STOCK MARKET WATCH, Thursday April 10

[ozymandius]

Source: du

STOCK MARKET WATCH, Thursday April 10, 2008

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 286
DAYS SINCE DEMOCRACY DIED (12/12/00) 2636 DAYS
WHERE'S OSAMA BIN-LADEN? 2361 DAYS
DAYS SINCE ENRON COLLAPSE = 2652
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 April 9, 2008

Dow... 12,527.26    -49.18    (-0.39%)
Nasdaq... 2,322.12    -26.64    (-1.13%)
S&P 500... 1,354.49    -11.05    (-0.81%)
Gold future... 937.50    +19.50    (+2.08%)
30-Year Bond 4.31%    -0.08    (-1.76%)
10-Yr Bond... 3.47%    -0.09    (-2.59%)







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>

---

Read more: du

[ozymandius]

1. Thanks to Demeter and Prag for your help.

I reconstituted my SMW links somewhat from my frail memory. The code sheet needed some tweaking since I am now working on a Mac. This machine does not seem to have the convenient notepad text editor that I had relied upon while working on a PC. The Mac text editor seems to like saving this tiny document in Rich text format. That presents some new quirks with the coding.

Meanwhile, we carry on.

The old Dell is still not performing well at all. I've archived and removed some files and applications while in safe mode to make room for the new OS. The new 40Gb drive has been reformatted several times but still only shows that I have a little less than 2Gb. Suggestions? Insights on this dilemma?

Do I have problems that only the dumpster can fix?

[ozymandius]

4. Also my debt of gratitude just gets larger to UpInArms.

Thank you for riding to my rescue once again while these leaps in technology occasionally send me back to the Stone Age.

:hug:

[Demeter]

29. Glad You Are Up and Running

The ongoing construction around my buried phone cables has for the third time interrupted and degraded my DSL and phone line.

[TalkingDog]

43. Feeling your pain.

While we are not Luddites in the strictest sense of the word, we have been spotted lurking around the Neo-Luddite camp.

We have been running ME (windows 2000)since 1999 and as we added newer software, the Dynamic Link Library (dll files) became unstable. I was able to geek patch it for quite a while by renaming the dropped link and rebooting and lather, rinse, repeat when it would drop out again.

Eventually it became too unstable and we, on the advice of our computer techies, upgraded to XP. Unfortunately, it was so trashed by that time that the software couldn't load, so we had the techies mirror the hard drive and save all our (unbacked up) files. Whew. Fortunately it was a relatively cheap (138.00) fix. I had literal YEARS of irreplaceable documentation on that drive. So we've started shopping around for a small daily backup. Probably something that only overwrites the files that have been opened and modified.

My suggestion is to go to the ol' Google, put the basics of the problem in and then type geek at the end. What usually happens is it shows you all the tech boards where that particular problem has been discussed. In my case, the problem was common enough, but the fix was beyond my acolyte geeking skills.

Good luck. And although, being independent minded intelligent folk, we like to think we can fix everything ourselves, sometimes it is worth the money to pay somebody to do it. (it was in my case)

Good Luck

[Karenina]

87. Today's word: ENTROPY

It works for computers AND economics!

[TalkingDog]

90. or in my case INERTIA n/t

[Hugin]

49. And here I thought Macs were...

Gawd's own computer! :lol:

"The Mac text editor seems to like saving this tiny document in Rich text format. That presents some new quirks with the coding."

Look for a "Save As..." option under the "File" menu and somehow set it to "Plain txt", that's about the only advice I can
give due to the fact my very own I-mac is older than most of the posters on "MySpace". ;)


Welcome Back, Ozy!

Demeter did a fantastic job under very trying circumstances. :thumbsup: :thumbsup: :thumbsup:

As usual, the regular and sporadic contributers to the SMW were at their best. (Yes, I read each and every
contribution and most of the articles contained in the Thread.)

[54anickel]

55. How "old" is the old Dell? It almost sounds like a motherboard BIOS issue -

My bet is the older BIOS is having trouble with the CHS (cylinder/head/sector) configuration of the drive.

I'd need a bit more info on "the old Dell" and OS change to be of any assistance. Got a model number? "Service tag" would be even better.

ETA Oops, forgot, it could be a simple FAT16 vs FAT32 issue as well. Was the drive formatted as FAT16 under an older OS?

[ozymandius]

2. Market WrapUp: SHOW ME THE BUBBLE!

BY CHRIS PUPLAVA

Enough is enough! As most commodities rallied strongly in February and into early March, many in the financial press were calling commodities a “bubble.” What happened to the commodity bubble of 2005, 2006, 2007? Commodities kept climbing the wall of worry. Long gone are the days of $50/barrel oil or $1/gallon gasoline, with the trend in these commodities, and commodities in general, continuing to advance despite being heralded as a bubble.

The mistake analysts often make is interpreting the short sprints that commodities undergo as signs that they are in a bubble instead of understanding that bull markets frequently get overheated along the way to their eventual peak. These short-term periods of overextended prices are followed by quick, nasty corrections that shakeout the hot money crowd while the smart money holds fast to their convictions until the fundamentals prove otherwise.

.....

One of the easiest ways to spot a bubble is in terms of excess supply. The number of technology IPOs surged as did technology employment and capacity during the 1990s. A clear warning sign that the technology bubble was about to burst was the surge in total inventories as excess investment in technology led to a saturation of the market in terms of industrial capacity. The capacity utilization rate plummeted from close to 90% prior to the 2001 recession to nearly 50% by the end of the recession as supply overwhelmed demand.

.....

SHOW ME THE BUBBLE IN COMMODITIES!

As shown above, bubbles are often marked by periods of excessive investment where absurd valuations are justified. So the question becomes, if there is a commodity bubble then, where are all the excesses? Where’s the extreme valuation within the sector? The simple answer to those questions is that there are no excesses and valuations still reflect pessimism, not rampant “this time is different” or “new era” mantra pushing multiples to extreme levels. Commodities are still climbing the wall of worry, which indicates a lack of a bubble and the bull market will likely continue.

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

[ozymandius]

3. Oil near $111 after hitting record

SINGAPORE - Oil prices steadied near $111 a barrel Thursday after jumping to a new record in the previous session on an unexpected drop in U.S. crude inventories.

The U.S. Energy Information Administration's inventory report, closely watched by the market, showed Wednesday that crude stocks fell 3.2 million barrels last week.

"The crude inventory draw was a big surprise to the market, which had actually expected an increase of 2 to 3 million barrels. It was a substantial drawdown," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.

Analysts surveyed by Dow Jones Newswires had expected, on average, an increase of 2.4 million barrels.

The decline in crude stockpiles pushed light, sweet crude for May delivery up $2.37 to settle at a record $110.87 a barrel on the New York Mercantile Exchange on Wednesday. It rose as high as $112.21 a barrel during the floor session, surpassing the previous trading record of $111.80 set last month.

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

[ozymandius]

5. Pump prices set records again

Retail gasoline prices surged to new highs in California and nationally over the last week, the Energy Department said Monday.

Prices are increasing even though supplies are plentiful.

In California, the Energy Department's weekly survey of service stations showed, the average price of a gallon of self-serve regular climbed 7.7 cents to $3.685 -- the biggest increase and the highest average in the country -- after hovering around the $3.60 mark for the previous three weeks. The state's latest average was 43.3 cents higher than the same week in 2007.

Nationally, the average jumped another 4.2 cents to $3.332, which was 53 cents higher than a year earlier. The jump in pump prices largely reflects strong crude prices.

http://www.latimes.com/business/la-fi-gas8apr08,0,5581893.story

---

As you may know - I just flew back from California to Georgia this week. The price of gasoline in the northern areas of LA are not too far from the prices we pay in metro Atlanta. Just about 15 to 20 cents higher in LA, on average. However, I did see one gas station's price for 93-octane in Malibu at $5/gallon.

[NMDemDist2]

18. Our gas jumped $0.15 yesterday. it's $3.459 at the cheapo stations, $3.499 at the name

stations

:banghead:

[Demeter]

24. We've Been There for Nearly Two Weeks Already

They can't raise it higher because people will be unable to get to their so-called jobs, if they have any.

[Roland99]

35. Here are some "bringing it home" facts about the cost of gas now.

My Dad lives about 15 min. away (maybe 10 if you hop on the interstate for a couple of exits).

I've had to have my daughter call him a couple of times in order to take her to work (she doesn't drive and while I'm only a mile and a quarter from her work, some of the weather has been pretty bad to where she couldn't walk it).

Well, the times he has to take his truck (a diesel), it costs him about $7-8 just to come pick her up, take her to work, and go back home.

$8.



My sister has her kids in various sports programs after school. It costs her about $6-7/day (above normal commuting) in order to run to all of the various practices and games. Multiply by 5 and multiply again by 4 (well, 4.33333333 to be accurate ;) ) and we're talking $120/mo. on the low side. She and her husband are right on about what I would call the minimum level of being considered middle class. They do have a couple of car payments which hurts but they own their own home and have to scrimp on clothing and groceries in order to afford the cars and allow the kids to be able to keep up in their sports programs.

But, consider they were already budgeting for, well, frugal expenditures on food and clothing and were mostly paycheck-to-paycheck. Add another $100-150/mo. in the extra gas costs (the after-school errands and the extra cost attached to the normal commute) and it's easy to see how what's left of the middle class is struggling to tread water.

This doesn't even consider the quickly rising cost of groceries in general, too, nor the expected increase of probably at least another $0.50/gal in gas as summer nears (which will put us here in Louisville right at $3.90...$3.95/gal).



But, I tell ya, I'm so glad we're spending $390,000,000 per *DAY* in Iraq to keep us safe from AL QAEDA and that oodles of billions are going to go to back dubious mortgage-backed securities to protect banks and investment firms from, um, well... the bloody free market!.


:banghead: :banghead: :banghead: :banghead: :banghead: :banghead:



And to top it off, I had to put my cat down yesterday. :(

[fasttense]

41. Thanks for filling in the details.

Sometimes just reading the price per gallon doesn't sink in. When you break it out like that, it makes it real.

I'm so sorry to hear about your cat. I've been there. Hang on, time does heal most wounds.

[TalkingDog]

45. Roland, so sorry.

I've been there. Twice. And while I knew I was doing the right thing in each case, it was still heartbreaking.

It sucks having to be a responsible adult sometimes.

Take care.

[Hugin]

52. Aw, Roland...

I'm sorry to hear about your cat. :(

[Tansy_Gold]

64. From a dog person

and my four pooches:

:cry: :cry: :cry: :cry: :cry:

:hug: :hug: :hug: :hug: :hug:

[AnneD]

85. Roland....

Was this the kitty that was sick earlier with the kidney problems. I'm so sorry:hug: I know she meant a lot to you and daughter. Take a while to heal yourself. sigh.....

Hubby can take one bus from our door to his office door-so he does that for a 2 buck a day round trip. Mine is a bit more complicated so I take my car. I go through 1/2 tank a week with all my errands, shopping, etc. That makes gas $20 a week for me. Before my daughter drove her own car, it was much more, like $30-45 per week. If I had lessons etc these days-well, we would be limiting our activities out of economic necessity. If I had to feed a pascal of kids-there would be few activities other than they play with each other in the back yard, and be thankful they are clothed and fed. Times are a changing.

[Roland99]

109. Yeah, the same... I managed to not cry today

but still haven't removed the litter box or her food and water bowls.



*sigh*



Oh, and thanks for the well wishes, everyone. :grouphug:

[AnneD]

110. She had a wonderful life....

and you bought her as much time as you could. It was a week before I could gather up my cat's things. I put them away and couldn't toss them. Good thing I didn't. Sampson needed them when he finally decided to grace our house with his royal presence.

[ozymandius]

6. Senate housing bill gets scant support

WASHINGTON - Democratic and Republican senators have crafted a package of tax breaks to help businesses and homeowners weather the housing crisis and head off deeper economic distress. Finding support for the proposal beyond the Senate may be a problem.

The Bush administration opposes the plan, saying it would make the mortgage mess worse. In the House, Democratic leaders regard the Senate proposal as skewed toward businesses rather than homeowners.

Key elements of the measure, which the Senate is expected to approve Thursday, are large tax breaks for homebuilders and credits for people who buy foreclosed properties, as well as $4 billion in grants for communities with the highest foreclosure rates to buy and rehabilitate foreclosed properties.

.....

A House bill takes a far different tack, steering tax breaks toward first-time home-buyers and investors in low-income rental housing. The measure is likely to be paired with a broader housing rescue package being drafted by Rep. Barney Frank, D-Mass., the Financial Services Committee chairman, that would have the FHA step in to back $300 billion in refinanced loans for 1 million or more homeowners who otherwise might face foreclosure.

http://news.yahoo.com/s/ap/20080410/ap_on_go_co/congress_housing

[ozymandius]

7. Soros: Credit crisis losses to top $1T

SHANGHAI, China - The credit crisis is far from over, billionaire financier George Soros warned Thursday, urging regulators to move faster to contain damage from the collapse of the housing finance markets.

"I think the situation is more serious than the authorities admit or recognize," Soros told journalists in a conference call. Measures taken so far to slash interest rates and stimulate the economy were "necessary but not sufficient," he said.

"Because of that, I think the situation is going to get worse before it gets better."

Soros is promoting a new book, "The New Paradigm for Financial Markets: The Credit Crisis and What It Means." He has urged regulators to move more aggressively to improve market oversight to curb risks from excessive reliance on debt for financial speculation.

.....

Soros pointed to the potential for massive losses from complex investments linked to the U.S. subprime mortgage market, such as credit default swaps, or CDS, which allow investors to put bets on the likelihood that companies will default on bond payments.

http://news.yahoo.com/s/ap/20080410/ap_on_bi_ge/soros_credit_crisis

[ozymandius]

8. Toyota and GM recall 662,000 cars in U.S.

DETROIT (Reuters) - Toyota Motor Corp and General Motors Corp are recalling more than 662,000 vehicles sold in the United States due to defects in power windows, the two companies said on Wednesday.

Toyota will recall 539,500 Corolla and Matrix vehicles for the 2003 and 2004 model years, it said in a statement.

GM said it would recall 122,598 Pontiac Vibe hatchbacks, which share the same platform with Toyota's Matrix and are built by GM in a joint venture with the Japanese automaker.

http://news.yahoo.com/s/nm/20080410/us_nm/toyota_recall_dc

[ozymandius]

9. Wall Street wary ahead of earnings

NEW YORK (CNNMoney.com) -- Stocks fell Wednesday amid a bleak outlook for corporate earnings made worse by a profit warning from United Parcel Service, more signs of weakness in the financial services sector and a surge in oil prices.

The Dow Jones industrial average (INDU) fell nearly 0.4% and the broader Standard & Poor's 500 (SPX) index was down 0.8%. The Nasdaq composite (COMP) was about 1% lower.

The mood on Wall Street Wednesday was guarded ahead of what is expected to be a disappointing earnings season. First-quarter earnings for the companies in the S&P 500 are expected to fall by 13.2%, according to Thomson First Call.

http://money.cnn.com/2008/04/09/markets/markets_newyork/index.htm?postversion=2008040917

[ozymandius]

14. early futures

06:21 am : S&P futures vs fair value: -2.8.

Nasdaq futures vs fair value: -6.8.

[ozymandius]

10. Tokyo shares close lower on caution about U.S. earnings, stronger yen - UPDATE

TOKYO, Apr. 10, 2008 (Thomson Financial delivered by Newstex) -- Japanese shares closed lower Thursday as investors took profit, cautious about the U.S. earnings season and discouraged by a stronger yen.

It was the third consecutive decline for the Nikkei 225 Stock Average after its 900-point gain since the beginning of April.

Stocks opened lower on profit-taking after Wall Street suffered losses as record oil prices and a weak earnings outlook from United Parcel Service Inc. (NYSE:UPS) increased worries about the state of the U.S. economy.

The Nikkei lost more than 200 points at one stage, but some of the losses were trimmed as investors sought bargains in the expectation of rate cuts this month by the Federal Reserve.

http://money.cnn.com/news/newsfeeds/articles/newstex/AFX-0013-24396892.htm

[Ghost Dog]

11. Euro Rises to Record Against Dollar, Pound Before Rate Decision

April 10 (Bloomberg) -- The euro rose to a record against the dollar and the pound on speculation the European Central Bank will leave its benchmark interest rate at a six-year high.

...

The euro climbed to $1.5913, the highest since the currency's 1999 debut, and traded at $1.5886 as of 10:23 a.m. in London, from $1.5831 yesterday in New York. It advanced to an all-time high of 80.29 British pence before trading at 80.15. The Japanese yen strengthened to 159.54 per euro and to 100.38 versus the dollar.

...

The pound extended declines versus the euro before the Bank of England decides interest rates today. Policy makers probably will cut the main rate for the third time since December as the worst housing slump since 1992 fans concern the economy is slipping into a recession. The nine-member Monetary Policy Committee, led by Governor Mervyn King, will lower the rate a quarter point to 5 percent, according to 52 to 61 economists surveyed by Bloomberg.

The Singapore dollar and the Malaysian ringgit gained, while China's yuan strengthened beyond 7 to the dollar, on speculation central banks will seek stronger currencies to reduce the cost of importing rice and fuel.

...

The Singapore dollar rose to a record S$1.3568 per dollar, from $1.3812 late yesterday, bringing its gain this year to 5.8 percent. The Malaysian ringgit rose 0.9 percent to 3.1510 per dollar and Taiwan's currency gained 0.5 percent to NT$30.298. China's yuan rose as high as 6.9904 per dollar from 7.0017, the strongest since the end of a fixed exchange rate in July 2005.

The Hong Kong dollar, allowed to trade 5 cents either side of HK$7.8, gained 0.1 percent to HK$7.7874. George Soros, who made $1 billion in 1992 by selling the British pound and knocking it out of the European exchange-rate mechanism, the precursor to the euro, said he expects the Hong Kong government to keep the city's currency peg to the dollar.

...

Further gains in the euro may be limited as some investors bet the impact of the U.S. financial market crisis will eventually crimp growth in the euro region.

Lehman Brothers Holdings Inc., U.S. fourth-largest securities firm by market value, has started to sell the single currency for the first time in eight months on speculation the ECB will start cutting rates in the second half of this year.

...

The dollar also fell against the yen on bets the Federal Reserve will cut borrowing costs by at least a quarter- percentage point this month. The International Monetary Fund more than halved its U.S. growth forecast and Wall Street banks said they own more securities that may be vulnerable to writedowns.

/... http://www.bloomberg.com/apps/news?pid=20601083&sid=amsrZiqwiT_E&refer=currency

[ozymandius]

12. Buyout CLOs Used for Fed Loans

Just when you think you've heard everything about how low the Fed has stooped to rescue an industry that really ought to be left to twist in the wind a bit, another squirmy critter crawls out from under a rock.

Investor Scott directed us to a Bloomberg story that cites a Morgan Stanley report which argues that investment banks are taking their hung leveraged buyout loans and bundling them into collatearlized loan obligations so they can use them as collateral for loans fromt the Fed.

Now admittedly, AAA-rated CLOs are permitted collateral at the discount window, valued at 93% to 98% of par depending on their duration. However, the discount window used to be an overnight, in extreis facility for banks under duress, while the alphabet soup of new central bank enabled loans to Wall Street increasingly look like a subsidy.

....
Aren't unaudited financial statements just wonderful?

http://www.nakedcapitalism.com/2008/04/buyout-clos-used-for-fed-loans.html

[donkeyotay]

62. Yes, it looks increasingly like a subsidy. A giant bouncing baby boondoggle

from the folks who say we can't afford social security. They'll never get this sucker off the teat.

[girl gone mad]

13. Another great cartoon.

Leave it to the editorial cartoonists to get straight to the point.

[Demeter]

15. Jim Rogers Calls for Abolishing the Fed Reserve

http://www.youtube.com/watch?v=lTXEWh2yT_g

[Demeter]

19. Musings on the Fed By Siegfried Othmer

http://www.opednews.com/articles/opedne_siegfrie_080408_musings_on_the_fed.htm


Whether we want to or not, we now have to have an eye on the Federal Reserve Board. In 1913 the Federal Reserve Board was established specifically to lodge the creation of money outside of the reach of the Executive and Legislative branches of government. We had been through numerous cycles of boom and bust in our nation's history that were exacerbated by political control of money. Rightly or wrongly, the new approach took the control of money out of the hands of elected officials who might bias monetary policy in favor of their immediate electoral imperatives...Monetary regulation required a steady hand, a long-term perspective, and a stability reminiscent of the Rock of Gibraltar. This could only be accomplished by an agency that was insulated from the day-to-day political ebbs and flows... It has been argued that moving the control of money to an independent agency violates our Constitution. But even if we are not inclined toward such a legalistic preoccupation at the moment, the Fed does give the appearance of being a fourth branch of government. In its domain, it has an independence equal to that of the other three branches. And that is potentially alarming.

The inventiveness of our financial gnomes has given us a world in which monetary instruments play the role of money without actually being money. And by now these instruments dominate our affairs. By the same token, the stability of the financial edifice can no longer be assured by the Fed just doing business the old-fashioned way. It must exercise some regulatory authority over this larger financial universe...Thus the case is made that every incremental step in the Fed's authority is rationally based in our larger self-interest. An instability of sufficient size can escalate rapidly to bring down the whole system, and that must be avoided at all costs. The Bear Stearns debacle clarified that for everyone involved. Nobody wanted to be around to witness the fallout of the apoptosis (cell death) of Bear Stearns. (The "pop" in apoptosis seems somehow fitting, don't you think?) Why should this be the case now, when it would not have been twenty years ago?

We are now living in a world of hedging strategies and of derivatives that vastly exceeds in size the underlying basket of securities. Each individual act of hedging reduces the microscopic risk of the parties to the transaction, but collectively the hedging strategy has increased macro-economic risk. A simple analogy is to the climbing rope that ties together a group of climbers. The rope reduces the risk to the individual climber, but increases it for the whole group. And whereas the rope is apparent to everyone who is tied to it, no one knows any longer where the risk is lodged in a hedging universe.
Everybody must assume that the other party will make good on its part of the financial bargain. When a local cataclysm sunders that assumption, the ripples go through the entire fabric of network relations like a run in an old nylon hose. The run is not self-arresting. There is no stopping it.

The risk is lodged in the weakest link. Or it could be lodged in what is simply suspected of being the weakest link. At some point, financial actors will protect themselves individually against this hazard; the weak actor gets cut out of the network and collapse becomes inevitable. The very thing that was feared will have been brought about. Everyone will have acted rationally at every point along the way. We have a positive-feedback situation that leads to instability and from thence to catastrophe. The system is no longer unconditionally stable. The hedging regime, brought into prominence as a risk-management strategy, has made the system as a whole more vulnerable to collapse under some conditions. Such a system cannot be left entirely to its own devices. An external regulator is mandatory.

What we have also witnessed in the apoptosis of Bear Stearns is the extraordinary rapidity with which things can go to hell. Now it was already known in Wall Street that BS was the baddest gunslinger in the East. It didn't take much for rumors of trouble to gain credibility and to propagate. But in order to intervene effectively at all, the Fed had to really have its fingers on the pulse---and to put a package together over a weekend...Of course it was a bailout. The only way the absorption by JP Morgan Chase went down was with the lubrication of a $30B dowry from the Fed, in which the Fed assumed responsibility for the most toxic of the waste in the BS inventory. For the Fed, read the taxpayer. This only looks good when it is compared to the alternative. Now one might well ask why no one had the relevant imagination beforehand, particularly when we have been here before.

Remember Long Term Capital Management? It had a couple of trillion dollars outstanding in arbitrage, and whole house of cards was threatening to come down around its ears with the Russian default. The whole hedging business was a lot smaller then, and a lesson learned then might have put us in a better place now. But the Fed bailed LTCM out and the lesson remained unlearned. The mathematical wizards at LTCM were basically operating on the simple principle of the Bell curve that the tails of the curve diminish at exponential rates. That is to say, large excursions from the mean don't happen. The boldness in their investment strategy hinges on the confidence they have in that asssumption. In reality, of course, large excursions do happen. But because these step out of the bounds of any model, they cannot be readily predicted. This is known as the long tail, or the fat tail. If the Fed protects organizations against the occasional disastrous miscalculation, then boldness in investing other people's money will know no bounds.
This is all quite nightmarish enough. But we have even bigger issues to worry about. Read on, dear long-suffering reader.



For the Fed to do its job in this new-fangled financial universe, it must be much more intimately informed about what is going on at the financial institutions whose viability it is now guaranteeing. The tendrils of connectivity to Wall Street will be ever more elaborate and extensive. Once again, every step along this path is rationally defensible. What we end up with, however, is the very opposite of what had been originally designed.

There is no more distance, no more isolation, between the regulator and the regulated. Wall Street and the Fed are becoming one living organism, each one explicitly dependent on the welfare of the other. The duality reminds one of the sympathetic and parasympathetic nervous systems in our own bodies. The sympathetic branch handles our engagement with the world. The fight/flight response matches up nicely with greed and fear. The parasympathetic branch handles our vegetative needs, analogous to the Fed meting out funds to keep the economic organism well supplied....

SEE THE CONTRADICTIONS AT LINK


The financiers should not be able to continue to raid the bottomless ATM that is the Federal budget and send the bill to the next generation. They have been spotted hundreds of billions during Bush's stolen-from-the-people presidency, and now they must pay it back. No tickee, no washee. And if we cannot get this done, then the next time they can fight their own war, and assume their own risks.




Authors Website: www.eeginfo.com

Authors Bio: Siegfried Othmer is a physicist currently engaged in the development of neurofeedback as a brain-training strategy for mental dysfunctions and for enhanced cognitive and emotional functioning.

Back

[donkeyotay]

60. As Wall St. and the Fed "become one living organism"

We enter into an economic version of Orwell. Like all institutions, to the degree that those inside can work it to their own benefit, they do. The Fed has not solved the problem of political influence over money, but has simply moved the influence to an even more corruptible realm.

Couple things I've noticed the free market and it's Fed have overlooked. First, I saw a stat that (IIRC) 40% of profits last year were financial creations. If capitalists believe that capital is to be invested in the means to create more wealth - ie, factories - this is clearly a problem, and relevant to any solution.

Another thing that has bothered me about this new-fangled finance is that they have made savings irrelevant. It became obvious years ago that banks no longer needed to attract savings from which to create a reserve to invest from. We stopped paying people to save and began to penalize them. We still are.

It seems to me that capitalism would have to return to some of these fundamentals to still be properly called capitalism. Greenspan and the boys have created something new, something structured, something that seems to operate primarily for the benefit of its inner sanctum.

I think we should kick them off the island. Just like privatization in and of itself never solved the inefficiencies of bureaucracy, the Fed has not solved the difficulties of money.

[Hugin]

63. Very thought provoking, donkeyotay...

Makes me wonder... I heard someone on the radio yesterday who was saying, it's true, we are at the end of an era.

But, nothing has stepped in or up to be the replacement era yet. Now, the Dems seem to think they'll inherit it
automatically... I doubt this. Not without some sort of effort on their part. The next era could be 'Progressive',
but, it's going to require effort!

[Demeter]

71. This is More Than a Business Cycle Thing

It's a sci-fi horror show worthy of Rod Serling. I don't see any way out except completely abandoning the current American non-economy, dropping back 50-100 years and rebuilding.

We have the resources, the technology, the workers, just no politicians or business leaders willing to give up their grandiose dreams of empire-building and deal with the dishes, diapers, and car repair issues of ordinary life. They must all be taken out and shot and their power and assets stripped and their children re-educated if we want to have a real country and a real economy.

They've killed the geese (we the People) that laid the golden eggs. And now they have no eggs, just smelly plastic faux-eggs that explode in clouds of toxic fumes and provide no nourishment.

[Tansy_Gold]

86. It's a scary scenario, but I agree with your assessment

I'm not sure I'd agree 100% with the "taken out and shot" notion, but I do believe that we're well on the way to an unfixable situation. Ergo, let it collapse, however messy that collapse may be, and THEN pick up the pieces to start over.

In a way, that might even be the least painful for most of those involved. Obviously, it will be MOST painful for those who have benefited from and caused the problems, but how many of them are there compared to all of us who have been victimized by their callous greed and "let them eat high fructose corn syrup!" attitudes?

I'm still waiting for someone to explain EXACTLY what would happen and how it would affect the lives of ordinary people if the Fed butted out and left these hedge funds, etc., to collapse.

As was quoted in another post upthread -- some of these derivatives are nothing but BETS on the FAILURE of industries. Excuse me? We're bailing out the very people who are hoping our economy will fail?????? Is there something wrong with this picture?????


Tansy Gold, who has other causes for today's anger and doesn't need any more

[TalkingDog]

84. FrankenFinance. A chimeric abomination n/t

[Hugin]

75. "approach took the control of money out of the hands of elected officials who might bias monetary"

"approach took the control of money out of the hands of elected officials who might bias monetary policy in favor of their immediate electoral imperatives"

And then along came the NeoCons and the Right Wingers who proceeded to politicize the Fed. :rofl:

[Demeter]

16. The Fading American Economy: Government is the largest employer By Paul Craig Roberts

09/04/08 "ICH " --- - According to the Bureau of Labor Statistics, the US economy lost 98,000 private sector jobs in March, half of which were in manufacturing. Today 13,643,000 Americans are employed in manufacturing, of which 9,849,000 are production workers.

Government employs 22,387,000 Americans, 8,744,000 more than manufacturing. Even the category leisure and hospitality employs 13,682,000 Americans, slightly more than manufacturing. There are as many waitresses and bartenders as production workers.

Wholesale and retail trade employ 21,467,000 Americans. Professional and business services employ 18,036,000 Americans of which 8,368,000 are in administrative and waste services. Education and health services employ 18,699,000 Americans.

Financial activities employ 8,228,000 Americans. The information sector employs 3,010,000. Transportation and warehousing employ 4,532,000. Construction employs 7,338,000, and natural resources, mining and logging employ 751,000. Other services such as repair, laundry, and membership associations employ 5,516,000 Americans.

This is the portrait of the US economy according to the Bureau of Labor Statistics. It is an economy in which government is the largest employer. Manufacturing employment comprises just under 10% of total employment and about 12% of private sector employment. Everything else is services, and not particularly high level services.

Is this a portrait of a super economy?

To help answer the question, consider that US imports in 2007 were 17% of US GDP, according to the National Income and Product Account tables provided by the Bureau of Economic Affairs. In contrast, the BEA industry tables show that in 2006 (2007 data not yet available) US manufacturing comprised only 11.7% of US GDP.

If US imports actually exceed total US manufacturing output by 5% of GDP, it does not seem possible that the US can close its massive trade deficit. Even if every item manufactured in the US was exported, the US would still have a large trade deficit.

The NIPA and industry tables from which the percentages come are not calculated identically, and I do not know to what extent differences might exaggerate the differences between the percentages. However, it seems unlikely that mere calculation differences would account for US imports exceeding US manufacturing output.

If the US cannot close its trade deficit, it is unlikely that the US dollar can remain the world reserve currency. If the dollar were to lose the reserve currency role, the US government would not be able to finance its annual red ink budget by borrowing from foreigners, as the US saving rate is about zero, and the US would not be able to pay its import bill in its own currency. The rest of the world continues to hold depreciating US currency, because the dollar is the world reserve currency. The dollar is certainly not a good investment having declined dramatically against other traded currencies.

From March 2007 to March 2008 the US economy created 1.5 million new jobs (in services). Legal and illegal immigration and work visas for foreigners exceed US job creation.

During the current school year, 3.3 million high school students are expected to graduate. If we assume that half will go on to college, that leaves 1.6 million entering the work force. College enrollment in 2007 totaled 18 million. If we assume 20% graduate, that makes another 3.6 million job seekers for a total of 5.2 million. Clearly, immigration, work visas, and high school and college graduates exceed the 1.5 million jobs created by the economy. Unless retirements opened up enough jobs for graduates, the unemployment rate has to rise.

The US unemployment rate is creeping up, and according to John Williams, the official unemployment rate greatly understates the real rate of unemployment. Williams has followed the changes that government has made to the official indices over the years in order to spin a more politically palatable picture. Williams uses the original methodology prior to the decades of spin. The original way of measuring unemployment indicates the current rate of unemployment in the US to be 13%, much higher than the 5.1% official number. http://www.shadowstats.com/alternate_data

Williams also calculates the CPI according to the same way it was officially calculated prior to the recent decades of spin. Williams estimates the current CPI at 12%, three times higher than the official 4% figure.

Williams reports that upward growth biases built into GDP modeling since the early 1980s “have rendered this important series nearly worthless as an indicator of economic activity.” http://www.shadowstats.com/article/57 Williams estimates that US GDP growth has been in negative territory during almost all of the 21st century. The notion that the US is just now entering a recession is nonsense if we have in fact been in recession for most of the 21st century.

America’s post-World War II economic dominance was based on the destruction of other economies by war and socialism. It is a different world now, and Americans have given little thought to the economic challenges of the 21st century.



http://www.informationclearinghouse.info/article19702.htmhttp://www.informationclearinghouse.info/article19702.htm

[Demeter]

17. 3rd World Status; A Pink Slip Away: By Mike Folkerth

http://www.opednews.com/articles/opedne_mike_fol_080409_3rd_world_status_3b_a_.htm




Good Morning Middle America, welcome to your King of Simple News Network, where the news that concerns Middle America is reported daily while we still have a Middle America to report to....

SEE MIDDLE AT LINK

Many, many years ago a good friend who is very bright and very realistic, explained to me that the U.S. could become a third world economy in the blink of an eye. I wanted to believe that he was crazy; but I knew better.

He explained that once a person loses his or her job, it’s a short trip to 3rd world status. That being said, employment then, is all that separates us from that unfortunate state. That and the social safety net that currently exists to supposedly create a floor for the level that one could sink.

But who supports that safety net? The remaining job holders; so with declining jobs and tax collection, is there a safety net? The short answer is no.

I want you to do something for me. Come on, pacify me for just a moment. I want you to stop reading and pretend that you are unemployed. Not only unemployed, but unemployable, as in, there are no jobs available. How long would it be before you reached third world status?

How long would it take before you couldn’t make your house and car payments or even purchase food? What would you do for medical care?

Don’t just dismiss this as, “It won’t happen to me.” That is what those in manufacturing, banking, home building, and mortgage lending industries thought.

What would you do? Where would you go? I can tell you; in a short time you would go broke and reach third world status.

Scary huh? But you say you’re in management and life is good. Here’s a prediction. I hope I’m wrong. I believe the next huge round of layoffs in the U.S. will be in upper middle management. Companies in trouble (like say banks) jettison their heaviest baggage first.

The #1 job in the U.S. is that of a sales clerk, number two, A cashier.

Basic employment in the U.S. is not creating wealth, it’s creating debt!





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.

Back

[MadinMo]

This very scenario is what scares me personally.

(She types at her work computer..... kinda sheepishly).

While my family and I live on a small acreage and would be able to provide for a good part of our food, the other expenses would be hard to meet. I don't think we would be among the first to be "third world", but we wouldn't be far behind. No savings to speak of, assets tied in the stock market, all the no nos.

Yep, very scary.

[DemReadingDU]

20. While you were sleeping: A financial coup d'état

An interesting posting and picture from one of the financial blogs that I read...

4/9/08
Ilargi: Much of what I have said and feared lately is now coming to fruition. And then some. Nationalization is the key.

The entire mass of bad debt and worthless paper that the Fed has bought is about to be moved to your bank account. I'm sorry, but I don't feel like saying too much about it right now. Basically, it's very simple: the Treasury will -massively- increase its borrowing from the Fed (yeah, as if it's not high enough yet) - at 6% interest, as per the law -, and the Fed will slush all those extra funds right through to its member banks.

All in the name of saving "The System", without which all the world would allegedly sink into deplorable anarchy. Bear Stearns was burned at the altar for dubious reasons, and more will follow, until no banks are left except for those that play the game the way the banks behind the Fed want it to be played.

Actually, "game" is not the right word: the time for games is over. We are fast moving towards Benito Mussolini's ideal of corporate fascism: the state run by corporations and, ultimately, their bankers. Ironically, another one of Benito's favorite principles was "Government by Propaganda".

It's quickly coming down to this: Speak now or forever hold your peace.Here are three articles from today's Wall Street Journal. I suggest you forget what I said, and you make up your own mind.

PS: The title "WHILE YOU WERE SLEEPING" comes from one of the best pieces of journalism, and one of the most heart-wrenching stories I know, from Charles Bowden, Harper's Magazine 1996, available at Jay Hanson's incredible DIE OFF site, the most valuable collection of material that exists on the web. Don't even try to read that story if you're not sure you are prepared.

lots more...
http://theautomaticearth.blogspot.com/2008/04/while-you-were-sleeping-financial-coup.html


edit: 3 interesting articles to read at the link

[Demeter]

23. Anarchy Has 3 Advantages:

1) It's cheaper

2) It's shorter and allows real organization to occur by destroying old deals

3) It hurts the big guys who created it the most

[donkeyotay]

73. You've given me so many interesting links! I'm not getting anything done.

A recession may be a good way to clean up the economy, while trying to prevent one may cost more and actually worsen it, he said. Also, the market should take care of investment banks. “If you bail out an investment bank that gets in trouble, that’s not capitalism, that’s socialism for the rich," Rogers told CNBC Europe. "That’s not the way this system is supposed to work. And why should 300 million Americans suffer so that we can bail out two or three investment banks on Wall Street?”

Good question, Mr. Rogers, why should so many suffer so much for so few? If the Fed is concerned about our economy melting down, they could focus their mitigation efforts on the 300 million captives of Fed policy. You know, the little people, who work and dream of things like health care. If they want to open a liquidity window to the undeserving, why not skip the trickle down and go right to Main St.? A WPA for alternative energy; or, as long as we're playing with Monopoly money, how about transitioning to universal health care? Or, if we're tightening belts, how about Star Wars and bush's trip to Mars being cut? Cut defense. There are so many alternatives to just standing back and saying, "Too bad, the American people are going to get screwed again."

If we are going to suffer through another recession, we ought to get something out of it. All they're talking about is more of, by and for the CEO government.

Edit: Oops, wrong place. Should be response to #20.

[DemReadingDU]

33. Mike "Mish" Shedlock: The Fed Is Terrified

Ilargi (see post 20.) and Mish have both picked up on this

4/9/08


The Federal Reserve is considering contingency plans for expanding its lending power in the event its recent steps to unfreeze credit markets fail.




The Fed is now considering borrowing from the Treasury (US taxpayers). Were the Fed to have to do this to remain whole, i.e., have the Treasury underwrite the Fed's balance sheet, the US central bank would be de facto insolvent, having insufficient assets to carry out its mandate.



The perceived invincibility of the Fed's ability to reflate is now clearly in question. The Fed's own discussions prove it.

lots more...
http://globaleconomicanalysis.blogspot.com/2008/04/fed-is-terrified.html

[Demeter]

21. THE RECESSION IS NOW A REALITY / NOT A FEAR By Allen L Roland

http://www.opednews.com/articles/opedne_allen_l__080407_the_recession_is_now.htm


As Henry Kissinger once said ~ " It's not a matter of what is true that counts but a matter of what is perceived to be true " and both Washington and Wall Street are determined that Main Street not know the reality of our present Recession nor the lies and fabrications regarding present economic updates and conditions. Let us use, for example, the outright lies and fabrications that officials of both Washington and Wall Street are telling you everyday to deny the reality of our present Recession ~ in a vain attempt to cover up the failure of Bush's economic policies.

Let's use last Friday's economic news, as a telling example. Martin Weiss, Money and Markets, calls it outright distortions and Lies.

DISTORTIONS, DECEPTIONS AND OUTRIGHT LIES

Martin D Weiss, Ph.D

http://www.moneyandmarkets.com/Issues.aspx?NewsletterEntryId=1640

Excerpt: " If you thought that the surge in the U.S. unemployment rate to 5.1% was a shock, consider John Williams' Shadow Government Statistics.

First, Williams points out that the total job loss the government reported on Friday wasn't just 80,000. It was 147,000. Reason: The previous two months of job losses had been greatly understated, forcing the government to revise them by a combined 67,000.

Second, he argues that these huge revisions are no accident. They are the consequence of the government's continuing misuse of seasonal adjustments.

"If the process were honest," he writes in his Flash Update issued to paid subscribers on Friday, "the differences would go in both directions. Instead, the differences almost always suggest that the seasonal factors are being used to overstate the current month's relative payroll level, as seen last month and the month before."

Third, his analysis shows that the job numbers have a built-in bias based on a model that makes assumptions about birth and death rates. Without those distortions, he calculates there would have been additional job losses of 135,000 in February and 142,000 in March.

Fourth and most important, as you probably know, the government excludes "discouraged workers" from its count of the unemployed; and the definition of "discouraged" is highly questionable ~ anyone who has not looked for a job in just the past four weeks !

His conclusion: The true unemployment rate in America is not 5.1%. It's 13%, or over two and a half times worse than officially reported.

The government's distortions of other critical data are no less egregious, " says Williams. "

William's comments on Inflation, Economic Growth and the government's distortions of GDP data are also most disturbing as well as Wall Street's equally dangerous layer of investor deceptions ~ all put in place to avoid the reality of our current precarious economic and financial condition.




Allen L Roland http://blogs.salon.com/0002255/2008/04/07.html
Authors Bio: Allen L Roland is a practicing psychotherapist, author and lecturer who also shares a daily political and social commentary on his weblog and website allenroland.com He also guest hosts a monthly national radio show TRUTHTALK on Conscious talk radio www.conscioustalk.net

[Demeter]

22. John Williams' Shadow Government Statistics

http://www.shadowstats.com/





for more alternative data graphs, see this link:

http://www.shadowstats.com/alternate_data

[Demeter]

25. Mergers of Corporate Giants Don't Benefit Consumers By Sherwood Ross

http://www.opednews.com/articles/genera_sherwood_080407_mergers_of_corporate.htm



“There is little if any evidence that increased corporate size in already-large national and international firms produces greater technological innovation,” writes Elizabeth Sanders, Professor of Government at Cornell University. “To the contrary, it probably leads to less, given lower competitive pressures, and the starving of research in debt-burdened companies.”

Sanders writes the annual value of corporate consolidations --- led by telecommunications, banking, broadcasting, chemical, and pharmaceutical companies---jumped 100-fold between 1980 and 1999, reaching three trillion dollars in the latter year, with cross-border mergers making up one third of the total.

“After the dust has settled, thousands of employees fired, surplus executives generously pensioned off and a vast new debt accumulated, the merged giant usually performs less well than did its major components formerly, and the stock price goes down in recognition of less favorable prospects,” Sanders writes in an article titled “Antitrust and American Democracy,” published in The Long Term View, a journal of informed opinion published by the Massachusetts School of Law at Andover.

Fifty-one of the 100 largest economies in the world are not countries but global corporations, Sanders points out, and the top 200 corporations now account for over a quarter of the world’s economic activity. “Consolidation has unleashed behavior for which the term ‘robber baron’ seems too tame,” Sanders writes.

“Many mergers appear designed more to create new opportunities for the enrichment of CEOs and favored stock purchasers (and to gratify testosterone-fueled empire building?) rather than to shuck off excess capacity, create new ‘synergies’ or reap economies of scale.”

“We have seen the shocking results in 2001-2002, as giant after giant reveals financial chicanery that enriched the managerial elite while looting the company, to the severe disadvantage of workers, pensioners, stockholders, and communities.”Sanders writes of “a broad expectation among businesses and citizens that conspiracies in restraint of trade, and other methods of unfair competition, will be prosecuted.”

The author notes the major antitrust laws of the 20th century --- the Clayton and Federal Trade Commission Acts of 1914, the 1950 Celler-Kefauver Act, and the 1976 Hart-Scott-Rodino Antitrust Improvements Act---all originated in and were passed by Democratic Congresses.”

Under President Ronald Reagan, by contrast, “consumer welfare” was “conceptualized almost solely in terms of the price of goods and services, stripping away the broader democratic concerns that had once been at the center of antitrust philosophy.

”With few cases worth prosecution, Sanders noted, antitrust staff and budgets under Reagan were slashed, so that Antitrust Division personnel in the Justice Department dropped to half the level under President Jimmy Carter, while “merger and monopoly case filings dropped to half the level of 1970, and only the most extreme horizontal mergers were now suspect; vertical and conglomerate mergers were of little or no concern.”

Sanders said if there is to be any revival of antitrust activity it will have to come from state attorneys general acting in behalf of state residents or from the European Union. The world, however, needs a strong U.S. antitrust policy, Sanders writes, not only because the U.S. worked hard over more than a century to develop one but because it is urgently needed today.

“It is time, not to abandon it(antitrust policy), but to share it, to reinforce the fledgling efforts of other nations to develop their own policies, and to cooperate in the development of a tough international policy against economic concentration and corporate bullying.”

The Massachusetts School of Law, Andover, is purposefully dedicated to the education of minorities, immigrants, and students from low- and middle-income backgrounds that would not otherwise be able to obtain a legal education. Views expressed in The Long Term View are not necessarily those of the Massachusetts School of Law at Andover. #(Further Information, Jeff Demers at MSL [e-mail], or Sherwood Ross, media consultant to MSL, [e-mail] )




Authors Bio: Sherwood Ross has worked as a publicist for the City of Chicago and Nassau County, N.Y., governments; as a news director for the National Urban League; as a reporter for the Chicago Daily News; as a workplace columnist for Reuters; as a media consultant to colleges, universities, law schools and more than 100 national magazines including The New Yorker, The Atlantic, Business Week, and Foreign Policy; as a speechwriter for mayors, governors and presidential candidates, and as a radio news reporter and talk show host at WOL, Washington, D.C. He holds an award for "best spot news coverage" for Chicago radio stations in 1963. His degree from the University of Miami was in race relations and he has written a book, "Gruening of Alaska," a number of national magazine articles and several plays, including "Baron Jiro," produced at Live Arts Theatre, Charlottesville, Va., and "Yamamoto's Decision," read at the National Press Club, where he is a member. His favorite quotations are from the Sermon on The Mount.

[ozymandius]

26. futures and blather

08:30 am : S&P futures vs fair value: -2.3. Nasdaq futures vs fair value: -4.5. After falling to session lows, futures pare some losses immediately following the release of the weekly initial jobless claims number. Just hitting the wires, new unemployment claims for the week ended April 5 fell to 357,000 from 410,000. Economists expected a reading of 383,000. Separately, the February trade deficit grew to $62.3 billion, compared to the expected deficit of $57.5 billion. Meanwhile, Target (TGT) reported March same-store sales fell 4.4%, compared to the Briefing.com consensus that called for a delcine of 2.7%.

08:00 am : S&P futures vs fair value: -2.2. Nasdaq futures vs fair value: -3.0. Futures point to a lower open. Lehman Brothers (LEH) liquidated three investment funds with a value of $1 billion due to market disruptions, according to the company's SEC filing. Other news this morning has been mostly positive. Wal-Mart (WMT) issued upside guidance for its fiscal first quarter. It expects earnings per share between $0.74 and $0.76, compared to the consensus estimate of $0.72. Banc of America upgraded Intel (INTC) to Buy from Neutral, along with several other semiconductor stocks. Dow component DuPont (DD) issued upside guidance for its first quarter, as it expects earnings per share of $1.29 versus the $1.17 consensus estimate. In overseas news, the Bank of England lowered its interest rate by 25 basis points to 5.00%, the European Central Bank left its rate unchanged at 4.00%.

[DemReadingDU]

27. Mike "Mish" Shedlock: Ponzi Financing At Citigroup

4/9/08
Citigroup is cash strapped. To raise cash it has agreed to sell $12 billion worth of leveraged loans it was holding at a reported 90 cents on the dollar. Earlier today in Less Than Meets The Eye at Citigroup, Goldman I noted that in order for Citigroup to get a price of $12 billion for the loan portfolio it sold, it had to agree to indemnify the buyers of the first 20% of losses. Tonight more details are emerging.

Reuters is reporting Citi financing its $12 bln sale of loans.

Citigroup Inc's (C) plan to sell $12 billion of loans and bonds made to private equity firms is seen as a positive for the bank and the loan market, but the deal will leave the largest U.S. bank with exposure to those private equity firms even after the sale.

That's because Citi is financing much of the sale itself, according to a person familiar with the deal. It is lending some money to the private equity firms, which will combine it with some of their own money to purchase the debt.

Essentially, Citigroup is re-lending money, but on different terms. The new loans are obligations of the private equity firms, and Citi is selling the original loans to the firms at somewhere around 90 cents on the dollar.

After the sale, Citi would no longer have to mark down the original leveraged loans if their value falls further, a real possibility in the currently disrupted credit markets. It also allows the bank to confirm the recorded values of other leveraged loans in its portfolio.

Comment: Exactly how does this confirm the value of anything? What this did was muddy the waters. Citi had to indemnify the buyers from the first 20% of the loss so Citi effectively got somewhere between 70 and 90 cents on the dollar for those loans. We will not know the exact amount until a later date.

The deal was made in this manner specifically to muddy the waters. It appears that Citi is setting up a con game in which they may pretend they got 90 cents on the dollar when they really didn't. That 20% indemnification clause in the sale is like a PUT option. That option has a value and it's a huge mistake to pretend otherwise.

"It demonstrates that there is a market for this paper," said Marshall Front, Chairman of Front Barnett Associates in Chicago, which owns about 450,000 Citi shares. "This whole process of credit unfreezing, which started with the Federal Reserve opening the discount window to investment banks, is beginning to play out."

Comment: Yes there is a market, at the right price. There's a market for anything, anytime, at the right price. And the price in this case was a 10% guaranteed markdown plus a free PUT option that has the potential to make the total markdown as high as 30%. And Citi had to agree to finance that! That's quite a market. If I was Marshall Front I would not be talking up that market too loudly. This whole setup smacks of desperation. Citi's dividend can't last long at this rate.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com/2008/04/ponzi-financing-at-citigroup.html

[Demeter]

31. It's Either a Panic Move or a Fraud

Probably both.

[TalkingDog]

51. You are sooo cynical.

I like it.

[Demeter]

67. Sadder But Wiser, and Royally P.O.ed, Too

[abelenkpe]

74. So what happens

to my student loans once Citi goes belly up? Any thoughts? They are o so close to being paid off. I fear my new master...

[Demeter]

76. It's Not Like Anybody Can Change the Terms of Your Loans

you have a contract, fulfill it and be free.

The problem awaits the next generation of students, who will most likely not go to college for lack of financing, or never pay off their loans for lack of a living wage.

[ozymandius]

28. Retailers Post Sluggish Sales in March

EW YORK (AP) -- Most retailers reported sluggish sales in March when consumers -- fretting about mounting economic problems -- limited their shopping to food and other essentials.
As the nation's merchants reported sales figures on Thursday, it was clear that shoppers remained focused on buying basics at discounters and wholesale clubs and snubbed mall-based chains for clothing and other discretionary purchases.

Wal-Mart Stores Inc. and Costco Wholesale Corp. were among the best performers. Wal-Mart raised its earnings outlook, noting that better inventory control helped to limit markdowns on merchandise.

But March proved to be another weak month for many others, including Limited Brands Inc. and Pacific Sunwear of California Inc., both of which reported sharp drops in sales.

.....
http://biz.yahoo.com/ap/080410/retail_sales.html

[ozymandius]

37. March Same-Store Sales Plunge at Chico's

FORT MYERS, Fla. (AP) -- Chico's FAS Inc.'s same-store sales -- a critical measure of a retailer's health -- plummeted even more steeply than analysts expected last month, the women's retailer said Thursday.

For the five weeks ended April 5, sales at stores open at least a year plunged 20.7 percent, the company said. Analysts polled by Thomson Financial forecast a decline of 14.1 percent.

http://biz.yahoo.com/ap/080410/chico_s_sales.html?.v=1

[UpInArms]

30. Today's Reports:

Apr 10 8:30 AM
Initial Claims 04/05
report 357K
briefing.com expects 380K
market anticipates 383K
last report 410K
rev'd from 407K

Apr 10 8:30 AM
Trade Balance Feb
report -$62.3
market anticipates -$57.6B
last report -$57.4B
rev'd from -$58.2B

Apr 10 2:00 PM
Treasury Budget Mar
briefing.com expects -$47.0B
market anticipates -$70.3B
last report -$96.3B

[UpInArms]

32. 8:30 report information

36. U.S. Feb. trade gap with China $18.4 bln, lowest in year
8:30 AM ET, Apr 10, 2008 | Comments: 0 | Tags: none

37. U.S. Feb trade gap, ex-oil down 17% yr-on-yr
8:30 AM ET, Apr 10, 2008 | Comments: 0 | Tags: none

38. U.S. Jan. trade gap rev $59.0 bln vs $58.2 prev est
8:30 AM ET, Apr 10, 2008 | Comments: 0 | Tags: none

39. U.S. Feb trade gap above consensus of $57.5 bln
8:30 AM ET, Apr 10, 2008 | Comments: 0 | Tags: none

40. U.S. Feb trade gap widens 5.7% to $62.3 bln
8:30 AM ET, Apr 10, 2008 | Comments: 0 | Tags: none

41. U.S. 4-wk. avg. continuing claims rise 36,500 to 2.9 million
8:30 AM ET, Apr 10, 2008 | Comments: 0 | Tags: none

42. U.S. continuing jobless claims rise 3,000 to 2.94 million
8:30 AM ET, Apr 10, 2008 | Comments: 0 | Tags: none

43. U.S. 4-wk. avg. jobless claims rise 2,500 to 378,250
8:30 AM ET, Apr 10, 2008 | Comments: 0 | Tags: none

44. U.S. weekly initial jobless claims fall 53,000 to 357,000
8:30 AM ET, Apr 10, 2008 | Comments: 0 | Tags: none

[ozymandius]

38. Trade deficit rises in February, defying estimates

The trade deficit rose in February, contrary to an expected decrease, according to a government report Thursday.

The Commerce Department said the gap between the nation's imports and exports came in at $62.3 billion, up from a revised $59 billion in January. Economists surveyed by Briefing.com had forecast the gap would fall to $57.4 billion.

http://biz.yahoo.com/cnnm/080410/041008_trade_balance.html?.v=3

[formercia]

44. The Administration couldn't psych the deficit

Driving the market with propaganda isn't working anymore. Roh Roh!!

[Demeter]

78. But Not for Lack of Trying

These megalomaniacs who think they can create their own reality and a Super Empire, when all they are making is death, decay, rubble, radioactive dust, and enough rope to hang themselves several times over.

I wonder if the walls are closing in for Nancy Pelosi yet. She sure cares about Tibetans more than she does Americans. Maybe that's her bolt hole, when the **** hits the ***.

[formercia]

81. Homeless Tibetans camping in her front yard.

NIMFY.

I used to see it all the time. My sister was in Girl Scouts with Jackie Robinson's daughter. She told my sister they tried to buy a house in Darien CT where we lived but they never could and ended up living in Stamford.

there was always some great cause to save this or that but at the time,(early 60's) there were 24 non caucasians living there and they were all 'domestics.'

[UpInArms]

100. Treasury Budget report

that is totally irrelevant because everything is off-budget anyway :eyes:

Apr 10 2:00 PM
Treasury Budget Mar
report: -$48.1B
briefing.com expects -$47.0B
market anticipates -$70.3B
last report -$96.3B

[ozymandius]

34. Today's Reports (oops! - sorry to be late)

8:30 AM Initial Claims 04/05
Actual 357K
Briefing Forecast 380K
Market Expects 83K
Prior 410K
Revised from 407K

8:30 AM Trade Balance Feb
Actual -$62.3B
Briefing Forecast -$57.6B
Market Expects -$57.4B
Prior -$59.0B
Revised from -$58.2B

2:00 PM Treasury Budget Mar -
Briefing Forecast -$47.0B
Market Expects -$70.3B
Prior -$96.3B

http://biz.yahoo.com/c/e.html

[UpInArms]

36. dollar watch

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

Last trade 71.490 Change -0.355 (-0.49%)

The Pressure on the US Dollar

http://www.dailyfx.com/story/bio1/The_Pressure_on_the_US_1207778251118.html

The currency market has been exceptionally quiet over the past few days with the EUR/USD and USD/JPY confined within a tight trading range. This range however was broken today as the EUR/USD came within 50 pips of its record high. Although there was no meaningful US economic data released, the move in the dollar represents the pressure that the market expects to fall upon the greenback over the next 24 hours. The European Central Bank and the Bank of England have monetary policy announcements. The former is expected to keep rates unchanged while the latter is expected to lower them. However for the US dollar, the relative dovishness of the Federal Reserve may be the most important. The minutes from the last FOMC meeting reveals a divided Fed that is concerned about both growth and inflation. Although from here on forward, the Fed could slow down their degree of easing, the ECB’s reluctance to cut interest rates and the BoE’s own internal struggles (read the EUR and GBP sections for more details) could keep pressure on the US dollar. Furthermore, the US trade balance could also turn out to be dollar negative. Even though the greenback has weakened significantly, which should help to narrow the trade deficit, manufacturing ISM also slipped that month which suggests that the contribution may have been limited. There are still a lot of inherent problems in the US economy. We have previously warned of a further deterioration in the US labor market, but more immediately, US retail sales are expected to be released on Monday. With Linens ‘n Things joining Domain, Fortunoff, and Sharper Image in filing for bankruptcy protection, there is a decent chance that consumer spending could contract for another month. Crude oil and gasoline prices have also hit a record high which will take a toll on the pocketbooks of nearly all Americans. It may not be long before gas prices hit $4 a gallon across the nation.

...more...

Euro At All Time Highs Ahead of ECB- Can It Hit 1.60?

http://www.dailyfx.com/story/bio2/Euro_At_All_Time_Highs_1207820159974.html

The euro staged a furious rally ahead of the ECB rate decision at 11:45 GMT taking out its all time high of 1.5900 in early European trade. Over the past several days market consensus has coalesced around the idea that ECB chief Jean Claude Trichet will continue emphasize the importance of controlling inflation while minimizing the burden of high exchange rates. Aided by relatively positive economic data which included better than expected Trade Balance numbers from Germany last night and stronger than forecast French Industrial Production tonight, euro bulls have completely dominated trade this week as the decoupling theme came back into vogue in the currency market.

If Mr. Trichet does indeed stick to his hawkish script, the pair could try to target the 1.6000 level before the end of the day. However, as we noted in our central bank preview “if Mr. Trichet chooses to de-emphasize price pressures and instead focuses on the possible downside risks to the Euro-zone economy, traders will interpret his words as a sign that the ECB’s monetary policy bias has turned from restrictive to neutral. In that case, with no future prospect of any additional rate hikes in the Euro-zone, traders are likely to sell the euro across the majors on a wave of profit taking.”

For the time being euro longs have the upper hand, having erased the all time highs with relative ease tonight. The pair is now trading on pure momentum alone and standing in front of these type of runaway markets can be extremely dangerous. Still, the question of how high is too high must be a concern to EZ monetary officials and given tonight’s price action Mr. Trichet may decide to choose his words carefully in the post announcement press conference in order to not aggravate the situation further. As we’ve been reporting, the economic situation in the EZ is far from uniformly positive, with producers continuing to experience relatively healthy growth, but consumers beginning to retrench.

Regardless of their ability to overcome high exchange rates so far, EZ producers are sure to feel the pinch in profits should EURUSD rise above 1.60 amidst increasing signs of global economic slowdown. Therefore even if the EURUSD clears 1.6000 any further progress is likely to be limited while volatility could increase tremendously. We would not be surprised to see 200+ point range in the pair today before the North American session is over.

...more...

[Demeter]

39. Liquidation is only solution to crisis by Doug Noland

http://www.atimes.com/atimes/Global_Economy/JD08Dj01.html

Bernanke quote:

"One of the prevailing theories at the time of the Depression was the so-called "liquidationist thesis" - which said basically "let's let the system return to normal. Let's liquidate banks; let's liquidate labor." This was Andrew Mellon, the Treasury secretary . It was partly on the basis of that theory that the Federal Reserve stood by and let a third of the banks in the country fail, which caused the money supply to drop sharply, and prices to fall rather sharply, and led ultimately to the severity of the financial crisis.

I think financial instability, which was not addressed by government or anyone else, was a major contributor, both to the Depression in the US and abroad. I believe the difference today is that we will address financial issues and try to maintain the integrity and stability of our financial system. We will not let prices fall at 10% a year. We will act as needed to keep the economy growing and stable. So, I think there are some very significant differences between the thirties and today, and we learned a great deal from that episode. (April 2, 2008, before Congress' Joint Economic Committee.)"

Not surprisingly, chairman Bernanke invokes a notable policy error - committed in the heat of an extraordinarily difficult (post-bubble) early-1930s period - as justification for government measures to sustain today's US bubble economy. Bernanke and the "Friedmanites" just love to pillory Andrew Mellon and the "liquidationists" (and would gladly throw in Friedrich Hayek and fellow Austrian economist Ludwig von Mises). They avoid (like the plague), however, the much more pertinent policy debate that transpired throughout the Roaring Twenties.

Mellon was among a group of elder statesman that had become increasingly concerned throughout the decade by the Wall Street speculative boom and its inevitable consequences. The son of a banker, his family's wealth was nearly lost in the Panic of 1873. Actively involved in banking and business from the age of 17, he had witnessed first hand the consequences of the recurring booms and busts that were the impetus behind the creation of the Federal Reserve in 1913. Blaming Mr Mellon and the "liquidationists" for the Great Depression - as opposed to the extraordinary financial excesses and failed policies of the bubble period - does disservice to history as well as to sound analysis.

There were astute thinkers during the twenties who believed the economy was being severely distorted from a protracted inflationary period that had commenced during World War I. Although it was not manifesting in consumer prices (because of new technologies, products, overheated investment, etc), excessive money and credit were fueling dangerous inflationary bubbles in asset prices - particularly in real estate and the stock market.

The astute recognized the boom as a period of acute financial and economic instability. Certainly, the great "Austrian" economists appreciated clearly how credit and speculative excess had come to grossly distort incomes, corporate profits, relative prices and investment. The underlying structure of both the financial and economic systems was being corrupted.

Importantly, during that fateful period a group of seasoned thinkers (businessmen, policymakers, and economists) believed adamantly that policies endeavoring to sustain the distorted pricing mechanisms and structures - and the resulting inflated and maladjusted US economy - were both inadvisable and doomed for failure. As such, so-called "liquidation" was a central facet of the unavoidable (post-inflationary boom) adjustment period for the highly distorted financial, labor and product markets. Profligate borrowing, spending, and leveraged speculation would come to their eventual end, requiring reallocation of both financial and real resources. It was only a matter of the degree of excess and the proportional adjustment.

Invitation to disaster

To further inflate an unsustainable boom with additional cheap credit guaranteed only more problematic financial fragility, economic imbalances/maladjustment and resulting onerous adjustment periods. The astute were adamantly against the (Benjamin Strong) Federal Reserve’s efforts to actively manage the economy (and markets) in the latter years of the twenties, fearing that to prolong the reckless Wall Street debt and speculation orgy was to invite disaster (the "old timers" had witnessed many!). History proved them absolutely correct, yet historical revisionism to varying extents has been determined to disregard, misrepresent, and malign their views and analytical focus. Bernanke’s analytical framework of the causes of the Great Depression is seriously flawed.

Regrettably, all the best efforts by the Federal Reserve and Washington politicians to sustain the US bubble economy are doomed to failure. It’s not that they are necessarily the wrong policies. More to the point, the basic premise that our economy is sound and growth sustainable is misguided. We’ve experienced a protracted and historic credit inflation and it will simply be impossible to keep asset prices, incomes, corporate cash flows, and spending levitated at current levels. The type and scope of credit growth required today has become infeasible. The risk intermediation requirements are too daunting. Sustaining housing inflation and consumption levels has become unachievable. And the underpinnings of our currency have turned too fragile.

I'm all for long-overdue legislative reform. Who isn’t? But I’ll say I heard nothing this week that came close to addressing the key underlying issues. We have longstanding societal biases that place too much emphasis on housing and the stock market, while we operate with ingrained policymaking biases advocating unregulated finance underpinned by aggressive activist central banking and government market intervention. In a 20-year period of momentous financial innovation, our combination of "biases" proved an overly potent mix. And it is worth noting that Wall Street security/dealer balance sheets expanded three-fold in the eight years since the repeal of the (Depression-era) Glass-Steagall Act.

The focus at the Fed and in Washington is to sustain housing, the stock market, and inflated asset prices generally - to bankroll the consumption- and services-based bubble economy. Bernanke believes that if financial company failures can be averted - and with the recapitalization of the US financial sector as necessary - sufficient "money" creation will preclude deflationary forces from gaining a foothold.

He assures us the Fed will not allow double-digit price declines, despite the reality that such price moves have already engulfed real estate markets. To be sure, prolonging current financial instability increases the likelihood of significant price level instability going forward. And while the federal government "printing presses" will be working overtime going forward, it is also apparent that a key facet of Washington’s strategy is to "subcontract" the task of "printing" to Fannie Mae, Freddie Mac, the Federal Home Loans Bank, the banking system, and "money funds" - sectors that today still retain the capacity to issue money-like debt instruments with the explicit or implied stamp of federal government (taxpayer) backing.

Desperate undertaking

Basically, the strategy is to substitute government-backed debt for the now discredited Wall Street-backed finance. I’m the first one to admit that this desperate undertaking stopped financial implosion in its tracks. However, the problem with this whole approach - because of our "societal," financial, and policymaking biases - is that our credit system will just be throwing greater amounts of (government-supported) debt on top of already fragile credit structures underpinned largely by home mortgages. Wall Street-backed finance buckled specifically because this (Ponzi finance) debt structure was untenable the day increasing amounts of speculative credit were no longer forthcoming. The underlying inventory of houses doesn’t have the capacity to generate debt service - only the mortgagees taking on greater amounts of debt.

The underlying economic structure is now THE serious issue. The last thing our system needs right now is trillions more mortgage debt, although it would work somewhat to sustain consumption and our services-based bubble economy. The inherent problem with a finance, housing, consumption, and services-dictated economic structure is that it inherently generates excessive debt backed by little of real tangible value or economic wealth-creating capacity. System fragility is unavoidable.

It may appear an economic miracle, but for only as long as increasing amounts of new finance are forthcoming. At the end of the day, one is left with an extremely fragile structure both financially and economically.

Yet as long as Wall Street "alchemy" was capable of creating sufficient "money" to fuel the boom - and the world was content in accumulating (increasingly suspect) dollar claims - our bubble economy structure remained viable. It is, these days, increasingly not viable. The wholesale and open-ended government backing of US mortgage debt - and financial sector liabilities more generally - will prove a decisive blow to already shaken dollar confidence. And it is today’s reality that the massive scope of credit growth necessary to sustain the current bubble structure will correspond to current account deficits and dollar outflows that will prove (as we’re already witnessing) only more destabilizing in markets and real economies around the world.

No substitute

Government backing of our debt does not substitute for a sound economic structure. And it is the current structure that is incapable of the necessary economic output to satisfy domestic needs and to generate sufficient exports to exchange for our huge appetite for imported goods and energy resources. Today’s services-based economy will no longer suffice. Examining last week’s job data, one sees that 93,000 "goods producing" jobs were lost in March after dropping 92,000 in February and 69,000 in January. At the same time, Education, health, leisure and hospitality jobs increased 178,000 during the first quarter. Yet it is more obvious than ever that we need to consume less and produce much more.

Back to the "liquidationists". It is my view that our economy will require a massive reallocation of resources. We will be forced to create much less non-productive (especially mortgage and asset-based) credit in the financial sphere, while producing huge additional quantities of tradable goods in the economic sphere. In our expansive services sector, there will no choice but to "liquidate" labor and redirect its efforts. Throughout finance, there will be no alternative than to liquidate bad debt, labor and insolvent institutions - again in the name of a necessary redirecting of resources.

After an unnecessarily protracted boom, there will be scores of enterprises that will prove uneconomic in the new financial and economic backdrop. Liquidation will be unavoidable, policymaker hopes and dreams notwithstanding.

MUCH MORE AT LINK

[AnneD]

40. Morning Marketeers....

:donut: and lurkers. Hubby went and got the mail yesterday and amid the credit card offers, Nursing job offers, and bills came my Q1 statements for my 403B and my Roth IRA. I stopped paying into either (403B last year and Roth in Feb). I wanted to focus my attentions on paying off my debts. Imagine my surprise :eyes: that they went down. But what I really found interesting was a letter that explained what a bear market was (their definition seemed more generous than the FEDs):sarcasm: It went on to explain that it is important to maintain a steady investment strategy ya da ya da ya da. I don't have the letter with me at the moment or my statement, so I can't calculate the exact percent loss. When I lost money with Smith Barney during the Dot.Com-I didn't get as much sorry, thanks for your money, nothing. I guess they must be desperate to soothe nervous small time investors. They bring up a good point though-it is always important to save and invest on a regular basis. I bet they don't think of precious metals and a full pantry as an investment-but the money diverted from the the funds to pay off my debts has yielded a savings of 29% interest on one CC that will be paid off this month-a better yield than anything on the market. I am STILL on the plus side on my precious metals and I don't think they will be going down anytime soon. They will always keep up with inflation-which is what I am happy about. And my other commodities-I smile every time I fix dinner. That investment pays interest daily...

Happy hunting and watch out for the bears....

PS the cartoon was spot on.

[Demeter]

46. AnneD! I'd LIke to Stretch Out My Pool Date

After spending all of March and February pumping hot air into the deflating bubble, the Fed has skewed the natural process of decline.

(Unless you are interested in taking into account the declining value of the dollar--in which case, we were below where we were when W started the wrecking ball several years ago...)

So I'm forecasting a return to pre-Bush levels by June 17th. After that, the markets go on summer vacation anyway....

[TalkingDog]

50. The Spousal Unit has a 401 from the last employer

We've been discussing taking the hit with taxes and zeroing out the credit line for home improvements since we have just installed a PV panel, figuring we might mitigate the end of year ouch.

After discussing with the appropriate folks yesterday, the post office coincidentally delivers the statement. I took one look at the balance last month and the reduction this month and said: Take it out...take it out NOW!

The Spousal Unit reported that co-workers (with the County) are complaining about not only losing money, but losing all that is put in every month, plus some.

And I had a very similar experience a couple of weeks ago, with a money market account with funds my mother left me when she died. I talked to a "counselor" about removing a large chunk of the money (and spending it on improvements like more garden, chickens, root cellar) because between the rates giving me much less of a return than they were last year (I have to take a whopping monthly dispersement of 30.00 per month which tells you how much grand wealth I inherited) which are reducing my nut instead of adding to it, inflation is killing the remainder.

And, I said, getting heated at this point: If George W. Bush keeps on approving interest rate cuts as he has promised to do -for as long as it takes- were his words, then all the years my mother broke her back in a factory to leave me that money will be for nothing....

He pondered for just a second and said, You know, you are the first person that I've never had to explain the broader fiscal picture to. You are exactly right.

And in the end, he didn't try to dissuade me but obviously he couldn't encourage my removal of the funds.

[Hugin]

56. "A Look at 401(k) Plans for Employees"

"Introduction

More and more employees are investing in their futures through 401(k) plans. Employees who participate in 401(k) plans assume responsibility for their retirement income by contributing part of their salary and, in many instances, by directing their own investments.

If you are among those who direct your investments, you will need to consider the investment objectives, the risk and return characteristics, and the performance over time of each investment option offered by your plan in order to make sound investment decisions.

Fees and expenses are one of the factors that will affect your investment returns and will impact your retirement income. The information contained in this booklet answers some common questions about the fees and expenses that may be paid by your 401(k) plan. It highlights the most common fees and encourages you, as a 401(k) plan participant, to:"


http://employment.findlaw.com/employment/employment-employee-wages-benefits/employment-employee-wages-benefits-retirement-top/employment-employee-wages-benefits-retirement-401k.html

_______________________________________________________________________

Today's "Where's Waldo"... Kiddies, see if you can spot all of the 'illusion of control' qualifiers in this article.

[DemReadingDU]

61. my dad left us an IRA

There were 8 of us kids, so the amount in each portion is small. However, we were told we did not have to take all the amount at once, that we could stretch it out for years. But once a year, we had to take a disbursement. While the minimum disbursement is just a few hundred per year, we were told we could also take out a larger amount, but taxes would be greater on the larger amount. It's sitting in a money market fund. I wonder now if the yearly fee would exceed the amount in interest.

But do I take out a larger amount and pay more taxes, or pay the fee every year, or inflation eating up the rest. Need to research this.

Thanks for getting me to think.


:think:

[abelenkpe]

77. Hey, Same here.....help? Thoughts? Wisdom?

I have an old 401k from my time at a union house and was thinking of rolling it into an IRA, o I dunno, today. I'm also stopping putting money into my current 401k, because that money just gets devoured every week anyway. I still want to save money though for my kids future.
Is an IRA just another money market thing? Because with my 401k money market money is still slipping away....and scarily tied to Lehman, even though it's supposed to be 'safe.' Is there an IRA that is FDIC insured?

I gotta make some calls....

[donkeyotay]

103. You can, people will think you're nuts, but oh well.

Talk with a local bank or credit union, and check their fees. You can move your money from your 401K into a CD that is FDIC insured. You won't make much, but in theory, they can't lose it for you.

[DemReadingDU]

104. but isn't there a penalty for early termination of the 401k?

I thought you couldn't touch it before age 59 1/2, unless moving it to a 'rollover IRA'.

Could an IRA contain a CD that is FDIC insured?


I have a few CDs, I wish I could move them to an IRA to save taxes.

[donkeyotay]

111. I moved my IRA into CDs at my local credit union a couple of years ago.

It was never in a 401K, so I don't know if the rules are different. It was a simple transfer of funds from one IRA custodian to another. Ask your bank. Everyone I checked with, while shopping fees, offers such a thing.

[Hugin]

53. I had previously shared my 401(k is for klepto) experiences...

But, to reiterate.

We had to PAY several hundred dollars to get my S.O. OUT of a mismanaged and corrupt fund mandated (and controlled)
by a former employer. Guess what! YOU'RE LIABLE IF THE FUND GOES UNDER! Read the small print folks. It's the ultimate
screw to labor. That's the reason management loves it so much. All perfectly legal.

[DemReadingDU]

58. but the same thing can happen in an IRA

When I was laid off, I rolled over my 401k to a Vanguard IRA. There is no FDIC on this IRA, so anything I invest in this IRA could go under, and I would lose the value. Most is sitting in a money market fund now, supposed to be 'safe', but there is no guarantee.


edit: My former employer also left me with a small pension. What upsets me is that it possibly could be invested in those risky sub-prime mortgage bonds. I tried checking it out, but the the most current annual report is for 2006. I'm not sure, since I am already taking a monthly small amount, that I can stop and take the balance to invest elsewhere.

[Hugin]

59. Doesn't seem like anything is 'safe' right now...

Well, anything which is subject to unregulated 'fees' (a.k.a someone sticking their filthy hand in and helping
themselves) anyway.

[kineneb]

65. well, except the canned food in my pantry

I figure if I buy a few extra cans of food every time I shop, I am making more in "interest" from inflation than having money in any saving account. Good to invest in a bag of flour and rice, stuff them in the freezer... they will only get more expensive.

[Hugin]

68. Good plan!

:7

Nice to hear from another investor in 'Pre-packaged Foodstuff Items' (PFIs)!

I was digging around in my Pantry the other day and I couldn't believe what I found...

Among all of the cans of Govt Applesauce, I found a can of Government SALMON! I didn't know there
ever was such a thing! I figure I'll hang on to it as it still has a couple of years 'till expiration.

Must avoid having a "Salmon Patte"* episode, however.




* Reference to the final skit from Monty Python's "Meaning of Life".

[Demeter]

99. I Rented and Watched that Movie after the Mr. Creosote Sketch Post

It came out the year my first child was born--probably why I missed it. Parts of it were good, parts were gross, but it's definitely Monty Python, and they all look so young!

[Trailrider1951]

82. The only thing I know of that is relatively safe right now is REAL money

Gold and silver have NEVER been worthless. When I quit my job in Houston in August of 2005, I rolled all of my 401 K into an IRA, a precious metals IRA. I bought gold bullion at about $520 an ounce. That's the good news. The bad news is that, had I purchased silver instead of gold, I would have more than TRIPLED my money. Silver is less than $20 an ounce. It is a bargain. And I'm still buying it. DISCLAIMER: I am not a financial advisor, nor do I play one on TV. I can simply tell you what I think and what I am doing with my own money. And until the FED shuts down the printing presses and raises interest rates, precious metals will only gain value (as measured in Federal Reserve Notes).

[KoKo]

97. Hi AnneD....

Thought I'd relate this ...about those Fed Auctions for Muni Bonds. We purchased three Muni's over a year ago, that Smith-Barney broker said would be a good retirement investment for return...and they would give us an 8% rate and were "totally liquid." IOWD's... any time we wanted the money they would just sell it at auction and we would get our investment plus interest.

About two months ago hubby got phone call from Broker suggesting asking if we wanted to place our three muni's up at the next auction in case we needed the money for anything. Hubby is out of town at convention but he calls me asking what I thought of that strange message since the point of the muni's were that we could keep them earning the interest for as long as we wanted. I told hubby to drop everything at his meeting and get back to our Smith-Barney broker immediately and SELL...SELL...SELL! My radar was sounding at full alert!

Fortunately, they managed to sell two of the bonds...but one keeps coming up for every Friday auction and it never sells and Broker says things are almost shut down in the Muni-Bond Auctions and we were lucky to sell the first two. That's two months ago and Bernanke is pumping all he has into the system. And, the one remaining Muni is for Charlotte-Mecklinburg (NC) Hospital System...so it's got to be a AAA rated bond...but it doesn't sell and we can't get our money until it does. Broker says to just wait that eventually the system will free up. But, I wonder what their liability is if it doesn't. And, I wonder why we don't hear anything about folks holding those Muni-Bonds who need the money for a house closing or some other expenditure and they can't get ahold of what was promoted as a "liquid investment." And, I wonder what would have happened if we hadn't thought the broker's message was odd and panicked... He didn't urge us to sell...just suggested that "in case we might need the money." :D

So...there are some scary things out there....that they are keeping the lid on. Not even CD's are paying anything worth having...and so what you are doing in paying off your credit card is making you more than anything else.. Crazy times.....

[DemReadingDU]

105. If the bonds were earning 8% interest, why sell?

I'm really confused.

The 3rd bond. It appears to be AAA and earning 8% interest, so why sell it?

[KoKo]

107. That we "can't sell it" is the worry. It was

promised as "liquid investment" ...Triple AAA Safe...but what he said was not true just a year later. If we needed that $15,000...for med expenses right now...we couldn't get it out. And, I'm worried that they might come back and say they can't sell it so we are out of the money...because they will say it's another Financial Crisis. How many other folks near retirement age put money into Muni's thinking they are safe...you can sell any time and they are interest free...but they didn't say if there's a "melt down" your safe, liquid investment just might be "frozen."

We don't need the money right now...and I'm thankful the other two sold...but, I wonder what really "IS" safe, anymore..if what your broker promises doesn't turn out to be true in a crisis? :shrug:

[DemReadingDU]

108. ah, "can't sell it"

That is scary.

[ozymandius]

42. Markets are open for bidness.

9:31
Dow 12,546.07 18.81 (0.15%)
Nasdaq 2,329.71 7.59 (0.33%)
S&P 500 1,354.97 0.48 (0.04%)
10-Yr Bond 3.468% 0.002
NYSE Volume 44,379,488.281
Nasdaq Volume 74,385,343.75

[antigop]

47. Lehman liquidated funds worth $1 billion

http://money.cnn.com/2008/04/10/news/companies/lehman_funds.ap/index.htm?postversion=2008041008

Lehman Brothers liquidated three investment funds last quarter after their assets declined in value amid the larger credit crisis, according to a regulatory filing.

Lehman moved the funds' assets - worth about $1 billion - onto its balance sheet. The bank purchased another $800 million in "deteriorated" assets from other funds, according to Lehman's report for the quarter ended Feb. 29.

Lehman did not specify what types of assets were affected. Mortgage-backed securities and complex derivatives of those investments have been declining in value as more home loans enter some stage of default. That has made investors skittish about buying many other types of complicated Wall Street products, causing the market for those securities to seize up.

"Due to market disruptions that occurred in the second half of the 2007 fiscal year and further deterioration in the 2008 quarter, certain investments held by the funds were either downgraded by rating agencies and/or experienced a decline in fair value," Lehman said in the Wednesday filing.

[antigop]

48. Real Life Adventures comic from Apr. 8

http://wpcomics.washingtonpost.com/client/wpc/rl/2008/04/08/

[mdmc]

95. thanks

for the laugh

[BluePatriot]

54. Washington Mutual

So what do you guys think about Washington Mutual's chances to crash hard? That's our main bank and I'm considering pulling a chunk of savings out to "shelter" in hubby's fun-money Compass Bank account due to the rumblings about WaMu being in trouble. (Something below the 10k mark though, don't want to alert the feds, eh?) I don't trust FDIC further than I can throw them if something happens to WaMu...Opinions on this strategy appreciated...I guess diversification never hurts, but am I being paranoid? And is Compass really in any better shape? Or any other bank for that matter? Should I look into a good mattress?

Links for WaMu reading

http://www.nytimes.com/2008/04/08/business/08cnd-wamu.html?em&ex=1207886400&en=85491db09794a529&ei=5087%0A
http://dealbook.blogs.nytimes.com/2008/04/09/tpg-leads-7-billion-washington-mutual-investment/

[Hugin]

57. ~11:35 ET: Looks like it's another day at the Addames's....

Index Last Change % change
• DJIA 12627.74 +100.48 +0.80%
• NASDAQ 2358.86 +36.74 +1.58%
• S&P 500 1364.91 +10.42 +0.77%

For Today's smooth and mellow Market Mood Maker I dug deeply into the SMW's glove compartment (Too deeply it seems,
I can't find the lyrics on the WHOLE INNERNETS TUBE'S) and emerged with a dusty cassette tape... "Roll On, Truckers" --
Judy Kay "Juice" Newton & Silver Spur (1975).

I chose this song not only to show solidarity with the plight of the Independent Truckers, but, also
because the lyrics resonate in an odd sort of synchronism with this Democratic Primary Season.

[kineneb]

66. another tune

how 'bout the Grateful Dead's Truckin'? Especially the "long, strange trip" part...

Truckin got my chips cashed in. keep truckin, like the do-dah man
Together, more or less in line, just keep truckin on.

Arrows of neon and flashing marquees out on main street.
Chicago, new york, detroit and its all on the same street.
Your typical city involved in a typical daydream
Hang it up and see what tomorrow brings.

Dallas, got a soft machine; houston, too close to new orleans;
New yorks got the ways and means; but just wont let you be, oh no.

Most of the cast that you meet on the streets speak of true love,
Most of the time theyre sittin and cryin at home.
One of these days they know they better get goin
Out of the door and down on the streets all alone.

Truckin, like the do-dah man. once told me youve got to play your hand
Sometimes your cards aint worth a dime, if you dont layem down,

Sometimes the lights all shinin on me;
Other times I can barely see.
Lately it occurs to me what a long, strange trip its been.

What in the world ever became of sweet jane?
She lost her sparkle, you know she isnt the same
Livin on reds, vitamin c, and cocaine,
All a friend can say is aint it a shame?

Truckin, up to buffalo. been thinkin, you got to mellow slow
Takes time, you pick a place to go, and just keep truckin on.

Sittin and starin out of the hotel window.
Got a tip theyre gonna kick the door in again
Id like to get some sleep before I travel,
But if you got a warrant, I guess youre gonna come in.

Busted, down on bourbon street, set up, like a bowlin pin.
Knocked down, it gets to wearin thin. they just wont let you be, oh no.

Youre sick of hangin around and youd like to travel;
Get tired of travelin and you want to settle down.
I guess they cant revoke your soul for tryin,
Get out of the door and light out and look all around.

Sometimes the lights all shinin on me;
Other times I can barely see.
Lately it occurs to me what a long, strange trip its been.

Truckin, Im a goin home. whoa whoa baby, back where I belong,
Back home, sit down and patch my bones, and get back truckin on.
Hey now get back truckin home.

[Hugin]

69. Works for me!

:thumbsup:

[TalkingDog]

88. in honor of the song and the economy

[Demeter]

70. So the Dow Is Allowed to Drop 50 Points Before It's Goosed

and since it dropped those 50 points in the first half hour of trading, somebody decided to give it a royal goose of 150 points, and now as the sun sets slowly in the West, so to will the Dow drift down to a maximum 50 point loss.

Talk about dying by inches!

[Hugin]

72. Yup, and every time the knot gets tighter and more tangled...

Talk about your, "Morning in America". :scared:

These delaying tactics are going to destroy... Have I mentioned there's been tons of wind blowing dust all over
the place lately, one could almost call it a Dust bo... bo... bowl. *gulp*

[Demeter]

79. UPSCALE by James Howard Kunstler

DailyReckoning.com

http://www.kunstler.com/

Things continue to slip, slide, and shift strangely Out There.

Last Wednesday, a bunch of peeved mortgagees protesting government favoritism in the Bear Stearns case entered the lobby of the company’s (soon-to-be-former) headquarters building in midtown Manhattan. While it might not seem like much, I view the symbolic “penetration” of this corporate stronghold as the very first sign of a much broader citizen revolt against the extraordinary protections being shown to crapped-out investment banker boyz – at the expense of millions of equally crapped-out poor shlubs facing the default and re-po of their McDwelling places.

Occupying an office-building lobby peacefully in broad daylight is one thing. Wait until summer gets underway and The New York Post gossip page resumes its coverage of hijinks in the Hamptons. The executives of Goldman Sachs, J.P. Morgan / Chase, and other dealers in fraudulent securities, plus the art world and show biz glitteratti who party together out there, might all find themselves the object of considerable grievance and resentment as the beaching season ramps up, and the limos roll around the charity lobster roasts, and the guests stray down the lawns, chardonnays in hand, to plot divorce from their over-leveraged husbands.... God knows what seekers-of-vengeance will be creepy-crawling the privet plantings along Gin Lane in the crepuscular gloom, searching for trophy wives to garrote.

Perhaps a bankrupt landscaping contractor from Lake Ronkonkoma, recently stiffed by a hedge fund manager over the installation of a half acre of pachysandra, will be arrested on the Wantagh Highway with blood on his sleeves and a high-C piano wire in his pocket. The non-Hampton precincts of Long Island, which make up more than 90 percent of the fish-shaped appendage to New York State, will be full of angry repo victims, and the Hamptons lie at the very dead-end tail of the geographical fish. Will the banker boyz attempt to flee by yacht? And where might they escape to? Newport, Rhode Island? Labrador?

I maintain, of course, that the media (and the public itself) has no idea how quickly things might get weird in this country – or how weird they might get.

Now bear with me while I shift gears. (Recently,) I went to a pretty major environmental conference put on by the Aspen Institute in their odd little mountain town – and nobody needs to tell me how un-correct it was that I flew all the way out to Denver and then drove a rent-a-car the size of a humpback whale deep into the heart of the Rocky Mountains to attend this thing. (I assure you, I wasn’t paid to go.) The Institute grounds – which looked like the set of a 1950s Raymond Massey movie about the future – were thick with many eminentissimos of Climate Change (minus Al Gore) and activists in “green” politics, more generally. The latest frightful measurements of retreating glaciers, vanishing species, and creeping deserts were proffered and everybody was suitably impressed by the acceleration of scary conditions facing the human race.

Being such a formal conference, though, with the putative mission to advance understanding and set agendas-for-action, a great effort was made through the medium of panel discussions to set forth various “initiatives” to deal with all the scariness, especially by enlisting the agencies of the U.S. government – and most especially with the prospect of a new administration sweeping out the detritus of Bush-dom next January.

I confess I found most of these well-intentioned proposals utterly implausible, along with their trains of hopes, wishes, and fantasies. The main conceit is that we can keep all the normal operations of the American Dream humming by some “non-carbon” related energy source – in other words, run Wal-Mart without oil, methane gas, or coal – and that all the forces of government and capital can be marshaled to make that happen. The secondary conceit is that they would accomplish these things in an orderly process, harnessing “new technology,” as though it were a higher sort of school science fair.

My own opinion is that these birds have the scale issue wrong. The exigencies of the Long Emergency imply that virtually everything organized at the grand scale will tend to wobble and fail as the problems of energy scarcity and climate change converge. Institutions from the federal government to Wal-Mart to the University of Arizona will face increasing impotence, incompetence, and bankruptcy. Vesting our hopes in propping up activities run at that scale is bound to be disappointing, to say the least, and the precursor to social upheaval to go a bit further. There’s probably a lot we can do at the finer and more modest scale, but that is not the scale that conferences like this focus on – in particular because so many of the participants are current or former high-up government wonks themselves. Anyway, the scale of global distress tends, by plain inference, to invoke the wish for global “solutions,” however detached from reality they may be.

At the center of all this conferencing was the movement’s lead eco-guru, Amory Lovins of the Rocky Mountain Institute (RMI), located just up Highway 82 from Aspen. Lovins’s long-running emblematic project with that outfit is something they call the “hyper-car,” a car that gets such supernaturally great mileage that it will save the human race’s threatened Happy Motoring program from extinction. The hyper-car program, which RMI still trumpets to this day, has, of course, the unintended consequence of promoting future car dependency – which is about the last thing that America needs – but that hasn’t prevented RMI from pushing it. Beyond that, Lovins’s RMI program-for-America resembles an actuarial exercise in “carbon credits” and other statistics-based fantasies aimed at inducing theoretically rational behavior among the Wal-Mart executives (and “greening” up Wal-Mart has been another of RMI’s consulting projects – I’m not kidding).

Here lies my third dissent from what I heard at the conference: since America is bankrupting itself so comprehensively at every level, the wished-for “funding” for the green rescue program will not be there in any case. Capital, as represented by Wall Street, is itself flying to pieces this year as its stock-in-trade of paper certificates loses legitimacy in the face of the overwhelming fact that the society behind that paper will be decreasingly capable of producing surplus wealth – which is what capital is. The unwind of “positions” now underway among the big bankz is the process of previously anticipated capital accumulation vanishing down a black hole. It will be gone forever.

This is the year we find that out. Bear Stearns was not the only sick puppy in the kennel. When another one wobbles and crashes, will the Federal Reserve step in again and accept its worthless CDO paper as collateral on another $30 billion loan, and another, and another, and so on? And will the individual mortgage default homeowner shlubs just watch all this go down on CNBC without any action beyond “penetrating” the lobby of a Manhattan skyscraper? I don’t think so. What goes down in the Hamptons will go down in Aspen, too.

[Demeter]

80. More From Kunstler

The airlines are dying.
It was not a good week to be at the mercy of America's floundering air travel program. The price of aviation fuel is killing them. They can't fire any more employees or shed anymore pension obligations. There is no elasticity left in the system. Coming back from Denver yesterday, the chaos at the concourse gates was impressive. Nobody knew when or if a given flight would board, and they certainly didn't post any realistic information on the high-def screens at every gate. When asked for updates, the harried gate agents could offer none. So much for computer wizardry. It is interesting to see how passively the public accepts this. For now, they slump like war refugees in the blow-molded plastic seats, numb with fatigue, anxiety, and disappointment. But I wonder if there will be riots in the concourses sometime later this year.

[Hugin]

83. I honestly never expected to...

read something like that written by someone from there.


Shhh... They're all sleeping Demeter. :scared:

[TalkingDog]

89. They are still in the first stage:

Denial: "It can't be happening."

and honestly I think most folks will go to

Bargaining: "Just let me live to see my children graduate."

before they get to

Anger: "Why me? It's not fair."

simply because when you know in your heart of hearts you can't bargain with God, but you sure can bargain with the Banker or a neighbor.

And when the Anger hits...I'm pretty sure it's going to be a BIG ugly.

as for

Depression: "I'm so sad, why bother with anything?"

Acceptance: "It's going to be OK."

I hope it takes a while to get to these two. If I had my way....well, I'll avoid inciting anything today....

[abelenkpe]

91. already bargaining here

Every nite I tuck my babies in to sleep I say:
Please let them live a long healthy happy life....

And hope I'm not asking for too much.
Maybe all parents do this anyway though?

[Hugin]

93. Aw, how sweet...

:)

No, that's not bargaining. That's called 'Hope'.

And with a little encouragement it can grow into the truth. ;)

[Hugin]

92. Probably a good surmise...

I'd also wager a good number of people will be hovering at the "Fulfilling immediate needs" level
of Maslow's pyramid too...

Not many "Self-actualization" opportunities on the horizon.

But, I could be surprised. Occasionally, events will cause leaders to emerge. Let's just hope they're the good type and not to the contrary.

[kickysnana]

94. Anecdote; Some are at angry already.

My Dad's neighbor across the street, (behind some big pine trees) sold his appliance business about 15 years ago and I assume he put his money in "investments". He looks to be about 60. Dad is 82, mom died in January. Dad lets the neighborhood kids use the basketball hoop in his driveway in the evenings to play as he has since I was little. The kids are now, white, black and asian. They feel safe cause he is there and leaves them pretty much alone but banishes druggies and other trouble makers. Other rules are no shouting profanity, no fighting. They have to leave before 10pm. Dad also pumps up bike tires, lets them borrow tools minor repairs to bicycles and the kids sometimes help him with the huge yard.

Last Monday at 9:55 the neighbor called my Dad and told him that he had to go tell the kids to leave because he couldn't sleep. When Dad told them they would be always go before 10 the guy went ballistic and ranted for about 5 minutes. Dad then looked out and the kids had gone. They leave the ball on the patio.

The next morning Dad woke up and open the shade and saw the neighbor coming into the patio and heading for the ball He saw Dad, did a quick Uturn and went back home. Dad told me that when he pulls the shades down at 11pm the he can see the flicker from the neighbors big screen TV through the trees.

[Karenina]

98. Very telling...

PLEASE give your dad a (((big hug))) from an ex-pat, not all that much younger than he, across the big pond.

[Viva_La_Revolution]

102. another: My Boss's Mom's millionaire neighbor...

He went to the hospital several days ago cause he thought he was having a heart attack... turns out it was a panic attack from watching his money bleed away.

[AnneD]

96. I wonder when folks will start...

wildcat strikes. I think that comes somewhere after anger and before acceptance. People sure are getting pissed. The passengers on AA were not happy with the :donut: in line or the hotel room vouchers.

[Demeter]

101. I Think We Need Two Things--A Trigger and a Leader

God knows we've had plenty of trigger issues already--and people have tried to rouse the populace--- but our stalwart Democratic leadership has firmly kept the lid on. The Opposition lacks Leadership! There are many small splinter groups--some with a charismatic figure, others with a consensus and a code of ethics-- but they are fragments that cannot reach out to the great Unwired and unify a ground swell response.

And W is stupid enough, and Cheney is evil enough, that they could nuke Iran. That would be the mother of all triggers, perhaps. If it didn't trigger internal reaction, it should definitely trigger external reaction.

But where is our Leader? We are all sitting tight, hoping that the election brings the cream to the top and that we get a leader with official power and popular support. If we can wait that long.



..............tick, tick, tick,tick.............

How I wish this nation would stop acting like sheep and start acting like adults.

[UpInArms]

106. end o' the day bs

Dow 12,581.98 54.72 (0.44%)
Nasdaq 2,351.70 29.58 (1.27%)
S&P 500 1,360.55 6.06 (0.45%)
10-Yr Bond 3.532% 0.066

NYSE Volume 3,686,184,750
Nasdaq Volume 2,217,130,500

There was no shortage of news Thursday. Some of it was good and some of it was bad. Regardless of the characterization, the stock market had a hopeful view of things for most of Thursday's trade.

In terms of the "good" news, the leading headlines included Wal-Mart (WMT 54.66, +0.52) raising its first quarter EPS guidance, a Banc of America Securities upgrade of the semiconductor sector to Overweight, a better than expected report showing initial claims for the week ended April 5 fell 53K to 357K, a $9 billion buyout offer for Millennium Pharmaceuticals (MLNM 24.34, +7.99) from Japan's Takeda Pharmaceuticals, and a contention from Goldman Sachs's (GS 170.55, -3.59) CEO that we are closer to the end of the credit crisis than the beginning.

On the flip side, the "bad" news included a noticeably weak batch of same-store sales results for March, a $62.3 billion trade deficit for February that was wider than expected and led to lowered GDP forecasts, and news that Lehman Bros. (LEH 40.25, -0.29) disclosed in an SEC filing that it shut down three investment funds whose asset values declined due to the stresses in the market.

Tucked in between these items was a report that Yahoo! (YHOO 28.59, +0.82) was looking at doing a deal with Time Warner's AOL unit in an effort to fend off Microsoft (MSFT 29.11, +0.22). At the same time, it was being reported that Microsoft and News Corp. (NWS 19.44, -0.09) have held discussions about making a joint bid for Yahoo!. To say the least, this story has its share of twists.

For the most part, though, the market locked in on the semiconductor upgrade and Wal-Mart's raised guidance as the driving factors behind Thursday's gains. Fittingly, the retail sector (+1.8%) and semiconductor sector (+1.6%) were among today's biggest gainers.

The strength in retail was curious given the battery of negative same-store sales reports; however, the guidance from Wal-Mart, short-covering activity, and the anticipation that sales will rebound in coming months with the arrival of warmer temperatures and tax rebate checks carried the retail stocks higher.

Strikingly, the financial sector, which dipped 0.4%, was one of just three sectors that didn't end the day higher. Utilities, down 0.6%, and telecom services, down 0.1%, were the other two. Today's losses marked the third straight loss for the financial sector, which has slipped 3.8% since Monday's close.

The technology sector, which jumped 1.5% on the back of strength in the semiconductor stocks and big-cap issues, acted as an effective offset to the weakness in financials. Similarly, strength in airline stocks, which rebounded from their recent drubbing, helped give the broader market a positive tilt Thursday.

At their highs for the session, the Dow, Nasdaq and S&P were up 122, 42 and 13 points, respectively. Some late selling pared most of the Dow's gains until a closing volley of buying interest propped the major indices comfortably above the unchanged mark at the closing bell. DJ30 +54.72 DJTA +1.4% NASDAQ +29.58 NQ100 +1.5% R2K +1.3% SP400 +1.3% SP500 +6.06 NASDAQ Dec/Adv/Vol 1172/1749/2.22 bln NYSE Dec/Adv/Vol 1171/1923/1.25 bln

3:25 pm : The stock market approached its session high and then ran into some selling pressure. Since shortly after the opening bell, the stock market has maintained a bullish bias. Financials, on the other hand, have seen more swings. The sector was up as much as 1.2% and down as much 1.2%. It is currently posting a modest loss of 0.3%.

Looking ahead, Friday's headline event will be an earnings report from bellwether General Electric (GE 36.89, +0.45)--which holds the second heaviest weighting in the S&P 500 after Exxon Mobil (XOM 89.54, -0.16). Analysts estimate GE earned $0.51 per share in the first quarter, marking a 16% increase year-over-year. DJ30 +79.80 NASDAQ +33.20 SP500 +8.70 NASDAQ Dec/Adv/Vol 1168/1715/1.81 bln NYSE Dec/Adv/Vol 1153/1936/990 mln

2:55 pm : The latest selling pressure eases as the major indices try to regain lost ground. The small-cap Russell 2000 Index (+1.4%) is outperforming its large-cap counterparts by a large margin.

The Fed announced the auction results of its latest Term Securities Lending Facility. The Fed offered $50 billion, with a total of $33.95 billion in bids submitted, making the bid-to-cover ratio 0.68. The stop-out rate -- which is the lowest rate the Fed accepted -- came in at 0.25%. The low stop-out rate and bid-to-cover ratio indicate there was not much demand, meaning financial firms may not be desperate.DJ30 +88.91 NASDAQ +34.61 SP500 +9.07 NASDAQ Dec/Adv/Vol 1119/1731/1.66 bln NYSE Dec/Adv/Vol 1089/1984/892 mln

2:30 pm : The stock market slides off its best level, although it continues to post a modest gain. A dip in financial stocks (-0.3%) is weighing on the broader market.

The best performing industry group is home improvement retail (+3.9%) -- components include Home Depot (HD 28.56, +0.89), Lowe's (LOW 24.57, +1.24) and Sherwin Williams (SHW 54.94, +0.75). The group has outperformed this year, gaining 6.4% compared to the market's 7.3% decline. However, when compared to a year ago, the group is down 23.4% versus the market's decline of 5.9%.DJ30 +75.40 NASDAQ +30.12 SP500 +6.82 NASDAQ Dec/Adv/Vol 1151/1687/1.54 bln NYSE Dec/Adv/Vol 1143/1912/828 mln

2:00 pm : The major indices establish new session highs. Tech stocks (+2.0%) are posting the largest gain, with consumer discretionary (+1.5%) close behind thanks to strength in retailers (+2.5%).

Within the S&P 500, 67% of stocks are trending higher. General Electric (GE 36.95, +0.51) is leading the way ahead of its earnings report on Friday morning. Analysts expect the conglomerate's earnings will rise 16% year-over-year. Exxon Mobil (XOM 89.37, -0.33) is the worst performing stock.DJ30 +101.29 NASDAQ +37.66 SP500 +10.35 NASDAQ Dec/Adv/Vol 1085/1731/1.41 bln NYSE Dec/Adv/Vol 1011/2042/756 mln