38 late in New York on Thursday. Platinum firmed to $929.50/934.50 an ounce from $926, while palladium eased to $182.50/187.50 an ounce from $182. Both metals have suffered from a fall in demand from carmakers, who account for around half of annual platinum consumption. Platinum and palladium are key components in catalytic converters.

/... http://money.ninemsn.com.au/article.aspx?id=732649

[UpInArms]

41. Gold hits record highs in euro, sterling terms

http://www.reuters.com/article/bondsNews/idUSLN4501620090123

LONDON, Jan 23 (Reuters) - Gold rallied to record highs on Friday in both sterling and euro terms as volatility in the equity and currency markets prompted buying of gold as a haven from risk.

Gold priced in euros <XAUEUR=R> rose to a record high of 685.70 an ounce, up from a previous high of 685.37 reached in October. Sterling-priced gold <XAUGBP=R> climbed to an all-time high of 648.51.

[ozymandius]

13. Bank Failures and Commercial Real Estate

from Calculated Risk

As I've noted several times most regional banks avoided the residential real estate market (because they couldn't compete) and instead focused on CRE and C&D (construction & development) lending. This exposed many regional banks to excessive CRE and C&D loan concentrations, and now that CRE will implode in 2009, many of these banks will be in serious jeopardy.

Eric Dash at the NY Times has some details: Smaller Banks’ Losses Expected to Bring Mergers

Most of these banks were never big players in credit cards, subprime mortgages or credit-default swaps. But they were major lenders to commercial real estate developers, home builders and small corporations. As the recession tightens, losses have started to surge.

“There will not be the shock and awe factor” of the big bank losses, said Nancy A. Bush, a longtime banking analyst. But “small and midsize banks are up to their eyeballs in commercial real estate related to residential development and business loans. We are going to see a reckoning with how bad that got” in 2009.
...
Gerard Cassidy, a veteran banking analyst, projected that 200 to 300 small banks might fail or be forced into mergers over the next year or so. While that is still a fraction of the industry’s 8,400 banks, it is up sharply from the 25 bank failures in 2008.

Follow the link to some interesting comments. Some are written by actual kooks!

[Dr.Phool]

14. Good morning all. Those futures do look uglier.

I checked earlier, and they weren't nearly as bad. I'm starting to get a really bad feeling about the financial world, as though the geese are headed for the engine. We had a break for a few days, celebrating the departure of the chimp, and the arrival of Obama.

But, that euphoric feeling is starting to slip away, as cold, hard reality looks us in the face. After observing the repukes in the Senate the last couple of days, and especially Cornyn, I'm more convinced than ever that they would rather destroy the country, than allow Obama to succeed. They have their yammering idiots, Limbaugh, Hannity, Lowry, and Faux News out in full force, and working harder than they did during the election.

I'm sitting down here in Idiot Central, home of the most incompetent and corrupt state legislature in the country. With the state economy collapsing, unemployment soaring, and foreclosures skyrocketing, our fearless leaders are sticking to their divine vision that all taxes are a plague, and Jeb and Jesus will save us. Legislation is going into effect this month to allow electric companies to charge a 25% surcharge on some of the highest rates in the country, and homeowners insurance rates to increase 10% annually. While teachers are being laid off, schools closed, services dwindling, and thousands of poor and elderly are being thrown of public health care rolls, our illustrious leadership is sitting on a 3/4 of a billion dollar stash of cash that is earmarked for CSX. The only reason I mention this, is that's it's probably coming to a state near you, in the not too distant future.

[Ghost Dog]

15. You mean this CSX?

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

[Dr.Phool]

18. Yep, that's the one.

[ozymandius]

17. Good morning Dr. Phool and everyone.

:donut: :donut: :donut:

Ahhh. The nature of Florida politics. My spouse's early professional days in journalism were spent covering Florida politics. She interviewed Senators and Governors during her years there. The common thread among them: they were all freakin' nuts. Every. Single. One.

She loves to tell the story about Governor Chiles and Senator Mack. (Yes, they share a single story even though they were interviewed separately.) As each spoke into the microphone - she noticed that the mouth was moving, there was clear evidence of a pulse, respiration and other similar brain stem responses. But the eyes! There was nothing there!

Both men were cut from the same brain-damaged cloth. And they both were totally nuts.

This condition permeated, to some degree, nearly every lawmaker in Florida she ever met.

So my condolences, Dr. Phool, for your situation. Georgia is not much better with a similar plague of poor-to-mediocre solons among our majority party.

[Dr.Phool]

21. I have sat down with Bob Graham and Bill Nelson.

Nelson is totally nuts. He lives in a fantasy world. Graham on the other hand seemed sane.

Anyway, I'm considering a name change. So far I'm drawing a blank, and Dr. Stoopid just doesn't have the right ring to it.

[tclambert]

28. If you want to confuse people, Prag and FinnFan are available now.

Nyuk, nyuk, nyuk. Whoa, look at the time, gotta go.

[Dr.Phool]

38. Maybe I'll go with Phools Gold.

Tell them I'm Tansy's significant other. :evilgrin:

[Tansy_Gold]

42. Oh, that's funny!!

And since I already have an INsignificant other. . ...


:evilgrin:


:hi:

[tosh]

36. Hello, ozymandius and Dr.Phool....

I'm a native Georgian who long ago inhabited the Florida Press Center. I now roam freely between the two regions.

Seems a fine time to tell you how much I appreciate the daily SMW thread. It's now a part of my morning coffee routine. Maybe someday I'll be able to contribute.

:hi: :donut:

[ozymandius]

86. How very nice of you to drop by and say so.

Thanks. Are you a journalist?

[Ghost Dog]

71. Dr. Traincrash?

[Dr.Phool]

78. Maybe the wreck crew.

We used to have a Conductor named Derail Dawson. And another Engineer named Crash.

[Demeter]

72. You Could Go With Robert Asprin's Spelling, In His Memory

His series character was called Phule.

[ozymandius]

97. I am considering changing my name to Shelley's version: Ozymandias.

I chose the alternate spelling just to be different. Callow youth that I am - or was (once youthful).

[Hugin]

103. I like the 'ius' spelling better.

It's more in line with the Greek spelling than 'ias'.

But, do whatever makes you happy. :)

[Tansy_Gold]

30. Arizona is not a whole lot better

We have, of course, the brilliant Jon "the speech was low-brow" Kyl as well as that old guy who picked the bimbo trophy VP, and of course the crooked as they come Rick Renzi, who was actually too crooked to even dare stand for re-election.

Our governors? We're still tops in the country in recent times for removing governors for malfeasance. When we finally got a Dem elected and things had a chance to turn around, Obama snatched her away and has left us with another right wing wacko, of which we have an abundance.

California is nearly bankrupt, but they refuse to raise taxes on the rich; instead they'll do it to the poor by cutting welfare. Arizona has a huge budget shortfall and revenues continue to decline, but our new guv Jan Brewer is a rightwing idiologue(sic) who wouldn't consider raising taxes.

And of course we have the hugely popular Sheriff Joe Arpaio. 'Nuff said. I mean, how many other county sheriffs have their own Fox reality show? :puke:


Molly Ivins made the follies of the Texas Lege (in)famous, but I suspect many of us could write similar stories of our state governments.



Tansy Gold, who just has to shake her head sometimes. . . ...

[tclambert]

87. When JFK said, "Ask not what your country can do for you, ask what you can do for your country,"

he was addressing a problem his father complained about, that there was a real shortage of top-notch people in civil service. Kennedy was asking well-educated, intelligent people to voluntarily forego higher-paying careers for careers of service to the country. I've heard that recently we've had a problem with this again as smart kids see the big bucks to be made in banking, finance, and executive jobs and opt not to pursue degrees in engineering or science. Apparently in some places it has become a fad for dumb people to become political party puppets.

Sometimes the solution is as easy as asking people to do the right thing. That is what Kennedy did. It might be nice if President Obama (that felt good to type) asked our bright young people to find a way to help the country.

[Pale Blue Dot]

23. In CT they just announced that the deficit is 3x what it was just 2 months ago.

It went from about $300 million to about $900 million in that time period. As someone whose employment depends partially on money from the state, I'm terrified. In my school, based on the old budget numbers (again, from 2 months ago), no one was going to have to be let go - instead, we simply were going to stop buying supplies, new textbooks, field trips, etc. Now I don't know what's going to happen.

Everyday I look at my students and think to myself, "You have no idea what's about to hit you." They're the main reason why I get so upset when someone tried to downplay this crisis (or wants to believe in some miracle solution that's going to save us, rather than planning for the worst.)

[natrat]

67. didn't cheney say defecits don't matter

[tclambert]

89. Some states, like Michigan and Arizona, are required to balance their budget every year.

In bad years, like perhaps this one, that means cutting back government services and funding for schools. Michigan school districts have pretty much used up their "rainy day funds," what with all the auto company layoffs in past years. There hasn't been any fat left to cut for a long time.

It should be quite entertaining, in a watching a slow motion car wreck kind of way, to see how the state budget discussions proceed in Arizona, Michigan, and Florida. Florida has no income tax, and the real estate interests pushed to have property taxes slashed. So they have to try to run the state mostly on sales tax receipts. But cars and houses aren't selling very well lately, and tourists are cutting down on travel. Could we have whole states slipping into receivership? And what would that mean?

[tclambert]

90. And Cheney is a Dick.

[AnneD]

44. I squarely blame the DEM leadership for not helping us oust Cornyn....

here in Texas. He was the weakest he had been in many cycles (my goodness he had to shake unwashed hands of plebs this year and attend a debate).

We had one of the best candidates we ever had in Rick Noreiga. He was in the Texas house of reps and got called away to Iraq (he is a Colonel in the reserve). Known and loved in Houston and we just needed some money to pay for state ads. We received no real help from National (this is when I stopped donating to the Nationals). The only folks that came out to help fund raise was Bill and Hillary one time and it was really late in the game then. I worked closely with Ricks campaign and it is a crying shame. They screwed up the same way over Tom DeLay's last re-election bid. He could have been unseated then. The national DEM leaders suck donkey balls when it comes to campaigning in the states and won this year despite their incompetence. I mean really-does it take opposition as bad as W for us to win? What does that say about us as DEMS. Howard Dean did more to make this state DEM than anyone else. We are in the process of seriously pruning the state leadership. These National leaders can't see past their shriveled dicks and can't target worth a damn. The GOP has us beat on that count.

Too bad he's giving you grief-but we are doing the best we can and the National put themselves in this position.

[AnneD]

46. I got more bad news for you Dr Phool....

Nurses are avoiding that state like the plague. The hospitals have all the power and the Nurses have zero control over poor working conditions. Can't tell you how many nurses AND teacher I have met in Texas that relocated here from Fla.

[Festivito]

16. Debt: 01/21/2009 10,625,053,544,309.79 (DOWN 1,823,504,603.29) (BHO's 1st.)

(Obama's first day and the debt goes down. Well, that's not exactly his doing, but just the same from me, good going Barack! I'm so glad that future of this debt will be for the good of this nation, not just buddies of the well connected.)

= Held by the Public + Intragovernmental(FICA)
= 6,307,084,792,840.85 + 4,317,968,751,468.94
DOWN 225,946,840.81 + DOWN 1,597,557,762.48

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

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 306-Million person America.
If every American, man, woman and child puts in $3.27 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.82, ABOUT TEN BUCKS for a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is the federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)

PERSONALIZED DEBT:
At the end of the workday of this report, there should be 305,653,115 people in America.
http://www.census.gov/population/www/popclockus.html
Currently, each of these American's owe $34,761.8.
A family of three owes $104,285.41. And that is IN ADDITION to their mortgage.

ANALYSIS:
There were 21 reports in the last 30 to 33 days.
The average for the last 21 reports is 1,278,974,439.30.
The average for the last 30 days would be 895,282,107.51.
The average for the last 33 days would be 813,892,825.01.
There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 75 reports in 112 days of GWB's part of FY2009 averaging 8.03B$ per report, 5.38B$/day.
There were 1 reports in 1 days of Obama's part of FY2009 averaging -0.13B$ per report, -0.07B$/day so far.
There were 76 reports in 113 days of FY2009 averaging 7.90B$ per report, 5.31B$/day.

PROJECTION:
There are 1,460 days remaining in this Obama 1st term.
By that time the debt could be between 11.8 and 18.4T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
01/21/2009 10,625,053,544,309.79 BHO (UP -1,823,504,603.29 so far since Obama took office.)
( NOTE: That is up a negative amount. That's actually DOWN.)
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: 600,328,647,397.30 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
12/30/2008 +000,055,730,362.68 ------------*******
12/31/2008 +046,553,280,763.13 ------------**********
01/02/2009 -049,252,670,832.20 -
01/05/2009 -000,912,747,082.07 --- Mon
01/06/2009 -000,344,326,906.71 ---
01/07/2009 -000,314,429,077.84 ---
01/08/2009 -027,599,431,464.26 -
01/09/2009 -000,568,123,287.98 ---
01/12/2009 -001,098,982,842.59 -- Mon
01/13/2009 -000,038,769,243.84 ----
01/14/2009 -000,515,208,818.51 ---
01/15/2009 +020,470,437,698.93 ------------**********
01/16/2009 -000,579,761,204.80 ---
01/20/2009 -001,254,116,733.01 -- Tue
01/21/2009 -000,225,946,840.81 ---

-15,625,065,509.88 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $960,421,741,050.72 in last 125 days.
That's 960B$ in 125 days.
More than any year ever, except last year, and it's 94% of that highest year ever only in 125 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 125 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=3701275&mesg_id=3701379

[tclambert]

91. Request for Festivito: Could you add a line giving the total Bush addition to the debt?

I'm thinking it's in the 4 1/2 to 5 1/2 trillion range.

[Festivito]

104. 4.89T$: 01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)

It's in the post. The day George left, the debt ended the day at 10.626 trillion dollars. The running total was changed on the 1/20/08 report date post to set George as the 4.89 trillion dollar asterisk, and Obama's running total was started from zero.

The debt was going down, surprisingly for what I expect from Georgie, so far Obama shows nothing but negative additions to the debt. I expect that to change once his plan begins to need cash infusion, or income taxes fall far behind budget spending.

[Festivito]

105. Debt: 01/22/2009 10,618,718,703,374.78 (DOWN 6,334,840,935.01) (**: 4.89T$.)

(Obama's first day and second day the debt goes down. Highlighted today is **'s 4.89T$ addition to the debt. Note that that addition does not include the mess he left that will take more trillions just to start the economy back and then more trillions to pay for problems he created, e.g. the cost of treating soldiers harmed by the wars for decades to come, bridge repairs, and more.)

= Held by the Public + Intragovernmental(FICA)
= 6,296,701,346,374.02 + 4,322,017,357,000.76
DOWN 10,383,446,466.83 + UP 4,048,605,531.82

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

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 306-Million person America.
If every American, man, woman and child puts in $3.27 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.81, ABOUT TEN BUCKS for a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is the federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)

PERSONALIZED DEBT:
At the end of the workday of this report, there should be 305,659,286 people in America.
http://www.census.gov/population/www/popclockus.html
Currently, each of these American's owe $34,740.38.
A family of three owes $104,221.13. And that is IN ADDITION to their mortgage.

ANALYSIS:
There were 21 reports in the last 30 to 31 days.
The average for the last 21 reports is 2,442,346,392.22.
The average for the last 30 days would be 1,709,642,474.55.
The average for the last 31 days would be 1,654,492,717.31.
There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 75 reports in 112 days of GWB's part of FY2009 averaging 8.03B$ per report, 5.38B$/day.
There were 2 reports in 2 days of Obama's part of FY2009 averaging -0.32B$ per report, -0.17B$/day so far.
There were 77 reports in 114 days of FY2009 averaging 7.71B$ per report, 5.21B$/day.

PROJECTION:
There are 1,459 days remaining in this Obama 1st term.
By that time the debt could be between 12.6 and 18.2T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
01/22/2009 10,618,718,703,374.78 BHO (UP -8,158,345,538.30 so far since Obama took office.)
(                 NOTE: That is up a negative amount. That's actually DOWN.)
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: 593,993,806,462.30 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
12/31/2008 +046,553,280,763.13 ------------**********
01/02/2009 -049,252,670,832.20 -
01/05/2009 -000,912,747,082.07 --- Mon
01/06/2009 -000,344,326,906.71 ---
01/07/2009 -000,314,429,077.84 ---
01/08/2009 -027,599,431,464.26 -
01/09/2009 -000,568,123,287.98 ---
01/12/2009 -001,098,982,842.59 -- Mon
01/13/2009 -000,038,769,243.84 ----
01/14/2009 -000,515,208,818.51 ---
01/15/2009 +020,470,437,698.93 ------------**********
01/16/2009 -000,579,761,204.80 ---
01/20/2009 -001,254,116,733.01 -- Tue
01/21/2009 -000,225,946,840.81 ---
01/22/2009 -010,383,446,466.83 -

-26,064,242,339.39 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $954,086,900,115.71 in last 126 days.
That's 954B$ in 126 days.
More than any year ever, except last year, and it's 94% of that highest year ever only in 126 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 126 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=3702913&mesg_id=3702963

[Demeter]

25. Details of alleged Satyam fraud emerge

http://www.ft.com/cms/s/0/f27df182-e85d-11dd-a4d0-0000779fd2ac.html

By Joe Leahy in Mumbai and Varun Sood in Hyderabad

Published: January 22 2009 09:25 | Last updated: January 22 2009 18:58

The former chairman of Satyam Computer Services inflated the size of the outsourcing company’s workforce by nearly one-quarter and siphoned off the wages of the fake employees, Indian authorities have claimed...



The public prosecutor’s arguments contradict a confession letter from the former chairman, B. Ramalinga Raju, to his board in which he said he had manipulated the company’s accounts to dress up poor performance but had never stolen money.

The public prosecutor of southern Andhra Pradesh state, Gangaraj Prasad, told the Financial Times: “The number of employees at Satyam Computer stands at 40,000 and not 53,000 as claimed by the company.”

Mr Prasad alleged the former Satyam founder had used the fictitious names to divert Rs200m ($4m) a month out of the company’s accounts “for his personal wealth”, but where exactly the money was invested was not yet known...



Mr Prasad also alleged that police had found evidence of secret business dealings between Mr Raju and a land broker. “This also suggests that hundreds of acres of land was bought using benami accounts,” said Mr Prasad.

The Raju family and its property and infrastructure arms under the name of Maytas (Satyam backwards) control thousands of acres of property.

The prosecutor said police found that Satyam had forged documents from an Indian private sector bank, HDFC. The bank had confirmed with police that supposed certificates confirming Satyam had deposits with it were false, Mr Prasad said.

WOW! CUTTING EDGE CRIMINALITY! INDIA AS THE WAVE OF THE FUTURE?

[Hugin]

58. I'd still like to see a listing of U.S. Corporations involved in this mess.

I'm starting to see a decline in Customer Service in some of the service providers I'm associated with...

But, the biggest worry is that all of the customer confidential data that has been transfered overseas will
be even more compromised.

If they were inventing Indians... You'd better believe they were inventing Americans too.

[tclambert]

93. Dey were doin' dat on da Sopranos alla time.

No work jobs. Fictitious worker names on payrolls. Dat's how Tony kept da IRS off his case. He supposedly had a job as a consultant for dat waste management company.

[tclambert]

26. Nice cartoon.

Did you see the Mad Magazine post? The humorists are going to be savage with Bush's legacy.

[Demeter]

29. WSJ Says That Crash Promulgator Plays Central Role in Planning Obama Economic Policy

http://www.prospect.org/csnc/blogs/beat_the_press

The Wall Street Journal told readers that former Treasury secretary and Citigroup honcho Robert Rubin is playing a central role in designing President Obama's economic policy. It would have been appropriate to note that with the possible exception of Alan Greenspan, Mr. Rubin is the person most responsible for the policies that lead to the current crisis.

Mr. Rubin was a staunch advocate the policy of one-sided financial deregulation under which the government ignored prudential regulation while continuing to allow major banks to benefit from the government's "too big to fail" insurance policy. Mr Rubin also actively promoted an over-valued dollar which led to the enormous trade deficit of recent years. In addition, he had a "bubbles are fine" approach that allowed huge asset bubbles to grow unchecked.

The WSJ does note that Mr. Rubin personally profited from these policies in his role as a top Citigroup executive, but it does not point out the extent to which he was directly responsible for the policies that have produced the worst economic downturn since the Great Depression. If Mr. Rubin is in fact playing a large role in determining the economic policies of the Obama administration, this should be serious cause for public concern.

[Demeter]

31. Someone Tell the Post: Pell Grants Boost the Economy

Washington Post reporters should have the time and expertise to evaluate the assertions on economic issues made by politicians. This is important, because readers almost certainly do not.

The Post was seriously negligent in reporting Senator Arlen Spector's complaint about the inclusion of an expansion of Pell Grants in the stimulus. According to the Post, Spector is opposed to the inclusion of expanded grants in the stimulus, "because it would do little to spur short-term economic growth."

The grants, which help to pay for college for people with low and moderate income families, actually would provide stimulus in roughly the same way as tax cuts to these families would. They provide them with more disposable income, which is likely to lead them to spend more. The Post should have told readers that Mr. Spector's assertion was wrong.

The article also notes the opposition of Republicans and the banking industry to a measure that would allow bankruptcy judges to rewrite the terms of mortgages in a bankruptcy proceeding. The articles tells readers that they oppose the measure because, "it might cause mortgage interest rates to rise."

This is the stated reason given by Republicans and the banking industry for their opposition, but it may not be the true reason. It is also possible that they oppose the measure because it would likely reduce the profit of the banking industry. It is virtually certain that lower bank profits would result if the measure is approved. It is far from obvious that higher mortgage interests rise, since the measure is likely to only apply to past mortgages not new ones. It is also not clear that Republicans and the banking industry would necessarily care much if mortgage rates did rise, especially since the plausible size of any increase would be in the neighborhood of 0.1 percentage point.

--Dean Baker

[Tansy_Gold]

32. Quelle surprise!

:sarcasm:

[Demeter]

35. I THOUGHT You'd Like It, Tansy!

Wishing you a good morning and better times...

[antigop]

47. Obama and his team should listen to Rubin and then do the exact opposite n/t

[Hugin]

51. Maybe that's the plan. n/t

:rofl:

[Demeter]

33. Wall Street Paychecks May Wither By FLOYD NORRIS

http://www.nytimes.com/2009/01/23/business/23norris.html?ref=business



It is one thing when the best-paid people seem to be the smartest and the most accomplished. Those who make much less may not like it, but the differential seems understandable. It is another thing when those people are shown to have committed huge blunders that would have driven their companies out of business, and them into the unemployment line, but for government bailouts.

So it is now with Wall Street. In both Europe and the United States, antipathy toward the bailout is rising amid complaints that the money has not helped the economy by encouraging loans, but has kept the bankers in Champagne and caviar.

Are financial workers overpaid? And if so, will it continue?

The answers, according to a new study by two economists, are yes, they are overpaid, and no, it will not last.

“Wages in finance were excessively high around 1930 and from the mid 1990s until 2006,” wrote Thomas Philippon of New York University and Ariell Reshef of the University of Virginia, in a National Bureau of Economic Research working paper released this week, “Wages and Human Capital in the U.S. Financial Industry, 1909-2006.”

They forecast that up to half the wage differential observed in recent years “can be expected to disappear.”

They won’t disappear overnight, of course. The sad story of how Merrill Lynch bosses handed out bonuses just before the Bank of America takeover was completed — and just before about $15 billion in losses materialized from Merrill’s portfolio — reinforces the suspicion that Wall Streeters see themselves as entitled to outsize paychecks even if their companies are failing.

But even in the Depression the adjustment took time. The professors calculate that relative financial wages, taking into account education and other demographic factors, declined sharply in the 1930s and then at a slower pace until about 1980, when there was virtually no difference. Then, in a new era of financial innovation, “The financial sector became once again a high-skill, high-wage industry,” Mr. Philippon wrote on the N.Y.U web site this week.

It may be no accident that New York City, the country’s financial capital, went broke in the 1970s as financial industry wages approached their low point. Nor is it surprising that Manhattan real estate prices soared in the 1990s and early in this decade, as multimillion-dollar Wall Street bonuses pushed up demand for high-end apartments. If relative wages are set to decline, the pain in New York could be greater than in other regions.

The authors offer several reasons why financial salaries soared in the 1920s and again since 1980. It isn’t computers, they argue, because there were no computers the first time, and it is not just a strong stock market. Instead, they attribute it in part to strong demand for financial analysis at a time when technical revolutions were leading to an explosion of new stock offerings and loans to young and risky companies. Before 1930, that was the electrical revolution. More recently, it was information technology.

There is also the lure of increasing financial innovation, which they say is least likely to occur when there is more regulation. “Highly skilled labor left the financial sector in the wake of Depression-era regulations, and started flowing back precisely when these regulations were removed.”

The authors note that risky debt was popular in the 1920s, then all but disappeared until the 1970s brought junk bonds. Such debt, they note, is used to finance companies with high growth potential, but skilled analysis is required.

“This explains the dynamics of rating agencies, which were important players in the interwar period, small and largely irrelevant in the 1950s and 1960s, and growing fast from the 1970s until today,” they write.

By the peak of the credit boom, rating agencies were essential to financial innovation; they had developed models that somehow proved that there was little risk for investors who put up most of the money for very risky loans. The models turned out to be very wrong.

As a result of the current crisis, much of that innovation now seems foolish or even criminal. Without the innovation, banks could never have issued subprime mortgages with teaser interest rates that would later soar. Nor could such mortgages have been bundled into securitizations financed largely by AAA-rated investments.

Nor could regulators have been persuaded that the banks’ own risk models should be used to evaluate the safety of the banks. “In retrospect,” the authors write, “it is clear that regulators did not have the human capital to keep up with the financial industry, and to understand it well enough to be able to exert effective regulation. Given the wage premia that we document, it was impossible for regulators to attract and retain highly skilled financial workers.”

“Of course,” they add, “regulators will be able to hire cheap skilled labor in 2009, just as they were able to in the 1930s.”

Just how much the demand for financial innovation will fade is unclear, of course. “These things come in waves,” Mr. Philippon said in an interview. “If for the next 10 years, we go back to a ’60s-style economy, where big firms make investments without taking too much risk, finance will shrink.” But, he added, if the green revolution, alternative energy and biotech “turn out to be like electricity, then we will need them.”

He is convinced that less financial innovation could be good for a time, and that this crisis has shown to all that much more regulation is needed. “Some of the financial innovations we have seen are obviously inefficient,” he said. “A good chunk of innovation has to do with tax and regulation arbitrage. That is really a waste for the society.”

And, he added, the society could benefit from a flow to other industries. “As a society, do we want to put a third of our best brains in the financial sector?” he asked, pointing to a study indicating Harvard graduates from the early 1990s were far more likely to go into finance than were those who had graduated a decade earlier.

That generation has grown accustomed to the idea that investment banks, not to mention hedge funds and private equity funds, pay far better than companies in other industries. There is no guarantee that at least some of the advantage will not continue, but as I read the study, I recalled a passage from the recently published history of Goldman Sachs, “The Partnership,” by Charles D. Ellis.

“Goldman Sachs was fighting for its life all through the Depression and World War II and was profitable in only half of the 16 years from the 1929 crash to the end of the war,” Mr. Ellis wrote. “Most of the partners owed the firm money because their partnership income was less than the moderate ‘draws’ that their families needed to get along.”

Floyd Norris’s blog on finance and economics is at nytimes.com/norris.

[Demeter]

34. Stuck in the Muddle by Paul Krugman

http://www.nytimes.com/2009/01/23/opinion/23krugman.html?_r=1

...in his speech Mr. Obama attributed the economic crisis in part to “our collective failure to make hard choices and prepare the nation for a new age” — but I have no idea what he meant. This is, first and foremost, a crisis brought on by a runaway financial industry. And if we failed to rein in that industry, it wasn’t because Americans “collectively” refused to make hard choices; the American public had no idea what was going on, and the people who did know what was going on mostly thought deregulation was a great idea.

Or consider this statement from Mr. Obama: “Our workers are no less productive than when this crisis began. Our minds are no less inventive, our goods and services no less needed than they were last week or last month or last year. Our capacity remains undiminished. But our time of standing pat, of protecting narrow interests and putting off unpleasant decisions — that time has surely passed.”

The first part of this passage was almost surely intended as a paraphrase of words that John Maynard Keynes wrote as the world was plunging into the Great Depression — and it was a great relief, after decades of knee-jerk denunciations of government, to hear a new president giving a shout-out to Keynes. “The resources of nature and men’s devices,” Keynes wrote, “are just as fertile and productive as they were. The rate of our progress towards solving the material problems of life is not less rapid. We are as capable as before of affording for everyone a high standard of life. ... But today we have involved ourselves in a colossal muddle, having blundered in the control of a delicate machine, the working of which we do not understand.”

But something was lost in translation. Mr. Obama and Keynes both assert that we’re failing to make use of our economic capacity. But Keynes’s insight — that we’re in a “muddle” that needs to be fixed — somehow was replaced with standard we’re-all-at-fault, let’s-get-tough-on-ourselves boilerplate.

Remember, Herbert Hoover didn’t have a problem making unpleasant decisions: he had the courage and toughness to slash spending and raise taxes in the face of the Great Depression. Unfortunately, that just made things worse....

[UpInArms]

37. dollar watch

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

Last trade 86.618 Change +1.143 (+1.47%)

Forex Sentiment Forecasts further Japanese Yen and US Dollar Strength

http://www.dailyfx.com/story/topheadline/Forex_Sentiment_Forecasts_further_Japanese_1232634372910.html

EURUSD – Euro Forecast Unclear on Indecisive Forex Positioning
USDJPY – US Dollar Predicted to Lose Further Against Japanese Yen
GBPUSD – British Pound Outlook Remains Bearish Against US Dollar
USDCHF – Forex Sentiment Gives Little US Dollar/Swiss Franc Bias
USDCAD – Canadian Dollar Forecast Unclear Against US Dollar



Historical Charts of Speculative Forex Trading Positioning



...more...

Pound Sinks Further As GDP Contracts The Most Since 1980, Euro Follows Suit

http://www.dailyfx.com/story/bio1/Pound_Sinks_Further_As_GDP_1232708558789.html

The Pound sank below support at 1.3685 to a low of 1.3526 as U.K. GDP showed that the current recession is deeper than expected. The preliminary quarterly reading of a 1.5% contraction was weaker than the estimate of 1.2% and the lowest since 1980 which dragged the annualized rate to -1.8%. The data confirmed that the country is in a recession as the 4Q contraction followed a 0.6% decline the quarter before. Despite the slumping economy, U.K. retail sales unexpectedly rose 1.6% in December as Britons took advantage of discounts during the holiday with a 28.5% increase in apparel sales.

The increase in consumer consumption may be an aberration as the deepening recession will add to the current weakness in the labor market and recent banking troubles should weigh on sentiment. The 0.4% drop in the service sector was the fifth straight decline brining it to the weakest levels since the 1970’s. The weakness in the sector which accounts for more than 75% of the economy may force the BoE to employ a zero interest policy as it tries to prevent depression like conditions. The Pound has found support ahead if 1.3500 but with little technical support and bearish sentiment, we could see 1.3000 tested before long.

Forex traders sold off the Euro as well, sending the single currency to as low as 1.2790 as risk aversion and the declining growth picture in the region fed the bearish sentiment. Yet, the PMI reading showed a slight improvement from last month’s all-time low of 38.2 with a reading of 38.5, on the back of stimulus plans and interest rate cuts. However, both the manufacturing and service sectors remained in contraction for an eighth straight month. Markets have started to price in more interest rate cuts from the ECB with Credit Suisse overnight index swaps calling for 46 bps worth of cuts over the next twelve months, which will remain a weighing factor for the Euro. Despite this the currency has yet to approach the November low of 1.2329 as 1.2800 has provided support.

The weakness in the equity markets may continue to add support for the dollar as safe-haven flows continue to target U.S> treasury’s. Yesterday’s sell off in the U.S. has carried through to Asia and Europe during overnight trading and weakening fundamental data in those areas have lowered expectations for global growth. The U.S. economic calendar is empty but corporate earnings should dictate sentiment again today with GE reporting. It was Microsoft’s dour earnings report and announcement that they were cutting 5,000 jobs that sparked the current bout of bearish sentiment. U.S. futures have been trading down over 150 points most of the overnight which is signaling another down day for U.S. stocks and more bullish dollar sentiment.

...more...

[UpInArms]

39. ugly reports - profits are falling! still profitable companies must layoff all the workers

to keep from ever becoming profitable again! :sarcasm:

Xerox 4Q profit plunges, misses Wall Street view
1 hour ago - NORWALK, Conn. – Xerox Corp.'s fourth-quarter earnings plunged as the printer and copier maker booked hefty charges for layoffs and other restructuring costs, and the company on Friday forecast first-quarter profit below Wall Street expectations. The Norwalk, Conn.-based company said earnings slid to $1 million, or break-even per share, for the three months ended Dec. 31, from year-ago profit of $382 million, or 41 cents per share. Excluding a charge of 27 cents per share related to staff cuts and other ...
news.yahoo.com/s/ap/20090123/ap_on_bi_ge/earns_xerox - - Yahoo! News

GE 4Q profit falls 46 pct, adjusted net meets view
1 hour ago - WASHINGTON – General Electric said Friday its fourth-quarter earnings dropped 46 percent as it restructured its troubled lending arm. The news comes as the conglomerate says it expects 2009 to be "extremely difficult" amid the financial crisis. Fairfield, Conn.-based General Electric Co., which makes everything from refrigerator to jet engines, said it earned $3.65 billion, or 35 cents per share, after paying preferred dividends in the quarter ended Dec. 31. That included $1.5 billion in restructuring ...
news.yahoo.com/s/ap/20090123/ap_on_bi_ge/earns_general_electric - - Yahoo! News

Schlumberger 4Q down nearly 17 pct
2 hours ago - HOUSTON – Schlumberger Ltd., the world's largest oilfield services company, said Friday its fourth-quarter earnings fell nearly 17 percent as a significant fall off in drilling and other activity by oil and gas companies hurt results, which missed Wall Street forecasts. Schlumberger said its net profit for the October-December period amounted to $1.15 billion, or 95 cents a share, compared with a year-earlier profit of $1.38 billion, or $1.12 per share. Revenue rose to $6.87 billion from $6.25 billion ...
news.yahoo.com/s/ap/20090123/ap_on_bi_ge/earns_schlumberger - - Yahoo! News

Harley to cut 1,100 jobs as 4Q profit falls
2 hours ago - MILWAUKEE – Harley-Davidson Inc. says it will cut 1,100 jobs over two years and scale back its operations as its fourth-quarter profit slid amid the weak motorcycle market. Harley says it will consolidate two engine and transmission plants in Milwaukee into another Wisconsin facility. It will shrink its paint and frame operations at its York, Pa., plant and close a distribution facility in Franklin, Wis. The company also says it will end its domestic transportation fleet, and plans a 10 percent to ...
news.yahoo.com/s/ap/20090123/ap_on_bi_ge/earns_harley_davidson - - Yahoo!

[Hugin]

53. I'm of the opinion that's exactly what's happening at Microsoft.

First they need more H1-bs because there aren't enough 'qualified' scabs workers...

and NOW they lay-off 5% of their workforce after reporting only a 0.3 Billion reduction in Estimated Earnings.

Something stinks and it's probably Ballmer taking advantage of Bad Economic News to justify dumping staff.

[antigop]

55. Check out my post on IBM below (post #54) n/t

[Hugin]

56. It's a case of...

GMTA! :lol: ;)

[DemReadingDU]

40. Time Magazine Best 25 Financial Blogs

1/23/09 Time Magazine Best 25 Financial Blogs

The list is stated to be not in any particular order but Mish's blog is listed first...

1. Mish's Global Economic Trend Analysis (7,903 links). Although Mish (aka Mike Shedlock) is not an economist by training, he adroitly gets into the thick of economic data. Mish uses observations made by those in major media, so-called experts and government officials and serves up analysis based on his impression of their relevance and validity. The author is not afraid to attack conventional wisdom.

7.The Big Picture by Barry Ritholtz (11,223 links). Ritholtz is one of the most well-respected market and economic pundits and bloggers who manages money as his day job. Multiple posts a day on subjects as diverse as criticisms of the business press, digital media, and key economic indicators. An excellent job of using relevant and interesting charts, tables, and graphs.

14. Calculated Risk (11,057 links) is among the most thoughtful and thorough financial commentary on the internet. Period. Tears apart poor economic assumptions. Gets to the heart of the elements that move the economy and markets. Big focus on housing and economic analysis.

more...
http://globaleconomicanalysis.blogspot.com/2009/01/time-magazine-best-25-financial-blogs.html


direct link to Time Magazine article...
http://www.time.com/time/business/article/0,8599,1873144-1,00.html

[Hugin]

48. What?!?! No mention of the SMW!

We got it ALL right here, baby! :7


Hmmpf! :eyes:

[AnneD]

62. what...

the name McLovin unavailable?

Actually I an glad we weren't nominated-The minute that happens-there goes the accuracy. I know most of the folks posting here and have for a while now. If we get a bunch of strangers in here, it won't be the comfortable old shoe-it will be more like the bowling alley shoe they rent to you. BLECK.

[Hugin]

64. True.

But, we've got Lysol!

Anyway, who cares what Time says... I stopped reading it after they put the emaciated Anne on the cover.

[AnneD]

65. I remember that cover.....

if only for the fact I felt an overwhelming need for eye drops and a shower.

[bread_and_roses]

43. B* tells truth - was warned "could be worse than Great Depression"

I almost missed this article but am glad I didn't.

http://www.commondreams.org/view/2009/01/22

The Day the Earth Still Stood
What Will Obama Inherit?
by Tom Engelhardt

In fact, our last president -- in that remarkable final news conference of his ...-- even blurted out one genuine, and startling, piece of news. With the Washington press corps being true to itself to the last second of his administration, however, not a soul seemed to notice.

..."Now, obviously these are very difficult economic times...And I readily concede I chunked aside some of my free market principles when I was told by chief economic advisors that the situation we were facing could be worse than the Great Depression.

... I said, well, if you were sitting there and heard that the depression could be greater than the Great Depression, I hope you would act too, which I did. ...."

Engelhardt goes on to review the illegitimate little tinpot dictator's previous statements on the economy minimizing the situation, then reflects:

Now, let's return to our last president's news conference and consider what he claims his "chief economic advisors" told him in private last fall. His statement was, in fact, staggeringly worse than just about anything you can presently read in your newspapers or see on the TV news. What was heading our way, he claimed he was told, might be "worse" or "greater" than the Great Depression itself...

Stop for a minute and consider what Bush actually told us. It's a staggering thought. Who even knows what it might mean? In the United States, for example, the unemployment rate in the decade of the Great Depression never fell below 14%. In cities like Chicago and Detroit in the early 1930s, it approached 50%. So, worse than that? And yet in the privacy of the Oval Office, that was evidently a majority view, unbeknownst to the rest of us.

Worth reading the entire article, I think.

As always, thank you to the regular Marketeers for this thread.

edit for misplaced quotation mark.

[AnneD]

Explains all the proping up they did...

OH, wait-they don't manipulate the market. That was just our imagination.

[Hugin]

45. As promised here's the results of the Pool from Tuesday.

If you recall the Pool called for predictions on:

Where the Dow will be on Bush's last day and minute, 1/20/09, at 11:59am EST.

Entries:

Ozymandius - 8,016.73
radfringe - 8,243.74
Prag - Up-side: 8,837.94, Down-side: 8,158.10
KoKo01 - Up-side: 9,000.00, Down-side: 8,100.00
Ghost Dog - 7,970.00
AnneD - Up-side: 8,395.00 or a sigh of relief Down-side of 7,890.00 (Finally heard from Jimmy.)
MsLeopard - 7,777.77 (Casino Style.)
CatholicEdHead - 7,863.56
DemReadingDU - 8,080.80 (A nice round number.)
UpInArms - 7,578.24 (Wants that in Trillions.)
TalkingDog - 7,500.00
PassingFair - 7,500.00 (Could have a tie here!)
natrat - 6,248.00 (Whoa, a new Cassandra!)
spinbaby - 7,992.44
DanaM - 8,999.99
spotbird - 8,516.00, 8,580.00 or there abouts.
GliderGuider - 7,650.00
Birthmark - 7,600.00
RetailSlave - 8,888.88 (Another round number.)
Gentle Giant - 8,317.69 (A little B-day magic.)
Wednesdays - 7,850.00
Tansy_Gold - 8248.24
InkAddict - 8,474.00
Roland99 - 8,449.00
dumpbush - 7,997.55
Karenina - 8,192.68
bain_sidhe - 7,979.79
tclambert - 8,350.00
lumberjack_jeff - 8,417.00

Dr.Phool - 10,000.00 (Pay no attention... Outlier.)

I obtained the value of the Dow from the records on Google Finance and unfortunately it only holds values
for even numbered minutes. (If anyone knows where I can find the Dow value at 11:59 AM EST 12/20/2009, please,
let me know.)

The Dow was listed at:

8,136.26 @ ~ 11:58 AM EST 1/20/2009

and

8,121.53 @ ~ 12:00 Noon EST 1/20/2009

Going by raw numbers, this range falls between my Down-side guess of 8,158.10 and KoKo01's Down-side guess of 8,100.00 almost
exactly.

How did I obtain my guess? I took the value of the Dow on the day I entered, (Early the week before, IIRC) and
added/subtracted 4%, thinking that for several weeks the swings have been consistently in the 4% range on days with big
Market news. I also cynically thought there is wholesale state-sponsored manipulation to keep it in this range. What can I
say? It turned out to be a reasonable guess. ;)

For fun, I've done a few minor statistical calculations on the entries...

They turned out as follows:

AVERAGE (Including Dr.Phool's optimistic 10,000) 8,166.56
AVERAGE (Without the 10,000) 8,111.00

MEDIAN (Including the 10,000) 8,129.05 <-- Pretty darn close to the Actual Value at 11:59 AM.
MEDIAN (Without the 10,000) 8,100.00 <-- Matches KoKo01's guess.

So, if one goes by the MEDIAN of the guesses all who entered 'won' the Pool.

QED

[4dsc]

49. Brink of Debt Disaster

Kemp's article is an excellent read that inquiring minds will want to explore further.

The key point is the path that Central banks are taking cannot possibly work. Buying distressed debt or playing shell games with good and bad banks will not resolve the basic problem which is too much private sector debt that cannot possibly be paid back.

http://globaleconomicanalysis.blogspot.com/2009/01/brink-of-debt-disaster.html

[fedsron2us]

84. Pretty good summary

There are really on three solutions to these debts

a) Pay them off
b) Default them
c) Inflate them away

I expect eventually we will wind up with a mixture of all of these being implemented.

Sadly at the moment the only strategies being touted at the moment are repainting them, renaming them and sweeping them under the carpet in the hope they go away.

[Demeter]

88. Experts Already Say We Can't Expect Inflation to Save Us

and without jobs, paying off the debt is improbable.

Default it is, by default!

[antigop]

50. Texas jobless fund to face $447 million deficit ( Gov. Goodhair halted tax)

http://www.star-telegram.com/804/story/1160347.html

Texas is projected to have a $447 million shortfall in its unemployment compensation trust fund Oct. 1, after the temporary suspension of the unemployment replenishment tax at the behest of Gov. Rick Perry, officials said.

The unemployment fund, which pays jobless claims, was flush with $90 million in savings nearly a year ago when Perry temporarily halted the replenishment tax, one part of the unemployment insurance tax.

The suspended tax was reinstated this month, but officials said it won’t be enough to cover the shortfall between the $414 million the state expects to be in the fund Oct. 1 and the $861 million it’s supposed to have.

Meanwhile, jobless claims have skyrocketed because people are having a hard time finding jobs.

Perry spokeswoman Allison Castle said the governor stands by his decision.

Next, the stupid people in Texas will probably vote in Hutchison to take Goodhair's place.

[w8liftinglady]

63. while we aren't ALL stupid-you're probably right..what a douchebag

[antigop]

66. Oh, I wasn't referring to the Dems in Texas -- just those who continually vote Repub n/t

[snot]

68. TX has a lot of electronic machines in their voting.

In Dallas County, lots of lower offices went Dem in 2004. even though the Presidency went to Bush -- locally,the result was considered very odd.

[antigop]

52. WSJ: How some firms boost the boss's pension (subscription req'd to read whole thing)

http://online.wsj.com/article/SB123265119486206979.html

Some major companies are boosting the value of retirement plans for top executives by using a generous formula when converting a pension into a single lump-sum payment.

The practice, which remained largely unknown until a recent change in federal disclosure requirements, can increase the value of a CEO's pension by 10% to 40%, sometimes amounting to millions of extra dollars. The additional sums aren't always fully reflected in annual pension-benefit tables included in proxy statements, or in company financial statements, due to the complexities of accounting and disclosure rules.

The list of companies turbocharging their executives' pensions includes Dun & ...

You need a subscription to read the rest.

[cosmicdot]

83. try the Digg link to the WSJ article

http://digg.com/business_finance/WSJ_com_How_Some_Firms_Boost_the_Boss_s_Pension

[antigop]

54. IBM beats expectations,lays off employees (Check out the quote)

http://www.wral.com/business/story/4375560/

Less than 24 hours after IBM reported profits that far exceeded Wall Street expectations, Big Blue began a series of layoffs across the company in North America on Wednesday.

IBM confirmed launching a "resource action,” which is how the company refers to layoffs, was launched. However, a spokesperson declined to provide specific numbers or to identify what IBM locations were affected by the cuts except to say the action is for North America only.

Especially hard hit was the IBM Software Group, according to IBM workers' posts to the Alliance@IBM union Web site and in e-mails to WRAL.com and Local Tech Wire.

Check out this excerpt from the article:

Loughridge said IBM planned “some acceleration” in what he called “work force rebalancing” in 2009. By rebalancing, Loughridge referred to IBM’s practice of reassigning workers or hiring workers in other locations, such as overseas, while displacing current employees.

More jobs being shipped overseas. Obama promised to eliminate the tax break companies get for shipping jobs overseas. He needs to get moving.

[tclambert]

100. Profits exceeded expectations and they are laying off?

It's some sort of Michael Moore nightmare scenario.

[antigop]

57. US railroads park freight cars as demand slump intensifies

http://money.cnn.com/news/newsfeeds/articles/djf500/200901221531DOWJONESDJONLINE000954_FORTUNE5.htm

Forget planes parked in the desert. The thousands of empty railroad freight cars parked on out-of-the-way tracks across the U.S. provide a potent symbol of the evolving global economic slowdown.

The three largest U.S. railroads said this week that they have put 107,000 rail cars into storage among them - 17% of their combined fleets - amid a deepening slump in freight.

Union Pacific Corp. (UNP), Burlington Northern Santa Fe Corp. (BNI) and CSX Corp. (CSX), as well as smaller peers and leasing companies, also have sidelined hundreds of locomotives.

"They're parked in every spare track I could find," Union Pacific Chief Executive Jim Young said in an interview.

Was it Tansy who wrote about this recently?

And notice how they are calling it a "demand slump".

[Tansy_Gold]

59. Yep, it was I.

Thanks for finding this!

I think the tracks out by Arlington, AZ are BNSF but I'm not sure.

But wow, I amaze myself by being ahead of the news!!!


Tansy Gold, dislocating her shoulder to pat herself on the back. . . . .

[Hugin]

60. Yep, Tansy_Gold broke this story...

This hobby-horse belongs to

Tansy_Gold!

TGTUS!

[4dsc]

102. Sure sign Chinese exports are down...

Lets face it, most of the crap being shipped by rail is probably Chinese crap..

[antigop]

61. TPM: "So Merrill traders resumed buying mortgage assets after the crisis ...was abundantly clear"

http://tpmmuckraker.talkingpointsmemo.com/2009/01/merrill_traders_to_mortgage_assets_i_wish_i_knew_h.php

Yesterday we told you about how Merrill Lynch paid out billions in bonuses to staff even as its new owner, Bank of America, was begging the government for another bailout to help it digest Merrill's massive losses on mortgage assets.

And today, buried in a New York Times story about the downfall of former Merrill CEO John Thain -- whose ouster as a Bank of America exec was announced yesterday -- is an intriguing nugget that suggests just how attached Merrill was to those toxic assets.

Reports the Times:

At a news conference announcing the merger, Mr. Lewis praised Mr. Thain. Mr. Lewis said Mr. Thain's new role had not been decided, adding: "That's a credit to John. It usually does not happen that way. And it was never about him, it was always about the deal."

But after Merrill appeared to be safely in Bank of America's arms, Merrill's traders began buying risky mortgage assets, thinking that the market had bottomed out, according to two people familiar with the firm's trading. Merrill also began to run up losses on equity derivatives and other instruments, they said.

...
So Merrill traders resumed buying mortgage assets after the crisis in the housing market was already abundantly clear. After the government had taken over the mortgage lenders Fannie and Freddie. After Lehman Brothers had announced it was filing for bankruptcy. After the US government had effectively taken over AIG. Above all, after Merrill itself had been bought by Bank of America, with help from $25 billion of government money.

[Demeter]

75. Somebody Ought to Remove the "Coke" Machine at Merrill Lynch

[snot]

69. Questions

I've read here about the PPT and also other speculation that authorities have been artificially suppressing gold prices or otherwise manipulating markets. What do folks here think will happen under Obama? Will any or all of these these manipulations be stopped, reduced, or continue?

[skoalyman]

73. evening everyone I'm back pc broke down that and I couldn't afford

TW stiff internet prices they seem to so conveniently have a monopoly on here in ohio:mad: oh todays my 35th:party: :cry: getting old
on snot question they'll continue until we can continue to no longer live in houses and move into tents down by the river:shrug:

[AnneD]

94. Hey Skoalyman.....

:argh: don't you just hate that. Same crap happened when I lived in rural NM-pure monopolies. The price went down as more providers came foreword.
Happy 35:party: Have fun.
We have multiplied the "official" unemployment by a factor of 2 to get the real numbers and have sent :grouphug: to you guys. On the SWT-we know what is really going on.

[UpInArms]

96. Happy Birthday skoalyman!

:toast:

and you're just a pup

:grouphug:

[skoalyman]

99. thank you guys and gals

may this year be better then the last:toast: :hi:

[specimenfred1984]

74. In the dry winter air do you harden and become a bugar?

Did you see what happened to crude oil prices in June when its electronic trading became regulated again? The price dropped like a rock. I don't see any evidence of gold being held down, just the opposite, since the inception of gold ETFs it's a lot easier to manipulate the price up.

http://finance.yahoo.com/q/bc?s=GLD&t=5y&l=on&z=m&q=l&c=

[tclambert]

101. Are you referring to Sen. Levin's largely unheralded success at repealing the "Enron loophole?"

None of which I would have heard of if not for Stock Market Watch.

[Demeter]

76. Most of the Manipulation Is NOT Done By the Government

It was just that all the regulations and oversight and enforcement departments were either gutted, converted to "free-market" religion, or privatized. So nobody was minding the store, there was no cop on the corner, and lawlessness reigned.

You can start with the Federal Reserve and all the formerly-known-as-investment-banks, the would-be-banks like GM and GE, and go from there. Don't forget the Ponzi players!

[Ghost Dog]

79. Obama's strong dollar policy may be for real

Thu Jan 22, 2009 10:08pm EST By Vivianne Rodrigues - Analysis NEW YORK (Reuters) - The Obama administration will have to persuade the world that the U.S. strong dollar policy is for real this time as it prepares to borrow $2 trillion to revive the U.S. economy from its worst crisis in decades.

Less than 48 hours after Barack Obama became president, his choice for U.S. Treasury secretary, Timothy Geithner, said a strong dollar is in the United States' interest.

That phrasing -- first used by former Treasury Secretary Robert Rubin more than 14 years ago -- lost its weight and credibility when it was over-used by the Bush administration.

The greenback lost about 40 percent of its value versus the euro and more than 15 percent versus the yen between 2000 and 2008. A weaker currency was an important step for the Bush White House in rebalancing a global economy plagued by a U.S. trade deficit and huge Chinese surplus.

"This time around the administration probably means it when it says it backs a strong dollar. They have to be dead serious about it," said Samarjit Shankar, a director for global strategy at the Bank of New York Mellon, in Boston.

"Trillions worth of U.S. debt is coming soon to the markets. Which foreign central bank or institution will buy this debt if they are not fully convinced the dollar will remain strong?" he added.

The challenge for Obama's team, analysts said, will be to support the dollar's value without direct manipulation in the markets, with the economy in recession, interest rates near zero, and a ballooning current account deficit.

Moreover, Washington will have to achieve all that without antagonizing China, the biggest holder of U.S. Treasury debt, the analysts said.

"It will be a real test. One thing is to finance a $450 billion deficit and another is to finance $2 trillion," said Chris Rupkey, a senior financial economist at Bank of Tokyo-Mitsubishi in New York.

"We are always worried foreigners could ditch the dollar. But they have no incentive to do that," he added. "The amount they own is so large that they can't get out of it without impacting their own currencies and economies in the process. And that includes China."

...

/... http://www.reuters.com/article/newsOne/idUSTRE50M0T820090123?sp=true

[Ghost Dog]

80. Accusation of Currency Manipulation May Anger China

By: Reuters | 23 Jan 2009 | 06:22 AM ET China will make clear its displeasure at U.S. accusations of currency manipulation but hold its anger in check in the belief that President Barack Obama is simply posturing, Chinese analysts said on Friday.

Timothy Geithner, Obama's choice to head the U.S. Treasury, said the president believes China is "manipulating" the yuan, a loaded term that the Bush administration had deliberately avoided even as it criticized Beijing's exchange rate policy.

The People's Bank of China, the central bank, had noted the comments by Geithner, a central bank official told Reuters on Friday.

"We have reported them to relevant government departments and are awaiting a response," the official said, declining to elaborate.

Under U.S. law, formally labeling China a currency manipulator would require the Treasury to begin "expedited" negotiations with Beijing to reduce China's huge trade surplus with the United States and eliminate any "unfair" currency advantage.

"China is going to be extremely unhappy, to say the least," Tao Xie, an expert on Sino-U.S. relations at the Beijing Foreign Studies University. "For administration officials, I do not think any one has ever pointed a finger so strongly at China."

Chinese anger at Geithner's choice of words, written in response to questions at his Senate nomination hearing, will add to simmering tensions over the global financial crisis.

...

U.S. Treasury bond prices fell on worries that China might respond to Geithner's frank comments by cutting its holdings, the world's largest, of U.S. government debt.

/... http://www.cnbc.com/id/28809112

[Dr.Phool]

81. NRCC: "The Fundamentals Of Our Economy Are Strong!"

http://www.talkingpointsmemo.com/archives/2009/01/nrcc_the_fundamentals_of_our_economy_are_strong.php

:rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl:

[skoalyman]

98. JeBus they must of been wearing welders glasses

and threw the rose colored glasses away:crazy:

[antigop]

82. Oh, for cryin' out loud....Tax breaks in the works for U.S. multinationals

http://financialweek.com/apps/pbcs.dll/article?AID=/20090123/SUB/901239984/1036

With the U.S. economy slowing and credit still scarce, two proposals have popped up to help embattled companies tap cash trapped in offshore subsidiaries.

Morgan Stanley, United Technologies and General Electric are promoting a plan to Congress that would waive U.S. tax penalties on businesses that borrow from their offshore units, Bloomberg reported recently. The proposal would allow foreign subsidiaries to lend cash to their parent companies for up to two years without triggering a tax that would otherwise be due. There is an estimated $655 billion earned offshore that has never been taxed by the U.S., Bloomberg said.

Honestly, this is beyond ridiculous. Make 'em pay the friggin' taxes.

[Robbien]

85. Porsche: a ‘Hedge Fund with a Carmaker Attached’

Last Oct. 29, Volkswagen experienced the kind of day that Oliver Stone must dream of making a movie about. The company’s stock rose from about 210 euros to 1,000 euros after Porsche announced it owned or had positions on 74.1 percent of the stock, making VW the most valuable company in the world.

The brief rise — shares quickly fell to 517 euros the next day — squeezed out short sellers who had been betting on VW shares to fall. Hedge funds were said to have lost between 10 billion to 40 billion euros. One billionaire investor committed suicide after losing more than $300 million.

While Porsche has made it known that it intends to take over Volkswagen, those few days in October were a wakeup call for those who didn’t understand the full scope of Porsche’s market ingenuity. That’s the subject of a news special, “Fast Bucks: How Porsche Made Billions,” that aired on BBC2 in Britain on Thursday night (you can watch it here with a British proxy IP address). In the program, Porsche is painted as “a hedge fund with a carmaker attached,” wrote the BBC.

“Just $1 billion of their profit comes from actually selling cars,” said Daniel Schafer, a writer for The Financial Times who is interviewed in the program. “But $6.8 billion from making bets on Volkswagen share price.”

http://wheels.blogs.nytimes.com/2009/01/23/porsche-a-hedge-fund-with-a-carmaker-attached/


Is there any car manufacturer who makes cars as its primary source of business any more?

[ozymandius]

92. calling it a day

Dow 8,077.56 Down 45.24 (0.56%)
Nasdaq 1,477.29 Up 11.80 (0.81%)
S&P 500 831.95 Up 4.45 (0.54%)
10-Yr Bond 2.622% Up 0.028
NYSE Volume 6,833,094,500
Nasdaq Volume 2,228,016,750

4:25 pm : Strength in tech, energy, and financial stocks helped the broader market shake off early weakness to finish the session 0.5% higher. Stocks had been down more than 2.6% at their session low.

Google (GOOG 324.70, +18.20) helped drive the tech sector 1.6% higher. Investors bid shares of the Internet titan higher after it announced better-than-expected fourth quarter results, which featured double-digit top and bottom line growth. Google's annual cash flow totaled roughly $25 per share, which is more than double that of Apple (AAPL 88.36, +0.00) or Microsoft (MSFT 17.20, +0.09).

The energy sector (+2.2%) put together a strong advance of its own as crude oil prices rebounded from a 5% loss to finish more than 4% higher at $45.60 per barrel. Crude advanced nearly 25% this week. Though oil staged a strong advance, demand concerns remain in focus.

Oil services outfit Schlumberger (SLB 41.00, +3.73) indicated a sharp drop in oil and gas prices caused a rapid and substantial decline in spending on exploration and production services. Its shares provided leadership to the energy sector in what some pundits believe was a short-covering rally. Schlumberger has been trading at multiyear lows in recent sessions, and reported this morning quarterly earnings results that fell short of the consensus estimate.

Financial stocks logged the best performance of the session. They advanced 3.4% with the support of other diversified financial services companies (+7.0%). Capital One Financial (COF 19.32, -2.62) was a laggard in the sector and traded at new multiyear lows; it reported a loss of $1.59 per share for the latest quarter. The results further underscore profit concerns and the threat of capital raises.

Such concerns have taken their toll on General Electric (GE 12.03, -1.45). The economic bellwether reported in-line earnings results and said it does not see a scenario where it would need to raise capital. Management also reiterated that it is maintaining its dividend. At GE's current share price, GE's dividend yield stands at almost 10%, leading many to quesion whether it is sustainable. GE registered new multiyear lows this session; its weakness undercut the industrial sector (-3.3%) and the Dow Jones Industrial Average.

Though overall credit conditions remain tight, cash rich companies are able to take advantage of depressed asset and securities prices by making acquisitions. According to reports, Pfizer (PFE 17.45, +0.24) may be looking to acquire Wyeth (WYE 43.74, +4.91) in a deal valued at more than $60 billion. Such a deal would help Pfizer rebuff concerns stemming from a narrowing product pipeline and increased competition from generic drug makers.

Stocks finished with a weekly loss of 2.1%, which isn't quite as severe as the 4.5% loss registered last week. Stocks are down almost 8% for the month.DJ30 -45.24 NASDAQ +11.80 NQ100 +0.7% R2K +0.3% SP400 +1.0% SP500 +4.45 NASDAQ Dec/Adv/Vol 1406/1268/2.18 bln NYSE Dec/Adv/Vol 1386/1663/1.42 bln