STOCK MARKET WATCH, Tuesday September 16

[ozymandius]

Source: du

STOCK MARKET WATCH, Tuesday September 16, 2008

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 124
DAYS SINCE DEMOCRACY DIED (12/12/00) 2795 DAYS
WHERE'S OSAMA BIN-LADEN? 2520 DAYS
DAYS SINCE ENRON COLLAPSE = 2811
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.
$1 USD = EUR 1.06678
$1 USD = JPY 116.6200

AT THE CLOSING BELL ON September 15, 2008

Dow... 10,917.51 -504.48 (-4.42%)
Nasdaq... 2,179.91 -81.36 (-3.60%)
S&P 500... 1,192.70 -59.00 (-4.71%)
Gold future... 787.00 +22.50 (+2.86%)
30-Year Bond 4.15% -0.17 (-4.02%)
10-Yr Bond... 3.48% -0.25 (-6.62%)






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

[Demeter]

1. Good Morning, Ozy! What Does Your Crystal Ball Say for Today?

[ozymandius]

3. Let me see... quite a few scratches on the plastic... some yellowing

AIG will rule the day. It's been downgraded by two ratings agencies as of last night. Now there's talk about filing bankruptcy now that we're no closer to a rescue of the largest U.S. insurance company. This is despite the fact that it was allowed by the State of New York to tap cash held by subsidiaries to fund day-to-day operations.

OY! This is going to sting a bit. No guess as to where the averages will wander and to the extents.

And - good morning. :donut:

[TomClash]

9. A rally in equities

A 50 point Fed Funds rate cut is on the way.

[girl gone mad]

31. I think I'd be selling into this rally.

I've been all treasuries for a while, but if I had stock, I'd sell into strength and pick it up again someday in the future.

[TomClash]

105. dow's up slightly right now nt

[Roland99]

14. The Futures are bright! Everybody jump in! The water's fine!

DJIA INDEX 10,968.00 +19.00 05:46
S&P 500 1,196.00 -0.10 05:47
NASDAQ 100 1,730.75 +9.50 05:47

[Roland99]

36. Futures taking turn south. At 7:17am DJIA -94

[Ghost Dog]

47. More folks taking on board nadinbrzezinski's LISTEN UP thread:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x4010456#4010568

And guerrilla campaigning...

[Hugin]

59. I went over and K&R'ed it.

Hard to argue with the truth.

Thanks for bringing that thread to my attention Ghost Dog. :thumbsup:

[Ghost Dog]

69. I've been waiting for economics to become your BIG ELECTION ISSUE

for a long time... ;)

[Ghost Dog]

196. ... And please do see #158 below:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3491922#3492789

[ozymandius]

2. Market WrapUp

Disconnection
The US financial system morphs into Wonderland
BY TONY ALLISON

“It would be so nice if everything made sense for a change.” – Alice (in Wonderland)

Presidential election years are always a strange brew of unusual economic events, but this year has raised the bar to an entirely new level. A series of disconnections have left many scratching their heads, but expect them to continue, at least until Election Day. Let’s look back over the last few months in “Wonderland.”

The dollar, without fundamental legs to stand on, has vaulted higher in near vertical fashion, wreaking havoc on all commodity-based assets around the world. The Fed has been forced to lend out nearly 60% of its balance sheet to keep the banks solvent. The US trade deficit is on track to be over $800 billion this year and the budget deficit could soar to $500 billion, counting small off-budget items such as the Iraq War. The credit crisis is exploding on Wall Street, while Main Street deals with a deepening recession. However in Wonderland, the dollar presses ever higher.

.....

Black is white, Up is down

As Fannie Mae and Freddie Mac are nationalized and become wards of the state (at a cost of $300 billion or more), the Federal government's balance sheet takes on another 5 trillion dollars in debt. This is apparently great news, as the dollar continues to move up dramatically. The markets must believe this and other bailouts to come must be good for the dollar. However, without foreign capital flowing into our Treasury in much larger amounts, how will the government pay for all this largess (and the largess yet to come) short of printing massive amounts of dollars? For the moment, who cares, when up is down and black is white?

The Grand Plan in Wonderland

Even in Wonderland there is a method to this madness. Some have theorized that the Grand Plan, hatched by Treasury Secretary Paulson and Fed Chairman Bernanke, was to use the excessive leverage in the hedge fund sector and force a massive de-leveraging, crushing the commodity sector, boosting the dollar and taking the pressure off the financial sector. A key benefit was to lower the cost of gasoline to hard-pressed consumers just before the election. The plan has seemingly worked very well, however it is likely just a “holding action.” And when the hedge funds have de-leveraged and dumped their commodity positions, what next? It would seem the wildly oversold commodity sector may just rebound, perhaps violently after the de-leveraging ends. Timing is everything, and Paulson and friends just want to hold off the cracks in the dike for another six weeks.

The part of the plan about taking pressure off the financial sector hasn’t worked out quite as well. With the dollar soaring and commodities plunging, the financial sector has continued in its primary trend, falling off a cliff.

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

[Demeter]

4. Nintendo makes more profit per employee than Goldman

http://www.ft.com/cms/s/0/9d9624a4-8341-11dd-907e-000077b07658.html


The programmers of Super Mario Galaxy will generate more profit this year than the average Goldman Sachs banker has ever managed. According to calculations by the Financial Times, the average employee at Japanese video games maker Nintendo is on track to earn more for their company this year than the average Goldman Sachs employee did in 2007, the investment bank’s best ever year. Nintendo also makes more per employee than internet group Google.

For an electronics company to make more per employee than a high-powered investment bank is exceptional, and the figures highlight how profitable Nintendo, a company with less than 3,000 permanent employees, has become after the success of its Wii and DS consoles. Before tax and before pay, the average Goldman employee generated $1.24m in profit last year, based on the company’s accounts. But after Nintendo upgraded its earnings forecast recently, the FT estimates each staff member will produce more than $1.6m in profit this year.

Assuming that most of Google’s overhead expenses are salaries, the equivalent figure for the internet company would be about $626,000 in 2007.

If Nintendo achieves its net profit target of Y410bn ($3.9bn) this year it will also rival Goldman’s pre-tax return on equity, a measure of how well a company uses its shareholders’ capital. Nintendo said that, if anything, the figures under-estimated its profitability per employee because it accounts for some salaries as Research & Development spending.

The FT was unable to deduct these to calculate Nintendo’s true profit-before-pay.

Nintendo is able to make so much money with so few people because it relies on outsourcing. All manufacturing of the Wii is outsourced, and even high-profile games such as Mario Party are developed externally, with oversight from Nintendo producers. In spite of their profitability, however, there is unlikely to be an outbreak of programmers driving Maseratis to work at Nintendo’s headquarters in the southern suburbs of Kyoto.

Whereas at Goldman the mean employee walked away with compensation of $660,000 in 2007 – about half of the profit they generated – the average salary at Nintendo was just $90,900. The rest goes to share-holders.

Nintendo and its staff remain humble – another contrast to the ‘Masters of the Universe’ at big investment banks – in spite of the pressures of running a company that now has a market capitalisation of $64bn. “We are not experiencing success,” says one long-time Nintendo employee, with no sign of dissatisfaction, “just increased overtime”.

THAT DOESN'T SOUND LIKE "HUMBLE" TO ME, THAT SOUNDS LIKE UNIONIZATION WAITING TO HAPPEN...

[Demeter]

7. Landmark launch of Indian Intel chip

http://www.ft.com/cms/s/0/2b537008-834c-11dd-907e-000077b07658.html


Intel is to launch the first microprocessor for the mass market that it has developed almost exclusively at its design centre in Bangalore in a milestone for the research and development of computer hardware in India. The US-based chipmaker’s Xeon Processor 7400 Series will feature six “cores” or processing units built into each chip, making it suitable for use in servers handling intensive enterprise applications. Previous chips had only four cores.

“It’s not just services and software that India is known for but this shows you also can do this kind of complex research and development and product design here in India,” said Praveen Vishakantaiah, president of Intel India.

India is known for its computer services outsourcing companies that develop and maintain software for third-party clients but its engineering prowess in designing and building information technology hardware is less well known. Many leading multinational IT companies and some outsourcing groups have long had hardware design units in India, which assist their foreign headquarters or clients in the development of chips and other components. In the past, few companies had developed complex products for the mass market from start to finish at their centres in India, but that is changing. “There is a huge gamut of product design that is happening out of India,” said Vinnie Mehta, executive director of India’s Manufacturers Association of Information Technology.

Intel’s Xeon 7400 processor will be used in the high-end segment of the global server market. The server industry generated total sales in the second quarter ended June of $13.9bn, according to IDC research company. The Xeon 7400, codenamed “Dunnington” during its development, is designed to handle heavy workloads typically associated with memory intensive business applications such as databases, enterprise resource planning programs and other software. The servers in which it will be deployed would typically be used by IT-intensive companies such as stock markets, investment banks and other organisations.

The development of a chip capable of standing up to the requirements of businesses requires exhaustive testing. Although not much bigger than a matchbox, the six-core processor contains 1.9bn transistors, each of which must be tested individually. Engineers at Intel’s Bangalore laboratories also had to test the chip to ensure it is compatible with almost all existing and forthcoming software.

[ozymandius]

5. Today's Reports

08:30 Core CPI Aug
Briefing.com 0.2%
Consensus 0.2%
Prior 0.3%

08:30 CPI Aug
Briefing.com -0.2%
Consensus -0.1%
Prior 0.8%

09:00 Net Foreign Purchases Jul
Briefing.com NA
Consensus NA
Prior $53.4B

14:15 FOMC Policy Statement

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

[ozymandius]

19. Consumer Prices in U.S. Probably Fell in August on Cheaper Fuel

Sept. 16 (Bloomberg) -- Prices paid by U.S. consumers probably dropped in August for the first time in almost two years as fuel costs retreated and retailers discounted merchandise, economists said before a government report today.

The cost of living dropped 0.1 percent after jumping 0.8 percent in July, according to the median forecast of 75 economists in a Bloomberg News survey. Excluding food and energy, so-called core prices likely rose 0.2 percent following a 0.3 percent increase the prior month.

The diminishing threat of inflation may make it easier for Federal Reserve policy makers today to lower interest rates to mitigate the damage from the collapse in credit that brought down Lehman Bothers Holdings Inc. Companies such as General Motors Corp. and J.C. Penney Co. are offering discounts to revive sales.

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

---

I am curious to see what they "cook" up.

[durablend]

114. Pardon my French

BULL SHIT!!!!!!!!!!!!!!

Nothing I buy went down...majority of it went through the roof.

[ozymandius]

119. Of course it's a bunch of crap.

Core inflation is still taken seriously. Plus there is the invisible distinction between 'want' and 'need'. Items we need are considered secondary to those we want.

[UpInArms]

49. CPI up 5.4% in past year, core CPI up 2.5% - Aug. real weekly earnings down 2.5% in past year

01. U.S. Aug. food prices up 0.6%
8:30 AM ET, Sep 16, 2008

02. U.S. Aug. CPI owners equivalent rent up 0.1%
8:30 AM ET, Sep 16, 2008

03. U.S. Aug. CPI energy prices fall 3.1%
8:30 AM ET, Sep 16, 2008

04. U.S. Aug. real weekly earnings down 2.5% in past year
8:30 AM ET, Sep 16, 2008

05. U.S. CPI up 5.4% in past year, core CPI up 2.5%
8:30 AM ET, Sep 16, 2008

06. U.S. Aug. core CPI up 0.2% as expected
8:30 AM ET, Sep 16, 2008

07. U.S. Aug. consumer price index falls 0.1% as expected
8:30 AM ET, Sep 16, 2008

[ozymandius]

6. Oil plunges to $92 in Asia on US credit fears

SINGAPORE - Oil prices plummeted Tuesday in Asia, falling briefly below $92 a barrel as investors feared the U.S. credit crisis that brought down brokerage giant Lehman Brothers will drag on global economic growth and restrain demand for crude.

Light, sweet crude for October delivery tumbled $3.59 to $92.12 a barrel in electronic trading on the New York Mercantile Exchange midafternoon in Singapore. It briefly fell as low as $91.54. Overnight, the contract dropped $5.47 to settle at $95.71, the first time oil closed below $100 since March 4.

.....

Crude has fallen about $55 — or 37 percent — from its all-time trading record of $147.27 reached July 11.

In other Nymex trading, heating oil futures fell 8.12 cents to $2.71 a gallon, while gasoline prices dropped 7.28 cents to $2.4886 a gallon. Natural gas for October delivery fell 5.2 cents to $7.322 per 1,000 cubic feet.

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

[ozymandius]

8. Asian markets plunge on Lehman, Merrill woes

TOKYO - Asian stock markets tumbled Tuesday as the collapse of Lehman Brothers and takeover of Merrill Lynch spurred fears of a global financial crisis. European markets, which fell sharply Monday, extended losses in early trading.

Japan's benchmark Nikkei 225 index sank nearly 5 percent to 11,609.72 — its lowest close since July 2005. Hong Kong's blue-chip Hang Seng Index shed 5.4 percent. Both markets — Asia's two biggest — had been closed for holidays on Monday, when news first broke about the turmoil on Wall Street that has dramatically changed its landscape.

Across Asia, markets were all deep in the red. South Korea's main index declined 6.1 percent, while Taiwan's benchmark was off 4.9 percent and China's Shanghai index sank 4.6 percent.

....

In Seoul, South Korean banks extended losses. Top lender Kookmin Bank shares declined 8 percent. Hana Financial Group shares fell 10 percent.

In Hong Kong, HSBC lost 4.4 percent, and leading Chinese lender ICBC plummeted 7.7 percent.

http://news.yahoo.com/s/ap/20080916/ap_on_bi_ge/world_markets

[Ghost Dog]

29. Asia central banks try to calm markets with cash, words

TOKYO/JAKARTA (Reuters) - Japan, Australia and India flooded money markets with cash on Tuesday and Indonesia cut one interest rate as central banks tried to prevent the upheaval on Wall Street from freezing the global financial system.

The region's banks dished out nearly $27 billion, following Monday's $70 billion Federal Reserve injection into the U.S. money market, which seized up after Lehman Brothers (LEH.N: Quote, Profile, Research, Stock Buzz) collapsed to become the latest casualty of the 13-month old credit crisis.

...

The Bank of Japan gave the banking system its biggest cash injection in almost six months as the prime minister met top financial policy makers to discuss the fallout of the latest act in the credit turmoil that pushed Lehman into bankruptcy.

The rates at which banks lend to each other jumped in South Korea and the financial hubs of Hong Kong and Singapore, while Asian stock markets, many of them closed for a holiday on Monday, tumbled and currencies whipsawed.

...

"The Bank of Japan will carefully monitor the recent situation surrounding U.S. financial institutions and its impact," Governor Masaaki Shirakawa said in a statement.

The central bank, which begins a two-day rate review on Tuesday, pumped 2.5 trillion yen ($23.67 billion) into the money market in two injections, the biggest since March 31, pushing the overnight call rate slightly lower to 0.52 percent.

...

Indonesia reduced its overnight repo rate, at which commercial banks can borrow overnight funds from the central bank by 200 basis points to 10.25 percent to boost liquidity, while it kept its benchmark BI target rate at 9.25 percent.

The Bank of Japan is expected to leave its benchmark interest rate unchanged at 0.5 percent on Wednesday, with its banking system largely unscathed by the global credit squeeze triggered by U.S. mortgage defaults.

...

The Reserve Bank of India added almost 60 billion rupees ($1.32 billion) through a refinance operation, its biggest injection in at least a month.

And China surprised markets on Monday with its first interest rate cut since 2002, seen partly as support the jittery stock and property markets

Hong Kong, South Korea, Taiwan and New Zealand all offered verbal reassurances.

/... http://www.reuters.com/article/marketsNews/idINSP26879920080916?rpc=44&sp=true

[ozymandius]

10. AIG Credit Ratings Cut, Threatening Quest for Funds (Update1)

Sept. 16 (Bloomberg) -- American International Group Inc., the largest U.S. insurer by assets, had its credit ratings cut by Standard & Poor's and Moody's Investors Service, threatening efforts to raise emergency funds to keep the company afloat.

S&P lowered AIG's long-term counterparty rating three grades to A- because of ``reduced flexibility in meeting additional collateral needs and concerns over increasing residential mortgage-related losses,'' the rating company said yesterday. Moody's cut AIG's senior unsecured debt rating two grades to A2.

The reductions may trigger more than $13 billion in collateral calls from debt investors who bought swaps, according to an Aug. 6 filing from AIG, intensifying pressure on Chief Executive Officer Robert Willumstad to raise cash. New York-based AIG is seeking $70 billion to $75 billion in loans arranged by Goldman Sachs Group Inc. and JPMorgan Chase & Co. to replenish capital, two people familiar with the situation said.

.....

The Fed urged AIG to seek private capital and discouraged the insurer from expecting a loan from the central bank, according to two people with knowledge of the discussions. Goldman and JPMorgan are working with AIG to determine how much the New York-based insurer needs, said two more people, all of whom declined to be identified because negotiations are private.

AIG was given special permission to access $20 billion of capital in its subsidiaries to free liquidity, New York Governor David Paterson said yesterday. The move gives the insurer time to work on securing more capital, he said.

http://www.bloomberg.com/apps/news?pid=20601103&sid=aX_zVXoWfK54&refer=us

[ozymandius]

12. Protection for AIG Customers

As word of financial giant American International Group Inc.'s desperate efforts to stay afloat spread yesterday, customers were calling the company and their agents with concerns about the safety of their life- and property-insurance policies and annuities.

Alan Sirota of Mansfield, Mass., said he has about $90,000 locked up in AIG Individual Retirement Annuities for himself and his wife. After reading about the company's losses, he tried to surrender the deferred annuities on Monday, but said he couldn't get through to anyone at the company. "I'm worried that the entire investment could be forfeited, could be lost," he said.

.....

For now, AIG's subsidiaries, such as AIG American General, one of the country's leading insurers, appeared to have adequate financial reserves and should be able to pay claims from people who hold its annuities, homeowner, commercial and life-insurance policies.

Moreover, the insurance industry and its regulators long have had rules in place to protect investors. State guaranty associations exist to pay claims in the event that insurance companies fail. The associations are in all states and are funded by insurers in each state.

http://online.wsj.com/article/SB122152624211640147.html?mod=googlenews_wsj

[ozymandius]

17. AIG Deal before U.S. Market Open?

Some interesting details from the NY Times: Fed Takes Steps to Aid A.I.G

The complex discussions, continuing into the night as a deal was hoped for before United States markets open on Tuesday, involved New York state regulators, federal regulators, private equity firms and Wall Street banks that rely on A.I.G.’s ability to honor its derivatives contracts.

...

The urgency of the talks grew by late Monday as A.M. Best Company, a credit rating organization specialized in insurance and health-care companies, downgraded the credit of A.I.G. and several of its major subsidiaries. Fitch Ratings also downgraded A.I.G.’s credit Monday evening.

But none of those downgrades appeared to be trigger events requiring A.I.G. to post billions of dollars of collateral to its swap counterparties.

http://calculatedrisk.blogspot.com/2008/09/aig-deal-before-us-market-open.html

[UpInArms]

40. Worried Singaporeans rush to redeem AIG policies

http://www.reuters.com/article/bondsNews/idUSSIN8932520080916?sp=true

SINGAPORE, Sept 16 (Reuters) - Hundreds of anxious investors thronged the Singapore office of a unit of American International Group (AIG.N: Quote, Profile, Research, Stock Buzz) to redeem their policies on Tuesday, on fears the U.S. insurance giant could be the next financial firm to tumble. American International Assurance, a wholly owned subsidiary of AIG (AIG.N: Quote, Profile, Research, Stock Buzz), pinned up an article from a local paper headlined "AIA policy holders get assurance" at its entrance, but that did not deter wary investors who are facing a deluge of bad news after Lehman Brothers (LEH.N: Quote, Profile, Research, Stock Buzz) (LEH.P: Quote, Profile, Research, Stock Buzz) filed for bankruptcy protection on Monday.

"There's so much financial turmoil. Anyway, the yield's not that attractive," said 60-year old stock trader Tan Peng Hock, a policy holder in the queue, who said he did not mind surrendering a policy worth about $42,000 despite possible losses.

"I prefer to hold cash for the time being...It's better to be safe than sorry," said Tan.

AIG, once the world's top insurer by market value, has scrambled to raise cash and has been thrown a $20 billion lifeline by New York state, but came under renewed pressure on Tuesday as ratings agencies downgraded its debt.

...more...

[MUAD_DIB]

51. A rush on an insurance agency?

If AIG goes how big a crater will that leave in the world insurance/banking market?

[54anickel]

55. Ozy, I recall reading somewhere that they've gone thru 3 CEOs in as many years. Who's in charge now?

Poor sucker, all he/she wanted to do was pad their resume.

IF I were one of those fools confident in the workings of the markets, my confidence would certainly be shaken on the notion that not even Goldman and JPMorgan could help them out. Just the fact that the Feds needed to ask them for a hand shouts FIRE to me. :shrug:

[ozymandius]

58. Martin Sullivan was fired in June. Robert Willumstad took his place.

Willumstad was formerly with Citigroup. Sullivan replaced Hank Greenberg in 2005.

[54anickel]

79. Thanks. Looks like Sullivan and Greenberg were with AIG for a long time, clawing

their way up the ladder, Greenberg running into Spitzer along the way. Looks like things were pretty damned shakey when Willumstad came up to bat.

http://www.iht.com/articles/ap/2008/06/16/business/NA-FIN-US-AIG-CEO.php

NEW YORK: When Robert Willumstad said goodbye to Citigroup Inc. three years ago, he boldly declared he was leaving to run a major company. Now, at 62, he is making good on that promise — at floundering American International Group Inc. during the most challenging climate of his four-decade career.

Wall Street has yet to be convinced that AIG is headed for profitability anytime soon. Not only did the world's largest insurer get trampled when the credit markets seized up last year, but it also never quite recovered from an industry shake-up a few years ago.

But if AIG needs a clean-up, most industry watchers are saying — tentatively — that Willumstad is the man for the job. Trained by the master cost-cutter himself, Citigroup's ex-CEO Sanford Weill, Willumstad had a strong record at the world's biggest bank by assets.

snip>

Though the management change was not unexpected, the suddenness of the decision worried some investors that the company might be in worse shape than they thought. The insurer, even after its recent $20 billion capital-raising effort, faces huge problems with its exposure to mortgages and other types of debt.

Lehman Brothers analyst Jay Gelb said the shake-up was "a step in the right direction," but that he expects "few quick fixes for AIG's problems related to the subprime credit crunch and lack of strong earnings power in its core insurance franchise."

more...

[ozymandius]

103. Oh I agree. They were clawing and grabbing. And grabbing some more.

Golden parachutes, like possible jail time and getting fired are practically job requirements at this level in the executive buddy system.

AIG is a different beast altogether. I've not found any reason why the Fed should help them at all. Quite the contrary, I've found at least a dozen reasons why no federal help should be rendered.

[ozymandius]

60. Mike Shedlock: AIG's problems and incompetent help

Wrapup

Let's tie it all together.

New York Gov. David A. Paterson (D) is going to violate regulations and allow AIG to borrow up to $20 billion from its subsidiaries. Timothy Geithner, president of the Federal Reserve Bank of New York approves this transaction. New York state insurance superintendent Eric R. Dinallo claims "At this point the insurance companies are financially strong and solvent and fully able to meet any claims." In the proposed swap-o-rama the spokesman for the superintendent claims "We're not going to allow them to put junk in the place of good stuff." (as if he has any clue).

Here's the Deal

If the "insurance companies are financially strong and solvent" why the hell do they need to raise $75 billion in another all night poker game with every rule in the book being broken to do so?

What's At Risk?

Life insurance policies, retirement annuities, and those with policy coverage against all manner of calamities, from financial to natural disasters are put at risk just so AIG can make good on a bunch of derivative bets gone bad.

Who Does AIG Owe?

This one should be easy to figure out: any bank or brokerage house scrambling like mad trying to "help" AIG raise cash so that it can pay off on its derivatives bets. The state insurance regulator is stupid enough to go along with this arrangement.

AIG is blowing all the policyholders protections with the assistance of New York insurance superintendent Eric R. Dinallo, Timothy Geithner, president of the Federal Reserve Bank of New York, and David A. Paterson, Governor of New York.

http://globaleconomicanalysis.blogspot.com/2008/09/crime-in-buying-aig-time.html

[cosmicdot]

201. Flashback 2005: A top insurance company as the new Enron?

and, other tidbits
``````````````````

April 01, 2005

A top insurance company as the new Enron?

An accounting probe at AIG worries Wall Street, and involves some of America's richest men.

By Ron Scherer | Staff writer of The Christian Science Monitor

NEW YORK – American business is facing yet another major scandal involving more accounting shenanigans.

But, this scandal has the potential to cause tsunami-sized damage: It involves a highly respected insurance company, American International Group (AIG) - which is part of the Dow Jones Industrial Average - which has now admitted to $1.7 billion in improper accounting. And, it has enveloped some legends in the financial arena: Maurice "Hank" Greenberg, forced out as chairman of AIG, and Warren Buffet, the Omaha stock market guru, who will be questioned about his possible involvement.

Because AIG is so massive and important to the financial world, regulators will have to tread carefully. The company's main business is providing reinsurance, that is, it insures insurance companies. This helps the industry to spread its risk among many large and financially sound companies so a single event does not become a financial disaster for one company.

Also, because of AIG's huge size, lawyers don't think the government will bring a criminal charge against the company as it did for Arthur Andersen, Enron's accountant. The criminal charge was a death sentence for the accountant.

~snip~

Greenberg and AIG have further expanded their reach through the use of the $5 billion Starr Foundation, named after the founder of the company Cornelius Vander Starr. It supports influential groups such as the Council on Foreign Relations and the National Chamber Foundation, associated with the US Chamber of Commerce.

Before its legal troubles, AIG had begun an advertising campaign to become more well-known to Americans. Its most recent logo is "We know money." And, it brags it is the financial organization to choose for your "great-great-great-great-great grandchild." Now, lawyers expect it is likely to be fighting class-action lawsuits and irate regulators as it battles to survive.

http://www.csmonitor.com/2005/0401/p03s01-usju.html


well, I hope, at least, they've cut their TV advertising $$$$$$ they advertise almost as much as AARP

~~~~~~~~
is any wonder former NY Atty General, former-Governor Eliot Spitzer, was targeted??

Ol'Poppy Bu$h harpie Carla Hills used to be on AIG's Board ... she must have gotten a heads-up and got off the Board

~~~~~~~~

from the last proxy http://www.sec.gov/Archives/edgar/data/5272/000093041308002228/c52434_def14a.htm:

OWNERSHIP OF CERTAIN SECURITIES

The following table contains information regarding the only persons who, to the knowledge of AIG, beneficially own more than five percent of AIG Common Stock.


FMR LLC and Edward C. Johnson 3d (collectively, the FMR Group)(2)
82 Devonshire Street
Boston, MA 02109

144,915,088
5.714%

C.V. Starr & Co., Inc.; Edward E. Matthews; Maurice R. Greenberg;
The Maurice R. and Corinne P. Greenberg Family Foundation, Inc.;
Maurice R. and Corinne P. Greenberg Joint Tenancy Company, LLC;
Starr International Company, Inc. (SICO); Universal Foundation, Inc.;
C.V. Starr & Co., Inc. Trust (collectively, the Starr Group)

399 Park Avenue
17th Floor
New York, NY 10022

354,987,261
13.6%

NOTE:

Greenberg's CV Starr may try to take over AIG

Source: Reuters via Yahoo! News

A company led by Hank Greenberg, a former chief executive of American International Group (AIG.N), may try to take over the insurer in a proxy fight or tender offer, according to a regulatory filing.

current thread
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3492991
```````````````````````````````````````

2007 total compensation

Martin J. Sullivan
President and Chief
Executive Officer

2007

$14,330,736

2006

$21,229,678

```````````````````````````````````````

Total Board compensation (2007 Non-Management Director Compensation)

about $4 million amongst 13 people

whatever happened to, i.e. $15,000 annual retainers to sit on a Board?

`````````````````````````````````````````````````` `````````````````````````````````

2007 up for stockholder approval
AIG Board of Directors and General Incest and Interlocking relationships with other companies:

STEPHEN F. BOLLENBACH
Elected January 16, 2008


Former Co-Chairman and Chief Executive Officer, Hilton Hotels Corporation
Age 65
Director, KB Home
Macy’s, Inc.
Time Warner Inc.


MARTIN S. FELDSTEIN
Director since 1987


Professor of Economics, Harvard University; President and Chief Executive Officer, National Bureau of Economic Research
(a nonprofit economic research center)
Age 68
Director, Eli Lilly and Company


ELLEN V. FUTTER
Director since 1999


President, American Museum of Natural History
Age 58
Director, Consolidated Edison, Inc. (also serves
as Trustee of Consolidated Edison
Company of New York, Inc.)
JPMorgan Chase & Co.


RICHARD C. HOLBROOKE
Director since 2001


Vice Chairman, Perseus LLC (a merchant bank and private equity fund management company); Former United States Ambassador to the United Nations; Former Vice Chairman, Credit Suisse First Boston
Age 66


FRED H. LANGHAMMER
Director since 2006


Chairman, Global Affairs and Former Chief Executive Officer, The Estée Lauder Companies Inc.
Age 64
Director, Shinsei Bank, Limited
The Walt Disney Company


GEORGE L. MILES, JR.
Director since 2005


President and Chief Executive Officer, WQED Multimedia
Age 66
Director, Equitable Resources, Inc.
Harley-Davidson, Inc.
HFF, Inc.
WESCO International, Inc.


MORRIS W. OFFIT
Director since 2005

Chairman, Offit Capital Advisors LLC (a wealth management advisory firm); Founder and Former Chief Executive Officer, OFFITBANK (a private bank)
Age 71


JAMES F. ORR III
Director since 2006

Chairman of the Board of Trustees, The Rockefeller Foundation
Age 65


VIRGINIA M. ROMETTY
Director since 2006

Senior Vice President, Global Business Services, IBM Corporation
Age 50


MARTIN J. SULLIVAN
Director since 2002

President and Chief Executive Officer, AIG
Age 53
Director, International Lease Finance
Corporation and Transatlantic
Holdings, Inc., subsidiaries of AIG


MICHAEL H. SUTTON
Director since 2005

Independent Consultant; Former Chief Accountant of the United States Securities and Exchange Commission
Age 67
Director, Allegheny Energy, Inc.
Krispy Kreme Doughnuts, Inc.


EDMUND S.W. TSE
Director since 1996

Senior Vice Chairman—Life Insurance, AIG
Age 70


ROBERT B. WILLUMSTAD
Director and Chairman since 2006

Founder and Partner, Brysam Global Partners (a private equity investment firm); Former President and Chief Operating Officer, Citigroup Inc.
Age 62

[Karenina]

221. How deep is THIS rabbit hole?

http://www.onlinejournal.com/artman/publish/article_1261.shtml

9/11 and the Greenberg Familia
By Jerry Mazza
Online Journal Associate Editor


Sep 29, 2006, 01:06

Email this article
Printer friendly page
Democratic Underground Demopedia reports in Who Killed John O’Neill that at the time of 9/11, AIG, the world’s largest insurance company, and subsidiaries Marsh McLennan, ACE and Kroll, were run by the Greenberg family. With Council on Foreign Relations (CFR) member Maurice “Hank” Greenberg as the AIG godfather, the Familia’s tentacles curled around the heart of the tragedy.

Hank’s son Jeffrey, a CFR member as well, was chairman of Marsh & McLennan, situated on floors throughout the North Tower of the World Trade Center as well as the top floors of the South Tower. Marsh also had ties to the CIA. Son Evan Greenberg, a CFR member, was CEO of ACE Limited, situated in Tower 7, which also contained AIG subsidiary Kroll, closely related to the CIA, also with an office in Tower 7.

Tower 7 also contained offices of the FBI, Department of Defense, IRS (which contained prodigious amounts of corporate tax fraud corporate, including Enron’s), US Secret Service, Securities & Exchange Commission (with more stock fraud records), and Citibank’s Salomon Smith Barney, the Mayor’s Office of Emergency Management and many other financial institutions.

Greenberg’s cousin, Alan “Ace” Greenberg, was former CEO of Bear Sterns, where the Bush family, Cheney family George Schultz, James Baker, et al, did business. It is the leading brokerage firm of the great and all-powerful Bush Familia.

Also reported by Democratic Underground, AIG’s Kroll “provided protection services,” among other things, to high level Americans at home and abroad. Kroll had military teams in their company and merged with Armor Holdings on August 23, 2001, adding Defence Systems Limited, another private military corporation, to their operation, and an ex-KGB team called Alpha Firm earlier acquired by Defense Systems Limited. These four teams could have been used on 9/11, part of a “corporatizing” of black ops in tandem with military teams.

According to whistleblower Richard Grove, who worked as a senior manager for SilverStream Software on Marsh and AIG accounts, Kroll also managed the Enron fraud once Kenneth Lay stepped down.

[cosmicdot]

229. Hank Greenberg is Chairman of the Nixon Center Board

those he rubs elbows and networks with @ the Nixon Center:

Board of Directors
Honorary Chairman: Henry A. Kissinger

Chairman: Maurice R. Greenberg

Dwayne O. Andreas
Jeffrey L. Bewkes
Conrad M. Black (is he in prison?)
Charles G. Boyd
Tricia Nixon Cox
Julie Nixon Eisenhower
Robert F. Ellsworth (Vice Chairman)
Leslie H. Gelb (knee-deep in stuff)
Henry A. Kissinger
Eugene K. Lawson
Joseph I. Lieberman (frit)
John McCain (frat)
Lionel H. Olmer
Peter G. Peterson (Blackstone Group, kissing cousin of the Carlyle Group)
Richard Plepler
Pat Roberts (US Senator, Kansas)
James Schlesinger (Pentagon Defense Policy Board)
Brent Scowcroft (one of the advisors at the US-Azerbaijan Chamber of Commerce http://www.usacc.org
J. Robinson West
Dimitri K. Simes, Center President (Ex Officio)
John H. Taylor, Executive Director of Richard Nixon Library & Birthplace Foundation (Ex Officio)

Advisory Council

Chairman: James Schlesinger
David Abshire
Richard V. Allen
Christopher Cox (now, at SEC)
John Deutch
David Eisenhower
Susan Eisenhower
Evan G. Greenberg (one of Hank's son)
Lee H. Hamilton (the "Democrat" on the 911 coverup commission)
Rita E. Hauser
Josef Joffe
Donald M. Kendall
Peter Kovler
Charles Krauthammer
Robert C. McFarlane
Janne Nolan
Joseph S. Nye, Jr.
Alexei K. Pushkov
John E. Rielly
Peter R. Rosenblatt
William V. Roth, Jr.
Thomas A. Russo
Angela Stent
Marin Strmecki
Yuli Vorontsov

http://web.archive.org/web/20050205063607/www.nixoncenter.org/boardac.htm

backup link to the above Wayback Machine, Internet Archive link
http://tinyurl.com/pubbw


possibly of interest ... son Evan's (Nixon Center Advisor) ACE, Limited has done some moving around .. note it operates in suspect/curious banking areas, i.e. Switzerland, Caymans, Bermuda

ACE Limited Announces Proposed Re-Domestication of Holding Company from Cayman Islands to Switzerland

http://preview.tinyurl.com/5o6ahj

DU journal:

summary of the Greenbergs: Hank and sons Alan (Bear Stearns), Jeffrey (Marsh & McLennan), Evan (ACE, Ltd)

http://journals.democraticunderground.com/DrDebug/69


some corporate sleuths have been raising flags over such things as the Greenbergs businesses, and other questionable corporate affairs, for years now, but, unless there's an 'accident', there's little rubber-necking concern/interest from the daily passers-by ...

[Demeter]

11. Financial Russian Roulette By PAUL KRUGMAN

http://www.nytimes.com/2008/09/15/opinion/15krugman.html?_r=1&th=&emc=th&pagewanted=print&oref=slogin


15/09/08 "New York Times' -- - Will the U.S. financial system collapse today, or maybe over the next few days? I don’t think so — but I’m nowhere near certain. You see, Lehman Brothers, a major investment bank, is apparently about to go under. And nobody knows what will happen next...And here’s the thing: The defenses set up to prevent a return of those bank runs, mainly deposit insurance and access to credit lines with the Federal Reserve, only protect the guys in the marble buildings, who aren’t at the heart of the current crisis. That creates the real possibility that 2008 could be 1931 revisited...

But Henry Paulson, the Treasury secretary, was adamant that he wouldn’t sweeten the deal by putting more public funds on the line. Many people thought he was bluffing. I was all ready to start today’s column, “When life hands you Lehman, make Lehman aid.” But there was no aid, and apparently no deal. Mr. Paulson seems to be betting that the financial system — bolstered, it must be said, by those special credit lines — can handle the shock of a Lehman failure. We’ll find out soon whether he was brave or foolish.

The real answer to the current problem would, of course, have been to take preventive action before we reached this point. Even leaving aside the obvious need to regulate the shadow banking system — if institutions need to be rescued like banks, they should be regulated like banks — why were we so unprepared for this latest shock? When Bear went under, many people talked about the need for a mechanism for “orderly liquidation” of failing investment banks. Well, that was six months ago. Where’s the mechanism?

And so here we are, with Mr. Paulson apparently feeling that playing Russian roulette with the U.S. financial system was his best option. Yikes.

[ozymandius]

25. Reactive vs. Proactive

I'll never understand how Paulson became head of Goldman Sachs.

[ozymandius]

13. Meredith Whitney: Wall Street's Future headaches

[DemReadingDU]

37. Meredith Whitney...

Never in my wildest dreams would I have thought the landscape would exclude Lehman, Bear and Merrill.

[Demeter]

15. Capital Punishment: Lehman on its way to the Gallows? By Mike Whitney

http://www.informationclearinghouse.info/article20765.htm


Economist Nouriel Roubini put it like this:

"All of the independent broker dealers are going to disappear. In March it was Bear Stearns. Tonight it was Lehman and Merrill Lynch. Morgan Stanley and Goldman Sachs should go find a buyer tomorrow. The business model of broker dealers is fundamentally flawed. They cannot survive."


Roubini may be right. The funny thing about capitalism is that you need capital to play. When the bank-vault is full of nothing but worthless mortgage-backed securities (MBS) and overvalued junk bonds; the whole thing goes belly-up fast. That appears to be the case with Lehman Bros, the century-old Wall Street warhorse that has joined the long procession of underwater banking establishments now ambling lemming-like towards the cliff. Lehman had a great go of it during the boom times when all it took to make oodles of money was a predictable flood of low interest credit from the Fed and a compliant ratings agency that would stamp every crappy securitized pool of mortgages with a big Triple A before hawking it to some gullible investor in Shanghai or Heidelberg. Lehman travails are not much different from anyone else in the banking fraternity. The problem is that the entire system is under-capitalized and over-leveraged. When Bear Stearns went down last year, it was levered at a ratio of 26 to 1. When Hedgie Carlyle Capital blew up, it was levered at 32 to 1. And when Fannie and Freddie were finally subsumed by the US Treasury; the two behemoths were levered at a whopping 80 to 1, which is to say that they had a paltry one dollar capital cushion for every $80 they had loaned out. That's no way to run a business. They would have continued on the same erratic path---buying up toxic mortgages and MBS from people who had no chance of ever repaying their loans--had they not been taken into federal "conservatorship", which is a fancy way of saying they were insolvent. Treasury Secretary Henry Paulson unwisely attached a 6 inch-wide money-hose from the bowels of the Treasury to Fannies front office so the two mortgage giants could continue to teeter-along at taxpayer expense regardless of the fact that the securitization business model has completely broken down and foreign investors--including China--have already started cutting back on their purchases of GSE debt. This is no laughing matter. The $700 billion US current account deficit is financed through the generosity of foreign investors who are getting increasingly jittery about sinking money into a system that looks more like casino-poker all the time...

When the net foreign purchases of US financial assets begin to slow; the game is over. The Fed will be forced to raise interest rates to attract foreign capital which will put downward pressure on the economy and accelerate the housing crash. Paulson's decision to provide unlimited capital to Fannie and Freddie will stack more and more debt atop the faltering dollar and US Treasuries. It is the equivalent of lashing the greenback to an anvil and tossing it overboard. Paulson's attempts to stave off a systemic banking crisis ensures that the federal government will undergo an unprecedented funding crisis sometime in the near future. There will be higher taxes for the battered middle class and higher interest rates for businesses and consumers. This will trigger a protracted economic slowdown and weaker growth. Credit will get tighter, banks will default, unemployment will soar and GDP will shrivel. A negative feedback loop will develop from the faltering financial system to the real economy; a vicious circle ending in massive layoffs, weakening demand, falling stock prices, and withering consumer confidence. Welcome to Soup kitchen USA.

...Wall Street is preparing for the worst. Many of the big players are busy working out the details on thorny derivatives contracts to avoid a sudden shock to the market. The fear is palpable and there's no way of knowing what will happen when the Asia markets open in just a few hours. It could be nothing more than a hiccup or it could be utter pandemonium ; nobody knows. Nouriel Roubini gave a particularly grim assessment of a Lehman default in his latest post on his blogsite Global EconoMonitor:

"It is now clear that we are again – as we were in mid- March at the time of the Bear Stearns collapse – an epsilon away from a generalized run on most of the shadow banking system, especially the other major independent broker dealers (Lehman, Merrill Lynch, Morgan Stanley, Goldman Sachs). If Lehman does not find a buyer over the weekend and the counterparties of Lehman withdraw their credit lines on Monday, you will have not only a collapse of Lehman but also the beginning of a run on the other independent broker dealers...Then this run would lead to a massive systemic meltdown of the financial system. That is the reason why the Fed has convened in emergency meetings the heads of all major Wall Street firms on Friday and again today to convince them not to pull the plug on Lehman and maintain their exposure to this distressed broker dealer." (Nouriel Roubini's Global EconoMonitor)

...After all, the giant investment banks are inescapably trapped in a net of complex, unregulated, over-the-counter derivatives contracts which--given the right conditions---could bring every skyscraper in lower Manhattan crashing to earth in one bloody afternoon of trading on the NYSE. But, that probably won't happen. It's more likely that cooler heads will prevail as the big-hand inches closer to midnight...

Securitization has failed. The cuts to the Fed's Funds rate have failed. The auction facilities--TAF, PDCF, and TSLF---have all failed. The off-balance sheets operations, the debt-pyramiding asset-inflation, the Enron-style accounting, the SIVs, the CP, MBS, CDOs, have failed. The subprimes, the piggybacks, the option-ARMs, the Alt-As have all failed. Structured finance has failed. The system doesn't work; won't work; can't work. It's built on the misguided assumption that capitalism can thrive without capital; that one dollar can be infinitely magnified by complex debt-instruments and mega-leveraging to generate real wealth and keep the wheels of finance and industry humming along. It can't be done. The system is under-water...

It might be a good time to stock up on Krugerrands and buy a rosary.

[ozymandius]

16. The Lehman fallout: unwelcome guest comes calling

The Fire Sales Begin: Lehman Unloading $852 Million of LBO Loans (Updated)

Ah, now the script that everyone was trying to avoid, that of an institution failing, selling assets in bulk leading to distressed prices, which forces other players to mark their books down to the new market prices, leading to losses and reductions of already-scarce equity, is now playing at your local credit market.

Lehman has started selling LBO loans, and unlike many recent sale of this sort of paper, will not be providing financing. Fortunately, this sale, at $852 million, is not at all large, but in this market, even what would have otherwise been a manageable sale may not attract great bids. We'll see soon enough where this trades.

Lehman Brothers Holdings Inc. is trying to sell $852 million of high-yield, high-risk loans, signaling it's dumping some assets after filing for bankruptcy, according to people familiar with the sale.

.....

The price of the average actively traded leveraged loan has fallen from above face value in June 2007 to 86.64 cents on the dollar, compared with a low of 86.3 cents reached in February, according to Standard & Poor's LCD, which earlier reported the loan auction. Prices fell 1.64 cent in the past week.

``We're basically at all-time lows for good credits,'' Blackstone President Tony James said in a presentation last week at a New York investor conference sponsored by Lehman. ``Because of capital pressures, and regulatory capital pressures in particular, by the holders of the loans, they are forced sellers at well below intrinsic value.''

While that may indeed be the objective, with AIG on the ropes, unless there is a quick and happy resolution on that front, buyers are shedding risk, and many of Lehman's assets involve a fair amount of complexity. Thus it may only take comparatively small sales to produce a "fire sale" outcome.

http://www.nakedcapitalism.com/2008/09/fire-sales-begin-lehman-unloading-852.html

[amandabeech]

153. Jesu Christo on a Popsicle Stick!

The last thing needed is a fire sale for any of this stuff. Marking to fire sale market really could force banks etc. to pull in even more credit lines and callable loans.

Is it time for another Resolution Trust Company?

[UK populist]

18. MUST READ. They have bailed the banks out.

This is a great piece on Daily Kos about how the FED have broken the law yesterday so they could pass any debts the banks have on to the taxpayers 10 days in to the new presidents term.

http://www.dailykos.com/story/2008/9/16/54230/2116/741/600308

[ozymandius]

23. That is worth the effort to bang pots and pans in the offices of our representatives.

This is also standard course for the Bush administration: make it look like it's not their fault. Personally speaking, I would like to see any proven violation of the law met with consequences that include confiscation of assets among those who benefited either directly or indirectly from policy decisions. Could we make these terms part of minimum sentencing rules for white collar criminals such as those concerning garden variety perps who rob liquor stores?

[Roland99]

24. Wow! (And welcome to DU, UK populist)

A very enlightening breakdown of recent events.

Thanks.

[DemReadingDU]

38. If poll numbers are any indication, the new pres will be McCain

Why would Republicans want McCain to deal with all this doom and gloom mess?

[54anickel]

81. He's the perfect scapegoat, the Maverick outsider (with one foot in the grave). If he would

happen to win. I've been saying all along, the Repubs are willing to throw this one, they KNOW what it will take to recover from this mess and it won't be easy or cheap and it will probably get worse before it gets better with the robber baron boobey traps they and their lobbyist friends have laid. Should Dems win, they'll point to Dem controlled gov't failing to rescue the masses. Should McCain win, they've managed to shape the image of distance between him and the party should they need to play that card. He's a fool and a tool and doesn't seem to mind being used and abused by his party.
Just my 2 cents worth thrown in for free....

[Fire1]

226. I say, No better for 'em!

As our economy crumbles at an alarming rate, I have often thought, if McCain wins, so be it. Let them clean up their own mess!! The stress alone would kill him or send him over the edge. Then, I think of 'dumb-dumb' as the new president and start looking into dual citizenship.

[snot]

71. great article -- nt.

[Hugin]

206. I'm going to re-post this at the bottom of the thread.

Too important to get lost in such a long SMW.

Thanks UK populist! :hi:

[Demeter]

20. The next big bang is private equity

http://business.smh.com.au/business/the-next-big-bang-is-private-equity-20080915-4h1g.html?page=2


...But there is one bright point in this otherwise tale of gloom and doom (in Australia). There has been plenty of criticism about the way our banks operate, including by this columnist. But the big four largely have shunned the high-octane, high-risk debt instruments that have brought the global financial system to its knees.

That's because they have been creaming it locally for so long they have seen no need to jump into US subprime loans or anything else that looked even vaguely risky. Why bother?

That makes them unique and explains why all four are among a select group of just 18 banks worldwide with AA balance sheets. National Australian Bank has written off almost $1 billion on its $4.5 billion exposure to collateralised debt obligations (CDOs), the toxic debt instruments written off the back of US subprime loans. It may have to write down another $1 billion.

That's likely to be the worst exposure in Australia. The Commonwealth Bank recently admitted to a small exposure to CDOs in the early part of this decade but had dumped them several years ago because the risk/reward analysis didn't justify it.

It is the same reason our banks largely ignored the mammoth loans to the private-equity cowboys. And that brings us to another rather frightening scenario for the global financial system. So far all we've seen is the fallout from the collapse of the US property market. We are yet to witness the meltdown from the debt-fuelled US consumer boom and the huge credit-card debts that are attached to that.

But the private-equity boom from 2006 and 2007 is the real time bomb silently ticking away in the mind of every executive of a major bank. In those two years, inexperienced thirtysomethings with inflated egos and overblown salaries scoured the globe buying businesses about which they knew nothing, with borrowed money, at grossly inflated prices.

It was an unprecedented debt binge that drove global stockmarkets in those years, and the fallout has yet to impact on the banking system.

Figures compiled by Thomson Financial show that in the year to June 30 last year, private equity firms spent $US1.06 trillion snapping up businesses.

The idea was to gut them, load them up with debt and sell them into a booming stockmarket in 2009 and 2010 and repay the loans. That's never going to happen now.

[Demeter]

21. Standard & Poor's cuts its ratings on Bank of America

http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSN1551490520080915

NEW YORK (Reuters) - , and said it may cut them again, and Moody's Investors Service also placed the bank on review for downgrade after it said it will purchase Merrill Lynch for $50 billion.

S&P also placed its ratings on Merrill Lynch on watch to be raised, lowered or left unchanged.

"This opportunistic acquisition takes place on the heels of BofA's recent July 1 acquisition of troubled mortgage lender Countrywide Financial Corp," S&P said in a statement.

"In our view, the purchase of Merrill will place further pressure on BofA's capital, already strained by the Countrywide acquisition," S&P added.

S&P cut Bank of America's counterparty credit rating one notch to "AA-minus," the fourth highest investment grade, from "AA." It rates Merrill Lynch "A," the sixth highest investment grade.

Moody's rated Bank of America "Aa2," the third highest investment grade

[MilesColtrane]

120. Shouldn't BAC be shoring up it's capital instead of spending it on "bargains"?

Maybe the strategy for this brave new financial world is to spread your tendrils into as many different sectors of the economy as possible, making a government bailout all the more necessary when the implosion comes.

[Demeter]

22. 10 Banks Form $70B Fund to Stave Off Crash

http://www.newser.com/story/37467/10-banks-form-70b-fund-to-stave-off-crash.html

(Newser) – Ten of the world's largest banks have formed a massive liquidity fund to mitigate the effects of the Lehman Brothers meltdown, reports the Financial Times. All the investment banks will be able to borrow up to a third of the $70 billion fund in order to reduce volatility and stay in business while Lehman is being wound down. They will also be able to borrow from the Fed under newly relaxed terms.

Henry Paulson said that the coordinated public and private measures would "be critical to facilitating liquid, smooth functioning markets and addressing potential concerns in the credit markets." But American authorities admitted that the aggressive moves would only reduce turbulence slightly, and that Wall Street is in for a very bumpy few days.

[Zenlitened]

125. I'm no math whiz (never took to that sort o' book-learnin') but...

... but how can 10 banks all be permitted to borrow a third of the fund?

:crazy:

Edited to add: I read it as a third of the fund apiece. Maybe it actually means that only one-third of the $70 billion will be available to the participants, the rest will remain in a lock-box? Oy, now I'm getting giddy.

[Dr.Phool]

127. You just don't understand!

This is Wall Street math. Sometimes called magic.

These wizards could feed a McCain rally with 2 loaves and 3 fishes. Ok, bad example. Maybe a large Obama rally.

[Zenlitened]

132. Actually, you COULD feed a McCain rally with...

... two loaves and three fish, no miracles required.

Of course, if Palin was there with him, the crowd would be somewhat larger.

In that case, you'd have to swing by Long John Silvers for some fish-sticks and hush-puppies, too.

:D

[Dr.Phool]

133. That's what I'm saying.

Everybody at the McCain rally would be fed -even have leftovers- no miracles required.

[Demeter]

26. SPOOKY STATS FROM THE U.S. MINT by The Mogambo Guru

http://www.dailyreckoning.com/Writers/Mogambo/DREssays/MG091508.html

I had just gotten off the phone to find out why the silver I ordered last month has not arrived, and I get some runaround about how there is no silver to be had to fill my order. Naturally, being familiar with how the supply/demand dynamic works, I call the little clerk a lying piece of thieving garbage, because it is impossible that the market price of silver is going down in an environment of zero supply and obviously rising demand!

Well, the phone mysteriously went dead right after that, and before I could call him back and REALLY tell him off, I see where this is common right now, as Theodore Butler says that “Premiums are up and delivery delays are longer. This is something we are all witnessing for the first time.”

And James Turk at Free Market Gold & Money Report notes that it is the same thing in the gold market, too!

He says that a normal person would assume that the size of the working stock of gold held by the United State’s Mint to make the popular Gold Eagle coins and miscellaneous trinkets would vary “from month to month, just like inventory varies from month to month in any business as a result of changes in production and the ebbs and flows in sales.”

It gets spooky when he goes on to note that “indeed, the Mint’s inventory did vary monthly, up until March 2006. But according to the Treasury’s reports, the Mint’s working stock has remained exactly 2,783,218.656 ounces since April 2006. How is it possible that the Mint’s working stock has remained unchanged for 28 months?”

Instantly I was on my feet, shouting, “Because they are all a bunch of lying, corrupt scumbags exploiting a fiat currency and insane levels of fractional-reserve banking, which is the very reason why you should be buying gold and silver in the first place!”

I thought, you know, that this witty interruption of mine would impress Mr. Turk, and so I sat back down with a big smile on my face and crossed my arms in smug self-satisfaction as I waited for him to shower me with praise, and maybe offer to buy me a drink, or a pizza, or let me use his car for a couple of hours or days.

Sure enough, he immediately said, “There are an infinite number of possible answers. Maybe the Treasury does not want to part with its remaining gold at these current low prices. Maybe the Treasury does not want Americans to exchange their fiat dollars for the safe haven of gold as the central banking fiat money scheme implodes. Maybe the Mint doesn’t have any gold because the 2,783,218.656 ounces were loaned out. Maybe the Treasury doesn’t have any gold either. Of course, no one really knows because the Treasury isn’t talking.”

So, realizing that I am going to have to do more to impress Mr. Turk, I stand up and say, “I think it is all of these, and more! So much more! Maybe even involving creatures from outer space, probably in the form of spores; and these spores, see, have infected the brains of everybody except smart people like you and me, so that they could control the behaviors of members of Congress, the Federal Reserve, the media, the schools and most of the general moronic populace to cause the collapse of the world’s economy, whereupon flying saucers containing the Main Invasion Force (MIF) will appear and take over the world, whereupon everybody will cry out, ‘Save us, oh, Mighty, Mighty Mogambo (MMM)!’ and I will laugh – ‘hahahaha!’ – rudely in their faces and say, ‘It’s too late for that now! You should have listened to me years and years ago when I told you to either stop electing socialist/collectivist morons who will bankrupt us with allowing, and then spending, a fiat currency multiplied to ridiculous extremes by a ludicrous fractional-reserve banking system, or start buying gold and silver, but preferably both! So shut the hell up, you morons, because you are getting exactly what halfwits like you so Richly, Richly Deserve (RRD)!’”

Apparently, Mr. Turk was not impressed by my insights, and has not been around many paranoid, schizoid, raving gold-bug lunatics like me, either. Obviously visibly shaken, he cleverly diverts my attention by appealing to my greed, and notes that the gold-mining XAU Index shows that “The XAU Index has fallen back to the bottom line of its long-term uptrend channel.”

If you have ever worked with technical analysis, you know that the price of something that “has fallen back to the bottom line of its long-term uptrend channel” that has been in effect since October 2000 is one of those rare Holy Grail occurrences that make you salivate with sheer greed and all you can think of is, “Who can I borrow some money from with which to buy this asset at an interim low?” and “How much money am I going to make when the price of gold goes ‘boing!’ back up to the top of the channel and will it be enough to quit my stupid job?”

On the other hand, the same XAU Index measured not in dollars but in grams of gold reveals that “It now takes only 5.0 goldgrams to purchase the XAU Index, just a whisker above the all-time historic low of 4.9 goldgrams reached in November 2000.”

Such a paradox will obviously be resolved somehow, and Mr. Turk figures that “we will not see the prices of the mining stocks this dirt cheap again for years to come – if ever.”

I’m betting he is right. You should, too, as that is the One Real Lesson (ORL) to be gleaned from the long, sad, sordid history of fiat currencies in the hands of governments; go gold!

Until next time,

The Mogambo Guru
for The Daily Reckoning

[PassingFair]

42. How can this guy be so right... and so WRONG at the same time?

‘Save us, oh, Mighty, Mighty Mogambo (MMM)!’ and I will laugh – ‘hahahaha!’ – rudely in their faces and say, ‘It’s too late for that now! You should have listened to me years and years ago when I told you to either stop electing socialist/collectivist morons who will bankrupt us with allowing, and then spending, a fiat currency multiplied to ridiculous extremes by a ludicrous fractional-reserve banking system, or start buying gold and silver, but preferably both! So shut the hell up, you morons, because you are getting exactly what halfwits like you so Richly, Richly Deserve (RRD)!’”

He's like Ron Paul.

:crazy:

[Tandalayo_Scheisskopf]

45. We stopped running him on WNT a while back.

I was not part of that decision, but I suspect his rampant gold-buggery has something to do with it.

And that above conjunction is intentional. When the little guys get sucked into gold and metals, buggery is what usually takes place on them.

[Demeter]

100. It's Like Being a Half-WIt

He's got half an idea, but doesn't carry it through to the logical conclusion. When you limit the data set, you leave out a lot of solutions...

Of course, if he's referring to CORPORATE socialist/collectivist morons, he's spot on.

[Alcibiades]

52. socialist/collectivist morons who will bankrupt us

No, actually it was our first Ivy League MBA president and noted non-communist Alan Greenspan who have bankrupted us.

[Hugin]

65. And, may I add... Ayn Rand acolyte.

Alan Greenspan.

[Dr.Phool]

106. I called every coin dealer in my area this morning.

I was looking to buy some Krugerrands. Nobody has any. One dealer told me that it's pretty hard to get your hands on ANY physical gold right now.

[Demeter]

211. Hence All the Fly By Night, Cash for Gold Storefronts and Ads, I Suppose

[Demeter]

27. Now it’s Lehman’s turn

http://www.dailyreckoning.com/Issues/2008/DR091508.html


Ten years ago, the New York Federal Reserve Bank called upon Lehman Bros. and a handful of other major players on Wall Street to rescue a high-flying hedge fund. The firms grumped and whined...but they came up with the money, $3.7 billion. The rescue was a success. LTCM’s positions were unwound slowly; there was no panic; Wall Street soon went back to doing what it is supposed to do – separating customers from their money.

Long Term Capital Management was run by a couple of Nobel Prize winning economists who believed they could use past financial patterns to model the future – just as if price movements were the same as the weather. If a hurricane had hit Houston twice in the last century, they figured the odds that another hurricane would hit the city at 1 in 50. Likewise, if the price of Lehman stock traded between, say, $10 and $30 during its 158-year history, they figured – grosso modo – that it would stay between $10 and $30.

LTCM went bust when the future turned out to be different from the past. Anyone with his eyes open at the time could have told the Nobel laureates why: weather patterns were independent of human decisions; market patterns are not.

One of the big revelations of the ’90s – or was it the ’80s? – was that stocks were traditionally, historically under-priced. Compared to bonds, said a popular financial author, stocks were a better deal. Stock buyers earned a premium over bonds for the risk they undertook, he said. But if you held stocks “for the long run,” the risk disappeared. Buying stocks seemed like a no-brainer.

Thus did the lumpen investoriat begin pumping money into stocks...cautiously in the beginning of the ’90s...and recklessly at the end of the decade. And by the year 2000, the stock market no longer reflected the “random” movement of prices as predicted by the previous hundred years of stock market history; instead, it reflected the recent and remarkable belief that stocks always went up...and that if an investor held long enough the risk disappeared.

From the peak of 2000 ’til today, stock market investors have earned nothing for their trouble. In nominal terms, stocks are about where they were 10 years ago. Adjusted for inflation, they are down 25%-80%, depending on how you measure it.

Wall Street made a fortune selling stocks to naïve investors. When the stock marked topped out, the financial industry might have gone back to sleep. Instead, it got a double dose of caffeine. The Greenspan Fed cut rates in 2001-2002 while the Bush administration boosted spending and cut taxes. All of a sudden, every hand on Wall Street turned to pumping out credit – derivatives, SIVs, CDOs, MBS. They didn’t really have to invent any new theories, they merely recycled the same numbskull ideas that sank LTCM – basically, that you could eliminate risk by modeling historic price movements. If Lehman Bros., for example, had never failed in more than a century and a half – the odds that it would fail this year were so close to zero as to be not worth discussing.

But...

“Lehman lurching closer to liquidation,” says the front page of today’s International Herald Tribune .

Now, it’s Lehman that is failing. And no consortium of Wall Street banks is willing, or able, to bail it out. Lehman has some $80 billion of dubious credits. These were the products of its own – and many other – whiz kid financial engineers. Lehman hired some of the best talent on Wall Street. It has some of the world’s top financial mathematicians on its payroll. It could compute the risk of loss down to 3...4...heck...as many decimal places as you like. But it could do so only as LTCM did – based on past history.

As we explained, once investors came to consider stocks as a riskless way to get rich, they bid up prices to the point where they were all risk...and no reward. And when their models told them that they could make money by lending money to people who couldn’t pay it back, practically every loan they made took them closer to bankruptcy.

[ozymandius]

28. Stocks in Europe, Asia Fall on AIG Debt Rating Cuts; UBS Drops

Sept. 16 (Bloomberg) -- Stocks fell in Europe and Asia after the downgrade of American International Group Inc.'s credit rating increased turmoil in global debt markets. U.S. index futures rose as traders bet the Federal Reserve will cut interest rates.

UBS AG, which took more than $43 billion of subprime- related writedowns, lost 5.9 percent, and Mitsubishi UFJ Financial Group Inc. slumped 7.9 percent on speculation that the seizure in financial markets will worsen and hurt the global economy. Rio Tinto Group sank 3 percent and BG Group Plc declined 3.7 percent as commodity prices retreated, while Porsche SE dropped 2.1 percent after an industry group said the slump in European car sales deepened.

....

The ratings assessor also lowered AIG's short-term counterparty credit rating and cut its counterparty credit and financial strength ratings on most of AIG's insurance operating subsidiaries. AIG's senior unsecured debt rating was downgraded by Moody's to A2 from Aa3.

http://www.bloomberg.com/apps/news?pid=20601100&sid=ayRQo62xWPYE&refer=germany

[Ghost Dog]

30. ECB offers funding injection for 2nd day running

Tue Sep 16, 2008 3:18am EDT

FRANKFURT, Sept 16 (Reuters) - The European Central Bank announced plans for a second overnight injection of cash in a row on
Tuesday, continuing its attempt to calm financial markets with extra funding.

The bank called for bids at a minimum interest rate of 4.25 percent and, as on Monday, gave no intended volume.

...

The ECB said on Monday it stood "ready to contribute to orderly conditions in the euro money market", shortly before pumping 30 billion euros into the system.

/.. http://www.reuters.com/article/marketsNews/idINWLA961620080916?rpc=44


ECB pumps 70 bln euros into money markets
Tue Sep 16, 2008 4:58am EDT

FRANKFURT, Sept 16 (Reuters) - The European Central Bank pumped 70 billion euros into money markets on Tuesday as demand from banks topped the 100 billion mark amid signs interbank lending had frozen.

It was more than double the amount it allotted on Monday and effectively adds 40 billion to the funds it has now shovelled into money markets since they were shaken by the collapse of Lehman Brothers and the sale of Merrill Lynch (MER.N: Quote, Profile, Research, Stock Buzz) to Bank of America (BAC.N: Quote, Profile, Research, Stock Buzz).

Demand for the overnight variable rate funding rose to 102.48 billion euros. The ECB said that the money was lent at an average interest rate of 4.40 percent with 56 banks taking part in the auction.

The ECB said on Monday it stood "ready to contribute to orderly conditions in the euro money market", shortly before pumping 30 billion euros into the system, although funding hungry banks would have sucked up more than three times that amount.

/.. http://www.reuters.com/article/marketsNews/idINWLA962320080916?rpc=44

[Ghost Dog]

32. Money mkts freeze, o/night dollar rates vault 10 pct

Tue Sep 16, 2008 5:23am EDT

LONDON, Sept 16 (Reuters) - The interbank cost of borrowing overnight dollar funds soared on Tuesday to over 10 percent, more than five times the Federal Reserve's target rate, indicating dollar lending between banks had virtually ceased.

The dramatic rise amid deepening financial market turmoil reflects the scarcity of dollars in European trading hours, funds that European institutions desperately need to cover short-term dollar liabilities and exposures, traders said.

...

Reuters data showed overnight dollar deposit rates indicated as high as 11.50 percent <USDOND=> on Tuesday and market participants said banks' reluctance to lend meant deals were only being done at much higher rates.

Some said the drying up of dollar funds was as serious as anything seen during the entire global financial crisis, including the Aug. 9 money market seizure last year that many say marked the onset of the 13-month-old credit crunch. "This is much worse than August last year," said one market source. Another said: "European banks can't get dollars. Banks are hoarding (cash) in case of payment issues," related to the collapse of Lehman Brothers.

"We need the ECB and SNB (Swiss National Bank) to start providing more dollars," he said.

The European Central Bank was among several central banks which pumped short-term funds into their respective local money markets on Monday to help ensure the functioning of these interbank markets.

The Fed pumped in $70 billion of temporary reserves into the U.S. banking system on Monday.

On Tuesday, the Bank of Japan, Bank of England -- and the ECB again -- were among major central banks that injected funds into their markets, with the BoE providing a hefty 20 billion pounds.

But it is dollars that banks are short of.

"I don't want to provide liquidity for other banks which don't have a client customer status," said one rates trader.

"If we look at the electronic platforms there is hardly any liquidity there. What we're doing here, we're providing liquidity on a 10 cent-spread between bid and ask, normally the spread is about 3 or 4 cents."

In another sign of how frozen interbank markets are, some bankers said the foreign exchange swaps market was not functioning.

The British Bankers Association's London interbank offered rates for overnight dollar funds (Libor) were fixed on Monday over a full percentage point above the Fed's 2 percent target rate.

/... http://www.reuters.com/article/marketsNews/idINLG51833720080916?rpc=44&sp=true

----

SNAPSHOT-Global financial market stress at a glance

[Ghost Dog]

33. Euro spurs struggling German investor sentiment-ZEW

MANNHEIM, Germany Sept 16 (Reuters) - Investor sentiment on the outlook for the German economy rose from low levels for a second straight month, fuelled by a drop in oil prices and the euro's retreat against the dollar, a survey showed on Tuesday.

The ZEW economic research institute's gauge of expectations for Germany, based on a poll of 315 analysts and investors -- only 10 percent of which were delivered after U.S. investment bank Lehman Brothers collapsed -- rose by more than expected.

The survey, which was polled between Sept. 1 and Sept. 15, showed a reading of -41.1 in September, up from -55.5 in August and ahead of a mid-range forecast of -53.0 from 47 economists polled by Reuters last week ECONDE.

An analysis of responses submitted after Lehman's collapse suggested it had not dampened expectations for Germany further, ZEW said.

Several economists were sceptical about this assessment, however.

...

ZEW said the ongoing decline in oil prices was easing the burden on consumers and firms. Moreoever, the euro's depreciation against the U.S. dollar in recent weeks was benefiting Germany's key export economy, it added.

/... http://www.reuters.com/article/marketsNews/idINLG52320420080916?rpc=44&sp=true

[Ghost Dog]

34. Europe shares extend losses; LIBOR rates jump

Tue Sep 16, 2008 7:11am EDT

FRANKFURT, Sept 16 (Reuters) - European shares fell to their lowest level in more than three years by midday on Tuesday with financials weighing heavily amid ongoing uncertainty about the fate of U.S. financial institutions.

Overnight dollar Libor rates were fixed at 6.4375 percent compared to 3.10625 percent on Monday, hurting bank stocks further.

The FTSEurofirst 300 index of leading European shares was down 2.6 percent at 1,091.41 points, having earlier hit 1,089.42, its lowest since May 2005.

Britain's FTSE 100 .FTSE sank 3.2 percent to more than three-year lows, while both Germany's DAX .GDAXI and the French CAC 40 .FCHI were down 1.8 percent.

/.. http://www.reuters.com/article/marketsNews/idCALG51807420080916?rpc=44

[Ghost Dog]

72. FTSEurofirst hits 3-yr low (Bank stocks melt down)...

Tue Sep 16, 2008 9:21am EDT

LONDON, Sept 16 (Reuters) - European shares extended losses in afternoon trade on Tuesday, as banks suffered heavily due to renewed concerns about the health of the financial system and a steep fall in profit posted by Goldman Sachs (GS.N: Quote, Profile, Research, Stock Buzz).

By 1312 GMT, the FTSEurofirst 300 index of top European companies was down 3.9 percent at 1,075.91 points, after falling as low as 1,073.75 -- its lowest since May 2005.

Banks were the top-weighted losers, with UBS (UBSN.VX: Quote, Profile, Research, Stock Buzz) down 20 percent, HBOS (HBOS.L: Quote, Profile, Research, Stock Buzz) slumping 37 percent, Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz) losing 16 percent and Fortis (FOR.BR: Quote, Profile, Research, Stock Buzz) down 18 percent.

/. http://www.reuters.com/article/marketsNews/idCALG66489520080916?rpc=44

[Ghost Dog]

134. Finance jitters drive Europe stocks to 3-year low

Tue Sep 16, 2008 1:00pm EDT

LONDON, Sept 16 (Reuters) - European shares fell to their lowest close since May 2005 on Tuesday as investors grew more jittery about the fate of American International Group (AIG.N: Quote, Profile, Research, Stock Buzz) and commodity stocks tracked sharply lower metal and oil prices.

The FTSEurofirst 300 index of top European companies closed 2.6 percent lower at 1,091.38 points, adding to a 3.6-percent slide on Monday. It is down about 28 percent so far this year.

...

In Europe, banks were the top negative weight on the index. UBS (UBSN.VX: Quote, Profile, Research, Stock Buzz), Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz), BNP Paribas (BNPP.PA: Quote, Profile, Research, Stock Buzz), HBOS (HBOS.L: Quote, Profile, Research, Stock Buzz), Credit Agricole (CAGR.PA: Quote, Profile, Research, Stock Buzz), and Deutsche Bank (DBKGn.DE: Quote, Profile, Research, Stock Buzz) fell between 3 and 22 percent.

"Europe is just a residual on what is going on in the U.S. All eyes are on AIG and whether they can drum up the money tonight to keep them from going bankrupt," said Philip Lawlor, chief portfolio strategist at Nomura.

...

Across Europe, the FTSE 100 .FTSE closed 3.4 percent lower, the German DAX .GDAXI was down 1.6 percent and France's CAC 40 .FCHI slipped nearly 2 percent.

...

BG Group (BG.L: Quote, Profile, Research, Stock Buzz), Royal Dutch Shell (RDSb.L: Quote, Profile, Research, Stock Buzz), BP (BP.L: Quote, Profile, Research, Stock Buzz), Total (TOTF.PA: Quote, Profile, Research, Stock Buzz) fell between 2.7 and 5.1 percent.

Miners were also down as metal prices retreated. Gold <XAU=> fell nearly 2 percent, while copper MCU3 dropped 1.6 percent.

Anglo American (AAL.L: Quote, Profile, Research, Stock Buzz), Antofagasta (ANTO.L: Quote, Profile, Research, Stock Buzz), BHP Billiton (BLT.L: Quote, Profile, Research, Stock Buzz), Lonmin (LMI.L: Quote, Profile, Research, Stock Buzz), Kazakhmys (KAZ.L: Quote, Profile, Research, Stock Buzz), Rio Tinto (RIO.L: Quote, Profile, Research, Stock Buzz), Vedanta Resources (VED.L: Quote, Profile, Research, Stock Buzz) and Xstrata (XTA.L: Quote, Profile, Research, Stock Buzz) were down between 4.5 and 7.4 percent.

"There has been an unwinding of cyclical commodity plays. The problem is just not in the financial sector, but it is becoming more widespread," added Lawlor.

Among individual stocks, Volkswagen (VOWG.DE: Quote, Profile, Research, Stock Buzz) jumped 9.4 percent after German sports car maker Porsche (PSHG_p.DE: Quote, Profile, Research, Stock Buzz) said it had raised its stake in the company. Porsche was down 1.75 percent.

/... http://www.reuters.com/article/marketsNews/idCALG66329720080916?rpc=44&sp=true

[DemReadingDU]

35. The Ted Spread is way up! FEAR

TED spread is the difference in yields between inter-bank and U.S. Government loans.

Initially, the TED spread was the difference between the interest rate for the three month U.S. Treasuries contract and three month Eurodollars contract as represented by the London Inter Bank Offered Rate (LIBOR). However, since the Chicago Mercantile Exchange dropped the T-bill futures, the TED spread is now calculated as the difference between the three month T-bill interest rate and three month LIBOR. The TED spread is a measure of liquidity and shows the degree to which banks are willing to lend money to one another.

The TED spread can be used as an indicator of credit risk. This is because U.S. T-bills are considered risk free while the LIBOR rate reflects the credit risk of lending to commercial banks. As the TED spread increases, the risk of default (also known as counterparty risk) is considered to be increasing, and investors will have a preference for safe investments. As the spread decreases, the risk of default is considered to be decreasing.
http://en.wikipedia.org/wiki/TED_spread


Here is a chart for the TED spread. You will notice that it was high last August 2007, and high in late November 2007, and high in March 2008. The TED spread is creeping up again. It was 1.92 this morning.
http://www.bloomberg.com/apps/quote?ticker=.TEDSP:IND

edit: click for the 3-year chart
http://www.bloomberg.com/apps/cbuilder?ticker1=.TEDSP%3AIND


12/1/07
The willingness of banks to LEND TO EACH OTHER is truly measured by the TED spread. The TED spread is the difference between 3-month LIBOR and 3-month Treasuries.
The significance of this spread is that it represents the spread between the rate charged for lending to a bank and the rate charged for lending to the government.
It effectively measures the perceived credit risk of banks relative to the government (the credit risk premium).
That spread generally indicates how much FEAR is in the banking system (about the banking system ITSELF).
Even though the media doesn't focus much attention on this indicator (AS IT SHOULD), it should not be dismissed or taken lightly. It is very serious.
The spread has risen sharply to 200 basis points now---very close to the peak it hit last August. Prior to that, the highest reading recorded was about 270 basis points in 1987.

Written by Bernard on 2007-12-01 08:33:06
http://www.rgemonitor.com/blog/roubini/229674

[UpInArms]

39. dollar watch

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

Last trade 78.773 Change +0.340 (+0.43%)

Lehman Fails And AIG Is On The Verge - What Is The Currency Impact?

http://www.dailyfx.com/story/bio1/Lehman_Fails_And_AIG_Is_1221531486652.html

The world’s financial markets are on the verge of a collapse that rivals the Asian Financial crisis of 1997/98, the Savings and Loans crisis of the 1980’s and 1990’s, and some say even the Great Depression. As market risks balloon and traditional assets begin to break down, we now look to the Forex market to identify those currencies and strategies to avoid and those to hold through the turmoil.

In this article, we will tally the market destruction so far and review the potential triggers for the next leg of the market plunge. Then, we will cover the dangers in dollar and carry trade exposure. Finally, we will offer FX alternatives that will lower risk and may even bring us out on top of the market.

The News So Far

This morning, few markets escaped the panic that was borne out of a series of events that, in the end, may spell disaster for the global financial system. Assessing the damage, we can see that equities plummeted through all time zones. The primary risk asset for most investors, the benchmark Dow Jones Industrial Average tumbled over 500 points to close below 11,000 for the first time since July 17th. A better view of the panic was read in the S&P Volatility Index (VIX) which surged above 30 percent for the first time since the March. Elsewhere, the yield on the two-year Treasury note fell a staggering 51 basis points on speculation the Federal Reserve will join its global counterparts by entertaining interest rate cuts; and the even crude dropped below $94 per barrel on speculation curbed growth would dry up demand.

Tracking the general deterioration of conditions over the past year, we can trace the roots of this specific market crunch back to the sub-prime meltdown. Back in July and August of 2007, only a few hedge funds with heavy exposure to mortgage-backed securities were suffering from a jump in defaults encouraged by the resetting of adjustable rate mortgages. Since then, major lenders have collapsed, defaults have jumped to their highest level in 30 years, a mortgage-based crisis has turned into a credit crisis, financial institutions have racked up over $500 billion in write downs and a few major firms have flirted with collapse. Today, we saw that stakes were raised once again. Lehman Brothers, the world’s third largest securities firm filed for bankruptcy after a drain on capital and liquidity left the venerable company with no alternatives.

What Could Be Worse?

So far this week we have witnessed the largest bankruptcy filing on record; however, that may only be the beginning for this round of the ongoing financial crunch. Of far greater consequence for the markets (especially after Lehman’s downfall) could be a failure of AIG – one of the largest insurance firms in the world. Representing the next step of the sub-prime contagion, insurance for investors and for citizens is now threatened by a lack of liquidity in the credit markets. Should this giant go under, the market will be inundated with unmovable assets that would further depress prices which in turn forces downgrades that starts the cycle all over again with additional bankruptcies.

...more...

US Dollar: How Will the Lehman Failure Impact the Fed's Rate Decision?

http://www.dailyfx.com/story/special_report/special_reports/US_Dollar__How_Will_the_1221499018638.html

The US dollar has experienced a wild day of trading as the bankruptcy of Lehman Brothers has led the markets to price in a possible 25 basis point cut by the Federal Reserve on Tuesday. Will they reduce rates and more importantly, how will the meeting impact the US dollar this week?

How Will the Lehman Failure Impact the Federal Reserve’s Rate Decision?

When we first discussed the outlook for the Federal Reserve’s next meeting on September 16 in 5 Key Events for the Forex Market This Week, the scenario seemed fairly simple: slowing US growth along with indications of easing price pressures would diminish the Fed’s hawkish bias but still lead them to leave rates unchanged at 2.00%. However, a massive financial market shake-up has rattled interest rate expectations, as fed fund futures are now pricing in a 64% chance of a 25bp cut to 1.75% on Tuesday.

Last week, Merrill Lynch saw their shares get pummeled in the markets, and on Sunday, the firm sold itself to Bank of America for $50 billion, approximately half its peak value in early 2007. Lehman Brothers Holdings, on the other hand, was not so lucky: the firm filed the largest bankruptcy claim on record on Monday morning. The failure led stock markets to tumble around the world, including the Dow Jones Industrial Average, which plunged approximately 300 points at the NY open. Indeed, the Federal Reserve and US Treasury have helped to eliminate some of the moral hazard stemming from their intervention in Bear Stearns, Fannie Mae, and Freddie Mac, as they have essentially deemed Lehman as being not "too big to fail."

However, Lehman’s failure will impact other banks as well, since the firm had $613 billion in outstanding debts. According to Lehman's bankruptcy filing, the bank to take the biggest hit is AOZORA of Tokyo, as they loaned Lehman $463 million while Mizuho Corporate Bank Ltd. of Tokyo loaned $289 million. US banks are not in the clear either as Citibank loaned $275 million, serving as a blow to the already financially unstable bank.

...more...

[UpInArms]

41. The Fed pumped in $70 billion of temporary reserves into the U.S. banking system on Monday

http://www.reuters.com/article/bondsNews/idUSLG51833720080916?sp=true

LONDON, Sept 16 (Reuters) - The interbank cost of borrowing overnight dollar funds soared on Tuesday to over 10 percent, more than five times the Federal Reserve's target rate, indicating dollar lending between banks had virtually ceased.

The dramatic rise amid deepening financial market turmoil reflects the scarcity of dollars in European trading hours, funds that European institutions desperately need to cover short-term dollar liabilities and exposures, traders said.

That need has been made even more pressing since the failure of Lehman Brothers (LEH.N: Quote, Profile, Research, Stock Buzz) at the weekend and the increasingly precarious situation of other major financial firms, such as U.S. insurer American International Group (AIG.N: Quote, Profile, Research, Stock Buzz).

Reuters data showed overnight dollar deposit rates indicated as high as 11.50 percent <USDOND=> on Tuesday and market participants said banks' reluctance to lend meant deals were only being done at much higher rates.

Some said the drying up of dollar funds was as serious as anything seen during the entire global financial crisis, including the Aug. 9 money market seizure last year that many say marked the onset of the 13-month-old credit crunch. "This is much worse than August last year," said one market source. Another said: "European banks can't get dollars. Banks are hoarding (cash) in case of payment issues," related to the collapse of Lehman Brothers.

"We need the ECB and SNB (Swiss National Bank) to start providing more dollars," he said.

The European Central Bank was among several central banks which pumped short-term funds into their respective local money markets on Monday to help ensure the functioning of these interbank markets.

The Fed pumped in $70 billion of temporary reserves into the U.S. banking system on Monday.

...more...

[UpInArms]

44. Man the Pumps! Federal Reserve planning liquidity action this morning

02. N.Y. Fed: Ready to arrange further operations if needed
8:20 AM ET, Sep 16, 2008

04. N.Y. Fed to arrange 'large overnight repo'
8:19 AM ET, Sep 16, 2008

05. Fed to 'arrange large overnight repo'
8:18 AM ET, Sep 16, 2008

06. Federal Reserve planning liquidity action this morning
8:17 AM ET, Sep 16, 2008

[UpInArms]

50. Fed adds $50 billion of temporary reserves to banking system - Reuters

08:24 ET
Fed adds $50 billion of temporary reserves to banking system - Reuters

[DemReadingDU]

43. GM sees credit squeeze post-Lehman

DETROIT, Sept 15 (Reuters) - The bankruptcy of investment bank Lehman Brothers Holdings Inc and turmoil in the U.S. financial sector will prompt a contraction in credit, raising the stakes for companies like General Motors Corp looking to fund turnaround efforts, GM President and Chief Operating Officer Fritz Henderson said on Monday.

Henderson, who was speaking to the Reuters Autos Summit in Detroit, said that while credit markets have been effectively closed to most corporate borrowers, the shakeout in the U.S. financial sector could add to the near-term pressure.

"Capital markets have been quite difficult, and this is just going to make it more so," Henderson said.
He added: "We're in for some rough waters here at least for this week if not the next couple of months."

Because of its exposure to autos and the U.S. housing market through its remaining 49-percent stake in its former finance arm GMAC, GM has been hit by the downturn in two of the weakest sectors in the U.S. economy, Henderson said. "We've felt it to our bones within General Motors," he said.

Meanwhile, GMAC, now controlled by Cerberus Capital Management, completed a $60-billion refinancing for its ResCap mortgage lending unit in June and has taken other action in the months since to cut costs and shed risk.

While those were needed steps, other action could still be necessary for GMAC, Henderson said. "I don't think in the current capital markets, you ever rest with great confidence," he said.

more...
http://www.guardian.co.uk/business/feedarticle/7800363

[Tandalayo_Scheisskopf]

46. Money-Market Rates Double Amid Global Credit Seizure

Sept. 16 (Bloomberg) -- The cost of borrowing in dollars overnight more than doubled to the highest since 2001 amid speculation the collapse of Lehman Brothers Holdings Inc. may cause more financial institutions to fail.

The overnight dollar rate soared 3.33 percentage points to 6.44 percent today, its biggest jump, according to the British Bankers' Association. Lehman filed for bankruptcy yesterday after succumbing to mounting credit-market losses.

``It's all a mess out there, it's unbelievable, it's very tough,'' said Padhraic Garvey, head of investment-grade strategy in Amsterdam at ING Bank NV. ``There really is no sign of this going away. If the Fed were to cut rates, it's not necessarily going to solve anything.''

Demand for short-term cash is surging even as central banks seek to revive lending through emergency cash injections. The increase underscores how, far from improving, the credit squeeze that started in August last with the collapse of the U.S. subprime-mortgage market is worsening.


http://www.bloomberg.com/apps/news?pid=20601087&sid=atGzU9EAf240&refer=home

[Tandalayo_Scheisskopf]

48. Let's play "Find The Real Level of Speculation in the Energy Markets"!

PETROLEUM ($/bbl)
PRICE* CHANGE % CHANGE TIME
Nymex Crude Future 91.51 -4.20 -4.39 07:53
Dated Brent Spot 87.78 -2.04 -2.27 08:23
WTI Cushing Spot 95.71 -5.47 -5.41 09/15


PETROLEUM (¢/gal)
PRICE* CHANGE % CHANGE TIME
Nymex Heating Oil Future 269.71 -9.41 -3.37 07:53
Nymex RBOB Gasoline Future 248.30 -7.84 -3.06 07:52


NATURAL GAS ($/MMBtu)
PRICE* CHANGE % CHANGE TIME
Nymex Henry Hub Future 7.36 -.01 -.19 07:53
Henry Hub Spot 8.05 .28 3.60 09/12
New York City Gate Spot 8.31 -.17 -2.00 09/15


ELECTRICITY ($/megawatt hour)
PRICE* CHANGE % CHANGE TIME
Mid-Columbia, firm on-peak, spot 61.15 -.04 -.07 09/15
Palo Verde, firm on-peak, spot 56.67 -.26 -.46 09/15
Bloomberg, firm on-peak, day ahead spot/West Coast 68.32 -3.43 -4.78 09/15

By the time this all shakes out, the real price of crude and distillates, without the gamblers in the mix, will be revealed. Something tells me that vague concerns about NG, left over from Ike, will be the last stand of the few Kasino dead-enders.

[54anickel]

53. SHIT! I'm gonna be sick all day now. Just caught McLame on GMA

talking about how America's strength is in its fodder units workers.

Obviously his crystal ball is working just fine as well. When asked if he could tell Americans that "they will be OK and this situation won't get worse" he CON-fidently answered "Yes I can, and I said the fundamental of our economy is the American worker".

Seems they've all been calling for this "crisis" to be addressed for 2 years....I remember hearing most Dems and a handful of Reps addressing this, but McCain? Remember this just as recently as March?

http://www.msnbc.msn.com/id/23788751/
SANTA ANA, Calif. - Republican John McCain on Tuesday derided government intervention to save and reward banks or small borrowers who behave irresponsibly though he offered few immediate alternatives to fixing the country's growing housing crisis.

"I will consider any and all proposals based on their cost and benefits," the certain GOP presidential nominee, who has acknowledged in the past that the economy is not his strong suit, told local business leaders south of Los Angeles.

Democrats accused McCain of lacking the skills needed to lead a country on the brink of recession.

snip>

"Instead of offering a concrete plan to address the crisis at all levels, McCain promised to take the same hands-off approach that President Bush used to lead us into this crisis," Democratic Party Chairman Howard Dean said in a statement.

more...

Here's the speech alluded to in that piece. Notice how he hasn't the foggiest idea of what this was about, or he's just really good a playing dumb about banking corrpution, greed and the derivatives game....taking the Republican corporate friendly line of blame the homeowner/victim of predatory lending.

http://time-blog.com/real_clear_politics/2008/03/mccains_housing_speech.html

[nolabels]

54. Looks like a lot people are going to be caught with their pants down very soon

Hard to tell people you were just kind a playing around when your in that position also. Four or five weeks is a long time with so many financial institutions in a free-fall. We all may be screwed but the Republican brand may be screwed even more :shrug:

Goldman 3Q Net Drops 70% On Lower Client Activity,Valuations
September 16, 2008: 09:00 AM EST
http://money.cnn.com/news/newsfeeds/articles/djf500/200809160900DOWJONESDJONLINE000390_FORTUNE5.htm

[ozymandius]

56. Goldman Profit Drops 70%, Says It's `Well-Positioned' (What the hell else are they going to say?)

Sept. 16 (Bloomberg) -- Goldman Sachs Group Inc., the largest of the two remaining independent U.S. securities firms, said third-quarter profit fell 70 percent, the sharpest decline in its nine years as a public company, and said it remains ``well positioned.''

Goldman fell 7 percent in New York trading after the New York-based firm said in a statement that net income dropped to $845 million, or $1.81 a share in the three months ended Aug. 29, from $2.85 billion, or $6.13, a year earlier. The earnings compare with the average estimate of $1.71 a share of 19 analysts surveyed by Bloomberg. Goldman has beaten estimates for 13 straight quarters.

....

Return on equity, a measure of how effectively the firm reinvests earnings, fell to 7.7 percent.

Revenue dropped 51 percent from a year ago to $6.04 billion. Fixed-income, currencies and commodities, the company's biggest source of revenue, generated $1.6 billion, down 67 percent. The firm took $275 million in writedowns on leveraged loans and related hedges, $500 million on residential mortgage loans and securities and $325 million on commercial mortgage loans and securities.

http://www.bloomberg.com/apps/news?pid=20601087&sid=ajj0AIP2rJqU&refer=home

[nolabels]

57. The brand is no good and not profitable enough, if at all, so sell it quick

Maybe even buy stock in mattress companies instead ;-)

[Hugin]

61. Hmm... 'Well Positioned' is that another way of saying 'Deer in Headlights'?

or maybe they have someone holding their place in the bread line? :shrug:


Edit: I can't resist pointing out that Goldman-Sachs is 'the touchstone' Human Resource model that has been used
to organize the US Government under the National Security Personnel System A.K.A. The new spoils system. Talk about irony. :eyes: :rofl:

[MilesColtrane]

122. "Well positioned" like a fast ball grooved over the plate.

[54anickel]

67. Nintendo makes more profit per employee than Goldman

Heh-heh, just wanted to post that headline!

http://www.ft.com/cms/s/0/ff909a58-8388-11dd-907e-000077b07658.html?nclick_check=1

The programmers of Super Mario Galaxy will generate more profit this year than the average Goldman Sachs banker has ever managed.

According to calculations by the Financial Times, the average employee at Japanese video games maker Nintendo is on track to earn more for their company this year than the average Goldman Sachs employee did in 2007, the investment bank's best year yet.

Nintendo also makes more per employee than internet group Google.

For an electronics company to make more per employee than a highpowered investment bank is exceptional, and the figures highlight how profitable Nintendo, a company with fewer than 3,000 permanent employees, has become after the success of its Wii and DS consoles. Before tax and before pay, the average Goldman employee generated $1.24m in profit last year, based on the company's accounts.

snip>

Whereas at Goldman the mean employee walked away with compensation of $660,000 in 2007 - about half of the profit they generated - the average salary at Nintendo was just $90,900. The rest goes to shareholders.

Nintendo and its staff remain humble - another contrast to the 'Masters of the Universe' at big investment banks - in spite of the pressures of running a company that now has a market capitalisation of $64bn.

more...

[Demeter]

109. dupe Post #4

[54anickel]

117. DOH! Sorry, saw that last night and was just looking for a juicy Goldman tie-in.

[ozymandius]

62. Markets are open; the crater gets bigger

9:31Dow 10,795.46 Down 122.05 (1.12%)
Nasdaq 2,155.33 Down 24.58 (1.13%)
S&P 500 1,180.19 Down 12.51 (1.05%)
10-Yr Bond 3.309% Down 0.174
NYSE Volume 205,397,390.625
Nasdaq Volume 79,049,437.5

09:17 am : S&P futures vs fair value: -25.50. Nasdaq futures vs fair value: -24.80. Futures trade near recently reached session lows and suggest a sharply lower open. Agriculture chemical company Monsanto (MON) raised its fiscal year 2008 guidance to between $3.58 and $3.60 per share, from $3.37. Wall Street forecast earnings of $3.45 per share. Oil is now down 5.1% to $90.78 per barrel -- its lowest level since February.

09:01 am : S&P futures vs fair value: -21.20. Nasdaq futures vs fair value: -18.30. S&P 500 and Nasdaq 100 futures hit session lows. Stock markets in Japan and Hong Kong, which were closed yesterday for a holiday, saw a steep sell off on the financial market turmoil. Japan's Nikkei fell 5.0% and Hong Kong's Hang Seng dropped 5.4%. In Europe, London's FTSE is down 3.6%, German's DAX is down 2.0% and France's CAC 40 is down 2.3%. In economic news, net foreign purchases declined to $6.1 billion in July from $53.4 billion in June.

[Hugin]

63. I guess I'd better open up the ool!

AnneD would want me to.


Anybody have some bolt cutters handy?

[ozymandius]

66. I'm still set for Quadruple Witching Day.

That's this Friday. I'll bet that the major index numbers return to their levels when Bush took office.

[Hugin]

74. Okay... *** POOL'S OPEN!!!! ***

Note to self: Write a letter to the Leatherman(tm) company highly praising their product's ability to cut chain
link fences with a cc to the DHS. :)

_________________________________________________________________________________________________________________________

Note: Please quickly look over the list and I'll try to update it before the editing time lapses.


Guess the date the DJIA rolls back to the level it was when the chimp took office-10,578.24. You can revise your dates until the DJIA hits(IMPORTANT CHANGE) 10700 (got to have a cut off). Anyone can join, just give a date and your reasoning for that date. Note the change on the cut off. That should make for a good horse race. I will check the post date/time for last minute posters but those that guessed the date way in advance get extra points. The earlier posters are at the top in the cases of multiple guesses on the same day.


MuleBoy(aka hiz honna da mayor).....9/11 (Note: Pretty darn close!)
Nickster.....9/12 (Note: Pretty darn close!)

Ghost Dog ....9/18 (You may just get it GD!)

Ozy.....9/19 (Note: Ozy picked this date a couple of months ago.)
AnneD..... 9/19 (Like the triple witching thang.)
readmoreoften... 9/19

Demeter.....9/22
Ozone man.....9/23
JuneBourder.....9/29
radfringe.... 10/09/08 (Countdown!)
Birthmark....10/10
Mojorabbit.... 10/11
Tansy_Gold.....10/13
DemReadingDU.....10/16
Roland99.....10/17
AnneD....10/24
Neshanic.....10/24
UpInArms.....10/30
MsLeopard.....10/31
Wordpix.....11/3
Passingfair.....11/4
Ship wrack.....11/5
Wednesdays.....1/16/2009

Remember-you can change the dates as we learn more. If your date isn't on the list, e-mail me and I'll add it the next time I post. I erased expired dates so you can guess again. I post about one a week-more often the closer we get to the number. The winner get the praise and admiration of those on the Stock Watch Thread. We have also kicked in for a years worth of bragging rights and Karl Rove as you own pool boy if we can find Speedos to fit. There is still time to place your bets.....And please-no Reggie bars in the pool.

IMPORTANT ADDENDUM: I believe, as an investor, one day does not a trend make. So as activity coordinator of the pool, additional guesses are allowed should it dip down but pop up above the cut off. Call it the Indian Summer Clause. I personally think that 11000 is their PIN, but the fact that it cannot be pumped up any further anymore points to weakness in the system-for my $0.02.

[readmoreoften]

82. I'm also going with 9/19

Friday.

[Hugin]

87. Got it.

:thumbsup:

[Karenina]

159. Same for me. Is it triple or quadruple witching this time?

[Hugin]

166. Ozy says somewhere it's triple.

But, I've also heard quadruple.

I'm not sure.

[ozymandius]

181. Quadruple in September

A day on which contracts for stock index futures, stock index options, stock options and single stock futures (SSF) all expire.

Quadruple witching days occur on the third Friday of March, June, September and December.

http://www.investopedia.com/terms/q/quadruplewitching.asp

[AnneD]

231. That's right...

the ides of March.

[radfringe]

89. put me down for 10/09/08 (I like the "countdown" look of that date)

[Hugin]

92. Countdown!

:7

[Neshanic]

93. Thanks! I am holding on the 10/24.

[Buttercup McToots]

96. I want 9/22

pleeeze...:)

[Hugin]

97. Well... Only because you asked so nicely.

Guess the date the DJIA rolls back to the level it was when the chimp took office-10,578.24. You can revise your dates until the DJIA hits(IMPORTANT CHANGE) 10700 (got to have a cut off). Anyone can join, just give a date and your reasoning for that date. Note the change on the cut off. That should make for a good horse race. I will check the post date/time for last minute posters but those that guessed the date way in advance get extra points. The earlier posters are at the top in the cases of multiple guesses on the same day.


MuleBoy(aka hiz honna da mayor).....9/11 (Note: Pretty darn close!)
Nickster.....9/12 (Note: Pretty darn close!)

Ghost Dog ....9/18 (You may just get it GD!)

Ozy.....9/19 (Note: Ozy picked this date a couple of months ago.)
AnneD..... 9/19 (Like the triple witching thang.)
readmoreoften... 9/19

Demeter.....9/22
Buttercup McToots ... 9/22 (Note: Said Please.)
Ozone man.....9/23
JuneBourder.....9/29
radfringe.... 10/09/08 (Countdown!)
Birthmark....10/10
Mojorabbit.... 10/11
Tansy_Gold.....10/13
DemReadingDU.....10/16
Roland99.....10/17
AnneD....10/24
Neshanic.....10/24
UpInArms.....10/30
MsLeopard.....10/31
Wordpix.....11/3
Passingfair.....11/4
Ship wrack.....11/5
Wednesdays.....1/16/2009

Remember-you can change the dates as we learn more. If your date isn't on the list, e-mail me and I'll add it the next time I post. I erased expired dates so you can guess again. I post about one a week-more often the closer we get to the number. The winner get the praise and admiration of those on the Stock Watch Thread. We have also kicked in for a years worth of bragging rights and Karl Rove as you own pool boy if we can find Speedos to fit. There is still time to place your bets.....And please-no Reggie bars in the pool.

IMPORTANT ADDENDUM: I believe, as an investor, one day does not a trend make. So as activity coordinator of the pool, additional guesses are allowed should it dip down but pop up above the cut off. Call it the Indian Summer Clause. I personally think that 11000 is their PIN, but the fact that it cannot be pumped up any further anymore points to weakness in the system-for my $0.02.

[uppityperson]

124. I wanted 9/18 please.

'tis a special day to me in many ways, so could I have that please? Thank you.

[Hugin]

126. There you are!

Guess the date the DJIA rolls back to the level it was when the chimp took office-10,578.24. You can revise your dates until the DJIA hits(IMPORTANT CHANGE) 10700 (got to have a cut off). Anyone can join, just give a date and your reasoning for that date. Note the change on the cut off. That should make for a good horse race. I will check the post date/time for last minute posters but those that guessed the date way in advance get extra points. The earlier posters are at the top in the cases of multiple guesses on the same day.


MuleBoy(aka hiz honna da mayor).....9/11 (Note: Pretty darn close!)
Nickster.....9/12 (Note: Pretty darn close!)

Ghost Dog ....9/18 (You may just get it GD!)
uppityperson... 9/18 (Note: Because it's a special day.)

Ozy.....9/19 (Note: Ozy picked this date a couple of months ago.)
AnneD..... 9/19 (Like the triple witching thang.)
readmoreoften... 9/19

Demeter.....9/22
Buttercup McToots ... 9/22 (Note: Said Please.)
Ozone man.....9/23
JuneBourder.....9/29
radfringe.... 10/09/08 (Countdown!)
Birthmark....10/10
Mojorabbit.... 10/11
Tansy_Gold.....10/13
DemReadingDU.....10/16
Roland99.....10/17
AnneD....10/24
Neshanic.....10/24
UpInArms.....10/30
MsLeopard.....10/31
Wordpix.....11/3
Passingfair.....11/4
Ship wrack.....11/5
Wednesdays.....1/16/2009

Remember-you can change the dates as we learn more. If your date isn't on the list, e-mail me and I'll add it the next time I post. I erased expired dates so you can guess again. I post about one a week-more often the closer we get to the number. The winner get the praise and admiration of those on the Stock Watch Thread. We have also kicked in for a years worth of bragging rights and Karl Rove as you own pool boy if we can find Speedos to fit. There is still time to place your bets.....And please-no Reggie bars in the pool.

IMPORTANT ADDENDUM: I believe, as an investor, one day does not a trend make. So as activity coordinator of the pool, additional guesses are allowed should it dip down but pop up above the cut off. Call it the Indian Summer Clause. I personally think that 11000 is their PIN, but the fact that it cannot be pumped up any further anymore points to weakness in the system-for my $0.02.

[Hugin]

205. Last dip for today...

Guess the date the DJIA rolls back to the level it was when the chimp took office-10,578.24. You can revise your dates until the DJIA hits(IMPORTANT CHANGE) 10700 (got to have a cut off). Anyone can join, just give a date and your reasoning for that date. Note the change on the cut off. That should make for a good horse race. I will check the post date/time for last minute posters but those that guessed the date way in advance get extra points. The earlier posters are at the top in the cases of multiple guesses on the same day.

Prag... 9/17 (Note: I'll update this until I get it correct!)

Ghost Dog ....9/18 (You may just get it GD!)
uppityperson... 9/18 (Note: Because it's a special day.)

Ozy.....9/19 (Note: Ozy picked this date a couple of months ago.)
AnneD..... 9/19 (Like the quadruple witching thang.)
readmoreoften... 9/19
Karenina.... 9/19

Demeter.....9/22
Buttercup McToots ... 9/22 (Note: Said Please.)
ozone_man.....9/23
JuneBourder.....9/29
radfringe.... 10/09/08 (Countdown!)
Birthmark....10/10
Mojorabbit.... 10/11
Tansy_Gold.....10/13
DemReadingDU.....10/16
Roland99.....10/17
AnneD....10/24
Neshanic.....10/24
UpInArms.....10/30
MsLeopard.....10/31
Wordpix.....11/3
Passingfair.....11/4
Ship wrack.....11/5
Wednesdays.....1/16/2009

Remember-you can change the dates as we learn more. If your date isn't on the list, e-mail me and I'll add it the next time I post. I erased expired dates so you can guess again. I post about one a week-more often the closer we get to the number. The winner get the praise and admiration of those on the Stock Watch Thread. We have also kicked in for a years worth of bragging rights and Karl Rove as you own pool boy if we can find Speedos to fit. There is still time to place your bets.....And please-no Reggie bars in the pool.

IMPORTANT ADDENDUM: I believe, as an investor, one day does not a trend make. So as activity coordinator of the pool, additional guesses are allowed should it dip down but pop up above the cut off. Call it the Indian Summer Clause. I personally think that 11000 is their PIN, but the fact that it cannot be pumped up any further anymore points to weakness in the system-for my $0.02.

[Wednesdays]

64. And the bleeding continues...

Stocks down. Oil Down. Metals down. Treasuries down. What the heck is anybody investing in? :shrug:

Or are our worst fears coming to reality...that all that "wealth" has been just an illusion?

[Demeter]

212. Antacids and Tranks

THe NY Shrinks are rubbing their hands in anticipation according to NPR.

[RUMMYisFROSTED]

68. Has 10,500 day arrived?

Lookin' likely.

[Buttercup McToots]

70. Good Morning All...

:hi:

Whats cooking?
Besides the market...

[nolabels]

76. It must be my oatmeal boiling over!

Guess it's time to go clean up the mess :hi:

[Dr.Phool]

118. That's why they put that little window in the microwave.

After 2 1/2 minutes, watch it like a hawk!

[ozymandius]

78. The 9:45 blather is quite stark in its response. Lotta stuff getting cooked.

09:45 am : The stock market tumbles at the open extending the previous session's massive loss -- which was the S&P 500's largest loss in seven years. Once again financial market turmoil is sparking the selling interest.

AIG (AIG 2.00, -2.76) is down 58% after having its credit ratings cut at Standard & Poor's and Moody's. Goldman Sachs (GS 121.15, -14.23) fell to a fresh 52-week low after reporting a 72% year-over-year drop in earnings per share. Washington Mutual (WM 1.70, -0.30) had its outlook downgraded at Standard & Poor's and had its counterparty credit rating lowered to junk.

The overnight dollar libor, the interest rate banks charge to lend dollars overnight, doubled following yesterday's developments, leading the Fed and overseas central banks to pump liquidity into the system.

The FOMC makes its policy announcent announcement at 2:15 ET. Fed funds futures are fully pricing in a 25 basis point rate cut to 1.75%, and even suggest a modest chance of a 50 basis point cut. Last week there was no chance of a rate cut.

As a result, Treasuries are rallying, with the 10-year note up a 25 ticks , sending its yield down to 3.29% -- the lowest yield since 2003

In news outside financials, Hewlett-Packard (HPQ 44.97, -0.36) will take a $1.7 billion charge related to its EDS acquisition, which includes cutting 7.5% of its workforce, or 24,600 employees. Dell (DELL 16.40, -1.59) said it is seeing further softening in global end-user demand.

On the positive side, CPI decreased 0.1% in August due to a drop in fuel costs. Core CPI rose 0.2%.

[antigop]

73. New Obama ad lambastes McCain's 'fundamentals' line

http://tpmelectioncentral.talkingpointsmemo.com/2008/09/election_central_morning_round_161.php

The Obama campaign has this campaign ad out today, set to run in targeted states, targeting John McCain on the economy and ridiculing his line about how "the fundamentals of our economy are strong":

"How can John McCain fix out economy," the on-screen text asks, "if he doesn't understand it's broken?"

You can watch the video at the link.

<edit> spelling

[burf]

75. It looks as though

the market is getting a bump off of the $50 billion "pump".

[Doctor_J]

77. Uh-oh. Whos got Sep 16 in the "Bush flat-line" pool?

:shrug:

[Hugin]

80. Nobody... See post #74. n/t

[DemReadingDU]

84. Someone is pumping up the market

Unless it tanks this afternoon, doesn't look like today
:shrug:

[Hugin]

88. I agree.

It's hard to see it happening unless there is some interruption in the pump.

[DemReadingDU]

99. Dow ramping up

Is the Fed going to bailout AIG?

[Hugin]

101. No, it looks like Lehman managed to do the 'bad bank' 'good bank' split by trickery.

THIS! is where we need some sort of regulators with teeth and a responsive Legislative branch.

I surmise this leaves Lehman's creditors holding the bag while the money dances off into the sunset with
the new owner.

If I were a Lehman creditor (which due to repos, we are) I'd be outraged and sue their bloomers off. :grr:

[Buttercup McToots]

102. Rumors rampet all over...

AIG saved...
No rate cut...
I'll see if I can find something solid...

[Karenina]

157. I also heard that AIG had been rescued from my ESL student

who's an investment banker. He seemed quite certain it would be propped up, no matter what.

[antigop]

83. Lehman spurned bid that would have saved firm, says Korea's KDB

http://financialweek.com/apps/pbcs.dll/article?AID=/20080916/REG/809169993/1036

Lehman Brothers Holdings could have avoided bankruptcy had it accepted an offer made by Korea Development Bank (KDB), the head of the state-run bank said on Tuesday.

“Lehman had agreed with us on most of the conditions, but there was too big a gap on the price of the stake,” KDB Chief Executive Min Euoo-sung told a media briefing.

Min said KDB had offered a price roughly equal to one-third of what Lehman was asking, and added the discussions between the two parties had involved a stake “much higher” than the 25% previously mentioned in some news reports.

Speaking in korean, he said talks with Lehman had been “wrapped up” for the moment and that the bank was focusing on other areas.

“Had Lehman accepted the proposal we sent them at the end of August, and had received government approval, from a personal point of view Lehman would not have gone into such a difficult situation,” Min said.

[Buttercup McToots]

85. U.S. may need new agency to deal with crisis: Volcker

U.S. may need new agency to deal with crisis: Volcker

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

http://www.reuters.com/article/newsO...dChannel=10112

U.S. may need new agency to deal with crisis: Volcker
Mon Sep 15, 2008 5:54pm EDT

By Kathy Skipper

NAPLES, Florida (Reuters) - Former Federal Reserve chairman Paul Volcker said on Monday that the U.S. government may have to set up a temporary, new agency with its own resources to deal with the financial crisis rocking global markets.

Volcker told a conference in Naples, Florida, that the fall of investment banks Lehman Brothers and Bear Stearns and the sale of Merrill Lynch showed the entire financial system needed a revamp and that the sky-high pay of company executives needed to be reined in to sensible limits.

"We have a failed financial structure," he said at the Global Financial Leadership Conference.

Volcker said the impersonal trading mechanisms of modern markets were heavily engineered to spread risk, to "cut and paste" both good and bad obligations.

"Unfortunately, instead of spreading risk, it has concentrated risk. It has made it more opaque, not more transparent," he said.

"I have personally, and reluctantly, come to another conclusion. It may require a new government instrumentality, powers that neither the Federal Reserve nor the Treasury enjoy at the present. But the basic idea of an organization with resources of its own, with professional, non-partisan management and limited life is timely."

Global stockmarkets fell on Monday after Lehman Brothers filed for bankruptcy protection, rival Merrill Lynch agreed to be taken over, and the Federal Reserve threw a lifeline to the battered financial industry. Insurer American International Group also sought emergency help.

That came just after the U.S. government intervened in mortgage firms Freddie Mac and Fannie Mae and six months since the collapse of Bear Stearns, all brought down by the implosion of the once booming U.S. housing market and a crippling credit crunch that rocked the world in its wake.

Volcker said the status quo could not deal with the situation fully.

"We cannot count on benign regulators and supervisors. There are structural things that need to be changed," he said.

Volcker also expressed the widely held view that some fundamentals of the broader U.S. economy needed to change. The United States had been consuming too much for too long, and was too dependent on capital from overseas.

He said exports and real savings had to increase to provide a more solid foundation to the U.S. economy and consumption patterns needed to become more sustainable.

"I have been around for quite a while and I've seen crises come and go, and this is a big one," Volcker said.

"Nonetheless, we are handling it and as we work through it, it's going to take steady hands, patience, a willingness to innovate and non-partisan politics, even in an election year."

[Buttercup McToots]

90. new linky

http://www.reuters.com/article/newsOne/idUSN1559911120080915?virtualBrandChannel=10112

[Buttercup McToots]

94. Paul Volcker Said, "Letting Gold Go to $850 Was a Mistake."

Paul Volcker Said, "Letting Gold Go to $850 Was a Mistake."

In looking back at the rise of gold from $35 to $850 during the 1970s', Paul Volcker said, "It was probably a mistake to allow gold to rise so high." Not only does that statement presuppose that the U.S. could have controlled the gold price, but it also suggests the establishment's arrogance in assuming they have a right and obligation to do so. How anyone believes gold is not manipulated from time to time is a mystery to me, given all the evidence provided by the Gold Anti Trust Action Committee (GATA), Reginald Howe's lawsuit as well as the Blanchard lawsuit, and given the importance of keeping the public believing in paper as money rather than gold. I guess people simply believe what they want to believe.

[Hugin]

91. I think the infrastructure required is already there...

It's been systematically de-funded, discredited, and hamstrung by those who've done so in order to deliberately loot the system.

[Demeter]

111. How About A New Administration from a New Party?

With a new sherrif, and shiny new handcuffs, and a spiffy new jail full of solitary confinement cells, and maybe for incorrigibles, a new location in Cuba....

[54anickel]

86. Wachovia To Bolster Evergreen Funds, More Support To Come

Posted this last night in LBN, no replies.


http://money.cnn.com/news/newsfeeds/articles/djf500/200809151850DOWJONESDJONLINE000776_FORTUNE5.htm

NEW YORK -(Dow Jones)- Wachovia Corp. (WB), the parent of Evergreen Investments, plans to pump money into three Evergreen money-market funds as a result of the bankruptcy filing by Lehman Brothers Holdings Inc. (LEH), and more money funds are expected to require shoring up as well.

Wachovia, in a posting to Evergreen's Web site Monday, said it has entered into support agreements with Evergreen Money Market, Institutional Money Market and Prime Cash Management funds to support the value of Lehman credit held in the funds.

The statement did not say exactly how much support would be provided, and Evergreen had no comment beyond the statement. As of the close on Sept. 12, however, Evergreen Institutional Money Market Fund had $309 million, or 1.9% of its assets, invested in Lehman credit, Money Market Fund had $110 million, or 1.66% of its assets invested, and Prime Cash Management had $75 million, or 0.97% of its assets, invested.

Evergreen has no credit exposure to Lehman across the firm's municipal money- market funds, according to the statement. Lehman also serves as a counterparty on certain repurchase agreement transactions entered into by Evergreen Treasury Money Market Fund, it said. Those agreements are collateralized by U.S. Treasury securities in the event Lehman is unable to fulfill its obligations under the agreement, the statement said.

At least one other money fund manager is preparing to announce very soon that it will provide support to a money fund due to its Lehman holdings and others may follow suit, said Peter Crane, president of Crane Data LLC.

more....


I can't help but think that this benefits Wachovia more than Evergreen. Here's a peek at the thinking of Wachovia's CEO...

http://www.cnbc.com/id/26720573
snip>

Steel called it a “sad, hard day” for all the executives who worked so hard to keep these companies in business.

Still, as bad as things have gotten, the CEO doesn’t think the events so far have been catastrophic.

“We’re working through this,” he said, “and we’re making progress.”

snip>

And there’s plenty of capital left to be had, Steel said, whether it’s from high-level money market funds, sovereign wealth funds or savings. These potential investors just want to make sure financial companies are done with their business strategy of low liquidity and high leverage.

[Dr.Phool]

123. Where is Wachovia getting the money?

Unless they're now using their option to invest depositor funds into their investment bank business.

Wachovia is the first bank that I've ever enjoyed doing business with, but right now I want to get my money as far away from them as possible.

[nolabels]

95. Like a deer in the headlights, today might be standstill

AIG Shares Plunge After S&P Downgrades
Tue. September 16, 2008; Posted: 10:37 AM
(snip)
New York Governor David Paterson said Tuesday that AIG has "about a day" to find the funding they need, an estimated $75 billion.

Paterson stressed the nationwide impact that the failure of AIG would have, stating that he doesn't think "anyone is understanding of the ramifications of this crisis."
(snip)
http://www.tradingmarkets.com/.site/news/TOP%20STORY/1884852/

[Buttercup McToots]

98. Read Denniger today? The-Giant-Kaboom

http://market-ticker.denninger.net/archives/581-Ready-For-The-Giant-Kaboom.html

You're very likely to hear it.

AIG is the 900lb Gorilla in the China Shop, and he's full of piss and vinegar.

What is AIG? The largest insurance company in the United States.

So what would make AIG detonate, and why would AIG blowing up kill the financial system?

Because AIG, like so many other insurance and similar companies, wrote Credit Default Swaps to virtually anyone, had inadequate (read: no!) margin supervision, and they now are in liquidity trouble.

In short, they levered up their balance sheet like the rest of the geniuses on Wall Street, and like most of these other clowns, aren't well-enough capitalized to survive a ratings downgrade.

To put this in perspective they are now trying to put together a 70 billion dollar credit line from multiple banks in order to allow AIG to be able to post collateral.

$70 billion dollars?! Yep.

These folks have a one trillion dollar balance sheet. And, like the rest of the financials, they have operated in a "no regulation" world for the last 20 years, and thus were running hog-wild making money hand-over-fist writing these swaps.

The worse news is that essentially everyone on Wall Street - and Main Street - is in some way connected to these folks. Either as a swap-buyer or as a buyer of some other form of insurance. So if and when they "boom" we have an instantaneous mess that hits everyone at once.

Welcome to reality folks.

I have warned about unbridled leverage for over a year, since The Market Ticker began publication. This disease has infested every corner of our financial system, from the corner store to the investment banker to the insurance company. None ignored the "vast profits" they could make, and to a lesser or greater extent they have all dug very deep holes from which there is no escape.

One by one the explosions of one firm will set off more blasts, until the leverage is reduced to safe levels, frequently by bankruptcy.

As each firm falls its credit default swaps become "zeros", and the people on the other end either have to be able to net it out (e.g. if the detonated firm had an opposite position with someone else, and you can find them, then you can rewrite the deal between the two of you - no harm, no foul) or someone has to pay. Of course if the swap is on the dead firm's debt, well, that poor bastard has to get out his wallet.

The bad news is that he may not have anything in it, and then the other guy both has a lawsuit and an exposed position he thought he was hedging.

Neither political party has had the will to get in front of this and put a stop to it. I have been writing, faxing, and petitioning (along with many of the readers of this blog) Congress and Regulators over the last year, pointing this out the entire time, and insisting that Congress and Regulators had to get in front of this problem and put a stop to it.

Instead all we've seen is Congress and Regulators, including Treasury, the FDIC, the OTS, OCC and The Fed stick their fingers in their ears and go "la la la la la la la la la".

Now we are discovering that the "exigent circumstance" facilities that The Fed has put in place, and Congress has permitted, have in fact made the problem worse because instead of forcing everyone to take their marks and deleverage, they have instead allowed everyone to play "hide the sausage" and continue to lie, cheat and steal.

That is exactly what they did but the fuse continued to burn and has now gone inside the box.

In turn we have now seen Fannie, Freddie and Lehman detonate. The fuse is inside on AIG and as it approached the corner of the container Merrill snipped theirs (temporarily anyway) by committing an obscene act with Bank of America.

If and when AIG detonates the impact will be global - and substantial.

There is $440 billion of counterparty risk embedded in AIG; this is the sort of BS that we allowed in that this firm alone was allowed to amass this much centralized risk to the system without the capital to back the swaps it wrote, and if there is no resolution to the AIG mess it is reported that they will be filing bankruptcy tomorrow.

Such a filing will trigger a "credit event" on the entirety of the $440 billion, in addition to impacting the insurance policies the firm wrote in the "real" economy - auto, fire, life insurance, annuities, business insurance and everything else!

The hubris displayed by these executives and regulators is outrageous - and in many if not most cases deserving of indictment.

Both Presidential Candidates, and indeed, the entirety of the House and Senate finance and banking committees, have received dozens of my Tickers documenting these abuses and the fact that these "extraordinary facilities" have been abused and no transparency has in fact occurred.

This morning we learn that one of the reasons that BAC said "no mas!" to Lehman was that their marks were, in BAC's opinion, indefensible.

Folks, there is one and only one way to stop this crap, and that is to ban "Level 3" and off-balance sheet garbage entirely, as I have repeatedly called for since last fall in both Tickers and petitions.

We had Enron years ago as a consequence of permitting this crap and now we've got the entirety of our financial system on the verge of imploding as a consequence of our lawmaker's refusal to put a stop to this outright FRAUD!

Senator McCain was on CNBC this morning claiming that "we're all at fault" (no, really John?) and yet what has he done about it as a sitting Senator? Where are your bills to address the fraud Senator?

Senator Biden (Barack Obama's VP pick) was on CNBC this morning talking about how the real cause is "the war" and other similar garbage. Senator, where are your bills to put a stop to the off-balance sheet crap and outright fraud in our financial system?

Senators, here is my solution, as I have said for over a year in multiple petitions and tickers:

No off-balance sheet anything. Period.
No Level 3 anything. If you can't get a bid on it in the market, its worth zero. If you can get a bid, that's its value today. If it goes up in value tomorrow, fine, but today, that's its price.
No off-exchange derivatives. You want to trade it, you can do it on an exchange with a central clearing house. This guarantees that margin supervision will be enforced because the "guy in the middle" is going to demand it. The OCC and DTC have done a damn good job of guaranteeing margin supervision. Bring that level of supervision to all derivatives and do it today. As a transition "tool" declare that any derivative not traded on a public exchange has a valuation and coverage against any other asset of zero.
All "assets" must be disclosed and marked daily. No exceptions. My account must be marked every night to the market. So should everyone else's, especially those who are trading with (or are) regulated and/or public entities.
No exceptions. You cheat, you go to pound-me-in-the-butt prison. PERIOD.
Oh by the way, if our CONgress and President don't cut this crap out, right now, we are going to go down the drain. The TIC data was out this morning and made clear that confidence is being destroyed - quickly - in the United States.

Agencies, corporates and equities are all down big, and Treasury purchases are declining.

Cut the crap right now Washington, or that $2 billion a day we need to meet our budgetary requirements is going to disappear.

How much more CLEAR of a warning do you need?

[radfringe]

104. FYI: check out this site

theyrule.net

shows who sits on who's board

[ozymandius]

108. "an extinction-level event"

But there is a bigger potential failure lurking: the American International Group, the insurance giant. It poses a much larger threat to the financial system than Lehman Brothers ever did because it plays an integral role in several key markets: credit derivatives, mortgages, corporate loans and hedge funds.

Late Monday, A.I.G. was downgraded by the major credit rating agencies (which inexplicably still retain an enormous amount of power ... despite having gutted their credibility with unreliable ratings for mortgage-backed securities during the housing boom). This credit downgrade could require A.I.G. to post billions of dollars of additional collateral for its mortgage derivative contracts.

Fat chance. That’s collateral A.I.G. does not have. There is therefore a substantial possibility that A.I.G. will be unable to meet its obligations and be forced into liquidation. ... Its collapse would be as close to an extinction-level event as the financial markets have seen since the Great Depression.

.....

If A.I.G. collapsed, its hundreds of billions of dollars of mortgage-related assets would be added to those being sold by other financial institutions. This would just depress values further. The counterparties around the world to A.I.G.’s credit default swaps may be unable to collect on their trades. ... More failures, particularly of hedge funds, could follow.

Regulators knew that if Lehman went down, the world wouldn’t end. But Wall Street isn’t remotely prepared for the inestimable damage the financial system would suffer if A.I.G. collapsed.

http://www.nytimes.com/2008/09/16/opinion/16lewitt.html?ex=1379304000&en=98b2bfe01f530f5e&ei=5124&partner=permalink&exprod=permalink

[ozymandius]

113. Credit Suisse sees higher chance of AIG bankruptcy

...
"While there is a chance the company can work its way through its liquidity problems if it can secure substantial bridge financing, we think this will be challenging to execute it in the current onerous credit environment," analyst Thomas Gallagher wrote in a note to clients.

The analyst estimated that negative marks at the AIG Financial Products (AIGFP) division, which manages AIG's credit default swaps portfolio, would require another $5 billion to $10 billion of collateral postings this quarter, pushing the total to $20 billion to $25 billion.

http://www.reuters.com/article/newIssuesNews/idUSBNG6841220080916

[TrogL]

107. Loonie Watch

Highlights

Current:



30-day and 90-day vs.greenback:



30-day vs. Euro, Yen, UK Pound and Swiss Franc




Currency Comparison: http://members.shaw.ca/trogl/looniewatch.html

Detailed analysis: http://quotes.ino.com/exchanges/?r=CME_CD

Up-to-the-minute graph: http://quotes.ino.com/chart/?s=CME_CD.Y%24%24&v=s&w=5&t=l&a=1

Historical values http://www.x-rates.com/d/USD/CAD/data30.html

2008-08-05 Tuesday, August 5 0.959233 USD
2008-08-06 Wednesday, August 6 0.95511 USD
2008-08-07 Thursday, August 7 0.951475 USD
2008-08-08 Friday, August 8 0.936593 USD
2008-08-11 Monday, August 11 0.936944 USD
2008-08-12 Tuesday, August 12 0.939761 USD
2008-08-13 Wednesday, August 13 0.938262 USD
2008-08-14 Thursday, August 14 0.941531 USD
2008-08-15 Friday, August 15 0.942596 USD
2008-08-18 Monday, August 18 0.943129 USD
2008-08-19 Tuesday, August 19 0.942863 USD
2008-08-20 Wednesday, August 20 0.940999 USD
2008-08-21 Thursday, August 21 0.956572 USD
2008-08-22 Friday, August 22 0.956389 USD
2008-08-25 Monday, August 25 0.955749 USD
2008-08-26 Tuesday, August 26 0.953652 USD
2008-08-27 Wednesday, August 27 0.953925 USD
2008-08-28 Thursday, August 28 0.949938 USD
2008-08-29 Friday, August 29 0.949938 USD
2008-09-01 Monday, September 1 0.940645 USD
2008-09-02 Tuesday, September 2 0.934754 USD
2008-09-03 Wednesday, September 3 0.942507 USD
2008-09-04 Thursday, September 4 0.93985 USD
2008-09-05 Friday, September 5 0.940115 USD
2008-09-08 Monday, September 8 0.935104 USD
2008-09-09 Tuesday, September 9 0.936593 USD
2008-09-10 Wednesday, September 10 0.931532 USD
2008-09-11 Thursday, September 11 0.926183 USD
2008-09-12 Friday, September 12 0.942863 USD
2008-09-15 Monday, September 15 0.937207 USD

Current values

http://quotes.ino.com/exchanges/?r=CME_CD)

Market            Open   High    Low   Last  Change    Pct Times
CD.Y$$ Cash     0.9322 0.9324 0.9320 0.9324 -0.0035 -0.37% 10:01 
CD.U08 Sep 2008 0.9335 0.9335 0.9300 0.9319 -0.0036 -0.38% set 09:53 
CD.Z08 Dec 2008 0.9323 0.9326 0.9300 0.9300 -0.0043 -0.46% 09:33 
CD.H09 Mar 2009 0.9519 0.9519 0.9519 0.9336 -0.0069 -0.74% set 15:07 
CD.M09 Jun 2009 0.9880 0.9880 0.9880 0.9329 -0.0068 -0.73% set 15:07 
CD.U09 Sep 2009 0.9350        0.9340 0.9322 -0.0068 -0.73% set 15:07 
CD.Z09 Dec 2009 0.9845 0.9845 0.9845 0.9315 -0.0068 -0.73% set 15:07  

Other combinations: (http://quotes.ino.com/exchanges/?c=currencies)

Market          Open    High    Low     Last    Change   Pct 
AUSTRALIAN $/CANADIAN $ (CME:ACD)
ACD.U08 Sep 2008 0.8669 0.8669 0.8669 0.8669 -0.0047 -0.54% 
EURO/BRITISH POUND (NYBOT:GB)
GB.U08.E Sep 2008 (E) 0.79610 0.79650 0.79230 0.79290 +0.00045 +0.06%   
EURO/JAPANESE YEN (NYBOT:EJ)
EJ.U08.E Sep 2008 (E) 151.350 151.440 149.335 150.130 -2.935 -1.95%    
EURO/US$ (SMALL) (NYBOT:EO)
EO.U08.E Sep 2008 (E) 1.4178 1.4183 1.4178 1.4177 -0.0032 -0.23%    

Blather (from http://quotes.ino.com/exchanges/?r=CME_CD)

The December Canadian Dollar was lower overnight as it consolidated some of last Friday's rally. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near-term. Closes above the reaction high crossing at 95.91 are needed to confirm that a short-term low has been posted. If December renews this summer's decline, monthly support crossing at 91.80 is the next downside target. First resistance is the overnight high crossing at 93.54. Second resistance is the 20-day moving average crossing at 94.10. First support is last Thursday's low crossing at 92.22. Second support is monthly support crossing at 91.80.

Analysis

The entire world has now discovered that the US economy is a house of cards built on a foundation of quicksand. The Canadian economy is built on oil revenues, manufacturing, innovation, science and other kewl stuff. Therefore the loonie is falling against the greenback. IDGI. :wtf:

[antigop]

110. FASB rules changes may be too little, too late for some

http://financialweek.com/apps/pbcs.dll/article?AID=/20080916/REG/809159955/1036
Fiddles to FAS 133 aimed at providing greater disclosure of credit default swaps

Wall Street may be in a state of shock over the weekend’s events. But for the Financial Accounting Standards Board, it’s business as usual.

“We’re continuing with ongoing projects,” Christina Klimek, communications manager at FASB, told Financial Week Monday. She added that there are “no special new projects because of what happened over the weekend.”

FASB was already working on issues that very much relate to the current crisis on Wall Street. For instance, on Friday the board released amendments to FAS 133 regarding accounting for credit derivative instruments and hedging activities. That change will require greater financial disclosure from sellers of credit default swaps for reporting periods ending after Nov. 15.

Although the move will benefit investors once the amendments take effect, it appears to be too little, too late for parties to CDS trades with Lehman Brothers.

[Demeter]

112. $50 Billion Doesn't Buy Much Anymore--Down 37 Points at 11:39

Not Even 3 Hours!

[ozymandius]

116. And just think: the Fed injected $70 billion yesterday.

$120 billion just doesn't go that far anymore either.

[slipslidingaway]

143. But yesterday's $70 billion expired today as did another $8 billion

from last week resulting in a drain of $28 billion.

:shrug:

http://www.ny.frb.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE

[Demeter]

215. So It's Like Heroin, Then?

[slipslidingaway]

222. Yes and no, you cannot take back the heroin given yesterday...

:)

[ozymandius]

115. Lehman Collapse Spurs Call for Credit Clearinghouse ( for the $62 TRILLION market)

Sept. 16 (Bloomberg) -- Banks may accelerate efforts to move trading in the $62 trillion credit-default swaps market through a central clearinghouse or to an exchange after the bankruptcy of Lehman Brothers Holdings Inc. and the credit downgrade of American International Group Inc.

Lehman, the first major market-maker to go bankrupt in the decade-long history of the privately negotiated, unregulated business, may leave behind billions of dollars in potential losses for trading partners, according to Barclays Plc of London. No one knows exactly how much because there's no central exchange or system for recording trades.

....

Wall Street created credit-default swaps more than a decade ago to help banks hedge against loan losses. Dealers later came up with contracts and indexes that allowed investors to speculate on a borrower's creditworthiness without owning any bonds.

The market grew 100-fold in the past seven years leaving dealers, who until a few years ago recorded trades on scraps of paper, struggling to keep up. New York Fed President Timothy Geithner assembled dealers in September 2005 to develop a plan to reduce the backlog of paperwork and unconfirmed trades.

http://www.bloomberg.com/apps/news?pid=20601009&sid=ad5I2uMlzN7o&refer=bond

---

Just why should the global economic structure be held hostage to this totally fucked-up system?

[Hugin]

121. Question Ozy....

"Dealers later came up with contracts and indexes that allowed investors to speculate on a borrower's creditworthiness without owning any bonds."

*ahem* Lemme calm down a second... *aaahhhummm* :meditating: *aaaahuummm*

Okay... IS THIS WHERE THE FUCKING 'CREDIT SCORES' THREE SISTERS BULLSHIT CAME FROM? :grr:

Those have led to the single biggest cause of personal financial hardship in the history of human kind.

[ozymandius]

129. This isn't FICO.

It's a different beast; one that is totally different than the one that sits in judgment of you and me when we apply for credit.

Your outrage is justified. Think of where AIG sits right now with its credit rating. This is the same credit rating that Lehman received after it filed bankruptcy. Where's the logic?

The aspect described as "to speculate on a borrower's creditworthiness without owning any bonds" refers to Vegas style wagering. It's a bet. It's an informed bet - but still leaves outcomes to wild chance. To me, that should be banned from having any relevance in the overall banking system.

[AnneD]

128. Morning Marketeers......

:donut: Hello from the purgatory that is currently Houston. I will title this post Anne and Srinivas's search for Chick fil-A, the wifi version.

As the hurricane approached, Anne was frantically searching for augers to stake down the travel trailer. She went to 4 different places to get the needed supplies. She wound up with 4 long tent stakes and some good strong nylon rope. She also bought some leather gloves. Srinivas was stuck at the hospital. When they finally released him-the buses stopped running and his wife had to pick him up-only after she had to wait almost 2 hours in a gas line to fill up the car. Together they and their neighbours threw the rope over the top of the trailer and staked it down as best they could. As they left Anne took one look and a few photos on her camera phone.
Srinivas, she said, this trailer will end up in Oz or AUS. They both laughed. They got a bite to eat, and after he took a brief nap, she drove him back to the hospital. Even though the Hurricane was not due to make landfall until 3 in the morning, she had to dodge flying debris to make it back to her friends house. Her poor dogs and cat would have to sty in the car during the storm, there was no room in the house. But even the car was safer than the trailer.

She was at her friend's house. They made calls, sent e-mails, and charged their phones. At 10:30 the wind was sounding like a train bering down on you. We still had power but the hurricane had not even made landfall. Anne was exhausted-she had not had sleep in over 24 hours. She hoped she had gotten all her valuables out. She fell into the sleep of the dead-but before she drifted to sleep-she wondered where she would wake up-Oz, AUS, or the Undiscovered Country. She woke up at ten minutes after three to what sounded like lightening, but had a distinctive crunch. She looked at the clock, just as the power went off. The train sounded even louder. She thought of the scene in Raiders of the Lost Ark-when they opened the Ark. That was the sound-she thought. Please let me go back to sleep dear God-and she drifted back to sleep. She woke at some time around dawn. Rain and wind lashing at the windows. Her friends were up. In true Indian fashion, good Chai was brewed. As the rain and wind subsided and they went outside-they discovered than the 'thunder they heard the night before was the sound of a tree that fell inches from the head of their bed-it's fall broken by the neighbours fence.

The next day, when the flood waters subsided, she ventured out. The destruction was stunning and seemingly random. The awning ripped of of a building, but traffic cones still in their original spot. She did not have much hope as she snaked her way to the RV resort. There was no power, the gate was opened. she saw metal skirting flung about. A trailer was flipped on it's side. And as she turned the corner, she saw the trailer, still anchored down by the ropes. All she could think was AUSSIE AUSSIE AUSSIE OYE OYE OYE.

We have power but no internet. I am posting courtesy of Chik fil-A wifi. Things are inconvenient for us, but we are grateful. We have a good mayor and city /county management and they won't let the government get away with the crap they did in NOLA. I hope they press for more aid for the smaller towns that were hit hard, they are trying to get out there ASAP. We caught a break and have some wonderful cool dry weather that helps make it more comfortable to tolerate the power loss. Folks are working hard to take care every one in need and do necessary repairs. There are long lines for everything but everyone is trying to be patient and share. I'll post later on what was lost.

Happy hunting and watch out for the bears.

[Hugin]

130. AnneD! (live from Chik-fil-a!)

:hi:

:hug:

If you don't mind I posted the pool above.

[ozymandius]

131. Fabulous!

What wonderful news to hear that your personages are well. Congratulations on the trailer! So glad you have means to communicate with the outside world!

:hug:

[Dr.Phool]

135. Glad to have you back safe and sound.

:hi:

I got an e-mail from a friend in Houston yesterday (I don't know what part).

His power and internet had just been restored. Hope yours is soon.

[Ghost Dog]

136. Cool.

:)

Lots of ill-prepared people around Houston, we hear. And sounds like ill-suppressed bad news from the coast, it seems. :(

[TalkingDog]

138. Hey!! Glad you and yours are safe. Stay that way. n/t

[Ghost Dog]

193. Hiya TD

:hi:

Not talking much, recently. :)

[TalkingDog]

230. Busy.... but still lurking when I can.

[Wednesdays]

147. Good to see you're getting thru this

Let's hope your losses were at a minimum.

[Tansy_Gold]

164. Welcome home, Anne!

:hi:

:hug:

[DemReadingDU]

168. Glad you are ok, Thanks for checking in

Would you believe those Ike winds blew into Ohio Sunday afternoon! Wind gusts of 70mph, wow! Trees down everywhere, power outages everywhere, but most power has been restored today. I can't imagine what you have just been thru.

[MsLeopard]

204. So glad to hear you are well

I've come to look forward to your posts and have been thinking of you since the storm. Great to have you back and congrats on the good luck in surviving pretty much intact. Might be time to buy a lotto ticket!

[TheWatcher]

217. So glad to have you back AnneD

Glad to hear you are safe and that you made it through that monster.

:hug:

[Demeter]

218. Thanks for Phoning Home

We were worried.

[Emillereid]

137. Can anyone explain what's going on in the markets - I mean the DOW is up,

gold is down, the dollar's up - it doesn't make sense to me. I feel like I'm in Wonderland. Also anyone know how one can pick a safe bank?

[ozymandius]

140. The market traders are cautiously optimistic over the FOMC announcement.

Easy money from the Fed is like free rock to a crack addict. For further explanation, you might see today's WrapUp (post #2) because the author is just as befuddled as you are.

About a safe bank: any honest bank will allow you to see their financial statement. My wife and I have talked about putting some money away in a local credit union as a second savings stash. Before we do that, there's plenty of homework to be done in determining how much exposure to bad debt may exist. Our current bank, we are relieved to learn, has no exposure to Fannie/Freddie. Some banks hold (or held) preferred shares as a means of steady income. Preferred Fan/Fred stock is worthless now. Fact of the matter: our current bank is as traditional as one S&L can get in terms of their deposit/loan ratio.

This post is not meant to be construed as advice. I offer these thoughts as an open conversation into our deliberations over where to keep money safe at hand (aside from inside a mattress).

[InkAddict]

225. I thought this one might be appropriate

https://www.killbuckbank.com/


It's in the middle of Ohio Amish country.

[Tandalayo_Scheisskopf]

139. Speaking of Craters:

PETROLEUM ($/bbl)
PRICE* CHANGE % CHANGE TIME
Nymex Crude Future 91.34 -4.37 -4.57 12:53
Dated Brent Spot 87.39 -2.43 -2.71 13:23
WTI Cushing Spot 92.45 -3.26 -3.41 12:01


PETROLEUM (¢/gal)
PRICE* CHANGE % CHANGE TIME
Nymex Heating Oil Future 270.92 -8.20 -2.94 12:54
Nymex RBOB Gasoline Future 244.14 -12.00 -4.68 12:53


NATURAL GAS ($/MMBtu)
PRICE* CHANGE % CHANGE TIME
Nymex Henry Hub Future 7.33 -.04 -.57 12:53
Henry Hub Spot 8.05 .28 3.60 09/12
New York City Gate Spot 8.31 -.17 -2.00 09/15


ELECTRICITY ($/megawatt hour)
PRICE* CHANGE % CHANGE TIME
Mid-Columbia, firm on-peak, spot 61.15 -.04 -.07 09/15
Palo Verde, firm on-peak, spot 56.67 -.26 -.46 09/15
Bloomberg, firm on-peak, day ahead spot/West Coast 68.32 -3.43 -4.78 09/15


Will Crude break $90 today? Will RBOB break 2.40 today? What is propping up HO? Will John marry Mary? Tune in later for most of the answers to these thorny questions!

And NG has started back down. Looks like the last repository of the energy dead-enders has taken quite the hit.

Notice also the electricity markets. These are starting to come down as well. Even The True Devil Spawn of Enron are feeling it.

[ozymandius]

141. Merrill Faces 'Calamity' If Deal with 'Fragile' Bank of America Collapses (not a done deal)

Has anyone seen the language in the Bank of America-Merrill merger agreement? We haven't. But given that Merrill's stock continues to tank -- and take BofA down with it -- we wonder what kinds of "outs" Bank of America has. (Update: After ending virtually flat on Monday, Merrill shares were recently up 17% on Tuesday as Bank of America shares - remember, this is an all-stock deal - rebounded from Monday's shellacking.)

Bank of America wasn't exactly a Rock of Gibraltar before the Merrill deal, and Merrill's toxic assets will now make its own capital situation even more tenuous. And CEO Ken Lewis still has yet to adequately explain why he paid $29 per share for Merrill when he likely could have had it for $15 by waiting a day.

Merrill's stock is now below where it was trading before the BofA deal was announced...and the spread between the stocks is huge. The market, therefore, appears to think there is some risk to the deal, which seems a reasonable conclusion. Needless to say, if the deal falls apart, Merrill is likely toast.

http://finance.yahoo.com/tech-ticker/article/60575/Merrill-Faces-%27Calamity%27-If-Deal-with-%27Fragile%27-Bank-of-America-Collapses?tickers=bac,mer,leh,gs,c,wb,wm

[Hugin]

142. Well, as Lehman and Barclays just taught us... BoA is only interested in the 'good bank'.

So, I predict BoA will carve off any marginally profitable parts of Merrill toss the rest to the fishes and
catch the next train out of town.

[thewiseguy]

144. NO RATE CHANGE

[thewiseguy]

145. Economic growth has slowed recently. Labor markets have weakened in recent months.

[MrsCorleone]

146. Fed leaves rates unchanged! Wow. Market is not happy!

[Yo_Mama_Been_Loggin]

154. Not happy at all

Dow-84.11-0.77%
10,833.40

Nasdaq-18.13-0.83%
2,161.78

S&P-10.18-0.85%
1,182.52

[Wednesdays]

148. Whoa...a 120 point drop in no time

Edit: I'm not surprised the market's unhappy.

[Dr.Phool]

149. Irrational exuberance expecting a rate drop didn't happen.

Now back to just plain irrational.

[Wednesdays]

151. They had to choose between a rock and a hard place

They chose the rock.

[Hugin]

152. They're gambling again...

Maybe the rock is softer than the hard place. :shrug:

[radfringe]

160. U-TURN +84... wtf? n/t

[antigop]

150. Sirota: How should progressives talk about the economy? Here's how...

http://action.credomobile.com/sirota/2008/09/how_should_progressives_talk_a.html

Now, my perception of the economy is that if you get off of the county club circuit, you stop talking to the millionaires and the billionaires and the large campaign contributors, but you talk to ordinary working people, people who own small businesses, what you find, in fact, is that the middle class in our country is under more assault than has been the case since just before the Great Depression.

Bernie Sanders --- My pick for Secretary of Labor.

[Roland99]

155. 2:40pm - DJIA/S&P/Russell2K up 0.5% ... NASDAQ down 0.6% .. Oil ~$92

[MrsCorleone]

156. IMHO, Fed passed on cut in favor of some sort of deal

on AIG. Still awaiting news.

Edit: Big green candles with VOLUME at 2:38 EDT on AIG.

[Ghost Dog]

158. This latest Obama speech on the economy is superb:

/... http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x4012804

... big snip ...

Americans have always pursued our dreams within a free market that has been the engine of our progress. It's a market that has created a prosperity that is the envy of the world, and rewarded the innovators and risk-takers who have made America a beacon of science, and technology, and discovery. But the American economy has worked in large part because we have guided the market's invisible hand with a higher principle – that America prospers when all Americans can prosper. That is why we have put in place rules of the road to make competition fair, and open, and honest.

Too often, over the last quarter century, we have lost this sense of shared prosperity. And this has not happened by accident. It's because of decisions made in boardrooms, on trading floors and in Washington. We failed to guard against practices that all too often rewarded financial manipulation instead of productivity and sound business practices. We let the special interests put their thumbs on the economic scales. The result has been a distorted market that creates bubbles instead of steady, sustainable growth; a market that favors Wall Street over Main Street, but ends up hurting both.

Let me be clear: the American economy does not stand still, and neither should the rules that govern it. The evolution of industries often warrants regulatory reform - to foster competition, lower prices, or replace outdated oversight structures. Old institutions cannot adequately oversee new practices. Old rules may not fit the roads where our economy is leading. But instead of sensible reform that rewarded success and freed the creative forces of the market, too often we've excused an ethic of greed, corner-cutting and inside dealing that threatens the long-term stability of our economic system.

... big snip ...

Just today, Senator McCain offered up the oldest Washington stunt in the book – you pass the buck to a commission to study the problem. But here's the thing – this isn't 9/11. We know how we got into this mess. What we need now is leadership that gets us out. I'll provide it, John McCain won't, and that's the choice for the American people in this election.

... big snip...

/... http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x4012804

:)

[Ghost Dog]

187. I just finished closely reading it all. That, believe me,

is a well-timed winning blow the other side can not recover from.

With your help. And by making good use of whatever media:

...

Now it falls to us. And I need you to make it happen. If you want the next four years looking just like the last eight, then I am not your candidate. But if you want real change – if you want an economy that rewards work, and that works for Main Street and Wall Street; if you want tax relief for the middle class and millions of new jobs; if you want health care you can afford and education so that our kids can compete; then I ask you to knock on some doors, and make some calls, and talk to your neighbors, and give me your vote on November 4th. And if you do, I promise you – we will win Colorado, we will win this election, and we will change America together.

/... http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x4012804

[Ghost Dog]

213. See video here:

http://www.dailykos.com/story/2008/9/16/16623/9233/211/600830

[ozymandius]

214. Call it what it is. That's wonderful.

"Senator McCain offered up the oldest Washington stunt in the book – you pass the buck to a commission to study the problem."

Little nuance. Plainly spoken. That's potent.

[Buttercup McToots]

161. Russia halts trading after 17% drop...is this posted?

http://www.ft.com/cms/s/6ff9306c-83f1-11dd-bf00-000077b07658,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F6ff9306c-83f1-11dd-bf00-000077b07658.html%3Fnclick_check%3D1&_i_referer=http%3A%2F%2Fwww.timebomb2000.com%2Fvb%2Fshowthread.php%3Ft%3D301624&nclick_check=1


Russia halts trading after 17% drop

By Rachel Morarjee
Published: September 16 2008 15:07 | Last updated: September 16 2008 15:07

Russia authorities halted trading on the country’s stock exchange on Tuesday after it plunged 17 per cent in a broad-based sell-off.
At 1700 local time, the rouble-denominated Micex index had fallen 17.5 per cent to 881.17 and the RTS index dropped 12 per cent to 1,131.120 as the falling oil price, margin calls on local investors and a broader sell-off in emerging markets stocks drove shares down.

[MrsCorleone]

165. Thanks for posting. I suspect the commodities sell off

is hurting Russia as it has Brazil, Australia, and other commodities rich countries.

[Doctor_J]

162. DJIA UP 109! We've turned the corner! More tax cuts!

:sarcasm:

[MrsCorleone]

163. Update: AIG shares up 1.92 from 2:38 EDT on the following Bloomy releases.

14:38 AIG American Intl: Fed reconsiders stance on helping AIG, person says - Bloomberg (3.26 -1.46)

AIG may get loan package from Federal Reserve, person says - Bloomberg

This could be rumor-mongering, even though it's been floated on Bloomberg. Waiting on more concrete news.

[Buttercup McToots]

167. EXTREME Mood Swings....sorry...please ignore

EXTREME Mood Swings!

[Cassius23]

174. Don't feel bad..today is a good day for it..

I think the market is in the middle of extreme mood swings.

[Hannah Bell]

185. I've been wondering too. I noticed another prediction he made that

came to pass & have followed his posting off & on since.

It's all too opaque for me; all I can gather is that various kinds of bubbles/crashes are predictable/planned, & it has to do with the Church.

I'm sort of fascinated.

but you've erased it...never mind.

[Cassius23]

169. Uhhh...what..is..going..on?

Did I just loose about 90IQ points or did the markets become much, much wierder?

AIG either will or will not go under if they don't raise around $40 billion dollars. The Fed said that they won't bail anyone else out but now they might.

Lehman is pretty much DoA, everyone at least agrees on that.

Stocks got pummeled yesterday but now they are up even though there is no rates change?

Can someone explain what in the hell is going on here? Please?

Totally.don't.get.it.

[MrsCorleone]

172. Buying on rumors & selling on news. Lots of rumors & news

today, especially the former. The market is being held together with scotch tape & bubblegum. Free market? LMAO!

[Yavin4]

173. Simple. The Fed Is Going To Bailout AIG

In addition, they're going to help out BofA with their acquisitions of Countrywide and Merrill.

Paulson and the Fed Reserve are doing EVERYTHING in their power to keep this meltdown off the front page, and make this election turn on the Moose lady from Alaska.

We won't know the full details until after the election, and then we will find out that the true total costs for all of these bailouts will be in the trillions of dollars. Say goodbye to any National Healthcare, Education, Energy, the Environment, etc. Grove Norquist will be popping champagne bottles.

[MaineDem]

177. But where is this money coming from?

More borrowing from China?

How on earth can we continue this way - and add in all the $$$ for the Iraq debacle? It's beyond maddening!

And, you're right. How will we possibly be able to continue or expand social services?

[Yavin4]

180. A Combo of Hyper-Inflation, Borrowing, and Massive Social Spending Cuts

Also, if McCain wins, we'll have a war in Iran.

[fedsron2us]

191. I have a mirror I can lend you.

[Tansy_Gold]

192. Expand social services?

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



:sarcasm:




:grr:

[Ghost Dog]

200. Eh. DO Follow the link at #18

http://www.dailykos.com/story/2008/9/16/54230/2116/741/600308

#

*
The banks are taking the money... (2+ / 0-)

Recommended by:
Halcyon, JG in MD

...directly from our accounts to prop up their new investment banking subsidiaries, all in violation of Federal Reserve regulations.

Essentially, the banks are being permitted to boldly engage in malfeasance to, in effect, "lay off" the liability of their buyout of these firms on the U.S. taxpayer via the FDIC.

Put another way, you're not putting your money in a bank account for the bank to then take that money and use it in ways that are not permitted under the law.

Worse yet, the Feds are saying they're not bailing out these investment banks, but that's a travesty. And, who's going to make a profit if the investment banks are successful down the road once the government's paid for all the overhead? Well, the large banks that own them, of course!

"I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

by bobswern on Tue Sep 16, 2008 at 04:27:16 AM PDT

< Parent >
o
Understood (1+ / 0-)

Recommended by:
JG in MD

More people need to understand. Can we boil it down to a more concise headline? "Your savings accounts are no longer safe."

Your story is great..it's just that, after googling this I can find very little coverage of this incredibly important implication. We need to get your diary on the rec list.

by eltee on Tue Sep 16, 2008 at 04:36:36 AM PDT

< Parent >

#
and then they will blame the Dems (1+ / 0-)

Recommended by:
bobswern

like they are blaming Clinton for 9/11

[MaineDem]

203. Yikes!

Thanks.

[readmoreoften]

223. Social service=we will resentfully search for your body in a disaster, you filthy stinking American

What we meant was: we will resentfully search your person in a disaster, you filthy stinking American. You want rescue? Where is your husband? He dead? Where is your brader? You want blanket and pillow, you buy blanket and pillow. Why you need to live in gym? Why you no have second home? Why you no make investments and win? Stinking American socialist pigs.

Old lady die in wheelchair? Why she no have second home?!! Why she no can afford slave-maid from less-human country? Why she not fit and healthy? Always depending on Government to help her. Let her die! Stinking American socialist woman!

We have wars to fight and stuffs to steal, you stinking socialist pigs! We have no time for your laziness and your crying.

*I'm the Republican Party, and I approve of this message.*

[Hugin]

178. Pretty well sums it up.

But, we'll all have all of this rhetoric to sustain us.

Ick! Leftover rhetoric...

[TheWatcher]

176. It's The Power Of Bullshit once again.

The Powers that Be needed a Happy Print Today, so once again they utilized the "Magical Rumor" Strategy.

FOMC Announcement: No Cut. Market In Freefal to new lows

Fed Announces that they MAY work a deal with AIG: Market Skyrockets

A few Minutes later, Fed "Declines Comment" on AIG Deal, Market Hesitates, but resumes Skyrocketing on another Bullshit rumor that has no substance.

Now, that being said, The Fed may actually follow through, but for now, this is nothing more than another mindless Wall Street Kegger based on the "possibility" of action, not any real action or event itself.

SO there you have it. The Power Of Bullshit. Absolutely nothing has changed. The system is still broken, in the midst of of a total breakdown, the rest of us will still be left holding the bag for all the mess, BUT the Market comes charging back so the Clowns and Carnival Barkers of the Financial and Mainstream Media can parade forth with coke-addled smiles tonight and proudly report that all is well once again, in a maniacal attempt to put the public back to sleep again.

"See? It's just like 1998! We're saved! AGAIN! The Worst is finally over! AGAIN!"

Except that it is not.

People should take the meaning of today's events for what they mean.

Because they mean ABSOLUTELY NOTHING.

NOTHING. HAS. CHANGED.

[Cassius23]

182. See, now at least that makes sense...

I was starting to think that someone slipped crazy pills into my morning caffine.

Usually I can keep up but today was just getting bizzare. Hurricane shuts down refineries so oil prices go down? One of the largest insurance companies in the US needs $70bil, one investment bank bailout and another went bankrupt so stocks go up?

I mean, I was pretty sure we weren't going to have some sort of Mad Max type scenario by Friday afternoon but I also didn't think that everything was going to be rosy happy either.

At least I'm pretty sure now I wasn't slipped crazy pills.

[Yavin4]

183. But They Get The Headlines Moved Back To Moose Lady

That's what they really want. They will do anything to keep the public distracted from the mess that the economy is in.

When the election is over, we will know full well what the final tally for all of these bailouts will be, and it won't be pretty.

[TheWatcher]

189. EXACTLY. Nail On The Head.

Like I said, the system is broken and likely cannot be fixed. The breakdown is just now becoming visible to an uncomfortable level for those who have caused it.

Their challenge now is two-fold.

1. They MUST keep the ILLUSION that everything is still functioning as it always has and that there is nothing to see here, at all costs.

2. Find a new-fangled scheme that will supposedly "Save The System", so that they can ride in on their White Horses as our "Saviors" and "Heroes", a delicious bit of irony since THEY were the one's who caused the crisis to begin with. Sadly, The Public will not realize that whatever "Solution" they come up with will not be to Save The System, but just another Ponzi or Con Scheme designed to Save Those Who Created the Crisis, while the rest of us are subjected to yet another hundred year fleecing.

Alternatively, if they truly have lost control of things and #2 is not possible, they will just stick with #1 until after the election, and then the fun will begin.

Where do the rest of us come into all this?

Why, where we always have.

Collateral Damage.

[Hugin]

184. I find it amusing they always claim these events are 'already priced in'.

I heard it spew forth from the Corporate Media only yesterday.

Like they have a crystal ball or something prescient.

These wild swings only prove the fallacy of the 'self-correcting Free Market' bunk.

[ozymandius]

190. I love it when a 25 basis point cut has been "priced in" and then they don't get one!

:rofl:

I expect resignations immediately from the fools who wrote this trash.

I'm waiting.







C'mon.







It'd be nice to see a little integrity here....

[TheWatcher]

195. Shakespeare and Geddy Lee told us "All The World's A Stage"

But in the case of Wall Street, everything is just Staged.

All pure theater for the masses.

Free Market?

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

"These wild swings only prove the fallacy of the 'self-correcting Free Market' bunk."

Truer words cannot be spoken. :)

[MsLeopard]

208. The "Magical Rumor" Strategy

Perfect description. :toast:

[MrsCorleone]

170. Lehman shares halted. Interesting to halt a 0.20 cent stock.

[Jersey Devil]

171. Lehman in bankruptcy court at 4 pm to sell assets to Barclays

Main core of Lehman to Barclays and Neuberger to 3rd party.

[fascisthunter]

175. Watching these late rallies is like watching a constipated dog

try to take a shit. Come on republicans.... you can do it! Put lipstick on that pig!

[radfringe]

179. thar she goes again... heading down.. 70 something and dropping ...n/t

[ozymandius]

186. screaming and laughing like a lunatic before the close

Dow 11,035.24 Up 117.73 (1.08%)
Nasdaq 2,198.11 Up 18.20 (0.83%)
S&P 500 1,208.97 Up 16.27 (1.36%)
10-Yr Bond 3.491% Up 0.008
NYSE Volume 8,632,291,000
Nasdaq Volume 2,875,583,000

3:30 pm : Shares of Lehman Brothers (LEH 0.19, -0.02) are halted news pending, with the Wall Street Journal reporting that Barclays (BCS 22.49, +1.00) is buying Lehman's investment bank, which will save 9,000 jobs. The stock market climbs to session highs on the share halting, and then gives back some gains on the Journal report, apparently due to disappointment that Barclays is not buying more of Lehman.

The financial sector is up 3.5% and the energy sector is up 2.4%.

Six of the ten economic sectors hit fresh 52-week lows this session, including energy, materials, industrials, telecom, utilities and tech. Interestingly, the financial sector, which has been at the center of the recent downturn, is up 18% from its 52-week low that was reached July 15.DJ30 +62.53 NASDAQ +18.15 SP500 +11.43 NASDAQ Adv/Vol/Dec 1489/2.74 bln/1340 NYSE Adv/Vol/Dec 1289/1.67 bln/1904

3:00 pm : The major indices rebound after Bloomberg.com reports its sources said the Fed is reconsidering its stance on helping AIG (AIG 5.09, +0.33), and the company may get a loan package from the Federal Reserve.

Shares of AIG are now posting a gain on the day, after trading down as much as 73.7% to $1.25.

FDIC Chairwoman Blair said banks are safe and sound, according to Reuters. Blair added that insurance funds for deposits will be adequate to absorb any losses.

The S&P 500, Dow and Nasdaq hit fresh session highs. Eight of the ten sectors are posting a gain, with the financial sector up 4.1%.DJ30 +112.65 NASDAQ +14.61 SP500 +13.35 NASDAQ Adv/Vol/Dec 1375/2.47 bln/1426 NYSE Adv/Vol/Dec 1234/1.52 bln/1953

[ramapo]

188. Hooray! Everything is ok now!

I just saw the Dow up nearly 150! That's huge. Big news. We've weathered the storm.

I feel so much better.

end-of-sarcasm.

[Hugin]

194. Didn't I say they'd ramrod it back above the 11,000 PISL today?

I stand vindicated.

*sigh* so proud of a 0.47% Annual Rate-of-Return over EIGHT YEARS! :eyes:

How many Trillions did it cost us this time?

[TheWatcher]

197. Yes You Did.

And vindicated you are.

Like I said, TPTB needed a "Happy Print" today. It was imperative to close things above that psychological level.

Has anything changed?

No.

But they can now crank up the Propaganda Machine and Salve The Herd for at least another 24 hours.

The Carnival Of Bullshit continues.

Big money got a heavy hand
Big money take control
Big money got a mean streak
Big money got no soul...

[RUMMYisFROSTED]

202. Tomorrow will be nasty, though.

I predicted they would spread it out, as well.

Next month will be hellacious.

[Hugin]

198. Whoowee! Look at that volume... Would-ja!

Biggie.

Very biggie.

Almost double biggie.

[ozymandius]

199. It makes 5 billion shares look like small taters.

Maybe we'll see 10 billion shares traded when witching day and hour arrive.

[Hugin]

207. Re-post of the dreaded Post #18... Don't miss this one!

http://www.dailykos.com/story/2008/9/16/54230/2116/741/600308

:scared:

[MrsCorleone]

219. Folks, go to the link Prag posted or go to post #18

[ozymandius]

209. end of the day

Dow 11,059.02 Up 141.51 (1.30%)
Nasdaq 2,207.90 Up 27.99 (1.28%)
S&P 500 1,213.60 Up 20.90 (1.75%)
10-Yr Bond 3.491% Up 0.008
NYSE Volume 9,536,237,000
Nasdaq Volume 3,225,596,500

Stocks End Higher On AIG Bailout Hope

Tuesday was a roller coaster session as market participants considered the fate of AIG (AIG 4.00, -0.76) and other struggling financial companies. The market also digested an FOMC decision to keep rates unchanged, an in-line CPI report and discouraging comments from Dell (DELL 16.01, -1.98).

The S&P fell 2.0% shortly after the bell, only to rebound to settle with a gain of 1.8% on a late session report that AIG may indeed receive a bailout.

AIG was at the center of the volatility after the insurance giant had its credit rating downgraded at the major rating agencies, sparking speculation that the company would have to file for bankruptcy if it could not get ahold of cash. AIG fell as much as 74% as various reports said a private deal to help AIG is not going to happen, and the Fed was not going to lend money. AIG closed with a loss of 16%, however, after a late-session Bloomberg.com report said that the Fed may end up giving the company a loan package.

Lehman Brothers (LEH 0.19, -0.02), which filed for bankruptcy yesterday, sold its investment banking segment to Barclays (BCS 23.15, +1.67) according to the Wall Street Journal. The sale will reportedly save 9,000 jobs.

Goldman Sachs (GS 134.04, -1.46) fell to a fresh 52-week low after reporting a 72% year-over-year drop in earnings per share. Revenue declined 40% in investment banking and 67% in trading and investments.

The financial market turmoil yesterday prompted a doubling in the overnight interest rate banks charge to lend dollars, also known as Libor. This led the Fed and overseas central banks to use repurchase agreements -- secured short-term lending agreements -- to pump liquidity into the system.

The Fed was willing to add liquidity, but decided not to cut interest rates at this session’s FOMC meeting, leaving the fed funds rate at 2.00% and the discount rate at 2.25%. The FOMC’s directive was very similar to the wording from August 5, although downside risks to economic growth received additional attention. Inflation risks remain a significant concern to the Fed.

In corporate news, Dell said it is seeing a slowdown in global end user demand, sending the computer maker’s stock down 11% to its lowest intraday level in 10.5 years. Hewlett-Packard (HPQ 48.28, +2.95) is laying off 7.5%, or 24,600, of its workforce and is taking a charge of $1.7 billion related to its EDS acquisition. Once the plan is completed, HP expects to save $1.8 billion a year.

Best Buy (BBY 42.43, -1.27) reported second quarter earnings of $0.48 per share, which is $0.09 worse than the average analyst estimate of $0.57. Despite a revenue increase of 12% year-over-year, earnings per share fell 14% due to increased spending related to store labor and the roll out of Best Buy Mobile.

August CPI was in-line with expectations, showing a welcomed 0.1% month-over-month decline thanks to a decrease in fuel costs. The core rate, which excludes fuel and food, rose 0.2%.

Crude prices tumbled for the second day in a row, falling 3.0% to $92.89 per barrel. Commodities as a whole slid 2.0%

In the end, eight of the ten economic sectors posted a gain, although six hit fresh 52-week lows in intraday trade. The financial sector climbed 6.2% and the energy sector gained 3.9% despite the drop in energy prices.

The utilities sector (-1.1%) underperformed after Constellation Energy (CEG 30.90, -17.09) plummeted 36% on debt fears.

Treasuries also had a wild day, with the 10-year note trading up more than a point in early trade, and then ending the session down 43 ticks.

[Hugin]

210. How about that... The day after the 4th largest investment bank in the world folds and

financials are up 6.2%. :shrug:

Wow! The settled volume is even larger.

[ozymandius]

216. Truly amazing Prag.

Somehow a belief exists that mommy and daddy will make it all better. Where do these people come from?

[Ghost Dog]

220. Amazing and timely Obama address (VIDEO) here:

http://www.dailykos.com/story/2008/9/16/16623/9233/211/600830
and http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x4012804

[Hugin]

224. Excellent.

The only word to describe it! :)

[truthisfreedom]

227. I don't own any stocks, but I'm wondering how many of you are going to follow this guy's advice...

http://www.wallstreetdigest.com/hotline.php

This is The Wall Street Digest Hotline Update for Tuesday, September 16, 2008, at 6:00 p.m. EST.

Stock prices were volatile today, but the good news is that AIG survived for another day. At the closing bell, the Dow jumped 141 points, closing at 11,059, while the Nasdaq gained almost 28 points, closing at 2,207. The S&P 500 closed almost 20 points higher at 1,213. Oil closed $4.56 lower at $91.15 per barrel, and gold closed $6.50 lower at $780.50 an ounce.

But here is the bad news:

Everything that is happening today (Bear Sterns, Fannie & Freddie, IndyMac Bank, Lehman Brothers) is a symptom of the real problem, which is the enormous level of defaulting debt. There is almost $600 trillion in derivatives debt, over $2.5 trillion in credit card debt, and $58 trillion in credit default swaps. We are witnessing the very beginning of a worldwide credit-market meltdown. Long-term, the banking and financial sectors may not bottom anytime soon.

Wall Street fears that the Fed and/or the Treasury will allow AIG to fail. That would create a financial mess that could trigger a financial meltdown.

First, tomorrow morning let's sell all remaining positions so we are 100 percent cash at the end of the day.

On Wednesday's hotline I will provide you with ETFs that will allow you to short the market and the sectors by 100 percent and 200 percent.

The next Hotline Update will be on Wednesday, September 17, 2008, at 6:00 p.m. EST.

[MrsCorleone]

228. Wallstreetdigest advising a move into short & ultra-short ETFs without

fully explaining the potential counterparty risks involved would be incredibly irresponsible, IMHO. These have been very profitable for me personally, but I have closed all positions in these as of yesterday afternoon.

It's important to read the prospectus & understand how these instruments work.