STOCK MARKET WATCH, Wednesday February 25

[ozymandius]

Source: du

STOCK MARKET WATCH, Wednesday February 25, 2009

Bush Administration Officials Under Indictment = 0
Financial Sector Officials Under Indictment = 0
Financial Sector Officials In Prison = 1

AT THE CLOSING BELL ON February 24, 2009

Dow... 7,350.94 +236.16 (+3.21%)
Nasdaq... 1,441.83 +54.11 (+3.90%)
S&P 500... 773.14 +29.81 (+4.01%)
Gold future... 969.50 -25.50 (-2.63%)
30-Year Bond 3.49% -0.03 (-0.88%)
10-Yr Bond... 2.80% +0.02 (+0.79%)

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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 WrapUp

Global Downside Breakout
BY FRANK BARBERA, CMT

Well, I don’t know about you, but I know I will sleep a lot better tonight having tuned in for Mr. Bernanke’s semin-annual ‘pearls of wisdom.’ According to Uncle Ben, who testified today in front of the Senate Banking Committee, “there is a reasonable prospect that the recession will end this year,” provided that the credit markets and financial markets operate “normally.” I know I feel better already, don’t you? Of course, if we go back and look at some of Uncle Ben’s prior comments, well, maybe we might not feel so confident. Let’s see, I guess it was June of 2008 when he addressed the International Monetary Conference in Barcelona, Spain. Back then, Bernanke summarized his outlook stating,

“The Outlook:

With this broader perspective as background, I turn now to a brief discussion of the current situation and outlook. Broadly speaking, the functioning of financial markets has improved of late, but conditions remain strained and some key funding and securitization markets have shown only tentative signs of recovery. Some borrowers, such as highly-rated corporations, retain good access to credit, but credit conditions generally remain restrictive in areas related to residential or commercial real estate. Residential construction continues to contract, and the overhang of unsold new homes remains large, although it has declined some in absolute terms. Consumer spending has thus far held up a bit better than expected, but households continue to face significant headwinds, including falling house prices, a softer job market, tighter credit, and higher energy prices, and consumer sentiment has declined sharply since the fall. Businesses are also facing challenges, including rapidly escalating costs of raw materials and weaker domestic demand. However, the strength of foreign demand for U.S. goods and services has offset, to some extent, the slowing of domestic sales. Overall economic growth was quite slow but apparently positive in both the fourth quarter of 2007 and the first quarter of this year. Activity during the current quarter is also likely to be relatively weak. We may see somewhat better economic conditions during the second half of 2008, reflecting the effects of monetary and fiscal stimulus, reduced drag from residential construction, further progress in the repair of financial and credit markets, and still solid demand from abroad. This baseline forecast is consistent with our recently released projections, which also see growth picking up further in 2009. However, until the housing market, and particularly house prices, shows clearer signs of stabilization, growth risks will remain to the downside. Recent increases in oil prices pose additional downside risks to growth. Our decisive policy actions were premised on the view that a more gradual reduction in short-term rates could well have failed to contain the financial and economic problems confronting us. For now, policy seems well positioned to promote moderate growth and price stability over time.”

As we re-read his comments from only a few months ago, we see a relatively perfectly well balanced, carefully crafted, very “close to the vest” analysis. Yes, it is true that the analysis touched on many salient points both PRO and CON, accurately noting the deterioration in housing and the slow down in consumer spending. However, in reading and re-reading many of the speeches by many Fed members, not just Bernanke, it is always in the conclusions where things go wildly to pieces. In concluding that “we may see somewhat better economic conditions during the second half of 2008,” and “growth picking up in 2009,” “moderate growth and price stability” ...What? How about the potential for a heart-stopping recession, or did that thought ever cross your mind? I guess not, as the Federal Reserve has been wrapped up in its own grandiose view of its dominion over the world economy. As new readers should understand, prior to six months ago, recessions had been officially outlawed by the Fed and consigned to the trash bin of history. Well, with the entire Western world sinking into nothing less than a global DEPRESSION six months later, one can only look back and wonder what the heck the Fed was collectively smoking, starting with Greenspan and ending with Bernanke.

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

[DemReadingDU]

16. It's all an illusion

What did TheWatcher call it yesterday. Oh, Perception Management. Yeh, that's the ticket.


BTW, good toon today. The banks are ticking time-bombs, but a temporary nationalization gives them a longer fuse before the bomb explodes.

[ozymandius]

2. Today's Reports

10:00 Bernanke Monetary Policy Report
Semi (again?)

10:00 Existing Home Sales Jan
Briefing.com 4.80M
Consensus 4.79M
Prior 4.74M

10:30 Crude Inventories 02/20
Briefing.com NA
Consensus NA
Prior -138K

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

[UpInArms]

38. U.S. Jan. existing home sales fall 5.3% to 4.49 million rate - lowest in 12 years

19. U.S. Jan. existing home sales fall 5.3% to 4.49 million rate
10:00 AM ET, Feb 25, 2009

20. U.S. Jan. existing-home sales lowest in 12 years
10:00 AM ET, Feb 25, 2009

21. U.S. Jan. existing-home prices fall 14.8% vs. year earlier
10:00 AM ET, Feb 25, 2009

22. U.S. Jan. existing-home inventories fall 2.7% to 3.6 million
10:00 AM ET, Feb 25, 2009

23. U.S. Jan existing-home sales less than 4.80 million expected
10:00 AM ET, Feb 25, 2009

[UpInArms]

39. Petroleum Inventories Report (refined fuels are up)

08. Crude extends gains after inventories data, rising near $41
10:32 AM ET, Feb 25, 2009

09. U.S. gasoline inventories fall 3.4 million barrels last week
10:31 AM ET, Feb 25, 2009

10. U.S. distillate inventories rise by 800,000 barrels
10:31 AM ET, Feb 25, 2009

16. U.S. crude inventories rise 700,000 barrels last week: EIA
10:30 AM ET, Feb 25, 2009

(edited to clarify title line)

[ozymandius]

3. Oil near $40 as market digests Bernanke (foolish) comments

SINGAPORE – Oil prices hovered around $40 a barrel Wednesday in Asia as investors mulled optimistic comments from the top U.S. central banker against more bleak news that showed a deepening recession.

Benchmark crude for April delivery rose 9 cents to $40.07 a barrel by late afternoon in Singapore on the New York Mercantile Exchange. The contract rose $1.52 Tuesday to settle at $39.96.

Federal Reserve Chairman Ben Bernanke told Congress on Tuesday the worst recession in decades might end this year, and that regulators aren't planning to nationalize banks.

Investors, battered for months by news of massive layoffs and huge bank losses, took heart from the comments.

....

Investors will also be watching crude inventory numbers for signs of rising oil demand when the Energy Department releases its report Wednesday.

Analysts expect crude stocks for the week ended Feb. 20 grew by 2.25 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

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

[ozymandius]

4. Asian stock markets rise after Bernanke comments

HONG KONG – Asian stocks rose Wednesday, taking their cue from Wall Street after U.S. Federal Reserve Chairman Ben Bernanke said the government had no plans to nationalize hard-hit banks and the recession might end this year.

Gains across the region were modest compared with U.S. markets, where the major benchmarks surged from near 12-year lows in a broad rally led by shares in financial companies.

Japanese shares snapped a three-day losing streak as the yen swooned to a three-month low against the dollar and amid speculation that the government may use public funds to buy stocks. The upswing came despite news the country's trade deficit hit an all-time high as global demand evaporates.

As in the U.S., investors found a measure of comfort in Bernanke's comments that formally nationalizing the banks to ensure their viability "just isn't necessary." In recent days, the prospect of nationalization has weighed heavily on markets because of fears it would dilute share prices and turn over major decision to government regulators.

http://news.yahoo.com/s/ap/20090225/ap_on_bi_ge/world_markets

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Chopper Ben has been stress tested. Thus proving, once again, that he is held captive by the banks.

[ozymandius]

5. Big banks get ready for White House stress tests

WASHINGTON – The Obama administration is getting ready to conduct "stress tests" on the nation's biggest banks to judge whether they can hold up if the recession were to worsen.

Banking regulators plan to scrutinize the financial conditions of Citigroup Inc., Bank of America Corp. and more than a dozen other institutions that have received billions from the Treasury Department's $700 billion bailout pot.

The tests, expected to start on Wednesday, will help regulators decide whether the banks have sufficient capital — and the right mix of it — to withstand any additional shocks to the economy over the next two years.

....

"The outcome of the stress test is not going to be fail or pass," added Bernanke, whose agency is the primary regulator for many of the country's largest banks. "The outcome of the stress test is, how much capital does this bank need in order to meet the credit needs of borrowers in our economy?"

....

Bernanke says the economy is likely to keep shrinking in the first six months of this year after posting its worst slide in a quarter-century at the end of 2008.

http://news.yahoo.com/s/ap/20090225/ap_on_bi_ge/economy

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Bernanke is boxed-in. Do we need any more evidence?

[ozymandius]

6. Some Slightly Good News: Feds Trying to Engage in More Serious Oversight of Citigroup

To be honest, I'm not quite sure how to read this Wall Street Journal piece, since this is a spat between two parties, with a "he said, she said" quality to it. However, the title, "Citigroup Chafes Under U.S. Overseers:" suggests a bias in favor of Citigroup."Overseers" is a weak word, suggesting Uncle Sam really doesn't have legitimate authority to take the actions it is demanding.

But that assumes both viewpoints are equally legitimate, when the case can be made that they aren't. Poor abused Citigroup is unhappy that the government is trying to leash and collar the behemoth company. They somehow seem unable to process the fact that if they had done the same lousy job with a smaller institution, it would already have been seized by the FDIC and put in to receivership.

This viewpoint is not an exaggeration of the facts on the ground. As former bank regulator William Black points out in "Why Is Geithner Continuing Paulson's Policy of Violating the Law?":

Whatever happened to the law (Title 12, Sec. 1831o) mandating that banking regulators take "prompt corrective action" to resolve any troubled bank? The law mandates that the administration place troubled banks, well before they become insolvent, in receivership, appoint competent managers, and restrain senior executive compensation (i.e., no bonuses and no raises may be paid to them). The law does not provide that the taxpayers are to bail out troubled banks.

The other bit of bias is in how the piece characterizes the relationship. It mentions the 7.8% equity state the government holds, but fails to acknowledge the additional guarantees of what amounts to $250 billion of loans (once you parse out first losses and loss sharing arrangements). The story also depicts a possible effort to break up the bank as politically motivated, as opposed to something that would make managerial sense. The span of control in the bank is simply too large, and the synergies between many of the businesses are weak to non-existent. Plus every study ever done of banks in the US had found that banks, once they exceed a certain asset size, show a slightly INCREASING cost curve, as in their costs/revenues rise. Big banks are not more efficient; the evidence is that they become a tad less efficient the bigger they get.

http://www.nakedcapitalism.com/2009/02/some-slightly-good-news-feds-trying-to.html

---

ITA! These big banks do not create wealth even when they are functioning as they should. They concentrate wealth. The mere size of the big banks creates the incentive to adopt sloppy standards and practices from a profit motive standpoint. When a bank has concentrated its customer base through mergers and acquisitions - the incentive to create income for the company amplifies, at the expense of its customers through "mistakes" and mysterious charges.

I see no upside from any company becoming so large, so insulated and removed from the interests of its customers. On moral and pragmatic grounds these banks should be nationalized, broken into little pieces and regulated to the point that M&A activity becomes painfully difficult.

[AnneD]

18. Morning Marketeers.......

:donut: and lurkers. This can be a culturally confusing time to live in Houston. We are wrapping up Mardi Gras and we have Go Texas day on Friday-thus the explanation as to why Mardi Gras beads with chili peppers are popular.

There is one thing though that is not confusing. To paraphrase my dear brother...."Ben may think he is hot shit on a silver platter but he's nothing more than a cold turd in a Dixie cup." As his term winds on and the full ignorance/damage/mess that his predecessor made becomes more apparent-the more the average American realizes he has been screwen. The hold outs may say we are in a recession and golly gee things will get better the last half of 09, but I am of a different mind.

I think we are bouncing at the top of a depression. If, and this is a mighty big if, Obama's first attempt at stimulus succeeds, we might not have such a bad depression. But I think the wrong voices are being listened too. It will take Obama several tries to hit the right mix. But I am optimistic because I do believe he will triumph. I also think he will continue to work with the opposition but it is hard to work with a disorganized opposition.

Well Jimmy's heading back into the fog for now.

Happy hunting and watch out for the bears.

[Hugin]

31. It's time for Citi to take one last trip to the beach... Chittagong!

Those gentlemen in Chittagong, Bangladesh know how to deal with things... "Too Big To Fail".

Check out this link... (Warning Dialup DUers! Very large picture.)

http://www.shipspotting.com/modules/myalbum/photo.php?lid=709214&cid=70

Take special note of the crew in the lower-left hand corner of the picture...

[ozymandius]

7. Mysterious plans (by Paul Krugman)

I’m trying to be sympathetic to the various plans, or rumors of plans, for bank aid; but I keep not being able to understand either what the plans are, or why they’re supposed to work. And I don’t think it’s me.

So the latest is that we’re going to convert preferred stock held by the government to common stock, maybe. James Kwak has a good explanation of what that’s all about. And it’s not at all clear what is accomplished thereby.

....

What we want to do is clean up the bank’s balance sheet, so that it no longer has to be a ward of the state. When the FDIC confronts a bank like this, it seizes the thing, cleans out the stockholders, pays off some of the debt, and reprivatizes.

....

I just don’t get it. And my sinking feeling that the administration plan is to rearrange the deck chairs and hope the iceberg melts just keeps getting stronger.

http://krugman.blogs.nytimes.com/2009/02/24/mysterious-plans/

[Tansy_Gold]

12. I'm with Krugman. It's a mystery how anyone can think that.. . . .

. . . . just by making the banks lend paper money printed by the truckload by the government, the economy will miraculously recover.

BANKS DON'T MOVE THE ECONOMY. Labor moves the economy. Labor makes wealth. Labor takes the coal and the iron ore from the ground and makes it useful. Adds value to it. Labor tills the soil and plants the seeds and reaps the harvest. Labor builds the houses. Labor makes the cars and the shoes and the pencils and the computers and the chairs and the pots and pans and the plumbing fixtures and the shovels. Banks don't do any of this.

Jobs jobs jobs jobs.

It doesn't make any difference how low your mortgage interest rate is: If you don't have steady income, you can't pay the bills. Not the mortgage. Not the car note. Not the electric bill. Not the groceries.

And I have to scream every time I hear anyone -- I don't care if it's Geithner or Obama or Olbermann or Maddow or ANYONE -- say that we need to get the credit flowing so companies can meet their payrolls. ANY COMPANY THAT HAS TO BORROW TO MEET ITS PAYROLL IS IN DEEP FINANCIAL TROUBLE.

You make payroll out of cash flow. You start small, with yourself, your spouse, your friends, your partners, working for a stake in the company. When you establish cash flow and start to grow, you hire employees. You don't hire employees unless you can afford to take money/profit out of your own pocket to pay them. It doesn't change just because the company has a million employees.

And I have to laugh when I listen to someone who is supposedly as intelligent, as educated, as savvy as Obama go off on this fear of protectionism rant. When are they going to realize that the U.S. economy -- AND U.S. WORKERS -- have been the victims of protectionism from the very start? Oh, sure, he gave lip service to the "we're gonna tax those corporations that shift jobs overseas so they can make more money instead of paying American workers," but that's shutting the door after the cows, the horses, the pigs, the chickens, and even the rats have left the barn and the whole structure is burning down.

But I cry when I listen to the bright sunny hopeful tone that seeks to reassure us and tell us everything is gonna be okay. Just fine and dandy. All the kids will go to college. The new cars will be rolling off the assembly lines. Every family will have its own home. We'll run the country on pollution-free solar and wind energy. We knew different in the 70s. Yes, the 70s. Not the wild and wooly 60s, but the 70s, when the real back-to-the-land movement started. "Less is more" was the mantra then. Obama didn't even hint at that possibility.

And why not? That's another mystery.



Tansy Gold

[DemReadingDU]

15. I think Obama was talking to the world

A lot of people around the world were most likely listening to Obama. Heck, Obama does speak so much better than Bush!

So everyone is listening, and Obama is reassuring everyone that it's all gonna be ok, it just takes a little bit of time, and money to get those credit lines flowing again. But not to worry, recovery is just around the corner, just like we have had.

Uh, Obama, I don't think so. Like Tansy says, people need jobs, jobs for income to purchase the necessities. If they don't have a job, they can't get credit to buy a car, or a house. The jobless don't care if the credit is flowing or not. I betcha the jobless and homeless don't even use a bank.

[Tansy_Gold]

26. y'know, I still have my reservations about Obama

Oh, I'm like all the rest. I get teary-eyed at some of the soaring rhetoric and the lofty goals, but after all the analysis is over, I go back to the hard cruel reality of life and I remember that soaring rhetoric and lofty goals do not a presidency make.

He's five weeks into his presidency and he's already acting like he's going to go down in history like FDR or Lincoln. I think he'd do well to take a hard lesson from Jimmy Carter.

Carter's lofty goals got him nowhere. He got his recognition, his Nobel Peace prize, two decades after he left office. The good he's done for the world has been hands-on. I think of Jimmy Carter in a flannel shirt hammering nails in a Habitat house and I compare that image to boooosh. . . .doing anything. Carter got real. Of course, he was an engineer, not a lawyer. He knew things have to work in order to work, if you know what I mean.

I remember being in a class a few years ago and watching a documentary about the women who went to work during WW2. When it was over, the professor asked us what were some of the glaring inaccuracies of the film. Most of us in the class were 35+ --- I was 50 at the time -- but only a few of us recognized that for one group of women going to work for wages was nothing new. African American women had been working outside the home for wages for years. So when the war was over and the returning soldiers came back to their jobs and forced the women back into the house, many of those women were upset at losing their independence, but many were also glad to be going back to the "comfort" of being wives and mothers and having a man to provide for them. That wasn't an option for the black housekeepers and maids and nannies whose lives hadn't changed all that much during the war years.

Obama needs to go back to those roots -- the working people's roots, regardless of color. Bill Clinton should have been able to do it, but he couldn't -- or he'd never have signed away Glass-Steagal. Boooosh certainly couldn't have. And I think in a way that was part of Obama's campaign appeal. He had that attachment to the real world and he made a lot of people believe he could maintain that connection even in the lofty circles of great power.

He needs to get his hands dirty. Instead of celebrating how thoroughly he has left that heritage behind, he should embrace it, not just as heritage but as currency.

And he also needs to stop seeing himself as Savior of the World. That's part of what caused the current calamity -- the booooshies saw themselves as remakers/rulers of the world. And it's not possible. Clean up your own house, Barack, and worry about the neighbors' dirty curtains later. Fix the American economy, sir, and I can pretty much guarantee you that the rest of the world will take care of its.

Worry less about tomorrow, Mr. President, and focus on today. Booosh was right about one thing: History won't matter to us because we'll all be dead. Look out for the living and let history reach its own conclusions.



Tansy Gold

[TalkingDog]

54. Working women: Damned if you do....

That has always been my smack at 2nd wave feminist; they only speak to college educated middle-class (and up) women.

In the 70's women "got to choose" whether they "wanted" to work.

Oh, really?

Tell that to my mother, who went from working on her Daddy's tenament farm to waitressing to factory work. And during the 70's recession worked 2 other part time jobs to keep us in a 4 room cinderblock shack.

I was amazed to see young women in college (who were presumably also learning critical thinking) never quite get the disconnect between feminist theory and harsh reality. Poor and minority women always "got" to work. If they made the same choice middle class women made to be "stay at home moms" they were labled as welfare queens, often coming under the scrutiny of DSS.

For all the strides it made,feminism of the 70's era was just another unwittingy divisive tool in the class and culture war.

[tclambert]

17. Businesses do borrow to start up and expand.

For a while, and sometimes it's years, they may meet payroll with borrowed money. Once they get the new line established, their business plan has to include not just meeting payroll, but making payments on the loan they took out to start up or expand. Sometimes during normal operation, they may need short term loans to smooth out cash flow, such as during a recession, or to stock up for the Christmas rush. That doesn't necessarily mean they are in deep trouble. Part of the reason Ford is not in deep trouble compared to GM and Chrysler is that they borrowed lots of money before the crisis hit.

And last night Obama did say, "We will restore a sense of fairness and balance to our tax code by finally ending the tax breaks for corporations that ship our jobs overseas." That line got thunderous applause from the Republicans as well as the Democrats.

And he said, "It’s an agenda that begins with jobs." OK, like you, I wish he had said, "Jobs, jobs, jobs, jobs." Still, I think he gets it.

When Obama talks, I'm hopeful. When Geithner talks, not so much.

[Tansy_Gold]

27. In the days of venture capital, maybe, but not in the real world

Most businesses don't start with much beyond the original owners' personal capital (or the investment of suckered friends). If they don't have the capital to start, then they start with labor -- their own.

But you don't walk into a bank and say, "Hey, I have this great idea, but I have no money for buildings or machinery or inventory or payroll." You have to have some collateral. Once you prove your ability to cash flow, you can borrow, but that's for expansion, not for payroll.

If a business isn't making enough money to pay its employees, it's a failed business. or, at best, struggling. And instead of giving a struggling business more money via credit, the business should be examined as to WHY it's struggling and what to do to pull it out of that struggle. Maybe it's simply no longer viable and should be shut down, assets liquidated, employees cut loose. Without that kind of change, what's accomplished? Nothing. A big fat Greek nothing.

I guess my point is that there's been so much emphasis on the NECESSITY for credit to keep businesses running and meeting payroll. NO ONE ever suggests that maybe a really successful business can operate without credit to fund its daily operations/expenses. Maybe it's time to wean our economy from credit, from the cancerous need to expand, grow larger, find new markets, etc. But no one ever talks about that.


Except


Tansy Gold

[Mojorabbit]

50. When my husband got out of medical school

and finished his internship he started his own practice. I worked double shifts and extra days for years supporting him while he got it going. Still we had bad months and good and there was a time during the 80's recession where I was using one credit card to pay another to keep us going till he got established. We do use credit for big ticket items still. His malpractice policy did away with quarterly and monthly payments so every year we have to come up with 25 grand for the premium. THe first time they did this we had three months notice. Now We save all year for that bill but always come up a bit short and credit helps when the office roof needs replaced etc. There is a place for it esp when unexpected large bills occur. We would never use it to make payroll though. It would seem to me that there is a problem if one cannot make payroll from incoming cash flow.

[tclambert]

71. Don't have stats, just anecdotes to back it up, but many businesses do start on borrowed money.

It was my impression that the typical scenario involved writing up a business plan for the bank's approval. That's what held up one friend from starting a performance auto parts store for a couple of years--not raising capital, the necessity of writing up the business plan. It was my impression from discussions with him that this is a very normal practice, the business founder gets a bank loan based on a business plan that sells the bank on becoming a temporary partner in the venture.

I'm sure it is for many business ventures, such as buying a McDonald's franchise. "Hey, banker, I want to buy a McDonald's. Can I borrow sumpin' to pay the franchise fee?" ($45,000) I'm sure a prudent banker would require a prospective business owner to put up part of the money, to "put some skin in the game," but I suspect very few McDonald's franchisees came up with 100% cash to get started. That could delay your start for years when the business itself could pay for the startup loan. Any bank would have a model for these standard businesses, how much down payment and what kind of work history they want to see from the prospective owner. And if you want to add a drive-through window, you can get a loan for that, too.

Many startups I've read about do not make profits the first few years. Some have made no profits when they reach the point of issuing an IPO. In fact, the IPO is often financed.

I know there was a book a few years ago called, what was it, The Millionaire Next Door (thanks Google) by Thomas Stanley (1996), in which he said these small businesspeople next door do everything on credit, even buying lunch or gasoline. He said that on Oprah.

When I worked for a small consulting company, I knew the two founders had to have a line of credit to guard against any month in which a client company paid late. They were quite successful. The main partner was the best salesman I have ever met. They eventually sold out to a larger firm for millions. But I know they often worried about making payroll. Clients can be so unreliable. They refused to make contracts with certain companies who had a bad reputation for delaying payments on their contractual obligations.

I'm not sure any of this is on point, though. I started out quibbling with something you said that I thought was too overstated. Oh, yeah, "ANY COMPANY THAT HAS TO BORROW TO MEET ITS PAYROLL IS IN DEEP FINANCIAL TROUBLE." That's just not so. If it happens every payday, then, yeah, they need to control their cash flow better. But any, ANY, prudent company has to have a line of credit ready to deal with a short term problem in cash flow. The real problem for most businesses now, though, is not the banks, it's the recession. Cash flow has been reduced to a trickle for a long time now. A lot of businesses may not have the financial strength to hold on until the spigot gets . . . Oh, hell, I lost control of the metaphor.

[Dr.Phool]

97. Walk in to a bank with a plan for a start-up, they'll laugh you outta the place.

When we bought an existing business, a restaurant, a couple of years ago, they wouldn't do it. What they did do, was give me a HELOC for the purchase. The collateral was my home.

The same thing applied to my BIL &SIL, when they bought a meat warehouse. Our suppliers offered us 14 & 30 day lines of credit, but we never used them.

And, I agree. Anyone who has to borrow money for payroll, has a very flawed business plan, in is living on borrowed time.

[Hugin]

20. This would be my plan: Economic Recovery Bonds

These would be like the 'War Bonds' of days gone by... Except, they would facilitate a financial recovery.
I've been thinking about this for awhile now.

"Economic Recovery Bonds"
Motto: For those Americans who don't mind helping their neighbors and children.


Features:

- Guaranteed 4% interest at maturity. (5, 10, and 15 year Bonds)
- Bond Purchase Tax Deductible. (Take THAT you slimy Tax-Cut chanting Republicans.)
- Payoff at maturity Tax Free. (and again... Take THAT you uncaring Anti-American CNBC talking heads and CBT traitors.)
- WRT a retirement investment these Bonds would be a much better deal than a 'Retirement Savings Account'.

Uses:

- The proceeds from these Bonds would be used to help Individual Americans and Some Small Businesses.
- Would provide the means for a Government Entity to provide relief for Upside-down Mortgage Holders, Student-loans/Grants, Credit Card problems, Catastrophic Medical Finance etc...
- Benefit loans would be available to any American Citizen. However, the amount of interest paid on a loan would be inverse to the borrower's ability to pay. But, never more than 4%.

A few more comments...

Here's how this fund would work. It would allow Judges or some other yet to be determined Agency to reset and fund Individual Mortgage terms (principle and interest) via an escrow set up in the Individual's name. If the original Lender insists on a pay-off that would also be set on a 'Take-it-or-leave-it' basis.

I'm sure there are things I haven't considered, but, to me... This is a very workable plan.

Edit: Is anyone else having problems with weird line breaks here at DU lately? It's driving me nuts.

[Pachamama]

24. I'd invest in my neighbors and community and country like that!

Interesting idea....you should post it on the White House blog and comments...they do say Obama is reading atleast 10 a day....

I only know that I would rather invest in the neighbors, community and citizens around me before any stock that is on the market these days. This would do far more than anything I've seen proposed so far. Granted I'm sure that there would be much to be attended to in order to make this work, but I'm sure it could be done to be viable and work.

Make it available and they will come.... :hi:

[Hugin]

25. Thank you Pachamama.

Yes, I'm sure it needs some refining.

This is not a totally unknown process. It should be patterned on the established Loan Programs which are geared to providing low amount loans to people in developing countries. There are a couple of them running right now, but, I can't think of their names off hand.

It's really important that no person walk away from this program homeless. The process should determine if the potential borrower's situation can be altered so they can stay in their home or if not, a workable situation found and established for them...

[tama]

59. Why do you need

White House and Obama and dunno what all officials for that kind of idea? Seems perfectly doable and even better without the pompous class, at the grass roots level.

If you seriously believe in that idea, why not start making it happen yourself, instead of expecting someone other (bigshot) to do it for you?

[Pachamama]

23. "The Hindenburg going to Rescue the Titanic "

Hi Ozy....that's the best description I can come up with to describe that sinking feeling you have about the administrations plan to rearrange the deck chairs and hope the iceberg melts...

Trust your feelings....they are right....sadly... :hi:

[Warpy]

52. If Krugman doesn't get it

you can be sure the plans are a bunch of obfuscation to cover an ongoing theft of taxpayer money.

All the rats want just a little more so that when they leave the ship, they can all motor off in yachts instead of having to swim for it with the rest of us.

[ozymandius]

8. Bernanke's Hide and Seek Delaying Tactics

The ever changing model of nationalization took another leap towards a resolution of sorts today. Bernanke's new plan amounts to a game of hide and seek, hoping the mess resolves itself over time. Please consider U.S. Will Take Bank ‘Ownership’ Stakes Only as Losses Climb.

The Treasury will buy convertible preferred stock as needed in the 19 largest U.S. banks after stress tests to determine how much capital is needed to address losses in a “worse” case scenario, Bernanke told lawmakers at a Senate Banking Committee hearing today. The shares will be converted to common only as the extraordinary losses happen, he said.

“It doesn’t have an ownership implication until such time as those losses which are forecast in the bad scenario actually occur,” the Fed chief said. Bernanke also said that the so- called stress tests that regulators will run on the 19 banks will look at potential losses over a two-year horizon if the economy worsens.

Bernanke’s remarks come after some investors expressed concern that the Treasury’s capital-injection plan would hurt banks’ shareholders and lead to government ownership stakes. The chairman added that it will be up to Treasury Secretary Timothy Geithner and the Obama administration to determine whether more bailout funds will be needed from Congress.

“How much more we’ll have to do depends on the state of the banks, it depends on how the economy evolves and it depends on the margin of safety we think we want to have,” Bernanke said today. He separately warned that “if we don’t stabilize the financial system, we’re going to founder for some time.”

....

The purpose of the reviews isn’t to provide a “pass” or “fail” grade for banks. Instead, the government wants to ensure that banks can meet their obligation to lend even if the economy worsens, he said.

My Comment (Mish): The purpose of the "stress test" is to pretend something is being done when it isn't. No one can possibly believe any announced results. Neither the Fed nor the Treasury has any credibility at this point.

....

The game Bernanke is playing will allow the Fed to slowly bleed taxpayers to death by 100 tiny cuts. Each cut will all the Fed to inject taxpayer blood (capital) in drips to the banks while pretending the cancerous patient is in good health. Meanwhile, Bernanke is hoping the taxpayer will not notice. This is essentially the same model that left Japan's economy stagnating for over a decade.

http://globaleconomicanalysis.blogspot.com/2009/02/bernankes-hide-and-seek-delaying.html

[Pachamama]

19. I thought a big red flag was Bernanke's comment about the stress tests not being "Pass or Fail"

Isn't that the point to be Pass or Fail? Or am I missing something? I listened closely to the testimony yesterday and then watched all the headlines across the the newswires and news websites touting everything rosy. I agree with DemReadingDU above saying its all an illusion and "Perception Management". The market might be up again on all the giddyness and excitement of them taking heart of what Bernanke and Obama said last night, but the reality is far different from what they are saying it is. Its a ticking time bomb and I really don't think there is much time left on the timer. :scared:

[ozymandius]

80. That's Bernanke-land logic.

If students were tested this way then anything below a passing grade would indicate how many points need to be thrown at them to make them appear competent.

[MilesColtrane]

108. If those "stress tests" involve hooking up electrodes to the nether regions...

...of the bank's CEOs, then I'm all for them.

[ozymandius]

9. Japan Exports Fall By 46% in January, Producing Record Trade Deficit

Japan has been hit by a double-whammy: the global fall in trade, made worse by its (formerly) rising yen.

While deteriorating conditions in China generally get more media attention, the falloff in Japan is stunning and serious. Japan has spent more than a decade stagnant, but the overall growth figures mask the fact that the domestic economy contracted, while the export sector exhibited good growth.

The export plunge (December's results horrid too, a 35% fall in exports), means that Japan's only engine of growth has gone into stall. China, by contrast, is not as dependent of trade for its overall performance as is popularly believed (commercial real estate and infrastructure spending have also been important sources, although CRE has taken a dive too).

The fact that Japan is now running trade deficits also means they will not be accumulating foreign exchange reserves, specifically buying Treasuries (Japan could still buy Treasuries to lower the value of its currency, but the terrible economic news has already put the yen on a downward path).

Bloomberg story here

Naked Capitalism comments here

I recall a story claiming that Japan's economic situation has fallen past Recession and is now in a Depression. Evidence gathers to support his assertion.

This situation with the yen will also wreak havoc with the carry trade. This will make it more difficult to finance any stimulus package. Japan is an isolated buyer of US treasuries. Japan's situation, through various aspects of globalization, will blunt demand from other areas of the world because the yen has been the favored currency for carry trade operations.

So I ask: Now what? :shrug:

[Festivito]

10. Debt: 02/23/2009 10,839,526,591,486.90 (UP 768,177,322.44) (Teensy tiny.)

(SMALL in capital letters.)

= Held by the Public + Intragovernmental(FICA)
= 6,529,919,612,154.59 + 4,309,606,979,332.31
DOWN 426,861,213.78 + UP 1,195,038,536.22

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:
Every 14 seconds we net gain a another American, so at the end of the workday of this report, there should be 305,856,772 people in America.
http://www.census.gov/population/www/popclockus.html
Currently, each of these American's owe $35,439.88.
A family of three owes $106,319.63. (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 10,434,736,431.11.
The average for the last 30 days would be 7,304,315,501.78.
The average for the last 31 days would be 7,068,692,421.08.
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$/day.
There were 23 reports in 34 days of Obama's part of FY2009 averaging 0.28B$ per report, 0.20B$/day so far.
There were 98 reports in 146 days of FY2009 averaging 8.31B$ per report, 5.58B$/day.

PROJECTION:
There are 1,427 days remaining in this Obama 1st term.
By that time the debt could be between 12.8 and 20.9T$.
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)
02/23/2009 10,839,526,591,486.90 BHO (UP 212,649,542,573.82 so far since Obama took office.)

Fiscal Year ends: Sep 30
Borrowed in FY1993: (Maybe later.)
Borrowed in FY1994: 281,261,026,873.94
Borrowed in FY1995: 281,232,990,696.07
Borrowed in FY1996: 250,828,038,426.34
Borrowed in FY1997: 188,335,072,261.61
Borrowed in FY1998: 113,046,997,500.28
Borrowed in FY1999: 130,077,892,735.81
Borrowed in FY2000: _17,907,308,253.43 Bill alone
Borrowed in FY2001: 133,285,202,313.20 Bill and George
Borrowed in FY2002: 420,772,553,397.10 All George
Borrowed in FY2003: 554,995,097,146.46
Borrowed in FY2004: 595,821,633,586.70
Borrowed in FY2005: 553,656,965,393.18
Borrowed in FY2006: 574,264,237,491.73
Borrowed in FY2007: 500,679,473,047.25
Borrowed in FY2008: 1,017,071,524,650.01
Borrowed in FY2009: 814,801,694,574.50 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
02/02/2009 +046,334,807,167.90 ------------********** Mon
02/03/2009 -000,138,225,404.41 ---
02/04/2009 -000,068,491,025.50 ----
02/05/2009 +046,668,131,793.54 ------------**********
02/06/2009 +000,340,839,567.98 ------------********
02/09/2009 -000,572,980,736.98 --- Mon
02/10/2009 +000,388,825,726.33 ------------********
02/11/2009 -000,221,760,520.78 ---
02/12/2009 +043,810,585,841.25 ------------**********
02/13/2009 -000,268,428,512.00 ---
02/17/2009 +028,425,868,676.29 ------------********** Tue
02/18/2009 +000,178,127,394.43 ------------********
02/19/2009 +012,906,622,783.22 ------------**********
02/20/2009 +035,338,367,983.16 ------------**********
02/23/2009 -000,426,861,213.78 --- Mon

212,695,429,520.65 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,174,894,788,227.83 in last 158 days.
That's 1,175B$ in 158 days.
More than any year ever, including last year, and it's 116% of that highest year ever only in 158 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 158 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=3753260&mesg_id=3753369

[Festivito]

105. Debt: 02/24/2009 10,843,355,058,860.91 (UP 3,828,467,374.01) (Small.)

(Just small.)

= Held by the Public + Intragovernmental(FICA)
= 6,530,393,414,088.52 + 4,312,961,644,772.39
UP 473,801,933.93 + UP 3,354,665,440.08

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:
Every 14 seconds we net gain a another American, so at the end of the workday of this report, there should be 305,862,943 people in America.
http://www.census.gov/population/www/popclockus.html
Currently, each of these American's owe $35,451.68.
A family of three owes $106,355.04. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 22 reports in the last 30 to 32 days.
The average for the last 22 reports is 10,134,451,473.97.
The average for the last 30 days would be 7,431,931,080.91.
The average for the last 32 days would be 6,967,435,388.36.
There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 75 reports in 112 days of GWB's part of FY2009 averaging 8.03B$ per report, 5.38B$/day.
There were 24 reports in 35 days of Obama's part of FY2009 averaging 0.24B$ per report, 0.19B$/day so far.
There were 99 reports in 147 days of FY2009 averaging 8.27B$ per report, 5.57B$/day.

PROJECTION:
There are 1,426 days remaining in this Obama 1st term.
By that time the debt could be between 12.8 and 20.8T$.
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)
02/24/2009 10,843,355,058,860.91 BHO (UP 216,478,009,947.83 so far since Obama took office.)

Fiscal Year ends: Sep 30
Borrowed in FY1993: (Maybe later.)
Borrowed in FY1994: 281,261,026,873.94
Borrowed in FY1995: 281,232,990,696.07
Borrowed in FY1996: 250,828,038,426.34
Borrowed in FY1997: 188,335,072,261.61
Borrowed in FY1998: 113,046,997,500.28
Borrowed in FY1999: 130,077,892,735.81
Borrowed in FY2000: _17,907,308,253.43 Bill alone
Borrowed in FY2001: 133,285,202,313.20 Bill and George
Borrowed in FY2002: 420,772,553,397.10 All George
Borrowed in FY2003: 554,995,097,146.46
Borrowed in FY2004: 595,821,633,586.70
Borrowed in FY2005: 553,656,965,393.18
Borrowed in FY2006: 574,264,237,491.73
Borrowed in FY2007: 500,679,473,047.25
Borrowed in FY2008: 1,017,071,524,650.01
Borrowed in FY2009: 818,630,161,948.50 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
02/03/2009 -000,138,225,404.41 ---
02/04/2009 -000,068,491,025.50 ----
02/05/2009 +046,668,131,793.54 ------------**********
02/06/2009 +000,340,839,567.98 ------------********
02/09/2009 -000,572,980,736.98 --- Mon
02/10/2009 +000,388,825,726.33 ------------********
02/11/2009 -000,221,760,520.78 ---
02/12/2009 +043,810,585,841.25 ------------**********
02/13/2009 -000,268,428,512.00 ---
02/17/2009 +028,425,868,676.29 ------------********** Tue
02/18/2009 +000,178,127,394.43 ------------********
02/19/2009 +012,906,622,783.22 ------------**********
02/20/2009 +035,338,367,983.16 ------------**********
02/23/2009 -000,426,861,213.78 --- Mon
02/24/2009 +000,473,801,933.93 ------------********

166,834,424,286.68 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,178,723,255,601.84 in last 159 days.
That's 1,179B$ in 159 days.
More than any year ever, including last year, and it's 116% of that highest year ever only in 159 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 159 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=3754939&mesg_id=3754993

[tclambert]

11. Listened to Obama's speech last night. I think he gets it.

I'm not sure Geithner gets it. But if he listens to his boss, maybe he will learn something. Big change from the previous admin, where the guy on top didn't get anything and his advisers basically gave up trying to explain it to him.

Text of the speech is available here: http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=132x8222763

"Now is the time to jumpstart job creation, re-start lending, and invest in areas like energy, health care, and education that will grow our economy, even as we make hard choices to bring our deficit down. That is what my economic agenda is designed to do, and that’s what I’d like to talk to you about tonight.

It’s an agenda that begins with jobs.

As soon as I took office, I asked this Congress to send me a recovery plan by President’s Day that would put people back to work and put money in their pockets."

...

"Over the next two years, this plan will save or create 3.5 million jobs. More than 90% of these jobs will be in the private sector – jobs rebuilding our roads and bridges; constructing wind turbines and solar panels; laying broadband and expanding mass transit.

Because of this plan, there are teachers who can now keep their jobs and educate our kids. Health care professionals can continue caring for our sick. There are 57 police officers who are still on the streets of Minneapolis tonight because this plan prevented the layoffs their department was about to make.

Because of this plan, 95% of the working households in America will receive a tax cut"

...

"to truly transform our economy, protect our security, and save our planet from the ravages of climate change, we need to ultimately make clean, renewable energy the profitable kind of energy. So I ask this Congress to send me legislation that places a market-based cap on carbon pollution and drives the production of more renewable energy in America. And to support that innovation, we will invest fifteen billion dollars a year to develop technologies like wind power and solar power; advanced biofuels, clean coal, and more fuel-efficient cars and trucks built right here in America.

As for our auto industry, everyone recognizes that years of bad decision-making and a global recession have pushed our automakers to the brink. We should not, and will not, protect them from their own bad practices. But we are committed to the goal of a re-tooled, re-imagined auto industry that can compete and win. Millions of jobs depend on it. Scores of communities depend on it. And I believe the nation that invented the automobile cannot walk away from it."

(Okay, that last sentence might have made the Germans scratch their heads as the invention of the first automobile is often credited to Karl Benz, though Nicolas-Joseph Cugnot (of France) can claim the invention of the first steam-powered automobile. The part that made my son's eyebrows go up was this next part, though.)

"And so tonight, I ask every American to commit to at least one year or more of higher education or career training. This can be community college or a four-year school; vocational training or an apprenticeship. But whatever the training may be, every American will need to get more than a high school diploma. And dropping out of high school is no longer an option. It’s not just quitting on yourself, it’s quitting on your country – and this country needs and values the talents of every American. That is why we will provide the support necessary for you to complete college and meet a new goal: by 2020, America will once again have the highest proportion of college graduates in the world.

I know that the price of tuition is higher than ever, which is why if you are willing to volunteer in your neighborhood or give back to your community or serve your country, we will make sure that you can afford a higher education."

********

At that point in the speech, my son and I agreed that Obama was swinging for the seats. He doesn't want to be just another President, he wants to be a great one. Now, I don't expect him to deliver on every point here, or achieve his goals by the most perfect, most efficient means. But it gives me considerable hope that he's trying. And unlike his predecessor, he will follow up on these plans and try to make them work, not simply "move on" and go on vacation. If George were still in office, I'm sure they'd still be trying to assure us we weren't really in a recession.

[Pachamama]

21. Obama is intelligent and has his heart in the right place - and gives great speeches. But that doe

not change the facts, and the facts are that the system is broken and while he may not have created this system and the failures and problems that he has inherited, his plan to fix it involves having the very same people (Rubin, Summers, Geithner etc.) who broke this system, advicing him on how to fix it. Sorry, but that is just a recipe for more failure. It gives me no confidence and it signals to me that there is not going to be the necessary changes. Here is a blog posting by ilargi from the "Automatic Earth" blog (thanks go to Demeter for turning me on to this site) that summarize it best - his very last sentence summarizes it best

"None of Obama's initiatives will do anything to save the banking system, or restore economic growth, or benefit the taxpayer. We're witnessing the liquidation of the US as a going concern.":

Ilargi: Bernanke says the recession will be over in a few months. MarketWatch has a deadline that says "Evidence mounts that recession's worst is past”. The Dow is up 3.5% when I write this. Now I'm sure Bernanke would look just fine with a party hat on his skull, but by now words like his this morning have become irresponsible. You can't keep on lying to people and expect them to always come back for more. The high and mighty in the markets are understandably giddy at the prospect of hundreds of billions of additional taxpayer dollars being moved into their failed institutions.

This is the cover of the February 15, 1999, issue of TIME Magazine (). Robert Rubin, Alan Greenspan and Larry Summers as the three wizards who will save the world. Ten years later, Rubin is the man behind the scenes of Obama's finance team, Greenspan is busy doing mea culpa's that leave him without blame, and Summers has his eyes on Greenspan's old throne. These guys have orchestrated the downfall of the American economy ten years ago, through the Glass-Steagall repeal, insanely low interest rates and lack of regulation for 'innovative' financial instruments. They are today still firmly in the seats of power. I can't think of anything more worrisome than that.

So what are the chances that the new bank bail-outs will accomplish what they are supposed to do? It may seem like a very complicated question, and one that many will claim no-one can foresee the answer to, but maybe it's actually pretty easy. A new version of the Case/Shiller S&P Housing Index was published today, and it shows another record fall in US home prices. 18.5% in one year, a 9th consecutive record.




Professor Robert Shiller, someone I’ve taken issue with for his overly rosy forecasts in the past, did an interview yesterday with Henry Blodget in which he makes three points with regards to the future of domestic real estate.

House prices are still only halfway back down to fair value.


Prices don't usually stop at fair value. (Shiller calls this overshoot, I have referred to it as oscillation, what goes up must come down harder)


Obama's plan won't turn house prices around.

What this means is that prices have come down between 25% and 30% already, that they will drop another 30%, and that's before the overshoot. Shiller is getting very close to the prediction of 80% or more peak to trough I have been using for well over a year now, don’t you think?

How do we link housing prices to the bank bail-out? Like this. MoneyandMarkets has a cute little set of numbers.



Mike Larson adds a few comments:

Citigroup is on the list because of three factors: Its main banking unit has a C- financial strength rating. It has large exposure to the credit risk of derivatives. Plus, it has a big exposure to mortgages — $198 billion. Wachovia is in a similar situation: It made the fatal mistake of buying the nation’s largest and most aggressive mortgage lender — Great Western Financial — at the worst possible time. And it’s also got some serious exposure to derivatives. Washington Mutual, the nation’s largest thrift, has a D+ rating and is loaded with mortgage exposure. HSBC has a D+ rating. Plus, it has an exceptionally large 721% of its capital exposed to the credit risk of derivatives. In other words, for every single dollar in capital, HSBC is taking a credit risk of $7.21 with trading partners in derivatives, according to the U.S. Comptroller of the Currency.


Citi's market cap is around $12 billion. Its "assets" (wonder what is in that pot) are stated as over 100 times its cap, at $1,292 billion. If Citi indeed has all those assets, investors would be nuts not to buy in, wouldn't they? Its mortgage exposure is 16 times the market cap, while its derivatives risk is $2.79 per dollar in capital. (NB: total Citi derivatives positions were estimated at $38 trillion last year)

If housing prices keep falling in the way and to the extent that Shiller indicates, Citi will lose another $100 billion on its mortgage portfolio, while its mortgage backed securities and other derivatives will easily add a trillion here and there to the bleeding. Which in turn indicates that if home prices don't come back up, which Shiller says they will not, that Citi is way beyond salvation.

In 1999, mere months before the Glass-Steagall repeal was voted through, Robert Rubin handed the Treasury Secretary seat to Larry Summers, in order to move on to Citi and put to "good use" all the new financial powers he himself was responsible for writing.

In 2009, Rubin left Citi through the revolving door that connects Wall Street to Washington, to team up again with Larry Summers and Tim Geithner, and make sure hundreds of billions are being poured into the bank he helped implode. None of Obama's initiatives will do anything to save the banking system, or restore economic growth, or benefit the taxpayer. We're witnessing the liquidation of the US as a going concern.

[Tansy_Gold]

29. AMEN!

:yourock:

[DemReadingDU]

45. Write Obama a letter. He reads 10 letters a day

2/23/09 The President Reads 10 Letters a Day from the Public

In his first week in office, President Obama requested that he see 10 letters a day "representative of people's concerns, from people writing into the president," recalls Gibbs, "to help get him outside of the bubble, to get more than just the information you get as an elected official."

Says Axelrod, "he did it because his greatest concern is getting isolated in the White House, away from the experiences of the American people...The letters impact him greatly."

Some recent examples, according to aides, include a letter from a businessman who owns a manufacturing company and says he finds it very difficult to lay off employees who have done nothing wrong. If things don't improve, the correspondent wrote, he'll have to lay off 10% of his workforce.

Another letter came from a divorced senior citizen raising a grandchild on a fixed income, including Social Security. She confessed to being depressed and scared.

A third came from a realtor who urged the president to do something about the large number of foreclosed properties. A fourth was a plea for help from an unemployed truck driver.

Monday through Friday the head of White House Correspondence delivers ten letters to be read by the President, choosing among letters that are broadly representative of the day’s news and issues; ones that are broadly representative of President’s intake of current mail, phone calls to the comment line, and faxes from citizens; and messages that are particularly compelling.

more...
http://blogs.abcnews.com/politicalpunch/2009/02/dear-president.html


Tansy - Here's your chance for Obama to hear you. Send him a great letter!

[UpInArms]

13. dollar watch

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

Last trade 87.192 Change +0.415 (+0.53%)

Weaker U.K. GDP Would Conflict With Bullish Pound Technical Outlook

http://www.dailyfx.com/story/special_report/special_reports/Weaker_U_K__GDP_Would_Conflict_1235540218288.html

The second reading for U.K. 4Q GDP is expected to be revised lower to -1.6% from -1.5% initially. Private consumption is expected to be revised to -0.6% from -0.2% as Britons have retrenched more than expected. NIESR is forecasting that household spending will decline by another 3.8% in 2009. The lack of domestic growth will make it formidable for the U.K. economy to rebound with global demand faltering. Indeed, fourth quarter exports are expected to be revised lower to -4.9% from 0.3% which leaves the economy without a source of growth. Additionally, the service sector which accounts for nearly 70% of GDP is expected to be revised lower to -1.0% from -0.4%. The slower growth at the end of 2008 will make it challenging for the economy to rebound by the end of 2009 which will push forecasts of a recovery into 2010. The lower growth expectations should weigh on the pound which would conflict with the bullish technical outlook. The lagging indicator may not have a significant impact if we don’t see a significant revision lower which could see technical’s dictate price action. Sterling has been wedged between the 20-day and 50-day SMA which could signal that a break out is imminent. Therefore, an inline print could spark a bullish reaction and lead to a test of 1.5000.



...more...

US Dollar, Japanese Yen Tumble as Fed's Bernanke Stokes Risk Appetite, S&P 500 Gains 4%

http://www.dailyfx.com/story/dailyfx_reports/daily_fundamentals/US_Dollar__Japanese_Yen_Tumble_1235513385722.html

US economic news was very disappointing this morning, as the S&P/Case-Shiller home price index tumbled by a record 18.23 percent in Q4 and the Conference Board’s consumer confidence index hit the worst level since record keeping began in 1967. Meanwhile, Federal Reserve Chairman Ben Bernanke’s prepared remarks before the Senate Banking Committee didn’t reflect much in the way of new updates, as he essentially just provided a timeline of the development of the financial crisis. Bernanke reiterated the Federal Open Market Committee’s (FOMC) stance that “economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time,” suggesting that the fed funds target will remain at a record low range of 0.0 percent - 0.25 percent through 2009. He also noted that the financial markets have stabilized somewhat in recent months, but that some stresses still remain, as evidenced by the fact that “most securitization markets remain shut, other than that for conforming mortgages, and some financial institutions remain under pressure.” Bernanke expressed optimism that the initiatives discussed by Treasury Secretary Tim Geithner on February 10 would eventually work to “further stabilize our financial institutions and markets, improving confidence and helping to restore the flow of credit needed to promote economic recovery,” but that there is currently a "painful adjustment" going on toward more saving. Indeed, most businesses thrived off the tendency of consumers to leverage themselves to the hilt with credit card debt in order to obtain a better quality of life. However, with everyone becoming increasingly conservative, that sort of risk appetite may become a thing of the past as individuals spend less and save more, which will hurt the sectors that benefited most from once-robust consumption.

During the Q&A session, Bernanke brushed off the notion of nationalization, but also said that the US lacks a “regime for closing big, critical firms” and that any reforms should include a way to do so. Bernanke also said that "there are some banks that are too big to fail,” but refused to commit to never shutting down a big bank. With the Federal Reserve saying that they want to learn the "true positions" of US banks, it seems like things could get worse before they get significantly better, but based on the surge in equities and forex carry trades on Tuesday, the markets seem to be believing otherwise. If this sentiment intensifies, both the US dollar and Japanese yen may be in for further declines, with the outlook for the former hinging upon a break below Monday’s low. Meanwhile, the yen may be at even greater risk due to its closer link to risk trends.

Looking ahead to Wednesday, Bernanke will testify again, this time in front of the House Financial Services Committee at 10:00 ET. Most of the commentary will likely consist of repeats from today, but biased or unexpected remarks could impact risk trends. At the same time, the National Association of Realtors' (NAR) existing home sales report is expected show that they rose for the second straight month at a rate of 1.3 percent in January to 4.8 million. However, this is still fairly close to the record low of 4.45 million reached in November, which may not even describe the true extent of the weakness in the housing sector as record keeping only goes back to 1999. Nevertheless, another increase would suggest that lower home prices and mortgage rates are helping to provide a small boost to demand for previously-owned homes.

...more...

[tclambert]

14. And on the Stanford Financial front, we have:

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3749851&mesg_id=3749851

Basically, the suggestion on this link is that John Negroponte, Bush's "intelligence czar," may have been involved in asking the SEC to go easy on Stanford. Negroponte is linked to Iran-Contra back in the 80s. He was Ambassador to Honduras during that time. It is further suggested by responders to the original post that Stanford and/or his South American banks may have been CIA assets. The alleged drug trade/money laundering may have actually been on behalf of the United States government.

The evidence seems quite tenuous, with a lot of "could haves" rather than "dids." However, it would be a neat twist if Stanford turned out to be making unusually good returns because he was making deals with drug cartels at the request of our own enforcement agencies. How would the legalities of that play out? What if illegal activities generated profits, but the activities were authorized as an undercover law enforcement operation? That might actually be a decent investment strategy. Then again, the DEA might have authority to confiscate all the proceeds, leaving legitimate investors with nothing.

[Pachamama]

22. And there are those that say Gary Webb did not commit suicide.

I am one of them. Gary Webb (Dark Alliance - http://www.amazon.com/Dark-Alliance-Contras-Cocaine-Explosion/dp/1888363932/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1235572175&sr=8-1) knew where the money trail led and it cost him his life.

Very interesting times indeed.... :hi:

[tama]

60. Yes and no

Al Giordano, who AFAIK knew Gary quite well and has been writing about that tragedy quite a lot and at a very personal level, is not hinting in any way to any black ops assassination. On the other hand, Al says something to the effect that the actual suicide was if fact a murder by the society that demonized, abandoned and tortured the truth-sayer.

[antigop]

33. Ney praised Stanford in the Congressional Record -- just as he did for Abramoff

http://tpmmuckraker.talkingpointsmemo.com/2009/02/ney_praised_stanford_in_congressional_record_--_ju.php?ref=fp8

Did Allen Stanford get the Jack Abramoff treatment from Bob Ney?

Via the Sunlight Foundation, check out what Ney, the Ohio GOP congressman who went to jail for his role in the Jack Abramoff scandal, entered into the Congressional Record in September 2005:

Mr. Ney: Mr. Speaker --

Whereas, Allen R. Stanford has been recognized as the 2006 Recipient of the "Excellence in Leadership Award" by the Inter-American Economic Council ; and

Whereas, Allen R. Stanford has been acknowledged for his performance and leadership in the areas of finance and investments; and

Whereas, Allen R. Stanford should be commended for his service as the CEO of the Stanford Financial Group based in Houston, Texas.

Therefore, I join with the residents of the entire 18th Congressional District of Ohio in honoring and congratulating Allen R. Stanford for his outstanding accomplishments.

[Robbien]

41. Two employees of Stanford were also part of the regulator agency FINRA,

Lena Stinson, director of global compliance at Stanford Financial Group, is listed as serving on the membership committee of the Financial Industry Regulatory Authority, or FINRA, which describes itself as the largest independent regulator of U.S. securities firms.

Frederick Fram, the chief operating officer of Stanford Group Holdings, serves on the FINRA continuing education content committee, "where he participates in creating material for the Regulatory Element continuing education program," according to a biography on Stanford's website.

Nancy Condon, a spokeswoman for FINRA in Washington, had no comment. Calls placed to Stanford's Houston offices went unanswered.

http://uk.reuters.com/article/marketsNewsUS/idUKN2437857220090224

This new head of FINRA (replacing Shapiro) comes from Citibank. Just another fox in charge of the henhouse?


Before becoming chief regulatory officer of the NYSE in 2004, Ketchum was general counsel of the corporate and investment bank of Citigroup Inc. Prior to that, he worked at the National Association of Securities Dealers, the Nasdaq Stock Market and the SEC, where he headed the market regulation division.

http://www.google.com/hostednews/ap/article/ALeqM5jCS0Qhrv-Q9ZlG0dc88adHEzokZAD96I4N100


FINRA appears to be just an old boys club IMO.

[Robbien]

43. Other countries don't want to hand Stanford assets to the US

They want to keep the assets in their own country for their own citizens. Appears they don't trust the US to play fair and treat foreign depositors on the same basis as US depositors.

Turnabout is Fair Play: Officials Outside U.S. Seek Assets
http://xerobank.com/news/2009/turnabout-is-fair-play-officials-outside-us-seek-assets/

WASHINGTON — Authorities outside the U.S. are seeking control of Texas businessman R. Allen Stanford’s assets, setting up potential jurisdictional fights that could complicate efforts by tens of thousands of customers to retrieve funds.

Lawmakers on the twin-island nation of Antigua and Barbuda are set to convene in emergency session on Thursday, government officials said. They are aiming to pass legislation to reaffirm control of local assets of Mr. Stanford’s companies, collectively known as Stanford Financial Group.

. . .

Jack Blum, a Washington lawyer who is an expert in offshore financial havens, said the problem of competing jurisdictions “makes these cases a huge nightmare” for investors. Mr. Blum cited the 1991 collapse of Bank of Credit and Commerce International, which spanned 70 countries and featured fights by governments in Asia and Africa that tried to seize assets.

The Antiguan Parliament’s move to claim assets in part reflects government officials’ pique at a U.S. court-appointed receiver, Texas lawyer Ralph Janvey. Last week, Mr. Janvey asserted control of Stanford assets “wherever located.” Antiguan government officials say they are concerned that many of Mr. Stanford’s real-estate assets in the country could come under the control of foreign regulators.

The order had the effect of freezing transactions by Stanford’s offshore entities, even before non-U.S. regulators took action. Financial regulators in Panama, Venezuela and Antigua have since seized local Stanford units, partly to halt runs on separate Stanford banking units in those countries. Mr. Janvey’s broadly worded order appears to leave little room for regulators and receivers in other countries in determining the fate of the assets.

[Demeter]

28. AIG may abandon asset sales plan: report

http://news.yahoo.com/s/nm/20090225/bs_nm/us_aig_strategy_4


(Reuters) – American International Group Inc (AIG.N) may scrap a plan to repay a $60 billion U.S. government loan by selling businesses, after failing to find enough promising bidders, Bloomberg said, citing people with knowledge of the matter.

AIG Chief Executive Edward Liddy, who took charge in September and unveiled the strategy the following month, has concluded it will not work, the people told the news agency on condition of anonymity.

AIG is proposing additional ways to reduce the company's debt to the U.S. government, including handing over stakes in some operations directly to the government, a person told the news agency.

AIG could not be immediately reached for comment by Reuters.

IS IT A DEPRESSION, YET?

[Tansy_Gold]

30. Excuse me? Who's gonna buy toxic shit?

I shake my head in amazement at the utter stupidity of these people. Have they no touch with reality at all? Have they forgotten that all of us sweat, belch, fart, and die?

All this toxic shit they have on their books, stuff they've acknowledged to be worthless, do they really think they're going to find some addled trillionnaires to buy it?

And what's with the stupidity of the government, believing this crap?


It's toxic waste. Bury it. Lose it. Write it off and get back into the real world.


Sheesh.





Tansy Gold

[Hugin]

32. Yes, it's probably time for a trip to the Chittagong scrap-yard in Bangladesh for AIG too...

Some photos of where 'Things too big to fail' go to die.

http://www.shipspotting.com/modules/myalbum/photo.php?lid=700297

http://www.shipspotting.com/modules/myalbum/photo.php?lid=684604

[Tansy_Gold]

35. A better end?

http://www.spiegelgrove.com/


My late husband served on LSD-32 for about 3 months in 1969. Of course, she was stripped of all toxic materials before being sunk. . . . . . .



TG

[Hugin]

37. I'm all about recycling Tansy.

But, a little reuse is good too! :)

Artificial reefs are better made out of ships which have a sentimental value... These Wall Street Behemoths lack sentimentality.

Thanks for the great pics, Tansy! :D

[Tansy_Gold]

44. The dangerous part of recycling. . . .

IIRC, many of the ships that are beached in southeast Asia and then scavenged have not been stripped of toxic materials -- asbestos, lead, etc. -- and this poses a danger to those who break them down for recycling. If disposed of properly and safely, indeed, there is a wealth of material that would otherwise go to waste. Imagine, for instance, how much steel could be recycled from all the auto junkyards, never mind all the boxcars sitting idle on abandoned -- or not so abandoned -- railroad tracks?

As a nation, we never learned to do that. We've been wasteful, forgetting the old maxim of waste not, want not. We wasted, and now we are wanting.


Tansy Gold, who has a huge crow circling around her yard
http://news.nationalgeographic.com/news/2002/08/0808_020808_crow.html

[DemReadingDU]

101. That is one smart crow!

[tclambert]

81. You want to recycle Tansy? Sicko.

Although they do say the crops did really well in Gettysburg the year after the battle.

[Tansy_Gold]

86. !

:rofl:

[Hugin]

89. Here I am trying to discuss economic recovery...

and co-posters are all hung up on punctuation. :eyes:

[Tansy_Gold]

100. Now, honey, you know we need these little laugh breaks once in a while

or we'll go completely insane. the good goddess knows there's more than enough serious discussion -- and serious shit -- to go around.

and anyway, Tansy is herself heavy into recycling. She hasn't managed to get the BF trained to her satisfaction, so she still has to dig some of his discards out of the trash can so they can be recycled, but she's more than happy to do it. (Besides, that way I get to point out to him how UNperfect he is.)




Tansy Gold, who sometimes thinks she recycling her whole life

[DemReadingDU]

103. I used to recycle, until I saw spouse

He took all the items to be recycled, and dumped them into the regular trash can. I don't mind retrieving an occasional item, but I just refuse to pluck them all out for recycling. He refuses to be trained in recycling.

[InkAddict]

102. Hey, lot's of sites will turn YOU into a coral reef

www.nmreef.com

www.greatburialreef.com

www.eternalreefs.com

Is this what they mean about GO GREEN?

[Dr.Phool]

36. It's all just an act. Going through the motions.

These guys know, or should know, that nobody in their right mind will buy their worthless shit. Not that the wouldn't sell it, if a sucker came along. They're just holding on too their jobs. Milking the cow for all it's worth. Get caught throwing lavish junkets at a four-star resort? Who cares? They're gettin', while the gettin's good.

[Demeter]

91. AIG Was Shipping Around Its Best Money Assets

divisions that make money. No takers! Problably no money, or price too high, or would-be buyers can't get financing.

And when the vultures are hurting, you KNOW it's Depression Time!

[tama]

61. "AIG could not be immediately reached for comment by Reuters."

How telling is that? :D

[antigop]

34. What I didn't hear in Obama's speech last night

We will investigate and HOLD ACCOUNTABLE those responsible for this economic crisis.

We will restore Glass-Steagall.

We will withdraw the SEC ruling that allowed banks to leverage themselves to the hilt.

We will regulate hedge funds and derivatives.


I didn't hear any of this....did I miss something?

[amandabeech]

40. You missed Obama telling us what we should put in those "private retirement accounts" now

in order to have a gain in them a dozen years from now.

He also didn't tell us what we should have put in IRAs back in 1997 that would show a gain today.

You notice that he got a dead room in response to his proposal?

Perhaps he placed his "private retirement account" proposal too close to the words "Social Security" in his speech.

Well, at least he was honest.

[antigop]

42. Oh, yes, those "tax-free universal savings accounts"

http://www.huliq.com/3257/77798/full-transcript-obamas-speech-congress

---
To preserve our long-term fiscal health, we must also address the growing costs in Medicare and Social Security. Comprehensive health care reform is the best way to strengthen Medicare for years to come. And we must also begin a conversation on how to do the same for Social Security, while creating tax-free universal savings accounts for all Americans.
---

[Dr.Phool]

46. Brilliant!

Just think, if my wife saved her ENTIRE salary for a year, tax-free of course, we might be able to spend it ALL on a 2-night hospital stay, with say maybe an MRI, and a few $30 Tylenol. They might even throw in a quack, who stops by, and asks, "How do you feel today"? for the bargain basement consultation fee of $350.

Brilliant!

More change we can make believe in.

[amandabeech]

53. Oh, I believe!

I believe that when I hit retirement age, which isn't that far away, I'll be eating cat food, and not the designer brands, either.

[tclambert]

74. 9 Lives but not Fancy Feast?

With or without melamine?

[ozymandius]

95. Nevermind melamine. 9 Lives has too much bone meal. Gets stuck in my teeth.

Fancy Feast? I'll wait for the coupon to give it a try. Of course - anything beats boiled shoe leather.

[tclambert]

75. I'm sorry that was in bad taste.

[tclambert]

76. D'oh! I can't even apologize right.

[amandabeech]

87. Friskies from Costco.

No need to apologize!

[kickysnana]

66. Just got back from the hospital with Auntie

She had a stroke 2 1/2 years ago and has movement restrictions and the circulation in her legs has deteriorated. Either an infection further deteriorated or further deterioration caused an infection and a few hours more and she would have lost her leg. They stented it and ballooned it for now.

She is on Medicare now. She was not when she had the stroke and that took her life's savings.

The procedure was probably expensive but I imagine an amputation would be about the same price.

If I have one more MS attack within 6 months I am supposed to resume $1200 a month medicine. But I don't have $1200 a month so I just won't worry about it.

[DemReadingDU]

104. I'm sorry to hear about your Auntie

I do worry so much about getting older, and losing whatever savings to health issues. Health care definitely needs reformed. But lots of our tax money is bailing out the banksters.


Take care, that $1200 is way too much money for medicine.
:(

[Gregorian]

47. My foggy memory says, he mentioned regulation.

It wasn't the kind of speech where he could get into details. But I am most sure he understands. Unless I'm still asleep I believe he mentioned credit default swaps. But I have just woken up and have had no coffee.

I'm not worried about Obama. I'm worried about how people resist change. Global warming puts this economic situation to shame. And nobody is going to do anything serious about that. Because that means NOT DOING stuff. Not doing stuff is exactly the opposite of stimulus. Go figure that mess out.

[antigop]

48. I don't think so --I did a search on the transcript...here is the only mention of "regulations"

"Regulations were gutted for the sake of a quick profit at the expense of a healthy market."

No mention of an intent to PUT BACK those regulations that were gutted.

And I did a search on "credit default swaps"--the search didn't find anything.

You can check the transcript at
http://www.huliq.com/3257/77798/full-transcript-obamas-speech-congress

[Gregorian]

49. Well I'm having my espresso, and it isn't helping my memory.

Thanks! I missed parts of that and wanted a transcript.

Here's what I heard, which although not specific, does show an informed intent-

"Our job is to govern with a sense of responsibility. I will not spend a single penny for the purpose of rewarding a single Wall Street executive, but I will do whatever it takes to help the small business that can't pay its workers or the family that has saved and still can't get a mortgage."

[DemReadingDU]

51. Yay, mortages for everyone!

This is part of the problem that got us into this financial mess. Mortgages were given to just about anyone.

Ninja people got mortgages (no income, no jobs, no assets) as well as credit-worthy people got mortgages. Obviously, the ninjas shouldn't have been allowed to purchase a house, but even the family who has saved may not be credit-worthy either.

:shrug:

[Gregorian]

58. I loved Obama's speech. But I've got real problems with it too.

Stimulus is exactly opposed to curing global warming. That one is a real dilemma.

I was waiting for this mortgage meltdown long ago. I have been on both sides of the fence. I tried to buy a dairy farm once. Holy shit I put more time into finding a loan than just about anything I've ever done. And then there was the time I refinanced a farm to buy another farm. The answer to the question of how much my income was was simply anything I wanted to tell them. I saw the change. I watched the idiots pumping out the silly McMansions. I was disgusted and nervous.

Yes. I do understand. But I still have faith in Obama. Maybe I'm foolish. He sure seems trustworthy and intelligent. I know that a big bunch of compromise is going to be part of the solutions. I don't see any solutions. But I'll play along for a while.

[DemReadingDU]

65. Really, It's too soon to throw in the towel.

Obama's in for 4 years, so 1 month isn't long enough to fully see his plans working. I just have some reservations about his advisers (Geithner, Summers, and Bernanke).

[bread_and_roses]

88. Not a solution but maybe a mitigation in terms of stimulus vs global warming

I was thinking about this the other day - not all spending is equal in terms of its' global warming impact, I would think. For instance, hiring more teachers, funding weatherization for homes and schools, funding programs to improve local food supply through small farming, getting manufacturing for essentials like shoes and socks going in US again so we're not importing all of them across vast distances from China or where-ever....things like that? Of course, I am begging the question of the increased driving by now unemployed workers going back to work, but the entire transportation system is a problem that has to be addressed whatever we do. Of course, if the stimulus is used as nothing but a way to get the same old same old jump started, we'll continue down our merry path to destroying the entire ecosystem and us with it. And so far, no one I'm hearing in the Administration is talking about any real fundamental change, so you're spot on in it being a real dilemma. We're likely to be put in a position of cheering on more cheap knick-knacks and poisonous toys from China being sold at $$ stores.

[Gregorian]

107. Thanks for setting me straight.

I really did reduce the stimulus/recovery package wrongly. You are absolutely correct. We aren't going to stop consuming. But we can certainly minimize carbon emissions in the process. I'm kind of a hard core anti-consumption advocate. It's hard to see us go down the path, even if it is miniimized.

I'm hoping our hope is justified..

[tclambert]

78. Here's another quote from his speech:

"to ensure that a crisis of this magnitude never happens again, I ask Congress to move quickly on legislation that will finally reform our outdated regulatory system. It is time to put in place tough, new common-sense rules of the road so that our financial market rewards drive and innovation, and punishes short-cuts and abuse."

Maybe that's what you were trying to remember. But why remember when you have the interwebs at your fingertips? http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=132x8222763

[tama]

62. Umm

"We will investigate and HOLD ACCOUNTABLE those responsible for this economic crisis."

Besides some drop-out hippies and few remaining primitive tribes, who of us is not responsible?

What purpose, besides continuing the ritualistic blame-gaming and scape-goating, would such investigation serve, if it didn't also include ourselves, each of us?

[DemReadingDU]

67. Obama on TV now talking about accountability, n/t

[antigop]

69. Well, silly me. I guess the ratings companies that rated all of this shit shouldn't be held

accountable.

Yes, we should let them continue this practice. By all means.

[tama]

92. Didn't say that

Meant that roots of this shit that is now hitting the fan go very deep, to the whole consumerism ideology, short term living on account of multigenerational debts... and deeper. In that regard, all of us should be held accountable and will be held accountable, not just the top dogs.

Sure I'd like to see some heads roll down like anyman, just out of spite, but then again... we get the kinds of leaders we deserve. So perhaps we could try something else next time, something very different, if such opportunity would be kind and mercifull enough to appear. Instead of trying to repeat this lunacy again and again.

[tclambert]

73. The thing I would've liked to hear

is "We will prosecute those who authorized torture." All he said, to great applause, was "America does not torture." Maybe he will build up to the other later.

He did say, "I intend to hold these banks fully accountable for the assistance they receive, and this time, they will have to clearly demonstrate how taxpayer dollars result in more lending for the American taxpayer. This time, CEOs won’t be able to use taxpayer money to pad their paychecks or buy fancy drapes or disappear on a private jet. Those days are over." That doesn't exactly address your first point, but it's just an inch away.

[specimenfred1984]

55. Please don't call anyone a bad name, like "war criminals" or "Piyush"

Reality will not be tolerated, we will strictly adhere to whatever reality the war criminals or guys named Piyush prefer. Also, please use terms like "toxic assets", "nationalize", "freedom fries" and "Homeland".

[Dr.Phool]

57. You're gonna piyush that Yokum's Band-aid guy off!

[mikelgb]

68. lol

[antigop]

56. Oh, boy! Another securities fraud case

http://www.talkingpointsmemo.com/news/2009/02/2_arrests_in_ny_securities_fraud_case.php
>>
The owners of an investment firm that managed hundreds of millions of dollars for universities and charities were arrested Wednesday by the FBI in the latest white-collar scandal to strike Wall Street.

Paul Greenwood and Stephen Walsh were awaiting an appearance in federal court in Manhattan to face securities and wire fraud charges alleging they raided funds to cover personal expenses. The names of their attorneys were not immediately available.

Court papers identified Greenwood and Walsh as the owners of Greenwich, Conn.-based WG Trading Company LP and of Westridge Capital Management Inc., based in Santa Barbara, Calif. Their operation also had a Manhattan office.

The firms' clients included "charitable and university foundations, retirement and pension plans and other institutions," a criminal complaint said.

The complaint alleges that since the summer of 2007, $1.3 billion in illegal wire transfers were made to bank accounts held by Greenwood and Walsh's wife.
>>

[TheWatcher]

63. Delete. Wrong Place.

[Robbien]

72. They bought themselves an $80,000 teddy bear! . . Stealing pensions for teddy bears

FBI arrest men linked to $339 million in frozen Iowa pension money

<snip>

The arrests come days after the Iowa Public Employees’ Retirement System reported that $339 million in Iowa pension funds have been frozen following the suspension of Greenwood and Walsh’s trading privileges by the National Futures Association, which had been attempting to audit WG Trading.

. . .

According to a complaint, they covered up the theft by manufacturing promissory notes to present the appearance that investors' money had been loaned to them.

These promissory notes totaled about $293 million for Greenwood and about $261 million for Walsh, authorities said.

More than $161 million was allegedly used for Walsh and Greenwood's personal expenses, including purchasing rare books, horses, Steiff teddy bears costing as much as $80,000, and a $3 million residence for Walsh's ex-wife, federal officials said.

http://www.desmoinesregister.com/article/20090225/NEWS/90225027/0/NEWS03

[tclambert]

79. $80,000 teddy bear? Was it full of heroin?

[Robbien]

84. This story gets weirder and weirder

These people were spending like they had billions of other peoples money instead of just hundreds of millions.

One guy bought Paul Newman's farm and turned it into a real fancy show horse farm. $$$$$

When most of all the money was gone, they started to

issue bad checks to some investors seeking to cash out, and ultimately suspended all investor redemptions due to what he called investors’ “irrational behavior.”

http://www.mondovisione.com/index.cfm?section=news&action=detail&id=81066

[ozymandius]

94. Some psychologist will have a field day with this psychotically selfish behavior.

Here's a segment of the population entrusted with other people's money. Yet they act like depositors cash is their own personal expense account. Then there's the added dynamic exemplified by the demonstrated belief that the rules do not apply to them.

Madoff, Stanford, Paul Greenwood and Stephen Walsh, and now Nicholson/Westgate: they're a clinical psychologist's dream date.

[Hugin]

96. What bothers me is that these types may be the rules instead of the exceptions.

The only difference is they were stupid enough to get caught.... The trickier ones are still out there. :scared:

[ozymandius]

98. Trickier ones.

I'm sure they're still in operation. These crooks, now caught, grabbed opportunity with both hands and threw it to the ground. It's not surprising that they were caught. My (rhetorical) question is: what took so damned long?

Culture of Corruption bled everydamnedwhere. What would it have taken for these guys to be brought down under the Bush administration? I shudder to think.

[Robbien]

106. These guys aren't being taken down by the change in administration

They are being taken down by the change in the financial world

Madoff was down to his last 3 or 4 billion when Santander asked for and got a payout of over 3 billion. Then a month Santander said they wanted the rest of their money, $6 billion. Madoff didn't have it so he "confessed".

Stanford was down to his last half billion when he lost it all because it was invested with Madoff. He started reneging on deals which sent up red flags. Without plenty of cash to spread around, he went down.

These four guys in this article were spending their clients money as if they were billionaires. Their clients only deposited hundreds of millions. They ran out of money so down they go.

Same story with Drier, Nadel, Petters, Satyam, etal.

Without the creation of derivatives which magically produced tons of new money, money stopped flowing into the scams. Without new money, the scammers are dropping like flies.

Other than Holder, there has not been a big change in the DoJ. Most of the old bushie USA's are still there. Over at the SEC Cox is gone, but Shapiro is not much better since she also has a pro-business attitude. Also, there really hasn't been a big shake-up so far at the FBI.

With almost all of the old Bushie law and order system still in place, the authorities aren't bring down the scammers, but the economy sure is.

[Robbien]

77. The independent auditor turned out to be a firm known as “The New York City Virtual Presence”

where Nicholson leased “virtual space,” prosecutors alleged. The phone number for the supposed auditor turned out to be Nicholson’s home phone number.

http://www.hedgefund.net/publicnews/default.aspx?story=9799

At least Madoff and Stanford has real life people who made up financial statements. These guys didn't even bother going that far. A make-believe auditor to produce make-believe statements. A cyberspace make-believe auditor no less.

[TheWatcher]

64. Well, They DID Manage to Turn It All Better for a bit there, didn't they?

Here's Why The Fairy's Showed Up For Afternoon Tea, I think:

Treasury says big banks can get more bailout funds
Treasury says biggest banks can have immediate access to further support from bailout fund

WASHINGTON (AP) -- The nation's biggest banks are being granted immediate access to further support from the government's $700 billion financial rescue fund.

Treasury Department officials said Wednesday the new support will be provided through the government's purchase of preferred shares of the bank stock that are convertible into common shares at a 10 percent discount to their price before Feb. 9.

The preferred shares will carry a 9 percent dividend and be convertible at the bank's option, but subject to regulatory approval.

The option to convert the preferred shares into common shares is a change in the rescue program designed to give financial markets greater confidence.

Common shares absorb losses before preferred shares do, which means that under a stock-conversion plan taxpayers would be on the hook if banks keep writing down billions of dollars' worth of rotten assets, such as dodgy mortgages, as many analysts expect they will.

However, common stock in banks is incredibly cheap, and taxpayers would reap gains if the banks come back to health and the stock price rises.

More Fun At The Link:

http://finance.yahoo.com/news/Treasury-says-big-banks-c...

Now, the reason that was given for the DECLINE prior to this was the Market was "disappointed" in Last Night's Speech because it provided little in the way of "details" of how things were going to be "Fixed" in the economy. (And I hate to ever agree with Criminals, but they were right on that one for the most part. Hopefully no one will read what's in the parenthesis, lest one of the "Truth Squads" arrests me for daring to question the words of His Holiness)

SO basically Mr. Market is sending us woeful commoners TWO different Messages today

1. From 9:30AM-2:21PM it was "Hey, Looks Like YOU Guys Are Screwed."

2. From 2:21PM-3:45PM: "But Hey, Daddy Just INCREASED OUR ALLOWANCE!"

When In Doubt- BAILOUT!

On Edit: The Dump At The Close is a bit worrisome. Maybe they spent those newly acquired funds ALREADY? Those Crazy Banksters. Always Impulse Buying.

[TheWatcher]

70. WOW. Now THAT Was One UGLY Close.

So maybe the Housing Data from this Morning Matters after all?

But, But, there's more Bailout Funds on the way for The Banks! That's Good, right?

Sheesh, those Fairies are getting fickle.

Maybe Japan's Exports collapsing, (which by the way WAS their only source of Growth, down 46% in January alone) Matters too.

http://news.bbc.co.uk/2/hi/business/7909248.stm

By the way, one of the posters at Wall Street Examiner's Bear Chat (Lee Adler's Site) has set up a Site collecting all the daily available Layoff information, in a one-stop source:

Here's the link:

www.layoffdaily.com

Lots of Information there.

Some of the news from TODAY alone:

Nortel Lays off 3200
Zales to close 115 Stores
Coach Inc. Lays Off 150
Georgia Furloughs 25,000 State Workers

*Sigh*

Ugly, this is getting.

[ozymandius]

93. closing numbers and blather - look at the wicked volume!

Dow 7,270.89 Down 80.05 (1.09%)
Nasdaq 1,425.43 Down 16.40 (1.14%)
S&P 500 764.90 Down 8.24 (1.07%)
10-Yr Bond 2.945% Up 0.146
NYSE Volume 8,726,956,000
Nasdaq Volume 2,454,268,250

4:25 pm : A rally in financial stocks helped the broader market overcome a fit of early weakness, but the advance proved unsustainable as stocks finished the session more than 1% lower.

Stocks spent the majority of the session trading in the red as traders opted to take profits from Tuesday's 4% advance. The selling effort came amid a lack of positive headlines and continued uncertainty in the financial system, which failed to improve after President Obama gave his first speech before a joint meeting of Congress.

The need for additional capital amid such uncertainty led both Lincoln National (LNC 11.21, -1.83) and Allstate (ALL 17.57, -1.07) to cut their quarterly dividends. Meanwhile, an article in The Wall Street Journal seemed to suggest Wells Fargo (WFC 13.40, +0.35) should cut its dividend to help improve the bank's capital ratios.

The Fed and Treasury released key details of its bank stress-test plan. Officials will assess potential losses at banks and estimated resources to absorb those losses.

Capital provided under the plan will come in the form of preferred stock that is convertible into common equity at a 10% discount to the price prevailing prior to Feb. 9. Securities under the plan will carry a 9% dividend yield and will be convertible at the issuer's option.

The plan essentially backstops financial institutions, though the banks receiving capital will be required to submit monthly reports on their lending and will be subject to restrictions on paying quarterly common stock dividends, repurchasing shares, and pursuing cash acquisitions.

Financial stocks gave ground in the wake of the announcement, but eventually rallied to a 3.8% gain. Financials finished the session with a 0.5% loss as sellers pushed back, but that was still better than the 6.5% loss that financials traded with at their session lows.

Nine of the 10 sectors finished lower. Telecom (+1.0%) was the only sector in the S&P 500 to finish with a gain.

There was only a trickle of earnings announcements ahead of the opening bell, none of which received much attention from the broader market. Still, trading volume was above-average as nearly 1.8 billion shares traded hands on the NYSE.

The only item on the economic calendar was a bleak January existing homes sales report. Sales fell more than expected to their lowest level since 1997. Many of the sales were distressed, contributing to a near 15% year-over-year drop in the median home price. Inventory supply increased slightly to 9.6 months. DJ30 -80.05 NASDAQ -16.40 NQ100 -0.9% R2K -2.7% SP400 -1.4% SP500 -8.24 NASDAQ Adv/Vol/Dec 799/2.15 bln/1863 NYSE Adv/Vol/Dec 1208/1.80 bln/1878

[Robbien]

82. Bernanke Says There May Be Benefit to Uptick Rule

Feb. 25 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke said there may be a benefit in resurrecting a rule that restricts short-selling stocks when share prices are falling amid the current bear market.

“In the kind of environment we have seen more recently” the so-called uptick rule “might have had some benefit,” Bernanke said in testimony before the House Financial Services Committee today. The rule, scrapped by the U.S. Securities and Exchange Commission in 2007, barred investors from betting against a stock until it sells at a higher price than the preceding trade.

Bernanke’s comments may give credence to lawmakers such as U.S. Representative Gary Ackerman, a New York Democrat, who blamed the rule’s elimination for triggering attacks on financial stocks.

. . .

The SEC approved the rule in 1938 to prevent bear raids on companies. The agency eliminated the regulation after studying its effect on share prices and determining it was no longer relevant in markets dominated by fast-paced electronic trading.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a5.dyHLeI8a0&refer=home

There can be no recovery if the vultures are allowed to jump on every positive sign and short it to death.


Of course Cox fought hard against re-instating the rule.

[doxieone]

83. I did a photoshop of Rick Santelli the other day...

It is over at Freaking News.

http://www.freakingnews.com/The-Great-Santelli-Pictures-61802.asp

I listen to CNBC as a refuge from the missing blonde networks and, no, I do not consider Rick 'great.' That is a term being used by his fellow CNBC'ers.

[Hugin]

90. All that's missing is a 'Mission Accomplished' sign in the background...

Then Santelli would look just like that other hater of common Americans.

[dweller]

85. Crisis of Confidence:

Do the Markets Have No Faith in Obama?
Posted Feb 25, 2009 05:08pm EST by Aaron Task in Investing, Newsmakers, Recession
Related: ^dji, ^gspc, SPY, DIA, QQQQ

Do the markets hate Barack Obama?

Consider the following:

* The Dow has fallen about 11% since Election Day.
* The Dow's fall on Obama's Inauguration Day was the worst Inauguration Day decline in history.
* The Dow fell 384 points on Feb. 10, the day Treasury Secretary Geithner unveiled his financial stability plan.
* The Dow fell 298 points on Feb. 17, the day Obama signed the Stimulus Bill.
* The Dow fell to an 11-year low on Monday, following weekend reports about the government's potential new plan to bail out Citigroup.
* The Dow fell nearly 200 points intraday Wednesday following Obama's generally well received speech Tuesday evening. (The index did recover some lost ground, even briefly trading positive in the afternoon, before closing down 80 points as Treasury announced yet more bailout options for banks.)

Investor and blogger Paul Kedrosky refutes the apparent cause and effect at The Daily Beast and in the accompanying video. Attributing the market's moves to any single factor is futile, says Kedrosky, a strategist at Ten Asset Management. The very notion of the market being anti-Obama is mainly the playground of mischievous partisans, he adds.

Kedrosky is actually expecting another "savage rally" in the short-term, but is far from bullish about the market's long-term prospects, no matter what Obama does or doesn't do.

http://finance.yahoo.com/tech-ticker/article/194102/Crisis-of-Confidence-Do-the-Markets-Have-No-Faith-in-Obama?tickers=%5Edji,%5Egspc,SPY,DIA,QQQQ


why does the market hate America?
dp

[UpInArms]

99. ...

:blush: