STOCK MARKET WATCH, Tuesday April 8, 2008

[Demeter]

Source: DU

STOCK MARKET WATCH, Tuesday April 8, 2008

COUNTING THE DAYS DAYS REMAINING IN THE * REGIME 288
DAYS SINCE DEMOCRACY DIED (12/12/00) 2634 DAYS
WHERE'S OSAMA BIN-LADEN? 2360 DAYS
DAYS SINCE ENRON COLLAPSE = 2651
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 10
Enron execs conveniently deceased = 3
Other Arrests of Execs = 54

---

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

---

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

AT THE CLOSING BELL ON March 28, 2008

Dow.........12,612.43 +3.01 (+0.02%)
Nasdaq...... 2,364.83 -6.15 (-0.26%)
S&P 500......1,372.54 +2.14 (+0.16%)
Gold future... 926.80 +13.60 (+1.47%)
30-Year Bond 4.37% +0.05 (+1.18%)
10-Yr Bond... 3.56% +0.08 (+2.15%)






GOLD, EURO, YEN, Loonie and Silver

---

PIEHOLE ALERT

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

For information on protests and other actions
Citizens For Legitimate
Government>

---

No link yet.

[Demeter]

1. Inflation Revelations BY ROB KIRBY

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

We all read and hear from officialdom that the prospects for inflation, while elevated somewhat recently, always remain anchored and/or subdued on a forward looking basis:

….if the public experiences a spell of inflation higher than their long-run expectation, but their long-run expectation of inflation changes little as a result, then inflation expectations are well anchored. If, on the other hand, the public reacts to a short period of higher-than-expected inflation by marking up their long-run expectation considerably, then expectations are poorly anchored. ~ FED Chairman, Ben Bernanke, July 10, 2007

In this speech titled, Inflation Expectations and Inflation Forecasting, Mr. Bernanke goes on at length about the influence that ‘expectations’ have on inflation but he fails to mention its true cause:

“Inflation is a phenomenon caused by the increase of money supply relative to the growth of production capacity for goods and services.”

As regular readers of this site should be aware and as Jim Puplava has pointed out, time-and-time again, inflation is and always has been “a monetary phenomena.” So, while Mr. Bernanke speaks volumes about the containment of inflation expectations, here is what the Federal Reserve has empirically done to M3 - the broadest measure of MONEY SUPPLY :




Money supply growth is now approaching 20% per annum. As an entity whose primary mandate is to “control inflation,” it’s no wonder the FED has lots of time to discuss ‘expectations’ and zero interest in discussing inflation’s real cause. Heck, these ‘revisionists’ even had the gall to claim that broad money growth was ‘irrelevant’ to heightened inflation as a further explanation for their discontinuing reporting of M3 data :

“True to form, the conspiracy minded were inspired to vent after last week's announcement that the Federal Reserve would cease publishing its broadest measure of money supply numbers, otherwise known as the M3 series. The official reason is that M3 is a dud. That is, M3 offers little information above and beyond M2. Dave Skidmore, a spokesperson for the Fed, told CS today . M3 adds sparse, if any insight to monetary trends that's not available in M2, a narrower definition of money supply, he continued.”

Not surprisingly, as the growth of the broadest measure of money supply took its ‘upward bend’ immediately after March 26, 2006 – the nominal prices of many commodities, as represented by the CRB Index, began trending upward:

MORE GRAPHS AT LINK

Conclusion

Money supply growth is rampant. Problems created by already excessive money supply growth are being met by the Federal Reserve with solutions which require still more money growth.

This is why the dollar is declining against other currencies and why nominal prices for so many staple goods is increasing.

To protect oneself from the ongoing severe debasement of the currency through money growth, folks need to ensure that they have adequate assets allocated to tangibles, namely, precious metals.

[Demeter]

71. There Is No Way Short of Robbing a Bank

marrying a Rockefeller, or committing a fraud on the order of Enron that one can get 20% per annum returns.

The only recourse I can see is hoarding--take the money and convert it to something useful that can be stored, bartered, or used later.

Solar photovoltaics, water purification, improved farmlands, non-perishable food, friends, and gold are the things that come to mind. And maybe a defensive capability....

[Demeter]

2. Oil steady above $109 after steep rise By GILLIAN WONG, AP

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

Oil prices steadied Tuesday after jumping by almost $3 a barrel in the previous session on concerns about falling gasoline supplies and expectations that U.S. interest rates will be cut again.
Oil prices climbed Monday as traders bet that future U.S. Federal Reserve rate cuts will weaken the greenback. A weak dollar attracts investors to hard commodities such as oil, which are seen as a hedge against inflation. Also, a falling dollar makes oil cheaper to overseas investors.

"What we're seeing at the moment is still a very high interest in commodities, driven by non-fundamental issues such as a hedge against the falling U.S. dollar," said Mark Pervan, senior commodity strategist with the ANZ Bank in Melbourne.

Light, sweet crude for May delivery rose 22 cents to $109.34 a barrel in Asian electronic trading on the New York Mercantile Exchange by midafternoon in Singapore. The contract rose $2.86 overnight to settle at $109.09 a barrel on the Nymex, the highest settlement for a front-month contract since March 18. Oil futures are now nearing last month's trading record of $111.80 a barrel after a swoon that twice brought them briefly below $100. The rise is helped by a growing belief that gasoline supplies are falling as the summer driving season in the U.S. approaches.

Last week, the Energy Information Administration said gasoline inventories fell more than expected during the week ended March 28. Also, gasoline demand rose for the first time since January, last week's EIA report showed, raising the prospect that supplies will fall further as Americans drive more during the spring and summer. Analysts say refiners have cut back on gasoline production due to low profit margins. The rising price of crude means it costs refiners more to turn the raw product into motor fuel.

The prospect that the Organization of Petroleum Exporting Countries will hold production steady this year also pushed oil prices higher Monday.

[Demeter]

3. Batten Down The Hatches: This Is The Big One By Ashley Seager "The Guardian"

http://www.guardian.co.uk/business/2008/apr/07/economics.banking

"Whole cities of pain. A continent of pain," said the great, if eccentric, Wall Street money dealer Jim Cramer recently. He was talking about the economic pain spreading across the United States, of course. Until recently, the pain of the US housing market had not spread to our own fair land. Much of the economic data here has been, if anything, surprisingly healthy. But such figures are generally backward-looking and often look fine until suddenly they don't.

Last week we saw a dramatic escalation in pain levels as one mortgage lender after another either withdrew home loans or raised the interest rates. The chart shows the growing divergence between the Bank of England's official rate and interbank Libor rates that explains this. This is the most concrete evidence to date that the esoteric "credit crunch" has moved out of the so-called "interbank money markets" and into the consciousness and pockets of the British people.

The Co-op Bank and First Direct said they had to shut their doors to new business because house buyers were deluging them with requests for favourable mortgage terms. Many who bought a two-bed flat in a city centre anywhere in Britain are now finding they can't afford the mortgage repayments and the value of the property is dropping fast...Britons are also carrying record levels of debt. Figures last week showed a surprise jump in unsecured lending in February, mostly overdrafts.

A sign of continued consumer confidence, you might say. But it looks more as if consumers faced with greater difficulty in raising mortgage finance have simply let their overdrafts take the strain: it is a sure sign of consumers under stress. That makes sense when survey after survey has been showing consumer confidence is very weak and people's intentions of making a major purchase are vanishing. No wonder private car sales are dropping. Ernst & Young, the consultants, have warned that dealerships face a year of struggle. The Bank of England's credit conditions survey last week showed banks expect lending conditions to get worse, signalling more trouble ahead. The economy has sailed resiliently through many shocks over the past 15 years, from the Asian crisis in the late-1990s to the dotcom bust of the early noughties. But it has not been hit by anything like this credit calamity for a very long time, if ever. This is the big one.

The idea that we can escape the impact of what is happening in America is just wishful thinking. There was some optimism in financial markets last week that the worst of the credit crunch might be over. These are the same markets that failed to predict the credit crunch and are the root cause of this misery, so their opinion, frankly, is not worth much.


[e-mail]

[Demeter]

4. Tax Policy Favors Investors Over Wage Earners By Gerald E. Scorse

http://www.informationclearinghouse.info/article19697.htm

07/04/08 "ICH" -- - -- Over the last ten years, nobody has gotten more love from Washington than investors. It’s time to stop and ask if the love is misplaced. Investor-love settled in on the Potomac in 1997, when President Clinton cut the tax on long-term capital gains from 28% to 20%. In 2003, President Bush kept the love coming from the GOP side. He took another 5% off the capital gains rate and slashed the levy on corporate dividends as well.
Just recently, some Republicans proposed adding a dollop of investor-love to the economic stimulus bill. Their idea didn’t fly, but it showed that the flame is still burning.

All this love has worked splendidly for the loved. The tax on long-term gains and qualified dividends has been driven down to 15%. That’s a 70-year low, and it’s less than the rate on the wages of average Americans. As the multi-billionaire Warren Buffett abashedly confessed, the secretaries in his office now pay taxes at a higher rate than he does. Buffett was quickly called out for coming up short on investor-love. Maria Bartiromo, an anchor on the business channel CNBC, labeled his remark “misleading”. Misleading? Hardly, compared to the claim that buyers of stocks drive the U.S. economy by growing jobs and new businesses. If so, investor-love might be deserved. Let’s look in on the market and analyze what takes place.

Billions of shares change hands daily on the major exchanges. On any given day, only a minute fraction of those shares grows anything. Days can pass without a bona fide investment; the sounds you hear are aftermarket noise and the closing bell. In short, “investors” do not grow jobs (except in the financial sector). The seed money that nourishes start-ups and expansions comes from a tiny subset of real investors; the rest of us merely place our bets at the tables down on Wall Street. What’s the problem with investor-love? First, Warren Buffett has it right: it’s wrong for income from work to be taxed at a higher rate than income from wealth. Second, investor-love has no reason for being; it’s a tax policy shaped by propaganda.

Lawmakers might better follow the policy shaped by Ronald Reagan.

Reagan’s 1981 tax cuts tilted toward the wealthy and made him a supply-side icon. But Reagan could also be fair, and fairness would permeate his last fiscal legacy. In the landmark Tax Reform Act of 1986, nearly three years in the drafting, Reagan again cut marginal rates but raised taxes sharply on investors. The reform ended preferential tax treatment of capital gains. The tax rate on long-term gains leapt from 20% to 28%, nearly double the current levy. Higher-income taxpayers could pay as much as 31% on their gains. Reagan hailed the bill as “the dream of America’s fair-share tax plan.” He also called it “the best job creation program ever to come out of the Congress”; hyperbole, but evidence that he expected no growth falloff from higher capital gains taxes. The new 28% rate held until ’97, when a GOP-controlled Congress and a Democratic president fell under the spell of investor-love.
Republican presidential candidate John McCain stays miles away from the fact that Reagan equalized taxes on income from wages and income from wealth. But Barack Obama (and John Edwards, before dropping out) have pointed to it with relish.

In their bones they know what’s fair, just like The Gipper did.

The writer is a member of Responsible Wealth, a Boston-based advocacy group for economic fairness. He has an M.B.A. from Baruch College.

[Demeter]

5. Home Prices Fall in 21 U.S. Cities Amid Foreclosures (Update3) By Kathleen M. Howley

http://www.bloomberg.com/apps/news?pid=20601103&sid=aljcM42pGwyY&refer=us

April 3 (Bloomberg) -- Home prices declined in 21 U.S. cities in January, led by Sacramento and Las Vegas, as banks sold foreclosed homes at bargain prices.

The price per square foot in Sacramento, the capital of California, dropped 28 percent to $166 from a year earlier, according to a report released today by New York-based Radar Logic Inc., a real estate data company. Las Vegas fell 25 percent to $137 a square foot.

Rising foreclosures and tighter lending standards are deepening the U.S. housing slump as it enters its third year. The median price of an existing single-family home dropped 8.7 percent in February from a year earlier, the most in four decades of record keeping, the Chicago-based National Association of Realtors said in a March 24 report...U.S. mortgage foreclosures rose to an all-time high at the end of 2007, the Mortgage Bankers Association said in a March 6 report. New foreclosures jumped to 0.83 percent of all home loans in the fourth quarter from 0.54 percent a year earlier. Late payments rose to a 23-year high, according to the Washington-based trade group's report...


San Diego was the third-worst U.S. market, with prices dropping 21 percent, and Los Angeles was fourth, with a 17 percent decline, Radar Logic said. In Tampa, Florida, prices tumbled 16 percent. Phoenix had a 15 percent decline, Miami dropped 14 percent, and San Francisco had a 13 percent slip. Boston was down 9 percent and Washington declined 8.7 percent, the report said. Charlotte, North Carolina, saw a 3.9 percent gain in values, and New York prices rose 2 percent, the only areas to have an increase in the study of 25 U.S. cities. Milwaukee and Philadelphia saw price declines of less than one percent, changes so slight the study gave them a ``neutral'' ranking rather than count them as decreases...

[ozymandius]

19. Foreclosures come to McMansion country

LEESBURG, Virginia (Reuters) - Million-dollar fixer-upper for sale: five bedrooms, four baths, three-car garage, cavernous living room. Big holes above fireplace where flat-screen TV used to hang.

The U.S. housing crisis has come to McMansion country.

Just as the foreclosure crisis has hollowed out poorer neighborhoods, "for sale" signs are sprouting in upscale developments so new they don't show up on GPS navigation screens.

Poor people weren't the only ones who took out risky, high-interest loans during the housing boom. The sharp increase in housing costs -- and the desire to live in brand-new, spacious houses with modern features -- led many affluent buyers to take out loans they couldn't afford.

.....

Between 1990 and 2005, the county's population tripled to 272,000. Many of those moving here relied on risky, high-interest loans to buy the house of their dreams.

.....

High-interest loans accounted for 16 percent of the total during the height of the mortgage boom in 2005, less than other outer-ring suburban counties in the region but more than neighboring counties closer to Washington.

Now the bill has come due. One out of every 69 households in the county was in foreclosure in the last three months of 2007, well above the national average of one filing for every 555 households, according to RealtyTrac.

http://www.reuters.com/article/wtMostRead/idUSN0130613220080407?pageNumber=2&virtualBrandChannel=0

[AnneD]

48. Morning Marketeers.....

:donut: and lurkers. Welcome back Ozy. What did you bring us??????:rofl: We'll settle for some news.

I saw a story about this very thing on the overnight news this morning and thought about some of the things we had discussed on this thread. Some real estate person(that should have know better)- and her WTD hubby were getting their ARM adjusted from 1K+ per month to 8K. They were able to get in touch with the bank and get them to reduce it to 4K but in their situation-that was still more than a stretch. The sad thing was -she had used her grandmother's inheritance for the down.

If there is one good thing that comes out of these awful times-I hope it is a change of heart about wealth, poverty, and money. Many of the wealthy, esp. those born into wealth (unless raised right), think that they deserve it or worse yet, blame the poor for being poor. They treat poverty like it is a character flaw.

After years of observation of the wealthy and poor, and reading about it and real life experiences-I have decided there are several factors that determine your financial well being. These basic factors include: the ability to make money either by receiving a wage or producing goods or services, a basic understanding of how money works, discipline of long term thinking (to see beyond Friday or Saturday night), good health, and above all-luck (or God, Karma, whatever you choose to call it).

I have known folks that have not had one or more of these things and made it because they had luck (won the lottery, married well, born into money) just as I have know folks that had all the other factors, but no luck (illness at a critical juncture, accident, legal judgment, etc). You can survive to a degree with any of these skills but luck makes the difference.

There are some that say they make their own luck, and they game the system...and while that might work for a while...it doesn't last forever. The bottom of the ocean floor, the ancient tombs, and even modern day prisons, are littered with those that thought it was their divine right to own wealth. I have come to the belief that you don't own it, you merely borrow it. And if you are lucky, you get to use it for a while.

I think some folks are about to lose their turns.

Happy hunting and watch out for the bears

[specimenfred1984]

82. It's much worse than that around there

I live near Loudoun and there are huge numbers of unsold McMansions around here and they've been for sale for more than 1 year. That's in addition to the other 1000s of "units" for sale. They are still building around here too. I've seen the "foreclosure vans" riding around as well as the "Forclosure.com" car. Realtors are still lying their asses off and asking at least $100,000 more than what any home is worth. The homes that sell are foreclosures that were going for around $300,000 and get listed at less that $100,000.

Still, neighboring Fairfax county is the richest county in the U.S. and those suckers think their money will just keep flowing in, for now. The counties of Loudoun, Prince William and Fairfax have been way overdeveloped and won't recover for years, despite people's optimistic/bs outlooks.

[Demeter]

95. After the Election, A Whole New Bunch of Suckers, I Mean Customers Will Arrive

My father's in Annandale. I may be there myself in a year or less.

[Roland99]

51. WaMu largely exits mortgage industry

http://www.bloomberg.com/apps/news?pid=20601087&sid=a7M_ER.SKD9E&refer=home

Shutting Offices

As part of the agreement Washington Mutual will stop making loans through mortgage brokers and close its freestanding home loan offices, while focusing on its 2,500 bank and small business lending offices.

TPG's founding partner Bonderman will be added to the board. Larry Kellner, CEO of Continental Airlines and former chief financial officer of American Savings Bank, will be an observer at TPG's request. Bonderman declined to comment through a spokesman, Owen Blicksilver.

The lender, known as WaMu, once ranked among the 11 biggest originators during 2006 of subprime mortgages, which are made to people with the weakest credit. Washington Mutual plans to put aside $1.8 billion to $2 billion as a cushion against bad loans for the first quarter. For the full year, the company may lose $4.2 billion as home loans continue sliding, CreditSights said in a report this month.

[Demeter]

78. Josh Rosner on US Housing Market

http://us1.institutionalriskanalytics.com/pub/IRAstory.asp?tag=269


Rosner: The housing market woes in the US will not be over before 2010, regardless of what legislative initiatives come out of Washington. The fundamental reason why we are having these problems in the US is that real wages and incomes have not kept pace with home prices since the 1960s and that's what drove demand for these affordability products. Unless the Congress wakes up and let's home prices correct so that we restore some balance between wages and affordability, this problem will remain for years to come.

The IRA: That implies a 40-50% cut in home prices from peak levels and an insolvent US banking system.

Rosner: Yes, long term trends in home prices suggest that we will revert to the peak levels of the previous cycle. That implies that we are going back to the pre-1991 peak home price levels.

The IRA: Yikes. Then you agree with our view that the US government may be forced to take over some of the largest banks?

Rosner: Yes, well, we won't call it nationalization, but in economic terms that is the substance of the situation. One of the striking comments I hear in Europe is that at least with Northern Rock, the Financial Services Authority in the UK screwed up the first time, but then admitted the mistake and publicly nationalized the bank. With Bear, Stearns, the US has nationalized the bank and appointed JPMorgan as conservator, but then US regulators tell the public and the Congress that it was not nationalization.

The IRA: The Fed seems to be incapable of admitting that they screwed up, whether on structured assets or Bear Stearns. I've never heard anyone at the Fed admit, for example, that their active push to allow banks to migrate more and more business over the counter and off exchange has vastly increased systemic risk.

Rosner: The difference between Fed's prior to the Greenspan and the Bernanke Fed is that the former did not see themselves as part of the President's Cabinet

The IRA: Exactly, Bernanke seems completely co-opted by Paulson and the Goldman Sachs mafia that runs the Treasury. Both Bernanke and Geithner seem so weak and lacking in market experience that is almost sad to watch them testify next to banksters like Steel and Paulson.

Rosner: Correct and that is a very dangerous path for the United States.

[ozymandius]

6. Good morning everyone.

:donut: :donut: :donut:
It's so good to be back after a week in Los Angeles.

A mountain of thanks is offered to Demeter :hug: for keeping the thread chugging along in my absence. :yourock:

[Demeter]

7. You're Very Welcome

I learned a lot doing this, and it's good to know you made it home safely. It's all back to you now. I didn't do the daily briefing bit, but everything else is up.

[DemReadingDU]

44. Many thanks Demeter

We sure appreciated that you started up the daily SMW thread for us!

[Hugin]

64. Welcome back, Ozy!

Yeah, just wait 'till you see the mess Demeter made of the SMW! Worse than anything I've eve.... Uh, I... Uh...
replied to the wrong post. Didn't I? : oops :




(I kid. I kid. You did a fantastic job Demeter. :) )

[JNelson6563]

14. Amen!

Welcome back dear Ozy and Demeter is a hero for filling in as he did.

Julie

[ozymandius]

18. McSame!

:rofl:

[AnneD]

49. McShame on you!!!!!

you are so McBad:spank::spank::spank:

[UpInArms]

33. Welcome home, Ozy! and many thanks to Demeter, too!

Glad to have you back safe and sound and my hat is off to Demeter for her many fine efforts that resulted in some truly grand SMW threads

:grouphug:

[DemReadingDU]

43. Good morning Ozy

Nice to see you back from L.A.

Demeter did an excellent job for you while you were away.

We all appreciated Demeter for starting up the daily SMW thread for us!

[Roland99]

54. Welcome back!

:hi:

[Dr.Phool]

58. At least you got to go to L.A,

I was stuck in the heart of Appalachia for a week. I hadn't been back there for 30 years. Still dirt poor, but a few more paved roads than I remember.

The economy must be booming. Massey Energy was holding a job fair in my hotel. Every little fast food joint in this little town had "help wanted" signs. The odd thing is, I never saw any customers.

Welcome back!

[Tansy_Gold]

63. Welcome Back, Ozy! And Many Thanks, Demeter!

Always a splendid job!


Tansy Gold, who will try not to ask any stupid questions today (but does not guarantee success!)

[Demeter]

72. Remember, There Are NO Stupid Questions

and we'll try to sort out and identify the stupid answers.....

[Demeter]

70. Um, Ozy, You May Want to Check Your Countdowns

I'm not certain I kept them straight.....

[mdmc]

90. welcome back!

Thanks to DEMETER for kicking it old school!

[ozymandius]

8. Today's Reports

10:00 Pending Home Sales Feb
Briefing.com NA
Consensus -1.0%
Prior 0.0%

14:00 FOMC Minutes for Mar 18

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

[Roland99]

53. CNBC: Feb. Pending Home Sales ... -1.9%

[ozymandius]

9. Alcoa 1Q profit drops on higher costs

PITTSBURGH - Alcoa Inc. unofficially opened the first-quarter earnings season by reporting profits sank by more than half as higher costs and a swooning U.S. dollar weighed down results, but executives said the company's future is bright.

.....

In a conference call with analysts and reporters, Alcoa President and Chief Operating Officer Klaus Kleinfeld said the company held a strong position in the aerospace market and expected to benefit from growing urbanization around the world as developing countries build new infrastructure.

With those trends, Alcoa sees aluminum consumption increasing about 6 percent annually over the next decade, he said.

Alcoa, the world's third-largest aluminum producer, said Monday it earned $303 million, or 37 cents per share, for the first three months of the year, compared with $662 million, or 75 cents per share, during the same period last year.

Sales fell nearly 7 percent to $7.38 billion, from $7.91 billion a year earlier.

.....

Belda said higher energy costs and the weaker dollar squeezed margins, but that the global market remained tight and prices were near historic highs, primarily driven by demand in Asia, particularly China.

http://news.yahoo.com/s/ap/20080408/ap_on_bi_ge/earns_alcoa

[ozymandius]

10. AMD cuts follow Intel restructuring

SAN FRANCISCO - Advanced Micro Devices Inc.'s plans to jettison 10 percent of its work force are the latest sign that the seesaw battle between semiconductor rivals Intel Corp. and AMD has taken its toll on both companies.
ADVERTISEMENT

AMD said Monday that its job cuts, which will amount to more than 1,600 workers out of 16,800 worldwide, are slated to start later this month and finish by September. The cuts were widely expected as the slumping chip maker has been battered by product delays and burdened by heavy acquisition costs.

The Sunnyvale-based company also warned investors that first-quarter sales were lower than expected across all business lines, a miss that surprised Wall Street. Sales for the three months ended March 29 came in at about $1.5 billion, a 15 percent drop from the year-ago period and short of the $1.61 billion that analysts polled by Thomson Financial were anticipating. The company is scheduled to report its full quarterly results April 17.

AMD shares fell 18 cents, or nearly 3 percent, to $6.16 in after-hours trading. The stock had risen 11 cents to close at $6.34 before the layoffs and sales warning were announced.

.....

But now it's AMD that's fallen on hard times as it confronts intensifying competition from Intel, which has regained some lost market share with a powerful line of new chips and has lowered its costs with a new manufacturing process.

http://news.yahoo.com/s/ap/20080408/ap_on_hi_te/amd_outlook

[Demeter]

11. THE GOVERNMENT GENIE FLIPS A COIN by The Mogambo Guru

http://www.dailyreckoning.com/Writers/MogamboGuru.html

Junior Mogambo Ranger (JMR) Gary S. sent me the chart of “30-Day Gold Lease Rates” from Kitco.com, which definitely shows that the one-month gold lease rate was less than zero. He asks, “The lease rates on 30-day gold and silver are negative?!?! What does that mean? Are banks paying other banks to lease gold? Are banks so desperate to raise cash that they are giving away gold???? Am I using too many question marks?”

...But this biting satire and raw sarcasm has given me the idea for a new television game show of my own. Thus, I proudly announce the latest television hit show, Mogambo’s Let’s Make A Deal (MLMAD). The essence of the 30-minute show is that I say to a randomly-picked audience member who is dressed in some ridiculous garb, “If you think that a negative lease rate for gold is weird, and if you think that the banks reporting total reserves of $44 billion while at the same time non-borrowed reserves are an astonishing negative $61 billion is weird, and if you think that banks’ ‘free reserves’ are a sudden, staggering negative $75 billion is weird, or if you think that borrowed reserves in the banks are a sudden, terrifying $80 billion is weird, and if you think that private-sector investment banks borrowing from the Federal Reserve itself for the first time in history is weird, then you are not only 100% correct, but you win! You are a winner! You have won the chance to choose between the two Mogambo Doors Of Mystery (MDOM) and claim the fabulous prize that is waiting there for you!”

The camera pans down to two mysterious doors on stage as I say, “Step right up and pick which door you wish to open, and discover the surprise behind that door! And why don’t you tell us what is behind the two doors, Bob?” at which point Bob the Announcer says, “Right you are, Mogambo! Behind one door is a government that will grant you seven wishes, making all your dreams come true! Behind the other door is the economic death from the government making someone else’s seven wishes come true.” Waiting for the applause from the audience at the prospect of being granted seven wishes to die down, I say, “And there you have it! Which door will it be?”

The audience chants rhythmically, “Which door? Which door? Which door?” louder and louder and louder, like some demonic jungle voodoo rhythm, until the contestant finally, and excitedly, chooses a door!
If he guesses right, he gets seven wishes and he goes off to enjoy them. If he chooses wrong and chooses the door behind which waits “economic death from making someone else’s seven wishes come true”, then thugs rush out to strip the surprised contestant naked before dragging them out to throw them into the cold, filthy gutter while our audience watches in air-conditioned comfort as our lawyers loot the contestant’s house, their bank accounts, retirement plans, brokerage accounts, their safe-deposit box at the bank and then burn their house to the ground. All gone!

Well, all the network people, all of the money people and everybody who heard of my new show said it was the worst idea they had ever heard, which I cleverly counter by saying, “The moronic population of this country loves this game already, even though nobody has ever had to pick the wrong door until now! Where in the hell did you think all this government spending was going?” And if you think, like everybody else seems to think, that this is an ugly, vicious and stupid idea, then get used to it, because you are going to see all kinds of weird things from now on, as the governments – not just American but everybody’s – are now realizing, too late and to their horror, that we are all freaking doomed by the vast expansions of fiat currencies and indebting taxpayers to fund massive amounts of government growth and government spending, and now they are going to do every slimy monetary, fiscal and legal trick that they can think of. And with the awesome, unlimited power of a fiat currency that can be increased in volume literally at will, all fiscal and monetary plans are, suddenly, possible! Negative interest rates, tax rebates, tax cuts and increased government spending all at the same time! It’s literally possible, and without end! Ask Zimbabwe!

But it is, alas, impossible that they will succeed in alleviating the problems. As Clyde C. Harrison at Brookshire Raw Materials correctly said, “Governments and central banks are completely incapable of keeping tomorrow from coming”, which is too bad, which in turn reminds me of the funny line, “Tomorrow is the greatest labor-saving device today”, which seems oddly and chillingly apropos, considering what the government and the Fed are doing is merely fighting for another day of economic reprieve!

[ozymandius]

Wall Street worries over earnings miss, job cuts

NEW YORK (CNNMoney.com) -- Futures were down this morning, following dismal earnings from the aluminum giant Alcoa, and ahead of a report that's expected to show a decline in pending home sales.

Futures for the Dow and Nasdaq were trading down at 6:28 a.m., and Asian and European stocks were also trading lower.

......

No major earnings announcements are expected for Tuesday. Instead, investors have an economic report to focus on, which could spell more bad news for the housing market. The February report for pending home sales comes at 10 a.m. ET and a decline of 1% is expected.

Adding to the economic gloom, Merrill Lynch (MER, Fortune 500) chief executive John Thain said in Tokyo on Tuesday that his bank does not plan to raise more capital and will keep shrinking its balance sheet because of the credit crunch, according to Reuters.

http://money.cnn.com/2008/04/08/markets/stockswatch/index.htm?postversion=2008040806

[TalkingDog]

12. Morning Oz, Demeter

Glad to see you back safe and sound. YOU ROCK! does not begin to express our newly blossomed Demeter worship (ha! pagans that we are) here on the SMW. Me, I would've fainted from stage fright.....

And now for something completely different (that is completely the same)

http://www.bloomberg.com/apps/news?pid=20601109&sid=at6oLFppL7G0&refer=exclusive

The freeze in leveraged buyouts is slashing fees for investment banks by more than 75 percent as Blackstone Group LP and Kohlberg Kravis Roberts & Co., the industry's two biggest firms, put takeover plans on hold.

Private-equity companies paid $1 billion to securities firms in the U.S. and Europe during the first quarter, down from $4.3 billion a year earlier, data compiled by New York-based research firm Freeman & Co. and Thomson Financial show. Revenue from loan underwriting plunged more than 91 percent, and fees from advising on takeovers dropped 51 percent.

The crisis in the debt markets that started with the collapse of the subprime mortgage market in the U.S. shows no sign of abating. No buyout firm has announced a deal worth more than $3.1 billion since borrowing costs started climbing last July, according to data compiled by Bloomberg. Banks are now in the process of clearing about $230 billion of loans that they committed to finance acquisitions, sapping their interest in funding new deals.

``Until the banks sort out their credit issues, there will be a follow-on impact on the larger M&A deals,'' said Bruce Barclay, a London-based managing director at Advent International Corp., which this week raised 6.6 billion euros ($10.4 billion) for LBOs.

[Demeter]

16. Stop It, You Sly Dog! I'm Blushing!

Demeter worship--it's been a long time coming, that's for certain!

[ozymandius]

13. Foreclosure crisis fix faces murky future

NEW YORK (CNNMoney.com) -- The Senate on Tuesday is expected to pass a package of housing measures intended to stabilize the housing market.

But that bill - crafted in 24 hours of bipartisan negotiation last week - faces an uncertain fate as the House gets ready to have its say on how best to address the nation's foreclosure crisis.

The House is expected to craft its own bill and not simply follow the Senate's lead. In addition, House leaders have indicated they might also pursue proposals to address other problems in the economy - a move that could complicate speedy approval of any foreclosure provisions.

.....

But the pressure is on for lawmakers to act swiftly to prevent a substantial number of foreclosures. Nationwide, 1.5 million subprime adjustable-rate mortgages will reset to higher interest rates this year, putting many of those homeowners at risk of falling behind on their payments and losing their homes.

http://money.cnn.com/2008/04/07/news/economy/house_response_Sentatehousing/index.htm

[Demeter]

15. One Bubble Pops...Another Inflates DailyReckoning.com

...this (latest unemployment) number will keep the pressure on the Bernanke team to cut rates. It didn’t mention that it will also keep pressure on the dollar – as speculators will expect the dollar to fall as a result. That’s the trouble with this battle between inflation and deflation – many of the soldiers don’t seem to know what side they’re on! When speculators unload dollars, it doesn’t have the effect on U.S. lending rates that Bernanke intends. In fact, it has the opposite effect. Pushing down on the short end of the yield curve (the Fed sets the rate at which member banks borrow from it, short-term), Bernanke hopes to drag longer-term rates along. Easier said than done. If speculatorsfear inflation, they sell the dollar, lower prices on U.S. credits and raise yields. All else remaining the same, prices on T-bonds go down, while yields go up...The Bernanke team had a good week. By the middle of the week, everything seemed to be slipping and sliding his way. That is, stock prices were up and gold was falling. But by week’s end, whoever is on the other side in this tug-of-war had dug in its heels, refusing to budge. Gold was back up over $900...the Dow was off...and Bernanke was back in the news, saying that a “recession is possible”. There is a big question that we’ve been unable to answer: Which way will this tug-of-war go? But we realize that this is the wrong question. Of course, it will go both ways. We will neither have our cake nor eat it. Instead, we will have both inflation and deflation...losses from consumer price increases, and losses from defaults. Between the two, the value of both our credits and our debts will go down.

In addition to the bad unemployment news, the weekend brought word that bankruptcies had risen 30% in market. Strip malls’ vacancy rates are the highest in 12 years (there is far too much retail space in the United States...it will take years to work it off). Gasoline hit a new record in Texas. Even the American Mortgage Bankers Association can’t pay its rent. And when pollsters put the question to them, 81% of Americans thought the country was going to Hell in a handcart.

Yet, in spite of all this disturbing news, stock markets seem to want to go up – or at least not go down. The short sellers are in trouble; there are far too many of them and every small increase forces them to cover their positions, buying back in and sending prices higher. Still, we do not want to hold U.S. stocks – other than the special situations we find from time to time. If our analysis is correct, the inflation that is holding up stock prices will be felt even more in other places – namely, in commodities, gold and consumer prices. When one bubble pops, the next one always appears somewhere else. So don’t even think about buying back into the finance sector. That trend is over. George Soros says it’s the end of the road for cheap and easy borrowing. That is to say, it’s the end of a trend that has been going for the last 28 years. We may not see another boom in the financial industry during our lifetimes. We remind readers, too, that while stocks are no lower today than they were 10 years ago, stock market investors have lost about a quarter to a third of their money to inflation. The next ten years could bring another, similar loss, even without a crash or bear market on Wall Street.

Meanwhile, in what could be the NEW bubble area – gold was back over $910 on Friday, corn hit $6 a bushel...rice is disappearing from the market...and the developing world, according to the Washington Post , is in a panic. All over the world, food is causing trouble. Why? Not because there is too much of it or too little, but because it has gone way up in price. Why has it gone up? Well, for one reason, Ben Bernanke and other monetary authorities are pushing more money into the world financial system. The cash has to go somewhere. Much of it seems to be finding its way into the commodities markets – including soft commodities, notably food. In other words, worldwide inflation of food prices is a monetary phenomenon, as Milton Friedman might have put it, not a feature of the weather. But rather than attack the cause of inflation, the authorities are aiming squarely at its consequences.

Of course, there are other reasons for food price increases. There are a lot more people in the world than there used to be. And the new people have to eat too. Since many of these new people are entering the ‘middle class’ they have more money to spend on food, so they can bid up prices. And, typically, they want more meat. It takes more land to produce meat than it does to produce grains – putting further pressure prices all up and down the food chain....The price of rice rose 50% in the last two week, causing fear of riots all over the world. Vietnam, India, China and Egypt have all banned foreign sales. Nations either export rice or import it. The exporters are coming under pressure to export less – in order to lower prices at home. The importers, meanwhile, have no choice but to try to get as much of it as possible, as soon as possible, in order to head off shortages. Result: a run on rice. Oh...if only we’d bought some rich, wet rice land...instead of bone-try cattle country. Beef is about the only farm product that has gone down in price!

The finance sector is being de-leveraged. Soon it will be dismembered too. Finance, as a percentage of total business earnings, went from 10% at the beginning of the boom in ’80 to 40% last year. Whole legions of bright eyed, bushy tailed young people have entered the trade – usually with spiffy degrees from Wharton or Oxbridge or HEC. They are the cogs of this great, globalized polyglot machine. On a recent tour of private banks, we were greeted by a young man of Indian origin who had trained in Canada and now works for Barclays. Another meeting, at HSBC, featured two young women – one of English, the other of African, origin. Over at Pictet, our interlocutor was a Frenchman who has worked in the City for more than 10 years. They all speak the same language, though – a kind of financial Desperanto. Ask them about the Black Scholes Option Pricing model or about rebalancing portfolios to take more advantage of decoupling...or about alpha; you will get roughly the same answer.

During the boom years, putting together these interchangeable parts must have been too tempting to resist. But it has produced some rather ungainly monsters. UBS, for example. Former CFO Luqman Arnold was forced out of UBS in 2001. Under Marcel Ospel, the bank became one of the biggest employers in the industry, adding a whole range of products and services. But now, Arnold is on the attack, saying the whole thing needs to be reassembled. The shareholders are up in arms too. In Basel, 6,000 shareholders got together...mostly to complain about what they see as gross negligence on the part of the people running UBS. News reports say they also had it in for the United States of America, whose loose financial mores they think have infected the Swiss financial industry. “The American El Dorado has become a scene from a Western,” declared one middle-aged shareholder, Therese Klemenz. “UBS was the figurehead of Swiss business. As a good housewife, I know you shouldn’t put all your eggs in one basket. A bank is not a casino.” Thomas Minder, a local shareholder activist, was even more outraged. “What happened here is a scandal,” he thundered. “You’re responsible for the biggest loss in the history of the Swiss economy. Put an end to the Americanization of the Swiss economy!”



UBS bet $80 billion of shareholders’ money on US mortgage securities. So far, it has lost $37 billion.
UBS shareholders seemed to think that what happened to them should have been illegal. So do a lot of people. And here comes David Komansky, former CEO of Merrill Lynch, with the kind of eye witness testimony we were looking for. Asked what his successor, Stanley O’Neal, had contributed to Merrill’s problems, Komansky said: “What he did to Merrill Lynch was absolutely criminal... The thing I resent about Stan’s tenure is his attempted destruction of the value system and culture that existed at Merrill Lynch."

[aquart]

26. Pictet! Oh, I haven't heard that name in years!

Not since my ex-boss was hiding cash for a friend at Brown Brothers Harriman.

[donkeyotay]

75. We need a new term: legal crime

UBS bet $80 billion of shareholders’ money on US mortgage securities. So far, it has lost $37 billion. UBS shareholders seemed to think that what happened to them should have been illegal. So do a lot of people.

Whether or not what these financial geniuses structured was legal in the letter of the laws (that they bought), it was certainly illegal in spirit. Banks have special privilege and corresponding responsibilities - fiduciary obligations - to operate as a public trust rather than like organized crime.

For instance, a school board in PA got a loan for $750K and JPM pocketed over $1M for making the loan. The board also paid an adviser, who apparently gave them bad advice. Eventually, the school district another $2.9M to get out of the deal. I agree with the Swiss, things like this should be illegal. If it's not it's legal crime. Either the criminal activity needs to be prosecuted or the system that produced these obscenities needs a major overhaul. To my mind, this is a direct result of unleashing the "free market" ideology against the regulations that might have stopped market-wrecking excesses. The triumph of greed over sense and community is a direct result of allowing our representation to be bought right our from under us.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ay5LDbjbjy6c

[Demeter]

79. No Matter Which Way You Slice It, It's Crime

Same with Bush and his signing statements. Just because he says it's legal doesn't mean it is, and in a nation of laws and fair courts, it will go down as such. But first, we have to purge the courts and the fiats that the cabal has tried to push into "law".

[ozymandius]

17. WaMu finalizing capital injection plan: report

NEW YORK (Reuters) - Washington Mutual Inc (WM.N: Quote, Profile, Research) and its advisers on Monday were working out the final details of the plan for capital injection from investors led by private equity firm TPG, the Wall Street Journal reported online citing a person familiar with the matter.

-very short-

http://www.reuters.com/article/businessNews/idUSN0739555320080408

[aquart]

27. Is WaMu a bank or a pyramid scheme?

[ozymandius]

29. Damn good question. Truly relevant.

If you look at so many of these financial institutions where their continued viability has rested with more players "buying in" while the monetary proceeds have benefited lavish salaries of the company executives; it's difficult to differentiate a bank such as WaMu from any kind of pyramid "investment" scheme that the Feds would have shut down a long time ago.

[TalkingDog]

20. Ben and the banker boyz gaze shyly at each other from across the room

Their eyes meet...the music swells.... One brave economist walks over to Ben, reaches out his rough hands, calloused from years of hard, unending labor and touches Ben's now colored cheek. The banker, breathless, whispers softly.....

``There is a sense of stability returning to the market,'' said John Hendricks, who helps oversee $137 billion at Hartford Investment Management Co. in Hartford, Connecticut. ``Bernanke's comments that there's a significant amount of monetary easing already in the system and you've got these other measures coming into play as well that should help the economy rebound in the second half.''

Turning Point

The turning point came when the Fed promised $30 billion to back New York-based JPMorgan's bailout of Bear Stearns, preventing the biggest collapse of an investment bank. The central bank lowered its pledge to $29 billion on March 24 after JPMorgan quadrupled the purchase price to about $2.4 billion.

snip:

While acknowledging for the first time that the economy may be in a recession, Bernanke told the Joint Economic Committee of Congress last week that the Fed's actions ``will help to promote growth over time and to mitigate the risks to economic activity.''

snip:

``You started seeing some improvement,'' said Andrew Harding, who helps manage $18 billion as chief investment officer for fixed income at Allegiant Asset Management in Cleveland. ``There's been a series of positive events.''

http://www.bloomberg.com/apps/news?pid=20601109&sid=a6COKDe5XsoU&refer=exclusive


See...just a little judicious editing and it is revealed....

OMG! We are soooo crushing on Ben.


http://www.smh.com.au/ffximage/2007/03/29/benbernanke_narrowweb__300x408,0.jpg


(What are those things above his head? Exclamation Points!!!? Bunny Ears?)

Have fun today...I'm off on my latest adventure. I'll check in later to say hello.

[InkAddict]

52. What are those things above his head?

Silly, that's the mothership...re - mi - do - do - sol. He's having a really scary "Close Encounter."

[donkeyotay]

80. Give us a kiss, Ben, and tell us whose growth and whose risks?

Bernanke told the Joint Economic Committee of Congress last week that the Fed's actions ``will help to promote growth over time and to mitigate the risks to economic activity.''

While you've been on the dance floor with your banker buddies, I've been sidelined. So after you get your boyz humming again, what are you going to do for the economy I live in, Ben?

[ozymandius]

21. UPDATE:Merrill Lynch CEO:Balance Sheet Shrinkage To Continue

TOKYO -(Dow Jones)- Merrill Lynch & Co. (MER) Chief Executive Office John Thain said Tuesday that writedowns at the brokerage would likely continue to affect its balance sheet but denied the U.S. financial giant would need to raise more capital.

"We deliberately raised more capital than we lost...(but) the shrinkage of our balance sheet will continue," said Thain.

The Wall Street institution raised $12.8 billion in fresh equity over the past five months in a bid to shore up its finances following a $8.6 billion net loss for 2007 it racked up stemming largely from subprime-linked losses.

Many analysts are expecting a further wave in writedowns next week, when the bank is scheduled to report first-quarter earnings for 2008.

http://money.cnn.com/news/newsfeeds/articles/djf500/200804080625DOWJONESDJONLINE000225_FORTUNE5.htm

[Demeter]

22. What Ever You Do; Don't Do the Math: By Mike Folkerth

http://www.opednews.com/articles/opedne_mike_fol_080407_what_ever_you_do_3b_do.htm



I wish for one day that I could write nothing but good news in this space. But if I did, that would be a day that I couldn’t ask you to prepare for your future and every day counts. As I watch all of my past predictions continue to unfold, I have to consider future predictions that could help us to see the best way to proceed.

I was accused of being Chicken Little when I predicted the housing collapse. Some two years ago I wrote the following. “Housing cannot and will not continue to increase at the current maniacal pace. It is just not a logical or mathematical possibility...There will be a significant decline in home prices, and the effects will be far reaching. Interest rates will increase and prices will go down. Affordability for larger homes will be out of reach for the average person...The perfect financial storm is brewing from years of inflation and socially induced illogical housing choices. The end result will take its toll on the wealth that you believe you have accumulated in personal housing.”

I went on to give advice to those nearing retirement, “If your plans for retirement include selling your present home in order to cash in on the equity, do it NOW. Even if you have a few years before you had planned to sell, inconvenience yourself a little now and clip the coupon.”
You don’t know how much I wish I had been wrong. But the point now is that I wasn’t.

The job reports on Friday revealed the loss of 80,000 jobs in March. I believe that April will also report a net loss of jobs as normal spring construction fails to occur...I’d like for you to consider something while we are on this subject. The U.S. has annual immigration increases, which between legal and illegal entry, amount to a conservative 1.5 million people. That means 125,000 people per month enter the country. It also means that these immigrants need employment; post-haste. So if we have reported layoffs of 80,000 people…what are these immigrants going to do? What? You mean that wasn’t covered on the evening news?

At the same time that the U.S. economy is turning down, the first of 78,000,000 baby boomers are eligible for Social Security. In three years they will eligible for Medicare. Yet, in this year of 2008, Medicare will pay out more than it takes in. As millions of Americans take retirement, they not only draw out of the entitlement programs, they quit paying in. Tax collection goes lower and lower to the point of insolvency. The government's own figures say that Medicare will be insolvent by 2018 and Social Security will go bust in 2041. I don’t buy that. The whole enchilada was based on growth. A recession is the opposite of growth and that is where we find ourselves. I believe that Medicare, if not totally overhauled (which I see no earthly way to accomplish) will turn turtle as early as 2012. When growth is replaced by contraction, the results of the race to the bottom are nothing short of astounding.

The total burden of these two programs alone, whose total unfunded debt represents a greater amount than all combined wealth in the U.S., will devastate the U.S. economy. That is why so many U.S. Corporations with the assistance of our elected officials are getting out of Dodge.



Wake up Middle America, Dodge is going to be ghost town.




Authors Website: www.kingofsimple.com

Authors Bio: Mike Folkerth is the author of "The Biggest Lie Ever Believed" and is not your run-of-the-mill author of finance and economics. The former real estate broker, developer, private real estate fund manager, auctioneer, Alaskan bush pilot, restaurateur, U.S. Navy veteran, heavy equipment operator, taxi cab driver, fishing guide, horse packer and few jobs too embarrassing to mention, writes from experience and plain common sense. Mike’s humorous systems of “Mikeronomics” and “Mikemathics” drastically simplify the economic and mathematic formulas commonly used by very smart, but terribly sheltered individuals.

[ozymandius]

23. futures at 6:05am ET

S&P futures vs fair value: -7.6.

Nasdaq futures vs fair value: -12.0.

[Demeter]

24. Cross Post On Bush's Economic Predictions

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3259527

[ozymandius]

28. President Stupid is delusional as he ever was.

Clearly, he does not recognize how the frequency and wild diversions of his pronouncements have aligned with persistent reality.

[ozymandius]

25. Rosner on the Prospects for the Credit Markets (Not for the Fainthearted)

Institutional Risk Analytics featured an interview with Joshua Rosner (hat tip reader bill) which focused on the outlook for the credit markets. We have a great deal of respect for Rosner; among other things, he co-authored a terrific paper, "Where Did the Risk Go? How Misapplied Bond Ratings Cause Mortgage Backed Securities and Collateralized Debt Obligation Market Disruptions: with Joseph Mason. The article made a devastating critique of rating agency models and practices.

Rosner is most decidedly not of the view that our credit woes are behind us. There is a lot of juicy material here, including Fannie getting into the unsecured lending business, the near-term outlook for the dollar, and the even-worst-than-you-thought outlook for the housing market:

The IRA: So what is the Rosner view of the world? The party line in Washington and on Wall Street is that everything's fine and we'll return to normal growth in the second half of 2008.

Rosner: I see troubles radiating outward. What I mean specifically is that there is no functional change in the problems in the mortgage markets. What is really making us feel OK, at the moment, is the fact that banks are destroying shareholder capital and that they are raising new money. That's all well and good, but we still have not changed the underlying reality, namely that most of the losses taken so far are due to mark to market issues. We have not yet really seen the bulk of the underlying credit losses.

The IRA: Ditto. We have been talking about this for six months, but there seems to be a refusal on the part of many observers to accept that the losses reported to date have been primary trading book write downs vs. actual charge offs of loan losses. Citigroup, for example, did just 120bp in aggregate charge offs in 2007.

Rosner: There is a lack of appreciation or maybe a lack of understanding between these two issues, mark to market losses and actual credit losses, and we need to distinguish between these two issues. I continue to believe that we are going to see further downward pressure on home prices -- regardless of what the Congress believes or intends or manipulates. Unless we actually nationalize the housing industry, there is not much we can do to avoid the downward correction in home values.

.....

Rosner: The housing market woes in the US will not be over before 2010, regardless of what legislative initiatives come out of Washington. The fundamental reason why we are having these problems in the US is that real wages and incomes have not kept pace with home prices since the 1960s and that's what drove demand for these affordability products. Unless the Congress wakes up and let's home prices correct so that we restore some balance between wages and affordability, this problem will remain for years to come.

The IRA: That implies a 40-50% cut in home prices from peak levels and an insolvent US banking system.

Rosner: Yes, long term trends in home prices suggest that we will revert to the peak levels of the previous cycle. That implies that we are going back to the pre-1991 peak home price levels.

http://www.nakedcapitalism.com/2008/04/rosner-on-prospects-for-credit-markets.html

[UpInArms]

30. dollar watch

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

Last trade 72.208 Change -0.007 (-0.01%)

Will it be a Good Week for the US Dollar?

http://www.dailyfx.com/story/bio1/Will_it_be_a_Good_1207604879160.html

No news can be good news for the currency market and this certainly seems to be the case for the US dollar which has rallied on little economic data. Consumer credit was the only number released and it came out slightly weaker than expected, which should have been dollar negative, but consumer credit almost never moves markets. Instead, the dollar is rallying because risk aversion is subsiding. This shift in sentiment is confirmed by the rebound that we are also seeing in the Australian and New Zealand dollars. The hope that equity market deal flow is returning with Discover Financial Services snapping up Diners Club and financing becoming more readily available as Washington Mutual receives a $5 billion cash infusion from investors has helped to restore some confidence in the financial markets. Whether this is enough to offset the deterioration in the labor market remains to be seen, but at least for the time being, hope is driving the US dollar higher. With non-farm payrolls behind us, no economic data poses a major threat to the US dollar this week, which is why it could continue to recover. Pending home sales and the FOMC minutes will be released tomorrow, but a weak housing market and the 75bp rate cut by the Fed is almost old news at this point. Since the March 18 monetary policy meeting, the equity markets have stabilized and credit markets have eased, which means that for the time being, the Fed’s efforts have worked in preventing far more serious consequences for the US economy and financial system had they let Bear Stearns go bankrupt.

...more...

Pound Hurt By Housing Data - Will BoE Cut 50bp?

http://www.dailyfx.com/story/bio2/Pound_Hurt_By_Housing_Data_1207648087964.html

The HBOS housing survey in UK showed a much sharper decline than expected sending pound tumbling into the midday European session as speculation mounted that BoE may lower rates by as much as 50bp at the upcoming MPC meeting this Thursday. According to HBOS, prices fell a whopping -2.5% versus -0.3% forecast indicating that the contraction in this key sector of the US economy is becoming more serious by the day. Price declined by their largest amount in 15 years as much stricter lending practices dampened demand.

House price inflation was the primary reason for BoE’s staunch hawkishness over the past several years. However, with the sector clearly ailing and the price trends reversed, many market participants are beginning to anticipate a much more accommodative policy from the BoE going forward. Although we do not think the BoE will surprise the market with a 50bp cut this week, we do think that the Mr. King and his MPC colleagues will become more aggressive in their easing, most likely lowering rates on a monthly rather quarterly basis as we move into Q2 of 2008.

This readjustment of expectations is going to continue to pressure cable on the crosses especially if UK data displays further signs of deterioration. In overnight trade EURGBP once again approached the key 8000 level as traders started to price in the possibility of further rate cuts.

The EURUSD meanwhile continued to firm, trading above 1.5750 for most of the night. With economic calendar empty tonight, the unit continues to enjoy the positive momentum from last night’s surprisingly strong Sentix and Industrial Production results which have kept the decoupling theme alive at the start of this week. Despite the strong price action EURUSD continues to face stiff resistance at the 1.5800 level. It remains an open question whether it can overcome that barrier even if today’s US Pending Home sales print weaker than expected. We continue to believe that Mr. Trichet may moderate his typically hawkish posture at this months ECB meeting which in turn will cap any euro rally for the time being.

...more...

[fasttense]

31. All right everyone

just stop putting up such interesting articles. I've printed out three and read two. I just don't have the time for all this.

But kidding aside, the folks on this post always provide such interesting reading. Thanks everyone. :hi:

[UpInArms]

32. Ex-Refco's Maggio tells of multimillion deceit

http://www.reuters.com/article/bondsNews/idUSN0728934620080407?sp=true

NEW YORK, April 7 (Reuters) - A former Refco executive, who said he helped hide multimillion-dollar trading losses from clients, testified on Monday that his bosses had said "we're all in this together."

Santo Maggio, a top deputy to former Refco Inc Chief Executive Phillip Bennett and former President Tone Grant, told how the trio deceived banks, foreign exchange traders, hedge fund executives and even top managers at investor George Soros' funds, six years before the 2005 collapse of one of the world's largest commodity brokers.

Bennett pleaded guilty in February on fraud and other charges stemming from the collapse, but Grant chose to stand trial.

Maggio, who was president of the Refco Capital Markets unit, pleaded guilty in December and agreed to cooperate with U.S. authorities in their investigation of Refco.

In a second day on the stand in U.S. District Court in lower Manhattan, Maggio described how the company was perennially short of cash after meltdowns in the late 1990s sank clients Refco had financed.

...more...

[UpInArms]

34. Big bank writedowns could top $629 billion: AXA

http://www.reuters.com/article/bondsNews/idUSL0824849520080408

FRANKFURT (Reuters) - Asset writedowns at big western banks could exceed $629 billion AXA Investment managers, part of French insurer AXA (AXAF.PA: Quote, Profile, Research), said.

AXA's figure is higher than the worldwide total of $400 billion projected by U.S. investment bank Lehman Brothers but lower than the $1.2 trillion in global credit losses estimated by Goldman Sachs, another U.S. investment bank.

"So far, big western banks have booked writedowns and losses of over 200 billion euros. This process of balance sheet adjustments will continue as, in our view, total writedowns could be double that amount," AXA Investment Managers said in an investment strategy report received on Tuesday.

[Demeter]

42. Seems To Have Taken Quite A While For Everybody to Catch On

Which makes me worry about how long it will take for today's frauds to become known, even now that people are aware of the problem. There's still too much denial and fingers crossed to ward off an untimely interruption in the scam.

[UpInArms]

35. Greenspan says unfairly blamed, has no regrets: report

http://www.reuters.com/article/bondsNews/idUSSP30310020080408?sp=true

SINGAPORE (Reuters) - Former Federal Reserve Chairman Alan Greenspan has lashed out again at his critics, saying he was being blamed unfairly for the credit crisis and that he had no regrets about decisions he took while at the helm.

In an interview in Tuesday's Wall Street Journal, Greenspan, who left the Fed in early 2006, says critics are ignoring evidence in his favor and failing to give credit to the thinking behind the Fed's decision to lower rates when he was in charge.

Critics say Greenspan, under whom U.S. rates went from 6.5 percent in late 2000 to 1 percent in mid-2003, eased policy too much and then took too long to tighten again. That, they say, spurred excessive mortgage borrowing and stoked the housing bubble that is now the root cause of the credit crisis.

<snip>

Analysts also blame Greenspan for failing to press for stricter rules for bank lending to consumers with weaker credit records, and for not anticipating the subprime mortgage meltdown.

...more whining at link...

:nopity:

[Demeter]

38. Poor Alan! Are His Feelings Hurt?

Is he feeling just the slightest bit remorseful, or foolish? Or is Poppy stepping on his tender parts? Or maybe someone with a little more clout...

Perhaps he thought his guru status would last until his death. Well, in these Internet days, there are no secrets, no crimes under complete cover or control. Even if all but one person in the know is dead, the suspicious deaths point the way. And there's too much money out there for bribes to be effective. You have to go for physical intimidation and threats to loved ones. And for fraudsters, teh only loved one is the self.

I hope that the defrauded get together and do a conga all over Alan and Bernanke and Bush and the rest, strip them of their loot, and end their miserable lives in jail or poverty or both. In a global economy, there's no place to hide!

[ozymandius]

39. I wish for Greenspan to live a long, long time.

The world would receive a great service to witness this babbling whiner's growing irrelevancy and malicious legacy for years to come.

[Demeter]

41. Only If He's Reduced to Food Stamps and Medicare, Though

[Tansy_Gold]

56. My thoughts exactly!

Add Section 8 housing (do they still have that?) --- or a cardboard box under a freeway bridge. . . . . .

Tansy Gold, who is usually a pretty tender-hearted gal but not when it comes to loathesome scum like Greedspan (with apologies to loathesome scum everywhere)

[AnneD]

50. Considering his ego....

that might be the appropriate Karma for him. Hmmmmm justice in our lifetime. Sounds simply delish.

[librechik]

69. Justice would be a chapter in every future economics 101 text: The Greenspan Bubble

how can he avoid that? Start thinking, genius.

[Demeter]

73. That Should Be Bubbles, Plural

Greenspan has a lot to answer for.

[Demeter]

76. A Global House of Cards: Interview with Josh Rosner

http://us1.institutionalriskanalytics.com/pub/IRAstory.asp?tag=269


...First, we notice that former Fed Chairman Alan Greenspan is defending himself on www.ft.com against a growing army of detractors. But we repeat that, in our view, the mortal sin of Greenspan and other US regulators over the past two decades was not irresponsible monetary policy, but rather dropping the ball on bank supervision and market structure. We described the ill effects of allowing the liberal academic economists at the Fed's Board of Governors in Washington to set bank supervision policy in a comment in Friday's American Banker.

In particular, in the two decades of Greenspan's tenure, the Fed's Washington staff, other regulators and the Congress allowed and enabled Wall Street to migrate more and more of the investment world off exchange and into the opaque world of over-the-counter derivative instruments and structured assets. This change is described by people like Greenspan and Treasury Secretary Hank Paulson as "innovation," but our old friend Martin Mayer rightly calls it "retrograde."

In a market comprised primarily of exchange traded instruments, there is little or no counterparty risk. OTC trades which reference exchange traded benchmarks are likewise far more stable. By replacing exchange traded securities with ersatz OTC instruments, Greenspan and the quant economists who dominate the Fed's Washington staff have created vast systemic risk that need not exist at all and that now threatens our entire financial system.

BSC failed not because it had too little capital or too little liquidity, but because the thousands upon thousands of OTC trades which flow through the firm's books are bilateral rather than exchange traded. It was the understandable fear of counterparty risk, not a lack of capital or liquidity, which killed BSC. The irony is that the "financial innovation" of OTC derivatives and structured assets takes us backward in time to the chaotic situation that existed in the US prior to the crash of 1929.


I'D CALL IT FRAUD, MYSELF, BUT I'M RATHER JUDGMENTAL.

[Demeter]

77. ANOTHER JUICY TIDBIT--SAME ARTICLE

Would that the Congress and the Fed had the courage to confront Paulson and the other banksters who have turned America's financial markets into an increasingly unstable, derivative house of cards. If all federally insured commercial banks, mutual and pension funds were required by law to invest only in SEC registered, exchange-traded instruments, the threat of further systemic risk could be eliminated tomorrow. What a shame that neither Chairman Bernanke nor FRBNY President Timothy Geithner said that last week when they appeared before the Senate Banking Committee.

[Tansy_Gold]

87. House of cards?????????

:grr:

Even ignorant Tansy Gold called this a "house of cards" months ago.


Goddess, but this makes me so friggin' mad.


Tansy "Just Call me Cassandra" Gold

[ozymandius]

36. Simons, Mandel Post Biggest Drop in Hedge Fund Slump (Update1)

April 8 (Bloomberg) -- Hedge-fund titans James Simons and Stephen Mandel are showing the biggest losses of their careers in the $1.9 trillion industry's worst start in more than a decade.

Simons's $18 billion Renaissance Institutional Equities Fund declined 12 percent since its value peaked last May, investors with direct knowledge of the situation said. Mandel's Lone Cedar Fund dropped about 10.6 percent from its high in December, according to people familiar with the fund.

Hedge funds lost an average 2.78 percent of their value in the first quarter, according to data compiled by Chicago-based Hedge Fund Research Inc. The debacle shows the extent to which frigid credit markets, depreciating homes and an economy exhibiting all the signs of a recession are wreaking havoc on even the savviest investors.

.....

At the end of March, the largest funds run by Mandel and Simons had posted their biggest peak-to-trough declines, known as a maximum drawdown. They can still boast of having among the best long-term track records in the industry.

.....

World financial markets haven't been in such bad shape since the 1930s, billionaire hedge-fund investor George Soros said in an interview last week in which he predicted more losses.

http://www.bloomberg.com/apps/news?pid=20601087&refer=home&sid=a5R7vjeKPqHA

[UpInArms]

37. Mutual funds have blood on their hands

http://www.marketwatch.com/news/story/mutual-funds-have-blood-their/story.aspx?guid=%7B8C52B1EA%2D07C0%2D46DD%2DAB53%2DE080CA10D88F%7D&dist=MostReadHome

NEW YORK (MarketWatch) -- A couple of weeks ago, I received an unusual phone call just before I put the kids to bed.

On the phone was a representative of Fidelity Investments, the company that runs my 401(k) and maybe yours too, along with $1.5 trillion in assets.

Fidelity, to the best of my recollection, has never called me before. It has inundated me with mail, sending me small forests' worth of proxy information, tax fodder and marketing junk, but it's never called, and for that I was grateful -- until the other day.

No institution has killed American shareholder democracy more than the mutual fund. By creating extra layers of bureaucracy and complicated hurdles, the asset-management industry has taken away the voices of the owners of public companies.

Sure, we hear about aggressive funds that push for change in the boardroom and in the executive suite. T. Rowe Price, for example, pushed the family behind Dow Jones & Co. to accept a hefty premium from News Corp. (NWS) last year. (As a result of that buyout, News Corp. is the parent company of MarketWatch.) Mutual Series, the investment fund founded by agitator Michael Price, recently took on Time Warner Inc. (TWX) with Carl Icahn, producing mixed results.

But these instances are rare. Most mutual funds follow the recommendation of company management. They vote against corporate-governance proposals, limits on executive pay and resolutions to make companies friendlier to the environment. These funds are patsies, but at least they vote. Some funds don't vote at all.

...more...

[antigop]

59. One of the "results" of shifting to 401(k)'s

The mutual funds in the 401(k)'s vote the shares.

[antigop]

61. The secret power behind America's top companies (article from 2004)

http://moneycentral.msn.com/content/P75037.asp

Investors' growing disdain for actively managed mutual funds has produced a disturbing consequence: Ownership of American public companies is increasingly concentrated in the hands of just four giant index-fund managers.

Through the end of 2003, the world's four largest index-fund firms -- Barclays (BCS, news, msgs), State Street (STT, news, msgs), Fidelity Management and Vanguard Group -- in aggregate held an average of 12.6% of the 20 largest U.S. companies on behalf of their clients. Together, for instance, this elite band owns 15% of IBM (IBM, news, msgs), 15% of Citigroup (C, news, msgs) and 14.5% of Johnson & Johnson (JNJ, news, msgs).

Barclays, a British bank, has emerged as the first among near-equals, as it has paired its new iShares exchange-traded funds business with its long-established pension-fund indexing business to become one of the largest single holders of U.S. companies, if not the largest -- about $1 trillion worth. Fourteen of the 20 largest U.S. public companies now count Barclays as their largest institutional owner.

[specimenfred1984]

84. That's what the U.S. financial industry has come to, genocide for money

Any crime will do as long as it pays and they don't get caught.

[DemReadingDU]

40. Columbus trial - Convicted executive says Aruba plot is lie

4/8/08 Convicted executive says escape plot is lie
Federal informer made up Aruba story, motion says

A former National Century Financial Enterprises executive, jailed after word of a plot to flee the country surfaced, continued his efforts to be released yesterday.

Attorneys for Randolph H. Speer filed a motion yesterday in federal court in Columbus saying a jailhouse informant lied and that there was no plan by National Century executives to meet in Aruba if convicted.

Five former executives of the defunct Dublin-based health-care financier were convicted on a variety of fraud counts in March.

The motion, filed by attorneys Fred Benton and James Ervin Jr. on behalf of Speer, says the government's allegations of a plot are baseless and asks that Speer and the other executives be freed pending sentencing.

"Mr. Speer vehemently and unequivocally denies knowledge or participation in any such plot," Speer's attorneys wrote. "There is no credible evidence to support such a blatantly false allegation."

Last week, federal Judge Algenon L. Marbley ordered that Speer, Donald H. Ayers, Roger S. Faulkenberry and James E. Dierker Jr. be placed behind bars instead of on house arrest.

A bond revocation hearing for the National Century executives is expected to be held April 16. Marbley made the order after Rebecca S. Parrett's disappearance in late March. Parrett was among the five convicted, and her whereabouts remain unknown. Then FBI agents learned from a confidential informant of a plan to escape to Aruba, information that reportedly came from Lance K. Poulsen, former National Century president who's awaiting trial.

Poulsen says he never made such a statement. Poulsen's assertion was made in a letter from his attorney that was attached to the motion.

The motion filed yesterday also says the government's informant is Robert Cihy, who is being held in the Ross County Jail on federal charges along with Poulsen.

Cihy was charged with robbing the Farmers Citizen Bank, 5858 N. High St., Worthington, where $1,577 was taken and a gun was shown. He also is a suspect in several other robberies, according to federal court records.

Cihy agreed to a plea bargain and is expected in court Wednesday.

Assistant U.S. Attorney Doug Squires has said the government does not comment about its confidential sources.

In a written ruling yesterday, Marbley ruled that the government will not have to disclose the identity of the source.

http://www.columbusdispatch.com/live/content/business/stories/2008/04/08/HesLying.ART_ART_04-08-08_C10_P59S7FL.html?sid=101


link to previous articles...
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3255083&mesg_id=3255121

[ozymandius]

45. updated futures numbers

08:28 am : S&P futures vs fair value: -8.7. Nasdaq futures vs fair value: -17.0. Futures continue to point to a lower start. Crude oil prices (-0.7% to $108.36) have eased a bit after rallying yesterday. On the economic front, February pending home sales is set for release at 10:00 ET, and the March 18 FOMC minutes are set for release at 14:00 ET.

08:00 am : S&P futures vs fair value: -6.6. Nasdaq futures vs fair value: -13.0. Current indications point to a lower open. Alcoa (AA) kicked off the earnings season on sour note. The aluminum company reported earnings of $0.44 per share, which missed the consensus estimate by four cents. Advanced Micro Devices(AMD) expects its first quarter revenue will be short of the consensus estimate, due to lower than expected sales across all business segments.

[UpInArms]

46. First Marblehead sinks as big client (The Education Resources Institute Inc) goes bankrupt

http://www.reuters.com/article/bondsNews/idUSN0833823520080408

NEW YORK (Reuters) - Shares of First Marblehead Corp (FMD.N: Quote, Profile, Research), one of the largest securitizers of student loans, plummeted on Tuesday after a major client filed for bankruptcy protection.

First Marblehead shares fell $3.20, or 41.6 percent, to $4.50 in premarket trading.

The decline came after The Education Resources Institute Inc, which calls itself the largest not-for-profit guarantor of U.S. private education loans, filed Monday for Chapter 11 bankruptcy protection. It said rising borrower defaults and credit market problems damaged liquidity, and that its viability would be threatened absent a bankruptcy filing.

According to First Marblehead's quarterly report, processing fees from TERI, as the company is known, represented about 32 percent of total revenue in the six months that ended December 31.

TERI is the exclusive outside provider of default guarantees for private student loans of First Marblehead clients. It also guarantees loans held by the National Collegiate Student Loan Trusts, which First Marblehead uses in its securitization program. The Boston-based companies have worked together since 2001.

...more...

[UpInArms]

47. 9:33 EST opening with a bloody thud

Dow 12,532.07 80.36 (0.64%)
Nasdaq 2,346.01 18.82 (0.80%)
S&P 500 1,364.12 8.42 (0.61%)
10-Yr Bond 3.509% 0.047

NYSE Volume 71,209,226.562
Nasdaq Volume 49,536,625

[antigop]

55. Carlyle Group raises $1.35 billion

http://money.cnn.com/2008/04/07/news/companies/carlyle.ap/index.htm?postversion=2008040715

Private equity firm the Carlyle Group said Monday it has raised $1.35 billion for a new fund that will invest in debt and equity issued by distressed companies.

The new fund comes just weeks after a Carlyle affiliate, Carlyle Capital Corp., collapsed after it borrowed approximately $20 billion and invested in mortgage-backed securities.

[Demeter]

57. Operating on the "Sucker Born Every Minute" Theory?

How does that go---Fool me once, shame on you, fool me twice--not gonna get fooled again!

[antigop]

60. Oh, brother -- now they are spinning the private equity firms as heroes?

Private Equity to the Rescue

http://money.cnn.com/2008/04/07/news/companies/boyd_banks.fortune/index.htm?postversion=2008040810

For the past year, the buyout crowd has been in retreat. Blackstone (BX) stock has fallen sharply since the firm's huge initial public offering back in June, and Warburg Pincus recently saw the value of its investment in bond insurer MBIA (MBI) plunge more than 60% before the deal even closed. The problems haven't been confined to the market, either: Blackstone chief Steve Schwarzman drew hoots last summer with a lavish birthday party, just as Congress was up in arms about tax laws that let billionaires like Schwarzman pay lower rates than their chauffeurs.

All in all it has been an ugly time in what once was a red-hot business. But chatter in the banking industry over the past week shows that the private equity hardhitters may yet get a new lease on life, in a development that's good for financial sector investors too.

The Wall Street Journal reported Monday that TPG - the David Bonderman-led firm once known as Texas Pacific Group - is about to make a $5 billion injection into deeply troubled savings and loan Washington Mutual (WM, Fortune 500). If the deal pans out, it will represent the largest private equity investment into a struggling financial institution yet. The WaMu talk comes just days after the Journal reported KeyCorp (KEY, Fortune 500) is considering a purchase of struggling Cleveland bank National City (NCC, Fortune 500) in a buyout that would involve a capital injection from Kohlberg Kravis Roberts.

While KKR and TPG surely are looking at these deals because of their attractiveness as investments, the National City and Washington Mutual investments could carry a public relations benefit too. The private equity firms could be cast as saviors of companies with deep roots in their communities, perhaps preserving thousands of jobs.

[lib2DaBone]

62. GOLD.... here we go... again

Is it just me, or is this not at least the fourth time in a month that they have released this "Breaking News" story? Hasn't this already been priced in numerous times?
__________________________________________________________

METALS STOCKS
Gold drops over 1% as IMF announces gold sales

By Polya Lesova, MarketWatch
Last update: 8:51 a.m. EDT April 8, 2008Print E-mail RSS Disable Live Quotes
NEW YORK (MarketWatch) -- Gold futures dropped sharply Tuesday after the International Monetary Fund said it would sell more than 14.2 million ounces of gold, currently valued at more than $13 billion.
Gold for June delivery fell $11.40 to $915.40 an ounce on the New York Mercantile Exchange.
The IMF said it will sell 403.3 metric tons of gold from its holdings, and cut substantial costs as part of an efficiency drive. Read full story http://www.marketwatch.com/news/story/gold-drops-over-1-imf/story.aspx?guid=%7BAC726D16%2DC196%2D4271%2DAD03%2D37106B08CB7B%7D

[Demeter]

74. That's What You Call Jawboning

Or making threats to move markets. They are either really hot to sell off the gold (and take what, exactly, in its place? Oil futures, would be the only sensible thing, or maybe rice), or they are playing with people's minds.

I think they are playing with our minds, personally.

[AnneD]

65. BOJ pick vows central bank independence

TOKYO — The nominee to head the Bank of Japan told lawmakers Tuesday he would preserve the central bank's independence as he tried to avoid the political sparring that has thwarted two previous candidates.

Both houses of parliament held confirmation hearings for Masaaki Shirakawa, a former Bank of Japan executive director who was nominated Monday. The political opposition rejected the previous candidates because they said they were too closely tied to the Finance Ministry.

In the lower house hearing, Shirakawa said as governor he would maintain the BOJ's independence and transparency, taking into account the mid- and long-term economic outlook, which he said was steady despite harsh conditions in the United States.

<snip>

Shirakawa warned that Japan's economy likely will slow for now before resuming a mild expansion. He called the ongoing "confusion" in international financial markets "the biggest risk factor as well as the most serious (financial crisis) since the U.S. Great Depression in the 1930s."

http://www.chron.com/disp/story.mpl/ap/business/5682857.html

At least the sun is shining somewhere.

[AnneD]

66. A natural gas 'frenzy' profits Pennsylvania

HUGHESVILLE, PA. — At first, Raymond Gregoire did not want to listen to the raspy voice on his answering machine offering him money for rights to drill on his land. They want to ruin my land, he thought. But he called back anyway a week later to hear more.

By the end of February, he had a contract for $62,000, and he pulled together a group of 75 neighbors who signed $3 million in deals. "It's a modern-day gold rush in our own backyard," Gregoire said.

Not just his backyard, either — a frenzy unlike any seen in decades is unfolding here in rural Pennsylvania, and it eventually could encompass a huge chunk of the East, stretching from upstate New York to eastern Ohio and as far south as West Virginia. Companies are risking big money on a bet that this area could produce billions of dollars worth of natural gas.

A layer of rock here called the Marcellus Shale has been known for more than a century to contain gas, but it was generally not seen as economical to extract. Now, improved recovery technology, sharply higher natural gas prices and strong drilling results in a similar shale formation in north Texas are changing the calculus. A result is that a part of the country where energy supplies were long thought to be largely tapped out is suddenly ripe for gas prospecting.

http://www.chron.com/disp/story.mpl/business/5682262.html

I hope some told those folks to count their fingers after they shake hands with these guys.

[AnneD]

67. SHEET HAPPENS.......

April 8, 2008 -- Looking to salvage what he can from his tattered investment in Linens 'N Things, billionaire financier Leon Black may soon push the struggling retailer toward bankruptcy, The Post has learned.

Black's buyout firm Apollo Management, which took the retailer private in 2005 for $1.3 billion, is weighing the idea of a potential "prepackaged" bankruptcy, sources said.

In such a plan, Apollo and creditors would settle on a restructuring plan before a Chapter 11 filing is made.

The speculation comes as the cash-strapped chain faces a clampdown on its $700 million revolving line of credit from GE Capital, sources said. While GE hasn't cut off the flow altogether, sources said payments to vendors that supply sheets, towels, curtains and kitchenware have become more selective.

http://www.nypost.com/seven/04082008/business/sheet_happens_105584.htm?dlbk

So when they pay off creditors-I guess they split the sheets;)

[AnneD]

68. New Path for Kings of Buyouts

Private equity bigwigs like David Bonderman used to sneer at the idea of investing in public companies. You know, companies that are traded on stock exchanges — the kind ordinary folks buy. Instead, they espoused the virtues, or at least the big rewards, of taking public companies private.

<snip>
David Bonderman, who runs the buyout firm TPG, is going against last year’s rules by buying a stake in a public company.
That was two years ago, when credit was easy. Back then, the lords of private equity were all doing the same thing: buying companies outright with borrowed money (leverage is the Wall Street term) and then sitting back and getting rich.

“Private equity allows me to make long-term decisions and make investments in companies that are not valued by the market,” Mr. Bonderman, a lanky man with a quick wit, told a packed room in Frankfurt back in February 2006. He preached the industry gospel: go private, take control and leverage to the hilt.

<snip>

Mr. Bonderman, who runs a firm called TPG, was near a deal late Monday to invest $5 billion in Washington Mutual, a big mortgage lender with big troubles that is traded on the New York Stock Exchange. He is throwing out the previous playbook: he would be buying less than a quarter of the company in the public market. And he would be using little to no leverage.

more....

http://www.nytimes.com/2008/04/08/business/08sorkin.html?_r=2&ref=business&oref=slogin&oref=slogin

Watch your money folks, watch your money. This is a really good article that examine the private equity getting back in to publicly owned. If they can find a loophole to freely take from Joe 6pack...they will. We do not have nearly the transparency or Federal over site we need in this arena. It's like these ghouls are wanting to rob corpses.

I look for a greater push to get Social Security privatized (yes that tired chestnut)and more buyouts and I think they will start eying internationally companies and markets.

[Demeter]

81. New Source of Bank Woes: Companies Drawing Down Credit Lines

http://www.nakedcapitalism.com/2008/04/new-source-of-bank-woes-companies.html

The problem with offering deals that involve optionality is that the option will inevitably be exercised only when it is favorable for the user, which as things often work out, can wind up being at a time which is not so hot for the option provider. And in the case of bank standby lines of credit, this is a poor time indeed for them to have more assets loaded onto their balance sheets.

And the odd bit is that the article mentions rather blandly is that even if Tribune draws downs its full credit lines, it may not be able to pay off its debt maturing in two years. Um, that means if it can't find a way to refinance it at reasonable terms, it may have to file for bankruptcy

From Bloomberg:

Tribune Co. and Dole Foods Co. may need to draw down on bank lines to avoid default, causing a new drain on bank capital, according to Morgan Stanley analysts.

The companies currently don't have enough cash and committed credit to cover debt repayments over the next two years and may have to resort to credit lines or ``potentially face severe financial difficulty,'' said Greg Peters, the head of credit strategy at Morgan Stanley in New York.

For lenders including Citigroup Inc. and Merrill Lynch & Co., prospects that the 80 companies with revolving credit lines of more than $1 billion will start drawing them down threatens to further erode balance sheets that have been hammered by losses from securities linked to U.S. home loans. Banks are restricting lending after $232 billion of credit losses and writedowns from subprime-mortgage related debt.

``There's a real game of chicken going on between banks and the corporations as to whether you should tap,'' Peters said on a conference call for investors today. ``This is a very big deal.''

Even if Tribune, bought by billionaire investor Sam Zell for $8.1 billion in June, taps its entire $750 million credit line, it still may not be able to pay back $1.85 billion of debt maturing in the next two years, the analysts said. They estimate that the amount of cash, cash equivalents and funding available on the credit line currently falls $664 million short.....

Revolving credit lines can be reused once they've been repaid. Almost a third of U.S. banks are tightening loan standards and junk bond issuance has dropped 75 percent from 2007 levels, according to Morgan Stanley data. High-yield, high-risk debt is rated below investment grade and known as junk.

``High-yield issuance is a shadow of itself,'' Peters said. ``The numbers are nothing short of staggering.''

Drawing down on bank lines carries costs for banks and corporations, since they promise unattractive returns, Peters said. Companies that tap bank lines also risk breaking so-called covenants that restrict leverage and face higher interest costs.....

``It's been mystifying to me all along why Zell chose to be so highly levered given what had been going on in the newspaper industry and in the general economy,'' said Robert Broadwater, managing director of the media investment bank Broadwater & Associates in Bronxville, New York. ``Having blue jeans, a motorcycle and a foul mouth doesn't seem to be quite enough to get it done, so far.''

Other high-yield issuers that may need to draw down include Westlake, Village, California-based Dole Food Co., the biggest U.S. producer of fresh vegetables, Cablevision Systems Corp., the New York-area cable television operator, and R.H. Donnelley, the Cary, North Carolina-based phone directory publisher.


DOUBLE OR NOTHING! C'MON SEVEN!

[Demeter]

83. Wall Street Wants Student Debt as Collateral for Fed (Update1) By Sarah Mulholland

http://www.bloomberg.com/apps/news?pid=20601087&sid=aYrLnryRU7iM&refer=home

April 7 (Bloomberg) -- Wall Street is pressing the Federal Reserve to take bonds backed by student loans as collateral in its new lending facility to stem a slump in demand for the debt that's driving lenders to stop writing loans. The American Securitization Forum and the Securities Industry and Financial Markets Association asked for acceptance of AAA rated securities in an April 2 letter to the Federal Reserve Board and the Federal Reserve Bank of New York.

The lobbying effort follows the central bank's willingness to take on more mortgage-related debt to unfreeze the market for asset-backed securities. Student loan companies are paying more to raise money as investors shun the securities, after a collapse of credit markets last year that began with record losses on subprime-backed debt. CIT Group Inc., NorthStar Education Finance Inc. and Brazos Higher Education Service Corp. are among companies that suspended new originations.

``There is a big concern among a lot of originators that there will not be enough capital available for all eligible students to receive government-subsidized loans,'' Tom Deutsch, deputy executive director of the American Securitization Forum said in a telephone interview today from New York.
At least 40 lenders have ceased writing some form of student loans as the cost of raising money in the asset-backed market has skyrocketed, according to a report from UBS AG. Sales of bonds backed by student loans have dropped 65 percent this year compared with the first quarter of 2007, the analysts led by Laurie Goodman in New York said.

Legislative changes enacted last September increased the costs for student loan companies to originate new loans under the Federal Family Education Loan Program. More than 85 percent of loans originated under the program were financed in the asset-backed market, according to the letter from the securities groups. About 6.7 million students and parents are expected to apply for a loan under the program in coming months, the letter said, noting that three-quarters of all student loan volume is originated between April and September.

Bonds backed by student loans are losing value for the first time since at least 1999 as competing investments offer higher yields and banks tighten terms on lending against the securities.
Securities with student loans as collateral have fallen 4.2 percent this year after recording their first back-to-back monthly decline in February and March, according to a Merrill Lynch & Co. index of 186 issues from Reston, Virginia-based SLM Corp. that began nine years ago.

[Demeter]

85. Fed Auctions Another $50 Billion--Cross Post--I Found the Goose!

Source: AP

WASHINGTON (AP) -- The Federal Reserve, still working to combat the effects of a severe credit squeeze, said Tuesday it had auctioned another $50 billion to cash-strapped banks. Meanwhile, the International Monetary Fund warned that further actions are needed globally to prevent more wrenching problems.

The Fed auction marked the ninth in a series that began in December that so far have pumped $310 billion in short-term loans into the nation's banking system.

Meanwhile, the 185-nation IMF delivered its most detailed review yet of the global credit crisis that hit last August. It said Tuesday that governments must be prepared to do more to support the global financial system if conditions worsen.

....
In a related move, the European Central Bank, which serves the 15 nations that use the euro as their common currency, announced Tuesday that it had auctioned $15 billion in short-term credit to European banks. It was the sixth auction conducted in tandem with the Fed as the two central banks continue to coordinate their efforts to battle the credit crisis.

Read more: http://biz.yahoo.com/ap/080408/fed_credit_crisis.html?....



BUT IT LOOKS LIKE NOT EVEN VIAGRA WOULD HELP THIS MARKET TODAY...

[Demeter]

86. How About a Theme for Today? Anyone? Prag? Bueller?

[Demeter]

88. Well, All Right Then--Looking for a Culprit?

My favorite ditty from the Mikado by Gilbert & Sullivan

play the music and sing along!

http://math.boisestate.edu/gas/mikado/webopera/mk_midi/105a.mid


Ko-Ko:
As some day it may happen that a victim must be found,
I've got a little list — I've got a little list
Of society offenders who might well be underground,
And who never would be missed — who never would be missed!
There's the pestilential nuisances who write for autographs —
All people who have flabby hands and irritating laughs —
All children who are up in dates, and floor you with 'em flat —
All persons who in shaking hands, shake hands with you like that —
And all third persons who on spoiling tête-á-têtes insist —
They'd none of 'em be missed — they'd none of 'em be missed!

Chorus.
He's got 'em on the list — he's got 'em on the list;
And they'll none of 'em be missed — they'll none of 'em be missed.


Ko-Ko.
There's the banjo serenader, and the others of his race,
And the piano-organist — I've got him on the list!
And the people who eat peppermint and puff it in your face,
They never would be missed — they never would be missed!
Then the idiot who praises, with enthusiastic tone,
All centuries but this, and every country but his own;
And the lady from the provinces, who dresses like a guy,
And who "doesn't think she dances, but would rather like to try";
And that singular anomaly, the lady novelist —
I don't think she'd be missed — I'm sure she'd not he missed!

Chorus.
He's got her on the list — he's got her on the list;
And I don't think she'll be missed — I'm sure she'll not be missed!

Ko-Ko.
And that Nisi Prius nuisance, who just now is rather rife, (SCALIA, TODAY)
The Judicial humorist — I've got him on the list!
All funny fellows, comic men, and clowns of private life —
They'd none of 'em be missed — they'd none of 'em be missed.
And apologetic statesmen of a compromising kind,
Such as — What d'ye call him — Thing'em-bob, and likewise — Never-mind,
And 'St— 'st— 'st— and What's-his-name, and also You-know-who —
The task of filling up the blanks I'd rather leave to you.
But it really doesn't matter whom you put upon the list,
For they'd none of 'em be missed — they'd none of 'em be missed!
Chorus.
You may put 'em on the list — you may put 'em on the list;
And they'll none of 'em be missed — they'll none of 'em be missed!

[Karenina]

89. BWHAHAHAHAHAHAHAHA!!!

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

[Hugin]

91. Sorry, I was off researching my other great love...

Carnivorous Ungulates.

Rodhocetus balochistanensis in particular.

Looks like you found a theme... Although, I thought there was a long standing moratorium on Gilbert & Sullivan
here in the SMW. ;)



:silly:

[Demeter]

93. There Is? Since When?

How can anybody put Gilbert and Sullivan on moratorium? It's positively disloyal!

[Demeter]

94. No, I Do NOT Want to Know Why You Care About Extinct Whale Ancestors in Pakistan

[Hugin]

92. ~16:35 Initial closing numbers...

Index Last Change % change
• DJIA 12576.44 -35.99 -0.29%
• NASDAQ 2348.76 -16.07 -0.68%
• S&P 500 1365.54 -7.00 -0.51%


As long as they have these 90-day Repos and 'Special Auctions' to just about anybody who can
drag themselves up to the window, it's going to look like this for some time to come. They've
reduced the volatility and replaced it with a slowly hemorrhaging fiction. -- IMO.