STOCK MARKET WATCH, Tuesday May 12

[ozymandius]

Source: du

STOCK MARKET WATCH, Tuesday May 12, 2009

Bush Administration Officials Under Indictment = 2
Financial Sector Officials Under Indictment = 0
Financial Sector Officials In Prison = 2

AT THE CLOSING BELL ON May 11, 2009

Dow... 8,418.77 -155.88 (-1.85%)
Nasdaq... 1,731.24 -7.76 (-0.45%)
S&P 500... 909.24 -19.99 (-2.15%)
Gold future... 914 -1 (-0.15%)
30-Year Bond 41.80 -0.94 (-2.20%)
10-Yr Bond... 31.80 -1.13 (-3.43%)

---

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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---

Click for larger image.


Read more: du

[hamerfan]

1. Love the toon!

Thanks to everyone here for all the effort you put in to keep us informed.
hamerfan

ON EDIT:
Forgive my lack of manners. Good morning to you as well. :hi:

[ozymandius]

3. Thank you.

And good morning... :donut: :donut: :donut:

[Dr.Phool]

23. Talk about truth in advertising!

[ozymandius]

2. Market Observation

The Road Ahead
by Tony Allison

The road ahead may be a little smoother than the wild ride of the past year, but no one really knows what lies around the next bend. Everything is subject to change, especially in today’s world. Permanent, dogmatic opinions can be hazardous to one’s financial health. But given the unwavering fiscal and monetary policy of our government to re-inflate the economy at all costs, the road is becoming somewhat more visible looking forward.

The US may end up borrowing nearly three trillion dollars this year in its efforts to stimulate the economy, and run a budget deficit in excess of two trillion dollars. Expect interest rates to start ticking higher under this avalanche of supply, despite the quantitative easing. Even more ominous are the overall costs of this stimulus/bailout program thus far. According to data from the Federal Reserve and the Congressional Budget Office, the government has made hard guarantees of $12.9 trillion ($8.2 trillion by the Federal Reserve, $2.7 by the Treasury Dept. and $2.0 trillion by FDIC). Of this $12.9 trillion in government guarantees and spending, only 1.5% is directed toward infrastructure, or just $190 billion. In addition the government has made asset purchases of $2.3 trillion, implicit guarantees of $7.3 trillion to Fannie Mae, Freddie Mac and Ginnie Mae, and “soft” guarantees of $6.6 trillion to the banking system. It all adds up to a cool $29.1 trillion.

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

[ozymandius]

4. Today's Reports

08:30 Trade Balance Mar
Briefing.com -$29.5B
Consensus -$29.0B
Prior -$26.0B

14:00 Treasury Budget Apr
Briefing.com NA
Consensus -$20.0B
Prior $159.3B

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

[Ghost Dog]

49. Trade deficit widens in March to $27.6 billion

WASHINGTON – The U.S. trade deficit rose in March for the first time since last July as the global recession cut sharply into sales of American exports. The politically sensitive deficit with China increased.

The Commerce Department said Tuesday the deficit widened to $27.6 billion in March, slightly lower than the $29 billion gap that economists had forecast.

The March deficit was 5.5 percent higher than February's revised $26.1 billion trade gap, which had been the smallest since November 1999. Through the first three months of this year, the trade deficit was running at an annual rate of $359.7 billion, far below last year's $681.1 billion. Economists expect the deficit will remain at low levels this year as a recession in the U.S. crimps demand for foreign goods.

Other reports out Tuesday showed the federal government ran a deficit in April for the first time in 26 years, home prices in most of the U.S. fell in the first quarter, while job openings have hit an eight-year low. Still, economists said the latest data indicate the domestic and global economies are stabilizing, although at very low levels.

The global downturn also has cut into sales of U.S. exports. That will limit the amount of improvement seen in the deficit, which is the difference between what America imports and what it sells abroad. The slump in exports has been a blow to U.S. manufacturing giants such as Boeing Co. and Caterpillar Inc. who derive a large part of their sales from foreign markets.

For March, exports of goods and services fell 2.4 percent to $123.6 billion, the lowest level since August 2006. Sales of farm products dropped $2.4 billion, while exports of capital goods slid $1.7 billion, led by big declines in sales of civilian aircraft, telecommunications equipment, semiconductors, and domestic autos and auto parts.

"The composition of exports suggest that the global economy is beginning to stabilize," Nigel Gault, chief U.S. economist at IHS Global Insight, wrote in a research note. "The steepest export declines are behind us. But given the weak state of overseas economies, we do not expect the U.S. recovery to be export-led."

The March trade deficit also was smaller than the one the government assumed when it released its first estimate showing the overall economy, as measured by the gross domestic product, fell at an annual rate of 6.1 percent in the January-March quarter. That means the next GDP estimate for the first quarter likely will be revised to show a drop of around 5.7 percent, Gault said.

Imports declined 1 percent to $151.2 billion, the lowest level since September 2004. Imports of capital goods dropped $516 million, led by declines in industrial machinery. The overall import level fell even though imports of oil rose 6.2 percent to $17.2 billion, the highest level since January.

The politically sensitive deficit with China rose 10 percent to $15.6 billion in March. But for the first three months of this year, the deficit with China is running 10 percent below last year's pace.

/... http://news.yahoo.com/s/ap/20090512/ap_on_bi_ge/us_economy;_ylt=AvhuH_J9pJYZZWhpCOxKafuyBhIF

[UpInArms]

67. Budget falls into red in April 1st time since 1983

U.S. April deficit $20.9 bln vs $159.3 bln surplus
2:01pm Today

U.S. books first April budget deficit in 26 years
2:00pm Today

http://www.marketwatch.com/story/budget-falls-into-red-in-april-1st-time-since-1983

WASHINGTON (MarketWatch) - With the recession undermining income-tax receipts, the U.S. government recorded a $20.9 billion deficit last month, the first April deficit in 26 years, the Treasury Department reported Tuesday. Through the first seven months of the fiscal year, the federal deficit has mounted up to a record $802.3 billion, compared with $153.5 billion at the same time last year. Income-tax receipts are down nearly 31% for the fiscal year so far. Total receipts are down 19% to $1.26 trillion. Spending for the first seven months rose 20% to $2.06 trillion.

[ozymandius]

5. Oil hovers below $59 on signs recession easing

SINGAPORE – Oil prices hovered below $59 a barrel Tuesday in Asia on growing investor optimism that the U.S. recession may have bottomed.

Benchmark crude for June delivery was up 35 cents to $58.85 a barrel by late afternoon in Singapore, in electronic trading on the New York Mercantile Exchange. On Monday, the contract fell 13 cents to settle at $58.50.

....

Investors will be eyeing first-quarter earnings figures this week from retailers including Wal-Mart Stores Inc. and Macy's Inc., while the government reports retail sales for April.

....

In other Nymex trading, gasoline for June delivery was steady at $1.68 a gallon and heating oil was steady at $1.50 a gallon. Natural gas for June delivery rose 3.6 cents to $4.38 per 1,000 cubic feet.

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

[ozymandius]

12. Gasoline prices jump in California and U.S.

With rising oil prices providing a brisk tail wind, gasoline prices jumped during the last week, rising nearly 7 cents a gallon in California and more than 16 cents across the U.S., the Energy Department said Monday.

The average price per gallon of self-serve regular gas in California rose 6.9 cents to $2.424, according to the government's weekly survey of fuel stations. Nationally, the average increased 16.2 cents to $2.240, led by the Midwestern states, which saw a bump of 20.6 cents.

....

Analysts have been betting that crude oil will hit $60 a barrel soon, based on last week's 10% price surge on the New York Mercantile Exchange. On Friday crude reached its highest point this year -- $58.63 a barrel. But crude for June delivery slipped 13 cents Monday to $58.50 a barrel.

http://www.latimes.com/business/la-fi-gas12-2009may12,0,4904609.story

[Demeter]

28. I Predict The Plunge Occurs BEFORE Memorial Day

That which cannot continue, will not continue.

[happyslug]

78. I lean to the first week of June

The reason being that after the Memorial Day Weekend we will have a better idea of how much gasoline will be used this Summer, and it will be less then (or about the same) as last year. Given the excess inventories and the fact the industry has long finished its annual conversion to making gasoline, the glut will be clear and price will settle down to about just under $2 a gallon.

There is to much oil in inventory for the price to stay this high to much longer, unless someone has a revolution (Possible in Nigeria, but Nigeria is NOT enough for a Nigerian war to be a serious factor in world wide price of oil).

Right now the #1 oil producer (But only the #2 exporter of oil), Russia is stable, Putin may be a dictator but he has popular support. Oil production has started to drop, but Putin is exporting all he can produce, undermining the efforts of OPEC to keeps prices up by reducing production (Putin needs to money to keep his fellow Russians happy, which why Putin has refused to cut oil production, he needs all the money he can get). Long Term, Putin would be better dropping oil production, even if it means drop in price means less income this year. Sooner or later peak oil will hit, and when it does those countries that kept oil back will be in the driver's seat.

The # 2 Oil Producer (and # 1 world wide Exporter), Saudi Arabia has been questionable for ten years as the Sons of King Saud I slowly die out, leaving their sons (The Grandsons of King Saud) to rule. When families rule a nation, the founder tends to have absolute power (As did King Saud till he died). When the Founder dies, his Children inherit the Country, but the siblings, having grown up together, are reluctant to kill each other off, thus they work together as a common front. As the Second Generation dies off, the Third Generation takes over, they have grown up in different families and the loyalties of their fathers, no longer binds them, thus infighting turns nasty in the third Generation, leading to weakening of the family hold on the country and a good possibility of a revolution. Saudi Arabia is a country to watch, it is in a transition of generations and that is never good.

The Third largest producer of oil is very stable, but is is also the #1 oil IMPORTER, that is how much oil the US uses compared to the rest of the world, and volume of consumption affects world wide oil prices as while as the prices in the US.

The fourth largest oil producer is Iran and still the fourth largest oil exporter, a wild card in the oil business, a stable government given that its government, while NOT meeting the requirements of Western Democracy, is more Democratic then any other country between Turkey, India and Israel. If you look at the Palestinians in the West Bank and Gaza and being part of Israel/Palestine (Where they can NOT vote) Iran is more democratic then even Israel (Through Israel does permit everyone who is a permanent resident of Israel proper to vote, Iran permits everyone who lives in Iran to vote).

The Fifth largest oil Producer is China, but like the US is a net oil importer. China's Rural Areas is in a pre-revolutionary state, through its coastal cities are thriving. The Communist Party knows it won Control of Government by riding a Wave of peasant unrest, and fears it may be the victim of such a peasant unrest. The plus side for the Communists is Urban Coastal China has NEVER been as strong as opposed to the Rural areas, thus the traditional method of Chinese Revolution, a Rural Peasant revolt, may no longer worked, but none the less it will cause problems until the present leadership does something about the problems in Rural China, an area it has ignored since the 1970s.

The Sixth Largest Oil Producer is Mexico, which is the #1 exporter into the US (Through this varies with Canada on a regular basis). Mexico is suffering rapid drop is production, which will force it to end exports within a few years. NOT in 2009, but maybe in 2010, and with the drop in exports goes a drop in foreign exchange AND support for the Government. I have to put Mexico as the # 2 oil exporting country at risk for revolution and with a revolution a drastic cut back in oil production (Through probably NOT till 2010 if not later).

The seventh largest oil producer is Canada, and is the #2 source of importer oil into the US (It did not make the top ten exporter's list mentioned above, but that seems to be a statistical quake more then anything else). Canada is NOT as dependent on its oil exports to pay its bills, so much more stable then Mexico.

The Eighth largest oil producer is United Arab Emirates (and #6 Exporter), If the House of Saud goes, these Emirates may go at the same time. The Emirates are Sunni Dictatorships ruling over a Shiite majority. Without the money from oil, these countries would have collapsed decades ago and joined Iran.

The Ninth largest oil producer is the European Union, which is now a net oil importer given the fall of North Sea oil.

The tenth largest oil producer is Venezuela, which is the # 3 exporter of oil to the US (and #5 overall oil exporter in the World). Under, Bush the US appears to have tried to overthrow the present Government, but Chavez has popular support so he is stable (Through the drop in the price of oil has hurt Venezuela severely).

The Eleventh largest oil Producer is Kuwait (and # 7 Exporter), like the Untied Arab Emirate, will be affected by whatever happens in Saudi Arabia. Kuwait is like the rest of the Persian Gulf, a Shiite majority area, ruled by Sunnis except for Iran and since the US Invasion, Southern Iraq.

The Tenth largest oil producer is Norway, a stable country, compared to the rest of the top oil exporters, world wide Norway is still the # 3 exporters, mostly to the rest of Europe.

With the above 12 countries we are already over 1/2 of world wide oil production, the remaining producers of over 100 nations, produce less the the above 12 producers (And that includes Iraq, whose production is just below Norway's. Iraq beats out Nigeria ($8 exporter), Brazil and Algeria (#9 Exporter) before production falls below 2 million barrels a day for any other producer on the production list.

For more details see CIA list of Oil Producers:
https://www.cia.gov/library/publications/the-world-factbook/rankorder/2173rank.html

Top ten oil importers:
http://internationaltrade.suite101.com/article.cfm/top_ten_oil_countries

Oil Exports into the US (Energy Information Agency EIA):
http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/company_level_imports/current/import.html

My point is, while the price of oil should DROP over the next three months or so given the sheer oil sitting in inventories, enough of the MAJOR exporters of oil are unstable enough that such surplus can disappear within three to six months. When you look at the top ten oil exporters and decide only four of the ten of them can be called "stable" (i.e. Russia, Iran, Venezuela and Norway), while the rest could end up in revolution, either do to the drop in revenue do to the drop in the price of oil, or other reason (this includes, Saudi Arabia (8.73 million barrels per day), United Arab Emirates (2.33), Kuwait (2.20), Nigeria (2.19), Mexico (1.80), and Algeria (1.68), it becomes clear we are on thin ice when it comes to the possibility of a rapid price increase. This is complicated by the fact the US has express in interest (in at least the Bush years), to bomb two of the stable countries (Iran and Venezuela).

While I do not see any rapid price increase in the near future, the further you look ahead, the less likely it appears that will last. The question is NOT if but when we will see $5 to $10 a gallon gasoline.

Read more: "Top Ten Oil Countries: Leading Oil Importers & Exporters | Suite101.com" - http://internationaltrade.suite101.com/article.cfm/top_ten_oil_countries#ixzz0FLqSQXou&A

[Demeter]

79. Thanks for the thorough and succinct summary!

[DemReadingDU]

80. AP: Oil climbs to near $60 on falling US inventories

5/13/09
VIENNA (AP) — An unexpected drop in U.S. crude inventories propelled oil prices to near $60 Wednesday on indications that demand may be picking up.

Still, forecasts were less than rosy. OPEC, in its monthly report, said it expected oil demand for next year to grow less than in its previous estimate because of continued clouds over the world economy.

more...
http://www.google.com/hostednews/ap/article/ALeqM5i5TtajgUpSm7KY5jf-lCJGHBB-tAD985AAQO1



:shrug:

[CatholicEdHead]

53. AAA: Cheaper gas and a case of cabin fever will mean more travel this Memorial Day weekend

http://www.startribune.com/business/44785027.html

NEW YORK - After a plunge in gas prices, Americans are expected to hit the highways in larger numbers this Memorial Day, giving the traditional start of the driving season a boost for the first time since 2005, AAA said Tuesday.

An estimated 32.4 million people — roughly 11 percent of the U.S. population — will take some kind of trip over the holiday, most of them on the road. That's an increase of 1.5 percent from last year's dismal travel season, when pump prices rose above $4 a gallon and millions of people stayed put.

On Tuesday, retail gas prices averaged $2.25 a gallon, about $1.47 a gallon cheaper than a year ago, according to auto club AAA, Wright Express and Oil Price Information Service. Prices have increased 17 cents a gallon in the last week, but experts believe we are near a peak for the year.

Travel researcher Ken McGill used a combination of surveys and economic models to make AAA's forecast. Many respondents told McGill that they were lured by hotel discounts and cheaper gas.

It sounds like driving demand is trying to be created, as $2.30-$2.50 gas is apparently affordable now :sarcasm: .

[Demeter]

60. I Predict Crow Barbecue For Gasoline Sharpies for Memorial Day

They over-estimate cabin fever.

[ozymandius]

6. Big U.S. banks selling stock to repay government

NEW YORK (Reuters) – Four big U.S. banks on Monday said they would sell $6.55 billion of common stock and repay funds from the government's bank bailout program, after federal stress tests showed they can weather a deep recession without new capital.

U.S. Bancorp (USB.N) plans to sell $2.5 billion of stock, and sold $1 billion of five-year notes. Capital One Financial Corp (COF.N) sold $1.55 billion of stock, BB&T Corp (BBT.N) said it will sell $1.5 billion, and Bank of New York Mellon Corp (BK.N) said it will sell $1 billion.

....

The offerings were announced three days after Wells Fargo & Co (WFC.N) and Morgan Stanley (MS.N) sold a combined $12.6 billion of stock. Morgan Stanley also sold $4 billion of debt.

http://news.yahoo.com/s/nm/20090511/bs_nm/us_banks_tarp

[Demeter]

29. Bank of America raises $7.3 billion through CCB share sale

http://www.marketwatch.com/story/bank-of-america-raises-73-bil-through-ccb-stake?siteid=yahoomy


HONG KONG (MarketWatch) -- Bank of America Corp. has generated $7.3 billion from the sale of 13.5 billion shares of China Construction Bank, according to media reports Tuesday.

The sale was carried out at a per-share price of 4.20 Hong Kong dollars (54 U.S. cents), according to a Wall Street Journal report that cited people familiar with the matter. The price represented a 14% discount to China Construction Bank's closing price of HK$4.91.

The shares of China Construction Bank /quotes/comstock/22h!e:939 (HK:939 4.98, +0.08, +1.63%) were reportedly picked up by a group led by Hopu Investment Management Co., a private-equity fund run by Fang Fenglei, a Goldman Sachs Group Inc. executive.

Singapore's Temasek Holdings Pte. Ltd as well as China Life Insurance (Group) or its parent China Life Group, also are part of the purchasing group.

The stake represents the maximum number of China Construction Bank shares that Charlotte, N.C.-based Bank of America -- which faces having to raise nearly $34 billion to be in compliance with U.S. government requirements regarding its capital levels and which on Friday said it also plans to sell 1.25 billion shares of common stock -- could sell after a lock-up lapsed last week.

SO, BoA IS BAILING FAST, AT FIRE SALE PRICES, AND GOLDMAN SACHS BENEFITS. JUST KEEPING IT ALL IN THE FAMILY, I SEE.

[ozymandius]

7. Let's play 'Pretend'.

Bernanke says early response to bank tests encouraging

JEKYLL ISLAND, Ga (Reuters) – Government "stress tests" of how 19 major banks would endure a sharp downturn in the economy already appear to be helping banks gain access to private capital, a key element in economic recovery, Federal Reserve Chairman Ben Bernanke said on Monday.

Bernanke also assured a conference here that the dollar would be strong, because the U.S. central bank would keep inflation at bay by raising interest rates when the time is right.

....

Another positive sign in the aftermath of the tests is that several banks have announced plans to issue long-term debt not guaranteed by the Federal Deposit Insurance Corp, Bernanke said.

Even so, the Fed chairman cautioned it will be "some time" before it is possible to say whether the exams, which put banks' portfolios through bleaker-than-expected scenarios for economic output, unemployment and house price declines, will fully restore investor confidence and assure banks' access to private capital.

http://news.yahoo.com/s/nm/20090512/bs_nm/us_usa_fed_bernanke

[Demeter]

26. Musical Interlude: Make Believe (With Apologies to Oscar Hammerstein)

CITI, BOA, ET AL.

Only make believe I'm Solvent,
Only make believe that you're solvent too.
Others find peace of mind in pretending
Couldn't you?
Couldn't I?
Couldn't we?
Make believe our value's soaring
In a phantom leap, or two, or three.
Might as well make believe I cheat you,
For to tell the truth, I do.
(He steps back)
Your pardon I pray,
'Twas too much to say
The words that betray my heart.

TREASURY & FED RESERVE
We only pretend,
You do not offend
In playing a bankster's part.
The game of just supposing
Is the sweetest game I know.
Our dreams are more romantic
Than the world we see

TUTTI
And if the things we dream about
Don't happen to be so,
That's just an unimportant technicality.

[ozymandius]

8. Bill would allow return to lower credit-card rates

WASHINGTON – Consumers who are paying more in interest because they have fallen behind on their credit-card bills could regain their older, lower rates if they pay their bills on time for six months, under a compromise proposal reached by senators seeking changes in laws governing the credit card industry.

The Senate proposal was brokered between Republicans, who say lenders should be able to take into account a person's behavior, and Democrats, who contend that the practice of hiking rates on past balances prevent consumers from climbing out of debt.

....

The latest proposal would prohibit lenders from increasing interest rates on past buys unless the cardholder has fallen at least 60 days behind. At the same time, lenders would be required to review a cardholder's terms every six months.

http://news.yahoo.com/s/ap/20090511/ap_on_go_co/us_congress_credit_cards

[ozymandius]

11. Banks Brace for Credit Card Write-Offs

...

The unemployment rate has long mirrored banks’ loss rates on card balances. But Eddie Ward, 32 and jobless, may be one reason that rule of thumb no longer holds. For many lenders, losses are now starting to outpace layoffs.

...

The bank stress test results, released Thursday, suggested that the nation’s 19 biggest banks could expect nearly $82.4 billion in credit card losses by the end of 2010 under what federal regulators called an adverse economic situation.

But if unemployment breaches 10 percent, as many economists predict, the rate of uncollectible balances at some banks could far exceed that level. At American Express and Capital One Financial, around 20 percent of the credit card balances are expected to go bad over this year and next, according to stress test results. At Bank of America, Citigroup and JPMorgan Chase, about 23 percent of card loans are expected to sour.

Even the government’s grim projections may vastly understate the size of the banks’ credit card troubles.

http://www.nytimes.com/2009/05/11/business/11credit.html?_r=1&em

[Demeter]

30. Reminds Me of Mark Twain's Story of the Miser Praying to Heaven in Church

Such generosity!

[KoKo]

42. So, easy credit was pushed on folks to get them to consume more and more

but there's no bailout for them for the Usury Fees they have been and currently are being charged for increasing the GDP all those years. Instead they have to be good little payers (with what?) for six months, monitored by the banks before their fees go down to the lower usury fee they had before which caused the problem when the layoffs began and their mortgages went below water and unlike the very banks who are stiffing them they have not the resources of the Federal Government to help them.
This stuff gets me so crazy, I can't think straight...hence my garbled post.

:eyes:

[Tansy_Gold]

45. True. And I agree with you. But....

What about returning card accounts to the original terms on existing balances which would then be paid off FIRST with current payments, and future charges would get higher rates? Would that encourage people to pay off their loans, give the banks some cash, and discourage additional borrowing?

Obviously, it wouldn't stimulate spending/borrowing/consuming, but as long as we ain't MAKING anything here, why would we want to spend our money/debt on imported crap?


TG

[KoKo]

65. That might be too logical for those "running things" to propose...

and we know that the "special interests" rule and shut out proposals like yours...

It is a good thought, though. Would appeal to the RW'ers and Lefties who are more fiscally conservatively oriented.

[ozymandius]

9. Ford to sell 300 million common shares

DETROIT (Reuters) - Ford Motor Co said on Monday that it would sell 300 million common shares and use part of the proceeds to pay off its healthcare obligations to the United Auto Workers under the terms of a recently concluded deal with the union.

Ford also said it expects to grant to the underwriters -- Citigroup, Goldman Sachs, JPMorgan and Morgan Stanley -- a 30-day option to buy up to 45 million shares of common stock.

Ford shares fell 4.6 percent to $5.80 in after-market trade following the stock offering. At that price, the new shares would raise about $1.7 billion for Ford.

http://www.reuters.com/article/newsOne/idUSTRE54A5Y920090512

[tclambert]

20. What does this mean for current shareholders?

I presume it dilutes their holdings, but by how much? The article didn't say.

And I don't like that bailed out financials like Citigroup and Goldman Sachs get to buy up a big chunk of Ford, no doubt with our money.

[tclambert]

56. Ford stock down 17.6% today.

That is in one day.

So is the dilution of current equity 17.6%? I think it must be more than that. Darn. Could have made money short selling Ford.

[tclambert]

57. Then again, GM is down 20%.

Wow. Auto stocks just got stomped.

[Demeter]

31. Round Up the Usual Suspects

Why can't US purchase stock outright, instead of pretending Citigroup, Goldman Sachs, JPMorgan and Morgan Stanley are using their own money, when it's really ours?

[ozymandius]

10. Obama Takes Tougher Antitrust Line

WASHINGTON — President Obama’s top antitrust official announced on Monday that the administration would restore an aggressive enforcement policy against corporations that use their market dominance to elbow out competitors or to keep them from gaining market share.

The new enforcement policy reverses the Bush administration’s approach, which strongly favored defendants against antitrust claims. It returns to a policy that led to the landmark antitrust lawsuits against Microsoft and Intel in the 1990s.

....

The announcement is aimed at making sure that no court or party to a lawsuit can cite the Bush administration policy as the government’s official view in any pending cases. Ms. Varney warned judges and litigants in antitrust lawsuits not involving the government to ignore the Bush administration’s policies, which were formally outlined in a report by the Justice Department last year.

....

Many smaller companies complaining of abusive practices by their larger rivals were so frustrated by the Bush administration’s antitrust policy that they went to the European Commission and to Asian authorities.

http://www.nytimes.com/2009/05/12/business/economy/12antitrust.html?ref=politics

[tclambert]

59. What about antitrust action against companies just for being "too big to fail?"

That is the real crime. If you have to prove they committed specific illegal actions that harmed competitors, you face a task 1000 times more difficult. They will obfuscate, bury investigators in a blizzard of documents and deny, deny, deny, litigate, litigate, litigate until the government gives up out of exhaustion or change of policy.

In the early '80s, when the IBM antitrust suit was dismissed, IBM had a warehouse full of documents so big, they built an industrial shredding facility inside it to get rid of the paperwork after the dismissal. And the shredding contractors reportedly found the Ark of the Covenant hidden there.

[ozymandius]

13. The Solution to the Global Financial Crisis - funny and oddly insightful

Reproduced here in its entirety from The Big Picture:

In a small town on the South Coast of France, the holiday season is in full swing, but it is raining so there is not too much business taking place.

Everyone is heavily in debt.

Luckily, a rich Russian tourist arrives in the foyer of the small local hotel. He asks for a room and puts a Euro100 note on the reception counter, takes a key and goes to inspect the room located up the stairs on the third floor.

• The hotel owner takes the banknote in a hurry and rushes to his meat supplier to whom he owes E100.
• The butcher takes the money and races to his supplier to pay his debt.
• The wholesaler rushes to the farmer to pay E100 for pigs he purchased some time ago.
• The farmer triumphantly gives the E100 note to a local prostitute who gave him her services on credit.
• The prostitute quickly goes to the hotel, as she was owing the hotel for her hourly room used to entertain clients.

At that moment, the rich Russian comes down to reception and informs the hotel owner that the room is unsatisfactory and takes his E100 back and departs.

There was no profit or income. But everyone no longer has any debt and the small town’s people look optimistically towards their future.

Could this be the solution to the global financial crisis?

[tclambert]

21. Prostitution is the answer?

[Kip Humphrey]

25. That's the way our economy used to work. Nowadays, E87 would immediately

go directly to China! Do not pass go. Do not help the local economy.

http://lh6.ggpht.com/_uk2R9Lr1-bA/Rej_sdN8zXI/AAAAAAAAB5k/r3uGYw96Zk8/Feb.+2007+2-13-2007+12-28-41+AM.jpg

[Demeter]

32. Only If the Circle Is Completed

It looks to me like the name of the game is "The Buck Stops Here" and the Banksters are winning.

[tclambert]

63. It doesn't have to be a Russian, nor a small town in France.

And I think it makes more sense if it's a sleazy motel rather than a hotel. Hotels generally take the money at check-out time. Sleazy motels insist on money up front.

You could make the circle a little bigger, too, if you throw in a drug dealer and a fertilizer salesman.

[Ghost Dog]

14. China's exports sink, but factory investment rises

SHANGHAI – China's exports fell more than expected in April, dropping 22.6 percent from a year ago in the sixth straight monthly decline, as the government vowed to redouble efforts to help boost trade.

On the positive side, Beijing reported that investment in factories and property development jumped 30.5 percent during the first four months of the year to 3.71 trillion yuan ($543.2 billion), thanks to a slew of bank loans for government stimulus projects.

April's decline in exports, to $91.9 billion, was bigger than March's 17 percent drop and suggests China's trade sector has yet to see much relief from the prolonged drought in demand brought on by the global downturn.

"These figures show we cannot be optimistic about the future trends for exports," the Commerce Ministry said in a statement posted on its Web site that amounted to a lament over the lack of overseas demand for Chinese products. "We will have to view the problems and risks more seriously, expect that the crisis will persist a bit longer and take more complete measures ... to help stabilize foreign trade," it said.

There were some glimmers of hope even in the trade figures. While exports of heavy machinery and other industrial equipment continue to fall, recent increases from the previous month in exports of clothing, shoes, plastics and other labor-intensive consumer goods suggest some recovery in demand, economists say.

American retailers have begun ordering to restock low inventories, amid signs that consumer spending may be stabilizing, Jing Ulrich, chairwoman for China equities at J.P.Morgan said in a note to clients.

...

China's imports also remained anemic, falling 23 percent to $78.8 billion, the Customs Administration reported, putting China's trade surplus for April at $13.1 billion. That compared with an $18.6 billion surplus in March.

The surplus with the United States — or the amount exports exceed imports — edged higher to $10.6 billion in April from $10.2 billion in March, as exports dropped 15.7 percent from a year earlier to $17.2 billion while imports fell 17.4 percent to $6.6 billion.

China's surplus with the EU, its biggest trading partner, fell to $7.4 billion in April from $8 billion in March, while its deficit with Japan was $2.75 billion.

While China is channeling hundreds of billions of dollars into construction of roads, ports and other infrastructure, seeking to boost demand and create jobs, Beijing appears frustrated with the lack of a turnaround for the export sector. Exports contributed only 0.8 percentage points to China's growth last year, down from 2.6 percentage points in 2007, the Commerce Ministry said. And the drag on consumer spending and investment from the weaker trade sector is causing further harm, it said.

/... http://news.yahoo.com/s/ap/20090512/ap_on_bi_ge/as_china_trade;_ylt=AiVX3rmgQC2PXCjEa5v_hLWyBhIF

[Ghost Dog]

17. Asian shares tumble on global economy doubts

HONG KONG (Reuters) - Asian shares fell for a second straight session on Tuesday as some of the confidence that fueled a rally in stocks to seven-month highs was undermined by reports highlighting economic weakness.

...

Sentiment was hit by data on Tuesday showing China's exports in April fell more steeply than expected from a year earlier, casting fresh doubt on the prospects for recovery in the world's third largest economy. Imports also dropped.

Hopes of a recovery in China on the back of big government spending had fueled a surge in equity markets from lows in early March, as investors bet on a turnaround in the global economy.

"Exports are still falling, and the future of the world economy remains uncertain. It's really hard to be optimistic about China's trade prospects," said Qi Jingmei, an economist with the State Information Center in Beijing.

The MSCI index of Asia-Pacific stocks outside Japan (^MIAPJ0000PUS - News) lost 1.8 percent as of 0625 GMT (2:25 a.m. EDT). That marked the second session of losses for an index that just on Monday had hit its highest level since early October. Still, it is up about 50 percent since early March.

Japan's Nikkei average (Osaka:^N225 - News) fell 1.6 percent, retreating from its highest close in six months on Monday.

The declines come as debate about the outlook for the global economy is confounded by the mixed nature of recent reports. Optimists pointed to a survey from the Organization for Economic Co-Operation and Development on Monday that noted the pace of the decline in the world's major industrialized and emerging economies was easing. Leading central bankers, including ECB President Jean-Claude Trichet, on Monday also suggested the global economy was turning the corner. The South Korean central bank forecast mildly positive quarterly growth in coming months for an economy that just skirted a recession in the first quarter, but said risks remained so it would keep an accommodative monetary policy. It left rates at a record low of 2.0 percent as widely expected.

However, other reports have not been too rosy. Industrial production in France and Italy dropped more sharply than expected in March, data showed on Monday, in a bad omen for the eurozone economy. India also reported on Tuesday that industrial output fell in March more than expected from a year earlier.

In Asia, Shanghai's main index (^SSEC - News) was flat. Hong Kong's shares (HKSE:^HSI - News) fell 0.9 percent, though shares in HSBC (HKSE:0005.HK - News) advanced 1.1 percent after the British lender on Monday said first-quarter profits were "well ahead" of last year.

But with the exception of HSBC, Asian financial shares including Mitsubishi UFJ Financial Group (Tokyo:8306.T - News) dropped following a rally that had tracked gains in U.S. banking shares.

Taiwan's main index (Taiwan:^TWII - News) slumped 3.2 percent, while other major indexes such as Australia (ASX:^AXJO - News) and Singapore (^FTSTI - News) lost about 1 percent each.

/... http://finance.yahoo.com/news/Asian-shares-tumble-on-global-rb-15211370.html?.v=1

[Demeter]

Well, at Least China Doesn't Have to Worry About What to Do with the Foreign Exchange

[Hawkowl]

54. Bad news for the US

If China isn't making any money, who's going to finance our "recovery", i.e; bank welfare?

This is why the fed is resorting to printing money, why China is buying gold, and why stagflation is looming just over the horizon.

[Demeter]

64. Gee, Guess We'll Just Have to Cut Off Those Welfare Queens, then.

:evilgrin:

[AnneD]

44. What do they mean.....

"American retailers have begun ordering to restock low inventories, amid signs that consumer spending may be stabilizing, Jing Ulrich, chairwoman for China equities at J.P.Morgan said in a note to clients."

What tea leaves are they reading....As far as I can tell-they are stabalized because folks are buying the necessities only. What stats prove their point?

I refuse to buy food from China and most consumer goods due to their lax standards and the desire to support local. I hope more folks put thought into where they spend their money.

[TheWatcher]

15. 3 Signs that It's Tuesday

1. The Futures have magically turned around almost 100 Points to a meteoric Rise at 3AM, after being -45 most of the night.

2. The Market was down yesterday, and since it's only allowed to go down on Mondays, which has become the pet day when the "Monied Class" distributes all of the worthless shares of "Hopes", "Assurances", and "Optimism" to the Sheep at "Bargain Prices", or as Yahoo Finance calls it in their never ending quest for the most ANNOYING, VOMIT INDUCING, AND VIOLENCE INCITING Catch Phrases, "Cashing In Their Winnings", it simply HAS to be Tuesday.

3. The Propaganda Blitz has begun once again after taking it's customary day off, which, traditionally in our newly minted Fascist State, is Monday:

http://finance.yahoo.com/news/Oil-above-59-on-signs-US-apf-15212530.html?sec=topStories&pos=1&asset=&ccode=

Translation: Higher Gas Prices Means the Recession is easing :crazy:

I told Hugin yesterday the Good Ship Bullshit would be sailing again full steam ahead today.

Let's see if I'm right, or all wet.

But you see, it's OK.

In America, we've proven that it is not necessary to have a sound, strong, economy, or leadership that will facilitate a sound, stable, REAL economy with true fundamentals and growth.

We've proven that if you are full of shit long enough, not only will you not be able to smell it anymore, it will actually serve as the FERTILIZER for an illusory economy that works just as well as the real thing!

American Ingenuity At It's Finest!

I can't wait to see what Service Jobs are waiting for me in the camps!

[ozymandius]

16. Federal Reserve Inspector General Unable to Answer Basic Questions on Where the Trillions Went

From Naked Capitalism:

Rep. Alan Grayson asks Inspector General Coleman of the Federal Reserve some very basic questions of about various Fed programs and activities and gets nowhere. And the worse is that the IG isn't stonewalling, but instead is clearly completely clueless. Watching the video, you get the impression that Coleman can't name a program beyond the TALF.

But there is a possibly more important issue at stake. The interview is with the Inspector General of the Federal Reserve Board of Governors. The programs are actually at the Federal Reserve Bank of New York. For reasons I cannot fathom, the Board of Governors is subject to Freedom of Information Act requests, while the Fed of New York has been able to rebuff them.

So I take Coleman's inability to answer key questions to be a feature, not a bug. The Fed of New York probably can answer Congressional questions, is taking care to limit what it conveys to the Board so as to keep the information from Congress and the public. Note in the questioning the emphasis on "high level reviews".

Video available here.

[ozymandius]

18. more info

The Federal Reserve Can Not Account For $9 Trillion In Off-Balance Sheet Transactions

-excerpt-

As for the pittance of $9 trillion in Fed off-balance sheet transactions over the past 8 months, well, yeah, that's also somewhere out there... Just don't ask the Federal Reserve where.

Rep. Alan Grayson summarizes it best "I am shocked to find out that nobody at the Federal Reserve is keeping track of anything."

(P.S. Zero Hedge uses the term "anyone" generically, with the presumption that the Fed's Inspector General should traditionally receive most memos on memorandum items that deal with a dollar sign and +/- 12 zeros after it).

a bit more at link...

[tclambert]

55. Blame it on 3rd world accounting.

They tried that excuse for losing track of billions in Iraq. 'Course 3rd world accounting would be paper and pencil, which is still way more than they did in Iraq.

[ozymandius]

19. FDIC Sold $470 Million Commercial Loans In March At 46.4 Cents On The Dollar

When Zero Hedge previously demonstrated the results of FDIC commercial loan auctions and the discount the Federal Deposit Insurance Corporation was willing to take in order to offload commercial loans (both non-performing and performing) from its books, the result was very startling, specifically when considered in the context of the vocal endorsement Ms. Bair had given to the PPIP's Legacy Loan program and the expected commercial loan clearing levels in the 80s and 90s. At that time Zero Hedge concluded that it was very hypocritical for the FDIC to solicit banks in offloading loans, and for hedge funds to buy them at out of market prices (especially with taxpayer-subsidized guarantees for hedge fund purchases, compliments of the administration, Geithner and Bair).

-details and figures-

Yes, the same FDIC which is advocating using taxpayer money to endorse and guarantee legacy loan sales as part of the PPIP in the 80/90 cents on the dollar range, continues selling performing commercial loans at about 50% off their book value. Ms. Bair's hypocrisy continues to amaze.

http://zerohedge.blogspot.com/2009/05/fdic-sold-470-million-commercial-loans.html

---

In case you are a new reader of this jargon - the term 'legacy' means stagnant assets on a bank's balance sheet. These assets have stagnated because the banks cannot find a buyer for these Collateralized Debt Obligations. Hence the term 'Big Shitpile'.

[DemReadingDU]

24. and now they are going thru the back door, using the FDIC

the FDIC that guarantees our bank saving accounts, that same FDIC is now also being used for toxic crap

:mad:

[Festivito]

22. Debt: 05/08/2009 11,258,693,795,457.10 (UP 2,427,155,406.90) (Debt down, mostly FICA.)

(Not much of a move.)

= Held by the Public + Intragovernmental(FICA)
= 6,955,218,139,510.73 + 4,303,475,655,946.37
DOWN 216,334,016.92 + UP 2,643,489,423.82

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

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 306-Million person America.
If every American, man, woman and child puts in $3.26 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.79, ABOUT TEN BUCKS for a 1B$ 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 306,313,458 people in America.
http://www.census.gov/population/www/popclockus.html
Currently, each of these American's owe $36,755.47.
A family of three owes $110,266.4. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 22 reports in the last 30 days.
The average for the last 22 reports is 5,151,867,966.62.
The average for the last 30 days would be 3,778,036,508.85.

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$/day.
There were 76 reports in 108 days of Obama's part of FY2009 averaging 0.14B$ per report, 0.23B$/day so far.
There were 151 reports in 220 days of FY2009 averaging 8.17B$ per report, 5.61B$/day.

PROJECTION:
There are 1,353 days remaining in this Obama 1st term.
By that time the debt could be between 13.1 and 18.8T$.
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)
05/08/2009 11,258,693,795,457.10 BHO (UP 631,816,746,544.02 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: 1,233,968,898,544.70 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
04/20/2009 +000,193,620,436.16 ------------******** Mon
04/21/2009 -000,363,758,089.93 ---
04/22/2009 +000,051,738,680.14 ------------*******
04/23/2009 -012,857,484,009.95 -
04/24/2009 -000,133,239,400.23 ---
04/27/2009 +000,285,896,492.06 ------------******** Mon
04/28/2009 +000,154,949,620.57 ------------********
04/29/2009 -034,727,762,120.64 -
04/30/2009 +079,347,503,951.43 ------------**********
05/01/2009 -003,202,605,992.57 --
05/04/2009 +000,068,750,275.89 ------------******* Mon
05/05/2009 +000,122,936,524.80 ------------********
05/06/2009 -000,058,764,073.21 ----
05/07/2009 +027,679,213,817.18 ------------**********
05/08/2009 -000,216,334,016.92 ---

56,344,662,094.78 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,594,061,992,198.03 in last 232 days.
That's 1,594B$ in 232 days.
More than any year ever, including last year, and it's 157% of that highest year ever only in 232 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 232 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=3870913&mesg_id=3871010

[Festivito]

61. Debt: 05/11/2009 11,260,454,652,131.26 (UP 1,760,856,674.16) (Debt down, mostly FICA.)

(Not much of a move near to the same as yesterday's.)

= Held by the Public + Intragovernmental(FICA)
= 6,955,188,380,355.05 + 4,305,266,271,776.21
DOWN 29,759,155.68 + UP 1,790,615,829.84

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 $3.26 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.79, ABOUT TEN BUCKS for a 1B$ 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 306,331,972 people in America.
http://www.census.gov/population/www/popclockus.html
Currently, each of these American's owe $36,758.99.
A family of three owes $110,276.98. (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 4,320,428,781.27.
The average for the last 30 days would be 3,024,300,146.89.
The average for the last 31 days would be 2,926,742,077.64.
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$/day.
There were 77 reports in 111 days of Obama's part of FY2009 averaging 0.10B$ per report, 0.16B$/day so far.
There were 152 reports in 223 days of FY2009 averaging 8.13B$ per report, 5.54B$/day.

PROJECTION:
There are 1,350 days remaining in this Obama 1st term.
By that time the debt could be between 13.1 and 18.7T$.
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)
05/11/2009 11,260,454,652,131.26 BHO (UP 633,577,603,218.18 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: 1,235,729,755,218.80 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
04/21/2009 -000,363,758,089.93 ---
04/22/2009 +000,051,738,680.14 ------------*******
04/23/2009 -012,857,484,009.95 -
04/24/2009 -000,133,239,400.23 ---
04/27/2009 +000,285,896,492.06 ------------******** Mon
04/28/2009 +000,154,949,620.57 ------------********
04/29/2009 -034,727,762,120.64 -
04/30/2009 +079,347,503,951.43 ------------**********
05/01/2009 -003,202,605,992.57 --
05/04/2009 +000,068,750,275.89 ------------******* Mon
05/05/2009 +000,122,936,524.80 ------------********
05/06/2009 -000,058,764,073.21 ----
05/07/2009 +027,679,213,817.18 ------------**********
05/08/2009 -000,216,334,016.92 ---
05/11/2009 -000,029,759,155.68 ---- Mon

56,121,282,502.94 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,595,822,848,872.19 in last 235 days.
That's 1,596B$ in 235 days.
More than any year ever, including last year, and it's 157% of that highest year ever only in 235 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 235 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=3872456&mesg_id=3872511

[UpInArms]

27. dollar watch

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

Last trade 82.380 Change -0.461 (-0.59%)

Forex Strategy Outlook: Dollar Breakdown Boosts Strategy Performance

http://www.dailyfx.com/story/special_report/special_reports/Forex_Strategy_Outlook__Dollar_Breakdown_1242050535212.html

A major breakdown in the US Dollar greatly boosted performance in several of our forex trading strategies, as our Momentum and Breakout systems were heavily long the Euro, Canadian dollar, Swiss Franc, Australian Dollar, and New Zealand dollar against the US currency. A continuation of the dollar downtrend would certainly bolster outlook for these trend-following systems, and the US Dollar Index’s break below a key 10-month trendline and 200-day SMA suggests further losses are likely. Of course, we cannot discount the possibility that the Dollar breakdown may lead to subsequent consolidation.

It remains important to monitor day-to-day price action in key currency pairs. Fresh lows in volatility expectations suggest that few anticipate major price moves through the medium term. Said drop really limits our optimism for Momentum and Breakout trading systems, but we cannot ignore the clear short-term trends in major currency pairs.

Forex Trading Automated Systems Outlook

Our Momentum and Breakout trading systems have had a strong run in the past week or so, with the US Dollar’s breakdown providing solid opportunities in these strategies. Momentum2 had previously shown negative performance in the preceding 60 days of trading, but the recent turn has been enough to lift the strategy into positive territory through time of reporting. Clearly a continuation of the USD downtrend would be beneficial to the Momentum2 and Breakout2 systems. Yet we remain clearly aware of the fact that low volatility figures suggest markets may re-enter large trading ranges through upcoming trade.



...more...

US Dollar 'Certain' to Remain Global Reserve Currency, Says Bernanke

http://www.dailyfx.com/story/special_report/special_reports/US_Dollar__Certain__to_Remain_1242105583966.html

US Federal Reserve Chairman Ben Bernanke said he is “certain” the US Dollar would remain the world’s reserve currency. The British Pound may see volatility in European hours with the March Trade Balance and Industrial Production reports on tap for release.

Key Overnight Developments

• Bernanke ‘Certain’ US Dollar Will Remain Global Reserve Currency
• Australian Lending for Property Investments Surges Most in Nearly 2 Years

Critical Levels



The Euro rebounded a bit in Asian trading, testing above 1.36 once again but losing its grip on the figure ahead of the opening bell in Europe. The British Pound oscillated in a familiar 100-pip range below 1.5170 that has confined the pair over the past 24 hours.

<snip>

US Federal Reserve Chairman Ben Bernanke sounded notably optimistic in a speech at Jekyll Island, Georgia, saying Wall Street’s response to bank stress tests was “encouraging” and that troubled financial institutions are now "way ahead" in raising capital. On the macro economy, the Fed chief said deflation risks are "receding" and an inflation rate at 1.5-2% is "appropriate". Speaking of the US Dollar, Bernanke said he is “certain” the greenback would remain as the world’s reserve currency.

...more...

[Dr.Phool]

33. Denninger: The Economic Tsunami Is Curling Over.

If these numbers are right, we're really screwed. California sales tax receipts off by 50%!? Income tax collections off 43%!? Holy shit!!!!

http://market-ticker.denninger.net/authors/2-Karl-Denninger

The Economic Tsunami Is Curling Over



I have only one question for those who speak of "green shoots":

What are you smoking?

Let's start with a really ugly report from The Nelson A. Rockefeller Institute of Government:

The trend in state and local tax collections has been clearly downward from 2005 growth that was unusually high, and 2006 growth rates that were more in line with historical averages. Figure 1 shows the four-quarter moving average of year-over-year growth in state tax collections and local tax collections, after adjusting for inflation. Year-over-year change in state taxes, adjusted for inflation, has averaged negative 1.1 percent over the last four quarters, down from the 1.4 percent average growth of a year ago and 3.4 percent of two years ago.

There are a number of graphs in that paper, one of which shows that right around January (the latest for which they have complete data) there is an uptick in Goods consumption. This is part of where the Kudlow "green shoot" brigade is getting their information from.

However, if you look at the graph, you will see that every year there is a similar tick upward in consumption, although the exact date of it does vary by a month or two.

Why?

It's called Christmas!

State Sales Tax Revenues tell the story. California is absolutely cratering, for example:

Sales taxes were $452 million lower (-50.9%) than last April, and personal income taxes were down $5.7 billion (-43.6%).

Fifty percent?! FIFTY?

California is responsible for thirteen percent of the total US GDP and if it were an independent nation it would be the tenth largest economy in the world.

The idea that we can have some sort of economic recovery while the sales tax receipts - which are a direct measurement of consumer activity - are down by half is pure insanity. Where is the economic activity that is going to create this "recovery"?

And let me remind everyone - sales tax receipts are not a lagging indicator, they tell you what is going on right now.

Now let's look at job losses in this recession compared to others. As written up in the NY Times:

A bottom? Where?

To be fair employment is a lagging indicator; there is no pickup in hiring for some time after the economy truly bottoms, usually about 6-9 months. The reason is that people are both slow to fire (they're nice) and slow to hire (they're not convinced the recovery will "take") and as such there is a lag in both the firings when things slow down and the hirings when things begin to recover.

Nonetheless, there is nothing to suggest that we're anywhere near the bottom of this cycle. Indeed, we've been setting records for the severity and duration of losses in the postwar era, surpassing the 81-83 duration and vastly surpassing all of the previous recessions in terms of depth.

Nor are the "programs" trotted out by Obama (and his predecessor, to be fair) doing anything. We recently learned that "Hope for Homeowners" made a grand total of..... wait for it..... 51 loans.

FIFTY ONE? No, that is not a misprint:

Senior federal housing officials say that of 51 loans made under the program, 50 were made by Melville, N.Y.-based Lend America, and those 50 loans are being held up pending ongoing federal investigations. The officials, who insisted on anonymity because they are not authorized to speak on the matter, declined to offer specifics except to say anything from inadequate documentation to unethical practices could be the focus of the queries.

Remember, "Hope for Homeowners" was supposed to help four hundred thousand people stay in their homes.

The net closed loan count is fifty one over a period of six months.

Oh, and the reason for that article? The company responsible for 50 of the 51 loans is under investigation by The Department of Justice!

I would like to be optimistic on the economy and thus, the capital markets.

I refuse, however, to countenance and cheerlead for fraudulent "reporting" and false claims in the media in an attempt to prop up asset prices so that banks can issue stock into an overheated bubble market created through lies.

In my opinion, that is exactly what is going on here, and is an extension of the game-playing that occurred with the so-called "stress tests", as reported in the WSJ over the weekend:

The Federal Reserve significantly scaled back the size of the capital hole facing some of the nation's biggest banks shortly before concluding its stress tests, following two weeks of intense bargaining.

In addition, according to bank and government officials, the Fed used a different measurement of bank-capital levels than analysts and investors had been expecting, resulting in much smaller capital deficits.

....

The Fed's findings were less severe than some experts had been bracing for. A weeklong rally in bank stocks continued Friday, with the KBW Bank Stocks index surging 10%. Investors were especially relieved by the relatively small capital holes at regional banks. Shares of Fifth Third soared 59%, while Regions Financial Corp.'s $2.5 billion deficit led to a 25% leap in its stock.

Right.

The original numbers weren't what the banks wanted to hear, so they complained and got them changed. Investors were duped by this lack of disclosure of the exact nature and difference in the figures, and besides, the banks came up with the asset valuations anyway - there was apparently no independent verification.

Some of the changes were truly massive - Citibank, for example, managed to wheedle down $35 billion to $5.5, and Bank of America managed to wheedle down their $50 billion number to $33.9. Fifth Third's original number was $2.6 billion; the reported number $1.1.

Is it thus a "green shoot" that the results were "better" than investors expected? No. The results were in fact at least as bad as expected, and maybe worse. But when the banks didn't like the results they whined and managed to get the teacher to change the grade - ex-post-facto.

Finally, we have Bernanke. I have opined several times over the last couple of weeks that his "Quantitative Easing" is an abject failure. I said when it was announced that it would not work, and it hasn't worked.

Blackrock is prodding Ben to increase the buyback:

May 11 (Bloomberg) -- The world’s biggest investors are increasing bets that Federal Reserve Chairman Ben S. Bernanke will boost purchases of Treasuries as the steepest losses on government debt since 1994 send mortgage rates above 5 percent.

What I find disturbing is that through this entire crisis, as I have outlined repeatedly, neither The Fed or Treasury seems to understand the first damn thing about trading.

Simply put when you prop up prices beyond where they should be everyone who owns that thing will sell into you. The paradox is that this selling then causes prices to fall, not rise - that is, your intended move not only doesn't happen the reverse of the intended move does!

This happened with Fannie and Freddie (Paulson's infamous "Bazooka") and now it is happening in the credit market with Treasury Debt.

If Bernanke does not back off he will find himself in a tightening monetary flat spin. As he comes to own more and more of the public float of the long end the impact of each sale into his program by private holders is magnified in the market.

That is, if there is $1 trillion of something outstanding and you buy $100 billion of it (10% of the float) the impact is X. If there is now $900 billion outstanding (after the first operation) and you buy another $100 billion you have in fact sucked up about 11%. When you get to owning $500 billion another $100 billion sucks up 20% of the float. Each tender operation of the same size thus creates an ever-increasing impact on the underlying price, and since nobody in their right mind will continue to hold something they believe is overvalued, the spiral will tighten precipitously, forcing even more purchases until The Fed owns it all.

At or before that point the long end becomes unavailable to Treasury as a funding source. Forcing all the issue to the short end now starts to ramp short yields (supply and demand, remember - add massive supply and what happens to price?) and Bernanke will then be urged to buy down the time line.

This path leads to a singularity - and both monetary and political failure. The bad news is that the event horizon is far before Bernanke actually winds up owning the entire float, but nobody knows exactly where it is.

Yet once crossed, there is no escape from the outcome.

We best not go there, because if we go down that road too far Americans will be needing all those firearms that they've been buying since Obama was elected - not for a revolution, as some suppose, but rather for self-defense as our political, social and economic structures collapse.

[Demeter]

34. Thank You Doctor!

The Watcher is gonna have to crank up the vitriol to keep up with Denninger.

[Demeter]

35. Stress tests unleash fee bonanza

http://www.ft.com/cms/s/0/d6f61312-3e71-11de-9a6c-00144feabdc0.html

The completion of US banking “stress tests” has unleashed a fee bonanza for Wall Street, with financial institutions set to earn more than $500m in just a few weeks for helping rivals raise equity to plug capital shortfalls and repay federal aid.

DETAILS ON WHO'S RAISING WHAT AND HOW FOLLOW

[Demeter]

36. Geffen sets sights on NY Times

http://www.ft.com/cms/s/0/c35770aa-3e83-11de-9a6c-00144feabdc0.html

David Geffen, the former record executive who made an offer for the Los Angeles Times two years ago, now wants to buy the New York Times, according to people close to the situation.

Mr Geffen, a co-founder of DreamWorks SKG, made an offer in the past two months for the 19.8 per cent stake in the New York Times Company held by Harbinger Capital Partners, the activist US hedge fund controlled by Philip Falcone.

His offer was rebuffed, two people familiar with its details said. One of these said the offer was made at the prevailing market price but Harbinger wanted a premium, adding that Mr Geffen remained interested in owning the company and would be “a patient buyer”.

Harbinger, Mr Geffen and the Times declined to comment, but Mr Geffen’s interest, first reported by Fortune.com, could complicate the future control of America’s most prestigious newspaper company.

The Ochs-Sulzberger family, which controls the New York Times through a class of shares with super-voting rights, was forced to borrow $250m from Carlos Slim, the Mexican telecommunications billionaire, on terms that could allow him to raise his stake beyond the current 6.9 per cent to become one of its biggest shareholders.

Mr Geffen would not mount a hostile challenge to Arthur Sulzberger Jr, the company’s chairman, the person familiar with the situation said. Mr Sulzberger told shareholders recently the company was not for sale.

There is no clear path to control through the Harbinger stake, given the family’s grip on voting rights.

However, Mr Geffen’s interest comes amid speculation that the family’s loyalty may wane as its dividend income has dried up amid the company’s cash crunch.

Declining advertising revenues have forced the Times to mortgage its Manhattan headquarters, invite offers for its stake in the Boston Red Sox baseball team, and seek deep cost cuts at the Boston Globe to avert the closure of its second-largest title.

Mr Geffen is no longer interested in the Los Angeles Times, according to one person familiar with his thinking.

The Tribune Company, which owns the California newspaper, filed for bankruptcy protection in December.

Harbinger, whose stake is worth $193m, also held talks with Google, which declined to comment on “rumours”.

I THINK GEFFEN WOULD BE IN OVER HIS HEAD, BUT WHO KNOWS?

[Demeter]

37. Goldman agrees $60m subprime deal

http://www.ft.com/cms/s/0/ebc237b0-3e82-11de-9a6c-00144feabdc0.html

Goldman Sachs has agreed to a $60m settlement to resolve claims by a Massachusetts regulator that it participated in unfair and deceptive lending practices involving subprime mortgages, it was announced on Monday.

The settlement did not involve an admission of wrongdoing by the bank. But Martha Coakley, Massachusetts attorney-general, said Goldman had “played a role” in the “predatory lending” associated with the subprime market. In a statement, the bank said: “Goldman Sachs is pleased to have resolved this matter.”

Ms Coakley said Goldman agreed to forgo up to $50m so it could restructure subprime loans it had helped underwrite or facilitate – in some cases forgiving up to half the unpaid balance. In addition, Goldman will pay $10m to Massachusetts and continue to co-operate with the state’s regulators.

[Demeter]

38. Credit insurance hampers GM restructuring

http://www.ft.com/cms/s/0/1e2bf9ea-3e54-11de-9a6c-00144feabdc0.html

Hedge funds and other investors stand to make billions of dollars on credit insurance contracts if GM de­clares bankruptcy, a prospect that is complicating efforts to persuade creditors to agree to a restructuring plan for the automaker, analysts say.

Holders of $27bn in GM bonds have until June 1 to decide whether to swap their debt for a 10 per cent equity stake in the company as part of an offer that would give the US government 50 per cent of the shares, a United Auto Workers union healthcare fund 39 per cent and existing shareholders 1 per cent.

However, analysts say the chances the proposal will be accepted have been diminished by the large number of credit default swap (CDS) contracts written on GM’s debt.

Holders of such swaps would be paid in the event of a default – but would lose money if they agreed to restructure GM’s debt. For investors who own bonds and CDS, this could create an incentive to favour a bankruptcy filing.

According to the Depository Trust & Clearing Corporation, investors hold $34bn in CDS on GM. Once off-setting positions are considered, the DTCC estimates CDS holders would make a net profit of $2.4bn if GM were to default.

The opposition of 10 per cent of bondholders is enough to derail the proposal, which has already triggered protests from investors who argue it unfairly rewards the UAW at the expense of bondholders.

“You have every incentive not to agree,” said one bondholder, a large credit hedge fund. “You would be locking in a loss if you did. It isn’t only the ‘shark’ capital; it will be the mom and pop mutual funds who will oppose this deal. ”

Prices for GM’s debt and CDS indicate investors believe a bankruptcy filing is highly likely. GM’s bonds are trading at between 6 and 12 cents on the dollar. To insure $100m in GM debt for five years, an investor would have to pay $89m plus another $5m a year over the life of the CDS contract.

The CDS positions mark a crucial difference between GM and Chrysler, which filed for bankruptcy protection as part of what it hopes will be a swift restructuring. Chrysler had $6.9bn in bank loans, on which there were few credit insurance contracts.

“Chrysler looks like a simple two-car funeral compared to the traffic jam of assets and liabilities and contracts at GM,” said the credit research boutique CreditSights. “Chrysler provides limited parallel.”

[Demeter]

39. A Brief History of the Economy Courtesy of Daily Reckoning. com

Here we give you the first of four Daily Reckoning dicta:

People do not get what they want or what they expect from the markets; they get what they deserve.

Of course, people would like the downturn to be over. Many are counting on it. But Mr. Market doesn't give a hoot. He's got a "Capitalism at Work" t-shirt on and a sledgehammer in his hand.

What's he up to? He's demolishing a quarter century's worth of mistakes. There are always mistakes made. Investments go bad. Businesses go under. People go broke. When many mistakes are corrected at once, it's called a 'recession.' And when an entire economic model goes bad, it's called a 'depression.'

The economic model of the last quarter century caused more mistakes than usual. It encouraged people to spend, borrow, and speculate. And each time Mr. Market tried to make some corrections, the authorities came along with more money and easier credit. Businesses that should have gone under years ago kept digging themselves in deeper. Homeowners kept running up more debt. Speculators kept taking bigger and bigger gambles. Altogether, total debt - a measure of the bubble in the credit markets and all things associated with it - rose from only about 150% of GDP when the Pontiac GTO came out, to 370% during the Hummer and Prius years.

Fish gotta swim, birds gotta fly, and bubbles gotta blow. The bubble in the financial sector - including subprime debt, housing prices, bonuses on Wall Street and derivatives - hit the fan in 2007. And what a mess!

And why shouldn't it be? Which brings us to the second of our dicta:

The force of a correction is equal and opposite to the deception that preceded it.

The delusions and absurdities of the Bubble Epoque were monstrous. Naturally, the correction must be huge too. World stock markets were nearly cut in half. Property prices too have been knocked down almost everywhere. The total loss of nominal wealth has been estimated as high as $50 trillion.

In today's paper, we find that Buffett's company, Berkshire Hathaway, made its first loss since 2001. Thirty-three banks have been shut down this year. America's leading banks say they need another $75 billion to keep their doors open. And Fannie Mae said it lost $23 billion; it will need $19 billion more to continue jiving the housing market.

Could these losses have been prevented?

Ah...certainly many of them could. If the U.S. Congress had never created Fannie Mae, for example, it never would have distorted the mortgage market as much as it did. And if the feds hadn't created the Federal Reserve Bank, it couldn't have provided so much ready money for so many speculators and borrowers. And if the Fed under Alan Greenspan had done what it was supposed to do - that is, to "take away the punch bowl" before the party got out of control - the bubble in the financial sector probably would have been much more modest.

Of course, people drew all the wrong conclusions. They thought "capitalism failed." They saw the car drive off the cliff...but didn't notice how government had twisted the road signs. Instead of warning investors of the dangerous curve ahead, the Fed's low lending rates said: 'Step on the gas!'

Dictum number 3: Capitalism doesn't always take an economy where it wants to go; but it always takes an economy where it ought to be.

Whoever was responsible for the mistakes, capitalism went about correcting them with its customary élan. It hit imprudent investors with trillions in losses. It knocked down mismanaged corporations. It whacked homeowners...and pounded housing-based derivatives to dust.

Capitalism operates by a process that the great economist Joseph Schumpeter called "creative destruction." It destroys mistakes to make room for new innovations and new businesses. Unfortunately, this puts it at odds with government...and what most people want. When people make mistakes, they maintain that they are blameless ("who could have seen this crisis coming?") and that someone else should pay for the loss.

So today, the feds, who mismanaged their regulatory responsibilities during the Bubble Epoque, are bailing out mismanaged corporations in order to protect lenders who mismanaged their money. They are determined to prevent capitalism from making major changes - in the worst possible way. What's the worst possible way? Simple. Leave the mismanagers in place. Keep the brain-dead companies alive - along with the zombie banks. Let the government take ownership of major sectors of the economy. And stick a debt-ridden society with even more debt! The feds are expected to borrow $2 trillion this year alone. From whom? And who will repay it?

We think you have a pretty good idea of who is going to end up footing the bill, dear reader. And we don't think you should take it sitting down. That's why we've gathered all the resources you need to build your own personal bailout - and put them here to be easily accessible for you.

And the fourth dicta: The severity of a depression is inversely correlated with government's efforts to stop it.

The more the feds try to delay and distract the process of creative destruction, the longer it takes to get the job done. And the higher the eventual bill.

There are only two fairly clear examples in modern history. After the crash of '29, the Hoover and Roosevelt administrations tried desperately to stop the correction. They could not make bad debts disappear, nor turn bad decisions into good ones. All they could do was to retard the necessary corrections - and cause new mistakes! It wasn't until after WWII, 15 years later, when the New Deal was largely forgotten, that the United States got back to work. Similarly, when Japan was confronted with a major correction in 1990, its politicians followed the Hoover/Roosevelt model. Over the years, an amount equivalent to almost an entire year's output was applied to recovery efforts. But all they did was to prevent and forestall the needed changes. Now, 19 years later, the Japanese economy is still in corrective mode.

Tomorrow...beware the suckers' rally...

http://dailyreckoning.com/capitalism-at-work/

[Demeter]

40. Pirate "Consultants" Track Ships From London

Mother Jones http://www.motherjones.com/mojo/2009/05/pirate-consultants-track-ships-london

— By Bruce Falconer | Mon May 11, 2009 7:56 AM PST

You wouldn't know it from the pictures of scrawny, hungry-looking men chasing after mammoth commercial ships in faded-white speedboats with outboard motors, but Somali pirates operate what experts believe to be a sophisticated international network, complete with its own intelligence apparatus and PR flacks. Piracy is a multi-million dollar business, after all, taking in an estimated $150 million in 2008 alone, and is the only growth industry in Somalia, offering starved fisherman a taste of the good life. It's doubtful, however, that so many pirates would driving around Somalia's dusty roads in luxury cars without their coterie of undercover operatives in some of the world's busiest commercial ports.

That they have eyes and ears in key locations is not a new revelation, but a European military intelligence report, obtained by the Spanish radio station Cadena SER, lays bare the current thinking on the network's structure and function. Pirate "consultants" based in London, says the report, coordinate intelligence on ships bound for the Suez Canal by satellite phone, allowing the pirates to strategize individual hijackings long before ships enter the attack zone.

From the Guardian:

This enables the more organised pirate groups to study their targets in advance, even spending several days training teams for specific hijacks. Senior pirates then join the vessel once it has been sailed close to Somalia.

Captains of attacked ships have found that pirates know everything from the layout of the vessel to its ports of call. Vessels targeted as a result of this kind of intelligence included the Greek cargo ship Titan, the Turkish merchant ship Karagol and the Spanish trawler Felipe Ruano.

In each case, says the document, the pirates had full knowledge of the cargo, nationality and course of the vessel.

The national flag of a ship is also taken into account when choosing a target, with British vessels being increasingly avoided, according to the report. It was not clear whether this was because pirates did not want to draw the attention of British police to their information sources in London.

[Demeter]

41. Velocity of Money Falling--Rough Times Ahead?

http://3.bp.blogspot.com/_qFiyjwMlP0Y/SgkC_wz404I/AAAAAAAAAxo/gGvvJhvkMvo/s400/New+Picture+(2).bmp

http://3.bp.blogspot.com/_qFiyjwMlP0Y/SgkC_wz404I/AAAAAAAAAxo/gGvvJhvkMvo/s1600-h/New+Picture+(2).bmp

...An increase in the stock of money will only lead to a higher GDP if V, or velocity, is stable. V should be thought of conceptually rather than mechanically. If the stock of money is $1 trillion and total spending is $2 trillion, then V is 2. If spending rises to $3 trillion and M2 is unchanged, velocity then jumps to 3.

While V cannot be observed without utilizing GDP and M, this does not mean that the properties of V cannot be understood and analyzed. The historical record indicates that V may be likened to a symbiotic relationship of two variables. One is financial innovation and the other is the degree of leverage in the economy. Financial innovation and greater leverage go hand in hand, and during those times velocity is generally above its long-term average of 1.67 (Chart 4, above, click to enlarge).

Velocity was generally below this average when there was a reversal of failed financial innovation and deleveraging occurred. When innovation and increased leveraging transpired early in the 20th century, velocity was generally above the long term average. After 1928 velocity collapsed, and remained below the average until the early 1950s as the economy deleveraged.

From the early 1950s through 1980 velocity was relatively stable and never far from 1.67 since leverage was generally stable in an environment of tight financial regulation. Since 1980, velocity was well above 1.67, reflecting rapid financial innovation and substantially greater leverage. With those innovations having failed miserably, and with the burdensome side of leverage (i.e. falling asset prices and income streams, but debt remaining) so apparent, velocity is likely to fall well below 1.67 in the years to come, compared with a still high 1.77 in the fourth quarter of 2008.

Thus, as the shadow banking system continues to collapse, velocity should move well below its mean, greatly impairing the efficacy of monetary policy. This means that M2 growth will not necessarily be transferred into higher GDP. For example, in Q4 of 2008 annualized GDP fell 5.8% while M2 expanded by 15.7%. The same pattern appears likely in Q1 of this year

The highly ingenious monetary policy devices developed by the Bernanke Fed may prevent the calamitous events associated with the debt deflation of the Great Depression, but they do not restore the economy to health quickly or easily. The problem for the Fed is that it does not control velocity or the money created outside the banking system....


http://www.nakedcapitalism.com/2009/05/guest-post-is-inflation-inevitable.html

[DemReadingDU]

43. Charles Hugh Smith:

5/12/09 The Big Con (May 12, 2009)
Charles Hugh Smith

The level of propaganda spewing out of the U.S. government and the financial press/mass media is unprecedented in my lifetime (55 years). Public support for policies based on distorted statistics will crash once reality intrudes.

The U.S. government and its financial Plutocracy Overlords have undertaken an unprecedented propaganda campaign to convince the U.S. public that their looting of public treasure has "worked" and we can all start borrowing and spending again.

Having been cursed by a completely useless interest in politics since the age of 10 (the 1964 presidential election campaign) I can state without hesitation that the grand deceptions, Big Lies and blatant propaganda campaigns of the past pale in comparison to the current orchestration of phony statistics and "it's all fixed now, start spending."

What's breath-taking is they seem to be close to getting away with it. Here's the plan, brilliant, desperate, or simply "we have no other option": rather than actually make the fundamental reforms to our corrupt and venal financial system which democracy and capitalism both demand, our government and its Plutocratic handlers (money-center and investment banks--you know, the retired CEOs who sit on the NY Fed board) are gambling on The Big Con.

The Big Con is simple: if they can convince the American public that "green shoots" will soon grow into mighty oaks, then the public will save the financial system from its richly deserved impoverishment by starting to borrow and spend again on the same old grandiose scale we've grown accustomed to as "normal."

Even if it's all lies, deceptions, fraud and statistical trickery, if the public believes The Big Con then the financial sector will be "saved" from the pain of actual reform.

Want to know why the bank stocks all skyrocketed in the last month? No, it's not because they "made a healthy profit."
.
.
No, the real reason is that the Fed and Treasury--on the hook for trillions of dollars in bailouts and guarantees of speculative debt--and the insolvent banks needed very desperately to raise new capital. The faint mewling of public outrage over the trillions already squandered could be heard in the distance, so the Fed and Treasury felt slightly constrained in what they could engineer in the light of day.

The "solution" was to declare the banks "solvent", goose their stocks and then sell new stock to credulous private investors. When the Bank of America's stock was $3, raising capital by selling shares would have seriously diluted insiders' holdings; much better to goose the stock with Fed and Treasury connivance and then sell the rubes and fools more stock at $12--literally four times the probable "real value" of the shares.

I picked up this compelling thesis from the excellent blog THE HOUSING TIME BOMB. The mechanism is simple: the trading desks of the big banks account for up to half of all trading each and every day--rumor has it Goldman Sachs' desk accounted for fully 25% of all trading activity on its own.

How do you goose your own stock? Easy. Buy huge blocks above the bid and trigger institutional and hedge fund "buy" programs. Once you detect short selling, squeeze the shorts with relentless buying, forcing them to cover, which effectively boosts the stock by leaps and bounds.

All of this was laid out decades ago by legendary trader Jesse Livermore in Reminiscences of a Stock Operator and nothing has changed since except the level of deception and obfuscation has grown.

Now that the big banks have sold millions of shares at artificially pumped-up prices, then they can start dumping their own shares to other rubes on the open market.

more...
http://www.oftwominds.com/blogmay09/big-con05-09.html

Edit to delete a few paragraphs, too long

[Demeter]

46. How Can Anyone Fall for This Now, After Years of It?

The triumph of hope over experience, greed, or a sucker born every minute.

Drop in short positions adds pressure on bulls

http://www.marketwatch.com/story/drop-in-shorts-adds-pressure-on-bulls?siteid=yahoomy

NEW YORK (MarketWatch) -- A drop in short positions, or bets that stocks will fall, means that cautious investors who have been forced to join in the market's powerful two-and-a-half month's rally are putting more pressure on economic news not to disappoint.

"It was inevitable that the market's 38% gains since March would force to reconsider their short positions," said Dan Greenhaus, market strategist at Miller Tabak. "The question now is, if we start losing some gains, how quickly would they bring those positions back."

Late Monday, NYSE Euronext /quotes/comstock/13*!nyx/quotes/nls/nyx (NYX 24.00, -0.38, -1.54%) said that short interest in securities on the New York Stock Exchange fell to 15.17 billion shares as of April 30, compared with 15.64 billion shares two weeks earlier.

Similary, the Nasdaq OMX Group /quotes/comstock/15*!ndaq/quotes/nls/ndaq (NDAQ 18.58, -0.72, -3.73%) said short interest in shares fell to 6.46 billion shares in 2,999 securities, down from 6.71 billion shares in 2,997 for the same period.

[DemReadingDU]

47. Top GM Executives sell shares

more insiders selling

5/11/09 Top GM Executives sell shares
A group of top General Motors Corp. executives, including Vice Chairman Bob Lutz, have sold what was left of their personal stakes, according to several filings with the Securities and Exchange Commission on Monday.

"Our shareholders are obviously facing some pretty severe dilution if the bond exchange goes through or we end up in bankruptcy," GM spokesperson Julie Gibson said. "Either way, no matter the outcome, we'll essentially be issuing new stock."

She acknowledged that the executives took advantage of a trading window to sell their shares while there's still some value "like most reasonable people would do."

At the same time, GM is trying to rid itself of $27 billion in debt by convincing thousands of creditors to exchange their bonds for 10% in GM stock.

According to the SEC filings, Lutz was joined by fellow Vice Chairman Thomas Stephens, Ralph Szygenda, Troy Clarke, Gary Cowger and Carl-Peter Forster. All together, the six sold nearly 205,000 shares between Friday and Monday, fetching between $1.45 and $1.61 a share.

a bit more...
http://www.marketwatch.com/story/lutz-and-other-top-gm-executives-sell-shares

[TheMachineWins]

48. It's true, people want to be lied to to keep their delusional worlds going

The other day, someone was blaming baby boomers for the way things are today and I didn't have the heart to tell them that the propaganda is so thick today that it makes the current generation, not the boomers, the biggest group of lying and self-serving suckers the world has ever seen. I'm going to a college graduation party in a few days and my big problem will be keeping my mouth shut and not telling the latest graduates what lies they have to look forward to.

[TheWatcher]

50. *Yawn* 3 PM Propaganda Miracle Rally Right On Schedule

Apparently Based On This:

Greenspan sees "seeds of bottoming" for U.S. housing

WASHINGTON (Reuters) - Former Federal Reserve Chairman Alan Greenspan said on Tuesday that "the seeds of a bottoming" in plunging U.S. home markets were becoming visible.



Speaking to a National Association of Realtors summit, Greenspan said there were reasons to believe that bulging inventories of unsold homes were dwindling and that should bring some stability to prices.

(VOMIT INDUCING BULLSHIT ALERT) "It looks to me, judging from the balancing of household formation on one hand, conversions, mergers, demolitions...that we're at the edge of a major liquidation in that excess of inventories which I suspect and I hope will be of such a pace that it will stabilize prices," the former Fed chief said.

"So as I look at the housing market...we are finally beginning to see the seeds of a bottoming," he added.

Greenspan noted that in areas where the housing slump was steepest, like California, Nevada, Arizona and central Florida, sales appeared to be picking up even if prices are not yet showing the same rebound.

http://finance.yahoo.com/news/Greenspan-sees-seeds-of-rb-15219771.html;_ylt=Ahs0mcjVW8eyH8pf_TBee9a7YWsA?sec=topStories&pos=1&asset=&ccode=

And THIS:

Judge OKs deal to make GMAC top Chrysler lender

Judge approves agreement to make GMAC preferred lender for Chrysler dealers and customers



NEW YORK (AP) -- A bankruptcy judge on Tuesday ruled that GMAC Financial Services can become Chrysler LLC's preferred lender, potentially sending a slew of new business to the financing company and ensuring that Chrysler's dealers will have access to the loans they need to stay in business.


U.S. Judge Arthur Gonzales approved the four-year deal between Auburn Hills, Mich.-based automaker and GMAC, pending the completion of certain documentation. He also gave pending approval of a risk sharing agreement between Chrysler and Chrysler Financial, which allows the deal between Chrysler and GMAC to go forward.

Gonzales was expected to sign the approval orders for the motions later on Tuesday.

Under the agreement, the exact details of which were sealed by the court, GMAC will be allowed to provide showroom financing to Chrysler dealers and have the right to exclusively offer certain discounted financing rates to Chrysler customers.

http://finance.yahoo.com/news/Judge-OKs-deal-to-make-GMAC-apf-15219246.html?sec=topStories&pos=2&asset=&ccode=

You know, I'd say "I Told You So", but this BS has become The Economy itself, so it's so commonplace it would be redundant.

They are going to destroy what's left of this country, and Euthanize us all into pacification with the illusion that they aren't.

And apparently, WE ARE GOING TO LET THEM.

[TheMachineWins]

58. Yessiree, here's a list of terms used in 1/2 hour on TV today

---Definitely off worst levels. Are the bulls back? Well positioned for eventual rally. We don't see a pullback. There are green shoots down the road. There's a work off of inventory. Probably want to look to be buyers. Revenues less worse than expected. A recovery is being priced in. Fundamentally, equities look cheap. Buy after the next scare. Strongest rally since 1938. In 10 years, investors will look really smart.---

Isn't that just great, if I wait 10 years I'll look really smart!

[Demeter]

62. Greenspan Needs a Syntax Adjustment

"Seeds of a bottoming"? That's not even a mixed metaphor. It's a Bushism!

[CatholicEdHead]

51. New hires get less pay as jobs remain scarce

http://www.kare11.com/news/national/national_article.aspx?storyid=698489&catid=18

Employers are laying off workers and taking other steps to cut costs as they grapple with the recession, the longest since the Great Depression. Some companies also are reducing the pay and benefits for new employees, according to a new survey released by the Society for Human Resource Management.

Nearly 15 percent of service-sector companies reduced pay and benefits for new hires in April compared with March, the survey found. Only 2 percent increased such compensation.
....
It means roughly five workers are competing, on average, for each opening, compared with less than two for each job about a year ago.

Openings in education and health services fell to 558,000 from 589,000, the report said, while openings for manufacturing jobs dropped to 123,000 from 141,000. Openings in leisure and hospitality fell to 296,000 from 332,000.
...

[CatholicEdHead]

52. Park Nicollet to close Hopkins clinic

http://www.kare11.com/news/news_article.aspx?storyid=697689&catid=2

One of the Twin Cities largest healthcare providers is closing one of its clinics. It's the latest chapter in several rounds of cost-cutting measures at Park Nicollet over the last six months.

Park Nicollet officials tell KARE 11 that its clinic in Hopkins will be shutting down this fall. In addition, 240 workers will also be laid off system wide. About 500 workers have been let go since last December. Park Nicollet officials say the latest measures complete their plan to reduce costs and ensure Park Nicollet remains strong in this tough economy.

Other changes include:

* Consolidation of mental health services from five sites to two, increased space and additional evening and Saturday hours for St. Louis Park mental health services.
* Working with the Minnesota Nurses Association to develop a process to ensure staffing levels and schedules are responsive to the demand for inpatient services
* Consolidation of some administration/support areas
...

[CatholicEdHead]

66. AP Source: Chrysler to cut at least 800 of 3,200 dealers on Thursday as part of restructuring

http://www.startribune.com/business/44816257.html

DETROIT - Chrysler LLC plans to fire up to 800 of its 3,200 dealers on Thursday, a lawyer seeking to represent the dealers said on a conference call.

The lawyer, Stephen Lerner, who heads the bankruptcy and restructuring practice of the law firm Squire Sanders, told dealers on the Tuesday call that the automaker plans to reject at least 800 franchise agreements, according to a dealer who listened to the call.

The dealers were told that Chrysler will file a list of dealers it wants to retain with the U.S. bankruptcy court, said the dealer, who asked not to be identified because the call was confidential.

A Chrysler spokeswoman said Tuesday that the automaker is working to reduce the number of dealerships along with other restructuring actions. Spokeswoman Kathy Graham said the 800 number was just speculation....

[DemReadingDU]

69. GM Will Notify 1,000 Dealers on May 15 of Franchise Expiration

May 12 (Bloomberg) -- General Motors Corp., working to shrink operations to match consumer demand, will notify 1,000 to 1,200 auto dealers on May 15 that they fail to meet franchise agreements.

GM will deliver letters to dealers whose stores fail to meet criteria such as sufficient working capital, sales or customer-satisfaction levels, explaining that GM will not renew their franchise agreements when they expire this year or in 2010, GM spokeswoman Susan Garontakos said.

The largest U.S. automaker said last month it plans to shrink its dealer network to about 3,600 from the 6,200 outlets it operated at the end of last year as part of the restructuring plan it presented to the Obama administration.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aCXbYqsqX1g4&refer=home

[Robbien]

68. Japanese companies suffer a black Tuesday

TOKYO - Four Japanese companies post huge losses for the year 2008, displaying the destructive effect of diminishing exports and a strengthening currency. Hitachi reports the biggest ever annual loss for a Japanese manufacturer, with $8.1 billion.

Japanese companies suffer a black Tuesday Four of Japan’s leading companies, from electronics giant Hitachi to automaker Mazda, reported record losses yesterday, displaying vividly how the global economic slowdown has hit Japan Inc.

Hitachi posted the biggest ever annual loss for a Japanese manufacturer ever, saying it doesn't expect the global economy to recover until next year at the earliest.

http://www.hurriyet.com.tr/english/finance/11635386.asp?scr=1

The four:

Hitachi annual loss: 787.3 billion yen ($8.1 billion)
Electronics giant NEC: 297 billion yen ($3 billion)
Nissan: 233.7 billion yen ($2.4 billion) annual net loss, its first such loss in a decade
Toyota: 436.9 billion yen (which is about four and a half billion dollars)

[TheWatcher]

70. Should be good for about a 6000 Point Rally On The Dow.

Things appear to be bottoming out in Japan and the "seeds of bottoming" should help them recover completely in about 3 days.

But that's only if their Propaganda is as good as ours, and their Population is as gullible as ours is to believe it.

:beer:

[Dr.Phool]

71. Small business credit card lender to close all accounts

Small business credit card lender to close all accounts
by Associated Press
Tuesday May 12, 2009, 4:44 PM

NEW YORK -- Advanta Corp., a credit card lender to nearly 1 million small businesses, will close all its cardholders' accounts next month in a last-ditch effort stem losses.

Analysts said the move adds to already growing concerns that the company might not be able to survive. And while other credit card issuers won't likely fall into Advanta's situation, analysts said, worries remain that they might decide to cut credit lines further on small businesses.

"Advanta's problems call into question the business model at the end of the day," said Keefe, Bruyette & Woods card industry analyst Sameer Gokhale. "Are these really small business cards, or just consumer cards with really high credit lines?"

As of late March, Advanta wrote off about a fifth of its credit card debt as unrecoverable.

In anticipation of losses escalating further, Advanta said late Monday that on June 10 it will shut down all accounts. June 10 is when Advanta will offer to pay off investors who hold securities back by its cards -- a type of payout known as an "early amortization" of a trust. This way, Advanta said, the company can "maximize its capital and its liquidity measures."

(more) http://www.cleveland.com/business/index.ssf/2009/05/small_business_credit_card_len.html#more

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

I'm really surprised they stayed in business this long. I've got a corporate Mastercard with them. My company is "Murder Inc.".

Really, no shit.

I've had the card for 12 or 13 years. Back in '95, when I bought my first computer, a friend came over to help me set it up. When we were setting up Windows, he typed in "Murder Inc" for the company name. After a while, I started getting mail for this company. Then a credit card solicitation from Advanta. I wondered if they would really send out a card with that name on it. I filled out the application. I put down "zero" in the sales and earnings questions.

Sure enough, they sent me the card. The first place I used it was at a casino in Atlantic City. They've raised my credit limit over the years, but my balance is zero.

I wonder now, which criminal enterprise bank will take over the "Murder Inc." account.

[DemReadingDU]

72. That is bizarro

Kinda makes you wonder who was spying on that computer in 1995 when you first set it up.

[Dr.Phool]

75. I think it was Microsoft.

All of that info went out when you registered Win95, and other software.

[Robbien]

73. This is confusing

Advanta pays off its investors, closes down its main line of business but talks about "maximize its capital and its liquidity measures" as if it intends on being a on-going business. Huh?

according to this
http://www.philly.com/inquirer/business/20090507_PhillyDeals__Buy_company_notes_with_eyes_wide_open.html

investors own about $200 million of notes sold by Advanta Corp., a Spring House credit card company. Advanta advertises, in The Inquirer and elsewhere, rates of 8.5 percent for one year, up to 11 percent for 10 years.

Advanta has more than $400 million in capital, and a "cushion" of more than $100 million in junior debt held by institutional investors that would go bad before the notes, Browne said.


and according to this
http://www.bizjournals.com/philadelphia/stories/2009/04/27/daily46.html

Advanta Corp. said Thursday that it suffered a $76 million first-quarter loss

Provision for credit losses during the first quarter were $41 million


So Advanta is still cash rich. If it started out with $400 mil, paid back 200 mil, lost $76 mil in the first quarter (of which $41 mil is an increase in reserve); they still have over $170 mil on hand. And it still has over $160 mil due to be paid back by credit card holders.

What is Advanta intending on doing with its money as an on-going business, gamble it on the stock market? And what about the remaining 600 employees?

Its price per share has tanked going from $30 per share in the fall of 2007 to 24 cents in March.

---------


Murder Inc. Ha! That's priceless.

[Robbien]

74. Banks Hope That Twitter Will Save Them

Banks are signing on to social networking services, from Twitter to Facebook, in the hope that new ways to communicate to customers will...well, do something.

USA Today reports that Wells Fargo and Bank of America have begun to "tweet" with customers about bank fees and product features. Which sounds a lot like they are spamming their customers. Discover Financial, American Express and Citigroup are on Facebook or MySpace. As of this morning, Citigroup's group (that's awkward) has around 4,200 members.

. . .

Banks say they're establishing presences on social-networking sites to tap into a growing demographic and to control the conversation about their brands.

http://www.businessinsider.com/banks-hope-that-twitter-will-save-them-2009-5


Banks really don't understand the premise of social networking sites do they. "Control the conversation about their brands" Yeah right. Good luck with that.

[CatholicEdHead]

76. Not a good marketing plan

This will drive customers away as it will be seen as common spam.

[rucky]

77. The trend is officially over. n/t