STOCK MARKET WATCH, Monday September 21

[ozymandius]

Source: du

STOCK MARKET WATCH, Monday September 21, 2008

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 118
DAYS SINCE DEMOCRACY DIED (12/12/00) 2801 DAYS
WHERE'S OSAMA BIN-LADEN? 2526 DAYS
DAYS SINCE ENRON COLLAPSE = 2817
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 19, 2008

Dow... 11,388.44 +368.75 (+3.35%)
Nasdaq... 2,273.90 +74.80 (+3.40%)
S&P 500... 1,255.08 +48.57 (+4.03%)
Gold future... 864.70 -32.30 (-3.74%)
30-Year Bond 4.37% +0.25 (+6.15%)
10-Yr Bond... 3.77% +0.33 (+9.66%)






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

[Joanne98]

1. K&R

[ozymandius]

2. Market WrapUp

An Update on Classical Dow Theory
BY TIM W. WOOD

Here's a link in case anyone gives a damn about his yammerings.

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

[ozymandius]

3. no goobermental reports today n/t

[ozymandius]

4. Oil rises as investors mull US bailout

SINGAPORE - Oil prices rose Monday in Asia as investors grappled with the possible impact on crude demand of a $700 billion U.S. proposal to buy bad mortgage debt.

Light, sweet crude for October delivery was up $1.32 to $105.93 a barrel, after falling as low as $103.35, in electronic trading on the New York Mercantile Exchange by midafternoon in Singapore. On Friday, the contract rose $6.67 to settle at $104.55 on initial hopes the rescue plan would stabilize the U.S. financial system and help boost economic growth.

.....

In other Nymex trading, heating oil futures rose 1.44 cent to $2.912 a gallon, while gasoline prices gained 1.33 cents to $2.613 a gallon. Natural gas for October delivery jumped 5.1 cents to $7.48 per 1,000 cubic feet.

In London, November Brent crude rose $1.78 to $101.40 a barrel on the ICE Futures exchange.

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

[radfringe]

6. hopes the rescue plan would stabilize the U.S. financial system and help boost economic growth....

they are hoping for "trickle down"? heh - we are getting trickling showers alright - golden showers that is....

[ozymandius]

8. a last desperate attempt

This is the endgame to force feed 'trickle down' to us; a last ditch effort to loot every penny from the treasury for years to come. There's little time left to meet their destruction quotas set eight years ago.

[Hugin]

10. I wonder if that's where this magic amount comes from?

$700 Billion? $100 Billion/year for seven years, until they feel it'll be safe to steal again... Maybe they are thinking
they can tread water and everyone will be asleep again by then.

[ozymandius]

13. That's an aspect I've neither heard nor seen.

Is it a $700 billion lump sum to be paid immediately? Or is it graduated over several years? Either way it's intolerable to me.

[Hugin]

20. After looking at the terms, any amount would be 'too high'.

I'm not even sure what to call and how to describe what is being done.

Basically, they're charging us $700 Billion to hand over the keys to the Country. Pretty sweet deal for them.

[UpInArms]

24. the fear mongering is reaching a crescendo level

and they won't shut up until we pay up

this is disgusting

somebody needs to hold down these crooks so I can kick their arses!

[54anickel]

59. Financial terrorism. The US government has been the #1 terrorist since Dimson

took office. Shit, even St Ronnie didn't play the FUD card like this gang does.
Be afraid, be very afraid - your future is uncertain - doubt your every thought
Don't worry your pretty little mind, we have all the answers....
Trust us.....
BOOOO!

[ozymandius]

25. I still call it theft. They still think we're stupid.

How dare we not be happy about being mugged and left for dead! From Paulson's apparent point-of-view: it's only the banks' futures that matter. He doesn't give a shit about the rest of us.

[eowyn_of_rohan]

48. how about extortion?

seems to fit pretty well

[Tandalayo_Scheisskopf]

37. Simple way to get some of it:

Claw it out of Pentagon "Black Budgets", which generally are huge pools of money, most often administered by Air Farce generals, that exist as little but indicators of status, power and influence in the Pentagon.

In truth, they result in little of use.

[MattSh]

47. Air Farce generals ??

:) :) :)

[hunter]

91. I'll take it one step further: Get rid of the Air Force.

Take a machete to it, and whatever honest bits are left, merge them into the Army and Navy.

Then start chopping away at the Army and Navy too.

We could probably cut 90% out of the "Defense" budget while maintaining our security.

Then, if we shed our obvious imperial ambitions and decided to seriously pursue some sort of energy independence, we could retire all our military but the Coast Guard and the National Guard.

[orwell]

75. Think of it as a revolving line of credit...

...as "assets" are purchased the 700B line is used. As they are sold it is repayed. The 700B is just the maximum amount that can be used at any one time under authority of the proposed legislation.

So theoretically, the 700B could represent far more in total transactions when all is said and done, as long as the 700B limit is never exceeded at any one time.

A billion here a billion there - pretty soon you are talking abount real money...

[MattSh]

46. Well, it's 700 billion at any given time...

"The Secretarys authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time"

This is clever and nobody in the mainstream media has figured it out.

If you think the cost of this bill is $700 billion, you're wrong. The cost is actually infinite and the entire bill constitutes a giant money-laundering scheme.

Paulson can (and presumably will) buy up to $700 billion of these "assets", then sell them. Let's say he decides to buy them at 60 cents on the dollar and sell them for 10. You, the taxpayer, will eat the fifty cents, for an immediate cost of $350 billion dollars.

Having done so, he is then authorized to do so again, since the $700 billion is no longer on the government's balance sheet.

In fact, he can do this without limit, other than possibly due to the federal debt ceiling, which of course Congress will raise any time we get close to it. Oh yeah, this bill does that right up front too. No need to bother with it the first time around.

Folks, $700 billion isn't even close to the total cost of this monster.

http://market-ticker.denninger.net/archives/587-The-Mother-Of-All-Frauds.html

[UpInArms]

55. total pledged to combat the crisis to $1.8 trillion, or $15,000 per U.S. household

and it will be more than that!

:noicon:

[UpInArms]

69. Pushing The Bailout To $2 Trillion

http://www.247wallst.com/2008/09/pushing-the-bai.html

Paulson, Bernanke & Co. are learning just how diabolical the legislative process can be. Their $700 billion financial rescue program is meant to buy toxic assets from US banks and financial companies.

Since the bill was sent up to Capitol Hill as the weekend began, members of Congress have asked that individual mortgages be propped up under the legislation. Paulson has requested that foreign banks with US operations be included. Some representatives and senators want executive compensation at bailout targets curtailed

In a move which could push the value of the assistance program well above $1 trillion, Paulson is considering casting an extremely wide net of salvation. According to Bloomberg, "The change to potentially allow purchases of instruments such as car loans, credit-card debt and other devalued assets may force an increase in the size of the package as the legislation proceeds through Congress."

The terms "increase in size" lacks the hyperbole to describe the size of the tent that will be erected if everyone's interests are included.

The sad part of this mess, is that the money required today to fix this system, which has too many moving and broken parts will still be inadequate.

One of the most obvious and frequently mentioned problems with the new the Paulson-Bernanke reconstruction is that as banks sell mortgage-backed paper below market, they will be forced to write down the assets and take new, and perhaps significant charges. That will cause losses, probably into the tens of billions of dollars. To offset this, the financial firms will have to raise more money, dilute shareholders, and drive down their stock prices further. What was meant to save the system could undermine it, especially if banks cannot find the new investment they need. Sovereign funds have sworn off investing in US banks.

If the mortgages of every man, woman, and child are to be saved along with their credit card debt and car loans, and new bank losses are to be financed as well, the size of the pool of capital required could move closer to $2 trillion.

...more...

[antigop]

80. VOILA! That's it -- currently about 2 trillion in the Social Security trust fund.

I think so...let me try to find it...
http://www.ssa.gov/OACT/STATS/table4a1.html

Last column on the right.
Old-age and survivors trust fund...

Scroll down to year 2007
Assets at end of 2007
2,023,616 numbers in millions

So that's about 2 trillion, right? Sorry, I'm half asleep here..

[eowyn_of_rohan]

83. that is the last straw

almost lost my breakfast over this tidbit

[antigop]

84. Check me on this...I'm half-asleep. n/t

[eowyn_of_rohan]

86. you were right

$2,023,616,000,000

[antigop]

87. maybe it's just a coincidence......n/t

[eowyn_of_rohan]

88. so many uncanny coincidences during the bu$h administration

:eyes:

[Roland99]

119. None will see.

None will see
no one will fear.
Struck down from behind
Look of shock in their eyes.

[TalkingDog]

103. My favorite new illustration of the situation:

[Hugin]

12. Wouldn't that be by definition... Speculation?

Well, there goes the "Supply and Demand" argument. If anyone is paying attention.

[UpInArms]

68. November crude up $3.61 to $106.32 a barrel on Globex

03. November crude up $3.61 to $106.32 a barrel on Globex
7:58 AM ET, Sep 22, 2008

[ozymandius]

5. Goldman, M.Stanley transform into Fed-regulated banks

WASHINGTON/PHILADELPHIA (Reuters) - Goldman Sachs and Morgan Stanley were granted approval on Sunday to become bank holding companies regulated by the U.S. Federal Reserve, effectively killing off the investment banking model that has dominated Wall Street for more than 20 years.

The move enables Goldman (GS.N) and Morgan Stanley (MS.N) to take deposits, gain easier access to financing and gives them more flexibility to buy retail banks. It was initiated by the only two big and independent U.S. investment banks left after the failure of Lehman Brothers (LEHMQ.PK) and the agreed takeover of Merrill Lynch (MER.N) last week.

.....

Under the new set-up, the primary regulator of the parent companies switches to the Federal Reserve from the Securities and Exchange Commission but the SEC continues to regulate their U.S. securities businesses.

In exchange for the increased scrutiny, Goldman and Morgan gain long-term access to the Fed's discount window and access to bank deposits insured by the Federal Deposit Insurance Corp.

http://news.yahoo.com/s/nm/20080922/bs_nm/financial_bailout_fed_dc

[Buttercup McToots]

31. What does this mean, Ozy?

My head is spinning...

[ozymandius]

35. It means they've taken one giant step toward becoming fully regulated

commercial banks. They can take deposits after the infrastructure is acquired. They will have customers with deposit accounts, checking, etc. The most immediate action following this development is to acquire banks that have retail locations.

When some form of Glass-Steagall is enacted, they will be required to split these entities (just crystal ball gazing at this point) into separate enterprises.

[MattSh]

50. If they're to become fully regulated...

doesn't that mean they're not regulated at all ??

:crazy:

[ozymandius]

52. Under the current climate: pretty much

However there are new requirements that will be imposed on them as they transition to commercial banks. Think FDIC.

[bain_sidhe]

151. Wasn't there a recent rule change

that allows "bank holding companies" to "reallocate" retail-customer deposits to prop up their investment arm?

Does this mean that becoming holding companies will let them take customer deposits and "reallocate" them to cover bad debts *already* in their portfolios? Or am I misunderstanding the rule change?

[ozymandius]

38. Analysis from Naked Capitalism

The latest "Let's do something, anything" move to rescue the financial system is yet another example of expediency trumping sound long-term measures. The motivation for making Goldman and Morgan Stanley banks seems obvious: the powers that be seem determined to prevent either firm from going under. Being banks gives the firms access to a expanded menu of rescue facilities and tools. The other reason for the move is to subject the firms to increased oversight, but given the lack of enthusiasm of the Fed for regulating banks going into this crisis, and its lack of expertise in complex debt products, bringing the firms under the Fed's purview at this juncture is more a political talking point than a risk-reduction measure.

http://www.nakedcapitalism.com/2008/09/morgan-stanley-goldman-to-become-banks.html

more...

[ozymandius]

41. Updates to Bailout Bill Fracas

Paulson has tweaked the language of the bailout bill, with the Freudian-slip acronym TARP ("Troubled Asset Relief Program") to make some additions that in theory make it more sweeping but in practice, with no review or oversight, the Treasury can do what it bloody pleases; the rest of the language of the bill, besides the maximum outstanding at any one time, is window-dressing.

The changes (hat tip jck):

Changes assets eligible for purchase from " mortgage-related assets" to "Troubled Assets". This makes clear the willingness to buy instruments such as collateralized debt obligations, which may not contain only mortgages in their underlying assets, and LBO related paper, such as collatealized loan obligations, and any other dreck the Treasury might see fit to acquire.

Changes the eligible sellers from "any financial institution having its headquarters in the United States" to "any Financial Institution" which is defined as:

any institution including, but not limited to, banks, thrifts, credit unions, broker-dealers, and insurance companies, having significant operations in the United States; and, upon the Secretary’s determination in consultation with the Chairman of the Board of Governors of the Federal Reserve, any other institution he determines necessary to promote financial market stability.

This change means that Paulson can assist the currently demonized hedge funds and foreign institutions. Note Nouriel Roubini, whose has one of the best records in calling this credit crisis, predicts in today's Financial Times that the next eruption will be a run on hedge funds.

And on Paulson's defense of assisting foreign firms:

U.S. Treasury Secretary Henry Paulson said Sunday that foreign banks will be able to unload bad financial assets under a $700 billion U.S. proposal aimed at restoring order during a devastating financial crisis.

"Yes, and they should. Because ... if a financial institution has business operations in the United States, hires people in the United States, if they are clogged with illiquid assets, they have the same impact on the American people as any other institution," Paulson said on ABC television's "This Week with George Stephanopolous."

Since a good deal of the most toxic 2006 and 2007 vintage mortgage paper went to European financial institutions, and we have leaned on the ECB to support our liquidity operations, we aren't in a strong position to limit the clean-up to domestic institutions.

http://www.nakedcapitalism.com/2008/09/updates-to-housing-bill-fracas-plus.html

[adamuu]

57. We need to rename this bill now. It ought to be called "American Mortgage Relief Act"

it should have nothing to do with investment banks.

relieve the pressure from the bottom rather than the top.

[orwell]

77. As constructed currently...

...it could be called the US Wealthy Bankers Relief Act or

The American FIRE Bailout Act

[spotbird]

133. Someone else said Patriot Act II

There are many similarities, particularly the rights dissolved in the name of urgency.

[UpInArms]

73. not TARP but TRAP

Total Robbery of Assets Plan

[RUMMYisFROSTED]

92. Trap?

Total Robbery of Assets Plan

Complete Robbery of Assets Plan

[Dr.Phool]

95. RAPE

Robbery of Assets Plan Extraordinaire!

[Hugin]

104. Sadly, that fits so well. We're being charged for our own kits, too.

Is anyone else tired of this song?

[Dr.Phool]

118. Very fucking tired.

I just want to strangle every good republican I come across. Pass the lord and praise the ammunition.

[Tansy_Gold]

141. LOL! Just the medicine I needed today, Dr.

"Pass the lord and praise the ammunition."

I may have to turn that into a button.



TG

[ozymandius]

7. Europe halts world stock rally as U.S. plan eyed

LONDON (Reuters) - European stocks halted a rally in world equities on Monday and the dollar fell as jittery investors awaited detail of Washington's $700 billion bailout to tackle the worst financial crisis since the Great Depression.

Global stocks posted the biggest one-day gain in 20 years on Friday after the U.S. Treasury proposed the largest-ever bank rescue plan and world authorities banned short selling and exercised other measures to restore calm in the markets.

....

The FTSEurofirst 300 index fell 0.7 percent while MSCI main world equity index rose 0.6 percent, after rallying more than 6 percent on Friday -- its biggest percentage gain since 1988.

....

The December Bund future was down 4 ticks, paring early losses in a sign that investors were flowing back to buy safe-haven instruments.

http://news.yahoo.com/s/nm/20080922/bs_nm/markets_global_dc

[radfringe]

9. Reagan revisted and revised

"I'm from the government,
and I'm here to bail you out."

[Hugin]

15. That would be a great 'toon.

An elephant carrying a bucket...

[radfringe]

19. working on it...

just have to find some time

[Hugin]

23. I look forward to seeing it.

:)

[ozymandius]

11. Radical Shift for Goldman and Morgan

Goldman Sachs and Morgan Stanley, the last big independent investment banks on Wall Street, will transform themselves into bank holding companies subject to far greater regulation, the Federal Reserve said Sunday night, a move that fundamentally reshapes an era of high finance that defined the modern Gilded Age.

The firms requested the change themselves, even as Congress and the Bush administration rushed to pass a $700 billion rescue of financial firms. It was a blunt acknowledgment that their model of finance and investing had become too risky and that they needed the cushion of bank deposits that had kept big commercial banks like Bank of America and JPMorgan Chase relatively safe amid the recent turmoil.

It also is a turning point for the high-rolling culture of Wall Street, with its seven-figure bonuses and lavish perks for even midlevel executives. It effectively returns Wall Street to the way it was structured before Congress passed a law during the Great Depression separating investment banking from commercial banking, known as the Glass-Steagall Act.

....

As bank holding companies, Morgan and Goldman will have greater access to the discount window of the Federal Reserve, which banks can use to borrow money from the central bank. While they were allowed to draw on temporary Fed lending facilities in recent months, they could not borrow against the same wide array of collateral that commercial banks could. The discount window access for investment banks is expected to be phased out in January.

http://www.nytimes.com/2008/09/22/business/22bank.html?em

---

A-HA! They know what's coming. It's not just managing short-term capital that bothers GS and Morgan. They need the safety net of this bailout, in whatever form it takes, and re-regulation is a 99% certainty.

[UpInArms]

14. dollar watch

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

Last trade 77.432 Change -0.304 (-0.39%)

Dollar Weakness May Persist on Global Demand For Yield

http://www.dailyfx.com/story/currency/eur_fundamentals/Dollar_Weakness_May_Persist_on_1221865916568.html

After a wild week of trading, the US dollar ended the week lower as prospects of further intervention by the US government in the financial markets provided a boost to carry trades. Indeed, with the fed funds rate sitting at 2.00 percent, the US dollar is essentially a low-yielding currency like the Japanese yen. While there is no plan set in stone quite yet, US Treasury Secretary Henry Paulson said during a speech on Friday that the Treasury would expand their mortgage-backed security (MBS) purchase program announced earlier in the month in an attempt to remove toxic debt from the balance sheets of financial institutions. Furthermore, Mr. Paulson said that Fannie Mae and Freddie Mac would increase their MBS purchases, and that a permanent plan would likely be made over the weekend to address the stresses in the financial markets.

The market’s response? Buy all things associated with risk such as oil, stocks, and the Japanese yen crosses, while selling “safe-haven” assets like US and European government bonds, the US dollar, and gold futures. Looking ahead, it appears that there is still a good amount of bearish potential for the US dollar. According to the latest CFTC Commitment of Traders (COT) report for the week ended September 16, positioning grew increasingly bearish on EUR/USD and as a contrarian indicator, the data signals possible gains for the pair (see full analysis of the COT report on Monday on www.dailyFX.com). On the other hand, the massive sell-off in Treasuries also led fed fund futures to shift to only price in a 28 percent chance of a 25bp cut by the Federal Reserve on October 29, compared to 82 percent on Thursday. Nevertheless, with European Central Bank interest rates a solid 225bps higher than that of the US at 4.25 percent, these differentials have supported EUR/USD strength as the pair continues to trade within a massive range of 1.42 - 1.45.

There will be significant event risk on hand in coming days. First and foremost, traders need to watch for an announcement on Sunday from US Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke since they are expected to release details for a plan to take mortgage-related debts from financial institutions that will cost “hundreds of billions” of dollars. This sort of news could be beneficial for carry trades and negative for low-yielding currencies, and with Mr. Paulson and Mr. Bernanke both scheduled to speak multiple times during the week, volatility should remain high. In economic news, US Existing Home Sales and Durable Goods Orders are both anticipated fall negative while Q2 GDP is not expected to be revised from 3.3 percent.



...more...

BOJ says to start dollar supply operations on Weds

http://www.reuters.com/article/bondsNews/idUST8198020080922

TOKYO, Sept 22 (Reuters) - The Bank of Japan said on Monday it would start supplying dollars to the money market this week as part of a worldwide central bank effort to deal with strong dollar demand.

The BOJ said it would offer $30 billion in one-month funds to the money market on Wednesday, in what would be the first dollar-lending money market operation in the central bank's history.

The BOJ and other major central banks including the U.S. Federal Reserve announced joint measures last Thursday to pump billions of dollars into global money markets in an effort to ease a funding squeeze triggered by the upheaval on Wall Street.

"We participated in the scheme as there is an increased likelihood that the reduced liquidity in the dollar money market will affect the yen money market," BOJ Governor Masaaki Shirakawa had told a news conference on Thursday.

<snip>

He added that the outstanding supply of dollar funds to be provided by the BOJ would likely rise to as much as $50 billion by the end of the year.

The BOJ will offer dollars until the end of January, using proceeds from a $60 billion swap agreement with the New York Fed.

...more...

(nifty little check kiting procedure they set up, huh? and they get to keep $10 billion in the process!)

[ozymandius]

22. Damn! I'm impressed.

What magic can be worked when central banks work in concert to prop up fiat currency. With the same actions, they could actually inflate value into Monopoly money.

[NeoConsSuck]

16. Dollar May Get `Crushed' as Traders Weigh Up Bailout

Sept. 22 (Bloomberg) -- Treasury Secretary Henry Paulson's plan to end the rout in U.S. financial markets may derail the dollar's three-month rally as investors weigh the costs of the rescue.

The combination of spending $700 billion on soured mortgage-related assets and providing $400 billion to guarantee money-market mutual funds will boost U.S. borrowing as much as $1 trillion, according to Barclays Capital interest-rate strategist Michael Pond in New York. While the rescue may restore investor confidence to battered financial markets, traders will again focus on the twin budget and current-account deficits and negative real U.S. interest rates.

``As we get to the other side of this, the dollar will get crushed,'' said John Taylor, chairman of New York-based International Foreign Exchange Concepts Inc., the world's biggest currency hedge-fund firm, which manages about $15 billion.

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

[ozymandius]

18. That rings and odd tone doesn't it?

The rescue plan would boost stock averages. Bonuses would flow freely again. But the dollar's humiliating destruction would offer no real tangible value.

[NeoConsSuck]

26. At least for short term

I'm putting my money into commodities.

[UpInArms]

17. How Financial Madness Overtook Wall Street

http://www.time.com/time/printout/0,8816,1842123,00.html

If you're having a little trouble coping with what seems to be the complete unraveling of the world's financial system, you needn't feel bad about yourself. It's horribly confusing, not to say terrifying; even people like us, with a combined 65 years of writing about business, have never seen anything like what's going on. Some of the smartest, savviest people we know — like the folks running the U.S. Treasury and the Federal Reserve Board — find themselves reacting to problems rather than getting ahead of them. It's terra incognita, a place no one expected to visit.

Every day brings another financial horror show, as if Stephen King were channeling Alan Greenspan to produce scary stories full of negative numbers. One weekend, the Federal Government swallows two gigantic mortgage companies and dumps more than $5 trillion — yes, with a t — of the firms' debt onto taxpayers, nearly doubling the amount Uncle Sam owes to his lenders. While we're trying to get our heads around what amounts to the biggest debt transfer since money was created, Lehman Brothers goes broke, and Merrill Lynch feels compelled to shack up with Bank of America to avoid a similar fate. Then, having sworn off bailouts by letting Lehman fail and wiping out its shareholders, the Treasury and the Fed reverse course for an $85 billion rescue of creditors and policyholders of American International Group (AIG), a $1 trillion insurance company. Other once impregnable institutions may disappear or be gobbled up.

The scariest thing to average folk: one of the nation's biggest money-market mutual funds, the Reserve Primary, announced that it's going to give investors less than 100 cent on each dollar invested because it got stuck with Lehman securities it now considers worthless. If you can't trust your money fund, what can you trust? To use a technical term to describe this turmoil: yechhh!

There are two ways to look at this. There's Wall Street's way, which features theories and numbers and equations and gobbledygook and, ultimately, rationalization (as in, "How were we supposed to know that people who lied about their income and assets would walk away from mortgages on houses in which they had no equity? That wasn't in our computer model. It's not our fault"). Then there's the right way, which involves asking the questions that really matter: How did we get here? How do we get out of it? And what does all this mean for the average joe? So take a deep breath and bear with us as we try to explain how financial madness overtook not only Wall Street but also Main Street. And why, in the end, almost all of us, collectively, are going to pay for the consequences.

<snip>

You've heard, of course, that subprime mortgages — subprime is Wall Street's euphemism for junk — are where the problems started. That's true, but the problems have now spread way beyond them. Those predicting that the housing hiccup wouldn't be a big deal — what's a few hundred billion in crummy mortgage loans compared with a $13 trillion U.S. economy or a $54 trillion world economy? — failed to grasp that possibility. It turned out that Wall Street's greed — and by Wall Street, we mean the world of money and investments, not a geographic area in downtown Manhattan — was supplemented by ignorance. Folks in the world of finance created, bought, sold and traded securities that were too complex for them to fully understand. (Try analyzing a CDO-squared sometime. Good luck.)

...more...

[UpInArms]

21. Lookie here! They think there's a rate cut in there somewhere!

http://www.bloomberg.com/apps/news?pid=20601109&sid=aQ055w2uqXT4&refer=home

Sept. 22 (Bloomberg) -- The U.S. economy might be moving from the acute stage of the credit contagion to a chronic one.

Even with hundreds of billions of dollars from Washington to keep them solvent, banks facing the prospect of more loan losses may still curb new lending. Debt-laden consumers look set to rein in spending further as job cuts take their toll. And profit-pinched companies are turning cautious on investing and hiring as the rest of the world slows.

The plan the Bush administration and Congress are racing to enact is designed to alleviate the crisis in the markets rather than stimulate a sluggish economy. ``The fact that we have stepped back from the edge of the cliff doesn't mean everything is wonderful,'' says Michael Atkin, head of sovereign research at Putnam Investments in Boston. ``We shouldn't forget that the economy is not in great shape.''

That puts pressure on Federal Reserve Chairman Ben S. Bernanke and his colleagues to follow up their extraordinary interventions in the markets with more traditional medicine in the form of lower interest rates.

``The Fed still has more rate cuts to do,'' says John Makin, a principal at Caxton Associates LLC hedge fund in New York and a fellow at the American Enterprise Institute in Washington.

...more...

[Tandalayo_Scheisskopf]

39. Just the sort of drivel...

One would expect out of a fellow at AEI. As predictable as the weather.

[UpInArms]

27. Have you heard about the limosine welfare kings?

why in the world would we just hand over money like a slot machine gone berserk to these thieves?

and then Paulson says

Mr. Paulson is resisting efforts to limit the pay of executives whose firms participate in the program and plans to fight it "hard," according to a person familiar with the matter. He fears that provision would render the program moot, since many firms might choose not to participate.

lining up for free money - so long as there are no strings attached.

corporate welfare scum of the worst kind

limosine welfare kings

[ozymandius]

30. The Dennis Kozlowski sympathy package. n/t

[adamuu]

58. LOL .... funny if it weren't true

meanwhile we all set up tents and Dubyatowns across the country

[54anickel]

64. Yep, but please try to remember that the sky is falling! And WTF is this BS of choice in the matter

".....firms may choose not to participate". Who the fuck's in charge here? Is the Friday deadline being dictated by the banking kleptos on high? Let the entire system fail and collapse. We need a do over from this Jekyll Island nightmare.


I about posted Paulson's protecting the fatcats here:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=4049655&mesg_id=4049655

[Tansy_Gold]

71. Resistance to failure -- State of denial???

I dunno, SMWers, I think I'm losing my marbles.

I've seen posts here on DU in which the bail-out is defended because otherwise the system will collapse and all "the little people" will suffer.

Well, aren't we going to suffer anyway? Isn't this burden of new debt going to cripple the economy even as it survives? And since nothing is being done to make the shruggers help pay for it -- they get to keep their 8-figure bonuses, etc. -- where is there ANY relief for us? Wouldn't it be better to let it collapse now and start from scratch?

Who's doing the whining? I don't know. Do we have some folks here who are young and ill-informed and are still drinking some of the turn-of-the-millennium kool-aid? Or am I just misunderstanding something?

Is it possible to fix the system? Not change it or alter it or tear it down and rebuild it. Is it possible to leave the system intact but bail it out to the point that it can resume normal operations? I don't think so. I'm not an expert, but I don't think we can continue to operate in this manner. It HAS to be torn down. And yes, it's going to be painful. And yes it's going to be very painful for a lot of good-minded rational folks who don't deserve the pain.

Maybe it's that whole western enlightenment value-of-the-individual-over-the-tribe mentality that has us afraid to be the sacrifice that allows the clan/tribe/nation to survive. I find myself falling into it. I don't want to give up what little I have -- and even so I realize it's more than others have.

There were posts yesterday on the thread I started over in Editorials, posts that defended derivatives and even speculation, and I wondered -- because I lack confidence in my own thought processes -- if I had missed something. And I don't think so. I think there are still people who not only believe not only in "free market capitalism" but believe that it's what we're operating under.

I'm not sure there's anything in the history of civilization to qute compare to what we're witnessing now. This is retrogression, a dark ages imposed not by invaders from without but by destroyers from within.

The struggle to be optimistic just got harder. The struggle to survive may soon, too.



Tansy Gold

[kineneb]

145. dunno about you, Tansy

but I am sharpening my pitchfork and looking for torch materials...and hanging onto my canned goods. Humm, have rags, don't want to use precious oil products...that can of bacon fat will be useful after all....

[Tansy_Gold]

153. I *KNEW* there was a reason I was hanging onto that bacon fat!

;-)

I've got a pitchfork and several large shovels. I have rags. Not too many canned goods but the aforementioned pasta, and a friend just "donated" a box of rice.

I can't remember if it was Kevin Phillips or Paul Krugman who pointed out that the U.S. survived the 1930s Depression and came out stronger on the other side (in part because of WW2, which I don't think we need a repeat of), so maybe there is some hope after all. I dunno. I just dunno.



Tansy Gold, wondering if she can press enough oil out of her jojoba beans to light torches. . . . . .

[tama]

165. Well said

"Maybe it's that whole western enlightenment value-of-the-individual-over-the-tribe mentality that has us afraid to be the sacrifice that allows the clan/tribe/nation to survive. I find myself falling into it. I don't want to give up what little I have -- and even so I realize it's more than others have."

Words of wisdom. I would just like to add that in global capitalism the natural tribal sense of community is what the system works against, divide and conquer. For those of us still trapped in the system (on many levels, not just the material but more importantly mentally and spiritually) what is of prime importance is founding and finding new tribes, new communities, that are not dependent but independent - self sufficient and living in harmony with Mother Earth. It's a long and difficult process, especially in the beginning... but this is not only the end, this is also a new beginning...

[Tansy_Gold]

170. So true, so true.

Is that why the late 60s, early 70s counterculture was seen as such a threat?

It's hard work, it really is, to get over that feeling of ownership of "things." We live with it from the moment we're born. We get it from our parents, our schools, advertising, everything. And it's antithetical to healthy living.

Even to the point of being afraid of those we could so easily live with.

It's not dependence and it's not independence, but interdependence. I think.


TG

[tama]

174. Interdependence! n/t

[Demeter]

178. It Depends: For Whom You Are Being Asked to Give It Up?

There are some people I wouldn't piss on if they were on fire.

Ex-spouses beware! The enemies you make could have saved your life, if you'd given them a reason to care.

[Tansy_Gold]

182. "There are some people. . . . . . "

:rofl:

Oh, how true!

But I suspect the reason even those people are the way they are is due at least in part to the ownership culture. Spouses are treated as both cultural and legal "possessions" much to the detriment of the society as a whole in many ways.

However, I think we're also foolish and naive to think that a non-ownership culture would be perfect. Mead and Malinowski and Geertz and a lot of others kind of put that notion to rest a long time ago, didn't they?


Tansy Gold, who herself is perfect, of course.

[Demeter]

183. You Certainly Are, Tansy Gold

It takes one to know one!

[tama]

184. As the saying goes

"Perfect is the worst enemy of good."

And isn't that the truth. My life is (mostly) good and it won't be perfected until I die. :)

[ozymandius]

28. Danish Central Bank Rescues Ebh Bank With Liquidity (Update3)

Sept. 22 (Bloomberg) -- Ebh Bank A/S became the second Danish lender to be bailed out by the central bank since credit markets seized up last year after it booked larger-than-forecast losses on property loans.

http://www.bloomberg.com/apps/news?pid=20601085&sid=aqAJDX_XXfDg&refer=europe

Same old song...

[UpInArms]

32. prolly with our money: Paulson: Foreign banks can use U.S. rescue plan

http://www.reuters.com/article/innovationNews/idUSN2148303920080921?sp=true

WASHINGTON (Reuters) - Treasury Secretary Henry Paulson said Sunday that foreign banks will be able to unload bad financial assets under a $700 billion U.S. proposal aimed at restoring order during a devastating financial crisis.

"Yes, and they should. Because ... if a financial institution has business operations in the United States, hires people in the United States, if they are clogged with illiquid assets, they have the same impact on the American people as any other institution," Paulson said on ABC television's "This Week with George Stephanopolous."

Paulson was appearing on the Sunday television talk show circuit to provide details about the U.S. government plan for a sweeping bailout to mop up hundreds of billions of dollars in toxic mortgage debt.

The moves capped a week in which financial markets faced their most serious confluence of crises since the Great Depression in the 1930s and threatened national economies and the worldwide banking system.

Paulson defended the rescue package as painful and costly, but necessary to stabilize a financial system that has all but ground to a halt.

"The situation we had, where the markets are frozen and lending may not be available, is one that won't be good for the American people," he said.

...more...

be afraid, be very afraid

[UpInArms]

29. Housing crisis has spread to well-to-do

http://www.indystar.com/apps/pbcs.dll/article?AID=/20080922/BUSINESS/809220323

In 2003, Robert Provost snapped up a $2.5 million villa in Sarasota, Fla. A finance chief for an auto-sales chain, he earned more than $250,000 a year and had an impeccable credit history.

Then he lost his job. Provost missed one $10,500 mortgage payment, then another. This month, he put his house, a five-bedroom with sweeping views of the Intracoastal Waterway, on the market for $3.4 million. But the listing thus far has attracted little interest. Provost says he expects to receive a notice of default from the bank -- the first step to foreclosure -- in the next month or two.

"A foreclosure would be devastating," he says. "My wife and I would have to start from scratch."

The housing crisis that swept through working-class and middle-class communities across the country now is creeping into the gated communities of the most exclusive towns.

One symptom of these times: a surge in the number of million-dollar foreclosures. According to RealtyTrac, the number of homes valued at more than $1 million that are in some stage of foreclosure swelled to 7,968 from January to August. That compares with 4,214 during the same period last year.

The number of $2 million-plus homes in foreclosure has grown even faster, surging to 499 year-to-date compared with 201 for the same period last year. Home values are based on comparable recent sales in the neighborhoods.

...more...

so why is this dipshit attempting to make a million dollars off the sale of the house?

[Tandalayo_Scheisskopf]

40. I am an evil person.

I cannot seem to gin up any sympathy for this guy. I think a few years in a Section 8 Project would be constructive for his soul.

[AnneD]

111. President Bush is taking AF-1 out

touring Wall Street, viewing the devastation, looking sad. FEMA announced that they will be giving exec's emergency penthouse vouchers. Dry your tears.

[adamuu]

63. The banks are unwilling to re-negotiate. They're insured, after all

either by AIG or the government

[Demeter]

74. Why Did He Buy a House at a Cost of 10 Years Income?

I thought 2.5 years was the reasonable debt load....

[orwell]

81. Because he's a "smart guy"...

...who "knows" real estate can only go up.

It's known as greater fool theory...

[Dr.Phool]

89. Probably took out a HELOC, and blew it on a yacht.

[Roland99]

121. "My wife and I would have to start from scratch." With $1 million in gains?!?!?!

Jesus H. F'in Christ!!

I wish I could have "started from scratch" with a measly $1 million.



Crash and burn, asshole!! Crash and burn!! :mad:

[Tansy_Gold]

143. No, "scratch" only kicks in if they lose it to foreclosure.

Of course, they might SAVE it from foreclosure if they sold it for, um, what it's worth instead of what they think someone ought to give them for it --- with all due emphasis on "give."

I know too many people just like them, and it's making me sick to my stomach.


Tansy Gold,

[bentley]

158. he earned more than $250,000 a year.

"In 2003, Robert Provost snapped up a $2.5 million villa in Sarasota, Fla."

Rule of thumb - A house should cost no more then 3 yrs earnings. He should have lived within his means and paid no more than $750,000 - 1,000,000. Definitely a dip shit.

[ozymandius]

33. The Insanity of Adjustable Rate Mortgages Endures

Freddie Mac’s (FRE) “Weekly Primary Mortgage Market Survey” and press release “30-YEAR FIXED RATE MORTGAGE RATES FALL FOR FIFTH STRAIGHT WEEK” show average mortgage rates and points:

30 Year Fixed: 5.78%, 0.6 points and fees

15 Year Fixed: 5.35%, 0.6 points and fees

5/1 Year ARM: 5.67%, 0.6 points and fees

1 Year ARM: 5.03%, 0.5 points and fees

.....

Life circumstances and income changes can affect ability to pay with either fixed or variable rate mortgages. But, higher rates coupled with a job loss produce a tsunami that might not occur with a temporary job loss alone. The current Fed has set interest rates about as low as when Greenspan was promoting ARMs. There is no reason to believe that today’s ARMs will behave any differently than the past.

http://seekingalpha.com/article/96618-the-insanity-of-adjustable-rate-mortgages-endures

[UpInArms]

34. Blaming the Raters Part Deux: Swift AIG cuts hint at more downgrades ahead

http://www.reuters.com/article/ousiv/idUSN2151029420080922?sp=true

NEW YORK (Reuters) - Credit rating agencies, criticized for moving too slowly in cutting ratings on Wall Street firms and the complex instruments they devised, are now accused of acting too quickly.

As the credit crisis enters a new phase, the pendulum has swung too far back, critics argue. The agencies are still missing the mark, only now they are too aggressive, adding to market volatility, or changing their views within days or weeks.

Case in point: AIG.

On Friday, September 12, Standard & Poor's warned that if insurance giant American International Group Inc (AIG.N: Quote, Profile, Research, Stock Buzz) didn't demonstrate adequate access to capital in the short term, the rating company could cut its ratings by as much as three notches.

Late on the following Monday, S&P, Moody's Investors Service and Fitch Rating had struck a triple blow to AIG's investment-grade rating and warned more downgrades could follow.

Within 24 hours, the U.S. government had rescued AIG with an $85 billion loan, and the rating companies scrambled once again to revise their outlooks.

"AIG was a signal they are being more aggressive in today's environment," said Joseph Mason, a finance professor at Louisiana State University. "They've had their backs against the wall, and they are being forced to cut."

...more...

[ozymandius]

36. Let's pause for a bit of fun. New link provided.

From the series, "Why Dogs Bite People"

Go here and look for the antidote du jour.

[UpInArms]

45. pugs - being a notorious breed for looking unhappy -

has been surpassed by the actual misery etched on those two dogs' faces

:hi:

[muleboy303]

97. two new products ?

who was it that said @ six years ago "you don't introduce new products in August" ???

i recalled that quote this morning and wondered if indeed two new products have been
"introduced" in the past three weeks. Palin and Bailin'

p.s. tyvm ozy for your efforts here, 'tis most appreciated.

[TalkingDog]

105. "The Republican's New Fall Lines: Palin and balin'." I like it. n/t

[MilesColtrane]

116. "Moosecake and Wallet Take"?

"The MILFering and The Pilfering"?

"The Fizzle and the Chisel"

[Roland99]

122. AH HA HA HA HA HA HA HA!!!

[muleboy303]

168. tank you tank you

gotta joke ready for next year, hopefully 'twill be one of smug reminiscing and not bitter sarcasm

"what's the difference between the US Dollar and toilet paper?"

'well, it ain't lipstick' !!! (tadum, tish)


.... they can't all be gems :)

[Dr.Phool]

120. Palin and Bailin'

Sounds like a battle cry.

[Tandalayo_Scheisskopf]

42. Personally...

I think the Asian Traders are trying to put an extra hit on our economy.

PRICE* CHANGE % CHANGE TIME
Nymex Crude Future 106.00 1.45 1.39 06:08
Dated Brent Spot 102.46 4.57 4.67 06:38
WTI Cushing Spot 104.55 6.67 6.81 09/19


PETROLEUM (¢/gal)
PRICE* CHANGE % CHANGE TIME
Nymex Heating Oil Future 293.96 4.18 1.44 06:07
Nymex RBOB Gasoline Future 262.30 2.33 .90 05:59


NATURAL GAS ($/MMBtu)
PRICE* CHANGE % CHANGE TIME
Nymex Henry Hub Future 7.50 -.03 -.35 05:42
Henry Hub Spot 7.82 -.29 -3.58 09/19
New York City Gate Spot 8.00 -.44 -5.21 09/19


ELECTRICITY ($/megawatt hour)
PRICE* CHANGE % CHANGE TIME
Mid-Columbia, firm on-peak, spot 56.65 -1.95 -3.33 09/19
Palo Verde, firm on-peak, spot 54.05 -1.50 -2.70 09/19
Bloomberg, firm on-peak, day ahead spot/West Coast 61.53 -1.92 -3.03 09/19


The next order of business HAS to be addressing the commodities markets. Enough with this goddamned timidity.

[UpInArms]

43. well, they can afford to pay more for oil now

'cuz they got that extra $10 billion from the fed!

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3503637&mesg_id=3503663

[ozymandius]

44. Paul Krugman continues his analysis of Paulson's robbery plans.

Cash for Trash

How does this resolve the crisis?

Well, it might — might — break the vicious circle of deleveraging ... Even that isn’t clear ... And even if the vicious circle is limited, the financial system will still be crippled by inadequate capital.

Or rather, it will be crippled by inadequate capital unless the federal government hugely overpays for the assets it buys, giving financial firms — and their stockholders and executives — a giant windfall at taxpayer expense. Did I mention that I’m not happy with this plan?

Calculated Risk adds this part:

The current plan is vague, opaque, has almost no oversight, puts the taxpayers at extreme risk and encourages future moral hazard.

A better plan would be transparent (all deals would be publicized), involve a share in ownership for the taxpayers, and have substantial oversight. We can do better.

[TalkingDog]

110. Those have been my questions. What will it fix, EXACTLY?

It might "fix" the de-leveraging.

But how is it going to get the little people, you know, the "worker bees" out of their quicksand pit of debt? How will we generate marketable goods that will increase the flow of money through our financial system?

Let's say we *magically* become able to do that. How will the good little consumers pay for all these goods?

I doubt a magical savings account is going to suddenly appear in each of our banks. Most of us will still have crappy low-wage jobs that won't allow anything but subsistence living.

We still won't make anything, we still won't have money.

This only saves the 1%-ers.

The rest of us can go DIAF.

I may not be an economic expert, but I do know the difference between shit and Shinola.



And trust me, this smells worse than Shinola ever could.

[ozymandius]

49. Open Letter To Congress On The $700 Billion Paulson Bailout Plan

Dear Congress:

Treasury Secretary Paulson is asking you to rush through a $700 billion package because "we’re literally maybe days away from a complete meltdown of our financial system".

Paulson states that it must be done quickly and that it is better than the alternatives. Fed Chairman Bernanke agrees.

The first question Congress should ask is how would Paulson or Bernanke know?

It was only a month ago Paulson was reiterating to anyone who would listen how sound our banking system is. The fact of the matter is that neither Paulson nor Bernanke saw this coming, yet now Congress is supposed to trust they now "know" the solution.

Problem Defined

Before one can work out a solution, the first step is to identify the problem. The problem is not a lack of liquidity, it is not a lack of trust, it is not lack of consumer confidence, it is not subprime lending, and in fact the problem is not housing at all.

The problem is consumers and corporations are deep in debt with no way to service that debt.

Attempts to bail out banks and brokers at taxpayer expense will do nothing but add to consumer debt, weaken the US dollar, and literally waste $700+ billion dollars that can and should go to more productive uses.

What Caused The Problem?

* The Fed
* Congress
* Fractional Reserve Lending
* The Treasury

The root cause of this problem is the Fed micromanaging interest rates, the Treasury cheerleading every step of the way, and Congressional sponsored spending that went wild. The critical issue that ties everything together is fractional reserve lending allows banks to borrow money (credit really) into existence with insane amounts of leverage.

To top it all off, Greenspan slashed rates to 1% fueling the biggest global housing bubble the world has ever seen. Congress needs to figure out a way to eliminate the Fed.

http://globaleconomicanalysis.blogspot.com/

---

To be fair: Mish has a strong Libertarian bias. I still like to read him because he is quite insightful into dissecting issues to the bone.

[RUMMYisFROSTED]

94. Eliminate the Fed?

:think:

[antigop]

96. "Let's solve the problem, but let's not make it any worse by guessing."

This quote popped into my head.

Quote by Gene Kranz, flight director for Apollo 13.

[ozymandius]

51. Alas, I must leave.

:donut: :donut: :donut:

I'll return when the day is done. I hope you find some amusement from the jarring confusion that is our financial world.

:hi:

[UpInArms]

56. have a great day, Ozy!

I'm sure there will be lots to read later in the day.

:hi:

[UpInArms]

53. To cover the cost, Treasury asked Congress to raise the government's debt limit to $11.3 trillion

http://www.reuters.com/article/bondsNews/idUSSP433120080922?sp=true

excerpt:

"We need to see more details from the rescue package. What is missing is the price the U.S. authorities are going to pay for the toxic assets," said Heino Ruland, analyst at FrankfurtFinanz.

<snip>

"It creates a perception of greater safety and supervision," said Chip MacDonald, mergers partner at law firm Jones Day.

<snip>

Two key questions remained unanswered even after Treasury Secretary Henry Paulson appeared on four television talk shows to press his case for emergency action: what price will the United States pay for these bad debts? And when will it start buying them?

<snip>

To cover the cost, Treasury asked Congress to raise the government's debt limit to $11.3 trillion from $10.6 trillion.

A $700 billion fund would come on top of other steps already taken by the U.S. authorities and would push the total pledged to combat the crisis to $1.8 trillion, or $15,000 per U.S. household.

...more...

[Eugene]

54. Nomura grabs Lehman's Asia business

Source: Reuters

Nomura grabs Lehman's Asia business
Mon Sep 22, 2008 5:29am EDT

By Emi Emoto and Michael Flaherty

TOKYO/HONG KONG (Reuters) - Japan's Nomura
Holdings has reached a deal to buy the Asian
operations of Lehman Brothers, a source said
on Monday, outbidding other banks seeking to
scoop up Lehman's Asia group on the cheap.

The source, who had direct knowledge of the
deal, did not say how much it was worth, nor
did he say if certain Lehman units were
excluded from the agreement.

-snip-

Read more: http://www.reuters.com/article/topNews/idUSSP36966420080922

[UpInArms]

60. Smoking Gun on Paulson Plan: Corporate America is remarkably cash-rich with some $620 billion

http://www.reuters.com/article/ousiv/idUSN2142369720080921?sp=true

excerpt:

The good news is, outside of the financial sector, Corporate America is remarkably cash-rich with some $620 billion sitting on the books of large firms, so companies should be primed to spend once confidence is restored.

But household wealth has taken an unprecedented double hit from the real estate and stock market shocks, and it could be years before consumers feel flush again -- particularly if credit conditions remain tight.

Treasury Secretary Henry Paulson argued on Sunday that opening up federal coffers to Wall Street would benefit Main Street by preventing a deeper economic downturn.

"Last week as the credit markets were frozen, the capital markets were frozen, we had a situation where American companies weren't able to borrow money," Paulson said on ABC's "This Week". "This could ultimately affect small banks, loans to businesses, loans to farmers, jobs, people's retirement."

U.S. companies have cut more than 550,000 jobs this year, sending the unemployment rate up to a five-year high of 6.1 percent in August. Those figures are likely to worsen in the coming months, with or without a bailout.

...more...

giving money to investment banks will not fix this problem - they are the problem

[Robbien]

79. Why is Paulson so desperate to spend $700 billion of our money?

Blogging Stocks asks the question but doesn't have an answer but suggests it is because banks were inundated with redemption orders. The interesting part of the blog entry was the part revealing how much cash banks are sitting on:

According to the Post, if the Fed had not injected $105 billion into the money markets on Thursday, the Dow would have dropped 22% to 8,300. That's because, "money market funds were inundated with $500 billion in sell orders prior to the opening," according to the Post.

What caused these huge sell orders was reportedly a "$52 billion constriction in commercial paper <(CP) the $1.7 trillion short-term debt market that companies use to finance their daily operations>" coupled with rumors of more money market funds "breaking the buck" according to the Post. It claims that the Fed's $105 billion liquidity injection prior to the market open on Thursday kept investors from pulling the trigger on those $500 billion in sell orders. Those sell orders would have strangled CP -- without which many businesses -- such as credit cards and auto finance -- lack the money to operate.

As a result of this near CP market collapse, money market funds -- which buy CP -- experienced redemptions at 20 times the normal rate on Wednesday. In particular money market fund shareholders withdrew $144.5 billion by midweek -- 20 times the $7.1 billion worth of redemptions the week before, according to the Post. Moreover, banks were starting to hoard their capital -- they usually keep $2 billion on hand but by Wednesday that amount had risen 45-fold to $90 billion.

http://www.bloggingstocks.com/2008/09/21/why-is-paulson-so-desperate-to-spend-700-billion-of-our-money/

So not only is corporate America cash rich, banks are sitting on piles of cash. Everyone has cash except for the lowly consumer.

[Wilber_Stool]

61. Here's a dumb question.

Considering foreign investment has been driving this country for so many years, will this bail out be dependent on the same investments? Is that the reason we have to convince them that this plan will work?

[UpInArms]

62. hmmm.....

Three-card Monte, also known as the Three-card marney, Three-card trick, Three-card shuffle, Triplets, Follow the lady, Find the lady, or Follow the Bee is a confidence game in which the victim, or mark, is tricked into betting a sum of money that they can find the money card, for example the queen of spades, among three face-down playing cards. In its full form, the three-card Monte is an example of a classic short con in which the outside man pretends to conspire with the mark to cheat the inside man, while in fact conspiring with the inside man to cheat the mark.

It should be noted that even if the game is played without the usual sleight of hand, it is unfair to the players, as the payout is invariably even money, whereas the true odds are 2/1.

This confidence trick has a great deal in common with the shell game.

[DemReadingDU]

65. Mike Whitney: Mushroom Cloud over Wall Street

9/21/08 "All Hail Caesar!" The days of the republic are over. by Mike Whitney

some snippets...

These are dark times. While you were sleeping the cockroaches were busy about their work, rummaging through the US Constitution, and putting the finishing touches on a scheme to assert absolute power over the nation's financial markets and the country's economic future. Industry representative Henry Paulson has submitted legislation to congress that will finally end the pretense that Bush controls anything more than reading the lines from a 4' by 6' teleprompter situated just inches from his lifeless pupils. Paulson is in charge now, and the coronation is set for sometime early next week. He rose to power in a stealthily-executed Bankster's Coup in which he, and his coterie of dodgy friends, declared martial law on the US economy while elevating himself to supreme leader.

"All Hail Caesar!" The days of the republic are over.

Section 8 of the proposed legislation says it all:

"Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."

Right; "non-reviewable" supremacy.


Paulson's Chicken Little routine might might have soiled a few senatorial undergarments, but let's hope the American people are made of sterner stuff and will reject this charade. The conversation should be shifted from conceding more authority to hucksters in pin-stripes to indictments for securities fraud. Even the most economically-challenged nation ought to be able to afford a few sets of leg-irons and a couple hundred jail cells. That's all it will take. That, and a couple brisk dunks on the waterboard. Glub, glub.


Don't let the prospect of a national crisis trick you into giving up your freedom, America. The people behind this scam are the same landsharks and flim-flam men who polluted the global marketplace with their snake oil and toxic sludge. These are the fraudsters who manufactured the crisis to begin with. This is just the latest installment of the Shock Doctrine; engineer a crisis, and then, steal whatever is left behind. Same sh**, different day. Be resolute. Don't budge. Our economic foundations may be crumbling, but or determination is not. This is our country, not Goldman Sach's. The people who destroyed America must be held to account. Their time is coming. Justice first.

full article...
http://www.informationclearinghouse.info/article20839.htm

[UpInArms]

66. That, and a couple brisk dunks on the waterboard. Glub, glub.

best line

a few sets of leg-irons and a couple hundred jail cells. That's all it will take. That, and a couple brisk dunks on the waterboard. Glub, glub.

[MattSh]

113. Nah, this one is better...

Congress, of course, is more than eager to abdicate whatever little authority they have left. They're infinitely grateful for their purely ceremonial role, the equivalent of Caligula's horse, albeit, with considerably less dignity.

[UpInArms]

67. Fury at $2.5bn bonus for Lehman's New York staff

hattip to LiberalHeart and this DU thread

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x4055595

http://www.independent.co.uk/news/business/news/fury-at-25bn-bonus-for-lehmans-new-york-staff-937560.html

Up to 10,000 staff at the New York office of the bankrupt investment bank Lehman Brothers will share a bonus pool set aside for them that is worth $2.5bn (£1.4bn), Barclays Bank, which is buying the business, confirmed last night.

The revelation sparked fury among the workers' former colleagues, Lehman's 5,000 staff based in London, who currently have no idea how long they will go on receiving even their basic salaries, let alone any bonus payments. It also prompted a renewed backlash over the compensation culture in global finance, with critics claiming that many bankers receive pay and rewards that bore no relation to the job they had done.

A spokesman for Barclays said the $2.5bn bonus pool in New York had been set aside before Lehman Brothers filed for chapter 11 bankruptcy in the United States a week ago. Barclays has agreed that the fund should continue to be ring-fenced now it has taken control of Lehman's US business, a deal agreed by American bankruptcy courts over the weekend.

Barclays is paying $1.75bn for the US operation of Lehman and is keen to retain its best staff. It said it had made no promises to individual staff members about how much they will receive but that the bonus fund would be paid out. In addition to the $2.5bn cash pool, Barclays is also in negotiations with about 30 executives it considers to be Lehman's best assets and plans to offer them contracts worth tens of millions of dollars. British employees of Lehman described the bonus payments as a "scandal" as they waited anxiously yesterday to see whether a deal could be struck with buyers circling the bank's European operations.

Many of Lehman's UK staff are particularly angry about the US payouts because it has emerged that in the days running up to the bankruptcy, some $8bn in cash was transferred out of the account of the bank's European business into accounts at the New York head office.

...more...

[radfringe]

70. FYI: check out mccain's top contributors, and sectors

www.opensecrets.org


John McCain - top contributors:
http://www.opensecrets.org/pres08/contrib.php?cycle=2008&cid=N00006424

Merrill Lynch $298,413
Citigroup Inc $269,251
Morgan Stanley $233,272
Goldman Sachs $208,395
JPMorgan Chase & Co $179,975
AT&T Inc $174,487
Blank Rome LLP $150,426
Credit Suisse Group $150,025
Greenberg Traurig LLP $146,787
UBS AG $140,165
PricewaterhouseCoopers $140,120
US Government $137,617
Bank of America $129,475
Wachovia Corp $122,846
Lehman Brothers $117,500
FedEx Corp $113,453
Gibson, Dunn & Crutcher $104,250
US Army $103,613
Bear Stearns $99,300
Pinnacle West Capital $97,700

Sector totals:
http://www.opensecrets.org/pres08/indus.php?cycle=2008&cid=N00006424

Agribusiness $2,278,554
Communications/Electronics $3,476,025
Construction $3,717,548
Defense $445,051
Energy & Natural Resources $2,831,322
Finance, Insurance & Real Estate $22,108,926
Health $5,108,352
Lawyers & Lobbyists $8,801,162
Transportation $1,980,539
Misc Business $10,572,141
Labor $10,250
Ideological/Single-Issue $1,957,955
Other $26,928,560

[Demeter]

125. At This Rate, McCain Will Be Without Backers Before the Election

rubs hands while grinning evilly.

[Festivito]

72. Debt: 09/18/2008 9,664,631,803,259.07 =

Held by the Public + Intragovernmental(FICA)
5,492,459,419,394.83 + 4,172,172,383,864.24
(Public, I think now includes China and Brazil.)

Source: Debt to the penny:
http://www.treasurydirect.gov/NP/BPDLogin?application=np

I love having quick access to the gold, oil, and dollar-to-foreign currency prices each day. I just think this debt number needs to be in this thread. I hope nobody minds.

HISTORICAL:
01/19/1993 4,187,806,610,369.16
01/20/1993 4,188,092,107,183.60 BC Inaugural
01/21/1993 4,174,218,594,232.91
01/22/1993 4,175,229,095,992.95

01/19/2001 5,727,776,738,304.64
01/22/2001 5,728,195,796,181.57 GB Inaugural

Debt to the penny keeps changing. Now stuff is missing. Best to keep our own history.

[RUMMYisFROSTED]

76. Down 2.39!

[antigop]

78. Where do they come up with $700 billion? (updated)

I asked this question on the weekend thread, re-posting here to see if anyone has any info.

How did they arrive at a $700 billion figure? How did they compute this? If they just pulled a number out of their ass, why wasn't it $800 billion, or $826 billion, or $1.5 trillion, or (insert whatever number you want)?

Anybody?

<edit> Oops, sorry, I missed up-thread. $100 billion per year for 7 years?

see up-thread, starting at post #10

[DemReadingDU]

82. Hm, I missed that too. $100 billion per year?

But hey, they are going to use our taxes to buy/sell these toxic investments in a giant money laundering scheme, over and over again that essentially keeps them off the books. That's how this scheme wil end up sucking out trillions of our tax dollars.

Denninger explained it
http://market-ticker.denninger.net/archives/587-The-Mother-Of-All-Frauds.html

He has video at the beginning, and at the end too.

[antigop]

85. Prag suggested up-thread

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3503637&mesg_id=3503657

So sorry....

[slipslidingaway]

90. This might just be a coincidence...

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=4055932&mesg_id=4055932

Why I'll be dreaming of the 700 billion figure tonight....

I wonder how Paulson arrived at the 700 billion number, interesting sentence below and surely just a coincidence.


http://contraryinvestor.com/2008archives/momar08.htm

Fourth paragraph from the bottom

"...Trajectory, growth, rhythm and magnitude of global credit derivatives expansion is quite like the character we observed above for the US banking system proper. In three short years, global CDS exposure has increased roughly nine-fold. We're talking about close to $45 trillion of credit derivatives on a notional basis. The BIS kindly estimates a gross cash market value for this exposure at $700 billion..."


Jumped out at me when looking for information for this thread.

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=4055053&mesg_id=4055053

[antigop]

93. Thanks, I hadn't seen that figure with regard to credit derivative exposure. n/t

[slipslidingaway]

98. YW and IMHO if they are talking about a bailout they need to

address the derivatives monster.

[radfringe]

99. Pool Party?

still going on? or did we declare a winner last week? if we did have a winner - will pool party part two be opening?

[Dr.Phool]

109. No winner yet.

The market didn't close at or below the magic number.

So, it's re-opened.

[slipslidingaway]

100. Fun With Funding...THE critical issue looking ahead is COST

OF FUNDING


Posted here, full article at link

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=4053996&mesg_id=4053996

September 2008

"Fun With Funding...You know that for some time now we have been preaching about what we believe to be one of the most important macro themes of the moment that is deleveraging. Important both for financial market and real world economic outcomes ahead. And, whether we like it or not, it's a theme that we believe will be with us for a good while to come...


Enough of the ranting and raving. Let's get to the point. As this process plays out and the Federal government is continually forced to expand its balance sheet as an offset to the leverage contraction occurring largely throughout the remainder of the economy and domestic financial markets ahead, THE big question becomes, where will the funding for this balance sheet expansion come from and what will it ultimately cost? A question near and dear to the hearts of US taxpayers everywhere, to say nothing of the investment community. This, we believe, is now and will continue to become one of the most important questions for our investment activities. We cannot take our eye off of this ball as we move ahead. Point blank, and we could not be more serious when we ask this, will the US face a funding problem at some point?

...Once again, in the clarity of hindsight, the initial Japanese response to the equity and, several years later, property bubble peaks and subsequent busts was to lower interest rates. Classic monetary policy 101. As the decade of the 1990's wore on, the cost of what was accelerating government spending (expansion in the government balance sheet), was indeed in very good part supported and able to be accomplished by a lower interest rate structure. As Japanese government funding needs expanded, the cost of that funding declined. Why? It was financed internally. Just what the doctor ordered. The following chart is a proxy for longer term interest rates in Japan over the identical period covered in the chart above...


We hope that by now you can see why we believe the forward US funding issue is so important. We believe the question mark is huge as to who will be willing to meet these funding needs during a period of greater US non-government sector balance sheet contraction. Will the US continue to be able to procure low nominal cost funding as its already very large balance sheet (liability) expands ever further by necessity in the coming period? The US faces a series of obstacles that were absent in the similar cycle reconciliation experience of Japan. And THE primary obstacle and question mark is cost of funds. We're not preaching end of the world here. In fact, we're really not even questioning the ability of the US to procure continued foreign funding. THE critical issue looking ahead is COST OF FUNDING. At the outset we asked the question, will the US face a funding problem at some point, given that the US is beholden to foreign financing? It's the cost of funding that will be key to forward outcomes both in the real US economy and financial markets..."

[antigop]

107. Emerging markets face $111bn refinancing backlog, FT says

http://www.bloomberg.com/apps/news?pid=20601086&sid=aw0_fEV3jphA&refer=latin_america

Banks and companies in emerging markets may struggle to refinance $111 billion of bonds maturing over the next year because of the credit crisis, the Financial Times reported, citing ING Wholesale Banking.

``Many corporates and banks in the emerging markets are highly levered without cash to fall back on,'' said David Spegel, global head of emerging markets strategy at ING, according to the report.

Financial Times article here, but you need to subscribe to see the whole thing.
http://www.ft.com/cms/s/2e4d3d50-87fe-11dd-b114-0000779fd18c,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F2e4d3d50-87fe-11dd-b114-0000779fd18c.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus

A $111bn backlog of bonds that need to be refinanced over the next year has built up in the emerging market economies and raised the threat of defaults and company closures.

With the ability to raise money in the debt markets severely restricted because of the credit crisis, emerging market banks and companies could struggle to roll over the maturing debt, according to ING Wholesale Banking.

[slipslidingaway]

115. Thanks it just spills over to other markets :( n/t

[DemReadingDU]

101. Chris Martenson: bailout bill is the largest looting operation ever

Reading thru the website for the The Crash Course, I found this comment by Dr. Chris Martenson about the bailout bill:
9/21/08 "Mark my words, this is the largest looting operation ever in the history of the US, and it's all spelled out right in this delightfully brief document that is about to be rammed through a scared Congress and made into law."
http://www.chrismartenson.com/blog/what-latest-bailout-plan-means/5149

and here is someone's reply to Martenson that bluntly says it all:
Submitted by machinehead on Sun, 09/21/2008 - 16:13.
Correcto-mundo, Doctor M. This is bigger than 9/11. Bigger than the Crash of 1987. Probably bigger than the New Deal, which was the greatest expansion of central government ever. Some are calling it the "PATRIOT Act of Finance" in its sublime high-handedness. If this gets done, words such as "capitalism," "democracy," "economic freedom" and "representative government" will no longer apply to the US. I call the new system Kleptofeudalism. Under this system, a one-percenter group of privileged Kleptocrats owns and operates the country. Meanwhile, Worker/Suckers -- the remaining 99% of the population -- serve as their livestock. Worker/Suckers exist only to service the Treasury debt, and breed more Worker/Suckers to keep servicing the debt in generations to come. As in feudal times, class lines will solidify into iron curtains. The chances of your children advancing from Worker/Sucker to Kleptocrat will be virtually nil. This is literally the most radical event which has happened on North American soil since the Declaration of Independence was issued on 4th July 1776. But this is an anti-Revolution, a rollback of liberty, an enslavement. It is a fundamental and irrevocable alteration of our form of government. The only certainty, under the coming tyranny, is that the dollar is doomed to become a weak, Third World currency, which may not even be accepted outside CONUS borders. As refugees from 1930s fascism learned, gold is good. But diamonds may be more concealable and transportable. Frankly, I fear social unrest. If busted plutocrats can loot the Treasury for $700 billion on a whim, why shouldn't the jobless homeless loot stores for clothes and shoes? There is no answer, other than than "the 'law' is only for little people." And such an answer may not be satisfactory. Congratulations on proclaiming -- well in advance -- "The End of Money." Ding ding ding, it's here. Now what?
http://www.chrismartenson.com/blog/what-latest-bailout-plan-means/5149#comment-624

If you do not want to become a Worker/Sucker, please call your Senators and Congressman to vote NO on the bailout bill. If not available, their staff will take your message. Do it NOW!

To watch those Crash Course videos
http://www.chrismartenson.com/crashcourse

[RUMMYisFROSTED]

102. Kleptofeudalism.

Nice.

[dweller]

106. EQUITY, NOT "CASH FOR TRASH" IN BAILOUT

Kucinich Announces Plan for Ownership Society
by Dennis Kucinich

Congressman Dennis Kucinich (D-OH) today made the following statement announcing a plan for a new Ownership Society:

"The Wall Street financial disaster is an opportunity to create a genuine ownership society. If Congress invests $700 billion in the market, then the American people must get something of real value for their investment.

"Simply purchasing bad debt, "cash for trash" and not receiving anything of value or giving $700 billion and not having a commensurate equity interest in Wall Street firms is unacceptable. No "cash for trash".

"Since the bailout will cost each and every American about $2,300, tomorrow I will offer legislation to create a United States Mutual Trust Fund, which will take control of $700 billion in stock assets, at market value and not higher, convert those assets to shares, and distribute $2,300 worth of shares to new individual savings accounts in the name of each and every American."

Kucinich arrived at the $2,300 figure by dividing the cost of the bailout ($700 billion) by the US population (over 300 million).

http://www.opednews.com/articles/EQUITY-NOT-CASH-FOR-TRAS-by-Dennis-Kucinich-080922-836.html

:D
dp

[Roland99]

123. Oh that's rich! Well played, Dennis!

:)

[AnneD]

108. Morning Marketeers......

:donut: I demand a rape kit...and so do other taxpayers. At least that is the way I felt all this weekend. Every one here is hopping mad. Especially when we hear stories about folks that for the first time ever apply for food stamps, waits for hours in line, tells the truth about their past income level (they don't get payed if they don't work now they have a very limited amount of money, none coming in for a few weeks, a roof to fix, kids to feed) and they walk away with $13 worth of food stamps. FEMA is giving folks red tape made of iron:grr:

And with every potential McCain supporter I have come across I opined this question......

Now I know some home owners screwed up and are facing forclosure and may soon lose their homes.....but why is it these CO's have run these companies into the ground, the government bails them out-and the part with millions of dollars in severance. That home owners mistake dosent seem half as bad and he AND his family get tossed to the streets with nothing....THeir head starts turning around and they start spitting pea soup and sputtering. They I do the coup de gra.....So why would I vote for these guys for 4 more years.

I have also started wearing my Obama button (can't at work though). I figure, I am not ashamed or embarassed by my candidate. Know what, I think I've been treated better by more folks (at first I thought it was my imagination-but try it and see). And if they say something about it-I remind them to vote.I try to give Obama all the free advertising he can get. I tip generously, I go out, I support local businesses. I drive nicely because I have an Obama sticker on my car and I wouldn't want to give folks a reason to complain. I would like to see more folks showing their colours. It can give those on the fence some strength to make the right choice.

Congrats to Ghost Dog, Uppityperson, and Finnfan for their induction into the Prognosticators Hall of Fame. We still do not have a winner for the Pool as of yet-the number at the closing bell has to be at or below what it was when Bush took office. And true to the real life games on Wall Street-who would have guessed that the FEDS would have rigged the game at the last minute. In my heart of hearts, I believe that Friday was the day-and the fact that Paulson was running around crapping his pants during his congressional hearings make me feel certain we were hitting the bottom.

But I will tell you one thing-money and wealth flow like water. Like the Mississippi, they can dam it, channel it and engineer it into what they think is submission.....but it will find a way friends, it will find a way.

[Buttercup McToots]

112. Anybody seen this? Great American Cash Out?

http://www.thegreatamericancashout.com/

Just flying around and saw it...

[antigop]

114. The Paulson payoff at the Bush Treasury Department (from 2006)

Sirota's post: July 4, 2006

http://www.huffingtonpost.com/david-sirota/the-paulson-payoff-at-the_b_24379.html

Reuters reports today that "The incoming Treasury secretary, Henry M. Paulson Jr., was awarded an $18.7 million cash bonus for half a year of work as the chief executive of the Goldman Sachs Group." The massive bonus was, not surprisingly, approved by Goldman Sachs at the very same time Paulson was both CEO and Treasury Secretary designate. This raises a very simple question: What is Goldman Sachs buying with this brazen payoff to someone they knew was headed to one of the most powerful government posts in America?

From Reuters, via NY Times website-- 2006
http://www.nytimes.com/2006/07/04/business/04goldman.html?_r=1&adxnnl=1&oref=slogin&adxnnlx=1222099574-nknK0p5AZNvI6Sj+Boq3zg

Goldman Gives Ex-Chief $18.7 Million Bonus
The incoming Treasury secretary, Henry M. Paulson Jr., was awarded an $18.7 million cash bonus for half a year of work as the chief executive of the Goldman Sachs Group, the company said yesterday.

In its quarterly report, Goldman said the compensation committee of its board approved the payment on June 29 in recognition of Mr. Paulson's leadership for the six months ended in May, when profit doubled to $4.79 billion.

Goldman also agreed to buy, for an undisclosed price, stakes owned by Mr. Paulson and his wife in private investment funds it manages. A spokesman for the investment bank declined to elaborate on the filing.

"People in that business make an awful lot of money," said Brent Longnecker, president of Longnecker & Associates in Houston and a specialist in executive pay.

"Last year has been very active for deals, so my gut feeling is the award is fair in light of that activity, and the scrutiny that Wall Street executives get," he continued. "Cash is probably a much cleaner way to pay in light of the new position he's taking on."

[Roland99]

117. 12:27pm - Hovering around -200

Dow 11,192.11 -196.33
Nasdaq 2,225.21 -48.69
S&P 500 1,228.79 -26.29
10-year 3.89% +0.12
Oil $108.00 $3.45
Gold $903.50 $38.80

[TalkingDog]

129. Wouldn't that be Hoovering around -200? n/t [/snark]

[Tandalayo_Scheisskopf]

124. Looks like they just gotta screw everything up.

PETROLEUM ($/bbl)
PRICE* CHANGE % CHANGE TIME
Nymex Crude Future 109.70 5.15 4.93 12:38
Dated Brent Spot 104.00 6.10 6.23 13:08
WTI Cushing Spot 109.65 5.10 4.88 12:06


PETROLEUM (¢/gal)
PRICE* CHANGE % CHANGE TIME
Nymex Heating Oil Future 301.28 11.50 3.97 12:38
Nymex RBOB Gasoline Future 265.06 5.09 1.96 12:37


NATURAL GAS ($/MMBtu)
PRICE* CHANGE % CHANGE TIME
Nymex Henry Hub Future 7.59 .06 .81 12:38
Henry Hub Spot 7.82 -.29 -3.58 09/19
New York City Gate Spot 8.00 -.44 -5.21 09/19


ELECTRICITY ($/megawatt hour)
PRICE* CHANGE % CHANGE TIME
Mid-Columbia, firm on-peak, spot 56.65 -1.95 -3.33 09/19
Palo Verde, firm on-peak, spot 54.05 -1.50 -2.70 09/19
Bloomberg, firm on-peak, day ahead spot/West Coast 61.53 -1.92 -3.03 09/19


The greedheads have returned to energy.

[Mojorabbit]

126. It is where I parked most of my money

two years ago. I don't think the run up will last though.

[antigop]

127. Dodd Proposes Giving U.S. Equity Stake for Bad Debt

http://bloomberg.com/apps/news?pid=20601087&sid=aHeROL9EmlRg&refer=home

Senate Banking Committee Chairman Chris Dodd offered an alternative today to the Bush administration's financial rescue plan aimed at giving the U.S. Treasury an equity stake when it helps companies burdened by debt.

Dodd, a Connecticut Democrat, is circulating a draft of his bill as Congress seeks to deal with a financial crisis that has been called the U.S.'s worst since the Great Depression.

The Bush administration is proposing a $700 billion plan to buy devalued assets from investment firms to keep the financial system from coming to a halt. Democrats have pledged to act quickly on the measure, even as they seek to create an oversight structure, limit the compensation of executives at the companies benefiting from the rescue and provide mortgage relief for struggling borrowers.

``We cannot just turn over $700 billion in taxpayer money and not insist that that taxpayer is going to be protected in this,'' Dodd told reporters yesterday.

[antigop]

128. If we get equity, then do we get shareholder voting rights? heh,heh n/t

[antigop]

130. NYSE adds GEand GM, others to "no-shorting" list

http://financialweek.com/apps/pbcs.dll/article?AID=/20080922/REG/809229985/1036

The New York Stock Exchange has added 30 stocks of companies that engage in financial services to a temporary ban on short selling ordered last week by U.S. regulators.

The NYSE list, issued on Monday, includes shares of General Electric, M&T Bank Corp, Legg Mason and General Motors..

The U.S. Securities and Exchange Commission, besieged by complaints that its list of 799 stocks issued on Friday had missed companies with major financial operations, decided over the weekend to let exchanges add to its list.

The SEC emergency order against short sales in financial stocks will last through October 2. It may be extended further if the agency deems it necessary, but it can only last a total of 30 calendar days.

The SEC order followed similar action by the U.K. Financial Services Authority, which imposed a temporary four-month ban on short-selling of financial stocks.

Other companies on the NYSE list include Capital One Financial Corp, Discover Financial Services and U.S.-traded shares of several Canadian banks including Toronto Dominion Bank.

[Demeter]

131. How Nice For Them

Why not just close the markets, like Russia did? We're practically there already.

[Robbien]

132. CNBC is saying market is down because banks don't like having to give warrants

Bailout requires banks to warrant to the investment's value before We the People buy the toxic stuff. Banks are not happy.

Guess we can expect Paulson to come running out with another amendment real soon.

[Dr.Phool]

134. WTF?!!! Oil up $25 per barel?!

I just took a quick nap, for about an hour and I see this breaking.

Oil spikes as investors mull U.S. bailout
Markets digesting rescue package, impact on energy demand

http://www.msnbc.msn.com/id/12400801/


MSNBC
updated 1 hour, 22 minutes ago

NEW YORK - Oil prices spiked more than $25 a barrel Monday — the biggest one-day price jump ever — as anxiety over the government's $700 billion bailout plan battered the dollar and touched off frenzied buying of safe-haven investments including crude.

Light, sweet crude for October delivery jumped as much as $25.45 to $130 a barrel on the New York Mercantile Exchange before falling back somewhat to trade at $123.77,up $19.22. The contract was set to expire at the end of the day, adding to the volatility; the October price began accelerating sharply in the last hour of regular trading.

[Roland99]

138. Shorts caught with their shorts down?

[Buttercup McToots]

135. BOA is down...

People having trouble getting to their accounts...

[antigop]

136. Link, please? Where are you getting this info? Pretty please? n/t

[Buttercup McToots]

155. linky

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x4059428


Guess no one is too worried

[Roland99]

140. All I saw was this: McDonald's Says Bank of America Won't Boost Loans (Update1)

McDonald's Says Bank of America Won't Boost Loans (Update1)
http://www.bloomberg.com/apps/news?pid=20601087&sid=aAw5v_t72uqQ&refer=home

[Roland99]

137. 3:24pm - This was worth $700 billion?!?!?

Dow 11,077.98 -310.46
Nasdaq 2,196.27 -77.63
S&P 500 1,215.03 -40.05
10-year 3.82% +0.06
Oil $120.00 $16.37
Gold $909.00 $44.30

[dweller]

139. look at those numbers, trickling down

Fridays gains are going, going...

edit: they took back everything to the $ gained Friday on the DOW . . .
dp

[antigop]

142. AIG shares up on report investors aim to scuttle Fed takeover

Major stockholders said to be raising capital in bid to pay off government loan

http://financialweek.com/apps/pbcs.dll/article?AID=/20080922/REG/809229981/1036

Shares of American International Group Inc rose 27% on Monday after a report that some leading shareholders are searching for a way to keep the company from being effectively taken over by the Federal Reserve.

It was the third day of gains for the stock, which hit its all-time low last Tuesday, just before the company was bailed out by the Federal Reserve with an $85 billion loan to help it recover from massive losses it suffered on mortgage derivatives.

Under last week’s deal, brokered by Treasury Secretary Henry Paulson, the Federal Reserve would take an almost 80% stake in the insurer, diluting the existing shareholders’ ownership.

According to a report in The Wall Street Journal on Monday, citing an unnamed person familiar with the matter, major shareholders are looking for ways to quickly sell assets and raise capital to pay off the Federal Reserve loan, thereby keeping AIG independent.

[Demeter]

179. How VERY Interesting--Holding Yard Sales to Bail Out Their Stock

Think about it....these people have enough liquid assets to finance their little toy company. They don't want the US govt. to take it over, break it up and sell the pieces. What kind of scam are they running? Why the hell do they want to keep this monstrosity alive?

If anyone sees anything else related to AIG, please post!

[Pale Blue Dot]

144. FDIC Rolls out Deposit Insurance Awareness Campaign

The Federal Deposit Insurance Corporation (FDIC) today launches a national campaign designed to help consumers learn about the benefits and limitations of deposit insurance. The campaign's public service announcements (PSAs) will feature personal finance expert Suze Orman.

"For 75 years, no one has ever lost a penny of insured deposits," said FDIC Chairman Sheila Bair, "but as with any type of insurance, depositors are responsible for knowing how FDIC coverage works in order to ensure their money is protected. While awareness of the FDIC is high, understanding of deposit insurance is not. We want to encourage people to learn the basics and provide reassurance that, if they are within the coverage limits, their money is 100 percent safe."

The public awareness campaign encourages Americans to visit myFDICinsurance.gov, where they can use EDIE the Estimator, an online tool that provides customized information about their insured accounts. The estimator has been available to the public for a number of years but was simplified and made more accessible as part of this campaign. Those without online access may call toll-free 1-877-ASK-FDIC for assistance.

"No one should ever lose a penny of their deposited money, but Americans need to take the time to look at their accounts to ensure they're covered," said Suze Orman. "I have donated my time to this FDIC campaign because I want everyone to go to EDIE the Estimator and follow the simple steps to make sure their money is 100 percent FDIC protected."

Basic FDIC insurance covers up to $100,000 of deposits per account holder per bank, and up to $250,000 per account holder for deposit retirement accounts. myFDICinsurance.gov provides information about how these limits work.

"We're encouraging consumers to find out if all their money is FDIC protected, and we're providing them the tools to do so," said Chairman Bair.

http://www.fdic.gov/news/news/press/2008/pr08083.html

[MadinMo]

152. Sounds like they are expecting trouble. Bank runs anyone?

[uppityperson]

146. So, did the grotesque "let's send the country/people further into debt" thing work to improve moral?

[dweller]

147. Congress, Bush team agree on bailout terms

http://biz.yahoo.com/ap/080922/financial_meltdown.html
AP
Congress, Bush team agree on bailout terms
Monday September 22, 3:32 pm ET
By Julie Hirschfeld Davis
Administration accepts lawmakers' demands for mortgage aid, oversight in $700 billion bailout

WASHINGTON (AP) -- A key Democrat negotiating a $700 billion financial bailout says the Bush administration has agreed to include mortgage aid and strong congressional oversight in the plan.

Rep. Barney Frank, the Financial Services Committee chairman, says a great deal of progress has been made in talks between lawmakers and President Bush's team on the rescue.

A government official with knowledge of the talks also said the administration has agreed to create a plan to help prevent foreclosures on mortgages it acquires as part of the bailout.

dp

[radfringe]

148. i know the pool is based on the DOW

and that's where the "big" numbers are, but has anyone else notice that the Nasdaq and S&P are both LOWER than they were on the day smirk-boy took office?

[Roland99]

149. Yeah, they've been down there for a long time.

[theDash]

150. This is all just too unreal

I am mostly a lurker here at SMW (and DU in general) and as I watched oil spike $25 a barrel, I just became livid. It's like no matter what, we are going to get screwed one way or another so that the filthy rich continue to get richer as our economy and country is just run into the ground. I am to the point now to where I almost wish the whole damned system would just collapse, and these crooks would lose everything. I have already lost most everything as it is, so it will hurt them a heck of a lot more than it will hurt me at this point. Of course my rational side doesn't really want it to happen, because too many hard working people will suffer, but damn...

[Tansy_Gold]

156. I hear you, Dash, I hear you.

Glad you unlurked!

:hi:

[radfringe]

160. welcom dash

I'm with you on this...

pitchforks and torches... tar and feather - ride 'em out of town on a rail

[Roland99]

154. At the close - Back where we left off on Thursday. ALL of Friday's gains gone.

Dow 11,015.69 -372.75
Nasdaq 2,178.98 -94.92
S&P 500 1,207.12 -47.96
10-year 3.82% +0.06
Oil $120.00 $16.37
Gold $909.00 $44.30

[Hugin]

157. Damn, throw another couple Large on the fire... It's gettin' cold in here.

Those Giga-Dollars don't last long. :brr:

[nolabels]

159. Dow still hanging around 11,000

Call me NOT surprised :shrug:





Please sky, if you are falling, please, could you just make it quick :popcorn:

[PurityOfEssence]

171. When it dips into four digits, people are gonna freak

It is a sad but undeniable testimony to the character of the human race that panic reigns supreme, but it does...

[Ghost Dog]

164. Is 11,000 now a floor or is it a ceiling?

... It will be a few more weeks before economic data is available to quantify exactly how hard the latest drama hit the real U.S. economy. The market turmoil drove up borrowing costs for banks and other companies, and unless conditions improve, the tighter credit terms will weigh on economic growth.

Richard Curtin, director of the Reuters/University of Michigan Surveys of Consumers, said how consumers respond to the crisis "will help to determine the length and depth of the ongoing economic downturn.

"While the financial crisis is likely to make the ongoing downturn a little deeper and persist a little longer than originally anticipated, perhaps the most important implication is that the eventual resolution of the crisis is likely to slow the rate of growth in consumer spending for years to come."

Already the crisis has taken a big bite out of Americans' nest eggs. Government data released last week showed that household wealth declined for three consecutive quarters through June, the first time that has happened since records began in 1951. The current quarter will probably show losses as well, thanks to the housing bust and stock market unrest.

/... http://www.reuters.com/article/marketsNews/idINN1953391620080922?rpc=44&sp=true

[Roland99]

166. Easy to spin: "Record-breaking economic activity!"

Said with a gleam in the eye.

[RUMMYisFROSTED]

172. It's phenomenally energized!

:party:

[Demeter]

180. Pardon Me for Scoffing, But WHAT Economic Growth?

There Is No Growth. That's why it doesn't make any sense to save Wall St. They are parasites--they suck the lifeblood out of the economy.

[ozone_man]

181. Derivative growth is more like it.

http://angrybear.blogspot.com/2008/09/otc-derivative-growth-since-1998.html

I agree, Wall Street (financials anyway) are parasites that need a good fumigation.

[Ghost Dog]

161. US dollar slides, bailout rekindles deficit concern

Mon, Sep 22 2008, 16:30 GMT NEW YORK, Sept 22 (Reuters) - The U.S. dollar fell broadly, hitting three-week lows against the euro and sterling on Monday as the U.S. government's bailout plan to ease a global credit crisis re-ignited worries about the country's massive budget deficit.

...

"Nobody knows what form the bailout package will take. We only know vaguely how much it will cost," said Ron Simpson, director of currency research at Action Economics in Tampa, Florida. "So if you are a foreigner and looking at the U.S. fiscal position, it does not look pretty for this year and next...Overall, the uncertainty is driving the current flight out of the dollar," he added.

The Congressional Budget Office has forecast a record U.S. budget shortfall of about $438 billion in the next fiscal year, excluding the cost of the bailout. The rescue package is expected to raise the government's debt ceiling 6.6 percent.

In midday New York trading, the dollar fell nearly 1.0 percent on the day to 106.41 yen. The euro hit a three-week high at $1.4685, according to Reuters Dealing, up 1.5 percent. Sterling also benefited from dollar selling, hitting its highest in more than three weeks at $1.8489. It was last at $1.8476, up 0.9 percent. Against the Swiss franc, the dollar fell two percent to a six-week low at 1.0822 francs, according to Reuters Dealing.

/... http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=d85b6142-7b04-4a26-acbf-90aa1d75e3ea
__________

[On the Road]

162. Volume is Way Way Down

If oil is flat tomorrow, it should be another big up day.

[Ghost Dog]

163. Trichet says ECB stance aims for price stability

Mon Sep 22, 2008 3:54pm EDT PARIS, Sept 22 (Reuters) - The European Central Bank's monetary policy stance aims to preserve medium-term price stability, ECB President Jean-Claude Trichet said on Monday.

...

"We have a monetary policy stance that is always to preserve price stability in the medium-run," Trichet said. "I would say to all consumers, to all households...you can count on us, we will deliver price stability over the medium term."

...

In a section of the interview released earlier, Trichet called for change in the financial system and for greater transparency.

"It is the full body of the system which has to be reviewed, and we have to take care," Trichet said.

Asked whether he could imagine a situation where the ECB puts together a U.S.-style rescue package for financial firms, Trichet said: "We have a responsibility as regards liquidity providing, we have no responsibility as regards the solvency issue that might emerge here and there."

The "solvency responsibility is the responsibility of the executive branches," he said.

/... http://www.reuters.com/article/bondsNews/idUSLM13695420080922?rpc=401&

[OhioChick]

167. All day long

I couldn't figure out why this thread was still going....wondering where today's MarketWatch thread was. Today is the 22nd....threw me off. Thought today was Tuesday! :)

[Hugin]

169. I'll see to it Ozy...

is sacked.

(Seriously, there's been some late nights among the SMW crowd the last several days.)

[OhioChick]

185. No....

Don't sack Ozy! :rofl:

My bad....the markets have us all crazed. :crazy:

[amandabeech]

173. Cramer is touting GOLD on CNBC!

Cramer!

He's worried that Congress won't pass the bailout bill in time.

He's sounding like Mogambu (sp) and talking about printing money.

[ret5hd]

175. A true attention whore...and one that's late for the ship docking.

[amandabeech]

176. Agreed.

However, he has influence, just like Tom Friedman.

When either of them announce their position, it means near capitulation on the topic.

[UpInArms]

177. here's the print on the end o' day

Dow 11,015.69 372.75 (3.27%)
Nasdaq 2,178.98 94.92 (4.17%)
S&P 500 1,207.09 47.99 (3.82%)
10-Yr Bond 3.826% 0.057

NYSE Volume 5,431,324,500
Nasdaq Volume 1,938,224,875

4:20 pm : The major indices were pummeled on Monday due to uncertainty over the details regarding the U.S. government’s $700 billion plan to fix the financial market turmoil and news that the two remaining major Wall Street investment banks converted to a traditional banking structure.

The S&P 500 fell 3.8%, settling at session lows, with all ten of the economic sectors posting a loss. Financials fell 8.5%, and consumer discretionary stocks declined 5.0%. The dollar fell sharply, and commodities rallied.

Over the weekend, Treasury Secretary Paulson submitted legislation to give the Treasury authority to spend up to $700 billion to purchase troubled assets from financial institutions, with most of the focus on residential and commercial mortgage-related assets. The Treasury believes the plan will address the root cause of the financial system’s stress by removing the distressed assets from the system.

There is some political wrangling regarding the deal, which is adding to the uncertainty of when the proposal will be passed by Congress. Reports indicate there are disagreements over some additional proposals from Democrats for the plan, including the Treasury taking an equity stake in the participating financial companies and limiting executive compensation.

Sunday night, the Federal Reserve agreed to convert Goldman Sachs (GS 120.59, -9.21) and Morgan Stanley (MS 27.26, +0.05) into bank holding companies. The move will allow Goldman and Morgan to expand retail banking offerings and give ongoing access to the Fed’s discount window, but will place the firms under additional regulatory oversight from the Federal Reserve.

In addition, Morgan Stanley said it is pursuing a strategic alliance with Tokyo-based Mitsubishi UFG Financial Group (MTU 8.27, -0.09). Mitsubishi will eventually take up to a 20% stake in Morgan Stanley at book value, according to its nonbinding letter of intent.

In corporate news, there were several share repurchase program announcements this morning. Microsoft (MSFT 25.39, +0.23) announced an additional $40 billion share repurchase program and raised its quarterly dividend by 18% to $0.13 per share. Hewlett-Packard (HPQ 47.06, -1.20) authorized an additional $8 billion for share repurchases. Nike (NKE 63.06, -0.64) announced a four-year $5 billion share repurchase program.

The amount of spending in the government’s plan to help financial firms sparked a sharp decline in the dollar. The Dollar Index fell 2.3%, with the euro gaining 3.0% against the dollar. This prompted buying interest in commodities (+3.9%).

Crude oil futures traded in an extremely volatile manner. The crude oil contract for October delivery, which expired today, spiked as high as 24% to $130 per barrel, before settling with a 15% gain at $120.00. Oil for November delivery, which becomes the front-month contract tomorrow, rallied 5.6% to $108.50 per barrel, but saw gains much smaller than October.

The outsized gains of the October delivery oil contract suggests that a massive short-covering rally played a role in the advance.DJ30 -372.75 NASDAQ -94.92 NQ100 -4.5% R2K -4.4% SP400 -4.7% SP500 -47.99 NASDAQ Adv/Vol/Dec 634/1.92 bln/2142 NYSE Adv/Vol/Dec 574/1.27 bln/2592

3:30 pm : The major indices extend their losses. The S&P 500 is down more than 3%, with notable weakness in financials (-8.0%), consumer discretionary (-4.7%) and telecom (-4.4%).

Volume on the NYSE is poised to be the lowest level in at least two weeks with 908 million shares exchanging hands. Market breadth is negative, with advancers outpacing decliners by 4-to-1 on the NYSE.DJ30 -333.16 NASDAQ -79.98 SP500 -42.40 NASDAQ Adv/Vol/Dec 667/1.50 bln/2105 NYSE Adv/Vol/Dec 631/908 mln/2521

tomorrow's futures seem ever hopeful that someone will drop the magic piggy bank on the street

:eyes: