STOCK MARKET WATCH -- Tuesday, 21 August 2012

[Tansy_Gold]

[font size=3]STOCK MARKET WATCH, Tuesday, 21 August 2012[font color=black][/font]

SMW for 20 August 2012

AT THE CLOSING BELL ON 20 August 2012
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Dow Jones 13,271.64 -3.56 (-0.03%)
S&P 500 1,418.13 -0.03 (0.00%)
Nasdaq 3,076.21 -0.38 (-0.01%)



[font color=green]10 Year 1.81% -0.02 (-1.09%)
30 Year 2.92% -0.02 (-0.68%) [font color=black]


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[font size=2]Market Conditions During Trading Hours[/font]
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[font size=2]Euro, Yen, Loonie, Silver and Gold[center]

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[font color=black][font size=2]Handy Links - Market Data and News:[/font][/font]
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Economic Calendar
Marketwatch Data
Bloomberg Economic News
Yahoo Finance
Google Finance
Bank Tracker
Credit Union Tracker
Daily Job Cuts
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[font color=black][font size=2]Handy Links - Economic Blogs:[/font][/font]
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The Big Picture
Financial Sense
Calculated Risk
Naked Capitalism
Credit Writedowns
Brad DeLong
Bonddad
Atrios
goldmansachs666
The Stand-Up Economist
The Automatic Earth
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[font color=black][font size=2]Handy Links - Government Issues:[/font][/font]
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LegitGov
Open Government
Earmark Database
USA spending.gov
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[font color=black][font size=2]Handy Links - Videos:[/font][/font]
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Charlie Rose talks with Roubini
Charlie Rose talks with Krugman
William Black: This Economic Disaster
Bill Moyers with Kevin Drum and David Corn
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[font color=red]Partial List of Financial Sector Officials Convicted since 1/20/09 [/font][font color=red]
2/2/12 David Higgs and Salmaan Siddiqui, Credit Suisse, plead guilty to conspiracy involving valuation of MBS
3/6/12 Allen Stanford, former Caribbean billionaire and general schmuck, convicted on 13 of 14 counts in $2.2B Ponzi scheme, faces 20+ years in prison
6/4/12 Matthew Kluger, lawyer, sentenced to 12 years in prison, along with co-conspirator stock trader Garrett Bauer (9 years) and co-conspirator Kenneth Robinson (not yet sentenced) for 17 year insider trading scheme.
6/14/12 Allen Stanford sentenced to 110 years without parole.
6/15/12 Rajat Gupta, former Goldman Sachs director, found guilty of insider trading. Could face a decade in prison when sentenced later this year.
6/22/12 Timothy S. Durham, 49, former CEO of Fair Financial Company, convicted of one count conspiracy to commit wire and securities fraud, 10 counts of wire fraud, and one count of securities fraud.
6/22/12 James F. Cochran, 56, former chairman of the board of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and six counts of wire fraud.
6/22/12 Rick D. Snow, 48, former CFO of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and three counts of wire fraud.
7/13/12 Russell Wassendorf Sr., CEO of collapsed brokerage firm Peregrine Financial Group Inc. arrested and charged with lying to regulators after admitting to authorities he embezzled "millions of dollars" and forged bank statements for "nearly twenty years."




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[font size=3][font color=red]This thread contains opinions and observations. Individuals may post their experiences, inferences and opinions on this thread. However, it should not be construed as advice. It is unethical (and probably illegal) for financial recommendations to be given here.[/font][/font][/font color=red][font color=black]

[Demeter]

1. Morgan Stanley Distributes Facebook IPO Profits

http://online.wsj.com/article/SB10000872396390443324404577595360897586798.html

Profits made by banks underwriting Facebook Inc.'s initial public offering as the stock fell were distributed this past week from a pool of about $100 million, say people with knowledge of the deal.

The banks together made the money through a process known as stabilization, which is a standard procedure in IPOs, though Facebook's deal size made the profits larger than normal, these people said. The payout comes in a week that saw Facebook stock hit new lows, falling Thursday below $20 after an IPO price of $38 a share.

The profits are being distributed by Morgan Stanley MS +1.64% to the other banks involved in marketing the Facebook deal. The amount issued to each underwriter was calculated based on their participation in the IPO, said several people familiar with the process, with Morgan Stanley, the lead underwriter, receiving the largest share.

In IPOs, underwriters are allowed to sell about 15% more shares than the total deal size to investors the night before a stock begins trading. This creates a short position of shares sold that the banks don't actually own, and it can stay on the bankers' books for 30 days. The short position is created to allow underwriters to stabilize the stock in its early days of trading. Stabilization works this way, people familiar with the process say: If investors are selling the stock after the IPO launches, pushing the price lower, bankers can step in and buy shares at the IPO price in an attempt to keep it from falling below its issue price. This also serves to cover their short positions. If a short position remains on their books and the stock keeps falling—which was the case with Facebook on subsequent trading days—the underwriters can continue to cover their short positions by buying back shares at prices below the IPO price, netting a profit....

[Demeter]

2. Pre-Trial Slave Sues Jail for $11 Million—in Vermont

http://news.yahoo.com/pre-trial-slave-sues-jail-11-million-vermont-001819719.html

The year was December 2008, and University of Vermont graduate student Finbar McGarry faced a dilemma. An inmate in a Vermont county jail, McGarry was required by correctional authorities to work in the jail laundromat for 25 cents per hour. If he refused to work, McGarry would have been thrown in solitary confinement—otherwise known as “the hole.” Not a pleasant alternative. There’s plenty of legal and historical precedent for putting convicts to hard work in America...McGarry had no such sentence. He was certainly facing grievous charges—he had allegedly discharged a gun in his home while threatening to kill his family, then turned his anger on a school official.

But McGarry was still awaiting trial. He had yet to be convicted.

Upward of 1,000 inmates trapped in jail pre-trial posed little to no danger to the public—more than five percent of the county jail population. They were simply being held because they were too poor to pay for bail. Eventually, McGarry relented and chose to work in the laundry rather than face a prolonged and brutal spell in “the hole.” During the course of his work, McGarry says he contracted a serious MRSA lesion on his neck—a potentially deadly bacterial infection. McGarry’s charges were ultimately dropped, and he was released. In 2009, he pressed a suit against his former captors in Brattleboro, Vermont, federal court for $11 million—claiming he was made a slave in violation of his 13th Amendment rights. The Brattleboro judge ruled that McGarry’s constitutional rights had not been violated, but that finding was overturned on appeal last week... many, many thousands of people, potentially, are facing a predicament like McGarry’s.

So could McGarry’s suit help win new rights for pre-trial detainees?

Back in 2009, that prospect seemed distant. Vermont federal magistrate Judge John Conroy threw out McGarry’s case because doing the laundry in jail “was nothing like the slavery that gave rise to the enactment of that [the 13th] amendment.” However, just last week, upon appeal, Conroy’s original ruling was overturned. “Contrary to the district court’s conclusion, it is well-settled that the term ‘involuntary servitude’ is not limited to chattel slavery-like conditions,” stated the appeals court’s opinion. “The amendment was intended to prohibit all forms of involuntary labor, not solely to abolish chattel slavery.”

Of course that decision could still be reversed by a higher court. But, for now at least, there’s still a chance that McGarry’s suit can help remind the criminal justice system that the tenet “innocent until proven guilty” should apply to our jails too.

MORE DETAIL AT LINK

[Demeter]

3. We are watching the 4th and last part of

Slavery and the Making of America tonight, which chronicles the Civil War.

[Demeter]

4. Gen. Wesley Clark Shocker on 9/11 “Policy Coup”

http://whowhatwhy.com/2012/08/10/tvwho-gen-wesley-clark-shocker-on-911-policy-coup/

In this stunning but little-known speech from 2007, Gen. Wesley Clark claims America underwent a “policy coup” at the time of the 9/11 attacks. In this video, he reveals that, right after 9/11, he was privy to information contained in a classified memo: US plans to attack and remove governments in seven countries over five years: Iraq, Syria, Lebanon, Libya, Somalia, Sudan and Iran.

He was told: “We learned that we can use our military without being challenged …. We’ve got about five years to clean up the Soviet client regimes before another superpower comes along and challenges us.”

“This was a policy coup…these people took control of policy in the United States….”

&feature=player_embedded

AND YOU KNOW WHAT? THESE NEOCONS WHO STAGED THE COUP ARE STILL IN CONTROL!

[mother earth]

37. This deserves its own thread, really....this is an incredible admission of the state of affairs.

There really is no "we the people" left in democracy.

[AnotherMcIntosh]

51. Only the "governments" in those 7 countries? What about the type of democracy that we had?

It's gone.

Now what we have is memories for the nostalgic. The super-rich won.

[Demeter]

5. Punishing Cheaters Promotes the Evolution of Cooperation

http://blogs.scientificamerican.com/primate-diaries/2012/08/16/punishing-cheaters/

Humans are one of the most cooperative species on the planet. Our ability to coordinate behavior and work collaboratively with others has allowed us to create the natural world’s largest and most densely populated societies...However, a key problem when trying to understand the evolution of cooperation has been the issue of cheaters. Individuals in a social group, whether that group is composed of bacteria, cichlids, chimpanzees, or people, often benefit when cooperating with others who reciprocate the favor. But what about those individuals who take advantage of the generosity of others and provide nothing in return? These individuals could well thrive thanks to the group as a whole and end up with greater fitness than everyone else because they didn’t have to pay the costs associated with cooperating. For decades the idea that cheaters may in fact prosper has been the greatest difficulty in understanding cooperation as an evolved trait.

However, it turns out that cooperation could be a viable evolutionary strategy when individuals within the group collectively punish cheaters who don’t pull their weight. For example, Robert Boyd, Herbert Gintis, and Samuel Bowles published a paper in the journal Science in 2010 with a model showing how, so long as enough individuals work together to punish violators, each cooperative individual in the group can experience enhanced fitness as a result. Before understanding how their model could explain the emergence of cooperative behavior it is first important to look at the two leading explanations for the evolution of cooperation: William Hamilton’s (1964) theory of kin selection and Robert Trivers’ (1971) theory of reciprocal altruism.

Kin selection proposed that cooperation will emerge in groups that are made up of close relatives. Hamilton’s rule, beautiful in its simplicity, proposed that cooperation occurs when the cost to the actor (c) is less than the benefit to the recipient (b) multiplied by the genetic relatedness between the two (r). This equation is written out simply as rb > c. Kin selection has been one of the most well tested models that seeks to explain the evolution of cooperation and has held up among such diverse groups as primates, birds, and social insects (though Edward O. Wilson has recently challenged kin selection as an explanation in the latter)...Reciprocal altruism follows this same basic idea, but proposes a mechanism that could work for individuals that are unrelated. In this scenario, cooperation occurs when the cost to the actor (c) is less than the benefit to the recipient (b) multiplied by the likelihood that the cooperation will be returned (w) or wb > c. This has been demonstrated among vampire bats who regurgitate blood into an unrelated bats mouth if they weren’t able to feed that night. Previous experience has shown the actor that they’re likely to get repaid if they ever go hungry one night themselves. Whereas kin selection requires a community of closely related individuals for cooperation to be a successful strategy, reciprocal altruism requires that individuals be part of a single group, with low levels of immigration and emigration, so that group members will be likely to encounter each other on a regular basis. However, neither model can explain the emergence of cooperation in societies composed of unrelated individuals and where there is a constant influx of strangers. In other words, cooperation in human societies.

The more recent model proposed by Boyd et al. seeks to address this very problem. Their paper posits that fitness is enhanced, not by cooperating with close kin or reciprocating a previous act of generosity, but through the coordinated punishment of those who don’t cooperate. In a social group individuals are able to choose whether they want to cooperate or defect. Suppose, for example, that a hunter returns from a successful hunt and must decide whether or not to share their gains with other members of the tribe. According to Boyd’s model, the cost to the cooperator (c) is less than the overall benefit (b) but is still greater than the benefit to each member of the group (n): b > c > b/n. If the hunter chose to cooperate, the meat would be divided so that everyone benefits but the hunter still enjoys a slightly larger share. They would also receive a benefit in the future when other hunters had more success than they did (just as they would under reciprocal altruism). However, if the hunter refuses to share with other members there are two stages to contend with. The first is the signaling stage in which individuals signal their intent to punish those who refuse to cooperate. This is a common occurrence not just in humans but in many animals, especially primates. Baboons, for example, use threat signals such as staring, eyebrow raising, or a canine display to warn others to change their behavior. In humans this can take a variety of forms including angry looks, hand gestures, and/or harsh words. The cost of such signals are fairly low, but still high enough that it doesn’t pay to signal and fail to back it up with action if necessary. If the warning doesn’t provide the appropriate result the next stage is coordinated punishment. According to Boyd’s model a quorum (τ of punishers is required to work together to target an individual who refuses to cooperate. In such cases there will be a cost (p) to the target and an expected cost to each punisher of k/npa, where np is the number of punishers. Given that an outnumbered target is unlikely to inflict costs on the punishers, the model assumes that a > 1. What this means is that the higher the number of punishers, the lower the cost to each involved. Furthermore, the punishment doesn’t necessarily involve physical attacks. The model allows for punishment to come in the form of gossip, group shunning, or any other nonaggressive action that brings a cost to the uncooperative target....

****************************************************

Reference:

Boyd, R., Gintis, H., & Bowles, S. (2010). Coordinated Punishment of Defectors Sustains Cooperation and Can Proliferate When Rare, Science, 328 (5978), 617-620. DOI: 10.1126/science.1183665

This post has been adapted from material that originally appeared at ScienceBlogs.com.

********************************************************

TAKE THAT, AYN RAND, YOU CHEATER!

[Demeter]

6. Announcing Investigative Series on the Private Equity Industry

In the coming weeks, Naked Capitalism will publish an investigative series on the private equity industry that will include articles written by current industry participants with considerable experience. It focuses on the activity formerly called “leveraged buyouts”: the purchase of established businesses, heavily funded by borrowing. The private equity industry has over $2 trillion globally in assets under management. With leverage, this translates into over $8 trillion of buying power.

These players claim to deliver value for investors by taking over companies and then improving how they are run. We intend to show, on the contrary, that:

The growth and performance of the private equity business depends on extensive support by the government, both in the form of tax breaks and substantial funding from “public,” meaning government employee, pension funds

Gross returns of private equity go overwhelmingly to the industry itself (through extraction of fees), and not to its investors.

Partly for this last reason, investors in private equity have overall obtained underwhelming returns. In fact, taking into account the illiquidity and implicit leverage inherent in private equity investments, investors would be better served by avoiding this investment approach

The private equity industry has also played a demonstrably negative role in the economy overall and has increased the severity of job losses during this current downturn

Critics of private equity have often claim that the industry produces high returns for investors at the cost of widespread job losses. These critics are far too charitable – as indicated above, the industry does not produce high returns for investors. However, it is true that the process by which the industry redistributes money to itself involves significant externalities. Consequences are not limited to effects on employment; by rendering companies more vulnerable to cyclical downturns, the industry also exacerbates the effects of the business cycle.

The industry has numerous, well-paid allies and defenders. In later entries in our series, we will describe their arguments and refute them.

Read more at http://www.nakedcapitalism.com/2012/08/announcing-investigative-series-on-the-private-equity-industry.html#oLvqWTLv9Fhw9gZH.99

[Demeter]

7. Jury Finds MF Global Not Guilty

http://my.firedoglake.com/masaccio/2012/08/16/jury-finds-mf-global-not-guilty/

And by jury, I mean the candy ass prosecutors at the Department of Justice, who have made an in-house decision that it’s just too hard to indict anyone at MF Global, including friend of Barack Jon Corzine, for stealing billions of customer dollars. It’s just impossible that a friend of Eric Holder’s could be found to be criminally responsible for allowing a company to steal money from its customers to give to its bank, especially when the bank is the much-loved JPMorgan Chase. After all, the Department of Eric Holder is made up of peers of the MF Global crowd, so it’s just like a real trial.

These chicken-shits have been telling reporters from the beginning that there were really high hurdles to prosecution, as if this were some sort of Olympic event. They tell the reporters that “chaos and porous risk controls at the firm, rather than fraud, allowed the money to disappear”. The billions in losses were beyond human control, and nothing can be done, a phrasing which perfectly mirrors DOJ’s passivity in the face of one of the biggest heists in history.

The reporters, Azam Ahmed and Ben Protess of the Dealbook blog at the New York Times, add their own passivity: “But a lack of charges in the largest Wall Street blowup since 2008 is likely to fuel frustration with the government’s struggle to charge financial executives.”

These guys can’t tell the difference between frustration and anger, between irritation and hostility. Their repetition of talking points helps the Obama Administration fuel the sense of impotency among us mere citizens, a sense that nothing we can do makes a difference, and the certainty that the rich and connected do not face the same justice system as the operators of medical marijuana dispensaries and their pathetic clients....But look over there, a bright shiny object: civil suits! The government won’t lift a finger to support investors whose money was stolen, so they get to spend vast quantities of their own money in the hope that some civil court staffed by George Bush from the ranks of the Federalist society will eventually, in some future decade, give them a few of their dollars back. Good luck with that...It must be really distressing to the customers of MF Global to see that they are just more roadkill for Wall Street hyenas. They probably thought they were in the protected class because they had a few million dollars, but it turns out they were muppets.

MORE

[AnneD]

12. I only have one thing to say...

As a small investor, I think I will keep my life vest on while this ship of state sinks ......

Edited to add.... Can't wait until these jackals start suing each other. Seems that is the only way someone will be penalized.

[DemReadingDU]

8. Rachel talking about Montgomery County, OHio

The 2 Democrats on board of elections, could be fired by the Ohio Republican Secretary of State for wanting to expand early voting hours on weekends.

edit to add link

8/17/12 The two Democrats on the Montgomery County Board of Elections were suspended by Republican Secretary of State Jon Husted on Friday after they refused to back down in a standoff over extending in-person early voting hours for the upcoming election.

Dennis Lieberman and Tom Ritchie Sr. must appear at a hearing at 9 a.m. Monday in Columbus to decide whether they will be removed from office.

“You leave me no choice but to begin the process necessary to remove you as members of the Montgomery County Board of Elections,” Husted’s letter to the pair said.

more...
http://www.daytondailynews.com/news/news/local-govt-politics/husted-suspends-democrats-on-montgomery-county-boa/nRDx5/

[DemReadingDU]

24. Rachel Maddow video interview Dennis Lieberman and Tom Ritchie

8/20/12 appx 7 minutes
http://video.msnbc.msn.com/the-rachel-maddow-show/48732702

[AnneD]

9. Morning Marketeers....

and lurkers.

Today (Monday) was the first day that the teachers reported to our school. We have lost 50% of our seasoned staff. I was stunned. We have recruited new folks from Boston, Chicago, and St Louis, to name a few areas. I will be at the district Nurses meeting Tuesday so I will see what fresh hell awaits. Last time I looked at the portal, we had 22 opening down from 32. That is the worst I have ever seen. We School Nurses are suspecting that eventually they will opt to farm out the work to a private company and they will have LPN's working under RN's (like 6 LPN's under 1 RN). I would not want to do that as they would be practicing under MY LICENSE. That is too much delegation and too much to supervise for the money. I would just as soon work in the hospitals and make better money and have less liability.

I am getting too old to put up with that crap. I'll ride this horse as long as I can but I am preparing for the worst. Funny thing when I went on our road trip with my Nurse friends. We are all very liberal Democrats-old school style. We all decided, even our Mormon Nurse, that maybe if the Tea Party nuts win, they will see the error of their way really quickly once they start loosing their government SS or Medicare. We are so disgusted with both parties. We figure we have been digging in for 8 years, we can dig in for 12, but either way we will be digging in even more.

I look forward to the day.

Happy hunting and watch out for the bears.

[mother earth]

39. Insanity has really taken hold of the tea party, they are the "good germans" of today & too stupid

to understand where this is leading. The middle class is being destroyed in this country to make way for slave wages for all.

[Demeter]

10. Will Nothing Slay the Ethanol Dragon?

http://reason.com/blog/2012/08/15/will-nothing-slay-the-ethanol-dragon

Apparently the beast cannot be starved to death. As the drought kills off corn by the stalk, animal feed costs are rising, and this has a big impact on livestock management. It's causing ranchers to slaughter their animals earlier than usual, increasing the supply temporarily and actually pushing down meat prices....President Barack Obama announced a plan for the government to buy $170 million of this meat in order to keep farmers happy by keeping the prices up. This is a terrible idea, as the Washington Examiner explains:

"Prices are low, farmers and ranchers need help, so it makes sense," Obama explained. "It makes sense for farmers who get to sell more of their product, and it makes sense for taxpayers who will save money because we're getting food we would have bought anyway at a better price."

None of this makes sense. In fact, Obama's move only harms American consumers while protecting a corrupt federal program.

A drought is currently driving down corn production. The shortage of feed is forcing livestock producers to slaughter animals early, putting downward pressure on meat prices in the short run and guaranteeing shortages and higher prices next year. But nature is not the biggest factor in this crisis -- the government is. Specifically, the federal government's ethanol mandate, which requires that 13.2 billion gallons of corn-based ethanol be produced in 2012.

Thanks to the ethanol mandate, more than 40 percent of the nation's corn crop now goes into the production of a useless fuel that hardly anyone would buy if the government didn't require it. That's up from just 17 percent in 2005, before the mandate went into effect. Only 36 percent of the corn crop now goes for feed, and 24 percent goes for food.

Obama could solve this problem instantly by suspending the federal ethanol mandate -- something his EPA actually can do unilaterally and legally. Instead, Obama will buy up meat -- a move that meat producers say won't help them much anyway. "It doesn't solve the problem of having enough affordable corn next summer," industry analyst Steve Meyer told Reuters. "Without changing the ethanol program, nothing can be done," he said.

Right, so the artificial purchase of the meat will keep prices high, not low. And then next year when ranchers really start having to pay through the nose for this year’s poor corn crop, what happens to meat prices?

Even the United Nations is begging the Environmental Protection Agency to suspend ethanol fuel mandates, but there’s no sign of movement so far. The consequences:

To recap, government is driving up the cost of food, animal feed and gasoline, and Obama's solution is to drive up meat prices as well. Obama could eliminate the entire problem overnight and reduce carbon emissions were he to waive the ethanol mandate in a time of drought. Instead, he is creating a new spending program to mollify livestock producers, who, were it not for the ethanol mandate, would be able to make an honest living without his help.

Last week, Obama said he wants to do for other industries what he did for General Motors. If by this he meant waste taxpayers' money to preserve a lousy status quo, then bravo and mission accomplished.

Damon Root pointed out earlier an analysis of how Obama is pandering to farmers with subsidies already. If the government wasn’t so insistent on catering to both the farming and the ethanol lobbies, our food and fuel prices would drop.

[AnneD]

11. I think the grain supplies....

Are down so badly from world wide droughts that grain would not go down. We will have more hungry people and they should have priority over cattle-and I am a meat eating Texan.

Growing corn for fuel only makes sense when you have a surplus of corn.

[Fuddnik]

13. It doesn't make sense at any time.

Ethanol is useless. Unless it's for ADM's campaign contributions.

I get lower gas mileage, about 10% lower with a 10% ethanol mixture. The shit rots your hoses and carb parts. I can count on replacing my accelerator pump on my '97 Harley every year. Two years if I'm lucky.

They can't sell it at marina's because it destroys boat engines.

Get rid of it, forever.

[Demeter]

14. I am shocked no one has yet built an engine that runs on ethanol

Perhaps it cannot be done? Or it's hush-hush top military secret? They trotted out diesels fast enough when the option came along.

[zogofzorkon]

41. Methanol is already in use.

[link:http://nordicgreen.eu/pure-methanol-in-gasoline-and-diesel-engines-m100/|

Methanol can be made from scrap agricultural and forestry products without reducing crop yield.

[xchrom]

15. pics of Effie and Petunia

this is Effie -- making my life miserable by digging big, giant holes.



caught in a rare sweet moment -- Effie and Petunia



my terrible pit bull

[DemReadingDU]

25. Ahhh

dog pictures are cool!

[xchrom]

26. LOL! -- yeah i don't know about the dogs -- but the pics are. nt

[Tansy_Gold]

50. Dogs on the furniture! Dogs on the furniture! Mom, the dogs are on the furniture!

Every once in a while I get up in the morning and there is a suspiciously round indentation on the couch cushion, and there are always a few telltale short blonde hairs. Biscuit is very, very sneaky. . . . .




I love dogs. . . .

[xchrom]

53. yeah -- i have put dinning chairs on the good sofa -- and that's also why i LOVE slip covers.

i'd slip cover the empire state building if could.

keep it nice for when company comes.

[Tansy_Gold]

56. ...

(No wonder I never have company!)

[DemReadingDU]

57. I got some sheets for throwing over the couches

We never have company either, except the grandkids. And they don't mind the sheets at all!

[Fuddnik]

58. Same here. Upside down coffee table.

But, the dogs let us sit on the family room furniture sometimes. Hell, we get to sleep in the bed with them. What more could we ask for?

[xchrom]

59. Why is it my anger & fury mean NOTHING to them?

My dogs are afraid of me - they have NO intention of minding me - except to butter me up.

Yes - in the winter they can sleep in the bed - keeps the heating bills down.

[Fuddnik]

60. Mine laugh at me.

[xchrom]

61. Mine just wait for the purple face & bulging veins to pass.

And collect their cookie.

I am such an asshole.

[Demeter]

16. This explains a lot

[xchrom]

18. ...

i had that boss! -- er leader'[ship} style.

[xchrom]

17. Warren Buffett Cancels A Municipal Debt Bet 5 Years Early

http://www.businessinsider.com/warren-buffett-cancels-a-municipal-debt-bet-5-years-early-2012-8

Berkshire Hathaway Incterminated a large wager on the municipal-bond market five years early, the Wall Street Journal quoted a person familiar with the transaction as saying.
In a quarterly regulatory disclosure filed this month, the Warren Buffett-owned company terminated credit-default swaps insuring $8.25 billion of municipal debt.
The paper said the early termination is deepening questions among some investors about the risks of buying debt issued by cities, states and other public entities.
The WSJ quoted the source as saying that Buffett's bet that more than a dozen U.S. states would keep paying their bills on time had been made before the financial crisis.
The insurance-like contracts, which required Berkshire to pay in the event of bond defaults, were bought by Lehman Brothers Holdings Inc in 2007, more than a year before the firm filed for bankruptcy, the WSJ quoted the source as saying.


Read more: http://www.businessinsider.com/warren-buffett-cancels-a-municipal-debt-bet-5-years-early-2012-8#ixzz24BGfHcX6

[Demeter]

29. They can do that?

So why don't they all terminate?

[xchrom]

34. it's a wonder, isn't it? nt

[xchrom]

19. Ecuadorians Fear Their Country Is Being Taken Over By China

http://www.businessinsider.com/ecuadorians-fear-their-country-is-being-taken-over-by-china-2012-8

Event
The steady rise in Ecuador's debt to China (currently over US$7bn), and recent revelations of the terms on which it has been granted, has sparked concerns over an erosion of Ecuador's sovereignty.

Analysis
The Ecuadorean state started to receive loans from China in exchange for oil shipments in July 2009. The first deal was for US$1bn in exchange for 69.1m barrels of crude. The interest rate on the loan was 7.25% over two years. In August 2010, 36,000 barrels of oil per day were committed in exchange for US$1bn at a 6% interest rate over four years. In February 2011, the first "advance sale" for 69.1m barrels was renewed at a 7.09% interest rate over two years, and in June 2011 a US$2bn credit was agreed in exchange for 130m barrels over six years.
Additionally, two of the largest hydroelectric infrastructure projects (Coca-Codo-Sinclair and Sopladora) are being financed with loans from China. Although these are not being financed though oil exports, Ecuador is obliged to use Chinese contractors to build the projects. The loans for the two projects total US$2.25bn.


Read more: http://www.businessinsider.com/ecuadorians-fear-their-country-is-being-taken-over-by-china-2012-8#ixzz24BJ6outq

[xchrom]

20. Here Are The People Most Likely To Live Paycheck To Paycheck

http://www.businessinsider.com/people-most-likely-to-live-paycheck-to-paycheck-2012-8

According to a survey conducted by CareerBuilder, those between the ages of 45 to 54 are most likely to live paycheck to paycheck (43 percent), followed by those between the ages of 35 and 44 (42 percent), then those between 18 and 34 (40 percent).
Out of the more than 3,800 full-time workers surveyed nationwide, 40 percent of Americans admitted to relying on their next paycheck in order to make ends meet.
“Making ends meet remains a challenge for millions of households, but the situation has improved for workers who’ve grown more confident with their job security or who’ve taken steps to pay down debt and save more,” Rosemary Haefner, vice president of human resources at CareerBuilder, said in the survey.
“Seventy-two percent of workers report they are more fiscally responsible since the end of the recession, and as the labor market continues to improve, we expect more workers will again be able to spend in ways that will drive the economy forward.”
The study also says that women (44 percent) are more likely than men (36 percent) to rely on their next paycheck.


Read more: http://www.businessinsider.com/people-most-likely-to-live-paycheck-to-paycheck-2012-8#ixzz24BMZOwJb

[Demeter]

30. There is no point in breaking it down by age or sex--we are all screwed

[xchrom]

21. China's patent targets mask weak innovation - study

http://www.guardian.co.uk/business/feedarticle/10401330

BEIJING (Reuters) - China's ambitious drive to produce millions of new patents in the next few years as part of a switch from a "made in China" to "designed in China" economic model will curtail innovation standards, a European study warned on Tuesday.
China is seeking to transform itself from being the world's factory floor into a global pioneer by setting ambitious state-mandated patent targets -- a goal that has already resulted in it surpassing the United States last year in patent filings.
The European Union Chamber of Commerce said in a report that China filed more than 1.6 million patent applications in 2011, but only 32 percent met the highest threshold for patent quality -- new inventions.
The study noted that while China's innovation potential is "impressive", its actual innovation is "overhyped".
"This explosion (of patent applications) has come with a price in terms of the quality and mix of patents. This is not in the right direction," European Chamber Secretary General Dirk Moens said.
In some cases, financial incentives and performance evaluations for state-owned firms, officials and academics drive the filing of low-quality patents as they seek to meet quotas -- 2 million annually by 2015 under one national plan.

[xchrom]

22. Fixing Britain's work ethic is not the answer to this economic mess

http://www.guardian.co.uk/commentisfree/2012/aug/20/release-inner-tiger-economy-well


A new book by five Tory MPs has accused Britons as being among the worst idlers in the world. Photograph: Erik Dreyer/Getty

Well, that didn't last long, did it? The victory parades have barely begun, and already the midsummer dream is rudely shattered. No more talk of herculean efforts to win gold, no more hammering of iron rings of fire, no more warm fuzzy feelings towards our national broadcaster.

No, it's back to being depicted as a nation of slack-jawed lummoxes incapable of a decent day's work, and to Iain Duncan Smith accusing the BBC's economics editor Stephanie Flanders of "peeing all over British industry", after she failed to greet falling unemployment figures with unquestioning wonderment. So much for the legacy.

In fairness to the five Tory MPs who first pricked the bubble, via leaked excerpts from their forthcoming book arguing that we're not the nation of champions we had giddily begun imagining but "among the worst idlers of the world", this wasn't quite the plan.

Perhaps provocative references in Britannia Unchained to people preferring "a lie in to hard work" will look less inflammatory in context, or at least in season (the book's due out in September, traditional month of noses back to grindstones and party conference tub-thumping). But still, the politics of idleness deserves unpicking.

[xchrom]

23. U.K. Unexpectedly Posts Deficit As Tax Receipts Plunge: Economy

http://www.bloomberg.com/news/2012-08-21/u-k-unexpectedly-posts-budget-deficit-as-corporation-taxes-drop.html

Britain unexpectedly posted a budget deficit in July as corporation-tax receipts plunged, partly due to the closure of the Elgin gas field in the North Sea.

The shortfall, which excludes government support for banks, was 557 million pounds ($878 million) compared with a surplus of 2.84 billion pounds a year earlier, the Office for National Statistics said in London today. The median of 17 forecasts in a Bloomberg News survey was for a surplus of 2.2 billion pounds. Tax revenue fell 0.8 percent and corporation tax plunged 19.3 percent. Government spending rose 5.1 percent.

While the drop in revenue was largely centered on company taxes, the U.K.’s struggle to climb out of a recession has raised concerns that that Chancellor of the Exchequer George Osborne will miss his forecast for a deficit of 120 billion pounds in the current fiscal year. Osborne has resisted demands to ease the pace of his fiscal squeeze, saying his plans have helped to insulate Britain from the euro-area debt crisis.

“The figure highlights the huge challenges facing the U.K. in restoring stability to its public finances,” British Chambers of Commerce Chief Economist David Kern said. “To maintain credibility, we need to persevere with spending cuts, but supplement them with forceful policies to boost growth.”

[xchrom]

27. Wall Street Leaderless In Rules Fight As Dimon Diminished

http://www.bloomberg.com/news/2012-08-20/wall-street-leaderless-in-rules-fight-as-dimon-diminished.html


Jamie Dimon, chief executive officer of JPMorgan Chase & Co., talks to an assistant during a Senate Banking Committee hearing in Washington, on June 13, 2012.

Wall Street, the global financial community reeling from public outrage and increased regulation, is proving incapable of finding a champion to replace sidelined JPMorgan Chase & Co. (JPM) Chief Executive Officer Jamie Dimon.

Dimon, 56, one of the industry’s most forceful advocates, has lost stature as his bank, the largest in the U.S. by assets, juggles multiple investigations and a $5.8 billion trading loss on wrong-way bets on credit derivatives. His peers at other big lenders are hobbled by poor performance, tarnished reputations or a reluctance to step into the breach.

Bankers across the Atlantic, including former Barclays Plc (BCS) CEO Robert Diamond and Peter Sands of Standard Chartered Plc (STAN), have been muted by allegations that their firms rigged interest rates or were involved in money laundering.

“What you’re seeing in the financial-services industry is a lack of any kind of credible statesmen,” said Rakesh Khurana, a management professor at Harvard Business School in Boston. Dimon’s diminished ability to defend the industry publicly “basically leaves a vacuum,” he said.

[Demeter]

31. They are talking like that's a bad turn of events

Any time a crook is removed from the levers of power it's a good thing.

[Fuddnik]

35. Increased regulation? In what universe?

They can't order a 24oz soda?

Oh, how the mighty have fallen!

[Roland99]

28. Euro-hopium lighting a tiny spark under US Futures

S&P 500 +0.2%
DOW +0.2%
NASDAQ +0.3%

[Demeter]

32. Nah. They just trashed the dollar, again

[Roland99]

33. Bob Janjuah Goes "Risk Off Effective Immediately" In Advance Of "Major Risk Off Phase"

http://www.zerohedge.com/news/bob-janjuah-goes-risk-effective-immediately-advance-major-risk-phase

Firstly: ‘In terms of markets, the route map I set out in early April and which I affirmed in early June continues to play out extremely well. After correctly calling the late March/early April 1420 high in the S&P500, and also the early June (1270) low, we have also now fully captured the risk-on rally in stocks and credit that began in early June…’

Secondly: ‘Tactically, we have not yet hit my targets for the risk-on phase I called in early June – my S&P500 target was set at 1400/1450 by late July/early August, and my iTraxx Crossover target was set at 600bp. And as I also said in June, this risk-on phase was likely to be a struggle due to headline risk and volatility, market illiquidity, and the general lack of strong investor views/willingness to take big risks. Nevertheless, stock and credit markets have indeed climbed the wall of worry. Over the extreme short term, over the next two to four weeks, I would not be surprised to see my targets ultimately hit.’

And lastly: ‘However… I now think the correct thing to do – as I also said in April and June – is to prepare for a serious risk-off phase between August and November…over the August to November period I am looking for the S&P500 to trade off down from around 1400…by 20% to 25%...to trade at or below the lows of 2011... For iTraxx crossover, this equates to a spread wide for 2012 of – in my view – 800/1000bp (from 550/600bps)… investment grade cash corporate (non-financial) bonds remain a core (relative!) safe-haven. This coming major risk-off phase will, in my view, also be very USD bullish (my expectation of Fed USD1trn QE in December should eventually alter the bullish USD trend of course) and bullish core government bonds (USTs, Gilts, Bunds) – perhaps we could see 10yr Bunds at 50bp all-in yields, with USTs and Gilts at/close to 1%. By late 2012, based on my Fed December QE view, my tactical call will likely turn bullish/risk-on – let us see about that closer to the time.’

My July note thus held out the prospect of further Risk On over late July and August, where 1400/1450 has been my long-standing target ‘high’ for Q3 2012, but it also warned that in August we were likely to see the beginning of the next risk off phase, which would likely be the ‘biggest’ move of 2012. Whilst in the extreme short term – days – more risk on is possible, we now feel comfortable in flipping from risk on to risk off and positioning for this major risk off phase.

[xchrom]

36. Commodities Headed For Bull Market As U.S. Drought Withers Crops

http://www.bloomberg.com/news/2012-08-21/commodities-headed-for-bull-market-as-u-s-drought-withers-crops.html

Commodities are poised to enter a bull market led by surging grain futures amid the worst U.S. drought in half a century and on mounting optimism growth in the U.S. and stimulus from China will boost demand.

The Standard & Poor’s GSCI Spot Index of 24 raw materials rose as much as 0.7 percent to 673.82 today in London, the highest since May 3. The gauge has jumped 20 percent from this year’s lowest close of 559 on June 21. A close at this level will signal commodities entering a bull market.

The worst U.S. drought in a half century sent soybeans to an all-time high of $17.0475 a bushel today, while corn reached a record $8.49 a bushel on Aug. 10 on the Chicago Board of Trade. The Department of Agriculture has slashed its corn harvest forecast by 27 percent since June, after declaring more than half of U.S. counties as disaster areas while drought conditions stretched from California to New York.

“The grains have been the strongest performing subsector in commodities the past few months, and that has purely been driven by supply-side considerations and the U.S. drought in particular,” said Sudakshina Unnikrishnan, a London-based analyst at Barclays Plc. “While the rest of the commodity sector has been grappling with euro zone debt and macro headwinds, the grains have been isolated from that.”

[xchrom]

38. Merkel Allies Signal Greece Concessions Before Samaras Visit

http://www.bloomberg.com/news/2012-08-21/germany-s-barthle-says-small-concessions-possible-for-greece.html


Greek Prime Minister Antonis Samaras in front of the Greek Presidential guard in Athens on August 6, 2012.

Concessions are possible for Greece so long as Prime Minister Antonis Samaras shows a willingness to meet the main targets set out in his country’s bailout program, a senior lawmaker with Chancellor Angela Merkel’s party said.

A precedent for program adjustments was made with the first Greek bailout, when the country secured lower interest rates and longer maturities on bilateral loans than those originally set, Norbert Barthle, the Christian Democratic Union’s budget spokesman in parliament, said today in a telephone interview.

“Small concessions are feasible provided they are strictly made within the framework of the second aid program,” Barthle said. “For instance, the interest and maturity on loans could be adjusted, as in the case of the first aid package for Greece.”

Barthle’s comments add to signs of an easing in Germany’s resistance to granting Greece more room as it struggles to meet the terms laid down by its international creditors in a fifth year of recession. Samaras, whose ruling coalition favors an extension of its fiscal adjustment program by two years, is due to meet with Merkel in Berlin on Aug. 24, and will travel to Paris the next day for talks with President Francois Hollande.

[Roland99]

40. Republican Platform Won’t Protect Mortgage Tax Deduction

http://www.businessweek.com/news/2012-08-20/republican-platform-won-t-protect-mortgage-tax-deduction

Republican platform drafters refused to put their party on record for preserving the mortgage- interest deduction, giving Mitt Romney more flexibility to promote his plan to lower tax rates paid by corporations and the wealthiest Americans without increasing the federal debt.

The platform panel, meeting in Tampa, Florida, in advance of the Aug. 27 Republican National Convention, defeated a proposed mortgage deduction amendment by a show of hands as it moved toward today’s scheduled completion of the draft statement of positions the party will offer voters in the November election.

...

The mortgage interest vote was a shift in Republican policy from four years ago, when the party platform said that “because affordable housing is in the national interest, any simplified tax system should continue to encourage homeownership, recognizing the tremendous social value that the home mortgage interest deduction has had for decades.”

Romney, the presumed Republican presidential nominee, has proposed lowering corporate and individual income-tax rates and eliminating some tax breaks, without specifying which ones. A Romney campaign adviser, former Senator Jim Talent of Missouri, urged delegates to reject the mortgage-interest plank to avoid muddying the call for a simpler tax system.

Yet another way to screw the middle class to pay for tax cuts for the rich!

[Po_d Mainiac]

48. It wood crash the housing market

FIRE won't allow it.

[Demeter]

52. What Housing Market?

I'm sure that "investors" can still buy up the foreclosures and deduct interest....

[Demeter]

42. Sad But True: Corporate Crime Does Pay

http://www.alternet.org/sad-true-corporate-crime-does-pay?akid=9240.227380.rRjx_u&rd=1&src=newsletter695643&t=18&paging=off

Almost daily we read about another apparently stiff financial penalty meted out for corporate malfeasance. This year corporations are on track to pay as much as $8 billion to resolve charges of defrauding the government, a record sum, according to the Department of Justice. Last year big business paid the SEC $2.8 billion to settle disputes.

Sounds like an awful lot of money. And it is, for you and me. But is it a lot of money for corporate lawbreakers? The best way to determine that is to see whether the penalties have deterred them from further wrongdoing.

The empirical evidence argues they don’t. A 2011 New York Times analysis of enforcement actions during the last 15 years found at least 51 cases in which 19 Wall Street firms had broken antifraud laws they had agreed never to breach. Goldman Sachs, Morgan Stanley, JPMorgan Chase and Bank of America, among others, have settled fraud cases by stipulating they would never again violate an antifraud law, only to do so again and again and again. Bank of America’s securities unit has agreed four times since 2005 not to violate a major antifraud statute, and another four times not to violate a separate law. Merrill Lynch, which Bank of America acquired in 2008, has separately agreed not to violate the same two statutes seven times since 1999.

Outside the financial sector the story is similar. Erika Kelton at Forbes reports that Pfizer paid $152 million in 2008; $49 million a few months later; a record-setting $2.3 billion in 2009 and $14.5 million last year. Each time it legally promised to adhere to federal law in the future. Each time it broke that promise.

The SEC could bring contempt of court charges against serial offenders, but it doesn’t. Earlier this year the SEC revealed it has not brought any contempt charges against large financial firms in the last 10 years. Adding insult to insult the SEC doesn’t even publicly refer to previous cases when filing new charges... a fine of 75 percent of revenue would be needed to deter future violations. But the study found that actual fines ranged only between 1.4 percent and 4.9 percent...

MORE

[Demeter]

43. Why the prolonged economic slump? One word: Housing.

WELL, THAT AND THE FRAUD AND CORRUPTION THAT PILES ON MORE. AND ENDLESS WAR, THAT DOESN'T HELP, EITHER.

http://bubblemeter.blogspot.com/2012/08/why-prolonged-economic-slump-one-word.html

Economist Dean Baker writes about a recent research paper from the Federal Reserve Bank of Cleveland:

The study goes on to note the extraordinary weakness in housing in this recovery and point out that this weakness could explain much of the weakness of the recovery.

While the study notes that there are questions of causation (a weak recovery could lead to weakness in housing), there can be little doubt that if residential construction had returned to its pre-recession level, as had been the case by this point in all prior post-war recoveries, the economy would be back near full employment.

Of course it is not hard to understand why housing has not recovered. The massive over-building of housing during the bubble years lead to an enormous over-supply of housing, which shows up in the data as a record vacancy rate in the years 2006-10. In the last couple of years the vacancy rate has begun to decline which can explain the recent uptick in housing over the last few quarters.

This housing story explains why we should have expected a long and drawn out recovery. There is no easy way to replace the massive loss in demand associated with the collapse of the housing sector. And, it is hard to blame the collapse on President Obama, since the overbuilding took place in the years 2000-2006 and the collapse was already well underway at the point where he took office. ...

Ultimately we will need an increase in foreign demand, meaning a lower trade deficit, to fill the gap. This will require a lower valued dollar which will make U.S. goods more competitive internationally. Unfortunately, neither candidate seems willing to make the case for a lower valued dollar, which means that we can probably expect a weak economy for many years into the future, regardless of who gets elected.

[Demeter]

44. New York Times Publishes Apology for Obama’s Failed Housing Policies

On the one hand, the dismal failure of the Administration’s cosmetic responses to the foreclosure mess is so evident that the New York Times is willing to acknowledge it, via a first page article titled, “Cautious Moves on Foreclosures Haunting Obama.” On the other, what the story offers is a whitewash, not an analysis.

The Times puts forward a long form apology for the Administration’s failure to face the housing crisis head on. It admittedly does start off as if it might be a hard-hitting piece:

After inheriting the worst economic downturn since the Great Depression, President Obama poured vast amounts of money into efforts to stabilize the financial system, rescue the auto industry and revive the economy.

But he tried to finesse the cleanup of the housing crash, rejecting unpopular proposals for a broad bailout of homeowners facing foreclosure in favor of a limited aid program — and a bet that a recovering economy would take care of the rest.

During his first two years in office, Mr. Obama and his advisers repeatedly affirmed this carefully calibrated strategy, leaving unspent hundreds of billions of dollars that Congress had allocated to buy mortgage loans, even as millions of people lost their homes and the economic recovery stalled somewhere between crisis and prosperity.

But even here, you can see the deck being stacked in Obama’s favor. He “inherited” the housing mess, so how much can we blame him. Bold measures were “unpopular”. Really? “Controversial” is a better word. Helping millions and boosting the housing market would have been more “popular” than letting stressed homeowners twist in the wind and the home values, and the economy, continue to stagnate.

The excuse for the inaction? The servicers were even more screwed up than the Administration thought, so even if they had pushed really hard, it’s unlikely things would have been different. That’s a convenient cover for what was really at work: a belief by Geithner, who was driving this train, that the banks needed to be coddled, which aligned with Obama’s disinclination to ruffle powerful industry incumbents...


Read more at http://www.nakedcapitalism.com/2012/08/new-york-times-publishes-apology-for-obamas-failed-housing-policies.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29#04mdlDVIT5fCHi5W.99

[Demeter]

45. Uncle Sam Needs YOU for a Bailout: 6 Reasons Another Big Banking Crisis Is Coming Our Way

http://www.alternet.org/economy/uncle-sam-needs-you-bailout-6-reasons-another-big-banking-crisis-coming-our-way?akid=9240.227380.rRjx_u&rd=1&src=newsletter695643&t=9&paging=off

THIS IS A KEEPER--A COMPENDIUM OF ALL THAT'S GONE WRONG IN THE LAST 25 YEARS.....MUST READ!

...Time is running out for prosecutors to file cases against big banks for activities that triggered the 2007-2009 financial crisis, since statutes of limitations set deadlines for launching prosecutions for fraud and other financial crimes. If prosecutors don’t start lawsuits before these deadlines expire, the big banks will, once again, have got off scot-free. Failure to pursue banks, culpable management and employees for their complicity in causing the financial crisis is one of six bad policies that ensure we’re likely to see another bust-up of a big U.S. bank -- sooner rather than later. Who’s going to pay the price for such a failure? We will, of course. Uncle Sam’s policy of allowing banks to get too big to fail means we’ll all be left holding the bag when that collapse occurs — and another banking bailout is necessary.

1. Too big to fail

Thirty years of financial deregulation have seen unprecedented concentration of the financial sector. Before, financial firms were limited both in where they could do business and the types of business they could do. This prevented a big banking blowup in the U.S. for more than 50 years. Banks used to be limited to owning branches within individual states. When a bank got into trouble—and some did -- losses stayed confined. Regulators such as the Federal Deposit Insurance Corporation (FDIC) could clean up the mess and preserve depositors’ assets, without unduly burdening taxpayers. But after changes culminating in the Riegle-Neal Interstate Banking and Branching Efficiency Act in 1994, those restrictions vanished. So some banks got steadily bigger, while the overall number shrank. From 1990 to 2011, the number of commercial banks halved, from about 12,000 to 6,000, according to the St. Louis Federal Reserve Bank.

Once upon a time, the 1933 Glass-Steagall Act limited banks to either commercial or investment banking functions. Brokerage activities were restricted, and the operations of insurance firms constrained. Problems in one area of financial activity didn’t spread to another. Bankers could not speculate with small depositors’ money. Banks competed with each other, which led to better lending terms. And they didn’t get too big, so when they screwed up, they paid the price. They failed. In the 1980s, financial institutions claimed that Glass-Steagall and other restrictions prevented U.S. banks from competing head-to-head with foreign banks. They lobbied hard and regulators began to allow the restrictions slowly to erode...The net effect of all these rule changes – - was that banks became too big to fail. Fear that their failure has led regulators to go soft on the big banks, and to do anything to keep them alive.

2. See no evil, hear no evil

While the financial system was consolidating, another threat was looming: the “shadow banking system“ was being created. Another New Deal reform, the Investment Company Act of 1940, imposed heavy restrictions on investment companies, which were intended to protect investors from excessive risks, fraud and scams. But regulators decided that sophisticated investors, including the wealthy, pension funds and charities, had enough financial savvy to be allowed to invest in shadow banks that were either lightly regulated, or not at all. Such alternative investment vehicles, including hedge funds and private equity funds, were exempt from investment restrictions.

In the last two decades, there’s been an explosive growth in shadow banks. The size of this unregulated system has increased fivefold and today is larger than the regulated financial system. The rationale? Sophisticated investors, it’s claimed, can look after themselves, and therefore the largely unregulated funds that cater to them don’t pose any risks to the rest of us. But that’s not proven to be the case. And, surprise, surprise, when such firms fail, guess who pays the price? We do.

3. Calling in the cavalry, but giving them the wrong directions

Once the U.S. decided to deregulate the financial sector, and banks got bigger, it was inevitable that the government would be called in for a rescue. Most of us were aware that in 2008, the government stepped in to bail out big banks that were destabilized by Lehman Brothers’ collapse and by the bad derivatives bets entered into by AIG Financial Products. The world financial system was at the brink, we were told, and the Troubled Asset Relief Program (TARP) was necessary to save the system. But a decade before this bailout, U.S. financial regulators were involved in a rescue of a shadow bank, which helped set the stage for TARP. In 1998, the Long-Term Capital Management (LTCM) hedge fund got into trouble by placing heavily-leveraged derivatives bets during the Asian financial crisis. Hedge funds are allowed to operate with scant regulatory supervision on the rationale that they cater only to sophisticated investors who could bear the risk.

The Federal Reserve changed its mind when it realized that LTCM’s failure was a threat to the global economy. So the Fed corralled major banks in a room, and told them to fix the problem. They dismembered LTCM and took its underperforming assets onto their books. The Fed’s role in this rescue sent the wrong message: that the government would be there to fix problems, and that banks and shadow banks alike didn’t have to work too hard to manage risk and to protect themselves from contagion.

Sometimes you want government intervention to quell a banking panic, and to shore up or reboot a failed banking system. Banks need to be seized, or at minimum assessed by a neutral observer, and their balance sheets cleaned up. Investors, too, must pay a price for making foolish investment choices. Typically, existing shareholders are wiped out, while bondholders see their promises of guaranteed debt payments converted to more speculative shares of stock. We used to know how to do this. The Depression-era Reconstruction Finance Corporation seized failing banks, cleaned up their balance sheets, and later transferred these institutions back to private ownership. The Resolution Trust Corporation followed similar policies in cleaning up the savings and loan crisis of the 1980s and early 1990s. More recently, the Swedish government nationalized failing banks in the 1990s. Managers were penalized, and shareholders and sometimes bondholders took losses. But the U.S. forgot all these sound policies in the 2008 TARP. The government provided cash to stabilize shaky financial institutions, guarantees to bondholders, and tax breaks. It also purchased some risky assets. But it didn’t get much in exchange. Regulators didn’t demand that banks open their books and clean up their balance sheets. The big banks continued as going concerns. Bank managers paid no price and mostly kept their jobs. They paid themselves bonuses rather than using capital to shore up their banks. Bottom line: Managers, shareholders, and bondholders didn’t fully pay for their folly.

The government further erred by nudging sound banks to take over failing ones. This policy led to further consolidation of the banking system, making surviving banks even bigger! Finally, the government failed to take action to address the problems that let big financial institutions get into trouble in the first place.

4. Creating financial weapons of mass destruction


5. Companies consolidate, while regulation remains fragmented


6. Perps get off scot-free

SEE LINK FOR THE REST

****************************************************

Alexander Arapoglou, professor of finance at the University of North Carolina's Kenan-Flagler Business School, has been a derivatives trader and head of risk management worldwide for various global financial institutions.

Jerri-Lynn Scofield has worked as a securities lawyer and a derivatives trader.

[AnneD]

63. A truer article.....

Has never be written. A bookmark for all new economics folks.

[Demeter]

46. Global business barometer:Businesspeople around the world are gloomy, again

http://www.economist.com/blogs/graphicdetail/2012/08/daily-chart-1

GLOBAL business sentiment has worsened sharply, according to the latest Economist/FT survey of over 1,500 senior executives, conducted by the Economist Intelligence Unit. The balance of respondents who think the world economy will improve over those who think it will worsen fell from minus 5 percentage points in April to minus 25 in July. While sentiment was still bearish in April, it had been improving (down from minus 28 in January), and suits in North America, the Middle East and Africa were even bullish. Overall, 42% of executives now reckon business conditions will worsen. Most predicted, unsurprisingly, that Europe's biggest problem will be economic uncertainty. More than 60% believe economic conditions in the euro area will get worse in the next six months. The outlook for North America is more optimistic, though with a presidential election in November that could change. Barack Obama leads Mitt Romney in every region, and by 22 percentage points overall, on the question of which candidate would be better for the world economy. An Obama presidency is also considered better for business, with strongest support coming from those in government, education and health care, pharmaceuticals and biotechnology. When asked which candidate would be better for their own company, executives in every region said President Obama—except in North America where businessmen opted for President Romney by 39.3% to 31.9%.

WHICH SHOWS HOW BADLY INFORMED US BUSINESSMEN ARE

[Demeter]

47. ROMNEY VS OBAMA FOR BUSINESS

LIKE THE DIFFERENCE BETWEEN METASTASIZED CANCER AND CHRONIC MIGRAINES....

[Roland99]

49. How To Cut America's Healthcare Spending By 50%

http://www.zerohedge.com/news/guest-post-how-cut-americas-healthcare-spending-50

In the spirit of openly discussing a variety of sustainable, systemic healthcare options, we present this essay by correspondent "Ishabaka" M.D. on how to cut our current (18% of GDP) healthcare spending by 50%. Ishabaka received training in Canada, so he has direct knowledge of the Canadian system from the inside. Having spent decades as a primary-care and emergency room physician in the U.S., he also has deep knowledge of the U.S. sickcare system from the point of view of a care provider to under-served (i.e. uninsured) Americans.

Here is Ishabaka's essay:

Some time ago I told you how I could cut health care costs in half and provide every American with the healthcare they need (not necessarily the healthcare they want!). Here goes. Some of my points might seem drastic, but we are facing a drastic problem.

1. Immediately introduce national healthcare for all Americans ( and ONLY American citizens and H1B visa holders ) which will be paid for by an immediate TAX INCREASE.

2. Like Canada, this will cover all doctor's office, E.R., clinic, hospital etc. visits. Unlike Canada (the biggest mistake Canada made), there WILL BE co-pays for routine office visits and visits to the E.R. that are NOT serious emergencies.

Here is why Canada's no co-pay system is wrong. A family physician friend of mine in London, Ontario had a family in her practice. The little girl got an ear ache, with a low-grade fever on a Saturday. The mother took her to an E.R. and got an antibiotic prescription. On Sunday the girl was feeling better with no fever, but the mother took her to a walk in clinic "Just to make sure everything was all right". The doctor said "Yes". On Monday the mother took her daughter, who was now feeling fine, to my friend's practice "Just to make sure the other doctors knew what they were doing". The ear infection was cured.

[kickysnana]

54. xpost from Skinner Pay what you want. Pay how you want.....

http://www.democraticunderground.com/10131833

He must have read my message a few days ago, huh?

[Fuddnik]

55. That's the first thing I thought when I saw it.

The second thing I thought is they're going broke.

[Roland99]

62. US 10-year yields break below 1.80% Been stuck there for a few days

at 1.7794% right now