STOCK MARKET WATCH, Thursday April 17

[ozymandius]

Source: du

STOCK MARKET WATCH, Thursday April 17, 2008

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 279
DAYS SINCE DEMOCRACY DIED (12/12/00) 2643 DAYS
WHERE'S OSAMA BIN-LADEN? 2368 DAYS
DAYS SINCE ENRON COLLAPSE = 2659
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 16, 2008

Dow... 12,619.27 +256.80 (+2.08%)
Nasdaq... 2,350.11 +64.07 (+2.80%)
S&P 500... 1,364.71 +30.28 (+2.27%)
Gold future... 948.30 +16.30 (+1.72%)
30-Year Bond 4.53% +0.12 (+2.72%)
10-Yr Bond... 3.70% +0.13 (+3.53%)






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. Market WrapUp: Show Me the (Commodity) Bubble! Part II

BY CHRIS PUPLAVA

Last week’s WrapUp provoked a lot of responses from both the commodity bulls and bears. I had hoped to get ahead of the likely bear comments by addressing several of the arguments that they would likely claim but ran out of time and space as last week’s article was already fairly long. However, I did address one reader’s comments by e-mail and will be using that e-mail exchange as a follow-up to last week’s article to present a more in-depth analysis of the commodity bull market versus bubble debate. The comments made by the reader are presented below with my original responses as well as additional material.

Dear Mr. X,

First off let me thank you for taking the time to share your thoughts, and particularly so as they are contrary to my own. The smartest investors are those who keep an open mind and listen to both sides of a story, which is why I appreciate you sending your thoughts from the opposing side. One of the things I had hoped to write about was what the commodity bulls should be looking for in terms of warning signs of a bubble as the party will not go on forever, but run out of time and space. However, I would like to address some of the points you made.

“Your argument that we are not in a bubble is ridiculous. Since it hasn't blown yet simply means it will go on longer and blow bigger than it would have otherwise. It’s amazing that virtually all the commodities have suddenly hit this sudden supply/demand cycle at the same time. But I guess it's "Different this time."

My response to your statement is I am not amazed at all. The industrialization of major nations brings about demand for all types of resources for building their infrastructure from copper, lead, zinc, iron ore, oil, as well as food demand when diets improve. We’ve seen these periods before, but more importantly, the major driving force is not only demand but currency debasement that results in inflation/disinflation cycles. These alternating periods of inflation and disinflation typically last 20 years, though with bumps along the way. Secular inflation and disinflationary periods are associated with nearly all commodities rising in inflationary periods and nearly all falling in disinflationary periods. Were you amazed that virtually all commodity prices fell from 1980-2000? That period was the other side of the price appreciation coin that most forget.

.....

There are several causes for these secular periods of inflation and deflation. Two developments associated with secular periods of inflation are warfare, which puts a strain on resources that often leads to shortages, as well loose monetary policy relative to GDP. Though both warfare and loose monetary policy can be separate events, they often go hand in hand as governments increase national debt levels to finance wars. These links are shown in the following two figures with the first showing the link between monetary policy and inflation. As seen below, the secular periods of inflation and disinflation were associated with loose monetary policy during the inflationary period (1960-1980) and a tightening of monetary policy during the disinflationary period (1980-1995). The second figure below shows the secular inflationary trends over the last 100 years that are associated with major wars with the newest inflationary trend being characterized by the industrialization of China and India as well as the Iraq War.

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

[ozymandius]

2. Today's Reports

08:30 Initial Claims 04/12
Briefing.com 385K
Consensus 375K
Prior 357K

10:00 Leading Indicators Mar
Briefing.com 0.2%
Consensus 0.1%
Prior -0.3%

10:00 Philadelphia Fed Apr
Briefing.com -13.0
Consensus -15.0
Prior -17.4

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

[UpInArms]

34. Initial Claims in @ 372,000 - last wk rev'd up 2k

10. U.S. 4-wk. avg. continuing jobless claims rise to 2.94 mln
8:30 AM ET, Apr 17, 2008

16. U.S. continuing jobless claims rise 26,000 to 2.98 million
8:30 AM ET, Apr 17, 2008

17. U.S. 4-wk. avg. initial jobless claims fall 750 to 376,000
8:30 AM ET, Apr 17, 2008

18. U.S. weekly initial jobless claims rise 17,000 to 372,000
8:30 AM ET, Apr 17, 2008

[AnneD]

70. Today's Funnies.....

I thought you guys would like a good laugh.....

17,000 file applications for unemployment benefits

WASHINGTON — The number of newly laid off workers filing claims for unemployment benefits last week increased by more than had been expected, reflecting pressure from the weak economy.

<snip>

Aside from the period in the fall of 2005 after Hurricane Katrina hit, the four-week average for claims has risen to levels last seen in 2003 when the country was mired in a long jobless recovery after the 2001 recession.

The unemployment rate jumped to 5.1 percent in March as businesses cut 80,000 jobs, the biggest drop in payrolls in five years. Many economists believe that was the most dramatic indication to date that the country has fallen into a recession.

Economists believe that the downturn should be short and mild, ending this summer with the help of the economic stimulus package that will send rebate checks to 130 million households. Still, they are looking for the unemployment rate to rise to 6 percent before stronger economic growth starts generating renewed hiring.

<snip>

http://www.chron.com/disp/story.mpl/business/5708377.html

Short, mild ending this summer with the rebate checks.....:rofl::rofl::rofl: STOP IT!!! Your killing me here.

Next thing I know, you'll say the surge worked, you need 100,000 more troops and another 50 billion to wrap up the war in Iraq :rofl::rofl::rofl:

Take this comedy show on the road....In fact take my country.... please. Oh wait-you already have.

[Karenina]

77. Mo Money! Mo Money! Here ya go...

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3271139

US needs more war funds by June-Bush budget chief Updated at 3:18 PM
Source: Reuters

WASHINGTON, April 16 (Reuters) - The White House on Wednesday warned that the U.S. Congress must approve additional money for the wars in Iraq and Afghanistan by the end of May or risk the start of Defense Department layoff notices.

"Congress needs to fund our troops by Memorial Day," White House Budget Director Jim Nussle told the Senate Appropriations Committee. "Failure to act quickly could result in an unfortunate replay of last December, when furlough warnings were issued" by the Pentagon, Nussle added.

The Republican budget director was referring to layoff warnings for some noncombat personnel at the end of 2007, just before Congress finished work on $70 billion in additional money for the wars.

That $70 billion was a portion of about $172 billion requested early last year by President George W. Bush for combat in Iraq and Afghanistan.

Read more: http://www.alertnet.org/thenews/newsdesk/N16345945.htm

[Karenina]

89. And the "HITS" keep coming!

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x3184581

[UpInArms]

57. U.S. April Philly Fed index falls to -24.9 vs. -17.4 March

01. Philly Fed negative for 5 straight months
10:02 AM ET, Apr 17, 2008

02. April Philly Fed new orders -18.8 vs. -9.3
10:02 AM ET, Apr 17, 2008

03. U.S. March leading indicators rise 0.1% vs 0.3% drop in Feb.
10:02 AM ET, Apr 17, 2008

04. U.S. leading indicators point to weak growth
10:02 AM ET, Apr 17, 2008

05. U.S. April Philly Fed index falls to -24.9 vs. -17.4 March
10:01 AM ET, Apr 17, 2008

[ozymandius]

3. Oil hits another record high as dollar tumbles to record low

Oil prices hit all-time highs above $115 a barrel Thursday with reports that oil and gasoline stocks in the United States were lower than expected and as the dollar hit record lows.

Light, sweet crude for May delivery rose as high as $115.52 a barrel in electronic trading on the New York Mercantile Exchange. It eased back to $115.23 a barrel by midday in Europe, up 30 cents.

On Wednesday, the contract settled at $114.93 a barrel.

In London, Brent crude futures were up 43 cents to $113.09 a barrel on the ICE Futures exchange in London.

Oil and other commodities continued to attract investors as the values of the dollar continued falling and as a hedge against inflation. A weaker dollar also makes oil cheaper to investors overseas.

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

[ozymandius]

4. IBM's 1Q earnings jump 26 percent; company raises outlook

BOSTON - Shares of IBM Corp. surged to a six-year high after the technology company surprised analysts by reporting a 26 percent jump in quarterly earnings and boosting its full-year forecast.

The provider of technology services, software and server computers said it earned $2.32 billion, or $1.65 per share, in the first quarter. That was well ahead of its profit of $1.84 billion, or $1.21 per share, in the same period of 2007.

Revenue rose 11 percent to $24.5 billion, better than the $23.7 billion expected by analysts surveyed by Thomson Financial. The consensus earnings forecast was $1.45 per share.

IBM's revenue was boosted by ongoing weakness in the dollar, since deals done in other currencies now bring in more greenbacks. Armonk, N.Y.-based IBM said its revenue would have risen just 4 percent if not for currency fluctuations.

http://news.yahoo.com/s/ap/20080417/ap_on_hi_te/earns_ibm

[ozymandius]

5. Wall St futures dip; eyes on Merrill Lynch, Google (sucker rally yesterday)

FRANKFURT (Reuters) - Stock index futures dipped before the start of Wall Street trading on Thursday, pointing to a downward recoil after the previous session's strong rally.

Quarterly earnings are due from more than 30 S&P 500 companies. Europe-based traders and analysts singled out Merrill Lynch (MER.N: Quote, Profile, Research), due before U.S. stock markets open at 1330 GMT, and Google (GOOG.O: Quote, Profile, Research), after Wall Street's close, as the day's two key reports to watch.

At 5:30 a.m. EDT, Dow Jones futures were down 0.3 percent, S&P 500 futures were down 0.4 percent and Nasdaq futures traded 0.3 percent lower.

.....

Sonnenschein said, however, that Thursday's dip in U.S. stock index futures could reflect a degree of investor caution triggered by JPMorgan Chief Executive Jamie Dimon's remarks that financial markets face a long period of uncertainty and that these markets, and an economy that may be in recession, will weigh on results all year, if not longer.

(at least until the next sucker rally)

http://www.reuters.com/article/businessNews/idUSL1462313520080417

[ozymandius]

9. Futures slip ahead of earnings deluge

LONDON (CNNMoney.com) -- Stock futures slipped early Thursday as investors caught their breath after the previous session's strong gains and awaited another batch of corporate earnings.

.....

The earnings deluge continues with quarterly results due from financial giant Merrill Lynch (MER, Fortune 500). The company, due to report before the market open, is expected to post a steep loss.

Dow components Pfizer (PFE, Fortune 500) and United Tech (UTX, Fortune 500) also are slated to post results before the opening bell. Google (GOOG, Fortune 500) and AMD (AMD, Fortune 500) are set to release earnings after the market close.

http://money.cnn.com/2008/04/17/markets/stockswatch/index.htm?postversion=2008041705

[ozymandius]

6. SLM Has Loss as Student Loan Business Looks `Broken' (Update1)

April 17 (Bloomberg) -- SLM Corp., the largest U.S. student- loan provider, recorded its third consecutive quarterly loss as gains from selling loans to investors dried up. The company said its new loans are unprofitable.

SLM, known as Sallie Mae, recorded a first-quarter net loss of $103.8 million, or 28 cents a share, compared with net income of $116.2 million, or 26 cents, a year earlier. The Reston, Virginia-based company said in a statement that so-called core earnings, which exclude gains and losses from derivative instruments, fell to 34 cents a share, missing the 37-cent average estimate of eight analysts surveyed by Bloomberg.

Sallie Mae has been pounded by the collapse of a $60-a-share buyout bid for the company and investors' shunning of asset- backed debt, including bonds the company relies on to finance new student loans. Sallie Mae didn't have any first-quarter gains from packaging student loans for investors, compared with a $367.3 million infusion the year before.

.....

A year ago, Sallie Mae accepted a $25.3 billion buyout offer from J.C. Flowers & Co., Bank of America Corp. and JPMorgan Chase & Co. The deal fell apart after Congress passed, and President George W. Bush signed, a measure cutting subsidies to student- loan providers. Flowers withdrew its offer, saying the lower government backing would materially harm Sallie Mae's profitability.

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

[ozymandius]

7. US economic outlook 'worsening'

Conditions in the US economy have worsened noticeably in the past six weeks, the Federal Reserve said in its closely-followed Beige Book report.

The central bank's regular snapshot of business activity across the US described "weaker" conditions and "softening" consumer spending.

The report also described the troubled housing market as "anaemic".

http://news.bbc.co.uk/2/hi/business/7351839.stm

-Really nothing ground-breaking with this news.

[TalkingDog]

48. What? How utterly shocking. It's all so.....unexpected!!!! n/t

[ozymandius]

8. Anthem Blue Cross sued over rescissions

The state's largest for-profit health insurer, Anthem Blue Cross, was accused Wednesday of a widespread pattern of false advertising and fraud in a $1-billion lawsuit that claims that the company's coverage "is largely illusory."

Los Angeles City Atty. Rocky Delgadillo alleged in the suit that the insurer sold people false promises of coverage and concealed a scheme to renege on policies for those diagnosed with serious and often expensive medical conditions, including cancer and congestive heart failure. The suit says more than 500,000 people were tricked into buying individual and family policies from Blue Cross.

.....

The suit, filed in Los Angeles County Superior Court, accuses Blue Cross and WellPoint of violating more than 25 state and federal laws. It demands restitution for patients who were left with medical bills and seeks more than $1 billion in penalties.

The suit identifies allegedly illegal practices that were brought to light in Times articles highlighting problems associated with the cancellation -- known as rescission -- of the policies of sick patients.

.....

Blue Cross, she said, told her it dropped her for failing to disclose on her application that she had had breast cancer 11 years earlier. Thompson said the application had asked for 10 years of medical history. Still, she said, she asked the agent whether she needed to include the information and he told her no.

http://www.latimes.com/business/printedition/la-fi-insure17apr17,0,4986858.story

[DemReadingDU]

37. Uh oh. I have Anthem in Ohio

Although I am healthy, I hope I don't have anything minor in my medical record that Anthem will refuse coverage for something in the future.

[Dr.Phool]

49. Sounds like standard insurance policy to me.

Take money. Deny Claim. Cancel policy. Give execs a big bonus.

Rinse and repeat as long as you can get away with it.

[DemReadingDU]

10. National Century trial, Columbus Ohio, One convict out of jail

4/16/08 Judge lets one convict out of jail

An admitted bank robber's story about former National Century executives' plans to escape to Aruba was so detailed that a federal judge said he couldn't risk letting them all go free on bond again.

But James E. Dierker Jr., National Century Financial Enterprise's former marketing director, is different, federal Judge Algenon L. Marbley said.

Dierker wasn't as high-ranking as the other convicts, nor as culpable in the company's fraud, the judge said. And Dierker could prove that he had not talked to the others from the time he left National Century in November 2002 until seeing them again in court.

“I'm also persuaded by the 100 letters sent in (to the court) that show he is tied to the community,” Marbley said after a nine-hour hearing today.

So Dierker will be allowed out. Family, friends and Victoria's Secret co-workers who wrote the letters packed the courtroom and wept and hugged one another at the news.

Meanwhile, former National Century executives Donald H. Ayers, Roger S. Faulkenberry and Randolph Speer will remain in the Franklin County jail. Today, they broke their silence and took the stand for the first time, saying there never was an escape plan.

Company founder Lance K. Poulsen was in a holding cell at the courthouse and could have denied making claims of an escape plan, but he was never called.

Dierker's freedom is temporary.

The Powell man is expected to be incarcerated after sentencing in late spring or early summer.

The whereabouts of another co-defendant, Rebecca S. Parrett, remain unknown. She never showed up in Arizona, where she was allowed to return for house arrest, in late March. That, coupled with claims by Robert Cihy, changed everything for the others, Marbley said.

Cihy, the admitted bank robber and crack-cocaine user, also testified today. In the end, Cihy's testimony proved more credible than Ayers', the judge said.

Cihy said he and Poulsen bonded while they sat in neighboring cells in the Ross County jail. Both were “anti-government,” and Poulsen boasted that Cihy should view him as a hero because National Century's $1.9 billion loss of investors' funds “messed up pension funds of police officers.”

He said Poulsen told him about an escape plan hatched by him and the other defendants, using a cruise ship and getting off in Aruba. Parrett's escape “put a kink in those plans,” Cihy said.

Ayers wasn't as believable because he had lied before, about not having a safe in his home where he had hidden a substantial amount of money, Assistant U.S. Attorney Doug Squires said.

And Ayers also removed $800,000 from a bank account after being convicted, the judge noted. The money was for past and future legal fees, he said.

http://dispatch.com/live/content/local_news/stories/2008/04/16/natcen16.html?sid=101



link backwards to previous articles...
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3270348&mesg_id=3270411

[donkeyotay]

67. Several possibilities for Rebecca Parrett

She was married to Donald Ayers, and he played a central role in all this crime. So, what's happened to the former Mrs. Ayers? A) She's living in Aruba, B) She's been murdered to keep her quiet, or C) She's been kidnapped to keep Donald Ayers quiet. I suppose she could have met with foul play from one of the people they harmed with their schemes, or it could just be an unfortunate coincidence.

[Demeter]

81. This Would Be Unbelievable on TV

Mostly because it would zip over the heads of the production crew and audience....not being dumbed down to 2nd grade level....

[Demeter]

11. Why Wall Street Socialism Will Fail / Kevin Phillips

http://www.huffingtonpost.com/kevin-phillips/why-wall-street-socialism_b_96772.html

Socialism, we are told, is the naiveté of youth, and a fallacious economics the United States has luckily spurned. The late Seymour Lipset, an well-known academician, penned a book in 2001 entitled It Didn't Happen Here: Why Socialism Failed in the United States. Alas, nobody ever told the leaders of American finance. Whereas the old style of socialism elected no more than a handful of mayors and congressmen, Washington has now embraced a new variety that could not be more different in its class consciousness and privileged sponsorship.

I am talking, of course, about the collectivization of financial risk being promulgated by the Federal Reserve Board and the U.S. Treasury Department and applauded in pin-striped precincts from Park Avenue to Pacific Heights. Described as Wall Street Socialism by the gauche and more precisely identified as the "socialization of risk" by sophisticates, the new fashion leaves the profits of finance in private hands as of yore. It is only the "risk" -- of collapsed currencies, flawed speculation, busted hedge funds or the greedy misjudgments of large banks or brokerage firms -- that is quietly taken up by government entities and all too often shifted to taxpayers who do not understand the pompous phraseology but know full well that Washington will never bail out their hardware store or the widget plant where their son works.

This has been going on for decades -- a major reason why finance has grown and prospered so much compared with most other industries. But it's only been so boldly and shamelessly embraced in the last few weeks. The Federal Reserve insists that "inter-connections" require rescuing large institutions that might knock down other entangled financial dominoes. However, these would not have been so cocky or so inter-connected in their web-spinning if the Fed had not allowed so much greed and gamesmanship for so long. Ex-Fed Chairman Alan Greenspan is often singled out as a culprit, but most of what he did was what most of the financial sector wanted. They, too, loved making 4th of July speeches about the glories of free enterprise and free -- market profits while counting on the government to collectivize the perils of risk. Big, fat and dumb financial institutions could count on being big, fat and bailed-out. There was a time in the annals of American finance when this kind of practice would have been unacceptable -- indeed, serious economists like Joseph Schumpeter recognized that "creative destruction" was part of a vital capitalism. Painful as the depression of the early 1930s was, its creative destruction so revitalized U.S. finance and enterprise that by 1950, the U.S. economy was the kingpin of the post-World War Two world, vital and vibrant.

Even the sharp 30% Wall Street correction in 1969-1970 turned out to be a financial purge that refreshed. In the period between 1969 and 1970, the twenty-eight largest hedge funds saw 70 percent of their assets disappear, and roughly one hundred brokerage firms were acquired or disappeared. Then came the 1980-82 period, when Federal Reserve Board chairman Paul Volcker broke the back of runaway inflation by putting the stock market and the U.S. financial system through the wringer with interest rates that hit a brutal 18 percent. Adjusted for inflation, the Dow-Jones Industrial Average lost some nearly half of its value between 1978 and its bottom in the summer of 1982. Business Week even ran a famous cover story on "the death of equities." However, far from falling into a grave, equities rose for two decades in what became the biggest bull market in American history....But this is where Risk Socialism began to rear its head. The dangers of creative destruction in the marketplace were rejected. Bail-outs and government intervention became the norm. Big investors were upheld through everything from foreign currency bail-outs to the rescue of major banks. In 1998, the Federal Reserve arranged a bail-out of a well-connected hedge fund and now in 2008 it's katy-bar-the-door in Washington aid for the financially undeserving. And hardly anyone stops to figure out that the quarter-century suspension of anything resembling creative destruction or traditional market forces is the culprit. The inevitable chimera of economic collectivization is coming undone.

Will ordinary Americans pay much of the price? Almost certainly. Should they blame what happens on marketplace forces? No, because the historical operation of such forces has been stymied and suspended. Should they blame the political and financial proponents of Risk Socialism? Yes, because the longtime genius of American capitalism may be on its 21st century deathbed.

Kevin Phillips's new book, Bad Money: Reckless Finance, Failed Politics and the Global Crisis of American Capitalism, was just published by Viking.

[DemReadingDU]

14. Phillips was on NPR

4/15/08 Steve Inskeep talks to author Kevin Phillips about his new book, Bad Money. Phillips argues in the book that the U.S. economy is in danger because of its reliance on the financial industry. He also believes that Wall Street has steered the nation toward greater debt.

http://www.npr.org/templates/story/story.php?storyId=89642189

It was very good!



link for Phillips book
http://www.amazon.com/Bad-Money-Reckless-Politics-Capitalism/dp/0670019070

[Tansy_Gold]

45. Kevin Phillips on financial market "surges"

This is from Phillips' Wealth and Democracy: A political history of the American rich," (c) 2001, about the impact technology has on wealth creation (p. 256):

"By this numerology the high-tech crest of the 1990s -- global but led by the U.S. -- was the sixth wave. Each has overshadowed its predecessor, and the surge built around the microprocessor and Internet revolution was no exception despite the chastening it received in 2000-2001.

"Not that any of these waves, including the tsunami of the 1990s, rested on technological breakthroughs alone. Each, as we have seen, also involved a parallel increase in the instruments, velocity, and volume of the financial markets. New financial formulae and techniques heighted -- arguably inebriated -- the markets' exuberance in valuing the emerging technology. The Austrian economist Joseph Schumpeter, in particular, viewed speculative excesses as tending to cluster around both phenomena -- major developments in technology, but also financial and other innovations that 'transformed the economic structure and upset the pre-existing state of things.'

"At their millennial peak the new technology fortunes clearly enjoyed another such synergy. By the late 1990s the financial sector, for its own avid use, had become one of the largest purchasers of computers and software. These had become the essential electronic brain cells and motor neurons of arbitrage, relectless securitization (of everything from bundled snowmobile loans to the expected lifetime earnings of sports figures), and derivative instruments formulated to hedge this or that hazard. Like earlier waves, the nineties also required ample credit and surges of liquidity, imprecise stimuli that jumped the usual fence-lines of money-supply definition.*"

The * is to Phillips' footnote --

"* Liquidity itself is one of the more socially discerning forms of money. As furnished in recent years, it is almost always found hovering fondly around foolish bankers, clumsy speculators, and stock markets gashed by rampaging bears. It is rarely found in ruined farm districts or cities where giant corporations have laid off 20,000 employees."


The printed page provides no :sarcasm: label.



Tansy Gold, who would almost be tempted to accuse Mr. Phillips of, er, bitterness.

[Demeter]

52. Good Quote for the Day There, Tansy Gold!

and great parting shot!

There's a saying in England--you are what you drink, and I'm a bitter man! (Regarding the pub beverage known as "bitter")

[Demeter]

12. Credit Default Swaps and Bank Leverage

http://www.nakedcapitalism.com/2008/04/credit-default-swaps-and-bank-leverage.html


The Financial Times reports that that $45 trillion figure that most of us have been using for the size of the credit default swaps market is woefully dated. The International Swaps and Derivatives Association will announce today that outstanding contracts now total $62 trillion, up from $34.5 trillion a year ago...

Martin Mayer makes an interesting comment on the BSC debacle and leverage generally in this week's issue of Barrons:

In the OTC derivatives market, people who want to get out of their previous trades have to offset the obligations of that trade by creating a new instrument with a new counterparty. Take a credit-default swap, by which each party guarantees to accept the payout on a debt instrument held by the other party. It's an insurance instrument, with some differences: The holder of the insured instrument can sell it, and the new owner becomes the beneficiary of the insurance. And the insurer may find someone who will accept a lower premium to take the burden of the insurance, allowing him to lay off his risk at an immediate profit. The one trade thus generates two new instruments, with four new counterparties, and as the daisy chain of reinsurance expands, the numbers become ridiculous: $41 trillion face value of credit-default swaps... Once you begin to remove individual flower girls from the daisy chain of credit swaps, you don't know who will wind up with obligations they thought they had insured against and they can't meet.

MORE AT LINK...HIGHLY TECHNICAL, BUT DAMNING

[Demeter]

13. Graph of Interbank Spreads Suggests Financial Crisis Continues Unabated

http://content.ksg.harvard.edu/blog/jeff_frankels_weblog/2008/04/15/graph-of-interbank-spreads-suggests-financial-crisis-continues-unabated/

While some aspects of the subprime mortgage crisis were predictable, the freezing up the most liquid risk-free markets in the world was not. The illiquidity has been especially striking in the interbank market. The following chart was kindly made available by the Institute of International Finance, an association of international banks and other financial institutions, in Washington, D.C. Their Capital Markets Monitor reports in April: “Credit and equity markets have recovered somewhat, after a series of central banks’ moves to provide liquidity and safeguard systemic stability. However, tension in term interbank markets remains.”


<50>

I see three interesting lessons from the chart.

· The most important one, of course, is simply that the spreads shot up so abruptly last August, and that they remain very high. The have come down twice, most sharply in response to central bank measures in December-January, but they have also relapsed twice. It is extraordinary that even large banks are still so uncertain of their environment that they are reluctant to lend to each other. Not a good sign.

· The second interesting point one might glean from the chart is that each of the three times that the spreads have risen sharply over the last year, the spread in the UK has gone up somewhat more than the Euroland spread, with the Fed somewhere in between. One might use these differences to pass invidious judgment on how well the three central banks have handled the crisis.

· The third point, which dominates the second, is that the correlation across countries is very high. The three lines overall move closely together. This means that even though the interbank market has broken down in an important way that we did not think could happen, the banking system internationally is as tightly linked as ever. Contagion is everything. Even though the problem originated in the US (the sub-prime mortgage crisis last summer), you couldn’t prove it by this graph

[UpInArms]

25. Three-mth dollar Libor jumps on rate-setting worry

http://www.reuters.com/article/bondsNews/idUSL1786735520080417?sp=true

LONDON, April 17 (Reuters) - The interbank cost of borrowing dollars posted its biggest gain in eight months on Thursday, according to the British Bankers Association, which has accelerated a review of how Libor, a key reference interest rate, is set.

The market had been bracing for a higher fixing after the that the BBA said late on Wednesday it would exclude from the process any banks that distort the market and had launched a review of the rate setting process, but gave no indication of when it would be completed.

Speculation has rumbled over whether some have banks have understated their dollar-based borrowing costs in order to mask their appetite for cash.

Three-month dollar Libor rose to 2.81750 percent from 2.73375 percent -- its biggest rise since August 2007.

...more...

[Demeter]

15. Safe as Houses? (Banks and FDIC)

http://www.financialarmageddon.com/2008/04/how-safe-is-my.html

Events of the past 12 months should have made it quite clear to everyone that incorrect assumptions can be costly and dangerous. Some investors have discovered the hard way, for example, that certain funds and securities that were allegedly as safe as houses -- oops, bad example -- were much riskier than their brokers and others claimed. Many people (at least those who haven't read Financial Armageddon) are about to learn something else: the money they hold on deposit at a commercial bank is not as far out of harm's way as they might think.

In a Financial Sense University editorial, "How Safe is My FDIC-Insured Bank Account?" Dr. Chris Martenson, editor of the Martenson report, offers up some eye-opening insights.

Your bank account may not be as safe as you think (or hope). Taking a deeper look at the legal details and the financial depth of the FDIC reveals several troubling details that call into question how the FDIC would fare during a true banking crisis.

The US is coming out of a period of unusually low banking stress and failures. Since it is typical human behavior to let one’s guard down during tranquil periods, we might legitimately ask if this has happened with respect to the FDIC.

Before we address that though, we probably should understand bit more about the FDIC. There’s a fair bit of both good and bad information about the FDIC floating around out on the internet, so I thought we could stick to the facts. In this article I even go straight into the language of the 1933 FDIC act itself so that you can decide for yourself whether it’s worth spending any of your precious concern on this matter.

What is the FDIC?

Let's begin with a snippet from Wikipedia on the FDIC:

The Federal Deposit Insurance Corporation (FDIC) is a United States government corporation created by the Glass-Steagall Act of 1933. The vast number of bank failures in the Great Depression spurred the United States Congress into creating an institution which would guarantee deposits held by commercial banks, inspired by the Commonwealth of Massachusetts and its Depositors Insurance Fund (DIF). The FDIC provides deposit insurance which currently guarantees checking and savings deposits in member banks up to $100,000 per depositor.

Accounts at different banks are insured separately. One person could keep $100,000 in accounts at two separate banks and be insured for a total of $200,000. Also, accounts in different ownerships (such as beneficial ownership, trusts, and joint accounts) can be considered separately for the $100,000 insurance limit. The Federal Deposit Insurance Reform Act raised the amount of insurance for an Individual Retirement Account to $250,000.

The two most common methods employed by FDIC in cases of insolvency or illiquidity are the:

• Payoff Method, in which insured deposits are paid by the FDIC, which attempts to recover its payments by liquidating the receivership estate of the failed bank.

• Purchase and Assumption Method, in which all deposits (liabilities) are assumed by an open bank, which also purchases some or all of the failed bank's loans (assets).

In short, if your bank gets in trouble, the FDIC will ride in and either pay off your account (up to $100k), or sell your bank off to another bank which will then assume the usual duties of your bank. Under normal circumstances, a bank failure should not impact you in the least. But these are not normal times. We might reasonably ask how the FDIC would respond during a major banking crisis. After all, this is our money we’re talking about. Faith and hope are great at weddings and sporting events, but they should not form the basis of our strategy for handling our finances.

How many bank failures could the FDIC handle at once?

When we take a look at the financials of the FDIC (Figure 1) we see that the level of insurance (in circles below) is not terribly high either, when viewed as an aggregate amount (in blue) or on a percentage basis (in red).

Figure 1.

Fdic_fund

The 1.22% Reserve Ratio means that for every dollar in your bank account, the FDIC has 1.22 cents “in reserve” ready to cover your potential losses. This has proved to be an ample amount during the period of stability we’ve recently had, but it doesn’t seem particularly significant, considering the recent headlines about banking losses (Spring of 2008).

Consider, for a moment, the collapse of Bear Stearns. In order to assume that bank, JP Morgan asked for, and received, a special waiver from the Federal Reserve to keep $400 billion of suspect of Bear Stearn's assets off the books of JPM (page 4 of the linked document). While JPM may have been padding the books a little bit here, due to the uncertainty of how bad the wreckage might turn out to be, $400 billion dwarfs the $52 billion reserves of the FDIC.

If one medium-large bank collapse could wipe out the FDIC by a factor of nearly 8, what do you suppose would happen if there were multiple, simultaneous bank failures? At this point, my guess would be that Congress would be sorely tempted to borrow additional funds to remedy the situation, but I worry that hardship and losses might result while the laws were amended and sufficient funding avenues identified. So how many bank failures could the FDIC endure? The data suggests slightly fewer than one big one.

I thought the FDIC has full faith and credit backing by the US treasury?

Actually, no, it does not. The language in Section 14 of the FDIC Act is clear and unambiguous (emphasis mine):

(a) BORROWING FROM TREASURY.-- The Corporation is authorized to borrow from the Treasury, and the Secretary of the Treasury is authorized and directed to loan to the Corporation on such terms as may be fixed by the Corporation and the Secretary, such funds as in the judgment of the Board of Directors of the Corporation are from time to time required for insurance purposes, not exceeding in the aggregate $30,000,000,000 outstanding at any one time, subject to the approval of the Secretary of the Treasury: Provided, That the rate of interest to be charged in connection with any loan made pursuant to this subsection shall not be less than an amount determined by the Secretary of the Treasury, taking into consideration current market yields on outstanding marketable obligations of the United States of comparable maturities.

Now that’s pretty interesting. First, that any additional money from the federal government is not a guarantee, but rather a loan, which will only be made subject to the approval of the Secretary of the Treasury. Further, that the loan is to be made at “current market yields." What do you suppose would happen to US Treasury yields during a true emergency? I can imagine a few scenarios where they might skyrocket, and this would serve to compound the difficulty of keeping the FDIC fund solvent.

How long does the FDIC have to repay me if things go bad?

Here things get murky. We turn to Section 11 of the act and find this (emphasis mine):

(f) PAYMENT OF INSURED DEPOSITS.-- (1) IN GENERAL.--In case of the liquidation of, or other closing or winding up of the affairs of, any insured depository institution, payment of the insured deposits in such institution shall be made by the Corporation as soon as possible, subject to the provisions of subsection (g), either by cash or by making available to each depositor a transferred deposit in a new insured depository institution in the same community or in another insured depository institution in an amount equal to the insured deposit of such depositor.

That only says “as soon as possible” and sets absolutely no time limit or maximum. Taken to the extreme, it might be impossible for the FDIC to ever make depositors whole again, and this is one of dozens of such “outs” that exist in the document. Remember, this act was written in 1933 when money was gold, times were uncertain, and government lawyers were exceedingly careful to avoid locking the government into any possible financial black holes.

And the FDIC Act is very clear to spell out that the only insurance funds available to depositors are those that exist within the fund itself:

(f)(1)(A) all payments made pursuant to this section on account of a closed Bank Insurance Fund member shall be made only from the Bank Insurance Fund

So, if the fund runs dry, there isn’t another possible source of funds that can be legally tapped without changing this wording. And that would take – wait for it – an act of Congress.

Surely Congress would appropriate the necessary funds to keep the FDIC solvent?

Here your guess is as good as mine. I would personally expect the US Congress to do everything in its power to the keep the FDIC well funded, especially during an emergency. I would not fault their desire here. But I can also think of a few scenarios or circumstances under which their ability could be taken away. For example:

1. If the banking crisis came at the same time as an interest rate spike and general funding emergency

2. If we were at war with Iran and things were not going well

3. If China suddenly started dumping their Treasury holdings in the opening gambit of an economic war

These would all be times under which I could easily imagine either a lethargic or inadequate response from Congress on the matter.

[DemReadingDU]

32. Also this article is mentioned at The Automatic Earth

4/16/08

This comment at the top of the link...
Ilargi: I don't think we can question the FDIC guarantee of US bank deposits enough. We've done it a thousand times here already, but we'll keep going on the topic, if only because it's an idea that dies hard.

As a smart lady said a few months ago: the FDIC insures banks, not their clients. And then there's the superlien that the FHLB has on the FDIC, which means they get their loans back before you do your deposits.

If and when there are multiple bank failures in the US, I can't see how deposits would be reimbursed. From what? The FDIC has no funds to do it. And I'm by no means the only one who thinks that way. Look at the numbers, and draw your conclusions. A reserve of 1.22% doesn't look all that great to me, for one thing. Nor does a $30 billion maximum. Here's Chris Martenson's take:

http://theautomaticearth.blogspot.com/2008/04/does-fdic-really-guarantee-your-bank.html


edit to add a link to comments at the end of the article...
https://www.blogger.com/comment.g?blogID=4921988708619968880&postID=9194233451727517388

[AnneD]

55. Morning Marketeers......

:donut: and lurkers. I actually went through a bank closure. Once again it was during the Bust in Houston. I was unemployed but had gotten a Student Loan and was retooling myself. Being a fiscally responsible person-I shopped around to get the best interest rate on my money. I knew enough to ask if they were FDIC'ed (don't ask me why-must have been my senior gov class). This bank was offering 3/4 ths higher interest than the closest and free checking to boot. It was a new bank in the area. I closed my other account (they kept screwing up my account any way)and opened one at said bank. It wasn't even 2 months after I opened my account that it folded. I was going to get some cash for the weekend. I went to the bank and there was a note taped to the door that the bank was closed. There was a contact number to call. I called and they said it would be at least 3 days before I got my money. It was a rough weekend I'll tell you. Fortunately I had plenty of gas in my car and was ok. If it had hit me later that year, I would have been devastated. This was the start of many S&L's that folded in Houston at that time.

I now keep my money in a credit union where I am an owner, not a customer. We are treated well and I have confidence in them. They have answered all my questions honestly (they confirmed the Homeland Security on the deposit boxes thing). I keep a minimal amount there and I have since learned to be my own banker. I will never get caught cashless anymore. It's not just the possibility of a bank going under-it's things like a hurricane in the gulf, a power outage, etc.

It really does boil down to confidence. If the bank and banking system doesn't have customer confidence-they really have nothing. I think we will soon be finding out how big a bank can be and STILL fail.

Happy Hunting and watch out for the bears.

[KoKo]

73. Where does one store money these days...if our bank fails?

Under the Mattress? In the walls?

[Demeter]

80. More Importantly, Where Does One Put IRA and Other Pension Funds?

[KoKo]

85. Yes...that's the REAL QUESTION......what do we do?

and, I cannot find an answer.

[TalkingDog]

16. Cartoon: I really just want to beat somebody.

This kind of pre-verbal rage wells up in me every time I think about the complete and utter idiocy of food turned into fuel....for people who refuse to take public transport....or want to sit in the freakin' drive-thru.....

But then, I guess most of them have never gone hungry. As for me, I'm incredibly thankful that it's only happened to me a few times in my life and all of them in my childhood.

AAAAAAAAHHHHHHHHH!!!!!!!!!!!!!!!!!!!!!


Okay, I'm taking the dog's for a walk. ...work off some rage.

Until we can get the coyote thing situated it's walks with no non-structured playtime.
Call me naive, but I'm hoping the game warden can get it trapped and moved. I have come to suspect there might be a den with pups, since a male has no real reason for staying in exactly the same spot for days. The Spousal Unit saw coyote last evening and in the same spot that the dogs have been interested in for about a week now.

If not, she's only an eighth of a mile away. Our worlds will continue to collide. It may come to the rifle. It's a hard world.

[DemReadingDU]

27. My sister's story with her dog and coyote

At the time, she and family were living near Boston near a lake. There were reports of coyotes lurking around, possibly having rabies. Well her little poodle got into a skirmish with a coyote and was beaten up badly. The poodle was protecting his family.

Her children were in middle school and were really emotional that their pet was hurt. The dog was about 10 years old then, not young, but not old either. So my sister took it to the Angel Animal Clinic in Boston. One of the best anywhere (also one of the most expensive). The dog had to be stitched up, and quarantined for rabies.

But the worst part of this story, is that when her husband picked up the injured poodle, it was so frightened and hurt, that the poodle bit my brother-in-law. Not knowing if the coyote had rabies which could have entered into the poodle's saliva, my B-I-L had to undergo the series of very unpleasant rabies shots.

Thankfully, the story has a happy ending. The dog recovered and lived another 6 years, and B-I-L recovered from the shots and is doing well today.

Hopefully where you live there aren't any outbreaks of rabies, but still, please check with your vet to be sure.

[TalkingDog]

43. Thanks DemReading

I'm calling the game warden today. S/he should have some idea since they work in the woods on a constant basis. Mr. Spot's last rabies was in 05. Well within the 7 year (probably longer, but research is pending) window for vaccine effectiveness. Other than touching the blood from the flank bite, I took hygenic precautions while dressing his wounds and in my cleanup. Dealing with ticks every summer makes one.....cautious.

[DemReadingDU]

46. Better to be cautious

My sister's dog did have it's yearly rabies shot, so it wasn't so much that the dog would have contracted the disease. It was a weird situation where the poodle bit a possibly rabid coyote and the dog's saliva could have been in contact with the coyote's fluids which entered my B-I-L system. It happened so quickly, and everything was done as a precaution.

I remember my sister telling me that when they visited the dog at Angel Animal Clinic, they had to wash up and put on surgical gowns. Just like in a real hospital. Always, better to be cautious.

[notesdev]

29. I think you hit the nail on the head

That in order to support burning food for fuel, one needs to have never known real hunger.

I'm glad to see others who oppose this monstrous policy, hopefully there are enough of us to make a change before many more starve as a result.

[Demeter]

17. Quelle Surprise! Corporate Bankruptcies Rising

http://www.nakedcapitalism.com/2008/04/quelle-surprise-corporate-bankruptcies.html


Ah, what cheery news this morning. Oil at a new high, producer price increases running twice as high as expectations, real estate repossessions running double the rate of last year. Yet the Dow is up a tad on the report that New York manufacturing increased. Pray tell what is New York manufacturing, besides the garment business, artisanal cheese, Long Island wine, and tree farms? The last three items probably aren't included in the factory index; nevertheless, a clearer image might staunch unwarranted enthusiasm.

Similarly, despite assurances that US companies are holding boatloads of cash, what is true in aggregate is not necessarily true on an individual basis. With roughly half the corporate bonds rated at the junk level, it doesn't take much to push them into distress. This Bloomberg article also suggests that many companies facing bankruptcy aren't merely otherwise solid operations struggling with too much leverage, but include businesses that are weak as well as highly geared:

U.S. corporate bankruptcies are accelerating as the economic slowdown compounds the end of easy credit.....Increased levels of distressed corporate debt signal that failures will accelerate, says Lynn LoPucki, a professor at the University of California, Los Angeles law school who studies bankruptcies.

The amount of distressed corporate bonds jumped to $206 billion April 11 from $4.4 billion in March 2007, according to a Merrill Lynch & Co. index of bonds yielding at least 10 percentage points more than Treasuries. The share of leveraged loans considered distressed was 16 percent at the end of March, the highest since 1997, says Standard & Poor's, based on loans trading below 80 percent of their face value.

``Money was so easy, companies that should have failed were kept alive,'' said Rick Cieri, a bankruptcy lawyer at Kirkland & Ellis in New York. He said bankruptcies will include businesses ``with severe operational problems'' and too much debt. ``Companies may well be sicker when they enter Chapter 11.''.....

``Subprime was just a paradigm for the credit markets overall,'' Maxwell said. ``Now in the corporate market, the shoe is just beginning to fall, and we're poised for a major correction that has been coming for at least a decade.''

Bankruptcy filings have just begun to increase. According to court records compiled by Jupiter eSources LLC, Chapter 11 business bankruptcies, including small, nonpublic companies, increased 16 percent in the first quarter of 2008. Under Chapter 11 of U.S. bankruptcy law, a company seeks court protection from creditor lawsuits while working out a reorganization.

``I think this is the beginning,'' said Brett Barragate, a bankruptcy lawyer at Jones Day in New York. ``You have rising defaults into a market where it's virtually impossible to get refinanced.''....

Martin Fridson, chief executive officer of FridsonVision LLC in New York, a high-yield research firm, predicted that a recession as deep as the eight-month contraction that started in 1990 could push defaults to 16 percent.

The highest default rate for speculative bonds and loans since 1983 was 9.98 percent in 2001, during the last U.S. recession. The average annual default rate over the same period was 4.48 percent, Moody's says.

Default rates may not rise along with a company's financial distress this time as they have in the past because some companies got so-called ``covenant lite'' loans, without restrictions that can trigger defaults, said Kenneth Emery, Moody's director of corporate default research, in an interview. The covenants are usually financial ratios that measure ability to service debts, such as a quarterly limit on total debt related to cash flow.

``Even if a company's operating performance is sub-par, the bank issuers can't force them into bankruptcy because there are no covenants,'' Emery said. As a result, if a company does eventually file for bankruptcy, it will have even more debt, and less value....

The new wave of filings may be affected by debt from the era of easy credit. Some lenders have second and even third liens on a company's assets. That puts them behind the creditor first in line to recover.

The tightening of loan standards means some companies may have difficulty obtaining so-called ``debtor-in-possession loans'' that fund operations as a company restructures. Others have had trouble getting financing needed to exit bankruptcy...

``It is apparent now that some companies may be postponing Chapter 11 filings because it's not even clear they can fund themselves in bankruptcy,'' Kirkland & Ellis's Cieri said.

[UpInArms]

18. dollar watch

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

Last trade 71.538 Change +0.135 (+0.19%)

The Market Forecasts A 25bp Fed Cut Even As Growth Outlook Fades

http://www.dailyfx.com/story/topheadline/Market_Forecasts_A_25bp_Fed_1208389355816.html









...more...

Euro Flirts With 1.60 - Will This Barrier Fall?

http://www.dailyfx.com/story/bio2/Euro_Flirts_With_1_60___1208428187588.html

Since yesterday euro bulls have tried to make a run at the 1.60 four separate times but have been repelled each time with the defense of option barriers at that level remaining in tact. Still it may just be a matter of time before this seminal level falls taking out the many stops likely placed there.

The economic backdrop from the EZ continues to be supportive with tonight’s Trade Balance data showing a surprising surplus of 2.1 Billion euros versus expectations of -2.1 billion deficit. The fact that the region’s producers are able to export demonstrates that despite record high exchange rates the EZ economy has not yet been materially impacted to downside. Tonight’s news should allow the ECB to maintain its hawkish posture for the time being and may provide just enough momentum to finally tip the price over that key level.

The pound also saw a boost today, after a Reuters report suggested that UK authorities mortgage intervention plan could be announced as early as next week alleviating some of the risk concerns that plagued the unit recently. Cable rose to within a few points of the 1.9800 level in mid-morning London trade as the result of the news. Sterling continues to suffer from perception that UK rates are inevitably headed lower, however, given yesterday’s relatively string employment data, the pace of rate cuts may be less aggressive than some pound shorts assumed, providing some near term support for the currency.

Finally, today’s North American trade will focus on US LEI and Philly Fed numbers both of which are expected to improve. The greenback was aided by better than expected Industrial Production data yesterday which indicated that the lower dollar may finally be helping US manufacturers and if Philly Fed confirms this pattern, euro shorts may be able to hold off the rush to 1.60 for a while longer. The one fly in the ointment to this scenario would be worse than expected weekly jobless claims, which would once again raise the possibly of a larger than expected 50bp cut from the Fed.

...more...

[notesdev]

31. One possibility

is for the EU to increase its own money supply rapidly as a way to offset the trade difficulties involved with a too-strong currency.

[Demeter]

51. They've Been Trying--The Whole World Has

But nobody inflates like US!

[tama]

65. Not really

The grounding charter of ECB has basically just one obligation: to fight inflation.

The ECB has been modelled after "Otto", the German Central Bank, which understandably still fears nothing as much as Weimarian inflation...

[Demeter]

19. America’s triple-A credit rating may be in danger, says Standard and Poor’s.

DailyReckoning.com

If the country has to bail out Fannie Mae and Freddie Mac through a prolonged recession, it could cost the nation’s treasury as much as 10% of GDP.

We’re beginning to see the whole world financial situation as a U.S. problem. There is a lot going on...but the big story seems to be about America (and Britain, to the extent it shared the Anglo-Saxon economic model)...its money, its wealth and its place in the world. The plot is simple enough. After an extremely successful run, the United States is struggling to maintain its edge. Its people are deeply in debt. Its currency is being sold off. Its labor...its capital markets...and its technological lead are all being challenged by faster, more youthful competitors. Like any Greek tragedy, the hero is a victim of his own hubris. He thought he could steal the gods’ fire and get away with it.

Americans thought they could do things that have always been off-limits to mortals. They believed they could operate a financial system based entirely on paper money, for example. They believed they could spend money they hadn’t earned – and live off credit forever. They believed the myths of the Efficient Market Hypothesis and Benign Capitalism...the Black Scholes Option Pricing Model and the Great Moderation...that Deficits Don’t Matter and the War on Terror does.

And now...the whole society is being marked down – by inflation, deflation and a trillion-dollar, unwinnable war.

On the surface, it is merely another chapter in the world’s financial history. George Soros elaborates:

“The current financial crisis was precipitated by a bubble in the US housing market. In some ways it resembles other crises that have occurred since the end of the second world war at intervals ranging from four to 10 years. However, there is a profound difference: the current crisis marks the end of an era of credit expansion based on the dollar as the international reserve currency. The periodic crises were part of a larger boom-bust process. The current crisis is the culmination of a super-boom that has lasted for more than 60 years.”

Those last 60 years were the 60 glorious years in which the United States was on top of the world. It’s the period roughly corresponding to Baby Boomers’ lives. Born after WWII...growing up in the ’60s...taking command in the ’80s...and now looking forward to retirement. Was there any better time to be alive? Was there any better place to be alive in than the United States of America? Its money was the world’s best. Its economy was the most dynamic and productive. And its people were the world’s richest. Full employment. Full stomachs. Free love and open bars...what more could you ask for?

Yesterday, the dollar hit another record low against oil. It now takes $111 to buy a barrel of oil...and, in Atlanta, $3.36 to buy a gallon of gasoline.

“That’s nothing,” said our driver in Manchester yesterday. “Here, the price of gas is nearly $10 a gallon. Of course, you don’t see any big American gas guzzlers either.”

Our driver showed us the instrument panel of his 2-year-old Skoda. It revealed an average fuel consumption of 56 mpg.

The car was comfortable and reasonably large. It didn’t seem to lack power.

“Here in England, we couldn’t afford to drive your cars,” he concluded.

Our guess is that Americans can’t afford to drive American cars either. The latest numbers show consumer spending rising – but only because consumers are forced to spend more on fuel. And experts believe that the summer of ’08 will be the first in which Americans actually drive less – forced off the road by high fuel prices.

Most people think of inflation as affecting prices they pay for bread and magazines. But inflation has a bigger agenda; it adjusts the wealth of whole societies.

The problem for Americans – and many others in the developed world – is that their wages are too high. They are used to earning a lot more money than their counterparts in, say, China or Vietnam. But why? Only because they have more capital and more skills, so they can produce more. But that situation is changing fast. Capital is piling up in China, Russia, Brazil and India – and elsewhere. As a result – wages in those places are soaring. Nestle just agreed to a 16% wage increase for its St. Petersburg, Russia, staff. In China, urban wages rose 18.7% in 2006. Ten percent annual increases in India are said to be the average.

In the United States, the last real, hourly wage increases came in the 1970s. Since then, adjusted for inflation, wages have been flat. But we Baby Boomers scarcely noticed. Because we were entering our peak earning years, our assets (stocks, then houses) were rising in value, and the expanding credit cycle left us with more money to spend.

But now, as Soros points out, that credit cycle has turned against us. The super boom is over. Our houses are going down. And the value of our labor and our stocks – which have held fairly steady – are being marked down by inflation. We are not becoming a Third World country...but we are becoming a poorer one...with a labor force that is less and less overpriced each year. Seems like a good time to retire. But forget the Winnebago – with gasoline at $3.36 a gallon, who can afford to cruise around on the wide-open spaces?

“Inflating is immoral in a sense because it steals,” Ron Paul said to us in an interview for I.O.U.S.A. “It steals value if you double the money supply and your prices go up twice as much...it’s an invisible hidden tax. But the real immorality here is that some people pay higher prices then others. So if you’re in the middle class, or especially low middle income, your prices might be going up fifteen percent a year. Somebody on Wall Street working leverage buyouts doesn’t have to worry about the rising cost of living. This to me is a immoral act, that is prohibited by the Constitution, and the outcome is always tragic.”

Could it be downhill from here on out – to the end of our lives?

[tama]

40. "Seems like a good time to retire."

Yeah, except that pension funds are invested up to the neck in financial trash paper and their real values have been allready stolen and eaten by corporate fat cats and war mongers. There is no money for the pensions of the baby boomers. Where are dr. Kevorkians in times of real need? ;)

[TalkingDog]

47. And with all the longevity research going on right now...

Of course that will probably go to the top 1% first, along with the food, resources and well, everything else. Because there's nothing like a good old monetary caste to shake the meritocracy right out of a social system.

[tama]

66. As for longevity

The charming old lady, Ms. Guillotine, has a habit of occationally shortening the longevity of the monetary caste by a head's length...

[Hugin]

60. This is part of 'The Plan' to un-fund Social Security...

Occasionally, it would be nice to have a way back machine to recover articles. There was one posted about a year
ago mentioning that breaking the rating agencies was the new Bushite 'Stratergezie' for accomplishing their 'gowal'
of taking the overwhelming burden of Social Security and Medicare off of the backs of the 1% have-mores. After, their
full frontal assault with a friendly Congress had failed.

And here... It's happening. Wot a surprise. :eyes:

[starroute]

74. The real problem is that you can't live cheap in the US

The idea of the US standard of living coming into a better balance with the rest of the world is not unappealing in itself. Consuming less would certainly go a long way towards helping with our environmental problems.

But the hangup is that there is no easy way to actually live more cheaply in this country. Housing is ridiculously expensive -- and the various efforts to provide affordable housing that peaked around the 1950's were all scuttled long ago. (Heck, the rent-controlled apartment on the West Side of Manhattan that my family was paying $86 a month for when I was a kid probably rents now for upwards of $2000, if it hasn't already become a condo.) The only places where housing is still cheap are the places where there are no job.

There is no such thing as cheap health care. Doctors are expensive, hospitals are expensive, medicines are expensive. You can't downsize -- only do without.

The public institutions that used to provide free or inexpensive amenities to help the poor lift themselves by their bootstraps are gone or going. Colleges are expensive, even the public colleges that were once free or close to it. Museums charge hefty fees. Even the parks and public libraries are under assault in increasingly cash-strapped communities.

There are still a few areas where it's possible to economize or buy second-hand -- food (up to a point), clothing, household goods. But those areas already comprise only a small portion of the average budget. At most, you might save a few thousand a year by cutting back in all of them. And as the price of food goes up, and as cheap Chinese imports become a lot more costly, those savings will be eaten back up again.

Housing, health, and education/self-improvement are the biggest issues -- and there's no way the American people can handle a retrenchment unless they're addressed. This is not just a matter of helping out the poor, the homeless, the uninsured, and the under-employed. This is something that will affect all of us over the next few decades, and we and the integrity of our society will not weather the transition well unless the change is made as graceful and as frictionless as possible.

[UpInArms]

20. Merrill Lynch posts big loss ($2B for the 1st quarter), to cut 4,000 jobs

http://news.yahoo.com/s/nm/20080417/bs_nm/merrilllynch_dc

NEW YORK (Reuters) - Merrill Lynch & Co (MER.N) on Thursday posted a nearly $2 billion first-quarter loss, and said it plans to cut 4,000 jobs after suffering several billion dollars of write-downs for subprime mortgages and other risky assets.

The job cuts cover about 10 percent of staff at the world's largest brokerage, excluding financial advisers and investment associates. Merrill Lynch said the job cuts will be targeted in markets and investment banking operations and in support areas. The company said it ended March with 63,100 employees overall.

Merrill Lynch's quarterly net loss was $1.96 billion, and compared with a profit of $2.16 billion a year earlier.

Including preferred stock dividends, the loss was $2.14 billion, or $2.19 per share, and compared with a profit of $2.11 billion, or $2.26, a year earlier.

...more...

[Tansy_Gold]

76. ". . . They doubled down their bets."

I heard about three minutes of this on NPR this morning. Someone -- I think his name was Lawrence White (on edit: Lawrence White, Prof at NYU) -- was commenting on the Merrill Lynch write-down, and he said that as they saw their assets declining in value, rather than try to liquidate them or cut their losses, "they doubled down their bets," hoping to get lucky and recover. Guess what. It didn't happen.

I'll try to find a link, if no one else finds it faster. (on edit: http://www.npr.org/templates/story/story.php?storyId=89713230 Three-and-a-half minute audio of a damning report.)

What made me scream at the car radio, "WELL, DUH!" was the fact that the financial strategy of Merrill Lynch was once again being publicly labelled "a bet." This was not INVESTING, in other words, it was GAMBLING.

And then when the whole "risk management" came into play, the way to manage the risk, of course, was apparently to put the public on the hook for covering the losses. Which is fine, if the public wants to gamble with their money -- the Fed, the Treasury, the FDIC, CALPers, KPERS, to name just a few, etc. -- but if the public doesn't know, has no right to say yea or nay, then we shouldn't have to pay the bill.

The write downs, of course, are as far as I know only write-downs of formerly over-valued assets anyway. Someone profited handsomely -- some might say obscenely -- when these assets were going up in value based on nothing other than the promise of real gains upon the sale, but now when no one is buying this shit and the value is going down, who pays???? Not the ousted CEO who took home hundreds of millions in real money. . . .

Tansy Gold, growling

[DemReadingDU]

84. Both my spouse and I, at the same time

We Said, GAMBLING!

WTF! No wonder the financial industry is in a mess.

[UpInArms]

21. US Multinational Corp abandons dollar - Cargill plans 7-year euro-denominated bond

http://www.reuters.com/article/bondsNews/idUSL1776964420080417

LONDON, April 17 (Reuters) - U.S. agribusiness and trading giant Cargill Inc. plans to sell a seven-year euro-denominated bond, an official at one of the banks managing the sale said on Thursday.

Barclays Capital, BNP Paribas and UBS are joint lead managers for the bond sale, the official said.

...a bit more...

[kickysnana]

62. Duck and Cover Minneapolis when Iraq did this the US bombed the heck out of em. n/t

[UpInArms]

22. Sickened pork workers have new nerve disorder

http://www.reuters.com/article/newsOne/idUSN1636729020080416?sp=true

CHICAGO (Reuters) - Eighteen pork plant workers in Minnesota, at least five in Indiana and one in Nebraska have come down with a mysterious neurological condition they appear to have contracted while removing brains from slaughtered pigs, U.S. researchers and health officials said on Wednesday.

They said the illness is a new disorder that causes a range of symptoms, from inflammation of the spinal cord to mild weakness, fatigue, numbness and tingling in the arms and legs.

"As far as we are aware it is a brand new disorder," said Dr. Daniel Lachance of the Mayo Clinic in Rochester, Minnesota, who presented his findings at the American Academy of Neurology meeting in Chicago.

Lachance has been following the 18 Minnesota patients, all of whom have evidence of nerve involvement, typically affecting the legs.

He said tests showed patients had damage to the nerves at the root level near the spinal cord, and at the far reaches of their motor nerves, where the nerves connect with muscle.

...more...

[Demeter]

23. The Best Hedge Fund Manager of All-Time

http://www.1440wallstreet.com/index.php/site/comments/the_best_hedge_fund_manager_of_all_time/#When:21:12:01Z


Long before traders started whipping around pork bellies in Chicago, they were trading rice in Japan. And few traders have been as resourceful as this guy:

Into this market came Munehisa Honma in the 1750's. Homma's family, who lived in Sakata, had a huge rice farming estate, and held considerable sway over the market. Over the years Homma kept careful records, of rice prices, weather conditions and records of trading on the exchanges.

The conclusions enabled him to understand the psychology of investors and forecast the direction of the markets.

His accuracy in prediction was such that he never left home to conduct his trades. Instead, he placed men on the tops of houses from Osaka to Sakata with a series of flags giving his selling or buying instuctions. CandleCharts.com

A slow trading day gives you a chance to bone up on the story of the greatest trader of all-time, according to Veryan Allen:

That person was of the great Munehisa Honma who managed a long/short commodities hedge fund during the 18th Century. His house is well designed and much larger than most (modern day) hedge fund managers, but his book, “Fountain of Gold” is brilliant. Probably the best investment book ever written. His trading ability enabled the Honma family to go on to become the largest land owner in Japan for over a century. In today’s money his likely net worth was much more than $100 billion. Some years he would have “taken home” the equivalent of $10 billion so it is curious those excited about John Paulson’s “record” pay of $3 billion; fair compensation for the $12 billion absolute alpha he generated for investors that they would not OTHERWISE have. Hedge Fund Blog

You might not use candlestick charts, but you should probably read the story of Munehisa Honma, the greatest trader of all time.

[Demeter]

24. Bigger Role for Fannie and Freddie Could End US AAA Rating

http://www.nakedcapitalism.com/2008/04/bigger-role-for-fannie-and-freddie.html

Listen to this article The US has had a free lunch for so long, thanks to the willingness of kindly savings rich foreigners to buy our Treasuries, that the realization that there are limits to what we can have, both individually and as a nation, is hard for many to accept. We managed to have guns and butter for a short while by ballooning our debt to GDP ratio. But now that we are trying to keep the good times going, or more accurately, keep the bad times from being too bad, America is learning the hard way that it is going to have to make choices and tradeoffs. Given the divisiveness of our politics, this will be an ugly process.

The latest: bit of reality rearing its ugly head: Fannie and Freddie have the potential to cost the US its AAA. From the Wall Street Journal:

So-called GSEs enjoy implicit government guarantees and could cause the U.S. to lose its sterling triple-A rating if the government were forced to come to their rescue, Standard & Poor's said in a report Monday....

The demise of Bear Stearns Cos. and the Federal Reserve's efforts to alleviate strains at broker dealers has captured the attention of market participants who feared the financial system itself might seize up last month.

While this credit crunch has hurt financial markets, S&P notes that it hasn't threatened the standing of the nation's credit quality upon which U.S. Treasurys and debt priced off this government debt depend. But should a protracted recession cause Fannie and Freddie to buckle, the U.S. rating would be in danger.

The cost to the U.S. government in such a scenario would be as much as 10% of gross domestic product. The maximum potential cost of aiding the broker dealers during a prolonged economic downturn would be below 3%, S&P analysts found. The Federal Reserve's bailout of Bear Stearns and its extension of credit facilities to brokers so far costs less than 1% of GDP.

Freddie and Fannie's exposure to the housing market heightens the risk of future losses should borrowers run into trouble as home prices decline. That the two companies are guaranteeing larger loans as part of the government's efforts to shore up the housing market adds to this risk.S&P says, "These potential risks are not a prediction, but a risk worth monitoring."


It was only in January that Moody's warned that the US might lose its AAA rating within the next ten years. The S&P note simply provides a specific scenario.

[Demeter]

26. Fannie and Freddie Try to Get Tough with Mortgage Walkaways

http://www.nakedcapitalism.com/2008/04/fannie-and-freddie-try-to-get-tough.html

While it isn't clear whether homeowners with the ability to pay abandoning mortgages is as widespread a problem as the press would lead one to believe (Tanta at Calculated Risk has been skeptical), Freddie and Fannie appear to be taking no chances.

The Chicago Tribune reports on measures taken by the two government sponsored enterprises to combat this activity. As publicized earlier, Fannie has issued a blanket prohibition against lending to those who have a foreclosure on their record (five years unless there were "documented extenuating circumstances"). Freddie is even more tough-minded, with a longer ban against borrowers with foreclosures in their file, plus efforts to pursue deadbeats in states with laws that allow for it.

Nevertheless, it isn't clear what to make of this alleged trend. The reason for Tanta's doubt is that she suspects the borrowers in question in many cases aren't as able to make payments as the media alleged; my thought is that given the large number of no-docs, these walk-aways may have been speculators who are abandoning investment properties that they claimed were primary residences on their mortgage applications.

However, Credit Slips has suggested another angle: this trend, to the extent it is a trend, may be an unintended consequence of the 2005 bankruptcy law changes. If you don't qualify for a Chapter 7 bankruptcy (in general, if you have more than median income), it's easier to walk from your mortgage debt than your credit card liabilities.

From the Chicago Tribune:

The country's two largest sources of mortgage money have a blunt warning for anyone thinking about joining the "walkaway" trend, where homeowners stop making payments and months later send the house keys to their lender: You will feel the pain.

On March 31, Fannie Mae sent out new guidelines to lenders aimed at walkaways and other foreclosure situations. Fannie will prohibit foreclosed borrowers from getting another mortgage through it for five years, unless there are "documented extenuating circumstances." In those cases, the prohibition is three years.

Even after five years, borrowers with foreclosures in their files will have to put at least 10 percent down and need minimum FICO credit scores of 680.

Freddie Mac, Fannie's rival, counts foreclosures as major blots for seven years, and a senior official said the company is aggressively pursuing walkaways "to preserve our deficiency rights" where permitted by state law....

A number of Web sites have popped up claiming to cut the hassles of bailing out of a mortgage....

Federal legislation enacted last year allows homeowners who negotiate loan modifications with lenders and have portions of their principal eliminated to escape income-tax liability for the amount forgiven.

Walkaway borrowers, by contrast, have nothing forgiven, and the IRS may demand income taxes on the balance they never paid...

For borrowers who faced genuine financial hardships, underwriters are likely to be more sympathetic a few years down the road. But, regardless of what some promoter promises, don't expect to get a new home loan for five to seven years after walking away.

[Demeter]

28. The New York Times / Crisis of Confidence By PAUL KRUGMAN

http://www.nytimes.com/2008/04/14/opinion/14krugman.html?_r=1&oref=slogin

The Survey Research Center of the University of Michigan has been tracking American economic perceptions since the 1950s. On Friday April 11 the center released its latest estimate of the consumer sentiment index — and it was a stunner. Americans are more pessimistic about their situation than they have been for more than a quarter century. Meanwhile, a recent Pew report found that the percentage of Americans saying that they’re better off than they were five years ago is at its lowest level in 44 years of polling...What’s striking about this bleak mood is that by the usual measures the economy isn’t doing that badly — at least not yet. In particular, the official unemployment rate of 5.1 percent, though rising, is still fairly low by historical standards. Yet economic attitudes are worse now than they were in 1992, when the average unemployment rate was 7.5 percent.

Why are we feeling so down?

Our bleakness partly reflects the fact that most Americans are doing considerably worse than the usual economic measures let on. The official unemployment rate may be relatively low — but the percentage of prime-working-age Americans without jobs, which isn’t the same thing, is historically high. Gross domestic product is up, but the inflation-adjusted income of the median family is probably lower than it was in 2000.

Beyond that, perceptions of the current economy are strongly influenced by the public’s sense of the larger pattern. When Ronald Reagan famously asked, “Are you better off than you were four years ago?,” the correct answer was “Yes.” Median household income, adjusted for inflation, was higher in 1980 than it had been in 1976. But gas lines and double-digit inflation made people feel that things were falling apart. Conversely, unemployment was still historically high when Reagan proclaimed “Morning in America.” But people were ready to hear an upbeat message, because the economic storm seemed to have passed.

More recently, economic confidence held up relatively well during the 2001 recession, maybe because people were willing to see it as no more than a temporary interruption of the great 1990s boom.
A major reason we’re feeling so down now is that for working Americans the boom never did come back. Job creation in the post-2001 recovery was pathetic by Clinton-era standards; wages barely kept up with inflation. Instead, corporate profits and the incomes of a tiny elite surged — sucking up so much of the economy’s growth that only crumbs were left for everyone else. Now the boom that wasn’t has gone bust — and Americans, understandably, have lost confidence in the prospects for a return to real prosperity. They have also, I’d suggest, lost confidence in the integrity of our economic institutions....

[Demeter]

30. Senator Harry Reid seeks answers on tax treatment of American Gold Eagle

http://muckrakerreport.com/id306.html



April 14, 2008 – Following up on a recent Muckraker Report story, IRS delivers stunning reversal on the American Gold Eagle / Income Tax Question, television reporter Christopher Hansen, host of the show American Sovereign which airs on Channel 62 in Pahrump, NV, sent Senator Reid a copy of the IRS e-mail response, found in the aforementioned article, to the following question.

If I received a $50 American Gold Eagle (legal tender) as a wage, would I need to claim $50 on my tax return or the market value? Today, the $50 American Gold Eagle was selling for approximately $980.00.

The IRS wrote:

You will only be reporting your wages of $50. The American Gold Eagle is now your capital asset (collectible), and any gain or loss on the coin will not be reported as income or loss until you dispose of the coin.

Senator Reid responded to Hansen on April 11, 2008 via e-mail as follows:



Dear Mr. Hansen:



Thank you for contacting me regarding the tax treatment of compensation paid in the form of the American Gold Eagle coins. I appreciate hearing from you.



I took note of the article referred to in your letter and understand the confusion that has arisen regarding this matter. So that they may provide further clarification, I have forwarded your inquiry to the Internal Revenue Service and asked that they respond to me in writing and copy you on the reply.



Again, thank you for taking the time to share your thoughts with me. For more information about my work for Nevada, my role in the United States Senate Leadership, or to subscribe to regular e-mail updates on the issues that interest you, please visit my web site at http://reid.senate.gov. I look forward to hearing from you in the near future.



My best wishes to you.



Sincerely,



HARRY REID

United States Senator

Nevada



Hansen, who is also the State Chairman of the Independent American Party of Nevada, had contacted the IRS, in addition to Senator Reid, seeking further validation that the response offered to the Muckraker Report was accurate. Clearly, if Americans are only to report $50 as wages when receiving a $50 American Gold Eagle, and not be subject to any meaningful taxation until the coin is disposed, and then only be subject to a capital gain or capital loss tax rules, the impact could be far reaching.

Amazingly, another IRS employee identified as Mr. Poprik has responded to the Hansen inquiry by suggesting that the previous IRS employee that offered the answer to the Muckraker Report question, Ms. King, had not taken into account Internal Revenue Service Notice 2007-30. Basically one IRS employee is now saying the other IRS employee was wrong. How then are Americans expected to navigate the IRS when it cannot establish agreement internally?

Notice 2007-30, titled Frivolous Positions, appears to be nothing more than an IRS collection of issues it cannot directly support or back up with laws, and a catch all response to persistent questions it cannot answer in a fair and logical manner. It should be noted that the IRS decides what is frivolous absent any oversight whatsoever, so in theory, it can dispose of any lawful taxation objection it might encounter by making questioning the tax rules of the IRS – frivolous. With this sort of unwarranted power, Americans are decidedly at a disadvantage, if not virtually powerless against the Internal Revenue Service, particularly if the IRS is seeking vengeance for questioning its authority.

Item 12 of Notice 2007-30 Frivolous Positions regurgitates:

In a transaction using gold and silver coins, the value of the coins is excluded from income or the amount realized in the transaction is the face value of the coins and not their fair market value for purposes of determined taxable income.

So a segment of the IRS claims that this is a frivolous position. How can it be frivolous with no guidance offered whatsoever on this issue? There are no tax tables issued by the IRS that define fair market value of American Gold Eagles. And on what date is fair market value determined – on the day the coin is received, or on April 15th? And where is the law that states that fair market value must be determined with Federal Reserve notes as the measure? And what’s the fair market value of Federal Reserve notes anyhow? The list of non-frivolous questions goes on and on – questions the IRS must answer rather than arrogantly dismiss using Notice 2007-30.

The IRS is truly an out-of-control cartel that uses fear and intimidation, much like terrorists, to maintain its power and control over the people while refusing to act in good faith by showing the American people the laws that justify its actions.

Consider what one of its former Commissioners’ had to say about the IRS, and wake up to the fact that the IRS abolishment movement needs to progress from the content of political speeches during an election year to a viable national action committee that puts this atrocity out of business once and for all.

Eight decades of amendments and accretions to the Code have produced a virtually impenetrable maze. The rules are unintelligible to most citizens - Including those who hold advanced degrees and including many who specialize in tax law. The rules are equally mysterious to many government employees who are charged with administering and enforcing the law.


It is also a known fact that the Internal Revenue Code is a very easily misunderstood area of law, even misunderstood by trained professionals. Judges and lawyers admittedly do not know the tax laws.



Fifteen years later Ms. Peterson, and your former agency cannot even agree on legal tender values and laws – truly an impenetrable maze!

[happyslug]

71. As to the Gold Eagle, the real issue is what was the person's real income.

The law says, you MUST pay taxes on your income. What is income has NEVER been decided by any statute, thus we look at regulations and Court Decisions. These fall into two groups:

1. Income is what your received in normal terms. I.e. if I work for you all day, and you pay me in kind (i.e. food, Housing, Transportation etc) that "in Kind" property is my income and I owe income taxes on its value.

2. Stated value of an item. In the case of the Gold Eagle it is worth $980 but it face value is only $50.00. If paid in Gold Eagles I could claim its face value as my income NOT what i could sell the Coin for.

The problem with the Gold Eagle is these two concepts come into conflict. When I receive a Gold Eagle was I being paid $50 or $980? If I was being paid $50 then I only own taxes on $50, but I was being paid a Gold Eagle for work, services or Goods valued at $980 my Income is the value of the Work, Services or goods I sold ($980) NOT the face value of the Coin.

Thus the real issue is NOT the Gold Coin itself, but what does it represent. $980 or $50? If it represent only $50, then that is my income, but if it represents $980 then that is my income.

Legally a Gold Eagle only represents $50. If the value of Gold should drop (I know that is unlikely, but not unheard of) so that the Gold in the Gold Eagle is only worth $20, the Federal Government still has to recognize it as worth $50. Thus the first IRS report was correct, its face value shows its value IF THAT IS WHAT YOU WANTED FOR $50 worth of Work, Services or Goods.

The problem is almost everyone who wants a $50 Gold Eagle does NOT wants it to pay for $50 worth of Work, Services or Goods, but $980 of Work, Services and Goods. Thus for almost everyone the Gold Eagle does NOT represents its face value of $50 but its Gold Value of $980 and thus it presents $980 worth of Income NOT $50.

Accountants have had to handle this problem since Income taxes came in use during the Napoleonic wars. Gold and the value of paper money have varied since that time. When Gold was used for coinage for general circulation, the amount of gold in the coin was slightly less then the Value of that Gold melted down. When paper money was introduced, the two tended to stay close, till inflation stepped in and the gold coin exceeded their face value. Laws in the Countries affected by this did not change, but given the situation everyone worked around the problem. The chief means to do so was to pay a premium for Gold Coins and for book keeping purposes all accounts were kept in paper currency values (Except during times of extreme Inflation) with the gold coin valued NOT on their face value, but on the value of the Gold in them based on paper dollars. This has been the "Rule" since the Napoleonic Wars and is still the rule, Gold Coins that contain gold in excess of their face value are priced in terms of paper money NOT the Coin's face value. Gold bugs hate this concept, but it has worked since about 1800 and I see no reason why we should change the rules now.

[happyslug]

72. Duplicate

n/t

[Demeter]

33. The Black Death of financial collapse By James Cumes

The financial and economic crisis now upon us is by far the most menacing of the past century - even more so than the Great Depression of the 1930s. It is not just a "subprime" crisis; it is systemic - affecting the entire financial system. It is also global, affecting various countries in various ways but affecting them all. In achieving a certain "globalization", we have been uniquely successful in globalizing collapse, chaos and misery. It is a globalization which, in our short-sighted negligence, we never envisaged.

In this crisis, even a country such as Australia is no more than a subordinate, neo-colonial, financial and economic dependency. In essence, we have reverted to what we were before and during the Great Depression of the 1930s, when Whitehall, Westminster and the Bank of England played the tune to which we jigged. Then, from 1945 to 1969, for the first time, we played our own tune of full employment and stable economic growth. Wild radicals such as minister Eddie Ward in the governments of John Curtin (1941-45) and Ben Chifley (1945-49) warned us to be wary of Wall Street.

The cynics might now say that Eddie, who died in 1963, was right. After 1969, we forgot his warning. Indeed, the Americans themselves forgot to guard against the chicaneries of Wall Street, where eternal vigilance should always be the watchword. They forgot what the mania of Wall Street can do to the reality of Main Street; and we shared their amnesia.

From 1969 and especially from 1971, when the United States cut the dollar link with gold, Australia surrendered any worthwhile independence in its economic and financial thinking. We swallowed American financial and economic formulae, whether we were academics or policymakers, industrial entrepreneurs, banks or providers of "financial services."

We did not entirely switch off tunes played by Britain, the more so as its prime minister Margaret Thatcher formed her slapstick band with US president Ronald Reagan to drum up support for "free" markets, "free" trade, privatization, globalization and the free flow of almost everything, including speculative capital in unqualified pursuit of private profit. Corporation and consumer greed marched in step towards global disaster.

Rational economics based on real investment, productivity and production died in favor of speculative and often Ponzi pretensions. The cowboy junk-bond merchants of the 1980s metamorphosed into respectable, mostly young and usually idolized financial wizards who "perfected" sophisticated, highly complex credit devices. From the 1990s, these highly leveraged instruments took the form of derivatives, private-equity, hedge-fund and mortgage securities, abbreviated to CDOs, SIVs and the rest.
Allied with "free" markets, deregulation and the uninhibited flow of all kinds of finance, those financial devices destroyed industries and the jobs that go with them. With casual indifference, they also destroyed the self-reliant working and middle classes until then typical of robust free-enterprise economies.

Theirs was not Joseph Schumpeter's "creative destruction" but wholesale destruction of their own economies and, eventually, their own financial "system". They destroyed personal savings and created massive indebtedness. They undermined the power and security of the United States itself as they "outsourced" real economic strength and stability to countries especially in Asia.

The Asian Tigers, China and others grew into "powerhouses" whose creation, historically, would otherwise have taken them generations. Our eminently creditable aim of peaceful change through development of developing economies was distorted, largely through negligent inadvertence, into financial, economic and social self-destruction. Looming global collapse, with political and strategic uncertainties, are our inevitable legacy.

Consumerism rages, industry gutted
The speculative, Ponzi mania spread especially to Anglo-Saxon countries and to other developed countries in lesser degree. Australia took to "free" markets, "free" trade, free-floating currencies, deregulation, privatization, globalization, derivatives, hedge funds, private equity, wildcat mortgages and leverage-without-limit as a duck to water. Consumerism raged. Industry was gutted. Debts ballooned. The value of the currency fell at home and abroad. Despite low-cost imports, inflation flourished. In 2008, the Australian dollar can perhaps buy as much in real terms as five or 10 cents did in 1969.

A situation in which real public and private investment was replaced by "ownership investment", massive leverage and speculative finance, in which consumption grew and debts spread, could not persist, except so long as ever more money flooded in to support the insupportable. Once the flood slowed or stopped, a Ponzi-type collapse was inevitable.

But few saw it that way. Warren Buffet belatedly called derivatives weapons of mass destruction; but most saw the financial devices as belonging to a "new era". They represented a "new paradigm". Far from being a threat to stable growth in a stable financial system, they "spread risk" and made everyone more secure and of course more wealthy.

The wealth effect was a particular feature of the residential mortgage business. Funds were available from many new banking and non-banking sources, including hedge funds and private equity, as well as pension and mutual funds; and sources that, in their magnitudes, were new, such as the carry trade. Funds marketed wholesale and retail mortgages. Liability could be shifted even or especially for debt in the deepest sense sub-prime. Mortgages also enabled homeowners to expand consumption through mortgage-equity withdrawals (MEW).

In a real sense, MEWs were symptomatic of multitudes of individuals - and, in effect, whole societies - high-living it off their capital. That enabled a process of growth that was both irresistible and inherently unsustainable.

However, the Ponzi scheme to shame all others may yet be waiting to deliver its coup de grace. One commentator has drawn attention to "the bad news is the US$500 trillion derivatives market". He says that "This is an area that the general public does not even know exists. Few professionals understand this market. There is no regulation as government just let it go ... and go it did. You must expect a 5% default problem. That is a $25 trillion number ... It can create insolvent institutions all over the world ... It is the making of the first global depression. The world is not ready."

Unprepared for depression
Australia is not ready either. Prime Minister Kevin Rudd told us late in March that Australia's economic prospects remain "sound, strong and good". The Reserve Bank of Australia shares that view. Eerily, they echo US President Herbert Hoover in 1929 immediately before the stock market crash of that year.

Australia's situation contains some positive features. High commodity prices, it can be argued, are likely to persist, even though volatile, at least in the short term. A member of Iceland's central bank board recently said that "fears of a meltdown in my sub-arctic homeland are vastly overblown. True, the current account deficit was 16% of GDP last year, but that's an improvement from more than 25% in 2006. And while net private-sector debt is about 120% of GDP, there is virtually no public debt in Iceland. This is largely the result of unparalleled political stability and continuity."

Australia's situation may not be as dire as Iceland's; or indeed as dire as that of the United States or New Zealand; but all three of us have some negatives like those of Iceland.

Like all booms of such size and speculative character, the Australian housing boom must soon demand payment of its account. From their peak, prices could fall 30% to 50%. Industry researcher BIS Shrapnel does not agree; but we must expect that our housing boom, even more robust than the American, will collapse along the same general lines as the bust occurring right now in the United States.

The high "unaffordability" of housing for the average home-seeker, as distinct from speculator, suggests that the bust will be savage. The real-estate, building and associated industries will suffer severely, with massive job losses. Simultaneously, profitable investment opportunities elsewhere may have vanished with the widespread collapse of the "financial services industry".

How likely is such a collapse? So far, although some non-banking financial institutions have gone to the wall, the four major banks have seemed largely immune. "The take-up of the Australian economy is still good," Rudd said last week in New York. Australia had "limited exposure" to the subprime mortgage woes that erupted in the United States last year, he said. "We have excellent balance sheets in terms of our principal corporates and the banks themselves ... The default rate in Australia is minuscule by Organization for Economic Cooperation and Development standards."

We don't know how far banks and other potentially exposed institutions have concealed their liabilities and to what extent and how soon they will be forced to reveal whatever bad news there is. Within this broad question, we also do not know how far they are exposed to losses from the massive and still largely mysterious menace of derivatives.

In some measure, Australia's major banks have certainly been involved in the wide range of structured securities - CDOs, SIVs, and the rest. A report on April 4, 2008, that local councils in New South Wales have lost US$200 million and perhaps up to $400 million on investments in CDOs is a worrying sign that other and even bigger losses may yet be revealed in a variety of institutions, including banks. It seems scarcely credible that an economy which, for so many years, has absorbed so much of American theory and practice - so much of the American financial character - can be wholly immune from the penalties inflicted on its American model.

The subprime crisis first hit the United States after a housing about-turn that began as far back as 2005 or 2006. An unequivocal downturn in housing in Australia has yet to check in; but non-bank lenders are already withdrawing from the market. Wholesale mortgage lenders are closing shop, perhaps as a prelude to a sharp housing decline.

The carry trade which has presumably provided funds for mortgages and other financial services in Australia has been volatile for some time. If it unwinds completely, that could not only intensify mortgage problems but also impact on Australia's external balances.

Our deficits have so far tended to persist at a less healthy level than the commodity boom might have encouraged us to hope. Our aggregate private overseas debt is said to amount to the order of half a trillion dollars. Against that background, the current depreciation of the United States dollar might foreshadow what awaits our own currency.

Lagging impact
Economic and financial change in the United States tends to have a lagging impact on Australia. An acute awareness of the severity of our crisis may consequently not emerge before the second half of 2008.

When it does, what will the Rudd government do? Currently, it seems as unaware of the magnitude of the challenge it faces as the James Scullin government was in 1929. So the present government might become just as bewildered as Scullin and stagger just as blindly and ineffectually when they are called on to act. In the 1930s, we listened to the likes of Otto Niemeyer of the British Treasury who was also a director of the Bank of England. Will the Rudd government this time listen to the Americans and the likes of US Federal Reserve chairman Ben Bernanke? If they do, catastrophic outcomes might not be in short supply.

Our only real hope lies in clear, independent thinking by those not too steeped in the flawed policies responsible for our current crisis. We must see clearly that fundamental, comprehensive financial and economic reform is imperative. We must adapt that fundamental reform to our own needs, as the John Curtin and Ben Chifley governments did between 1941 and 1949. As we did then, we must simultaneously try to guide the international community out of the calamitous course that has evolved since 1969, and return it to the goal of stable, peaceful, global change which, as a primary objective, we pursued between 1945 and 1969.

While we embark on this journey, a high level of political volatility in Canberra is inevitable. Rudd might succeed; but the Labor Party and government might split two or three ways as they did between 1929 and 1932. Another Joe Lyons, prime minister from 1932 to 1939, might emerge. Whoever he might be, the odds are that he will be even less likely to find quick or easy solutions than Lyons was during the long and bitter years of depression. Those years ended only in the even deeper tragedy of world war.

James Cumes is a former Australian ambassador to the European Union and Australian representative at the United Nations. He is the author of among other works The Human Mirror: The Narcissistic Imperative in Human Behaviour.

http://atimes.com/atimes/Global_Economy/JD10Dj03.htmlhttp://atimes.com/atimes/Global_Economy/JD10Dj03.html

[Demeter]

35. Articles of Impeachment? Bear Stearns Buyout Illegal?

http://market-ticker.denninger.net/2008/03/articles-of-impeachment-bear-stearns.html?new=yes

"On or about March 16th, 2008, George W. Bush, both personally and through his Treasury Secretary Henry Paulson, caused to be provided to JP Morgan/Chase a bribe(1) ultimately flowing from the United States Treasury in an amount not to exceed $30 billion dollars US, via The Federal Reserve, in order to induce JP Morgan/Chase to assume the liabilities and assets of Bear Stearns and Company at a price not determined in the free market or via public bidding, in violation of the limitations expressly set forth in The Federal Reserve Act of 1913, 12 USC Ch 6."

(1) Bribery is defined by Black's Law Dictionary as the offering, giving, receiving, or soliciting of any item of value to influence the actions of an official or other person in discharge of a public or legal duty.

I have spent a solid week both reading The Federal Reserve Act of 1913 and thinking about the circumstances of this transaction trying to find a means under which "backstopping" Bear Stearns debt via The Federal Reserve is legally permissible.

Despite my best efforts I can't find explicit or implicit authorization for "a put", as differentiated from a loan, anywhere in The Federal Reserve Act. You can call something whatever you'd like but if in point of fact there is no recourse then it is not a "loan" at all; it is a "PUT" or a "conditional payment", and under The Federal Reserve Act such an action appears to these eyes to be a direct violation of the law.

It is widely reported that both Hank Paulson and George Bush personally "signed off on" The Bear Stearns "bailout" last Sunday. As such their direct and indirect actions, in my view, constitute a "High Crime and Misdemeanor" within the meaning of the United States Constitution and therefore subject George W. Bush to impeachment proceedings as proposed in the above sample article for same.

By the way, I'm not the only one who thinks this is an illegal transaction. John Hussman, of The Hussman Funds, has this to say in a letter with a publication date of tomorrow, March 24th:

"In my view, the deal would be palatable if J.P. Morgan was to remain fully responsible for any losses on the 'collateral' provided to the Federal Reserve, assuming shareholders were to consent to the buyout. As it stands, Congress should quickly step in to bust the existing deal and demand an alternate resolution, by clearly insisting that the Fed's action was not legal.

The Fed did not act to save a bank, but to enrich one. Congress has the power to appropriate resources for such a deal by the representative will of the people – the Fed does not, even under Depression era banking laws. The 'loan' falls outside of Section 13-3 of the Federal Reserve Act, because it is not in fact a loan to either Bear Stearns or J.P. Morgan. Bear Stearns is no longer a business entity under this agreement. And if the fiction that this is a 'loan' to J.P. Morgan was true, then the only point at which the 'collateral' would become an issue would be in the event that J.P. Morgan itself was to fail. No, this is not a loan. It is a put option granted by the Fed to J.P. Morgan on a basket of toxic securities. And it is not legal."

Finally, it appears that even the SEC Chairman, Christopher Cox, isn't sure that Bear was "done"; that is, this entire transaction might smell like dead fish:

"In what is likely to be a bit of a blockbuster, SEC chairman Christopher Cox sent a letter to Swiss regulators indicating the Bear Stearns (NYSE:BSC) did not have to go the way of all flesh. According to The New York Post "the fate of Bear Stearns was a lack of confidence, not a lack of capital," Cox, the head of the Securities and Exchange Commission, wrote in a five-page letter sent to a Swiss regulator.""

So there you have it.

Now, the question is, do our Congressfolk have the necessary will to stop this raiding of the public treasury for the enrichment of a private firm - if necessary, by bringing the above article of impeachment?

[Demeter]

36. A Man-Made Famine By Raj Patel

http://www.informationclearinghouse.info/article19759.htm


There are many causes behind the world food crisis, but one chief villain: World Bank head, Robert Zoellick



16/04/08 "The Guardian" -- - For anyone who understands the current food crisis, it is hard to listen to the head of the World Bank, Robert Zoellick, without gagging. Earlier this week, Zoellick waxed apocalyptic about the consequences of the global surge in prices, arguing that free trade had become a humanitarian necessity, to ensure that poor people had enough to eat. The current wave of food riots has already claimed the prime minister of Haiti, and there have been protests around the world, from Mexico, to Egypt, to India.

The reason for the price rise is perfect storm of high oil prices, an increasing demand for meat in developing countries, poor harvests, population growth, financial speculation and biofuels. But prices have fluctuated before. The reason we're seeing such misery as a result of this particular spike has everything to do with Zoellick and his friends.

Before he replaced Paul Wolfowitz at the World Bank, Zoellick was the US trade representative, their man at the World Trade Organisation. While there, he won a reputation as a tough and guileful negotiator, savvy with details and pushy with the neoconservative economic agenda: a technocrat with a knuckleduster. His mission was to accelerate two decades of trade liberalisation in key strategic commodities for the United States, among them agriculture. Practically, this meant the removal of developing countries' ability to stockpile grain (food mountains interfere with the market), to create tariff barriers (ditto), and to support farmers (they ought to be able to compete on their own). This Zoellick did often, and enthusiastically. Without agricultural support policies, though, there's no buffer between the price shocks and the bellies of the poorest people on earth. No option to support sustainable smaller-scale farmers, because they've been driven off their land by cheap EU and US imports. No option to dip into grain reserves because they've been sold off to service debt. No way of increasing the income of the poorest, because social programmes have been cut to the bone.

The reason that today's price increases hurt the poor so much is that all protection from price shocks has been flayed away, by organisations such as the International Monetary Fund, the World Trade Organisation and the World Bank.,Even the World Bank's own Independent Evaluation Group admits that the bank has been doing a poor job in agriculture. Part of the bank's vision was to clear away the government agricultural clutter so that the private sector could come in to make agriculture efficient. But, as the Independent Evaluation Group delicately puts it, "in most reforming countries, the private sector did not step in to fill the vacuum when the public sector withdrew." After the liberalisation of agriculture, the invisible hand was nowhere to be seen. But governments weren't allowed to return to the business of supporting agriculture. Trade liberalisation agreements and World Bank loan conditions, such as those promoted by Zoellick, have made food sovereignty impossible.

This is why, when we see Dominique Strauss-Kahn of the IMF wailing about food prices, or Zoellick using the crisis to argue with breathless urgency for more liberalisation, the only reasonable response is nausea.

http://commentisfree.guardian.co.uk/raj_patel/2008/04/a_manmade_famine.html

[Demeter]

38. March Housing Starts Down 36.5% Year-over-Year

http://nationaleconomist.com/blog/2008/04/16/march-housing-starts-down-119/

New construction of U.S. houses plunged to the lowest level in 17 years in March, the Commerce Department estimated Wednesday. Starts fell 11.9% in March to a seasonally adjusted 947,000.

This is the lowest level of starts since March 1991. Starts are down 36.5% year-on-year.

Starts of new single-family homes fell by 5.7% to 680,000 in March, while starts of large apartment units fell 24.6% to 267,000. Building permits, a leading indicator of housing construction, fell 5.8% to a seasonally adjusted annual rate of 927,000. This is the lowest level of permits since April 1991

[Demeter]

39. The Madness of Ben Bernanke By Gabor Steingart in Washington

http://www.spiegel.de/international/business/0,1518,547317,00.html

The dollar is in a tailspin, the trade deficit is growing and a recession is on the horizon. The American way of life is in serious danger. But the head of the Federal Reserve keeps on pumping easy credit into the system -- a crazy policy that will worsen the crisis.

Alan Greenspan and Ben Bernanke have more in common with the big cat entertainers Siegfried & Roy than any of us can be comfortable with. The Las Vegas magicians call themselves "Masters of the Impossible" and have been fascinating audiences for decades by getting snow-white tigers to leap through burning rings. The legendary Federal Reserve Chairman and his successor were equally adept at fascinating their audiences -- with a policy of miraculous monetary growth that gave America one of the longest periods of economic expansion in modern times. Many saw them as "Masters of the Universe." It seemed as if the central bankers had tamed predatory capitalism with their constant interest rate cuts.
Siegfried & Roy at times seemed at one with their cats, until the day everything went out of control. A tiger bit Roy in the neck during a show and looked as though it were about to devour him alive.

Greenspan and Bernanke too have lost their magic touch, and their image has been shredded by the real estate crisis and the dollar slide. The ravages of the financial markets aren't doing them any personal harm. But devalued stocks, bad mortgage loans and the diving dollar are damaging millions of small investors and savers....It's as if the tiger has leapt of the stage and is mauling the audience. We can't blame wild cats or financial markets for being ruthless. It's in their nature to be brutal. Their unmistakeable message is: you can take things this far and no further.

In the case of the real estate crisis which reached the banks and is now unsettling the stock markets, the markets are now showing what G7 finance ministers and central bank governors meeting last weekend in Washington for their annual spring get-together declined yet again to admit publicly: Americans must change their lives -- or it will be changed for them by force.

American Way of Life Under Threat

The credit-financed consumer boom of recent years is coming to a painful end. Today's American Way of Life has no chance of surviving the coming years undamaged. The virus will continue to ravage its way through the financial system...The property crisis is likely to spread to credit card providers soon and will then probably infect car manufacturers, furniture makers and all the other firms that owe their sales increases to the growth in credit finance. "The virus will keep on infecting the system," one management board member from a large bank said, requesting anonymity in return for the candour of his analysis. His argument is that banks that grant mortgages to home buyers virtually unable to pay their bills are unlikely to be especially scrutinizing when it comes to lending cash to the buyers of fridges, cars and furniture. Indeed, a furniture store in Miami recently tried to lure consumers with the following offer: buy now, pay your first credit installment in three years, and no need for a down-payment.

The credit-financed way of life is typical of the US these days. Many people resort to credit to plug the gap between the lifestyle they have become accustomed to and their declining wages.

Dulling the Pain With Credit

The borrowed cash is like an anaesthetic against the painful impact of globalisation. Private household debt has been growing by $4 billion each business day for years. All this wouldn't be so bad if the US economy were at least doing well in foreign markets. But it isn't, and hasn't been for a long time. Despite the depreciation of the dollar, which makes imports into the US far more expensive while making US exports cheaper in foreign markets, US manufacturers are finding it hard to sell their products...Contrary to forecasts by both the Federal Reserve and the Treasury, the trade deficit has continued to grow, by 6 percent in February alone. America imported $62 billion worth of goods more than they exported in February, including a disturbingly large number of cars, computers and pharmaceutical products. Try as they might, most private households in America can't keep up this consumer miracle. The savings behavior of many Americans means that many of them now live from hand to mouth.

But Bernanke is doing nothing to dampen this hunger for credit. The former advisor to President George W. Bush is even trying to whip up credit-financed consumption by lowering interest rates. This is helping to fuel inflation because the monetary growth isn't being matched by growth in real economic output. Inflation in the US currently stands at 4 percent...It's a paradox. The private commercial banks which have just had to make billions of dollars in write downs have become more cautious. They're scared of further risks. The management resignations at Citigroup and Bear Stearns have had a sobering impact.

Patriotic Madness

Meanwhile the Federal Reserve is urging the banks to go on taking risks. It has been injecting cash into the banking system for the past half-year while urging bank CEOs in confidential chats to offer more credit. The aim is to keep on financing consumer spending and even to stimulate it further -- for reasons of patriotism. There's a word for this policy -- madness.

But because there is method in this madness, the meeting of mighty central bank governors and finance ministers in Washington over the weekend remained silent about it, at least officially. Outside the meeting rooms, though, there were murmurings about the poisoned legacy of Alan Greenspan and Bernanke's irresponsible behavior. One participant told me: "There's an unwritten code of honor that says central bank governors should refrain from criticizing each other." Not least out of respect for the independence of central banks. But the US is unlikely to realize the error of its ways on its own. "The Americans will always do the right thing," British Prime Minister Winston Churchill once said, "after they've exhausted all the alternatives."

Central bankers and tiger tamers have something else in common -- obstinacy. Roy has recovered from his wounds and wants to return to the stage in Las Vegas. "The magic is back," came the defiant announcement. Alan Greenspan cut a similarly indestructible figure at the weekend. Even though criticism of his cheap money policy was only murmured privately, the 82-year-old legend of central banking said: "I was praised for things I didn't do. I am now being blamed for things I didn't do."
Not that he ever complained about getting false praise.

[Demeter]

41. How US Capitalism Will End US Military Adventurism By Peter K. Vickers

http://www.informationclearinghouse.info/article19756.htm


16/04/08 "ICH" --- - You know those overused phrases right? Those quips like 'What goes around comes around'; 'Karma is a bitch'; 'You reap what you sow'; the trite off the cuff sayings about shared human morality that used to hold some wisdom, but have long since become empty verbiage? I'm sure if you thought for just a moment you'd come up with another cliché in the same vein, that you could say and then laugh at how stupid it sounds, how meaningless it has become.

How about 'The bigger they come the harder they fall.'

I hope all of you in the USA are ready because Karma really is a bitch, and Ezekiel's Wheels are spinning out of your control, and the weight when they come to ground on America is going to hurt more than anything you can imagine. The gods of Mammon you have raised up will not be kind and millions of you are already beginning to feel the financial pain. You will not only lose your economic advantages in the fall to come, but harder to bear will be the loss of your illusions about your morality, your superiority, your supremacy, and your vaunted exceptionalism. As in your blind aggressions in foreign lands the innocent within America will be collateral damage. None but those of you who have so blatantly looted your country's coffers will be spared in the coming economic conflagration, and those vultures will simply flee to their international redoubts and leave you to your wretched misery.

Most Americans know instinctively, beyond the fog of flag-waving and hollow hymn singing, deep in their souls, that the invasion and occupation of Iraq is a crime of monstrous proportions, one committed in their name, with their permission, by those they elected and those they armed and equipped, a crime they could end at any time but do not. Any student of history also recognizes this aggression to be just the latest in a series of heinous crimes committed on innocents around the globe by the modern world's most egregious and dangerous country, a country once blessed, now drunk on power, cursed with addictions to venality, gangsterism, careless obese consumption and usury the likes of which has never been witnessed before. With so much original promise squandered America has allowed itself to become a vampire culture, consuming all it touches including its own natural wealth, its principals and institutions, its legacy, and in a final maddened act of social cannibalism devouring the future of its young and itself.

Poetic blind justice is about to render her verdict there in the land of the 'light on the hill', the Camelot of history’s most brutal and deluded killer culture. Not one country has had the strength to stand against American weapons and legions as they have killed millions in brutal aggressions over the last hundred years, but the USA has sown the seeds of its own destruction in the wanton, neo-liberal capitalism it has inflicted on the entire world, in the cost of its endless military adventures, in the social Darwinism that underpins American 'morality' and ‘theology’ and therein lies the self-administered poison that has rotted out the heart and guts of America and signals its inevitable demise. We know that the distress of this impending collapse in the US economy will extend into Canada and abroad, and that it will be very tough, and with the consequences clearly held, most global citizens stand ready to bear the suffering of this most necessary cure. A small price to pay for the future of our planet and our children, for those who are dying and will die under the guns of your young murderers in far-flung countries; a pittance in pain to finally be freed from all facets of this terminal malignant made-in-USA malady! It is finally becoming obvious even to Americans that their country has swallowed the poison pill which as we speak brings on the systemic failures which will ultimately silence the ravening dogs of war and deadly consumption that exude across the 49th parallel and around the world, a plague that left to continue its feral spread would be the end of all of us.

For you Americans who smell the rot that pervades your country and your culture, we feel pain and comradeship for what is to come but this cleansing must take place. The alternative is not something that humanity or the biosphere as we know it can survive.

[Demeter]

42. The Most Powerful People in America By Joel S. Hirschhorn

http://www.informationclearinghouse.info/article19752.htm



16/04/08 "ICH" -- -- They are not the rich and superrich, nor the politically powerful running the two-party plutocracy, nor the greedy heads of banking and finance companies, and certainly not the media moguls and bloviating pundits. The most powerful people are US, American consumers that account for over 70 percent of the economy. It is exactly now, when the economy is in the toilet, that consumers hold the maximum power. So why are we the people still deluding ourselves that the path to a better future rests on electing a new president?

We are suckers, conditioned by decades of clever marketing and advertising to believe the lies of politicians, and worst of all to believe that elections and our votes provide us with power. Wrong. Our real power can only be manifest through our spending dollars.

The overwhelming majority of Americans have been severely damaged by economic oppression by government policies that have produced historic economic inequality. Yet, despite revolting conditions, Americans seem unwilling to revolt by using their remaining economic power. They have let themselves become economic slaves. What is amazing and depressing is that there are no national leaders from the worlds of politics, religion, education, media or public interest that are attempting to harness consumer power at this critical time. No one is capturing the public’s attention by making it crystal clear that consumers could obtain any political or economic reform in the public interest by joining together to withhold their discretionary spending.

Where are the anti-Iraq war leaders? Why are they not shouting about forcing an immediate commitment to ending the Iraq war by using the power of a massive consumer boycott that clearly could destroy the whole economy? Tell President Bush that consumers will greatly curb their spending for a month to give him time to implement a plan for withdrawal from Iraq. Make it clear that the coming federal rebates will not be used for spending. Make it clear that Bush inaction will result in continuation of the boycott.

Where is Ralph Nader, the ultimate consumer advocate? Why is he not proclaiming the brilliance of a consumer boycott as the winning tactic to force effective government assistance to the millions of Americans screwed by the sub-prime mortgage fiasco and about the lose their homes?

Where is Barack Obama, who supposedly wants to produce change? Rather than putting all his energy into satisfying his egoistic hunt for the presidency, why is he not talking about harnessing consumer power right now to get political reforms, like .ending trade agreements that are destroying the middle class? Why does he not send a clear message to his million-plus contributors to join a national consumer boycott to obtain immediate concessions from the Bush administration?

Where are the professors who have published books making the case for a second constitutional convention as the way to restore American democracy? Not one has the courage to say that the way to get Congress to obey Article V of the Constitution and convene that the first Article V convention is by American consumers threatening to plunge a dagger into the heart of American business. Now is the time for all the millions of Americans that make up the 81 percent who see the nation on the wrong track to take action, to think like patriotic revolutionaries and take the power that now only exists with their spending. Sounds simple. All this strategy needs is leadership. Rather than spending so much time and energy on the media-hyped presidential campaign, we the people should demand that someone step forward to inform and mobilize consumers to become powerful citizens by using their spending as the ultimate populist political weapon.



Joel S. Hirschhorn can be reached through www.delusionaldemocracy.com. He is a co-founder of Friends of the Article V Convention at www.foavc.org.

[Demeter]

44. Well, Here's Ralph Nader....

http://www.informationclearinghouse.info/article19753.htm

Bailout Bonanza By Ralph Nader

16/04/08 "ICH' --- - Is there a larger, more exploited, defenseless group of undifferentiated Americans than the 133 million individual federal income taxpayers? Their dollars are used to subsidize organized corporate interests, giveaway taxpayer assets like minerals under the public lands, and bail out speculative, self-enriching corporations and their crooked bosses.

As large corporations, and their trade associations, complete their takeover of the federal government—a process that President Franklin Delano Roosevelt called fascism in 1938—the corporations become the government...Recently, the student loan scandals, exorbitant burdens on students graduating from college imposed on them by companies with influence in Washington, like Sallie Mae, whose government guarantees make a mockery of capitalism, have riled members of Congress to some modest action. Once again this year, the big boys on Wall Street stretched the envelope of risk and greed and ran down to Washington, D.C. to be bailed out by the accommodating Federal Reserve. Chairman Ben Bernanke testified before the Senate that he had no choice but to take on about $30 billion of Bear Stearns obligations or there could be a run on other big banks. Where was the Federal Reserve when this credit, debt and risk spree was building during the past five years? There is no penalty for failure—whether on Wall Street or in Washington, D.C. for misusing or wasting the taxpayers’ monies. When the heads of Citigroup and Merrill Lynch were asked to leave their positions recently as CEOs after tanking their companies’ shares, they could barely avoid tripping over the many millions of dollars they were taking with them through the exit door. Among many perverse incentives operating within these Wall Street firms, there are rewards for failure—big bucks rubber-stamped by the look-the-other-way, well paid Boards of Directors.

Back in 1971 and 1980 respectively, the White House proposed a $250 million loan guarantee for Lockheed corp., and a $1.5 billion loan guarantee for Chrysler with the government taking back warrants that it later sold for a profit. There was intense debate and discussion at public hearings in the House and the Senate before they authorized the guarantees. Now federal agency bailouts of big business, even Mexican oligarchs, rarely seek Congressional approval. Just have the Executive Branch do what it wants. No public hearings. Midnight bailouts without transcripts.

I asked a powerful Senator: “What are the discernable legal limits on the Federal Reserve’s bailout authority and how much total risk can the Federal Reserve heap on the taxpayers?” “Can they go to a trillion dollars?” He did not know...

What can be done about these gigantic runaway sprees?

First, pass legislation that broadens individual taxpayers’ right to sue in federal court against waste, fraud and abuse, including those receivers of bailouts—the reckless, avaricious corporations who have Uncle Sam in their back pockets. Second, have a voluntary checkoff on the 1040 tax return inviting individual taxpayers to join their own taxpayer defense organization. Such a group would have millions of small dues paying members and an on-the-spot skillful watchdog group in our national capital. Finally, place our public elections off the private auction block and have them funded by well promoted voluntary checkoffs on the tax returns together with a certain amount of free radio and television time for ballot-qualified candidates seeking federal office.

These and other proposals, such as giving shareholders more power to restrain their top executives, will give taxpayers some grip on the wide-open spigot of taxpayer dollars delivered to the misfits of the giant corporate world.

http://www.nader.org/

[Hugin]

53. Point of order, Demeter...

First of all, I hope yesterday worked out o.k. for you!


Secondly, although we here in the SMW appreciate your enthusiastic posting style... Unless it's been rescinded and
I wasn't informed. (I always miss the memos) There is a function within DU which will automatically tombstone a poster
who exceeds an unspecified number of posts in a unspecified amount of time. Although this function is in place to
discourage 'spamming posters' and is useful in that way... Occasionally, it reacts to otherwise well meaning, but,
energetic posters. Just so you know...

We'd miss you! (Although, I imagine your account could be reactivated by sending a e-note to the Admins. It would cause
a lapse in the info inflow we all cherish here on the SMW.)

[Demeter]

59. Okay! Thanks for the Heads Up

[Hugin]

64. I've seen it happen a couple of times...

I don't think you were all that close, but, being that it's sort of like a lightning strike out of nowhere. Better to be forewarned and forearmed.

Since it's automatic it's sort of like a rule of Nature. Also, I find it rude! How rude and impersonal! To be interrupted
in the middle of a big RANT! Damn, whatever happened to the 1st Amendment, anyway!

CALL YOUR CONGRESSPERSON!!!11!!!

[UpInArms]

69. well - how about that!

I never knew - so I went in search and here 'tis:

Duplicate Topics and Spamming

Do not post duplicate topics that have already been posted. There are different levels of enforcement in different forums. For example, the Latest Breaking News forum has extremely strict rules against duplicate topics, but the General Discussion forum is much more lenient. Cross posting of duplicates in the two General Discussion forums is not permitted. Cross-posting of duplicates in other forums is occasionally permitted if there is a clear reason for doing so.

Do not spam the message board by posting the same message repeatedly, or by posting a flood of different messages. We have an automatic spam filter which blocks out members who post numerous messages in a short period of time.

It's a wonder I haven't been banned!

:rofl:

[Karenina]

78. WOW! Demeter, THANK YOU SO MUCH!!!

ALL of your posts here are required reading. Your dedication knows no bounds nor does my deep appreciation for your efforts! THANK YOU!!! :hug::loveya::hug:

[Demeter]

50. And Now, on a Personal Note

Yesterday my sister and I and supporters were in Probate for the second episode of guardianship hearing over whether the state is going to take my daughter. We did not finish, and there will be a continuation in May.

The state did not have a good day. In fact, Adult Protective Services went into a meltdown in the first 5 minutes, and hd to call her supervisor!

(Three hours of strategizing with one's attorney and evil genius sister pay off).

We trashed the whole issue of abuse, and now they have fallen back upon 2 other attacks:

1) My housekeeping skills

2) My lack of involvement in my daughter's life since they took her away and told me I couldn't do anything with her. I'm supposed to be bossing the staff at the group home around! I'm supposed to write letters and make phone calls to say a) the bedspring is scratching my daughter's legs. b) the bathtub doesn't hold water so the kid can't bathe. c) the washing machine isn't level and the staff can't wash her underwear (chronic diarrhea due to her disability). d). The toilet hasn't been cleaned since her latest bout of diarrhea. Where is the state appointed guardian, you may well ask? Isn't the child's welfare her job now?

I'm supposed to drag a staffer along if I want to take my daughter anywhere (no idea who pays for the extra ticket), but I now have permission to take her out on outings. Cozy, don't you think?

Adult Protective Services is working without a net, or attorney, but seems to get coaching from the guardian ad litem who is only supposed to be interested in the child's side, not the state's.

It was amusing when Adult Protective Services asked my sis if she was a mother, and sis said no, shutting down another round of "Mom bashing". Then the guardian ad litem asked my sis for her "credentials" and after my sister expounded upon her 3 degrees, her 4 patents, her international business career, and her University teaching, that shut down that line of attack as well.

Odds still against our side, but looking a whole lot better. It was a good day, and the extra time means we can get the expert witness in, too! Round 3 scheduled for May 9th.

[Hugin]

54. Thanks for the update, Demeter.

You know we're all rooting for you.

[UpInArms]

58. glad you had a better day, Demeter

we all stand with you and are rooting for you

:grouphug:

[Karenina]

79. And even in the midst of such personal trauma

one who is providing such important information to us all must worry about being BANNED??? :freak:

Perhaps a heads-up to our Administrators is in order that the wheat be separated from the chaff. They ARE accessible and reasonable.

[AnneD]

63. And they'll keep stalling ....

and stalling. Frankly, you and your attorney and evil genius sister should go on the offensive against CPS now. It wasn't until my attorney started going after them and the judge threatened to put a bench warrant for the arrest of the director for contempt of court that we got some movement and they backed down. That entire system is so warped. I truly feel your pain. My mistake in my first child custody case was not hitting ex's wallet hard enough to put substantial fear of God into him.....

:hug:That's for you babe.....

[Demeter]

82. Oh, But The State Has Immunity--Just Like W!

He must have studied this paradox carefully.

[AnneD]

87. Judges are (should be) independent...

judge gave them until 4 that afternoon to release her. And he was hot....

[UpInArms]

56. FedSpew: Konn attempts to act tough

01. Kohn sees financial system operating with less leverage
9:50 AM ET, Apr 17, 2008

02. Kohn: Regulators need to focus on investment bank liquidity
9:49 AM ET, Apr 17, 2008

03. Kohn: Small banks have risks from commercial real estate
9:48 AM ET, Apr 17, 2008

04. Kohn gives banks long 'to do' list of necessary reforms
9:46 AM ET, Apr 17, 2008

05. Fed's Kohn: U.S. financial system has major weaknesses
9:45 AM ET, Apr 17, 2008

[UpInArms]

61. First Horizon profit falls 89 percent

http://www.reuters.com/article/bondsNews/idUSN1729415720080417?sp=true

WASHINGTON, April 17 (Reuters) - First Horizon National Corp (FHN.N: Quote, Profile, Research), the largest bank in Tennessee, said on Thursday first-quarter earnings fell a steeper-than-expected 89 percent, hurt by higher loan loss provisions and portfolio deterioration.

The bank said it will continue to shrink its mortgage banking business over the next several quarters but believes the segment still has value over the long term.

The company reported net income of $7.9 million, or 6 cents per share, compared with a profit of $70.5 million, or 55 cents per share, a year earlier.

Analysts on average had forecast earnings of 11 cents per share, according to Reuters Estimates.

First Horizon's provision for loan losses increased to $240 million in the quarter from $156.5 million in the prior quarter.

It said the increased provisioning reflects portfolio deterioration, especially in national construction and home equity portfolios.

...more...

[Tansy_Gold]

88. Aaaahhh, the dreaded "portfolio deterioration"

In other words, "We done bought ourself a heap o' junk. Now you folks is gonna pay for it." (Read, "Not us, and not the slimy bastards who sold it to us.")


Tansy Gold, still growling from this morning

[antigop]

68. GE Unit to buy CitiCapital

http://money.cnn.com/2008/04/17/news/companies/ge_citicapital.ap/index.htm

Citi sells off seven of its 'non-core' business divisions for undisclosed price in cost-cutting move.


NEW YORK (AP) -- General Electric Co. reached a deal to buy Citigroup Inc.'s commercial lending and leasing business - CitiCapital - for an undisclosed price, the companies said Thursday.

General Electric's GE Capital division is buying seven lending units from Citi: healthcare, private-label equipment, material-handling, franchise, construction equipment, bankers leasing and the Canadian division.

The acquired businesses have $13.4 billion in assets, 160,000 customers in North America and 1,400 workers.

Citi (C, Fortune 500) said the deal is part of the company's plan to jettison "non-core" businesses to focus on the most profitable opportunities.

Hmmm....sold for "undisclosed price" -- a fire sale, perhaps?

[AnneD]

75. It's been a slow new day so I think....

It's time to POLKA......
This song goes out to the candidates wanting to live at Pennsylvania Ave and voters in Pennsylvania...ompa:toast::toast: :beer:

"The Pennsylvania Polka" by Lester Lee and Zeke Manners, published in 1942


Strike up the music the band has begun
The Pennsylvania Polka
Pick out your partner and join in the fun
The Pennsylvania Polka
It started in Scranton. It's now number one
It's bound to entertain ya
Everybody has a mania to do the polka from Pennsylvania

While they're dancing
Everybody's cares are quickly gone
Sweet romancing
This goes on and on until the dawn.
They're so carefree
Gay with laughter, happy as can be
They stop to have a beer
Then the crowd begins to cheer
They kiss and then they start to dance again.

Strike up the music the band has begun
The Pennsylvania Polka
Pick out your partner and join in the fun
The Pennsylvania Polka
It started in Scranton. It's now number one
It's bound to entertain ya
Everybody has a mania to do the polka from Pennsylvania.


:party: Everybodys in a mania to do the Polka from Pennsylvania...:beer:

[Demeter]

83. Timely and Ethnic!

As a 100% Pollack watching the next primary, I feel doubly well-treated by your selection! Dancing down to dinner.....

[UpInArms]

86. end o' the day

Dow 12,620.49 1.22 (0.01%)
Nasdaq 2,341.83 8.28 (0.35%)
S&P 500 1,365.56 0.85 (0.06%)
10-Yr Bond 3.729% 0.033

NYSE Volume 3,715,606,500
Nasdaq Volume 1,862,320,875

Stocks were challenged Thursday to extend the prior day's surge. The indices spent the majority of the session modestly lower until making a late day push to higher ground, but the stock market settled at the unchanged level.

Investor sentiment was initially bolstered by a solid first quarter report from bellwether IBM (IBM 123.08, +2.61). IBM announced after yesterday's close better than expected earnings results and increased its full-year earnings outlook above the consensus forecast.

However, disappointing announcements from investment bank Merrill Lynch (MER 46.71, +1.82) and pharmaceutical company Pfizer (PFE 20.40, -0.70) led to pessimism among investors. Merrill, for its part, announced a loss of $2.20 per share, which fell $0.21 short of the consensus earnings estimate. The firm also announced asset backed security write-downs of $1.5 billion and an additional $3.0 billion in write-downs related to financial guarantees. As for Pfizer, the company reported first quarter earnings of $0.61 per share, which was a nickel short of the consensus estimate.

Despite the announcement from Merrill, brokers and investment banks (+3.0%) were able to advance markedly on the session. Citigroup (C 24.03, +0.59) also climbed after announcing it will sell CitiCapital, its North American commercial lending and leasing business, to General Electric's (GE 32.02, -0.21) GE Capital. Overall, financials (+1.4%) outperformed the other major economic sectors.

Jobless claims for the week ending April 12 totaled 372,000. On average, economists had expected jobless claims to total 375,000. Claims were up from the prior week's revised reading of 355,000 jobless claims.

In other economic news, Philadelphia's regional manufacturing index, the Philadelphia Fed Survey, came in at -24.9, that was worse than the expected reading of -15.0 and down from the prior month's reading of -17.4.

The Conference Board's leading economic indicators report for the month of March posted a 0.1% increase, which matched economists expectations. The previous reading indicated a decline of 0.3%.

Though crude oil finished the session at $114.78 per barrel, near the unchanged mark, it recorded a new intraday high of $115.54 per barrel earlier in the session.DJ30 +1.22 NASDAQ -8.28 NQ100 -0.3% R2K -0.8% SP400 -0.4% SP500 +0.85 NASDAQ Dec/Adv/Vol 1748/1107/1.82 bln NYSE Dec/Adv/Vol 1548/1583/1.23 bln

3:30 pm : Stocks have made a late-day push out of negative ground to test their best levels of the session. The advance, however, has waned.

Financials (+1.4%) remain the best performing sector, followed by the consumer discretionary (+0.6%) sector. Financials are being helped by the brokers and news that General Electric's (GE 32.08, -0.15) GE Capital will acquire most of Citigoup's (C 23.97, +0.53) CitiCapital.

Tech (+0.3%) and energy (+0.1%) have joined the pair to trade in the green.DJ30 +12.37 NASDAQ -6.40 SP500 +0.86 NASDAQ Dec/Adv/Vol 1711/1144/1.49 bln NYSE Dec/Adv/Vol 1570/1530/940.50 mln