STOCK MARKET WATCH, Friday September 19

[ozymandius]

Source: du

STOCK MARKET WATCH, Friday September 19, 2008

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 121
DAYS SINCE DEMOCRACY DIED (12/12/00) 2798 DAYS
WHERE'S OSAMA BIN-LADEN? 2523 DAYS
DAYS SINCE ENRON COLLAPSE = 2814
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 18, 2008

Dow... 11,019.69 +410.03 (+3.86%)
Nasdaq... 2,199.10 +100.25 (+4.78%)
S&P 500... 1,206.51 +50.12 (+4.33%)
Gold future... 897.00 +46.50 (+5.18%)
30-Year Bond 4.11% +0.03 (+0.78%)
10-Yr Bond... 3.44% +0.03 (+0.79%)






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

[Hissyspit]

1. Morning.

Great Toles cartoon. Hadn't seen that one.

[ozymandius]

5. Good morning.

:donut: :donut: :donut:

I could run Toles every day but it wouldn't be fair to the other great cartoonists.

[Roland99]

38. Morning Ozy. A thought...what about adding the TED spread and LIBOR to the daily stats?

:)

[ozymandius]

214. Good idea. Question:

Can you recommend a site that is a one-stop-shop for all market data? I use this site to compile the data currently posted on the banner page.

Are the TED and Libor data contained on one page?

Thanks.

[Hissyspit]

2. Congress Promises Quick Action on Bailout Package

http://news.yahoo.com/s/ap/20080919/ap_on_bi_ge/financial_meltdown

Congress promises quick action on bailout package

By JEANNINE AVERSA and JULIE HIRSCHFELD DAVIS, Associated Press Writers
1 hour, 22 minutes ago
WASHINGTON - Congress promised quick action on a plan to buy up toxic assets, such as bad mortgages, held by troubled banks and other institutions, hoping to lift the nation out of its worst financial crisis in decades.

ADVERTISEMENT

Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke are crafting a plan, which they plan to soon deliver to lawmakers, after concluding they need broader powers to combat fallout from a housing and credit market meltdown that has sent shock waves through Wall Street and around the globe. Congressional leaders said they expected to get the plan Friday and act on it before Congress recesses for the election.

"We hope to move very quickly. Time is of the essence," House Speaker Nancy Pelosi, D-Calif., said after Paulson and Bernanke briefed congressional leaders Thursday night.

Stocks on Wall Street shot up more than 400 points late Thursday on word that a plan was in the works. Fallout from the housing and credit debacles have badly bruised the economy and pushed unemployment to a five-year high.

"I don't say any prudent money manager would say we're out of the woods, but right in this moment it all seems positive and leading toward an upward move for the market going into Friday session," said Scott Fullman, director of derivative investment strategy for New York-based institutional broker WJB Capital Group.

Fullman said the biggest bonus of any potential government plan is that it is being put together to help the banking industry as a whole. Until now, the Treasury and Fed have selectively bailed out institutions that were the most vulnerable.

"This staves off Judgment Day," said Anthony Sabino, professor of law and business at St. John's University. "This is a detox for banks, and will help cleanse themselves of the bad mortgage securities, loans and everything else that has hurt them.

[ozymandius]

6. How horrifying.

"it is being put together to help the banking industry as a whole"

And it's being done hurriedly. I guess it's too much to ask that we be spared unintended consequences. Intended ones too.

[Dr.Phool]

78. It makes me sick to my stomach.

Could we ever possibly have a stupider congress in place, in a time of crisis? And I'm not talking about the repuke side. We know the repukes are craven idiots and fundie bushbots, but our side scares me. It's almost like they're trained monkeys, there only for the repukes entertainment.

Pelosi, Reid, Dodd, et al, seem to be in a hurry to get home and campaign for re-election, and are ripe for picking. They're going to pass any bullshit emergency measure that Bernanke and Poulson put in front of them right now. It's enough to make you want to cry over what's happened to our democracy. They really, really scare me.

Before the fireworks start today, I'm gonna take His Royal Fuddliness over to the dog park to visit his buddies (You gotta find intelligent life somewhere), and chat with a few people. One new addition to our circle, a guy who's owned by a doberman, is a day trader, who just moved here from California. I'm interested in his outlook on this shit.

Back in a few hours.

[diamidue]

142. Pelosi Reid

Wasn't Reid on record about 2 days ago as saying that no one had any idea what to do about this mess? Evidently he and Pelosi jumped on-board the first solution that was presented. It was very disheartening this morning to see Pelosi & other Democrats standing behind Bernanke, etc. during this announcement. Posters at on-line economic boards are absolutely livid over this bail-out. Furious! The Democrats should have used this opportunity to speak out against the mis-management of the economy during the Bush years, but instead they are joining with the GOP in praising this bail-out. And Obama comes out and supports it as well. He should have waited before issuing any comments. Any voters thinking that Obama was a better choice than McCain to lead the USA on economic matters, just realized there was not an ounce of difference between the candidates. The Dems could lose the election over this.

[harun]

236. Well said. I feel they have handled this very poorly.

[MadinMo]

79. Just curious, a serious question.....

What consequences do you forsee? Aside from prolonging the inevitable?

[Tansy_Gold]

80. I'm curious, too.

I see it as not just postponing the inevitable, but actually making it worse when it does finally arrive.


Tansy Gold, scared to bits

[Roland99]

87. I honestly dont know why the dollar isnt tanking. Everyone is ignoring one stark fact...

The MASSIVE and FAST accummulation of new debt on the back of the US government. $480 billion deficit forecast already and now several hundred billion more??

[MilesColtrane]

107. It's like the dollar market knows the looming boomer Social Security payouts aren't going to happen.

"All that money you were promised that we didn't have before? Well now we REALLY don't have it. Better strap on that Wal-Mart greeter vest buddy."

[Tansy_Gold]

191. yeah, and I'm one o' them boomers

:scared:

[Demeter]

220. Right Now, These Are Only "Promises"

Like the $85 Billion for AIG. The hope is that they can gut and sell off the good pieces before the bad ones rot the whole carcass.

Given the track record of these clowns, the odds seem unfavorable.

Much more troubling is buying all those mortgage based derivatives.

If they were buying the mortgages, that would be useful. They could renegotiate them, and cancel the derivatives. This is a case of having the cake and eating it, too.

[Duppers]

238. give it 60 days

there's at least that kind of lag.

I dread, dread, dread what our country will be suffering in 6 mos.

Obama is gonna have a hell of a mess on this hands.

[Dr.Phool]

120. I was up until 3:00am this morning.

Just pondering the possibilities. I was running a post about it through my head. I'll try to get something up later today.

I just got back from the park with the Fudd. I'll have some more coffee, maybe some vodka, then post. From the conclusions I came to last night, I'm gonna need the vodka.

[ozymandius]

215. Well, for starters, dumping future Treasury proceeds is a hugely political move.

This tactic is meant to tie the hands of the next president so tightly that any populist initiatives will wither before the ideas are even ripe. Clinton was denied much of his ambition from the deficit Bush Sr. and Reagan left him. Aside from the gargantuan bailout we see growing - the deficits that previously existed would have done the same.

Likewise, populist programs that began with FDR are threatened. This too is a target of Bush's deficits.

The dollar as casualty: dilution of the money supply will destroy intrinsic value of the dollar.

This plan kicks the financial crisis into the next administration. The cult of Bush will be gone and the blame for the "inevitable" will rest on someone else's watch.

I'm sure there are a few more fallout scenarios associated with this plan.

[Zenlitened]

86. I agree... what's the damned rush, at this point?

We're more than a year into The Financial Crisis now. Isn't it worth spending a bit more time on a plan that will radically transform the world financial landscape?

In fact, from a purely (cynically) political perspective, I'd think the pols would score more points by saying "We're going to delay our vacation because this is Hugely Important, not some slap-dash fix, and we've got to take the time to get it right."

:shrug:

[Demeter]

155. They Want to F It Up BEFORE Obama Takes Office!

So that nobody anywhere, anywhen can ever fix it.

[MadinMo]

207. That's what I think too.

And they also want him blamed for the agony we will go through TRYING to fix it.

[Demeter]

26. Then the Govt. Ought to Outright Nationalize the Banks

and get the profits as well as the losses. Dammit!

[Ghost Dog]

31. Looks like somebody ought to nationalize the Government

that appears to be so deeply embedded in corporate pockets.

[Demeter]

33. Great Idea! We Could Have a Little Revolution

or just a constitutional convention...but I think first we need Impeachment and war crimes trials to get the bad guys out of circulation and scare the nerve out of the rest.

[Ghost Dog]

40. Maybe some of those famous Town Hall Meetings,

all the way across the country, would do the trick? :)

[Demeter]

41. Only If They Bring Rope, I'm Afraid

Things are way past talking about them.

[alterfurz]

129. roger that

a friend recently joked that he was thinking of re-investing his 401K ("actually more like a 41K now") in commodities--e.g. torches, pitchforks, tar & feathers. "Maybe tumbrels, too."

[lumberjack_jeff]

118. Exactamundo. n/t

[Dr.Phool]

125. Bingo!

[Zorra]

209. I agree. But instead, they are putting the children back in charge of the candy store,

just moments after the little devils trashed it and ate all the candy.

Now they're salivating at getting the chance to do it again, and they won't be able to stop themselves.

What these naughty children need is a good spanking, having all their toys taken away, their allowances stopped, and to be made to stay in their room until they are sorry for what they've done.

[Hissyspit]

3. Asian Stocks Soar on Possible U.S. Rescue Package

http://news.yahoo.com/s/ap/20080919/ap_on_bi_ge/world_markets

Asian stocks soar on possible US rescue package
By JEREMIAH MARQUEZ, AP Business Writer
2 hours, 44 minutes ago
HONG KONG - Asian stock markets soared Friday after a punishing week as news of a possible U.S. government plan to rescue banks from toxic mortgage debt brought hope of a letup in the world's worst financial crisis in decades.

Hong Kong's Hang Seng Index jumped 7 percent at the open and was up 6.5 percent at the midday break at 18,779.03. Japan's Nikkei 225 average was up 3.8 percent at 11,920.86.

In China, the Shanghai benchmark surged a stunning 9.5 percent after the government eliminated a tax on share purchases and said it was buying shares in state-owned banks. Stock measures in Taiwan, South Korea and Australia were also sharply higher.

Following days of steep losses, regional markets got a boost from overnight gains on Wall Street, where the Dow Jones industrial average surged 410.03, or 3.86 percent, to 11,019.69 — the biggest percent gain since October 2002.

Investors also were encouraged by news that the U.S. government was seeking the power to rescue banks by buying distressed assets at the heart of the financial system turmoil that's brought down Wall Street giants Lehman Brothers, Merrill Lynch and Bear Stearns.

MORE

[Ghost Dog]

50. Bitter Asians wag the finger at U.S. bank bail outs

BANGKOK, Sept 19 (Reuters) - The turmoil in the U.S. financial sector has stoked many emotions, most of them closely related to fear, as its effects have rippled around the world.

But many in Southeast Asia have also reacted with anger at what is seen as the hypocrisy of Western governments in stepping in to prop up failing companies and institutions after preaching the exact opposite to the region during the 1997/1998 Asian financial crisis.

For former Malaysian Prime Minister Mahathir Mohamad, who flew in the face of world opinion in imposing capital controls to ride out the financial crisis 11 years ago, the current credit crisis provided a chance for yet another swipe at Washington.

"I remember how well we were told never to bail out failing companies," he wrote in his blog (www.chedet.com) this week.

"But in the last one year the Fed has bailed out dozens of failing banks, mortgage corporations and other businesses," the 84-year-old mused.

/... http://www.reuters.com/article/marketsNews/idINBKK36977820080919?rpc=44

[Demeter]

156. Entirely Justified

See if anybody ever pays attention to what America or the West wants ever again.

[antigop]

81. YIPPEE!! WE'RE SAVED! WE'RE SAVED! n/t

[ozymandius]

4. Market WrapUp

Deflation, Inflation or Goldilocks
BY MARTIN GOLDBERG, CMT

Fortunes will be won or lost based on which of these monetary events take hold in the next few years. At the moment, there is precious little truth that can be gleaned from the charts. Yet, many important charts are developing in a way that will enable intelligent analysts and traders to get the answers in a timely enough fashion so that they can position themselves on the “right side” of what will happen in the long term. Some of these charts will be highlighted tonight.

.....

The bull market in commodities was clearly accompanied by a bull market in the stocks of the nations that produce them. The emerging market ETF (symbol: EEM) appeared to have good support at $40 a share when we last spoke last month. It broke down decisively and then went parabolic downward. Such a parabolic move implied that when it was over, there would be a sharp correction to the upside. The beginnings of that may have been seen in today’s action where the ETF rallied over 8% from yesterday’s close, taking back yesterday’s loss and then some. If a meaningful year-end rally can be conjured up and coupled with the inflation scenario suggested above in this election year, then emerging markets should be a prime beneficiary. This oversold slingshot can rally and remain intact in an even more meaningful way. If we close below this week’s low, then all bets are off.

-see chart-

Finally, today’s action in the S&P 500 is similarly meaningful. Just look at the length and decisiveness of the “tail” near the psychological important 1200 level. If the index can remain above 1200, we could get our year end election rally. If the index closes 3 to 4 days below the October of 2005 lows, then the one year old market swoon will probably be just the tip of the bear market iceberg.

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

[ozymandius]

7. No Goobermental Reports Today n/t

[ozymandius]

8. Oil rises above $98 a barrel in Asia

SINGAPORE - Oil prices rose Friday in Asia as investors waited for details of a U.S. government plan that could help ease a credit crisis that has roiled global markets.

Light, sweet crude for October delivery rose 76 cents to $98.64 a barrel in electronic trading on the New York Mercantile Exchange midafternoon in Singapore. Overnight, the contract rose 72 cents to settle at $97.88.

....

In other Nymex trading, heating oil futures rose 2.3 cents to $2.8054 a gallon, while gasoline prices gained 1.75 cents to $2.499 a gallon. Natural gas for October delivery fell 5.5 cents to $7.566 per 1,000 cubic feet.

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

[UpInArms]

65. Crude futures rise on hopes for U.S. rescue plan

http://www.marketwatch.com/news/story/futures-movers-crude-oil-futures-rise/story.aspx?guid=%7BE34985BD%2D8A8B%2D429C%2DBF29%2D7290F2F3DCB0%7D&dist=hplatest

NEW YORK (MarketWatch) -- Crude-oil futures rose early Friday, getting a boost from hopes that U.S. government officials will hammer out a broad-ranging plan to fix the financial crisis.

Crude for October delivery gained $1.88 to $99.75 a barrel in electronic trading on Globex.

"The already-shattered investor confidence received some gleams of hope from policy makers around the world, with central banks and governments trying to sort out bad debts and restore liquidity," said Andrey Kryuchenkov, an analyst at Sucden Research.

Top U.S. officials emerged from a briefing with congressional leaders Thursday night with an agreement to work quickly toward fashioning a broad-ranging fix for the crisis roiling U.S. and world financial markets.

Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke briefed House and Senate leaders to hash out a solution to the massive downturn in global markets and the failure of several financial firms. See full story.

U.S. stock futures pointed to a second straight rally on the rescue plan and a temporary ban on short selling of financial institutions. See Indications.

On Thursday, crude climbed 72 cents to close at $97.88 a barrel on the New York Mercantile Exchange.

"The energy market is still well supported by solid fundamentals, despite slowing demand growth for oil and its products on the back of waning global growth this year," Kryuchenkov said in a note.

...more...

[ozymandius]

9. Morgan Stanley, others may get federal lifeline

NEW YORK - America's battered financial services industry is close to getting the lifeline it was desperately seeking as government leaders sketched out a plan to rescue banks from bad debts that threatened their survival.

Treasury Secretary Henry Paulson said after a meeting with congressional leaders late Thursday that there was consensus on a plan to deal with illiquid real estate and other assets on the books of financial institutions.

That could require massive amounts of additional federal funding, but leaders from both parties in Congress said they are prepared to act quickly on legislation needed to save big Wall Street firms and Main Street banks alike from collapse amid the biggest realignment of the financial system since the Great Depression.

.....

SEC Chairman Christopher Cox, who attended the closed-door meeting at the Capitol with Paulson and Federal Reserve Chairman Ben Bernanke, also had good news for financial companies struggling to fend off investors who sell their stock short — a bet that they can buy it back later at a cheaper price and make a profit.

Cox told the lawmakers the SEC may order a temporary emergency ban on all short-selling — not just the aggressive forms it already has targeted, according to a person familiar with the matter.

http://news.yahoo.com/s/ap/20080919/ap_on_bi_ge/banking_turmoil

[Karenina]

145. I be CERTAIN that Ike was the angry spirit of he who warned

BEWARE THE (CONGRESSIONAL) MILITARY INDUSTRIAL COMPLEX! Could it be more transparent? :tinfoilhat:

[ozymandius]

10. Citigroup considering bid for WaMu: report

(Reuters) - Citigroup Inc (C.N) is considering making a bid for Washington Mutual Inc (WM.N), the Wall Street Journal said on Friday, citing people familiar with the situation.

....

However, it is not certain that Citigroup will make a bid for WaMu, the Journal said, citing people familiar with the discussions.

http://news.yahoo.com/s/nm/20080919/bs_nm/citigroup_wamu_dc

-very short

[ozymandius]

12. Treasuries Slide as U.S. Government Seeks Solution to Crisis

Sept. 19 (Bloomberg) -- U.S. two-year notes fell the most since June as Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke said they are working on a plan to help stem a collapse in financial-market confidence.

The decline pushed the yield up from the lowest level since mid-March when the Fed cut the discount rate at an emergency weekend meeting and backed JPMorgan Chase & Co.'s deal to buy Bear Stearns Cos. European and Asian stocks jumped and U.S. stock-index futures surged.

.....

Two-year note yields rose 16 basis points, or 0.16 percentage point, to 1.89 percent at 9:37 a.m. in London, according to BGCantor Market Data. The 2.375 percent security due August 2010 slid 10/32, or $3.13 per $1,000 face amount, to 100 29/32. Yields on 10-year notes increased 4 basis points to 3.60 percent.

.....

The U.S. budget deficit will climb to a record $565 billion in the fiscal year that starts Oct. 1, Goldman Sachs Group Inc. economists Ed McKelvey and Alec Phillips wrote to clients on Sept. 10. The world's biggest securities company increased its estimate by more than $100 billion.

The Congressional Budget Office projects the figure will be $438 billion next year versus $407 billion in 2008.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aXQmkE1.uFWc&refer=home

---

Our debt keeps getting bigger just as the costs to finance it.

[ozymandius]

15. Backlash Against Bailouts Grows on Capitol Hill, Wall Street

Sept. 19 (Bloomberg) -- Amid calls for the government to take stronger measures to stabilize financial markets, some former Federal Reserve officials, lawmakers and Wall Street executives are saying too much has already been done.

``Every time they intervene, they do more harm than good,'' said Peter Schiff, president of Euro Pacific Capital in Darien, Connecticut, a brokerage that manages $1 billion.

Critics of the rescues agree that government actions, such as those that prevented the failures of Fannie Mae, Freddie Mac and American International Group Inc., can't postpone the inevitable worsening of housing and financial markets. They say the bailouts by the Fed and Treasury also encourage future reckless risk-taking by investors.

....

They're getting support from Republican lawmakers, who are stepping up their efforts to put a halt to further rescues. Yesterday a group of 100 lawmakers released a letter asking Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson to ``refrain from conducting any additional government-financed bailouts for large financial firms.''

....

To be sure, only a minority of lawmakers, financial professionals and former government officials have voiced opposition to further rescues. Prominent figures -- ranging from former Fed chief Alan Greenspan and his predecessor at the central bank Paul Volcker to presidential candidates Barack Obama and John McCain -- have called the Treasury and Fed actions necessary.

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

[Demeter]

27. I Expect These Clowns Will Do It In the Way That Most Screws It Up

if historical experience is any indicator. Because if the goal were to benefit the man and woman on the street, they sure wouldn't be doing it this way.

[AnneD]

96. It's about time a back lash against bail outs happen....

These leaders of these companies are getting billions in golden parachutes for running these companies into the ground. Plain folks manage their affairs in no worse a manner and they are thrown out in the streets with nothing. Show me the justice.

[Dr.Phool]

130. OMG! We're going to be saved by Republicans?

[Demeter]

221. What Do You Mean WE, Peasant?

Updating a Lone Ranger joke.

[Hugin]

123. I thought Citi was on a Death Watch...

Bidding?

This is more of that 'leveraging'.

[happyslug]

149. One of the worse mergers in History was the Pa Railroad and the New York Central

At the time (the early 1960s) the merger looked good on paper, two large Railroad merging together eliminating a lot of duplicate routes. Dissenters at the time wanted a different set of Mergers, each of the Railroads with a Coal hauling railroad. The coal hauling Railroads has deep pockets do to the coal hauling and under a merger could shift their trains to the easier to haul routes of the New York Central And Pennsylvania Railroad. The problem was the two mainline Railroad had always hated the coal roads and thus could take to each other better then they could talk to the coal Roads.

Now the two coal roads that were viewed as the option was the Norfolk and Western (Now the Norfolk and Southern) and the Chesapeake and Ohio Railroad (Which later merged with the B&O and became the Chessie System, through recently I have heard it has resumed the B&O name). Both the Norfolk and Western and the Chesapeake and Ohio Systems had been built in the late 1800s early 1900s do to excessive rates being charged by the Main Line railroads to haul coal. The Coal Companies decided it would be cheaper to build they own railroad to haul the coal to the East Coast. Thus was born both railroads, direct lines from the Coal Fields of Western Pa and West Virginia to the East Coast. These were hugely profitable. So Profitable that the Chesapeake and Ohio line ended up buying up the B&O line and transferring its trains to the B&O line (the C&O then closed its own line and sold it to the "Great Allegheny Passage" as the premium rails to trail line in the Eastern US, and some say the world). The Norfolk and Western Merged with the Southern Railroad to become the Norfolk and Southern.

On the other hand in 1969 the combined New York Central and Pennsylvania Railroad went Bankrupt, it was formed into Conrail a few year later (and made money as Conrail, another subject). Mo one had a problem with Conrail, since it was federally owned, but when the Feds wanted to sell it under Bush Sr, the states affected basically rebelled. Subsequent Conrail was broken up so that competition could be maintained. Basically the Old Pennsylvania Railroad went to Norfolk and Southern and the New York Central went to the B&O (i.e. the merger that SHOULD have happened in the 1960s).

Like the Penn Central Merger, I do NOT like any of the recent merger of various banks. The Banks being merged are often in direct competition, I would prefer a merger with a financial institution that has NEVER had any of the financial deals that bankrupt these firms. (i.e. like the Pennsylvania Railroad merging with the Norfolk and Western, both railroads, but the later NOT in the same type of business as the PA RR was in). Instead I fear the mergers are like the New York Central and the PA RR, two business in the same type of business and both marginal do to that business. I fear the recent mergers are like two drunks trying to hold each other up, not a sober person walking the drunk home. The later is what is needed, but I fear we are seeing the former.

http://en.wikipedia.org/wiki/Norfolk_Southern
http://www.nscorp.com/nscportal/nscorp/

On the C&O:
http://en.wikipedia.org/wiki/Chesapeake_%26_Ohio_Railway

CSX, Successor to the C&O and B&O Railroads:
http://en.wikipedia.org/wiki/CSX_Transportation

Right now only three "Class 1" railroads exist east of the Mississippi, the Norfolk and Southern, the CSX system and the Canadian Pacific. The Canadian Pacific has only about nine lines in the US total, The longest goes from Alberta through North Dakota to Chicago, to Detroit and back into Canada (And this may be three lines of the Eight lines, if the three sections are independent of each other). A fourth line connect with the above line through Minnesota, A fifth line goes from Chicago to the Ohio River on the Southern Tip of Illinois), A sixth line goes from Canada to Albany NY (with the Seventh Route going to New York City and a Eighth to Scranton PA, both from Albany). Th Ninth Route goes from Toronto through New York State till it intersects the route from Scranton to Albany. Not Large if you look at the other two Class 1 Railroads, but big enough.

[DrDebug]

181. Actually it was the ICC was destroyed that merger

The ICC insisted that the highly unprofitable New York, New Haven and Hartford had to be included in the merger. That is probably what turned the profitable Penn Rail into a worthless bunch of rust... After all New York, New Haven and Hartford was the brainchild of J.P. Morgan :/

The era of the Railroad Robber Barons. Thats when all the problem started... Harriman, J.P. Morgan, the Eire scams... Mind you, I do admire Cornelius Vanderbilt because he was essentially a builder and build Grand Central, a ridiculously large train station even though ultimately there were only four tracks from and to Grand Central, so their outrageous number of platforms is completely unnecessary. He build the world's largest train station because New York deserved the world's largest railroad station even though there weren't that many tracks leading to New York itself because of that damn Hudson River...

[happyslug]

206. The ICC had a say, but the real problem was that the two railroads should NEVER had merged.

For more on the Penn Central:
http://en.wikipedia.org/wiki/Penn_Central

The biggest problem was with the merger, the Pennsylvania Corporation (Which owned both Railroad as a result of the merger) was the second largest holding company in the world, second only to the Vatican. The Railroads were only a small part of the whole business and as business declined in the late 1960s the Company lost money. Overall the Pennsylvania Corporation made money in those years, even while the merged railroads did not. This is what brought up the bankruptcy, the Pennsylvania Corporation decided it would be more profitable to get rid of all three Railroads then to keep them. Remember the Railroads went bankrupt NOT the parent company (Which is still in business, even owning Madison Square Gardens).

This was one of the reason any merger but the one that took place was not possible, both companies wanted to preserve their non-railroad assets more then their Railroad assets. Given a Choice (and that was in January 1969) the Pennsylvania Company decided to give up on the Railroads and concentrate on it non-railroad businesses. The ICC thought otherwise, thus why the forced merger, but the Bankruptcy court declared the Holding Company no liable for the debts of the Railroads and that meant the railroads were dead.

Under Conrail the Railroads came back, and with the CSX and Norfolk and Southern splitting the lines between them we have what we could have had in 1968. In fact the biggest problem was extensive regulation especially on abandonment of rail service, while the new Trucking system had full access to a Government Funded highway system and the ability to pay truck drivers the lowest wages possible (Much lower then rail wages AND drivers who are willing to drive 24 hours a day while the Rail Unions kept its workers down to 8-12 hours a day). With high oil prices railroads have come back, but at lower competitive wages compared to what railroads workers earned in the 1950s.

[Buttercup McToots]

11. The Beginning Of The End.... Denninger

http://market-ticker.denninger.net/archives/585-The-Beginning-Of-The-End.html

The Beginning Of The End
The Market TickerThursday, September 18. 2008
Posted by Karl Denninger at 08:57

The Beginning Of The End
You'd think that with the ample proof that lying just leads to people shunning your debt and equity issues that global financial institutions would choose to come clean and tell the truth.

You'd be wrong. Grievously wrong.

Now there is a proposal out there that threatens to make a mockery of the foolishness already in the market and multiply it a few times over:

"The action by the four banking agencies provides more favorable accounting treatment of so-called good will, an intangible asset that reflects the difference between the market value and selling price of a bank. The move is similar to a step taken in the midst of the savings-and-loan crisis that helped many institutions in the short run.

Over the longer term, that decision increased the overall costs of the bailout after the government took away the good will benefits. Under the proposal issued this week, the regulators would permit buyers of banks and thrifts to count some of the good will toward meeting their regulatory capital requirements."

Let me decode this for you.

If I buy a bank for $30 billion but the "net" value is only $20 billion, then there is $10 billion of "Good will" on the balance sheet. That's the difference between what I paid and what "fair value" is for that particular transaction.

What this proposal - which will be adopted after only 30 days of comment - will do, is encourage banks to overpay for other banks in deals, because they will be able to count this "phantom" value toward regulatory capital requirements!

This is blatant, out-and-out fiction - another word for it would be "fraud".

Nor does it stop there. Unable to control the FedFunds trading rate or LIBOR, Ben Bernanke has now taken to literally showering the world with dollars - $180 billion worth last night.

In theory these sorts of swaps are inflation-neutral. In reality what often happens is that the "other end" plays "blatant print" to cover their end of the swap, which looks neutral to their economy (since the money immediately goes over to The United States) and effectively is exported here!

I doubt this will do anything of value and it may be tremendously destructive. LIBOR continued to move higher this morning even after this swap line increase was announced, saying quite clearly that the market isn't buying the effectiveness of this move. The danger here is that if The Fed fails to get LIBOR and the EFF under control then they will have truly lost the capability to manage anything in this environment. Add to that a rather explicit threat by China to put together a pan-Asian "new reserve currency" paradigm, plus the fact that agency spreads have blown out again and now are above where they were before Fannie and Freddie were nationalized, and you have all the ingredients for a true market panic.

Never mind that it appears that some "market participants" may be intentionally quoting false bids and asks on Agencies.

No, what you saw Monday and Wednesday was not a panic - that was the fat lady clearing her throat.

Watch the credit markets. They're where the real "tell" is.

I suspect you're going to see a few day bounce here - the selloff yesterday was totally unexpected by me, as I expected the AIG bailout would get thunderous applause and what it got instead was recognition that the house of cards had the Big Bad Wolf breathe on it.

That was a first during this credit crunch - the "short bus" (equity) traders figured it out fast that this wasn't "good news" at all.

But as the credit noose continues to tighten the upward fuel will wane, and we are very likely to see a "no bid" situation develop in some issues.

It if develops in the overnight lending markets or worse, in the Treasury market generally, the game is over.

Don't think it can't.

It can, and if the response to market conditions is to allow the lying to ratchet up instead of to force firms to face the truth it is simply a matter of time before it does.

[lapfog_1]

35. Look carefully at any market "crash"

There are many upticks (and headlines proclaiming that "market recovers") along the way.

I suspect that is what we are in the middle of right now.



and now this one (this week's DJIA) important to note than AIG was dropped and Kraft Foods was added in the middle.

http://chart.bigcharts.com/custom/cnnmoney2/interact-chart.img?ClientID=44711&symb=djia&sid=1000001643&pg=ch&time=10dy&freq=1dy&comp=%2C&compidx=aaaaa%7E0&ma=0&maval=60&uf=0&lf=1&type=8&charts=0&mocktick=1&symbtype=0&country=US&rtsid=1000001643&style=2108&size=2&rand=5358

[adamuu]

53. what would the value of DJI be if KFT was left out and AIG left in? n/t

[AnneD]

99. I have said this for some time.....

Barack may end up with a lower DJIA than when Bush took over. And if McCain win, his do nothing free market policies will mimic Hoover and we will not have another GOP elected for another generation.

I want the smartest guy in the room for a change.

[Dr.Phool]

136. I've been telling people lately, If there could possibly be a worse president.

Than George W. Bush, it's McCain. And if he croaks Mooselini can beat him, hands down.

[DemReadingDU]

119. Karl Denninger: Welcome To The USSA

9/19/08 Welcome To The USSA
Our government is truly unbelievable.

Election + Fear = Stupidity.

lots more...
http://market-ticker.denninger.net/archives/586-Welcome-To-The-USSA.html

[Buttercup McToots]

13. Mike Morgan

Thursday, September 18, 2008
Wall Street Dumps It's Cancer On Main Street

It looks like there is no plan coming out of Washington tonight, but it will be in the hands of Washington’s finest within hours. Here’s the rub. The bank is empty. Wall Street carted off all the money and bought mansions and yachts in the Hamptons. Now Paulson is proposing we cover all of that thievery and Fannie, Freddie, AIG and all money market funds. Why not? It’s not his money and he’s not going to be around when his house of cards crumbles. So we print more money, but it’s not worth as much as the money that was there. Will the world treat the dollar kindly? No. Will there be any accountability or will Wall Street be able to dump on Main Street? No.

You see, I keep hearing how Washington wants to isolate Wall Street’s cancer from Main Street, but it sounds like they just want to transfer Wall Street’s cancer to Main Street.

It looks like Paulson has pulled the strings of the SEC and short selling will be banned in the United States. I never would have dreamed this would have unfolded like this. Paulson’s Pals will emerge from this with all the money. When the markets do collapse . . . and they eventually will, it will be Paulson and his Pals that will buy up the pieces for pennies on the dollars.

The futures are skyrocketing tonight, indicating a higher open on Wall Street. Obviously, Paulson’s Pals are very happy. His alma mater, Goldman Sachs is up strong after hours on the news. We will re-group in the morning and hold a conference call. Maybe the financial world will come to its senses about how foolish it is to fool with Mother Nature (the free markets).

Somewhere down the road, Wall Street’s cancer will kill Main Street. I thought we were going to see some accountability before the end of the year, but I guess it is going to come later. The Republicans have managed to push the dark side of this crisis into the next administration. You can probably bet the Republicans don’t want to be the next administration. They’ll leave the mess for Obama. Is this a replay of the giddiness in 1929?

Earlier I quoted Annie when she sang about tomorrow. I will close with Scarlett O’hara’s take on tomorrow . . . “I can't think about that right now. If I do, I'll go crazy. I'll think about that tomorrow.”
Posted by Mike Morgan
http://realestateandhousing2.blogspot.com/search?updated-min=2008-01-01T00%3A00%3A00-05%3A00&updated-max=2009-01-01T00%3A00%3A00-05%3A00&max-results=50

[Buttercup McToots]

14. More Mike Morgan...Kaboom

Posted by Mike Morgan, J.D., RIA

Pusher Paulson with Another Fix???

I’ve been on the phone non-stop for three hours with contacts in Europe, Asia and here in Hedge Fund America. The saddest thing about today for the longs is . . . the rest of the world doesn’t buy it. In fact, if the rally lasts through the day tomorrow, I would be surprised. I’m writing this before Paulson reveals his latest scheme, because I’m not one of clowns that sits back and regurgitates everything they hear. I take a stand based on a lot of time in the field, on the phone and doing my research. Let’s face it, there is nothing Paulson can do to solve the global problem, the rally today was nothing more than a dead-fish bounce. A very stinky dead fish. Can it last? Sure. For long? No.

RTC v. Now - Let me explain what the RTC did. They took over failed institutions and disposed of assets. What Paulson is seemingly proposing now is for the taxpayer to bail out failed institutions AND take over their junk assets AND all of the derivatives created on top of the failed assets. That’s like paying the bank robber for the bank he just robbed . . . and the bank robber just happens to be the owner of the bank! It makes absolutely no sense. Moreover, Paulson is talking about taking over a variety of alphabet soup derivatives that even the people that created this crap don’t understand anymore, except that these instruments are leveraged at 20, 30, 40, 50, 60 and 70 to one. Now think about this. Even the “one” is not worth one. So they are hyper-leveraged at numbers we cannot comprehend or deal with. His plan flawed from the start, because he has no clue what he’s getting in to.

And to top it all off, Schumer and his gang have a competing proposal to Paulson, where Schumer’s boys would rewrite bankruptcy rules to reward flippers, greedy speculators and people with eyes bigger than their pocket books. I just don’t get it. I don’t understand how Wall Street can applaud either one of these plans. And I still don’t understand who pays for it. We have a systemic problem, but we have not even begun to talk about addressing the problem or penalizing those responsible. The global financial system must feel the pain in order to survive. Despite what King Paulson wants us to believe, there is no magic pill. But just like a heroin addict can feel great for a few moments with another fix, Paulson knows he can buy a little more time with another fix. Eventually the heroin addict goes through a very painful withdrawal . . . or dies.

Lehman – Nobody wanted it. Nobody. Not even for a dollar. That’s free market. That’s not short sellers.

AIG – Nobody wanted to loan them money. Nobody. Nobody wanted to loan them money under ANY circumstances, because everybody knows AIG’s parts are worth far less than the whole, so even if somebody loaned them money, the chances of getting it back were none to none . . . because AIG did not have enough unencumbered assets to pledge for a bridge loan. That’s not the fault of short sellers. That’s the fault of regulators looking the other way, and the owners and managers sucking out all the cash. And remember this. My contacts tell me the AIG problem is more than a trillion. The $85B from the Fed will be gone by next week.

WAMU – Today WAMU announced there were no bidders for their company. That’s free market. That’s not short sellers taking apart a company. NOBODY wants WAMU for any amount of money. WAMU goes bust, and with it the FDIC is broke. If it doesn’t go bust tomorrow, you’ve got to ask yourself why, when you consider nobody wants it for even a penny. And that’s not the only bank problem.

Hedge Fund America – That’s basically what Paulson is creating, but the taxpayers have all the risk and no gain. He has told us we are going to own equity and warrants and all the other razzle dazzle, but what he’s not telling us is this. The leverage he is shoving down the throats of the taxpayer will kill the taxpayer. There is no survival to reap any profits from the garbage Paulson is shoving down our throats. Paulson is creating a hyper-leveraged hedge fund that is funded with monopoly money.

KaBoom - Even if Paulson solves one problem, like people think he did with Fannie, Freddie and AIG, there are still a dozen more problems waiting to pop up. It’s like trying to get through a minefield, blindfolded and being chased by a pack of wild animals. Eventually Paulson and the markets will explode. Strike that. Paulson and his Hedge Fund America Pals will be long gone with the booty. The taxpayers will explode.

CNBC Fast Money – Dillon hit it on the head when he opened the show with an example of the underlying bonds Paulson is talking about covering . . . as well as the trillions in derivatives. Dillon posed the question to the experts about what happens to the trillions, and they all shook their heads . . . speechless. It was the first time I have ever seen any talking head on CNBC unable to mouth a single word. They simply raised their eyebrows and shook their heads, because there is no answer. Paulson thinks the problem goes away with fairy-dust. It doesn’t. The stinky fish is just moved from one spot to another. It keeps on stinking and keeps on collecting maggots.

What Does Actually Stink? – Now we’re talking. Paulson’s plan fails, because he doesn’t even understand what is stinky. And even if he understood what it was, he would have no clue what it is worth. That’s the heart of the problem. We need to see what the assets are and what they are being marked at, before we can even think about putting a discount value on them in order to develop a plan. Full Stop. Period. End Discussion.

Homebuilders – I’m not sure why anyone is still buying this group, because the Paulson plan did not say anything about bulldozing a few million homes to reduce inventory. And the Paulson plan didn’t say anything about Martians immigrating to Earth to fill up these homes. The bottom line for a third of the builders is still bankruptcy. Remember what I said . . . if you are a butcher and you don’t sell meat, you are not a butcher. If you are builder, and you are not selling homes, you are not a builder.

Banks and Financials – And why were they rallying today? Duh??? No matter what you might think, these guys are still in deep doo-doo. For some of these guys, there is nothing that can be done to save them. Once again, just like we have too many builders, we have too many banks and financials. We don’t need them, because most of what they have been doing for the last six years has been smoke and mirrors.

Retail Sector – Maybe retail and other consumer sectors have a right to rally, because a bail out will pump monopoly money into the economy. A bail out will not save the builders, banks, REITs, etc. It will save the consumer sector, health care and many other similar sectors.

Oops, We’re Not Alone – On the other side of the fence, or pond, is the rest of the world. They are not too happy with the US financial system right now. So here’s the catch. No matter what Paulson does, if China and Russian and the Oil Wealthy Nations don’t approve . . . Paulson will be diced up and shipped off. In order for Paulson’s plan to work, he needs the rest of the world to support our greed, inefficiencies and inability to regulate our financial system. I don’t think the rest of the world is going to let Paulson and America off the hook this easy.

Tomorrow – I think the song goes . . . the sun will come out tomorrow. Well, I’m in Seattle, so I’m not so sure we will see the sun tomorrow, and I am not so sure Wall Street will see too many sunny days in the weeks ahead. The stinky fish is still pretty stinky.

Our positions are still all sound, and our trading is still showing very handsome profits. With that said, I will be firing a few clients that seem to get totally bent out of shape over one bad day . . . even though yesterday was better than today for us . . . and I rarely hear cheers and high-fives when we have a string of dynamite days. Moreover, we are way ahead from day one of me taking on retail clients. So please, if you are looking for a guaranteed daily win-win, you need to stick with Cramer. He’s always on the money. Just ask him? As for me, I’ve had two losses out of 40 some odd trades. Will we have more losses? Absolutely. But let me give you a point on case for why I absolutely hate whiners . . . and I will not allow them as clients.

We shorted Morgan Stanley yesterday at $21.40. We covered today at $12.00 for a 44% profit. Then we re-shorted at $16. It closed at $22.55, so we lost 40%. By my math we are still up 4% on the day. Yes, you had losing trades today if you closed positions prematurely. I’m not closing, other than the trades I issued closed on today, because I still believe in what I do. I’m not a day trader, but we will take profits in one day if it makes sense. It made sense to take a 44% profit today. And it made sense to re-short the position when it rose 33%.

Our Basic Model Portfolio is still up more than 30% since June 27th. I could shut down for the rest of the year and beat 99.9% of the high priced hedge funds out there. Our trading speaks for itself with a 98% track record on profitable trades. My favorite shorts continue to be Wachovia, Morgan Stanley, Fifth Third Bank, the HOMEBUILDERS, American Express and our REITs. As for the “experts” calling the bottom in housing, I have one word. WRONG. I will save that for our Tuesday night call. Other than one analyst I know, I understand the builders better than anyone. The builders go lower, despite the misplaced faith of 20 something mutual fund mangers and Cramer.

In closing, if you want to be a client, you must think about more than the day or one week. That’s one reason I am limiting my clients to six month renewals.


Here is something that appeared in The New York Times today . . .

MOSCOW — Russia’s stock exchanges remained closed Thursday as President Dmitri A. Medvedev pledged to inject almost $20 billion into financial markets to stem a dizzying plummet in share prices and quash fears of a repeat of the country’s 1998 financial collapse.

The exchanges were shut around noon on Wednesday after suffering drastic losses this week. On Thursday, President Medvedev reiterated that the government, which has the world’s third-largest foreign reserves, is in a strong position to handle the situation, which threatens to undermine an eight-year economic success story and a resurgence in national pride. . . .

NOTE: Do you think Paulson is going to solve global system failures with his fairy dust and monopoly money?

And In England today, they banned short selling. We are seeing a deterioration of the global financial markets. We simply can’t bail out everyone and we can’t change the rules without losing the game. Short sellers are not responsible. In fact, short sellers generally are the ones that pinpoint trouble and clean it out before it can infect other areas of the economy. That is what is happening here. The short sellers are taking out the infected institutions. And now the Fed is going to step in and swallow them up at the taxpayer expense. Think of it like this. The Fed is taking the cancer away from the dying patient and giving it to the taxpayer. It’s really that simple.

We are in a market where there will be wild swings. If you can’t stomach that, I suggest you park your money in Treasuries and wait till the smoke clears. Honestly, you all need to think about that. This is history in the making. We have never seen anything like this in our lifetime. It is not easy, and it requires my team to work almost round the clock. Our performance is better than anyone I know of. If you can show me someone with better performance, I’d like to see it.

I will send an update out after we hear what Paulson pitches to Washington.

P.S. I usually have CNBC and Bloomberg on all day. I can’t stomach some of the CNBC clowns but I must bear it. But I can’t stomach Cramer. However, he led off tonight with a warning. He started his show tonight telling people to take some profits tomorrow and the end was not here. I’m not sure what he said, but that is enough to tip you off that even this clown realizes we are still in deep trouble . . . and we are going lower.
Posted by Mike Morgan, J.D., RIA at 8:41 AM 2 comments
Wachovia and Morgan Stanley
Wednesday - 4:15PM - Client Quick Note

Very quickly regarding the noise about Wachovia and Morgan Stanley merging. If it happens, it will be one of the all time greatest shorts in the history of the world. We can only pray they are this dumb. But once again we will be witnessing the power of Paulson, where he pushes his puppet Bob Steel into yet another ugly mess.

By the way, remember when Bob Steel took over at Wachovia and proudly announced buying a million shares at $15 a share? I guess his buddy Paulson owes him a few buck for that debacle.

WWTT – What Were They Thinking is replaced with WATT – What Are They Thinking . . . because it just gets dumber by the day. We are short Wachovia and Morgan Stanley and if they merge, we short more.

Wachovia is toxic with a laundry list of problems from real estate to credit card to auto to CDS, ARS, CMO and if you can spell it, they got it. Oh, and they also have Golden West. That alone is enough to sink the ship.

Morgan Stanley is beyond dead because of their toxic exposure to the derivatives AND real estate. Other than Lehman, Morgan Stanley was at the top of the list for worldwide dumb deals in real estate. Just look at how Stuart Miller from Lennar skinned them alive and then had them say Thank You Master.

[ozymandius]

16. The heart of the matter:

RTC v. Now - Let me explain what the RTC did. They took over failed institutions and disposed of assets. What Paulson is seemingly proposing now is for the taxpayer to bail out failed institutions AND take over their junk assets AND all of the derivatives created on top of the failed assets. That’s like paying the bank robber for the bank he just robbed . . . and the bank robber just happens to be the owner of the bank! It makes absolutely no sense. Moreover, Paulson is talking about taking over a variety of alphabet soup derivatives that even the people that created this crap don’t understand anymore, except that these instruments are leveraged at 20, 30, 40, 50, 60 and 70 to one. Now think about this. Even the “one” is not worth one. So they are hyper-leveraged at numbers we cannot comprehend or deal with. His plan flawed from the start, because he has no clue what he’s getting in to.

No one knows what the derivatives are worth - except they vastly exceed fair market value of the assets from which they are derived. Who sets fair market value, after all, on the assets whose value can be measured? How much money must be produced to cover the derivatives?

[Demeter]

28. Harry Paulson Confuses Himself With Harry Potter

and Harry Potter was always above the rules, because he was the Chosen One.


And I think the motivation is more the looming threat of Obama than any fear of economic collapse.
These wild grasping-at-straws actions are designed to blunt the Sept. 16th speech. They know that they can't stave off collapse. If they wanted to protect people, they would be building social programs to rescue the citizens.

These steps won't even rescue corporations. Unfortunately, corporations are too stupid to realize it.

No, I think they still want the collapse. When I see a jobs program, the repeal of the Bankruptcy screw-over, and Impeachment, then I will believe they want to stop the collapse.

[TalkingDog]

82. No, no Harry Potter....

[Demeter]

159. Good One!

I'm thinking of the chapter where the Golden Trio break into Gringotts and rob the goblins. It is arguably the worst chapter in the worst book of the series. And I used to like the series!

[Roland99]

42. The ban on short-selling will only serve to bolster the major indices for the short term

Bush: "See how the markets are recovering? I told you the fundamentals were fine."


:eyes:

[ozymandius]

17. SIPC: Lehman To Be Liquidated (Today)

SIPC released this:

“On Friday, September 19, 2008, SIPC will file a proceeding placing LBI in liquidation under the Securities Investor Protection Act (SIPA). After extensive discussions and consultation with representatives of the firm and its parent company, as well as representatives of the Securities and Exchange Commission, the Federal Reserve, the Commodity Futures Trading Commission, the Financial Industry Regulatory Authority and others, SIPC has decided that such action is appropriate for the protection of customers and to facilitate the transfer of customer accounts of LBI and an orderly unwinding of the business of the brokerage firm.

This action is being taken in connection with a proposed sale of the business of the broker-dealer to Barclays Capital Inc. A hearing on approval of that sale is scheduled for September 19, 2008, at 4p.m., in the Chapter 11 proceeding of the parent company, LBHI.

http://bigpicture.typepad.com/comments/2008/09/sipc-lehman-is.html

[54anickel]

68. Cute pic from Lehman in Hong Kong...caption anyone?

Found this interesting:

A painting of Lehman Brothers' CEO Richard Fuld is displayed by the artist Geoffrey Raymond outside the Lehman Brothers building in New York, Tuesday, Sept. 16, 2008. Raymond is asking pedestrians to write their thoughts on the painting; notations in green were done by Lehman Brothers


?

[TalkingDog]

114. Captioning Kids

My offerings:

"Hey, guess what we own?"


"Their Great-great grandkids will be paying this off."


"S" means "Screwed"



that's it, I'm done....

[54anickel]

196. I was leaning toward the "S" as well--- "They are sooooo screwed" or

"This symbol, but with 2 lines going down like this used to mean very wealthly and powerful"

[radfringe]

18. CNN BREAKING: Breaking NewsThe Securities and Exchange Commission ordered a temporary halt

Breaking News: The Securities and Exchange Commission ordered a temporary halt to the short selling of financial stocks, CNN reports.

no link to story, yet - just breaking headline on CNN

[ozymandius]

21. Not unexpected.

They surely would have taken a drubbing with so many contracts set to expire today.

[AnneD]

106. Despite their efforts...

Gravity is not just good idea...it's the law.
In the real world, gravity is the law, water finds a way, and space abhors a vacuum. They are nothing more than a little boy with a finger in a dyke, for stalling the inevitable.

[ozymandius]

22. Here's a Big Picture analysis of any ban (from last night) without any sugar

SEC: Ban All Short Selling

This is nothing short of a total panic by people who have no clue what they are doing. And to think, I mocked Russia for being a nation run by market commies.

This is the ultimate bailout attempt, which will have repercussions far far beyond our imaginations:

1) We suffer a loss of Market Integrity; The US is now a Banana Republic

2) Blatant market manipulation: this is nothing more than an attempt to force markets higher;

3) 60 days prior to a presidential election? This is a none-too-subtle attempt to influence the elections -- especially coming on top of the Fannie/Freddie bailout;

4) The coming pop will create a huge air pocket, ultimately leading to us crashing much lower;

5) Expect a huge increase in volatility -- upwards first, then down;

We Are A Nation of Morons, led by complete Idiots, making us complicit in our own self destruction.

[sendero]

47. I don't think,..

.... this is "an attempt to influence elections". If it is, it certainly isn't going to help the Republicans.

On the contrary, I think the Bush admin has done EVERYTHING IN THEIR POWER to forestall this until after the election so they could try to blame it on Dems. Problem is, like everything they do, they failed.

[Demeter]

165. It's a Problem for the GOP, But Not for US or Us!

[54anickel]

72. Last ditch effort to restore confidence to the game, since that's what it's really all based on

these days. Gotta work together to stop the panic in the little guys, regaining trust/complacency while they come up with a new game plan to facilitate the shearing.

edit to finish my thought:
For the majority on main street with the short attention spans and 401Ks on auto-pilot, this will probably work.

[Hugin]

112. Eh, nobody likes a cop.

This is one of the few things we disagree on Ozy.

But, I'm willing to discuss it. Maybe I'm wrong. I haven't seen any objective evidence to the contrary, however. :shrug:

[ozymandius]

24. Long list: 799 companies immunized with the ban

Here's the edict from the SEC. (pdf file)

[Demeter]

30. That's a Lot of Companies

Every nest of paper-pushers in the country is on that list. Interesting.

Banks, mutual funds, insurance of all kinds....

Reads like a GOP fundraiser list.

[54anickel]

75. Damn! Let's hope they didn't accidentally leave any vulnerable financial institution off the list!

[Ghost Dog]

37. UK firms protected against short selling:

LONDON, Sept 19 (Reuters) - The UK Financial Services
Authority said the following stocks would be subject to the
temporary ban on short-selling that came into force at midnight
(2300 GMT) on Thursday Sept 18:
http://www.reuters.com/article/marketsNews/idUSWLA990520080919

Admiral Group Plc (ADML.L: Quote, Profile, Research, Stock Buzz)
Alliance & Leicester Plc (ALLL.L: Quote, Profile, Research, Stock Buzz)
Alliance Trust Plc ATST.L
Arbuthnot Banking Group Plc (ARBB.L: Quote, Profile, Research, Stock Buzz)
Aviva Plc (AV.L: Quote, Profile, Research, Stock Buzz)
Barclays Plc (BARC.L: Quote, Profile, Research, Stock Buzz)
Bradford & Bingley Plc (BB.L: Quote, Profile, Research, Stock Buzz)
Brit Insurance Holdings Plc
Chesnara Plc (CSN.L: Quote, Profile, Research, Stock Buzz)
European Islamic Investment Bank Plc(EIIB.L: Quote, Profile, Research, Stock Buzz)
Friends Provident Plc (FP.L: Quote, Profile, Research, Stock Buzz)
HBOS Plc (HBOS.L: Quote, Profile, Research, Stock Buzz)
Highway Insurance Group Plc (HWY.L: Quote, Profile, Research, Stock Buzz)
HSBC Holdings Plc (HSBA.L: Quote, Profile, Research, Stock Buzz)
Islamic Bank of Britain Plc (ISLB.L: Quote, Profile, Research, Stock Buzz)
Just Retirement Holdings Plc (JR.L: Quote, Profile, Research, Stock Buzz)
Legal & General Group Plc (LGEN.L: Quote, Profile, Research, Stock Buzz)
Lloyds TSB Group Plc (LLOY.L: Quote, Profile, Research, Stock Buzz)
London Scottish Bank Plc (LSB.L: Quote, Profile, Research, Stock Buzz)
Novae Group Plc (NVA.L: Quote, Profile, Research, Stock Buzz)
Old Mutual Plc (OML.L: Quote, Profile, Research, Stock Buzz)
Prudential Plc (PRU.L: Quote, Profile, Research, Stock Buzz)
Resolution Plc
Royal Bank of Scotland Group Plc (RBS.L: Quote, Profile, Research, Stock Buzz)
Rsa Insurance Group Plc
St James's Place Plc (SJP.L: Quote, Profile, Research, Stock Buzz)
Standard Chartered Plc SCZ.LZ
Standard Life Plc (SL.L: Quote, Profile, Research, Stock Buzz)
Tawa Plc (TAW.L: Quote, Profile, Research, Stock Buzz)

So, by no means all financial institutions. These are the 'great and the good'?; the most embedded?; the most vulnerable? A mixture of all three?

[muriel_volestrangler]

60. Which UK banks or insurers do you think are missing ?

It's possible that for the very smallest, there isn't a market in short selling anyway.

[Ghost Dog]

64. Is Abbey still UK-incorporated & traded on LSE?

for example?

[muriel_volestrangler]

66. After the Santander takeover, I don't think so

Their web page directs you to the Santander share price, for instance: http://www.aboutabbey.com/csgs/Satellite?pagename=AboutAbbey/GSDistribuidora/PAAI_home

[Ghost Dog]

117. Looks like a small world, or an intimate club,

if these 29 are all the publically-quoted financial firms under FSA scrutiny.

Things have changed since my day in the City, over 20 years ago.

[Dr.Phool]

152. I noticed Third Federal is missing.

But, they're very conservative, and probably not in trouble.

[muriel_volestrangler]

188. Third Federal? This is the UK list

The US list is far larger, I think.

[Dr.Phool]

213. I was just looking at the US list. SEC. 799 companies.

[DrDebug]

164. Do you know what will happen if the Royal Bank of Scotland fails

I still have a twenty pound note of the Royal Bank of Scotland from the last time I was there and Soctland (and Northern Ireland) has a very strange system of promissory notes issued by a couple of banks which ARE NOT legal tender but a promise.

Royal Bank of Scotland is performing rather poorly and I wonder whether their promissory notes are backed by assets because bank notes aren't backed by assets anymore which isn't that important because the Federal Reserve or Bank of England technically can't fail, however RBOS can fail thus leaving the British government with no option but to nationalize that bank or face the wrath of angry scotsmen... (the latter is the worst choice...)



As written on the note: The Royal Bank of Scotland plc promises to pay the bearer on demand ten pound sterling... \

[muriel_volestrangler]

192. In practice, it's the same as a Bank of England note

"promises to pay the bearer on demand" is the wording on the English notes too; while the Bank of England was nationalised (but only after World War 2), the Scottish notes will have to be honoured by the Bank of England and other banks. 'HBOS' - 'Halifax Bank of Scotland' - was in trouble this week, and has undergone a 'shotgun marriage' with another bank; Bank of Scotland also issues Scottish notes, and no-one wondered what would happen about its notes (there has been talk about transfer of jobs from Edinburgh to London, which the Scottish Executive isn't happy about). Since most notes circulating in Scotland are from the (3, I think) issuing banks, I think there must be an agreement that notes will be honoured whatever happens to any one of the banks.

[DrDebug]

197. I am curious, because RBS is running major losses

Bank of Scotland is doing reasonably unlike Royal Bank of Scotland.

RBS had record profits during 2006, so they decided to expand and want to go international. During the same time the Bank of New York was trying to acquire Dutch ABN which was running a loss and thus vulnerable for a merger but also owned La Salle in Chicago which was profitable, so RBS tried to outbid the Bank of New York, because that merger would have doubled their annual revenue and make them an international bank. The final result was that after a lengthy legal battle the Bank of New York could take the profitable La Salle and the loss making ABN ended up with RBS for a ridiculously high price and then the housing market collapsed, so RBS ain't worth shit anymore and chances are that they will not surive that doubling of their revenue by overpaying for a loss making bank which was even bigger than they were...

The point is that the Bank of England technically cannot fail, because issuing money is their only activity so like all the other cental banks they are safe ... unlike Royal Bank of Scotland which issues bank notes even though their future is quite uncertain.

Don't know about any agreement, because bank notes of Bank of England are legal tender (just like dollars, euros, yens, etc.) which means that they CANNOT be refused. The bank notes in Scotland (and Northern Ireland) are not legal tender which means that they can be refused and are more like a gentlemen's agreement. It's basically a century old system which was allowed to continue because it worked and the Scots liked their own bank notes and the banks loved creating their own design which is a form of advertisement as well, and hey, it functions so why change that century old system...

[muriel_volestrangler]

212. Both HBOS and RBS had rights issues around spring this year

but HBOS was a bit smaller, and (I think, from articles, but I may have this wrong) had been borrowing more from international money markets, and so had been hit harder by the lack of international lending. HBOS has been taken over by Lloyds TSB (assuming it goes through with shareholder approval - look for 'HBOS' in a news search, and you'll get the articles) - in the past 18 months of so, its share price had fallen from about 1100p to under 200p - and in the hours before the takeover was announced, it had fallen below 100p.

All through this, I never heard anyone saying "what happens to Scottish paper notes if they go under", so I think there's something keeping the system OK whatever happens.

Ah - here we are:

Within the United Kingdom, banknotes are also issued by three note-issuing banks in Scotland and by four in Northern Ireland.

These note issues have to be backed pound for pound by Bank of England notes. Owing to the combined size of these issues – well over a billion pounds – it would be cumbersome for the Bank to hold ordinary Bank of England notes as cover. Instead, special one million and one hundred million pound notes - known as Giants and Titans - are used. These notes are not for general circulation. Jersey, Guernsey and the Isle of Man are not part of the United Kingdom and are responsible for issuing their own notes.

http://www.bankofengland.co.uk/banknotes/about/other_notes.htm

[Demeter]

224. Thanks for the Tutorial--I Learned Somethng!

[radfringe]

19. dupe - self-deleted

[Buttercup McToots]

20. Ex-SEC Official Blames Agency for Blow-Up of Broker-Dealers

Ex-SEC Official Blames Agency for Blow-Up of Broker-Dealers

Original article in The American Banker posted via

http://www.nysun.com/business/ex-sec-official-blames-agency-for-blow-up/86130/


The Securities and Exchange Commission can blame itself for the current crisis. That is the allegation being made by a former SEC official, Lee Pickard, who says a rule change in 2004 led to the failure of Lehman Brothers, Bear Stearns, and Merrill Lynch.
The SEC allowed five firms — the three that have collapsed plus Goldman Sachs and Morgan Stanley — to more than double the leverage they were allowed to keep on their balance sheets and remove discounts that had been applied to the assets they had been required to keep to protect them from defaults.
Making matters worse, according to Mr. Pickard, who helped write the original rule in 1975 as director of the SEC's trading and markets division, is a move by the SEC this month to further erode the restraints on surviving broker-dealers by withdrawing requirements that they maintain a certain level of rating from the ratings agencies.

"They constructed a mechanism that simply didn't work," Mr. Pickard said. "The proof is in the pudding — three of the five broker-dealers have blown up."

The so-called net capital rule was created in 1975 to allow the SEC to oversee broker-dealers, or companies that trade securities for customers as well as their own accounts. It requires that firms value all of their tradable assets at market prices, and then it applies a haircut, or a discount, to account for the assets' market risk. So equities, for example, have a haircut of 15%, while a 30-year Treasury bill, because it is less risky, has a 6% haircut.

The net capital rule also requires that broker dealers limit their debt-to-net capital ratio to 12-to-1, although they must issue an early warning if they begin approaching this limit, and are forced to stop trading if they exceed it, so broker dealers often keep their debt-to-net capital ratios much lower.

In 2004, the European Union passed a rule allowing the SEC's European counterpart to manage the risk both of broker dealers and their investment banking holding companies. In response, the SEC instituted a similar, voluntary program for broker dealers with capital of at least $5 billion, enabling the agency to oversee both the broker dealers and the holding companies.

This alternative approach, which all five broker-dealers that qualified — Bear Stearns, Lehman Brothers, Merrill Lynch, Goldman Sachs, and Morgan Stanley — voluntarily joined, altered the way the SEC measured their capital. Using computerized models, the SEC, under its new Consolidated Supervised Entities program, allowed the broker dealers to increase their debt-to-net-capital ratios, sometimes, as in the case of Merrill Lynch, to as high as 40-to-1. It also removed the method for applying haircuts, relying instead on another math-based model for calculating risk that led to a much smaller discount.

The SEC justified the less stringent capital requirements by arguing it was now able to manage the consolidated entity of the broker dealer and the holding company, which would ensure it could better manage the risk.

"The Commission's 2004 rules strengthened oversight of the securities markets, because prior to their adoption there was no formal regulatory oversight, no liquidity requirements, and no capital requirements for investment bank holding companies," a spokesman for the agency, John Heine, said.

In addition to computerizing the risk calculations, the new program required time-consuming oversight of the broker dealers by SEC officials, and in many cases, the use of subjective judgment calls.

"An important component of the CSE program is the regular interaction of Commission staff with senior managers in the firm's own control functions, including risk management, treasury, financial controllers, and the internal auditor, as well as onsite testing to determine whether the firms are implementing robustly their documented controls," SEC chairman Christopher Cox testified in a hearing of the House Committee on Financial Services in July.

Despite the increased oversight and supposed strengthening of the rule, the SEC did reexamine its efficacy after the Bear Stearns collapse. "Immediately after the events of mid-March, when the run-on-the-bank phenomenon to which Bear Stearns was exposed demonstrated the importance of incorporating loss of short-term secured funding into regulatory stress scenarios, the CSE program revised the analysis of liquidity risk management, with enhanced focus on the use and resilience of secured funding," Mr. Cox testified at the July hearing. "The SEC has also worked closely with the Federal Reserve in directing this additional stress testing."

Two months after Mr. Cox testified, however, two more broker dealers have collapsed, and yesterday there were reports that one of the two remaining broker dealers — Morgan Stanley — is now in talks to merge with Wachovia.

"The SEC modification in 2004 is the primary reason for all of the losses that have occurred," Mr. Pickard, who is now a senior partner at the Washington, D.C.-based law firm Pickard & Djinis, said.

The director of equity research at Fusion IQ and an influential Web logger, Barry Ritholtz, called the 2004 rule change "a hornets nest" that "proves the importance of having stringent rules in place."

The SEC said it has no plans to re-examine the impact of the 2004 changes to the net capital rule, and last week, it put out a proposal to revise the rule once again. This time, it is looking to remove the requirement that broker dealers maintain a certain rating from the ratings agencies.

"The SEC doesn't want to appear they are endorsing the efficacy of ratings agencies, but once again, they are going to simply cause more problems down the road," Mr. Pickard said.

[NeoConsSuck]

23. Socialism has no need for Capitalism

but Capitalism cannot survive without Socialism.

As I stated in another thread, the only time this market has shown any gains in the past month was when the taxpayer was told to drop 'em and bend over. Fannie, Freddie, AIG and now the ultimate Wall Street bailout.

How could any capitalist from this day on say 'Big Government is a Bad Thing?'.

And what is the taxpayer getting in all this? We already know this latest move saved the million dollar Wall Street bonuses, but how has the middle and lower class taxpayer benefitted from these bailouts??

[54anickel]

76. Good points! They will tell us the benefit is that we saved ourselves from another

great depression, forgetting to mention our government's role in "bringing it on".
Of course we'll also be in another great depression, they just won't call it that.
Just another day in the NeoCon alternate reality machine.

Last night I held Aladdin's lamp
And so I wished that I could stay
Before the thing could answer me
Well, someone came and took the lamp away
I looked around, a lousy candle's all I found

Well, you don't know what we can find
Why don't you come with me little girl
On a magic carpet ride
Well, you don't know what we can see
Why don't you tell your dreams to me
Fantasy will set you free
Close your eyes girl
Look inside girl
Let the sound take you away

[ozymandius]

25. What would a New Government Entity Look Like? (son-of-RTC)

http://calculatedrisk.blogspot.com/2008/09/what-would-new-government-entity-look.html

First, the goal of the plan is to help recapitalize the banks and keep them lending. Once again the credit markets are frozen, and all indicators of stress are at or near record levels (like the TED spread). It appears even credit worthy borrowers are having difficulties obtaining loans.

A number of observers have been comparing the new entity to the Resolution Trust Corporation (RTC). As an example, from the CNBC story that broke the news:

Such a facility would be similar to the Resolution Trust Corporation, which was set up in 1989 to take on all the failed thrift assets during the savings and loan crisis, sources told CNBC.

However this new entity would be very different from the RTC in a number of ways. The RTC was created to dispose of assets accumulated from failed Savings & Loans.

The new entity, according to the WSJ, would purchase illiquid assets "at a steep discount from solvent financial institutions and then eventually sell them back into the market".

.....

In the current situation, the government has no financial responsibility for the assets, except for a few exceptions like the assets of Fannie and Freddie, and the NY Fed's assets acquired in the JPMorgan / Bear Stearns deal. The new entity will both buy assets "at a steep discount" and eventually sell the assets. So unlike the RTC, this new entity puts the taxpayers at risk.

Details of how this will work aren't available yet. But one of the key problems - in addition to the risk to the taxpayer - is that this program will actually reduce regulatory capital as losses are realized. The opposite of the goal!

---

Now we learn that Bernanke and Paulson are considering parts of the 1932 Hoover plan. Hoover? Gods helps us from this folly!

[ozymandius]

29. Have a sane day.

I'll check back as time allows.

:hi:

[Demeter]

32. Good Luck to That!

There are unsung heroes in any crisis, and you, Ozy, are the Greatest!

[Buttercup McToots]

34. GOV BANK DEBT PLAN MIGHT COST UP TO HALF A TRILLION $$

GOV BANK DEBT PLAN MIGHT COST UP TO HALF A TRILLION $$

*U.S. GOVERNMENT BANK DEBT PLAN MIGHT COST UP TO HALF A TRILLION DOLLARS - CNBC

http://www.cnbc.com/id/26779080

How much is a Trillion?

http://www.tysknews.com/Depts/Taxes/million.htm

[Roland99]

39. And what usually happens to early estimates? They're always exaggerated.

NOT!!!

Oh what a tangled web....

[Buttercup McToots]

46. Hey...Todays is my birthday!

Wouldn't mind a trillion dollars!!
:party:

[Karenina]

63. Happy Birthday, Buttercup!!!

:party::toast::party:

[Buttercup McToots]

67. Thank you!! Karenina!

:)

[Hugin]

101. Can you break a $2 Trillion dollar bill?

Sorry, it's all I've got. (Emphasis on the 'BILL' part as a pun on 'Invoice'.)

No?

Well, then I got nuttin'.

Have a Happy Birthday!

:parrrty:

[AnneD]

108. Hey sister...

can you spare me a mill......

HAPPY BIRTHDAY!!!!!!!

[TalkingDog]

116. Happy Day of your Natal Emergence....

from:

http://www.buttercupcakeshop.co.uk/

[Buttercup McToots]

140. Mmmmm...That looks good!

Thank you all....
:)

[Demeter]

166. How About a Trillion Good Wishes?

I bought groceries today, and I'm a little short.

[Buttercup McToots]

36. What is the Ted Spread right now?

?

[Roland99]

44. 3.13 at 7:02am

http://www.bloomberg.com/apps/quote?ticker=.TEDSP%3AIND

[Buttercup McToots]

45. Thank you Roland...

:)

[UpInArms]

70. US 3-mo TED spread falls sharply on Tsy's money mkt plan

http://www.reuters.com/article/bondsNews/idUSLJ52074820080919

LONDON, Sept 19 (Reuters) - The premium for borrowing three-month dollars on the interbank market over the U.S. government's borrowing costs fell sharply on Friday after the Treasury created a program to guarantee money market mutual funds.

The plan, while putting the government's longer-term fiscal position under more pressure, was initially welcomed by investors as a move that will relieve some of the more immediate pressures that have virtually paralyzed financial markets.

Three-month T-bill rates soared to 0.8 percent <US3MT=RR> from virtually zero earlier this week and three-month interbank dollar rates were last indicated around 3.50 percent <USD3MD=>.

This narrowed the closely-watched 'TED' spread to 270 basis points <USD3MD=> <US3MT=RR>, Reuters charts showed, compared with around 380 basis points just before the Treasury's latest announcement.

The TED spread had ballooned to almost 500 basis points on Thursday, the widest in over a quarter of a century.

U.S. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke are also in discussions with Congressional leaders to thrash out a plan to create a taxpayer-funded entity which will mop up all the toxic assets infecting banks' balance sheets.

...more...

[Ghost Dog]

43. FTSE heads for biggest daily gain since 1987

Fri Sep 19, 2008 7:12am EDT

* FTSE 100 rises 7.8 pct to snap 4-day losing run

* Index on track for biggest daily gain since Oct. 1987 * Financials top-weighted gainers on U.S. asset plan * UK FSA bans short-selling on 29 financial stocks

...

Battered banks bounced sharply, tracking gains in the U.S. and Asian markets, with the FTSE 350 bank index soaring 22 percent.

Barclays (BARC.L: Quote, Profile, Research, Stock Buzz), HSBC (HSBA.L: Quote, Profile, Research, Stock Buzz), Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz), Lloyds TSB (LLOY.L: Quote, Profile, Research, Stock Buzz), HBOS (HBOS.L: Quote, Profile, Research, Stock Buzz) and Standard Chartered (STAN.L: Quote, Profile, Research, Stock Buzz) leapt between 12.6 and 40.5 percent.

/... http://www.reuters.com/article/marketsNews/idCALJ21452220080919?rpc=44

[Ghost Dog]

51. Europe shares soar 7 pct on short-selling ban

Fri Sep 19, 2008 8:01am EDT

LONDON, Sept 19 (Reuters) - European shares soared in afternoon trade on Friday, driven by a temporary ban on short sales of financial stocks in the United States and Britain.

By 1149 GMT, the FTSEurofirst 300 index of top European shares was up 6.9 percent at 1,136.75 points, after rising as high as 1,138.76.

...

Banks were the biggest weighted sectoral gainer on the European index, with HBOS (HBOS.L: Quote, Profile, Research, Stock Buzz) jumping 40 percent, Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz) surging 39 percent, Lloyds TSB (LLOY.L: Quote, Profile, Research, Stock Buzz) advancing 35 percent and UBS (UBSN.VX: Quote, Profile, Research, Stock Buzz) up 33 percent.

/.. http://www.reuters.com/article/marketsNews/idINLJ55222620080919?rpc=44

[Ghost Dog]

48. Banks Soak Up ECB's Latest Tender Of 3-Day Dollar Funds

Fri, Sep 19 2008, 11:54 GMT

FRANKFURT -(Dow Jones)- Banks soaked up the European Central Bank's latest offer of dollars that was part of a coordinated central bank action to provide badly-needed dollar liquidity to banks.

Demand for the $40 billion on offer, which would help banks feed their dollar liquidity needs over the weekend, was strong: Total bids amounted to $96.72 billion, or almost 2.5 times the amount allotted.

The funds were offered at a single rate of 3.5%, which is below the 4% single rate seen at Thursday's ECB dollar tender - a very tentative sign of easing in Europe's dollar funding conditions.

The ECB Thursday sold $40 billion in overnight funds provided by a reciprocal currency swap arrangement with the U.S. Federal Reserve, with bids totaling nearly $102 billion.

But financial market conditions remained tense in Europe Friday, despite news that the U.S. authorities plan to take poor assets off strained banks' balance sheets.

The Bank of England and the Swiss National Bank also continued their dollar liquidity provisions to cash-strapped banks Friday.

The SNB allotted the maximum of $10 billion in its daily auction of overnight dollar repos, fulfilling only half of the bids placed. The SNB said 18 banks domiciled in Switzerland or the European Union placed total bids of $21.1 billion, with the marginal interest rate at 2.15%. The weighted average rate in the SNB's variable rate tender was 2.78%.

Demand for dollar funds was less fierce in the U.K., where the BOE received bids worth $20.8 billion at a $40 billion tender of dollar funds expiring Monday. The weighted average accepted rate was 2.803%.

That may be because U.K. institutions have much better access to cheaper U.S. funding and are hence under little pressure to apply for dollars from the BOE, analysts said.

/... http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=8c55a065-2d4c-4964-b46c-841064d858c1

[Ghost Dog]

54. Cbanks keep cash flowing to markets despite rally

Fri Sep 19, 2008 7:39am EDT

FRANKFURT/TOKYO, Sept 19 (Reuters) - The world's central banks jumped to grease money market wheels again on Friday, pouring in more money even as stocks and the dollar rallied in response to an emergency U.S. plan to mop up toxic debt.

Japan, Australia, India and Indonesia pumped over $42 billion into their money markets as cash remained hard to find despite Thursday's unprecedented move, coordinated by the U.S. Federal Reserve, to make an extra $180 billion in dollar funds available to the banking system.

In Europe, banks showed increased appetite for short-term dollars from the Bank of England and the Swiss National Bank, although the European Central Bank logged slightly lower demand and the longer-term lending environment remained generally tense.

The three institutions lent out a total of $70 billion over the weekend, a slight increase on the $64 billion allocated on the first day of the joint liquidity action on Thursday.

The BoE used half of its $40 billion allotment, compared to just $14 billion on Thursday, and the SNB received bids worth double the $10 billion it had on offer.

Demand at the ECB's $40 billion auction was again the strongest of the three, but lower than Thursday's bidding at $96.7 billion compared to $101.675 billion.

Well-oiled money markets, where banks lend short-term funds to each other to smooth out daily swings in their balances, are crucial for the proper functioning of the financial system and the economy at large.

Overnight euro rates were trading close to the ECB's 4.25 percent benchmark on Friday despite banks having to repay 25 billion euros in one-day funds before the weekend.

London bank-to-bank rates also eased for overnight dollar funds, dipping to 3.25000 percent from a seven-year high above 6 percent hit on Tuesday <USDONFSR=>, although this remains above the Fed's 2 percent target.

Lending for any longer than a few days remains fraught. Libor rates for three-month euros, sterling and dollars all rose and Euribor euro rates for one-week, three-month and six-month rates jumped to historic highs.

/... http://www.reuters.com/article/marketsNews/idINLJ35937720080919?rpc=44&sp=true

[Ghost Dog]

49. Emerging Markets-Russian shares lead broader rally

Fri, Sep 19 2008, 11:39 GMT

LONDON, Sept 19 (Reuters) - Russian stocks surged by over 20 percent on Friday, leading a broader rally in emerging assets sparked by hopes of a comprehensive U.S. government solution for the crisis that has convulsed markets over the past year.

An easing in risk aversion helped to narrow spreads between sovereign debt and U.S. Treasuries back under 400 basis points and to raise the lira and rand, bellwether emerging currencies, versus the U.S. dollar.

/... http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=a9ec1aef-91e1-47ee-987a-9e6b1cd22d62

[UpInArms]

52. dollar chart

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

Last trade 78.909 Change +0.713 (+0.91%)

Forex Trading Conditions Difficult as Global Credit Crunch Worsens

http://www.dailyfx.com/story/special_report/special_reports/Forex_Trading_Conditions_Difficult_as_1221742363994.html

The currency market has recently been struck with adverse Bid/Ask spreads and unfavorable interest rate rolls stemming from evolution of a global financial crisis. Indeed, the lack of liquidity in today’s very volatile market place has made it difficult to assume leveraged positions. More succinctly for FX traders, the drop in market liquidity has led to the recent spike in overnight borrowing rates. In turn, this has led to tight or even negative interest rate rolls for many pairs at the interbank level. In reality, rollover in the Forex Market reflects more than just the benchmark interest rate differential between two currencies; and the true spread between accessible borrowing and lending rates helps us to understand why one trader could have to pay rolls even if he holds a long position in the highest yielding currency. Looking ahead, financial markets are likely to remain under a considerable stress; but the recent injections of liquidity by the world’s preeminent central banks and efforts to improve policy should help to alleviate some pressure in the financial system over time.

Money market difficulties are quite visible in overnight borrowing and lending rates, as dealers make it prohibitively expensive to hold positions that they view risky to their own operations. In fact, US Dollar Overnight London Interbank Bid Rates, or the rates at which banks are willing to bid for overnight borrowing from other banks, skyrocketed over 400 basis points in the span of a single day. Such a dramatic move underlines banks’ unwillingness to lend to each other and the true scarcity of such funds.



What Does it Mean for Forex Traders?

Traders will see the effects of sky-high London Interbank Bid rates on interest rates charged and collected on leveraged forex positions. If major bank are unwilling to lend to each other, they will make it prohibitively expensive for forex traders to borrow US dollars or any other currency—sending funding costs through the roof. At the same time, those same financial entities will pay relatively little on margined currency positions in which the trader is due to receive interest payments, and the end result is that margined forex traders may be forced to pay interest on either side of the market in even the most high-yielding forex pairs.

Interbank market illiquidity likewise translates into higher transaction costs for the forex trader, as banks’ unwillingness to take on risk means that they are likewise unwilling to act as counterparties to forex traders. Given more pressing needs elsewhere in their businesses, many financial institutions have pulled the plug on their forex dealing desks, and the result is less competition in setting bid and ask rates in even the most historically liquid forex pairs. Illiquidity only exacerbates market volatility, as less liquid markets are more prone to sharp price fluctuations. Indeed, our DailyFX 1-week volatility index remains at its worst since the Asian Financial Crisis and the failure of Long Term Capital Management.

...more...

ECB Allots $40B in Three-Day Tender, Euro-Dollar (EURUSD) Gives Back Overnight Gains

http://www.dailyfx.com/story/market_alerts/fundamental_alert/ECB_Allots__40B_in_Three_Day_1221820457206.html

ECB alloted USD 40 bln in 3 day tender, at a marginal rate of 3.50%. Bids amounted to USD 96.7 bln and 4.8% were alloted at the marginal rate. There was no additional EUR tender today and with yesterday's EUR 25 bln expiring interbank o-n rates have nudged higher again during the morning and are currently around 4.325%, clearly above the minimum bid rate of 4.25%, but slightly below yesterday's average overnight rate (EONIA) of 4.3740%. At the same time the European Banking Federation reported that the one week rate rose to 4.55% today, the highest level since December last year. Meanwhile, the EURUSD gave back overnight gains to hold below 1.4215 after peaking to an intraday high of 1.4256.

...more...

[UpInArms]

56. Dollar leaps on hopes for US rescue plan

http://news.yahoo.com/s/afp/20080919/bs_afp/forexeurope

LONDON (AFP) - The dollar jumped on Friday against major rival currencies as world stock markets surged skywards on hopes of a US government plan to rescue troubled financial firms, traders said.

The European single currency sank to 1.4197 dollars from 1.4348 in New York late on Thursday.

Against the Japanese currency, the dollar leapt to 107.46 yen from 105.37 yen.

Gold fell in value, having bounced higher earlier this week as investors had sought a financial safe-haven.

Investors were waiting to hear new developments after reports that the US government was preparing a lifeline to wipe out the bad debt that has weighed on banks and set off the current financial crisis.

US financial authorities have meanwhile banned short-selling -- when investors borrow company shares to sell in anticipation of profiting from a fall in value -- in a bid to help crisis-hit markets. Britain on Thursday declared a halt to short-selling in financial sector stock.

"US Treasury Secretary (Henry) Paulson and Federal Reserve Chairman (Ben) Bernanke met with lawmakers yesterday (Thursday) to push a plan that would move troubled assets from the balance sheets of American financial companies into a new institution," said Commerzbank analyst Antje Praefcke.

"The initiative is aimed at removing the devalued mortgage-linked assets at the root of the worst credit crisis since the Great Depression.

...more...

[Roland99]

74. So, diluting the dollar *increases* its worth?? Anyone got a chart of M3 growth lately?

*That* would be interesting to see.

[UpInArms]

94. is this what you wanted?

[Roland99]

100. Sorry I asked. Holy SHIT!!!!

:scared:

[RUMMYisFROSTED]

111. 14% sounds about right.

[UpInArms]

55. Treasury to guarantee money market mutual funds

http://news.yahoo.com/s/ap/20080919/ap_on_bi_ge/fund_rescue

WASHINGTON - The Treasury Department announced Friday it will tap into a Depression-era fund to provide guarantees for the nation's money market mutual funds.

Seeking to deal with a severe financial crisis, the department said that for the next year the U.S. Treasury will insure the holdings of eligible money market mutual funds.

The money to insure the mutual funds will come from the Treasury Department's Exchange Stabilization Fund which was created in 1934 to provide support for the dollar.

Fears were raised about the giant money market mutual fund industry earlier this week when Primary Fund announced that the value of its fund's assets had dropped to 97 cents for each $1 put in by investors, exposing them to losses.

This instance of "breaking the buck" marked only the second time since money market mutual funds were begun in the United States in 1970 that a fund couldn't assure clients of the full value of their investments.

President Bush has authorized Treasury Secretary Henry Paulson to use up to $50 billion from the Exchange Stabilization Fund to provide the guarantees, Treasury said in a statement.

...more...

[UpInArms]

59. Treasury will insure public offered money funds

09. The Reserve: No shares to be offered, redeemed in 23 funds
7:44 AM ET, Sep 19, 2008

10. Treasury to provide up to $50 billion in fund guarantees
7:33 AM ET, Sep 19, 2008

16. Treasury announces guaranty program for money market funds
7:32 AM ET, Sep 19, 2008

17. Treasury will insure public offered money funds
7:32 AM ET, Sep 19, 2008

[DemReadingDU]

69. up to $50 billion

So how much money do people totally have in those money market mutual funds? Probably way more than $50 billion. Then what happens?

[UpInArms]

71. Fed to buy federal agency discount notes to support market

01. Fed to buy federal agency discount notes to support market
8:38 AM ET, Sep 19, 2008

02. Fed acts to shore up money market mutual funds
8:38 AM ET, Sep 19, 2008

Is the Fed now eating its own notes?

[Demeter]

168. This Is Some Kind of Joke, Right?

What will the govt. guarantee next? Health care? Jobs? Something that actually DOES something besides maintain an unbearable status quo?

[uppityperson]

189. Does this mean, in essence, investing/stock market is now risk free?

I can gamble but never lose? Just pass my losses onto everyone else? thank you.

[Roland99]

57. 8:02am - DJIA Futures +318

Will the gains from no short-sellers and the blinded euphoria from the socialistic movements by the Bush administration withstand the Quadruple Witching Day?

[UpInArms]

62. Futures party with the Magic Piggy Banks on Tap!

S&P 500 +46.80 1250.00 9/19 8:11am
Fair Value 1209.49 9/18 9:44pm
Difference* +40.51

NASDAQ +54.50 1763.00 9/19 8:10am
Fair Value 1709.07 9/18 9:44pm
Difference* +53.93

Dow Jones +321.00 11306.00 9/19 8:07am

[UpInArms]

58. Wall Street ready for big open

http://money.cnn.com/2008/09/19/markets/stockswatch/index.htm

NEW YORK (CNNMoney.com) -- Stock futures surged Friday following news that the federal government is working on a plan to help take the bulk of the credit crunch burden off banks.

At 8:17 a.m. ET, Nasdaq and S&P futures were sharply higher, indicating an upbeat start for Wall Street, as a wild week of big stock moves comes to a close.

The troubled finance sector made a resurgence in pre-market trading, with Morgan Stanley (MS, Fortune 500) up 38%, Goldman Sachs (GS, Fortune 500) up 29% and Washington Mutual (WM, Fortune 500) up 30%.

Late Thursday, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke told Congressional leaders that they are ready to establish a program that would let banks get rid of mortgage-related assets that are hard to value and harder to trade.

The Treasury Department said Friday it would insure money market mutual funds for finance firms that pay a fee to participate in this temporary program.

Also lifting futures was an announcement by the Securities and Exchange Commission that it was halting short-selling in financial firms to try and help restore confidence in the markets.

Art Hogan, chief market strategist for Jefferies & Co., said the short-selling ban is a good short-term plan for helping the hard-hit finance companies pull out of their slump, while the plan for getting rid of mortgage-related assets is good for the markets on a long-term basis.

"The longer-term plan is sort of a central clearing house where can clear some of the bad debt that's hard to trade," said Hogan. "That's really been a drag on the market."

"Whether it's tangible or emotional, we're getting markets back up to where they should be," he added.

...more...

(edited to take out duplicate post - sorry GD!)

[poppysgal]

85. Hi You

:crazy: when they say "get rid of" where exactly are they talking about and mean and where are they (bad debt, mortgages, etc.) going? Just wondering if you know. Love ya girlfriend.

[UpInArms]

92. it's more of that YoYo thing

you (the taxpayer) now "own" all that bad stuff and our huge and inefficient bloated government gets to be bigger and bigger and they will "staff up" with incompetents that know nothing about what they are "managing" or have been a part of the problem to begin with -

those bad assets are now being put on the list of things the government owns or controls - if that helps clear the fog

:hug:

[poppysgal]

115. I see

in other words, they use my money to bail out these debts and I get the debts too-what a deal. Thanks, the fog is cleared, the horror remains.:scared:

[UpInArms]

61. So where's the plan to bail out all those 401k plans?

remember no one is too big or too small to fail!

:sarcasm:

[Hugin]

113. I seem to remember it was tabled for this session...

Didn't have time to look into it.

[dweller]

73. CNNMoney.com poll

1. Which candidate would be the best leader in a bad economy?

John McCain 42%
Barack Obama 58%
Total responses to this question: 82538

http://money.cnn.com/2008/09/19/markets/oil/index.htm

right below video link on page right, Quick Vote.
dp

:wtf: well they changed the poll, or else i see another b/c i voted. :shrug:

the above were results as i voted 10 min ago...

[Demeter]

170. How About a Poll: WHich candidate would be the best leader towards a bad economy?

Then MCCain might win!

[AnneD]

77. Pool's Open....time to break out the 50SPF BS block

After a night of skinny dipping-the place is a mess. The last time hubby and I went to Galveston was to see the Titanic artifact exhibit. And in an ironic twist of fate-I am sipping coffee from my 3rd class china cup. I started to buy a first class china cup but then thought, who am I kidding.

The winners of the pool have to hit the mark at the close of the day, but those that guessed yesterday will not go unrecognized. They will be inducted into the prognosticators hall of fame and will receive a virtual case of lipstick in their choice of colours-because they know how to put lipstick on the pig or pit bull-whatever....

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.


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
Talking Dog.....9/24
dweller.... 9/25
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
dweller....10/25 (Note: Standby Date)
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 your 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.

The Roulette ball is in play now....place your bets before it stops.

Prognosticators Hall of Fame


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

[TalkingDog]

83. Hi Annie D. Hope you and your are well.

I re-upped for Sept. 24th yesterday under Prag's watchful eye as pool guard.

Check you all later.

[Hugin]

93. Morning AnneD...

:hangover:

Nice to see you!

Only one addition to the current pool... Technically Finnfan should also be included in the Prognosticators HoF.

Also, there was talk yesterday of when and if this pool comes to a completion of starting a new pool centered on
predicting the depths the Dow might reach and if it'll again reach the most recent low. Around 7200 and change
from October 9th, 2002.

That's the bulk of what's been happening.

Glad you're back! :hug:

[Demeter]

171. AnneD: I'd Like to Move to October 13th

Because I THINK even these good ole boys can't drop the market by 1000 points in one trading session. I THINK. Of course, they might, just through dumb luck....

[Karenina]

194. I'm back to calling October 20 BLACK MONDAY.

Historical reasons. I'm amazed that the plates are still spinning. "Saw" tell of Ft. Knox being used to secure all those toxic MBS thingies. Who knows anything anymore?

[antigop]

84. Check out this quote from McCain advisor

He was on "The Newshour" with Jim Lehrer.
http://www.pbs.org/newshour/bb/business/july-dec08/fedrole_09-18.html

Peter Wallison
McCain Adviser

And Peter Wallison was general counsel of the Treasury Department in the Reagan administration. He's now a fellow at the American Enterprise Institute and an adviser to Sen. John McCain.

So they've paid a dear, dear price for this bailout that they have gotten. And ... when the government exercises its warrants and takes over 80 percent of AIG, the government's going to make a good profit for the stockholders and for the taxpayers.

I feel like I'm living in an alternate universe.

[Roland99]

89. The Michael Ledeen of the economic world. Batshit. Insane.

[antigop]

90. I about fell off my chair when I heard that. n/t

[antigop]

88. Buffett's swaps "time bomb" goes off of Wall Street

http://financialweek.com/apps/pbcs.dll/article?AID=/20080919/REG/809199997/1036

Credit default swaps seemed harmless enough, but they've turned out to be 'financial weapons of mass destruction'

When the credit default market began back in the mid-1990s, the transactions were simpler, more transparent affairs. Not all the sellers were insurance companies like AIG—most were not. But the protection buyer usually knew the protection seller.

As it grew—according to the industry’s trade group, the credit default market grew to $46 trillion by the first half of 2007 from $631 billion in 2000—all that changed.

An over-the-counter market grew up and some of the most active players became asset managers, including hedge fund managers, who bought and sold the policies like any other investment.

And in those deals, they sold protection as often as they bought it—although they rarely set aside the reserves they would need if the obligation ever had to be paid.

In one notorious case, a small hedge fund agreed to insure UBS, the Swiss banking giant, from losses related to defaults on $1.3 billion of subprime mortgages for an annual premium of about $2 million.

“They booked all these derivatives assuming bad things would never happen. It was like writing fire insurance, assuming no one is ever going to have a fire, only now they’re turning around and watching as the whole town burns down.”

[Hugin]

98. I've identified the one aspect of all of this which really bugs me...

and it centers on the whole "Make money if the market goes up or down, all you need is movement" concept.

Isn't that perpetual motion? How is something that ALWAYS produces a profit sustainable?

To me, it doesn't sound natural. If you look at it in a systems perspective, it's going to eventually
reach a critical mass and from there... Kablooie! :nuke:

This whole financial system has detached itself from reality. If the only purpose of money is to produce
more money (and really nothing else) then to the common person who must deal with reality to survive. Money
becomes an abstraction and abstractions are worthless in a practical sense. Survival is a practical matter
for most people.

[Ghost Dog]

121. It is the usury mentality gone wild,

and will end just as predicted by the ancients.

[Hugin]

126. I should amend 'profits' by saying 'HUGH PROFITS!1i!"

20% Annual returns? That exceeds almost any healthy natural system I know of... Notice I said, 'healthy'.

There are a few critters that are in that range of growth and above... Bacteria, Algal Blooms, so-called Disaster Species.

But, they either kill their host or produce such a mess it renders the rest of the environment toxic ultimately even
to themselves.

So, not healthy.

[nolabels]

102. And now all that Bullshit Junk-bond TRASH is going to be guaranteed by Joe Public Taxpayer

If you did not feel shackled and chained by big brother before, just wait till the oligarch starts cashing in on this boondoggle :crazy:

[spotbird]

91. What's next? Hyperinflation?

It's all an illusion and unsustainable, but where will it end?

[Roland99]

105. By all accounts (see that M3 chart UIA posted above???) it should be hitting already!!

[mnhtnbb]

95. DJIA Up 325 (was over +400) Servers can't handle traffic at TD Ameritrade

[antigop]

97. Hey, check out what's in The Exchange Stabilization Fund

http://blogs.wsj.com/economics/2008/09/19/the-exchange-stabilization-fund-to-the-rescue-again/

Back in 1995, Congress balked at the Clinton Administration’s $40-billion rescue plan for then-troubled Mexico so the administration turned to an obscure kitty known as the Exchange Stabilization Fund to offer Mexico up to $20 billion in loans and loan guarantees. Faced with a domestic financial crisis, the Bush Treasury is now turning to the fund to offer temporary insurance to investors in money-market mutual funds.
....
The ESF, as of the end of August, had $49.966 billion in assets –- including euro, yen, U.S. government securities and Special Drawing Rights, a quasi-currency issued by the International Monetary Fund.

[Hugin]

103. Yay! Another Piggy Bank to smash! Woot!

Where'd I put my hammer?

:bounce:

[54anickel]

122. Not again! Here's an oldie from Henry Liu that was posted here long ago when parts were

published in AsiaTimes....



snip>

In the weekend before Mexico's pending default, the US government took the
lead in developing a rescue package. The package put together by the Fed
under Alan Greenspan and the Treasury under Robert Rubin, a former
co-chairman of Goldman Sachs and a consummate bond trader, included
short-term currency swaps from the Fed and the Exchange Stabilization Fund
(ESF), a commitment from Mexico to an IMF-imposed economic austerity program
for $4 billion in IMF loans, and a moratorium on Mexico's principal payments
to foreign commercial banks, mostly US, with Fed regulatory forbearance on
bank capital adjustments that affected bank profits. It also included $5
billion in additional commercial bank loans, additional liquidity support
from central banks in Europe and Japan, and prepayment by the US to Mexico
for $1 billion in oil, and a $1 billion line of credit from the US
Department of Agriculture.

The ESF was established by Section 20 of the Gold Reserve Act of January
1934, with a $2-billion initial appropriation. Its resources has been
subsequently augmented by special drawing rights (SDR) allocations by the
IMF and through its income over the years from interest on short-term
investments and loans, and net gains on foreign currencies. The ESF engages
in monetary transactions in which one asset is exchanged for another, such
as foreign currencies for dollars, and can also be used to provide direct
loans and guarantees to other countries. ESF operations are under the
control of the Secretary of the Treasury, subject to the approval of the
president. ESF operations include providing resources for exchange-market
intervention. The ESF has also been used to provide short-term swaps and
guarantees to foreign countries needing financial assistance for short-term
currency stabilization. The short-term nature of these transactions has been
emphasized by amendments to the ESF statute requiring the president to
notify Congress if a loan or credit guarantee is made to a country for more
than six months in any 12-month period.

It was Bear Stearns chief economist Wayne Angell, a former Fed governor and
advisor to then Senate majority leader Bob Dole, who first came up with the
idea of using the ESF to prop up the collapsing Mexican peso. Bear Stearns
had significant exposure to peso debts. Senator Robert Bennett, a freshman
Republican from Utah, took Angell's proposal to Greenspan and Rubin, who
both rejected the idea at first, shocked at the blatant circumvention of
constitutional procedures that this strategy represented, which would invite
certain reprisal from Congress. Congress had implicitly rejected a rescue
package that January when the initial proposal of extending Mexico $40
billion in loan guarantees could not get enough favorable votes. The
chairman of the Fed advised Bennett that the idea would only work if
Congress's silence could be guaranteed. Bennett went to Dole and convinced
him that the whole scam would work if the majority leader would simply block
all efforts to bring this use of taxpayers' money to a vote. It would all
happen by executive fiat. The next step was to persuade Dole and his
counterpart in the House, Speaker Newt Gingrich. They consulted several
state governors, notably then Texas governor George W Bush, who
enthusiastically endorsed the idea of a bailout to subsidize the border
region in his state. Greenspan, who historically opposed bailouts of the
private sector for fear of incurring moral hazard, was clearly in a position
to stop this one. Instead, he used his considerable power and influence to
help the process along when key players balked.

The peso bailout would lead to a series of similar situations in which
private investors got themselves into trouble, vindicating the moral-hazard
principle that predicts such people will take undue risks in the presence of
bailout guarantees. As Thailand, Indonesia, Malaysia, South Korea, and
Russia stumbled into crisis, culminating in the collapse of hedge-fund giant
Long-Term Capital Management (LTCM), which played key roles in precipitating
the crisis to begin with, Greenspan moved to increase liquidity to support
the distressed bond markets. At the helm of LTCM was yet another former
member of the Fed board, ex-vice chairman David Mullins. Mullins was there
to plead for help from his former colleagues. When New York Fed president
William McDonough helped coordinate a bailout of LTCM at his offices,
Greenspan defended McDonough before a congressional oversight committee.
Reflecting on all the corporate welfare being doled out to prop up bad
private-sector investments worldwide, Bill Clinton appointee Alice Rivlin,
the able former congressional budget director, observed that "the Fed was in
a sense acting as the central banker of the world". During Clinton's first
term, Greenspan had handed the president a "pro-incumbent-type economy" and
was rewarded with a seat next to the First Lady in Clinton's televised State
of the Union address and a third-term appointment as Fed chairman. Crony
capitalism was in full swing.

snip>

Like the rest of the world, Asia is heavily dependent on export to the
United States. Japan, by far the largest Asian economy, is paralyzed by an
export addiction for dollars that are useless in Japan. This paralysis is
made worse by an institutionally based policy dispute between the Ministry
of Finance and the Bank of Japan, its newly installed central bank, in
dealing with its economic woes. The dispute centers on the nature of the
Japanese banking system and its traditional national banking role in
supporting the export-based national economic policy. Central banking, as
espoused by BIS regulations, challenges the very root of Japanese
political-economy culture, which has never viewed reform as a license to
weaken Japanese nationalism that saved Japan from Western imperialism in the
19th century. The Japanese model, until it became captured by Japanese
militarism, provided inspiration for nationalist movements all over Asia
against Western imperialism. After 1979, central banking has been viewed
increasingly as the monetary institution of financial neo-liberalism, which
has become synonymous with economic neo-imperialism.

In the US and EU, fiscal policy was significantly diminished as a
macroeconomic policy tool in the 1990s, releasing the Fed and the ECB to
assume the role of meta-political economic manager for their societies.
Money, instead of an engine of commerce for the benefit of people, has
become an economic icon whose sanctity must be defended with human
casualties for the good of the increasingly internationalized financial
system. Unregulated global financial markets operating within the context of
international monetary anarchy allows these two key central banks to impact
economic growth adversely, first in the rest of the world, now even in their
home countries. When the Fed moved to tighten monetary policy in 1999-2000,
after a panic ease in 1997-99, it in effect suppressed global economic
growth by forcing the ECB and other central banks into a series of parallel
rate hikes designed to support the value of their currencies against the
dominant dollar. With joblessness rising and growth restrained around the
world, pressure mounted on the United States to expand its already
unsustainable current-account deficit, to the inevitable detriment of many
US households and businesses, particular in the manufacturing sector but
increasingly in the information and data-processing sectors as well. The
so-called New Economy died. The Fed, the ECB and most other central banks
have remained uniquely opaque entities. In fact, the Fed takes pride in
playing cat-and-mouse games with the market over the prospect of its
interest-rate policy and allows the financial market to operate like a
lottery, with the winner being the lucky one who correctly guessed its
interest-rate decisions. Most Asian central banks follow reactively Fed
policy and action.

much more...

http://lists.econ.utah.edu/pipermail/a-list/2003-January/041236.html

[eowyn_of_rohan]

135. is "quasi-currency' like Monopoly money?

[antigop]

104. When lawmakers promise "fast action"....watch out

http://money.cnn.com/2008/09/19/news/economy/bailout_action.ap/index.htm?postversion=2008091909

Congressional leaders say they are working quickly to support the Treasury's plan to bailout financial corporations to restore liquidity to markets.

Senate Banking Committee Chairman Chris Dodd says the United States may be "days away from a complete meltdown of our financial system" and Congress is working quickly to prevent that.

Dodd said Friday that Democrats and Republicans on the Hill are coming together to support the Bush administration's developing plan to buy up bad debt from financial institutions and get the credit system working again. Dodd told ABC's "Good Morning America" that the nation's credit is seizing up and people can't get loans.

The ranking Republican on the Banking Committee, Senator Richard Shelby, predicts the new bailout plan will cost at least half a trillion dollars.

"We hope to move very quickly. Time is of the essence," House Speaker Nancy Pelosi, D-Calif., said after Paulson and Bernanke briefed congressional leaders Thursday night.

Oh, swell, let me guess...another damn bill written by lobbyists which our esteemed members of Congress WON'T EVEN READ before they vote on it.

Just like the Patriot Act.

[Hugin]

110. I heard that quote originated with Paulson and Bernake on the radio.

"days away from a complete meltdown of our financial system".

[fascisthunter]

109. Yay... We are all Indebt to Big Government for the Rest of Our Lives...

while the rich get to keep all their money.... yay!!!!!

[Tandalayo_Scheisskopf]

124. The Pirate Ship has docked outside The Kasino again. Yarr!

PETROLEUM ($/bbl)
PRICE* CHANGE % CHANGE TIME
Nymex Crude Future 100.54 2.66 2.72 10:53
Dated Brent Spot 94.46 1.16 1.25 11:23
WTI Cushing Spot 102.14 4.26 4.35 09:09


PETROLEUM (¢/gal)
PRICE* CHANGE % CHANGE TIME
Nymex Heating Oil Future 283.07 4.83 1.74 10:53
Nymex RBOB Gasoline Future 251.50 3.26 1.31 10:53


NATURAL GAS ($/MMBtu)
PRICE* CHANGE % CHANGE TIME
Nymex Henry Hub Future 7.63 .01 .12 10:53
Henry Hub Spot 8.11 .29 3.71 09/18
New York City Gate Spot 8.44 .35 4.33 09/18


ELECTRICITY ($/megawatt hour)
PRICE* CHANGE % CHANGE TIME
Mid-Columbia, firm on-peak, spot 58.60 2.72 4.87 09/18
Palo Verde, firm on-peak, spot 55.55 -.63 -1.12 09/18
Bloomberg, firm on-peak, day ahead spot/West Coast 63.45 -1.77 -2.71 09/18

[Hugin]

127. Avast! The mangy swabs!

How long do think it'll be until we're hearing the refrain... "Drill, Baby, Drill" again? (Not counting those places
were it never stopped?)

[Tandalayo_Scheisskopf]

128. I expect...

That it will be a mantra perfectly timed with certain obscene hand movements in their laps.

[antigop]

131. ".one of those rare moments... when Democrats and Republicans decided we needed to work together,.."

....decided we needed to work together, quickly,"

http://rawstory.com/news/afp/US_financial_rescue_plan_could_cost_09192008.html

US Treasury Secretary Henry Paulson and Federal Reserve chairman Ben Bernanke met with Congressional leaders late Thursday to hammer out a plan to rid financial institutions of bad assets at the root of the credit crisis.

US media reports said the finance officials and lawmakers were considering a bailout by taxpayers like that used in the country's savings and loan crisis of the 1980s and 90s.

It was "one of the rare moments, certainly rare in my experience here, that Democrats and Republicans decided we needed to work together, quickly," Dodd stressed talking about the meeting late Thursday.

Oh, joy, I can just imagine what an abomination this will be.

Yep. Just like they "worked together" on the Patriot Act.

And in a show of utmost patriotism, the passage in Congress will be unanimous, or close to it.

[Robbien]

132. Next up for a bailout: Moody's is threatening downgrades of monolines credit ratings

Ambac Financial and MBIA Inc. shares fell on Friday after Moody's Investors Service warned it may downgrade the beleaguered bond insurers again.

Moody's put the ratings of Ambac's and MBIA's main bond insurance units on review for a possible downgrade. Both bond insurers have already been downgraded several times because of their exposure to souring mortgage-backed securities and more complex mortgage-related securities known as collateralized debt obligations.
The ratings agency said Friday that it may cut again because losses on securities backed by subprime mortgages will be much higher than it previously expected.

http://www.marketwatch.com/news/story/ambac-mbia-fall-after-moodys/story.aspx?guid=%7BD8AD1BD1-9C48-4F32-8733-85F0C157EB2B%7D&dist=hpts

How can these monolines be in trouble now? As of today, We the People are guaranteeing the payment of these securities. What? Moodys doesn't think we are good for it?

[Dr.Phool]

133. Some words from FDR's "We have nothing to fear" speech.

...the rulers of the exchange of mankind’s goods have failed, through their own stubbornness and their own incompetence, have admitted their failure, and abdicated. Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.

True they have tried, but their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish.

The money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit.

Happiness lies not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort. The joy and moral stimulation of work no longer must be forgotten in the mad chase of evanescent profits. These dark days will be worth all they cost us if they teach us that our true destiny is not to be ministered unto but to minister to ourselves and to our fellow men.



Thanks to DUer "Crickets" who posted this on the Johnsonville Flood thread last night.

[antigop]

134. Uh, oh: Bush says, "We must act now"

http://money.cnn.com/2008/09/19/news/economy/paulson/index.htm?postversion=2008091911

President Bush and Treasury Secretary Henry Paulson on Friday outlined a series of far-reaching steps - likely to cost hundreds of billions of dollars - aimed at stemming a widening financial crisis that is roiling the financial markets and undermining confidence in the banking system.

"We must act now to protect our nation's economic health from serious risk," Bush said at a White House press conference. "There will be ample opportunity to discuss the origins of this problems. Now is the time to solve it."

Now when he says, "We must act now", you can just imagine the screw job they have planned.

How much will the BFEE benefit from this new plan?

[nolabels]

138. Okay i will act, go jump in the lake Mr Bush

Lame ducks should be rarely seen and NEVER heard x(

[AnneD]

137. Who's looking after your 401(k) funds?

With the turmoil in the financial services sector, you might be concerned about the safety of all that money you've allowed to be deducted from your paycheck and invested in a 401(k) or other retirement account.
The Federal Deposit Insurance Corp. guarantees up to $100,000 for your bank account, the Securities Investor Protection Corp. provides up to $500,000 in cases of missing assets from a brokerage account and even traditional pensions are backed by the government's Pension Benefit Guaranty Corp., but who's watching your 401(k) funds?

More........

www.chron.com/disp/story.mpl/business/6010240.html

[antigop]

139. Look over there.... while they try to slam through a bill to deregulate insurance industry even more

From Sirota:

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

Public Citizen and a coalition of consumer groups is sounding the alarm on a stealth measure being pushed in Congress this week - yes the same week of the AIG insurance meltdown - to potentially further deregulate the insurance industry.

Here's a snippet of the letter the organizations have sent to Democratic leaders in Congress:

"We are writing to you today to ask you to oppose a financial services bill, HR 5840 that would allow the Department of the Treasury to interpret or enter into international agreements regarding insurance policy and regulation, and then preempt state insurance laws and regulations...Many members of Congress remain unaware of the bill's negative implications for state consumer protections - much less that the bill would set a bad precedent by delegating new authority to an executive agency to become international trade and commercial agreement 'enforcer' against U.S. state consumer regulatory policy."

At a time when almost everyone agrees that the federal government totally failed to responsibly regulate the financial and insurance markets, the Democratic Congress has some nerve even considering using a suspension vote this week (ie. a parliametary method of passing something quietly) to pass legislation that would actually allow the same federal government to crush state consumer protections.

Consumer groups oppose trade/preemption provision of insurance bill
http://www.citizen.org/hot_issues/issue.cfm?ID=2005

[AnneD]

141. Ike's effect on ports 'hard to gauge' as traffic resumes

Although traffic began moving through the Houston Ship Channel again Thursday, the Port of Houston will take an economic hit from being forced to shut down temporarily because of Hurricane Ike.
So will the Port of Galveston, where officials plan to reopen Monday and, on Wednesday, unload their first cargo ship since the hurricane.
Just how significant the effect on the ports will be remains to be seen, said Tom Kornegay, executive director of the Port of Houston Authority.
"That's hard to gauge," Kornegay said Thursday. "The only thing I know for sure, they told me we lost three container ships. They just rerouted them somewhere else."
The actual number of ships that were diverted as a result of the shutdown of the Houston Ship Channel and the port's terminals likely will be higher, he said.

www.chron.com/disp/story.mpl/business/6010456.html

If you look in the comment section-there is a cool website that let's you know what ships are lined up to doc. A defiant bookmark

[Karenina]

146. Hard to gauge on one end...

easy to gouge on the other.

[UpInArms]

143. Wall Street woes may deal luxury a gloomy holiday

http://www.marketwatch.com/news/story/wall-street-woes-may-spell/story.aspx?guid=%7BAEE2F018%2D82E9%2D4BB4%2DACFF%2DD32B890AC3B3%7D&dist=hplatest

NEW YORK (MarketWatch) -- Already reeling from shoppers paring back their spending against the U.S. economic slowdown, luxury retailers from Saks Inc. to Tiffany & Co. may be in for a gloomier holiday outlook as their New York flagships get swept up in the crisis on Wall Street.

Saks (SKS: 11.35, +0.55, +5.1%) , which generates about one-fifth of its total sales from its New York flagship, and Tiffany (TIF: 39.78, +1.56, +4.1%) , which gets 10% of its total sales from its Fifth Avenue location, are among the most vulnerable, said Goldman Sachs analyst Adrianne Shapira. Other upscale retailers such as Coach Inc. (COH: 29.48, +0.96, +3.4%) , Nordstrom Inc. (JWN: 35.20, +1.66, +5.0%) and Polo Ralph Lauren Corp. (RL: 72.21, +1.80, +2.6%) also may be hurt, she said.

Luxury retailers from Saks and Tiffany to Nordstrom Inc. and Macy's and Bloomingdale's have already been hurt by aspirational shoppers who are becoming more budget-conscious and scouring for sales against the economic downturn. See full story.

The rare bright spots have been in the retailers' flagship shops in locations such as New York, which have been boosted by a flood of foreign tourists taking advantage of a weaker dollar.

With the recent troubles on Wall Street compounded with strengthening dollar, retailers are expected to get hit by a double whammy of slowing tourism income and the cutback in the financial industry, which could incur job losses and declines in bonuses against a volatile stock market.

"Today's banking crisis is likely to have significant ramifications for aspirational and luxury spending this holiday season," said Shapira in a research report. "New York City is at the epicenter of the slowdown. The slowdown will undoubtedly ripple beyond NYC to impact others tied to high end spending."

...more "oh noes!"...

:nopity:

[Buttercup McToots]

144. Holy Shyte!!!!!!US Government to secure mortgage market with gold reserves

I almost fell out of my chair when I read this. I would be surprised if the U.S. had over 100 billion worth of gold at todays price. And it appears it will be used as collateral for this massive (1 trillion?) bailout.

http://www.moneymarketing.co.uk/cgi-....cgi?id=173208
Gold for your worthless paper???

US Government to secure mortgage market with gold reserves

US Government to secure mortgage market with gold reserves
Lee Jones - 19-Sep-2008
The U.S. Treasury Department has promised “hundreds of billions” to save the US markets using its own gold reserves.

President Bush approved the use of existing authorities by Treasury secretary Hank Paulson to make available as necessary the assets of the Exchange Stabilisation Fund for up to $50 billion to buy more illiquid mortgage assets.
When the Government bailed out the the Government Sponsored Enterprises it promised to buy illiquid mortgage backed securities, but this announcement extends that pledge.

The ESF was created after the Great Depression and uses the US gold reserve as collateral for financial stability.

The plan will involve Fannie Mae and Freddie Mac increasing their purchases of mortgage assets. The Government will also expand its own purchase programme for mortgage backed assets, which was announced recently, to help increase the availability of capital for more mortgages.

Paulson says he will also work with Congress to create new legislation that will allow all mortgage backed securities to be bought up by the GSEs and the Government, instead of just those that fit within existing legislation.

This move is exactly what mortgage industry professionals have been calling for the UK Government to make. Earlier today, the Intermediary Mortgage Lenders Association urged the UK Government to take similar action. The Council of Mortgage Lenders also reiterated the call for help with illiquid assets.

Paulson said a press conference in Washington: “We are talking hundreds of billions of dollars, This needs to be big enough to make a real difference and get to the heart of the problem.”

“This morning we've taken a number of powerful tactical steps to increase confidence in the system.

“The underlying weakness in our financial system today is the illiquid mortgage assets that have lost value as the housing correction has proceeded. These illiquid assets are choking off the flow of credit that is so vitally important to our economy.”

Paulson says the Government will buy the illiquid assets but he urged that “this troubled asset relief program must be properly designed and sufficiently large to have maximum impact, while including features that protect the taxpayer to the maximum extent possible.”
__________________

[Roland99]

147. Paulson just tipped the scales on Buzzword Bingo! What a pantload!

:puke:

[Buttercup McToots]

148. THIS...is insane...Where am I?

Where am I? I don't know where I am anymore...

[antigop]

150. We're in an alternate universe. We are in a Star Trek episode. n/t

[Demeter]

177. It's More Like "The Outer Limits" or "The Twilight Zone"

Star Trek had happy endings....

Sir Alexander Dane: Where's the happy ending, Jason? "Never give up, never surrender"?-- Galaxy Quest

[Roland99]

151. I'm working faster to lower monthly expenses

This power outage (I've had no power since 1pm Sunday) has shown me how little I need cable TV. $35/mo saved.

Just switched to Progressive from GEICO...$55/mo savings.

[nadinbrzezinski]

157. Remember both him and bernacke are doing 180 of the great

depresion.They first tried the Japanese model...didn't work

And it didn't work in Japan either.

So now we are in uncharted territory. On the bright side this will FORCE re-regulation...whether these idiots want it or not

The question is how fast we'll get it and how far they're digging

[anarch]

160. wait, is the "root of the problem" that there is something left in the U.S. Treasury?

Well hell, this ought to solve that problem...

[AnneD]

167. You might want to secure your own metal....

I don't trust them to leave ours alone....

Spoken by a descendent of someone that the government stole gold from in the depression.

[CatholicEdHead]

173. Utterly insane!

They do want to drain the financial tank before January.

[xyouth]

153. What should this mean for the gold markets? N/T

[nadinbrzezinski]

158. Uncharted... but they may just go up sky high

gold bugs will be happy... the only ones who will

Wait, why am I not jumping up and down

[Ghost Dog]

154. European stocks surge to biggest 1-day gain

* FTSEurofirst 300 jumps 8.2 pct

* Biggest one-day percentage gain on record

* Financials soar on shorting ban, hopes for U.S. govt plan

FRANKFURT, Sept 19 (Reuters) - European shares surged on Friday to their biggest one-day percentage gain on record, as battered banks and insurers gained thanks to temporary bans on short sales of financial stocks and the U.S. government's moves to end the credit crisis.

The FTSEurofirst 300 index closed 8.2 percent higher at 1,150.78 points, recouping some of the sharp losses from earlier in the week and notching up the biggest one-day percentage gain on record, according to Thomson Reuters data.

The benchmark has still fallen 0.9 percent in a rollercoaster week, and is down 23.6 percent so far in 2008.

"We are watching history in the making, a scary one, however, and it seems that the shake-out of the financial industry has not necessarily come to an end yet," said Tim Brunne, an analyst at UniCredit in a research note.

...

Banks were the biggest weighted sectoral gainer on the index, with UBS (UBSN.VX: Quote, Profile, Research, Stock Buzz) surging 31.66 percent, Barclays (BARC.L: Quote, Profile, Research, Stock Buzz) advancing 29.24 percent and HBOS (HBOS.L: Quote, Profile, Research, Stock Buzz) jumping 28.91 percent. The DJ Stoxx European banks index was up 17.46 percent.

Financial stocks, which were battered this week after Lehman Brothers filed for bankruptcy protection, were also boosted by the temporary imposition of short-selling bans across the world.

The UK Financial Services Authority imposed its ban on the short selling of financial stocks on Thursday, while the short selling of 799 financial stocks is to be halted in the United States under an emergency Securities and Exchange Commission order. National market watchdogs in France, Portugal and Ireland took similar steps.

FOCUS ON REAL ECONOMY?

Analysts said that while the latest government measures have buoyed stock markets and may ensure the survival of the current financial system, equity markets will continue to suffer from a slowdown in the real economy.

...

Insurers were the second-biggest gainers on Friday, with Aviva (AV.L: Quote, Profile, Research, Stock Buzz) rising 18.26 percent, Old Mutual (OML.L: Quote, Profile, Research, Stock Buzz) up 19.42 percent and Prudential (PRU.L: Quote, Profile, Research, Stock Buzz) up 23.46 percent.

Among the few losers in the FTSEurofirst, Volkswagen (VOWG.DE: Quote, Profile, Research, Stock Buzz) was 13.8 percent lower after Lower Saxony said it was not buying shares in the group.

/... http://www.reuters.com/article/marketsNews/idCALJ06500820080919?rpc=44&sp=true

[Roland99]

161. I gave this analogy to try and explain to someone what's happening in the financial markets

Picture the endless downward spiral the poor and lower incomes families run into when they begin to rely upon those Paycheck Loan places.

Now, just picture a LOT more zeroes on those paychecks and those loans.

[Hugin]

174. I tell everyone the Government now is the proud owner of the tailings from a Gold Mine.

It's next move is to get the shaft.

[Buttercup McToots]

176. Prag, what ye think?

Alright, if this is true I'm predicting that it won't be long before they institute a ban on owning physical gold again and tell people to start turning it in.

:yoiks:

I won't do it I tell ya...
I won't I won't I won't

[Hugin]

180. Aye! Arrrr!

Bloomin' Barnacles!... Theey'd be wise to keep their rusty hooks of'n me dubloons!

[antigop]

162. purveyor's post: China paper urges new currency order after 'tsunami'

Purveyor's post in LBN:
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3499573

http://www.reuters.com/article/usDollarRpt/idUSPEK2402720080917

Threatened by a "financial tsunami," the world must consider building a financial order no longer dependent on the United States, a leading Chinese state newspaper said on Wednesday.

The commentary in the overseas edition of the People's Daily said the collapse of Lehman Brothers Holdings Inc "may augur an even larger impending global 'financial tsunami'."

Its pronouncements do not necessarily directly voice leadership views. But the commentary by a professor at Shanghai's Tongji University, as well as an essay in a Party journal, underscored official alarm at the turmoil in world financial markets.

China's central bank earlier this week cut its lending rate for the first time in six years, a move analysts said was aimed at bolstering the economy and the battered stock market.

"The eruption of the U.S. sub-prime crisis has exposed massive loopholes in the United States' financial oversight and supervision," writes the commentator, Shi Jianxun.

"The world urgently needs to create a diversified currency and financial system and fair and just financial order that is not dependent on the United States."

[Buttercup McToots]

169. A new reserve currency

I read a CNBC story this morning which said, "It is time for the world to establish a new reserve currency."

And that is where, my friends, your gold an silver will come in handy.

Lets face it, if they want a new global reserve currency we wont be able to stop it(short of global revolt). But for those with physical, itll be an easier transition into new said currency. THat is wealth preservation at its finest

[Zenlitened]

163. Bill Gross says bailing out the bond kingpins with tax-payer cash...

... is a super-duper idea. And golly, I believe him! I mean, he's a totally objective commentator, isn't he?

:grr: :crazy: :grr:

[Pale Blue Dot]

172. So the Fed and other world banks committed $700B this week to break even on the Dow?

If the half a trillion dollar estimates are correct, then that plus $180B injected in to the markets yesterday plus $85B into AIG means that $700B of our money was thrown into the markets so that they would finish up the week about where they started. :wow:

Do I have this right?

[Hugin]

175. It was worth it to them to keep Ozy from winning The Pool.

So much was at stake... and heck it's not like it's their money.

Do you remember way back when someone got fired from the GAO for suggesting the total cost of the Iraq war was
going to be $200 Billion... Total... He was fired because that estimate was OUTLANDISHLY HIGH!

Oh! Oh! and the reason given by the newly minted Republican Congress 12 years ago for not building the Super Conducting Super Collider was that at around ~$50 Billion the price was just way too steep and taxpayers had better things to do
with their money?

[Demeter]

179. Well, Now We Know What Those Better Things To Do Are

Give them away to incompetent corporations and their crooked managers.

[Pale Blue Dot]

198. LOL.

Thanks for helping me to end the week with a laugh. :thumbsup:

[ozymandius]

216. Arrr. Them's be scallywags and scurvy dogs - ALL! Arrr.

That's my best try to talk like a pirate.

[UpInArms]

178. Fed Check-Kiting Scheme in Progress: Fed holds auction to buy agency discount notes

http://www.reuters.com/article/bondsNews/idUSNYG00130420080919

NEW YORK, Sept 19 (Reuters) - The Federal Reserve on Friday is conducting an auction to buy agency discount notes, the New York Fed announced on Friday on its Web site.

The auction began at 2:15 p.m. (1815 GMT) and will close at 3:00 p.m. (1900 GMT), the New York Fed said.

[antigop]

182. No U.S. companies issued investment-grade bonds this week

http://financialweek.com/apps/pbcs.dll/article?AID=/20080919/REG/809199979/1036

Deterred by the seizing financial markets, no U.S. companies issued new investment-grade debt last week for the first time in nearly 19 years, according to data from Thomson Reuters.

The last week without a highly rated corporate bond offering was the week of Christmas 1989; the next most recent non-holiday week without such a debt issue was in August 1981. U.S. companies have raised $559.8 billion in investment-grade debt so far this year, down some 20% compared with the same period in 2007.

Meanwhile, worldwide high-quality bond issues fell to their lowest level since December 1988, Thomson Reuters found. Global highly rated bond issues have raised just $1.79 trillion to date, a 17% decline from last year.

Lower-rated debt fared no better: No U.S. companies sold new junk bonds last week. But that’s not nearly as remarkable, since the next most recent week without a speculative-grade debt issue was just a month ago, in mid-August. U.S. companies have raised 64% less this year from new junk offerings, Thomson Reuters found.

[Tandalayo_Scheisskopf]

183. The Pirates are Yarr'ing up a storm and the rum is flowing.

PRICE* CHANGE % CHANGE TIME
Nymex Crude Future 101.80 3.92 4.00 14:23
Dated Brent Spot 97.70 4.40 4.72 14:53
WTI Cushing Spot 100.69 2.81 2.87 14:09


PETROLEUM (¢/gal)
PRICE* CHANGE % CHANGE TIME
Nymex Heating Oil Future 285.32 7.08 2.54 14:23
Nymex RBOB Gasoline Future 256.10 7.86 3.17 14:24


NATURAL GAS ($/MMBtu)
PRICE* CHANGE % CHANGE TIME
Nymex Henry Hub Future 7.50 -.13 -1.65 14:23
Henry Hub Spot 8.11 .29 3.71 09/18
New York City Gate Spot 8.44 .35 4.33 09/18


ELECTRICITY ($/megawatt hour)
PRICE* CHANGE % CHANGE TIME
Mid-Columbia, firm on-peak, spot 58.60 2.72 4.87 09/18
Palo Verde, firm on-peak, spot 55.55 -.63 -1.12 09/18
Bloomberg, firm on-peak, day ahead spot/West Coast 63.45 -1.77 -2.71 09/18


Oh, we do need that energy bill in the house to move through successfully.

[RUMMYisFROSTED]

184. So bourgeois today.

Bourgeois, today is for you.


You're welcome.

[nolabels]

185. It's just a couple of days they just want to talk about too much

Okay it back up past the 11,000 mark. That little plumb-bob that says how they are treading water

Dow Jones Industrial Average
(DJI: ^DJI)
Index Value: 11,324.53
(snip)
http://finance.yahoo.com/q?s=%5EDJI

[antigop]

186. Sen. Bernie Sanders proposes surtax on wealthy to pay for bailouts

http://www.sanders.senate.gov/news/record.cfm?id=303270

Amid one of the worst financial crises in American history, Senator Bernie Sanders (I-Vt.) today laid out a four-part plan to cope with the collapse of financial institutions and avoid future failures of businesses “too big to fail.”

First, Sanders proposed a surtax on the very wealthy to pay for bailouts of Fannie Mae, Freddie Mac and American International Group.

“The wealthiest 400 families in America saw an increase in their wealth of $670 billion since President Bush has been in office. They have seen extraordinary benefits under Bush’s reckless economic policies. The middle class, whose standard of living has declined, should not be paying for these bailouts. Rather, we need an emergency surtax on those at the very top in order to pay for any losses the federal government suffers as a result of necessary efforts to shore up the economy,” Sanders said.

Second, he called for stronger oversight of financial institutions, “This Congress needs to put an end to the radical deregulation that we have seen under President Bush and even before him. We need to put the safety walls back up in the financial services sector. We need to regulate the electronic energy markets to end speculation in oil futures.”

Third, he said giant businesses like Bank of America should be broken up so no company in the future could bring the American economy down with it. Said Sanders, “This country can no longer afford companies that are ‘too big to fail.’ If a company is so large that its failure would cause systemic harm to our economy, if it is too big to fail, then it is too big to exist.”

Fourth, he called for an immediate economic stimulus package which would put people back to rebuilding our crumbling infrastructure, and moving us to energy efficiency and sustainable energy.

Oh, Bernie, there you go with your income redistribution schemes again.
:sarcasm:

[Greyhound]

193. While I think he is too accepting of "business as usual" in Congress, I love him.

Imagine a government run by the likes of Sanders, Kucinich, Boxer, Feingold...

[Demeter]

230. Bernie Saunders, He's Our Man!

With him, Obama, and Dr. Dean, we have the nucleus of a real government. Add in Fitz and the scorned US Attnys, and Justice becomes possible. Now, as to the economic side of the equation, who would you suggest? And for Judicial, Tribe, and Chomsky.

It could be done. We could rebuild--but all the crooks have got to be locked up and put out of business. Permanently.

[Roland99]

187. Suze Orman loves her some bailout. Said it should have happened long ago.

http://www.cnn.com/2008/LIVING/personal/09/19/lkl.suze.orman/index.html


:eyes:

[ozymandius]

217. What a simple-minded fool.

I wish that I hadn't read that. There's a few minutes of my life forever lost.

[Roland99]

219. I'll make it up to you next week

:-)

[ozymandius]

223. That's okay. I accept responsibility for clicking on something from Suze Orman.

It is the responsibility age y'know. I should have known better. Whenever she appears on the tee-vee it usually means she has another finance self-help book to hock.

[Buttercup McToots]

190. Mike Morgan sez

Friday, September 19, 2008

Let me include a note about what Paulson has just done. If the shorts are forced to cover, they have no options for investments, so they move to Treasuries. Paulson is also artificially forcing the market higher. This is akin to gouging after a hurricane. It’s illegal, and what he is doing is also criminal. By forcing prices higher, he gives his buddies the chance to dump their stock at higher prices. For example. His best buddy Bob Steel, the CEO of Wachovia, had a $5M loss yesterday. Today he had a $9M profit on the open. And when guys like Steel, Mack, Thain, Lewis and the others are given the opportunity to sell their polluted stock at artificially high prices, they will pocket huge piles of cash. When the markets correct . . . and they will, these are the guys that will have the money to buy for pennies on the dollar. The consumer will be doubly wiped out. Stock prices will eventfully fall . . . wiping out mutual funds and pension funds. And the taxpayer will be on the hook for trillions in debt piled high by Paulson.

For those that think this is going to be like Japan . . . WRONG. When Japan entered their crisis, they had huge savings. We have zero. What is coming down the pike for us is pure Armageddon.

Paulson is now announcing that he is offering to buy more money market assets this morning. It only gets worse. Basically, this man is putting the entire financial burden of Wall Street on Main Street. There is nothing left for him to back stop or bail out . . . except the taxpayer. Unfortunately, he’s just killed the taxpayer.

As for the SEC ban on short selling, I am not sure how that plays out if we are already short. After all, this is historic, and the rules are changing as one man sees fit. Last night I decided to go to a Seattle coffee shop for a break. I was sitting there, and I overheard a couple of guys next to me planning a murder. I’m not kidding. I listened intently to see if I could get any details. Finally, I hear Paulson’s name. I turned around and looked at the guys. One looked up and could see I was a bit startled. He laughed and joked about it, trying to explain who Paulson was and why it was the only way they could protect their money. Now the three of them were trying to explain that it was just a joke. It was pretty funny, but it was a sad commentary on how this man is destroying lives.
Posted by Mike Morgan, J.D., RIA at 10:16 AM 5 comments

[eowyn_of_rohan]

205. i am scared sick

[Roland99]

222. Make that a double. BTW, what happens when the gold used to back this scheme is gone?

:scared:

[UpInArms]

227. does the gov then come out and take whatever gold the people are holding?

and demand that no one can own gold (this wouldn't be the first time)

[Roland99]

235. Hope you don't have any gold fillings.

[eowyn_of_rohan]

237. this is so weird

i actuallly have my great aunt's gold covered TOOTH !! They saved ANYTHING gold back then, and I am a packrat

[antigop]

195. Bankers riled by government backing for money market funds

http://financialweek.com/apps/pbcs.dll/article?AID=/20080919/REG/809199973/1036

Say $50 billion backstop makes funds more attractive—and makes it tougher for banks to attract deposits

A banking trade association is irked by federal regulators’ plan to temporarily guarantee money-market funds. The group claims the plan will undercut banks’ market share and damage their deposits.

According to a letter the American Bankers Association sent today to Treasury Secretary Henry Paulson and Federal Reserve chairman Ben Bernanke, the government’s scheme “will undermine the role of banks during this current crisis and has the potential to have an extremely negative impact in the future. Simply put, the ability of banks to attract and keep deposits is being compromised in a profound fashion. Our bankers are, understandably, very upset by the action.”

Under the setup, the U.S. Treasury will insure for one year any publicly offered money-market fund that pays a fee to participate in the program. There will be no $100,000 limit on the insurance, as there is with banks. The government will use an existing emergency fund to backstop up to $50 billion. President Bush approved the plan.

Aw, poor Ben and Henry seem to be losing friends...

[54anickel]

199. WTF? I missed that Ben and Hank were guaranteeing MMFs. Seems they are getting

pretty one-sided on this bailout shit favoring investment banks and hedge players over more traditional banks. Are they trying to get out of backing FDIC now that it's nearly broke? :wtf:

[TalkingDog]

200. Bernanke/Paulson: "Days away from complete financial meltdown"

If you need to cut paragraphs...cut 'em...I'm so fucking mad right now, I don't care....

http://www.nytimes.com/2008/09/20/washington/19cnd-cong.html?_r=2&hp=&adxnnl=1&oref=slogin&adxnnlx=1221854994-Lc2vrGvnErxcJ19zMWH9tw

As Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the Banking, Housing and Urban Affairs Committee, put it Friday morning on the ABC program “Good Morning America,” the congressional leaders were told “that we’re literally maybe days away from a complete meltdown of our financial system, with all the implications here at home and globally.”

Mr. Schumer added, “History was sort of hanging over it, like this was a moment.”

When Mr. Schumer described the meeting as “somber,” Mr. Dodd cut in. “Somber doesn’t begin to justify the words,” he said. “We have never heard language like this.”

“What you heard last evening,” he added, “is one of those rare moments, certainly rare in my experience here, is Democrats and Republicans deciding we need to work together quickly.”

Although Mr. Schumer, Mr. Dodd and other participants declined to repeat precisely what they were told by Mr. Bernanke and Mr. Paulson, they said the two men described the financial system as effectively bound in a knot that was being pulled tighter and tighter by the day.

“You have the credit lines in America, which are the lifeblood of the economy, frozen.” Mr. Schumer said. “That hasn’t happened before. It’s a brave new world. You are in uncharted territory, but the one thing you do know is you can’t leave them frozen or the economy will just head south at a rapid rate.”

As he spoke, Mr. Schumer swooped his hand, to make the gesture of a plummeting bird. “You know we’d be lucky ...” he said as his voice trailed off. “Well, I’ll leave it at that.”

[MadinMo]

202. And we'll know it worked when.....?

I've said this before, the US is one paycheck from disaster. I hate to think what another Katrina/Ike, terror attack, epidemic or, God forbid, a new war, could do to us.

[TalkingDog]

203. We won't. And it probably won't. These F*ckers have destroyed my country.

So mad I'm crying....

[TrogL]

201. Loonie Watch

I'm too busy to post the whole thing.

Just two words.

HOLY CRAP

A 3 cent jump?!?!?! :wtf:

[54anickel]

204. So what happens Oct 3 when the short selling moratoriium ends? Here's a stretch from Max Keiser

Brigade homeland tours start Oct. 1

http://www.armytimes.com/news/2008/09/army_homeland_090708w/

The 3rd Infantry Division’s 1st Brigade Combat Team has spent 35 of the last 60 months in Iraq patrolling in full battle rattle, helping restore essential services and escorting supply convoys.

Now they’re training for the same mission — with a twist — at home.

Beginning Oct. 1 for 12 months, the 1st BCT will be under the day-to-day control of U.S. Army North, the Army service component of Northern Command, as an on-call federal response force for natural or manmade emergencies and disasters, including terrorist attacks.

It is not the first time an active-duty unit has been tapped to help at home. In August 2005, for example, when Hurricane Katrina unleashed hell in Mississippi and Louisiana, several active-duty units were pulled from various posts and mobilized to those areas.

But this new mission marks the first time an active unit has been given a dedicated assignment to NorthCom, a joint command established in 2002 to provide command and control for federal homeland defense efforts and coordinate defense support of civil authorities.

more...


http://www.maxkeiser.com/

I see he has a sequel to "Death of the Dollar"

"DEATH OF THE DOLLAR 2," PT 1
http://www.youtube.com/watch?v=54MUm2P1jOU

"DEATH OF THE DOLLAR 2," PT 2
http://www.youtube.com/watch?v=HdrNbhdl7uU

[antigop]

208. I was wondering when they were going to declare martial law. n/t

[Dr.Phool]

210. I knew something was rotten.

I woke up from my nap, and I decided to check on the gold coins I ordered the other day. I just wanted to make sure they got the wire transfer.

The premium on Krugerrands doubled since this afternoon. Where I paid a $16.00 per coin above spot a couple of days ago, It's now over $35.00.

And I just now found out about the gold guarantee for this financial mess.

[Buttercup McToots]

211. U.S. Government Seems `Punch Drunk'

U.S. Government Seems `Punch Drunk'

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

John Bogle Says U.S. Government Seems `Punch Drunk'
By Nick Baker

Sept. 19 (Bloomberg) -- John Bogle, who created the $106 billion Vanguard 500 Index Fund in 1976, said the U.S. government appears ``punch drunk'' given its proposals to rescue the financial system.

``We're playing a game of casino capitalism, interfering with the way the market is working,'' Bogle, 79, said in a telephone interview today from Valley Forge, Pennsylvania. ``The government seems punch drunk. It doesn't seem systematic.''

Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke proposed removing troubled assets from banks' balance sheets last night, while the Securities and Exchange Commission temporarily banned short sales of financial firms. The plans followed the government takeover this week of American International Group Inc., the biggest U.S. insurer, and its bailout of Fannie Mae and Freddie Mac, the largest mortgage financiers, two weeks ago.

The Standard & Poor's 500 Index rallied 4 percent today after yesterday's 4.3 percent rebound from the lowest level in three years. The gains helped send the MSCI World Index of shares in 23 developed nations to the steepest two-day surge since records begin in 1970.

``I'm obviously in the minority,'' Bogle said.

Byron Wien, the 75-year-old chief investment strategist at hedge fund Pequot Capital Management Inc., said policy makers are taking the correct approach.

Wien Disagrees

``The most important thing that Henry Paulson and the federal government could do is to keep the economy from slipping into a deep recession,'' Wien, formerly an investment strategist at New York-based Morgan Stanley, said during a Bloomberg Television interview from Paris. ``The next up is to restore stability in the financial markets.''

The U.S. stock market gained or lost more than $500 billion in value on four of the past five days, according to data compiled by Bloomberg.

``Believe me, the value of American business doesn't change that much in a day,'' said Bogle, named one of the industry's four ``Giants of the 20th Century'' by Fortune magazine in 1999.

Bogle, who retired from Vanguard Group Inc. in 1999, said he hasn't changed his personal asset-allocation target -- 35 percent in stocks and 65 percent in bonds -- since 2000. Because of price fluctuations, he currently has about 30 percent in stocks and 70 percent in bonds.

The S&P 500 jumped 6.7 percent from the low to its high yesterday, the biggest intraday swing since July 2002, according to Bloomberg data.

``We're in the most speculative market I've seen,'' said Bogle, who was born five months before the stock-market crash of 1929. ``We seem to be in the depths of despair one moment, and the heights of optimism the next.''

http://www.bloomberg.com/apps/news?p...xPY&refer=home

[ozymandius]

218. Wow. Just wow at the closing data.

Dow 11,388.44 Up 368.75 (3.35%)
Nasdaq 2,273.90 Up 74.80 (3.40%)
S&P 500 1,255.08 Up 48.57 (4.03%)
10-Yr Bond 3.769% Up 0.332
NYSE Volume 9,501,577,000
Nasdaq Volume 4,036,085,000

Just for fun... here's the closing info for Monday:

Dow 10,918.00 -503.99
Nasdaq 2,179.91 -81.36
S&P 500 1,193.53 -58.17
10-year 3.48% -0.25

$700 billion just doesn't stretch that far anymore.

---

The Dow closed nearly 370 points higher Friday, marking the end of a volatile week. The Dow registered triple-digit swings during each of the week's trading sessions.

The weeklong ride took participants both high and low. Despite closing the week's final session with a 3.4% gain, the Dow still ended the week 0.3% lower.

Still, the outlook among participants has improved substantially.

Following the collapse of Lehman Brothers and the government's intervention into the AIG (AIG 3.85, +1.16) debacle earlier in the week, federal agencies stepped up to restore investor confidence.

Just one day ago central banks injected liquidity into global financial markets to help restore their functionality. Now, the Fed is looking to create an entity that will help financial firms shed their illiquid and distressed assets, many of which remain linked to risky subprime mortgages.

The Fed will also begin purchasing short-term debt issued by Fannie Mae (FNM 0.69, +0.20) and Freddie Mac (FRE 0.55, +0.22), which extends existing plans to buy mortgage-backed securities from the two.

To further enhance confidence among investors, the Fed is planning to sell insurance that covers money market mutual funds.

Some investors were encouraged by a ruling from the Securities Exchange Commission that put a temporary ban on short-selling certain financial stocks. Though the plan aims to protect certain securities and restore confidence, it has come under sharp criticism from market makers. Late in the session the SEC staff announced it wants to implement certain exemptions to the rule.

The announcements helped financial stocks most. The sector closed the session 11.1% higher, extending the prior session's 12% advance. The financial sector concluded the week with a 7.4% gain.

Investment banks and brokers (+20.8%) registered the largest gain in the sector. The group rebounded as Morgan Stanley (MS 27.21, +4.66) posted a 21% advance. Shares of MS hit a multiyear low yesterday amid ongoing fear of financial fallout and uncertainty surrounding the firm's future. From yesterday's low to Friday's close it surged 125%.

The firm continues to seek a strategic alliance to help it move forward. Reports continue to indicate its talks are most intimate with Wachovia Bank (WB 18.75, +4.25) and the state-run China Investment Corp.

Though the outlook among investors has improved, credit rating agency Moody's remains cautious of financial and market conditions. The firm placed bond insurers Ambac (ABK 3.80, -2.80) and MBIA (MBI 12.88, -1.12) on review for a downgrade.

Nine of the ten economic sectors posted an advance, all trailing the financial sector.

Only consumer staples (-0.4%) finished the session lower. The sector fell out of favor as participants rotated out of traditional safe havens and into riskier plays.

In other news outside the financial sector, Texas Instruments (TXN 23.60, +0.85), hiked its quarterly dividend by 10% to $0.11 per share. Oracle (ORCL 20.07, +1.32) offered up better-than-expected earnings per share results and had its shares upgraded.

Trading volume was heavy as contracts for stock index futures, stock index options, and stock options expired. Nearly 3 billion shares traded hands on the NYSE. That was the largest volume ever registered on the exchange.

[UpInArms]

225. "participants rotated out of traditional safe havens and into riskier plays"

High stakes game of risk with the largest volume ever registered on the NYSE exchange.

:wipesbrow:

these people just are junkies on meth and they need to be detoxed.

[ozymandius]

228. Detoxed yes. But how?

Betty Ford style? Or Clockwork Orange style?

[UpInArms]

229. ...

[ozymandius]

231. Oh my.

That's worse than I imagined.

[UpInArms]

232. well, 54anickel is much nicer than I am

perhaps, if she shows up we can ask her what they deserve?

:D

[ozymandius]

226. "But there is a simple solution: punitive marginal tax rates on income."

I just loves me some Jerome a Paris!

The federal government is working on a sweeping series of programs that would represent perhaps the biggest intervention in financial markets since the 1930s, embracing the need for a comprehensive approach to the financial crisis after a series of ad hoc rescues.

At the center of the potential plan is a mechanism that would take bad assets off the balance sheets of financial companies, said people familiar with the matter, a device that echoes similar moves taken in past financial crises. The size of the entity could reach hundreds of billions of dollars, one person said.

After years of deregulation, of promotion of greed and assertion of the superiority of the market, and in particular of financial makrets to decide how to run the economy, it appears - nay, make that: it is now blatantly, in your face, obvious - that none of this worked. Worse, the people that have mocked government throughout, as wasteful, inefficient and incompetent are now counting on the very same government to bail them out from the hole they have dug.

....

They have no consistency, no shame and no scruples.

What do we need to do to ensure that we NEVER EVER LISTEN TO THESE PEOPLE AGAIN?

http://www.dailykos.com/storyonly/2008/9/19/71015/5006/600/603508

[RUMMYisFROSTED]

234. "...nay, make that: it is now blatantly, in your face, obvious ..."

There are none so blind as those who will not see.

[Demeter]

233. If You Read This Far Down the Thread, Drop In on the Weekend Economist

In the Editorial and other article section of DU! It ought to be a wild party. I for one am planning on going with drunkeness.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=103x385679