STOCK MARKET WATCH, Tuesday September 23

[ozymandius]

Source: du

STOCK MARKET WATCH, Tuesday September 23, 2008

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 117
DAYS SINCE DEMOCRACY DIED (12/12/00) 2802 DAYS
WHERE'S OSAMA BIN-LADEN? 2527 DAYS
DAYS SINCE ENRON COLLAPSE = 2818
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 22, 2008

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%)
Gold future... 909.00 +44.30 (+4.87%)
30-Year Bond 4.41% +0.04 (+0.94%)
10-Yr Bond... 3.83% +0.06 (+1.51%)






GOLD,EURO, YEN, Loonie and Silver

---

PIEHOLE ALERT

Heads Up!
Preliminary info on appearances by Bush & Co. throughout the country. Details & links are added as they become available so check back. And if you know more, are organizing something, or would like to, contact [e-mail]

For information on protests and other actions Citizens For Legitimate Government

---

>


Read more: du

[ozymandius]

1. hat-tip to dweller for bringing the day's cartoon to my attention

:hi:

[dweller]

131. oy Ozy, i missed this

thanks for the hat-tip, and one returned for your tireless work here.
:thumbsup:

dp

[ozymandius]

2. Market WrapUp

And the Band Played On
BY ROB KIRBY

To say that events that unfolded in the world’s financial markets last week were ‘unprecedented’ is perhaps a little too cliché. So let us revisit some of the key events which reportedly unfolded in the wake of Lehman’s demise – a fate that was sealed last weekend (Sept. 13 / 14) when last attempts to rescue the storied U.S. Investment Bank hit-the-rocks (or ice, perhaps?).

Lehman’s Demise Was Most Assuredly All-About J.P. Morgan

First off, I found it perversely odd that there were allegedly serious suitors who got to take a peak at the state of Lehman’s finances. Institutions rumored to be involved were Korea Exchange Bank, Barclays and B of A. What stuck in my craw was the widely publicized revelation that,

The Lehman rescue failed because the US government was unwilling to issue guarantees to the potential purchasers.

Ladies and gentlemen, are we to believe that the U.S. Fed and Treasury preferred to shoulder, as it turns out, the bailout of the whole global financial system rather than provide some comfort for a would-be purchaser of Lehman?

This makes absolutely zero sense. But the following does:

Late last week, I wrote about a very strange occurrence – the reporting of J.P. Morgan “transferring” 138 billion dollars to Lehman, after Lehman had already filed for Chapter 11 bankruptcy early last Monday morning.

This bears repeating.

.....

It is highly likely (or a certainty on my planet) that J.P. Morgan was INSOLVENT and was “BAILED OUT” last Monday, September 15, to the tune of 138 billion dollars. This would explain why the Fed and Treasury dictated that Lehman fail – to disguise or otherwise obfuscate the recapitalization of or illicit transfer of 138 billion to A MUCH SICKER, TEETERING ENTITY, J.P. Morgan Chase.

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

[ozymandius]

3. Todays' Reports

10:00 Existing Home Sales Aug
Briefing.com 4.95M
Consensus 4.93M
Prior 5.00M

10:35 Crude Inventories 09/20
Briefing.com NA
Consensus NA
Prior NA

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

[UpInArms]

63. U.S. OFHEO home prices down 5.3% in past year

01. U.S. OFHEO home prices down 5.3% in past year
10:03 AM ET, Sep 23, 2008

02. U.S. July OFHEO home prices down 0.6%
10:02 AM ET, Sep 23, 2008

[lumberjack_jeff]

4. g'morning!

One person's insomnia is another person's punctuality.

[ozymandius]

6. Good morning.

:donut: :donut: :donut:

Insomnia can be very useful. The shape of our world has been brought me sleeplessness lately.

[Hugin]

49. Morning Ozy.

My, my, my... Would you look at that Crude Futures chart!

Nothing like a big cup of Blatant Manipulation in the morning.

I guess we'll be hearing, "Drill, Baby, Drill" by noon. Drilling of course, would do nothing to turn around speculation.

[ozymandius]

5. Oil falls below $108 as traders mull bailout plan

SINGAPORE - Oil prices fell below $108 a barrel Tuesday in Asia in a choppy market driven by uncertainty about whether a $700 billion U.S. plan to buy bad mortgage debt will stabilize the financial system.

Oil prices had surged Monday in volatile trading, spiking more than $25 a barrel at one point, as investors fled to oil amid unease about the mammoth bailout plan.

....

Light, sweet crude for November delivery was down $1.96 to $107.41 a barrel in electronic trading on the New York Mercantile Exchange midafternoon in Singapore. The contract jumped overnight $6.62 to settle at $109.37.

The October contract, which expired Monday, surged as much as $25.45 to $130 a barrel before falling back to settle at $120.92, up $16.37.

....

In other Nymex trading, heating oil futures fell 1.8 cents to $3.025 a gallon, while gasoline prices rose 0.12 cent to $2.705 a gallon. Natural gas for October delivery rose 7.6 cents to $7.734 per 1,000 cubic feet.

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

[ozymandius]

7. Morgan Stanley, Goldman Search for Deposits; Banks Are `Lunch'

Sept. 23 (Bloomberg) -- Morgan Stanley and Goldman Sachs Group Inc., the two largest remaining independent U.S. securities firms, may add to the $81 billion of financial services deals unveiled during the past week as they morph into banks.

Morgan Stanley plans to sell as much as a 20 percent stake for $8.4 billion to Mitsubishi UFJ Financial Group Inc., Japan's largest bank, to shore up capital. Goldman Sachs said that its new status as a bank will help it purchase assets.

....

The next several weeks present a ``window'' for financial firms to issue new capital or merge, said Michael Mayo, a New York-based analyst at Deutsche Bank AG. The U.S. Treasury's plan to buy troubled assets, disclosed Sept. 18, and a temporary ban on short-selling make it easier to shore up capital, he said.

Morgan Stanley and Goldman probably will increase deposits by going after retail and corporate banking customers by selling products such as certificates of deposits, said Richard Bove, an analyst at Ladenberg Thalmann & Co. in Lutz, Florida.

http://www.bloomberg.com/apps/news?pid=20601102&sid=a9rMT8i7Lyqs&refer=uk

[ozymandius]

8. Japan's biggest bank to buy 20% stake in Morgan Stanley

SHANGHAI -- Major Asian banks that have pulled themselves from the depths of their own economic crisis of the 1990s are showing now just how crucial a role they may play as the U.S. tries to restore health and confidence to its tottering financial system.

Japan's biggest bank said Monday that it planned to spend as much as $8 billion for a 20% stake in investment banking firm Morgan Stanley in New York. Mitsubishi UFJ Financial Group in Tokyo is one of a number of Asian banks that appear primed to seize buying opportunities.

....

With huge stockpiles of foreign reserves, China, Japan and other Asian countries have the wherewithal to plow much more money into distressed American assets in the coming months. Many Asian financial institutions, which a decade ago foundered from bad lending practices and mismanagement, today look a lot better than their U.S. counterparts.

....

There is growing caution, though, in China and the rest of Asia about investing further in the United States. Spooked by the yearlong U.S. financial meltdown, Asian governments have slowed the pace of their purchases of American securities in recent months.

....

If Asia substantially pulled back on its purchases of U.S. securities, there could be significant implications for Americans. If the U.S. government had to print more money to support its needs, that would feed inflation. The U.S. could entice overseas investors into continued purchases of American securities by offering higher yields, but that would increase borrowing costs for the U.S. government -- and pinch consumers with higher rates on mortgages and other loans.

http://www.latimes.com/business/la-fi-banks23-2008sep23,0,809273.story

[ozymandius]

9. New York to Regulate Credit Default Swaps

Gov. David A. Paterson said Monday that New York would begin regulating credit-default swaps, the arcane financial instruments that were little known outside Wall Street before the credit crisis.

New state regulations will take effect on Jan. 1, but the governor said New York had jurisdiction to regulate only about a fifth of the sprawling market, and he called on the federal government to take steps of its own to oversee credit-default swaps, which have gone unregulated.

Credit-default swaps essentially function like insurance contracts to protect bond buyers from the risk that companies will default, but over the years they have become a favorite tool of speculators who use them to bet that a certain company will fail.

.....

The governor said the state’s insurance department would begin regulating credit-default swaps as insurance products in cases where the buyer of the swap also owns the underlying bond it is meant to back.

In those cases, only licensed insurers will be able to issue credit-default swaps. New guidelines will also increase minimum capital requirements and the reserves that financial institutions must maintain.

http://www.nytimes.com/2008/09/23/business/23swap.html?ref=business

[Owlet]

18. Oh..I get it..

1. Leave barn door open
2. Watch as horse runs out
3 Close barn door
4. Problem solved

[ozymandius]

20. Regulation has to start somewhere. Existing CDS are not effected.

This new regulation only applies to the issuance of new CDS to underwrite new debt.

I can see how it can be interpreted your way. I laud New York's plan to apply a tourniquet somewhere, somehow to these abusive credit instruments. As I read it: it also means that CDS cannot be used to gamble on defaults.

[adamuu]

28. absolutely essential move to prevent more people from taking

from the honeypot we're about to create.

[Buttercup McToots]

10. I'll take today when the pool opens up!!

Pleeeeze!!!
:donut:

[ozymandius]

14. Interesting bit posted here yesterday.

The S&P and Nasdaq are now below their levels when President Stupid took office. Since the pool is tied to the Dow - we can call it the last shoe to drop in a multi-year series of woeful mismanagement.

[Demeter]

23. Why Today, Buttercup?

That's over 500 point drop without any meaningful intervention...not impossible, but unlikely.

It looks like 11000 is the new holding point. For this week, anyway.

[ozymandius]

11. U.S. Scales Back Money-Fund Plan as Withdrawals Slow (Update1)

Sept. 22 (Bloomberg) -- The U.S. government backed away from insuring all domestic money-market funds as a run on the $3.29 trillion industry slowed and banks complained that they would be hurt by the Treasury's plan.

Investors pulled $5.2 billion from the funds on Sept. 19, compared with $133.3 billion in the previous two days combined, according to data compiled by Money Fund Report, a newsletter based in Westborough, Massachusetts. The exodus began after the $60 billion Reserve Primary Fund became the first money fund in 14 years to fail to cash out investors in full because of losses on Lehman Brothers Holdings Inc. debt.

The Treasury, seeking to prevent a broader run, announced Sept. 19 that it will reimburse investors for losses for a year. Officials scaled back the plan yesterday, saying it will only cover investments in money-market funds at the end of that day, meaning future deposits will not be insured. The change came after banks warned they would lose depositors.

....

Bank Complaints

Yesterday's decision followed objections to the insurance program from the American Bankers Association. ABA Chief Executive Officer Edward Yingling said it could compromise the ability of banks to attract and keep deposits.

http://www.bloomberg.com/apps/news?pid=20601213&sid=a1X8cIs8rQjs&refer=home

[dweller]

12. Bailout a mystery with lots of questions

By Martin Crutsinger and Jeannine Aversa, AP Economics Writers
Biggest government bailout in history raises plenty of questions of how and how much

WASHINGTON (AP) -- It's the largest government bailout in U.S. history and two days after it was introduced to the Americans paying for it, the proposal is still largely a mystery.
<snip>
How would the purchase of this bad debt work? Again, the Treasury draft legislation leaves a lot to the imagination. But Treasury officials have talked about employing a "reverse auction."

Under the process, the Treasury would advertise an auction, seeking to buy, for example, $1 billion of subprime mortgage loans that were originated around the same time.

In a reverse auction, the financial institution burdened with the bad loans agrees to take the lowest amount bid for the package. A bid of 50 cents on the dollar for a bundle of bad loans would beat out someone only willing to take 60 cents on the dollar.

The banks get to unload their bad debt and the government holds the asset either until it reaches maturity or until the market improves enough for the asset to be sold, perhaps for a profit.

This auction process holds one big advantage, economists say, while also posing a major risk for some financial institutions.

By purchasing the debt, the government would be creating a market that makes pricing easier and more uniform among institutions. That could clear up a huge amount of uncertainty in the market for subprime mortgages. But the clarity could bring bad news to some institutions: The writedowns they have taken so far could leave them with inflated prices for the bad debt remaining on their books.

In the worst case, it could cause some institutions to fall below the capital cushions they are required to hold against loan losses. That could produce a wave of bank failures. Given that threat, many financial institutions might be reluctant to participate in the auctions.

"If you try to low-ball the financial institutions too much, they won't take it because they can't take the capital hit," said Brian Bethune, an economist at Global Insight, a Lexington, Mass., consulting firm. Some economists argued that the program could be a big bust simply because enough financial institutions won't participate.

http://biz.yahoo.com/ap/080922/bailout_how_will_it_work.html">more befuddling info here

dp

[Demeter]

24. There Isn't Anything at All That Demonstrates That This Scam COULD Work

for anybody except Morgan Stearns and Goldman Sachs. And Hank and Ben.

It won't do jack for the GOP, that's for sure. It's likely to be THE selling point for the Democrats for a generation.

I don't get the point (but I'm sure we all will very soon, and in a very sensitive place, too)

[Dr.Phool]

35. Beware of Greeks bearing gifts.

Here's a different insight, and it's Rovian and Machiavellian at it's finest.

Some people think that Dems are getting played Big time. It explains the urgency. Repukes get the Dems to bail out their Wall Street buddies, piss off the taxpayers, and use it as an issue to run against them.

Are we this dumb?

http://talkingpointsmemo.com/archives/218880.php

Smack Down
09.22.08 -- 7:45PM
By Josh Marshall

I think Kos, Digby and Kilgore have this about right. The Republican/McCain plan is to get the Democrats to bail out the GOP's Wall Street friends and then run against them for doing it.

[antigop]

52. OMG! That explains it...I called my Repug Senator's office (up for re-election) yesterday

before I could even finish what I had to say, I was interrupted by the staffer who said, "The Senator has NEVER voted for a bailout and never will."

[Demeter]

90. Are We This Dumb? I Plead the 5th

and refuse to answer on the grounds that it may incriminate the DINO Do-Nothing Congress.


OF COURSE We're being played for fools! Thank God Obama spoke out against it!

[Ghost Dog]

13. Dollar interbank lending rates jump again

Tue Sep 23, 2008 3:28am EDT LONDON, Sept 23 (Reuters) - The interbank cost of borrowing dollars overnight and for three months jumped higher again on Tuesday as doubts about the U.S. government's bailout of the financial system saw equity markets and bank stocks slide again.

The interbank cost of borrowing dollars overnight was last indicated at 3.25 percent on Reuters screens <USDOND=>. This compared with Monday's London interbank offered rate (Libor) fixing at 2.96875 percent <USDONFSR=>

Despite easing from peaks well over 10 percent last week as the U.S. bank and asset market rescue plans were unveiled, the overnight rate is still well in excess of the U.S. Federal Reserve's 2 percent target rate and shows stressed banks remain extremely wary of lending to each other.

The cost of three-month interbank borrowing was indicated at around 3.7 percent <USD3MD=> in London markets on Tuesday, slightly off early peaks above 4 percent but still well up from the Libor fix on Monday at 3.19750 percent <USD3MFSR=>.

With three-month U.S. T-bill yields also higher at around 1.31 percent, the closely-watched 'TED' spread hovered around 240 basis points <USD3MD=> <US3MT=RR>.

/... http://www.reuters.com/article/marketsNews/idINLN4478520080923?rpc=44

[Ghost Dog]

15. ECB calls for bids in overnight dollar tender

Tue Sep 23, 2008 3:04am EDT FRANKFURT, Sept 23 (Reuters) - The European Central Bank called for bids on Tuesday in its fourth tender of short-term U.S. dollar funds, offering banks up to $40 billion overnight.

...

The ECB began offering overnight dollar funding last week as part of a joint effort with U.S. Federal Reserve and other top central banks to ease shortages in short-term dollar liquidity.

/.. http://www.reuters.com/article/marketsNews/idINFAE00249120080923?rpc=44

[ozymandius]

16. Henry Paulson, Socialist

(found at The Big Picture)

From Slate's new finance website, The Big Money, comes this dead on article by the title of Henry Paulson, Socialist.

Excerpt:

"There is a term in political philosophy to describe a government takeover of a critical industry: That term is socialism. The government is telling us that capital and credit markets cannot, for several reasons, solve the current crisis on their own—only the federal government and its massive taxpayer base have the authority and the resources to solve it. That is state socialism: the philosophy preached by the founders of the Second International, by the radical wing of the American labor movement, through the formation of the Soviet Union and its satellites, and now by Henry Paulson.

Like the ownership society, socialism is also a compelling vision; just look at the logic of the Paulson-Bernanke plan. There are several financial institutions that have brought themselves nearly to extinction by acquiring a cornucopia of toxic assets, ultimately related to mortgages. Those assets might be worth what the banks thought they were worth, and they might be worth nothing; it's hard to know because the market for them in many instances has disappeared."

GO. Read the entire piece . . .

[Joe Chi Minh]

22. Joe McCarthy would have sorted out Paulson and his Commie scumbags

in rag-time. No need for any Army-McCarthy hearings here. These people are brazen beyond belief!

[AlphaCentauri]

79. Let the old dinosaurs fall in misery and open the door to the entrepreneur to rescue the economy n/t

[ozymandius]

17. Banks Take Bigger-Than-Estimated Hit on Freddie, Fannie Conservatorship

Is there anything these clowns cannot fuck up?

We have said more than once that a terribly misguided aspect of the Freddie and Fannie conservarorship was the elimination of dividends on the GSE's preferred stock. Preferred was the best vehicle that struggling financial firms had for raising new capital. Eliminating the dividend lead to big losses in all financial preferred stocks, since investors assumed any bailout would similarly trash the preferred. Indeed, it is quite possible that this move accelerated Lehman's demise, since it closed off its best funding option.

A second reason for taking a dim view of this move was that the Treasury had encouraged banks to buy Fannie and Freddie preferred stocks, so any losses on these holdings would reduce the equity of banks that owned the stock. Paulson alluded to the issue in his statement announcing the conservatorship, and claimed very few banks would be affected, and the impact would not be significant:

The agencies believe that, while many institutions hold common or preferred shares of these two GSEs, only a limited number of smaller institutions have holdings that are significant compared to their capital.

It looks like they were wrong. From the Financial Times:

US regulators have underestimated potential bank losses on preferred stock issued by Fannie Mae and Freddie Mac, the American Bankers Association said on Monday.

Nearly a third of US banks hold preferred stock issued by the two mortgage financiers that were taken into conservatorship this month, according to an industry survey conducted by the ABA. The average bank exposure to such securities relative to core equity capital was 11 per cent.

.....

The government takeover of Fannie and Freddie all but wiped out the value of $36bn of their preferred shares. This would force exposed banks to take writedowns at the end of the third quarter that could impede future lending, the ABA warned.

.....

Regulators said this month only a small handful of banks had “significant” holdings in Fannie Mae and Freddie Mac relative to their capital bases and that they would help develop plans to restore capital at these banks.

However, the ABA survey suggests the impact of writedowns could be more widespread and more severe than regulators initially indicated, particularly among small community banks that engage in lending for small and medium-sized local businesses.

more...

http://www.nakedcapitalism.com/2008/09/banks-take-bigger-than-estimated-hit-on.html

---

Again: Paulson has been wrong 100% of the time in his public statements concerning the impact of Treasury's and The Fed's actions. He is another person, along with Cheney, from whom I would not believe a word that comes out of his mouth. Not even 'hello'.

[54anickel]

26. All I can do is laugh at myself or I'd be balling my eyes out. I had some

investments mature and needed to either roll them over or move them to something else. Told my "money dude" to just sock them into a CD, he offered several "big box" banks (including GE-wtf? anyway....). I asked for a small local bank to put it into thinking that would be a safer "bet". Shit, guess my crystal ball was on the fritz again!

[54anickel]

30. It certainly does appear as if Paulson is simply setting up a large laundromat operation

for getting those bad debt stains out of the banks. Brings a whole new meaning to the creation of the National Money Laundering Strategy :rofl:

http://www.ustreas.gov/offices/enforcement/money_laundering.shtml

[ozymandius]

19. "Hedge funds suffer mass redemptions" (Roubini proved right again)

One sign that the credit crisis is accelerating: Nouriel Roubini's forecasts are coming to fruition faster.

...

The time between Roubini making a dire forecast and it coming to pass has just collapsed. From yesterday's Financial Times:

The next stage will be a run on thousands of highly leveraged hedge funds. After a brief lock-up period, investors in such funds can redeem their investments on a quarterly basis; thus a bank-like run on hedge funds is highly possible. Hundreds of smaller, younger funds that have taken excessive risks with high leverage and are poorly managed may collapse. A massive shake-out of the bloated hedge fund industry is likely in the next two years.

In today's Independent (recall that London is an even bigger hedge fund center than New York/Fairfield County):

Hedge funds could have an unprecedented level of cash pulled out by investors this quarter, according to insiders, just as they faced millions of pounds of losses from last week's shock regulation of short selling. It has been a tough year for the industry with high-profile funds blowing up, clients increasing redemptions, as well as public fury over short selling and increased threats of regulation.

One hedge fund expert pointed to The Hedge Fund Implode-O-Meter (HFI) as how he judges the state of the industry. The HFI was set up online in the wake of the credit crunch "to track as hedge funds learn the double-edged-sword nature of the often extreme leverage they use".

The group's "imploded funds" list has hit 51 companies.....It has 34 stocks on its "ailing/watch list" of those that have suffered significant value declines or temporarily halted redemptions. According to EuroHedge, a hedge fund data provider, 272 individual funds strategies were launched during the first six months of 2008, the lowest for nine years. In the same time, 243 funds have been liquidated, the highest in a six-month period...

http://www.nakedcapitalism.com/2008/09/hedge-funds-suffer-mass-redemptions.html

---

Atrios linked to this post by Roubini yesterday.

Here's the thrust of Roubini's predictions:

We are observing an accelerated run on the shadow banking system that is leading to its unravelling. If lender-of-last-resort support and deposit insurance are extended to more of its members, these institutions will have to be regulated like banks, to avoid moral hazard. Of course this severe financial crisis is also taking its toll on traditional banks: hundreds are insolvent and will have to close.

The real economic side of this financial crisis will be a severe US recession. Financial contagion, the strong euro, falling US imports, the bursting of European housing bubbles, high oil prices and a hawkish European Central Bank will lead to a recession in the eurozone, the UK and most advanced economies.

European financial institutions are at risk of sharp losses because of the toxic US securitised products sold to them; the massive increase in leverage following aggressive risk-taking and domestic securitisation; a severe liquidity crunch exacerbated by a dollar shortage and a credit crunch; the bursting of domestic housing bubbles; household and corporate defaults in the recession; losses hidden by regulatory forbearance; the exposure of Swedish, Austrian and Italian banks to the Baltic states, Iceland and southern Europe where housing and credit bubbles financed in foreign currency are leading to hard landings.

Go read the whole thing. It lays out the situation step-by-step.

[Demeter]

25. Roubini Is The Very Model of a Dismal Scientist Economist

Does he offer any guidance out of this wilderness, I wonder?

[Tandalayo_Scheisskopf]

50. That is true, but...

He has called events with uncanny accuracy for quite a while now.

[ozymandius]

21. time to go

Have a wonderful day. I'll check back as time allows.

:hi:

[Pale Blue Dot]

27. Fed eases minority bank investor guidelines

WASHINGTON (Reuters) - The Federal Reserve on Monday relaxed some rules regarding minority shareholder investments in banks, in a move that could encourage investments by private equity and other firms.

The eagerly awaited guidelines bring greater clarity to defining limits for investors that want to buy sizable stakes in banks, but do not want to own so much of a bank that they are subject to U.S. banking regulations.

The new rules do not represent a dramatic change from the past, but are likely to attract fresh capital to the sector at a time when there is dire need for it, said Chip MacDonald, a mergers partner at the law firm Jones Day.

"The Fed is evolutionary not revolutionary, and this change reflects that," MacDonald said.

Key changes in the guidelines include allowing an investor to buy up to a 15 percent voting stake instead of the previous 9.9 percent limit. Investors can also buy up to 33 percent total equity interest, including voting and non-voting shares, instead of the 25 percent prior limit.

http://www.reuters.com/article/innovationNews/idUSN2260477720080922

Calculated Risk on the possible implications:

This is not a huge change, but those that remember the S&L crisis are a little nervous. In 1982, the Garn-St Germian bill allowed S&Ls to have just one owner, and this led to developers buying S&L and lending to their development companies at attractive rates (note: there were many other provisions to the bill that probably contributed to the S&L crisis). There is the same concern here with the new Fed guidelines - that private equity firms will lend to their other businesses excessively.

[Festivito]

29. Debt: 09/19/2008 9,727,009,619,894.34 UP 62,377,816,635.27

Held by the Public + Intragovernmental(FICA)
5,552,620,101,517.17 +4,174,389,518,377.17
(Public, I think now includes China and Brazil et. al.)

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

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. Stuff is missing. Best to keep our own history.
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3503637&mesg_id=3503801

[DemReadingDU]

57. National Debt will go to 14 digits if bailout is passed

w/o decimals

[Pale Blue Dot]

31. European markets currently down between 1-3%.

http://www.bloomberg.com/markets/stocks/wei.html

[Porschenut1066]

32. Wall St and the Martkets explained simply

I hope this helps

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

[UpInArms]

33. dollar watch

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

Last trade 76.303 Change +0.085 (+0.11%)

US Dollar Plummets More Than 2% as Credit Concerns Linger

http://www.dailyfx.com/story/bio1/US_Dollar_Plummets_More_Than_1222122092472.html

The US dollar plummeted more than 2 percent against the euro on Monday, especially as shifting interest rate expectations start to move in favor of the euro and British pound. Financial market news will likely remain the predominant driver of the markets in coming weeks, especially since it appears that massive consolidations in the banking sector are going to take place. The first sign? Goldman Sachs and Morgan Stanley were granted approval to become bank holding companies, and thus, will now be regulated by the Federal Reserve. Indeed, the days of the “big 5” investment banks are gone, as Lehman Brothers went bankrupt, Bear Stearns and Merrill Lynch were bought out, and now we have the transformation of Goldman and Morgan Stanley. The change will help the two survivors do two things: gain liquidity via deposits as financing will likely remain a problem in coming weeks, as well as put them in better positions to be acquired, to merge or to acquire smaller retail banks. On the other hand, they will also be subject to new capital requirements, additional oversight, and far lower profit margins. Nevertheless, it’s worth wondering if anyone will be seeing the sort of profits they’ve made in recent years, as asset deflation may serve as a threat for quite some time.

This has not stopped foreign banks from trying to get a deal on US banks, though, as Mitsubishi UFJ - Japan's largest bank - announced a plan to buy a 10-20 percent stake in Morgan Stanley. Likewise, Nomura Holdings - Japan's largest brokerage house - is paying $225 million for the Asian operations of Lehman Brothers. In what seems to be the norm nowadays, when the US hits bouts of financial distress, the government and financial institutions rely on foreign banks and sovereign wealth funds to save the day.

There is little in the way of US economic data scheduled for release in the next 24 hours, but traders should watch for testimony by Treasury Secretary Paulson and Federal Reserve Chairman Bernanke at the Senate Panel since it is sure to yield commentary on the latest credit turmoil. Furthermore, since Mr. Bernanke is speaking, his comments could potentially shake up US interest rate expectations. My fundamental bias for the US dollar this week remains bearish, especially as the Treasury’s $700 billion plan could be widened from just mortgage-related assets to include everything from car loans to credit card debt. These sorts of assets were poisonous for the balance sheets of financial institutions, and will be similarly toxic for the US government.

...more...

Euro Open: Poor Economic Data to Disagree With Euro Strength

http://www.dailyfx.com/story/special_report/special_reports/Euro_Open__Poor_Economic_Data_1222153375394.html

European consumption metrics are set to decline. French Consumer Spending is set to decline -0.1% on a monthly basis, bringing annualized growth to just 0.4% in the year to August, the second-lowest reading in 9 years. Italian Consumer Confidence is expected to fall to 98.4 in September as last month’s bounce to 99.5 from record lows on cheaper oil is reversed with deteriorating economic growth back in focus. Indeed, Italy’s economy shrank -0.3% in the second quarter, putting the country on the brink of recession.

Meanwhile, the manufacturing sector is expected to show continued weakness in July as Industrial New Orders are seen shrinking for the third consecutive month to print at -0.6% in July. This would mean orders fell -3.6% on an annualized basis. Purchasing Manager Indices for the manufacturing sector in France, Germany and the overall Euro Zone are also set to fall deeper into contractionary territory. Capital goods including machinery and transportation equipment are the primary exports of the currency bloc’s top economies so a decline in manufacturing will weigh heavily on economic growth. Indeed, Euro Zone GDP shrank -0.2% in the second quarter with economists’ estimates pointing to further slowdown in the three months to October.

The growth story is a familiar one at this point as for the Euro Zone, with the last remaining question being the timing of the first rate cut from the European Central Bank. Bond yields continue to forecast a 0.25% rate cut in the first quarter of next year with a grand total of 75 basis points in easing over the course of 2009 to bring benchmark borrowing costs to 3.50%.

...more...

[Buttercup McToots]

34. White House says opposes "the Credit Cardholders' Bill of Rights"

White House says opposes "the Credit Cardholders' Bill of Rights"


Mon Sep 22, 6:33 PM ET

WASHINGTON (Reuters) - The White House said on Monday it opposes legislation called "the Credit Cardholders' Bill of Rights" that would curb unfair and deceptive credit card practices, saying it would constrain banks' ability to price risk.


The White House said in a statement the bill would lead to less access to credit and higher interest rates for consumers.

"For the credit market to operate efficiently, creditors must have the flexibility to react to changes in customer risk and market conditions," the White House said.

The provision "would restrict when lenders may change terms of the credit agreement, significantly constraining the ability of financial institutions to adapt to changing credit risks and market conditions," the White House said.

The legislation is in the House of Representatives. The full House is expected to pass the bill, but similar legislation is not expected to progress in the Senate due to preoccupation with the financial crisis and U.S. presidential election.

The bill, chiefly sponsored by New York Democrat Carolyn Maloney, is similar to proposed regulations the Federal Reserve is reviewing and expected to finalize later this year.

Banks, reeling from the collapse of the U.S. housing and subprime mortgage markets and subsequent credit crisis, oppose the bill, which could limit their credit card revenue.

The bill would end double-cycle billing, in which card companies reach back to prior billing cycles to help calculate the interest charged in the current cycle.

It also seeks to give cardholders more time to pay by forcing card companies to mail bills 25 days before the due date instead of the current 14 days.

Among the biggest issuers of Visa Inc and MasterCard Inc credit cards are Bank of America, JPMorgan Chase, Citigroup, Capital One Financial Corp and Discover Financial Services.

The White House said it was concerned about unfair and deceptive practices and supports efforts to protect consumers, but added that regulations are better suited to address the issues instead of legislation.

(Reporting by John Poirier and Nancy Waitz; Editing by Gary Hill)

http://news.yahoo.com/s/nm/20080922/...kfXTf5A49v24cA
__________________

[spotbird]

45. These guys have no sense of irony

But seriously, don't give credit to risky customers. Problem solved.

[Ghost Dog]

36. IMF chief urges systemic solution to market crisis

BERLIN, Sept 23 (Reuters) - IMF Managing Director Dominique Strauss-Kahn welcomed U.S. steps to shore up its banking system, and said other governments should also be making contingency plans to cope with the global financial crisis.

...

"I welcome the bold steps being taken in the U.S. and look forward to their effective implementation," he wrote in the Financial Times.

"Other advanced economies should also be preparing comprehensive contingency plans, not least because of the complexity of dealing with the failure of institutions with extensive cross-border linkages," he said in an opinion piece headlined "A systemic crisis demands systemic solutions".

German Finance Minister Peer Steinbrueck said on Monday that the six of the Group of Seven economic powers aside from the United States did not plan any measures comparable with the U.S. package to support the banking sector.

But Strauss-Kahn said a systemic solution to solving the crisis required liquidity provision, the purchase of distressed assets, and capital injections into financial institutions.

"Nothing short of a systemic solution -- comprehensive in tackling the immediate fallout and comprehensive in addressing the root causes -- will permit the broader economy, in the U.S. and globally, to function with any semblance of normality."

Central banks should prevent runs on banks and financial institutions by reassuring depositors that bank deposits are safe and by providing liquidity to financial institutions against good collateral, he wrote.

Strauss-Kahn also urged treasuries to set up government agencies to buy distressed assets and hold them until they mature and can be safely resold. The financial system must be recapitalised, and probably with public support, he said.

"It is possible for the state to provide capital to banks in ways that do not imply nationalisation," he said. In the past IMF members had matched private capital injections with forms of capital that left ownership control in private hands, he added.

The role of credit agencies needs to be rethought as part of a review of the regulation of financial markets, with greater public scrutiny, the former French finance minister wrote.

/... http://www.reuters.com/article/marketsNews/idCALN52943220080923?rpc=44&sp=true

[UpInArms]

37. Chopper Ben the Printing Junkie is out there whining for more paper!

02. Bernanke: Failure of AIG a severe threat to global stability
8:25 AM ET, Sep 23, 2008

03. Bernanke defends govt. takeover of Fannie, Freddie, AIG
8:24 AM ET, Sep 23, 2008

04. Bernanke: Looked for private sector solution to Lehman, AIG
8:24 AM ET, Sep 23, 2008

06. Bernanke: Congress must deal with 'crisis at hand'
8:22 AM ET, Sep 23, 2008

07. Bernanke: Inflation is still a risk to the outlook
8:22 AM ET, Sep 23, 2008

08. Bernanke: Bailout must pass to avert damage to economy
8:21 AM ET, Sep 23, 2008

09. Bernanke: Action by Congress is 'urgently required'
8:20 AM ET, Sep 23, 2008

10. Bernanke: Economy hurt if financial conditions don't improve
8:17 AM ET, Sep 23, 2008

[TalkingDog]

40. Maybe this will help:

Here's that magic piggy bank you were asking for yesterday. And, as it's made of cake, if it doesn't work, you can always eat it.



nom nom nom....magic piggy bank.......

(just checking in...laterz)

[UpInArms]

41. you're being far to "sweet" - here's my offering to Whiner Chopper Ben

[muleboy303]

118. what a difference a week makes

last week's assertion by the Democratic Party's nominee for Vice-President, that for the wealthy, paying higher taxes should be considered a "patriotic act", was labeled "dumb" by the Republican Party's nominee for President. But this week, the Bush Administration's Treasury Secretary and the Federal Reserve's Chairman are asking Congress to fund a buyout of the financial sectors biggest mistakes.

A public debt incurred is a tax imposed. So the American people are all being asked to pay higher taxes in the future to "save" the economy from a "financial armegeddon" ?

Could that not be considered, ahem, ... a "Patriotic Act" ?

[antigop]

38. Look what Bush is pushing for in the bailout plan....

http://www.star-telegram.com/business/story/926938.html

Bush plan

Give the Treasury secretary broad authority to buy up to $700 billion in troubled assets from any financial institution if he decides, in consultation with the chairman of the Federal Reserve, that it’s necessary for market stability.

Raise the $10.6 trillion statutory limit on the national debt to $11.3 trillion.

Allow the Treasury secretary to buy, hold and sell the assets in any way he sees fit. That includes the ability to go outside normal government contracting practices to hire private companies to manage them.

Require the government to report to congressional budget, tax-writing and financial services committees within three months of using the authority and every six months thereafter.

Shield rescue program from judicial review.

Expire two years after enactment.

Hey, great! More crony capitalism...

[RUMMYisFROSTED]

51. Raise debt limit to $11.3T.

Which almost exactly doubles the debt from which Chimp started, $5.7T on 1-19-01.

Add the wars and the bailout and we're looking at Chimp having tripled the national debt. Is WPE even debatable anymore?

[Karenina]

70. He's now sent Cheney down to Congress with his GUN!

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3505757

[UpInArms]

39. TREASURIES-Curve steepens on bailout concerns, new supply

http://www.reuters.com/article/bondsNews/idUSHKG13968520080923

HONG KONG, Sept 23 (Reuters) - U.S. Treasury yields fell on Tuesday as safe haven seekers worried about the feasibility of Washington's $700 billion bailout plan and as risk aversion mounted amid a broad sell-off in equity markets.

However, the decline at the short end of the curve was greater as fund managers cut duration on worries U.S. debt supplies would rise to fund the rescue plan.

Trading was thin as financial markets in Tokyo were shut for a public holiday.

Yields on the benchmark 10 year U.S. Treasury note <US10YT=RR> fell to 3.84 percent, from 3.85 percent in New York but yields on two-year Treasury notes <US2YT=RR> declined to 2.13 percent from 2.16 percent.

"The bullish steepening trend will persist in the near term. There is flight to quality and safe haven flows which you can clearly see from the negative equities performance today," said Danny Suwanapruti, fixed income strategist with Standard Chartered Bank.

Asian stocks fell on the back of a surge in oil prices on Monday and on skepticism about the U.S. bailout plan which is coming under lawmaker scrutiny and may not be finalised until next week.

...more...

[Buttercup McToots]

42. Bernanke's Senate Testimony today posted by CalculatedRisk

Tuesday, September 23, 2008
Bernanke's Senate Testimony
by CalculatedRisk
Here is the text of Fed Chairman Ben Bernanke's testimony before the Senate Banking Committee today:

Chairman Dodd, Senator Shelby, and members of the Committee, I appreciate this opportunity to discuss recent developments in financial markets and the economy. As you know, the U.S. economy continues to confront substantial challenges, including a weakening labor market and elevated inflation. Notably, stresses in financial markets have been high and have recently intensified significantly. If financial conditions fail to improve for a protracted period, the implications for the broader economy could be quite adverse.

The downturn in the housing market has been a key factor underlying both the strained condition of financial markets and the slowdown of the broader economy. In the financial sphere, falling home prices and rising mortgage delinquencies have led to major losses at many financial institutions, losses only partially replaced by the raising of new capital. Investor concerns about financial institutions increased over the summer, as mortgage-related assets deteriorated further and economic activity weakened. Among the firms under the greatest pressure were Fannie Mae and Freddie Mac, Lehman Brothers, and, more recently, American International Group (AIG). As investors lost confidence in them, these companies saw their access to liquidity and capital markets increasingly impaired and their stock prices drop sharply.

The Federal Reserve believes that, whenever possible, such difficulties should be addressed through private-sector arrangements–for example, by raising new equity capital, by negotiations leading to a merger or acquisition, or by an orderly wind-down. Government assistance should be given with the greatest of reluctance and only when the stability of the financial system, and, consequently, the health of the broader economy, is at risk. In the cases of Fannie Mae and Freddie Mac, however, capital raises of sufficient size appeared infeasible and the size and government-sponsored status of the two companies precluded a merger with or acquisition by another company. To avoid unacceptably large dislocations in the financial sector, the housing market, and the economy as a whole, the Federal Housing Finance Agency (FHFA) placed Fannie Mae and Freddie Mac into conservatorship, and the Treasury used its authority, granted by the Congress in July, to make available financial support to the two firms. The Federal Reserve, with which FHFA consulted on the conservatorship decision as specified in the July legislation, supported these steps as necessary and appropriate. We have seen benefits of this action in the form of lower mortgage rates, which should help the housing market. The Federal Reserve and the Treasury attempted to identify private-sector approaches to avoid the imminent failures of AIG and Lehman Brothers, but none was forthcoming. In the case of AIG, the Federal Reserve, with the support of the Treasury, provided an emergency credit line to facilitate an orderly resolution. The Federal Reserve took this action because it judged that, in light of the prevailing market conditions and the size and composition of AIG’s obligations, a disorderly failure of AIG would have severely threatened global financial stability and, consequently, the performance of the U.S. economy. To mitigate concerns that this action would exacerbate moral hazard and encourage inappropriate risk-taking in the future, the Federal Reserve ensured that the terms of the credit extended to AIG imposed significant costs and constraints on the firm’s owners, managers, and creditors. The chief executive officer has been replaced. The collateral for the loan is the company itself, together with its subsidiaries. (Insurance policyholders and holders of AIG investment products are, however, fully protected.) Interest will accrue on the outstanding balance of the loan at a rate of three-month Libor plus 850 basis points, implying a current interest rate over 11 percent. In addition, the U.S. government will receive equity participation rights corresponding to a 79.9 percent equity interest in AIG and has the right to veto the payment of dividends to common and preferred shareholders, among other things.

In the case of Lehman Brothers, a major investment bank, the Federal Reserve and the Treasury declined to commit public funds to support the institution. The failure of Lehman posed risks. But the troubles at Lehman had been well known for some time, and investors clearly recognized–as evidenced, for example, by the high cost of insuring Lehman’s debt in the market for credit default swaps–that the failure of the firm was a significant possibility. Thus, we judged that investors and counterparties had had time to take precautionary measures. While perhaps manageable in itself, Lehman’s default was combined with the unexpectedly rapid collapse of AIG, which together contributed to the development last week of extraordinarily turbulent conditions in global financial markets. These conditions caused equity prices to fall sharply, the cost of short-term credit–where available–to spike upward, and liquidity to dry up in many markets. Losses at a large money market mutual fund sparked extensive withdrawals from a number of such funds. A marked increase in the demand for safe assets–a flight to quality–sent the yield on Treasury bills down to a few hundredths of a percent. By further reducing asset values and potentially restricting the flow of credit to households and businesses, these developments pose a direct threat to economic growth. The Federal Reserve took a number of actions to increase liquidity and stabilize markets. Notably, to address dollar funding pressures worldwide, we announced a significant expansion of reciprocal currency arrangements with foreign central banks, including an approximate doubling of the existing swap lines with the European Central Bank and the Swiss National Bank and the authorization of new swap facilities with the Bank of Japan, the Bank of England, and the Bank of Canada. We will continue to work closely with colleagues at other central banks to address ongoing liquidity pressures. The Federal Reserve also announced initiatives to assist money market mutual funds facing heavy redemptions and to increase liquidity in short-term credit markets.

Despite the efforts of the Federal Reserve, the Treasury, and other agencies, global financial markets remain under extraordinary stress. Action by the Congress is urgently required to stabilize the situation and avert what otherwise could be very serious consequences for our financial markets and for our economy. In this regard, the Federal Reserve supports the Treasury’s proposal to buy illiquid assets from financial institutions. Purchasing impaired assets will create liquidity and promote price discovery in the markets for these assets, while reducing investor uncertainty about the current value and prospects of financial institutions. More generally, removing these assets from institutions’ balance sheets will help to restore confidence in our financial markets and enable banks and other institutions to raise capital and to expand credit to support economic growth.

At this juncture, in light of the fast-moving developments in financial markets, it is essential to deal with the crisis at hand. Certainly, the shortcomings and weaknesses of our financial markets and regulatory system must be addressed if we are to avoid a repetition of what has transpired in our financial markets over the past year. However, the development of a comprehensive proposal for reform would require careful and extensive analysis that would be difficult to compress into a short legislative timeframe now available. Looking forward, the Federal Reserve is committed to working closely with the Congress, the Administration, other federal regulators, and other stakeholders in developing a stronger, more resilient, and better regulated financial system.

Posted by CalculatedRisk at 8:49 AM Comments

[Ghost Dog]

43. GLOBAL MARKETS-Stocks pressured as market awaits Paulson

* Global stocks extend fall on doubts over U.S. rescue plan

* MSCI world equity index down 0.6 pct at 314.00

* Eyes on Paulson, Bernanke testimony at 1330 GMT

Tue Sep 23, 2008 8:00am EDT LONDON, Sept 23 (Reuters) - Global stocks fell on Tuesday and the dollar struggled, weighed down by investor worries about political resistance to Washington's $700 billion bailout plan and whether the deal will work.

Worries about delays as the Bush administration and Congress haggle over details of the package paved the way for a negative start on Wall Street as markets awaited U.S. Treasury Secretary Henry Paulson's questioning by the Senate Banking Committee.

Initial exuberance about the plan to buy up toxic mortgage debt has given way to concerns about how the U.S. government would fund it and whether the package would be enough to boost the world's biggest economy, which is facing a recession.

"The focus does remain on the uncertainty surrounding the U.S. bailout package, the details of it and how exactly the final version will look. The recent developments in the U.S. suggest the debating process will be longer than expected," said David Powell, G10 FX strategist at Bank of America in London.

...

The FTSEurofirst 300 index of top European shares shed 2.1 percent, extending Monday's 2.1 percent slide, while Germany's DAX .GDAXI fell 0.8 percent.

This followed a decline of 2.2 percent for Asian equities excluding Japan .MIAPJ0000PUS. Japanese financial markets were closed for a holiday on Tuesday.

MSCI's world equity index .MIWD00000PUS shed 0.6 percent.

...

"It'll take some months before people can have confidence again in the financial system and in financial counterparties," said Hans-Juergen Delp, equity strategist at Commerzbank in Frankfurt.

Safe haven government bonds benefited from weakness in equities, pushing yields lower. The 10-year Bund yield <EU10YT=RR> fell 3.2 basis points to 4.219 percent, while the benchmark 10-year U.S. Treasury note yield <US10YT=RR> slid 6.1 basis points to 3.79 percent.

...

More weakness in the euro zone economy was revealed by a closely watched survey showing the services sector in Germany, the region's biggest economy, edging into contraction in September for the first time since January and manufacturing industry slumping to its weakest performance in over five years.

However, all eyes are on Paulson and Federal Reserve Chairman Ben Bernanke who will testify before the Senate Banking Committee at 1330 GMT.

...

Major central banks around the world have been pumping cash to improve interbank money markets, which practically seized up last week following the collapse of Lehman Brothers.

While there have been signs of improved liquidity, tensions remain high in the interbank money markets as financial institutions stay wary of lending to one another.

The overnight dollar London Interbank offered rate (Libor) was fixed at 2.95 percent on Tuesday, down a touch from around 2.97 percent on Monday and well off the high near 6.5 percent set last week.

/... http://www.reuters.com/article/marketsNews/idINLN56453220080923?rpc=44&sp=true

[Buttercup McToots]

44. Daddy doesn’t know best

http://krugman.blogs.nytimes.com/2008/09/22/daddy-doesnt-know-best/

Paul Krugman


Editorials Columnists Contributors Letters N.Y. / Region Opinions The Public Editor

September 22, 2008, 6:11 pm
Daddy doesn’t know best
I’ve had more time to read the Dodd proposal — and it is a big improvement over the Paulson plan. The key feature, I believe, is the equity participation: if Treasury buys assets, it gets warrants that can be converted into equity if the price of the purchased assets falls. This both guarantees against a pure bailout of the financial firms, and opens the door to a real infusion of capital, if that becomes necessary — and I think it will.
Can this be done? Can the Paulson juggernaut be stopped? I’m starting to think yes. Paulson displayed a lot of arrogance here — he basically marched in and said Daddy knows best, don’t worry your pretty little heads about the details. He offered no, zero, zilch explanation of how the plan was supposed to work — just “it’s a crisis and we need to act now.” And he overreached, especially with that demand for immunity from any review.
Now we’ve had a lot of pushback from economists and financial analysts, and the realization has sunk in that this particular daddy has shown very little sign of knowing best. So there’s a real chance to do something quite different.

[antigop]

54. and if those warrants get converted into equity, who gets the shareholder voting rights to those

shares? Who votes them?

[Buttercup McToots]

46. Where to hear

testimony this am?
CSPAN?
Let me know, I want to get set up...
Thanks

[Roland99]

47. Paulson/Bernanke before the Senate - 9:30am - C-SPAN 3

http://www.c-span.org/Watch/C-SPAN3_wm.aspx

[Delphinus]

53. They had better be

excoriated by Congress! :mad:

[Tandalayo_Scheisskopf]

48. Oil Short Squeeze Prompts Call to Curtail Speculators

Sept. 23 (Bloomberg) -- U.S. lawmakers may seek to include commodity speculation limits in legislation designed to rescue banks from bad mortgage investments after a squeeze in oil trading sent crude to a record gain.

Crude oil for October delivery yesterday climbed more than $25 a barrel in New York Mercantile Exchange trading, before settling 16 percent higher at $120.92 as the contract expired. The fluctuation, the biggest since Nymex crude trading started in 1983, prompted the Commodity Futures Trading Commission to say it was ``closely monitoring'' prices for manipulation.

``I know for a fact that some members of Congress are working to include speculation legislation in the financial markets legislation,'' CFTC Commissioner Bart Chilton said yesterday in an e-mail. ``Those efforts, I think, may get fueled by the large spike in oil prices.''

Any move to include commodity limits in the legislation to rescue Wall Street risks encountering opposition from the administration and delaying the law. President George W. Bush called on Congress not to load the $700 billion legislative rescue plan with ``unrelated provisions.''

http://www.bloomberg.com/apps/news?pid=20601072&sid=aMSdh.rgPmx0&refer=energy

On edit: I watched the energy market yesterday. It struck me as not unlike a bunch of coke heads being confronted with the last kilo of ether-washed Peruvian Krell on earth. They could not stop themselves.

Time for some adult supervision.

[antigop]

55. Well, that didn't take long did it?

post by maddezmom in LBN

http://ap.google.com/article/ALeqM5isOFwdbq0tsqatW6vJpkDRTI1gMgD93CESAG1

Democratic presidential candidate Barack Obama says he probably would have to delay the spending programs he has called for during his campaign in light of the massive government bailout being proposed for the nation's financial industry.

The Bush administration and Congress on Tuesday were discussing the details of a $700 billion financial rescue plan. Obama said the problem should be dealt with as a short-term crisis with bipartisan action and then as a long-term structural issue.

"Although we are potentially providing $700 billion in available money to the Treasury, we don't anticipate that all that money gets spent right away and we don't anticipate that all that money is lost. How we're going to structure that in budget terms still has to be decided," Obama told NBC's "Today" show in an interview aired Tuesday.

"Does that mean I can do everything that I've called for in this campaign right away? Probably not," he said. "I think we're going to have to phase it in."

The Illinois senator has proposed ambitious and expensive initiatives aimed at health care, education, infrastructure, alternative energy and other concerns. He didn't say what proposals might be delayed first, adding that tax revenues would play a role in any budget decisions. He made no reference to the rescue plan's impact on his call for tax cuts for most taxpayers and tax increases for wealthier Americans.

We called this one, didn't we? Who on the SMW asked the question,"How soon will it be that we hear from Obama about not being able to implement social programs?"

[antigop]

56. WSJ: Auto-Finance Firms Seek a Helping Hand

http://online.wsj.com/article/SB122212851099465403.html

Automobile-finance companies lead a growing list of liquidity-starved industries trying to get in on the huge government rescue plan targeted originally at cleaning up bad mortgage bets.

As Congress crafts a $700 billion federal government plan to buy up financial companies' troubled assets, auto-finance-company lobbyists are pressing for specific language including them in the plan, according to a lobbyist for one of the Big Three auto makers.

Other businesses, such as student and credit-card lenders, also could eventually access the program. To permit that, House and Senate versions of the bill written overnight -- with lobbyist input -- ...

You need a subscription to see the rest...

[Roland99]

59. That slide down the slippery slope started after the 2nd bailout.

Where does it end?


When the last corporation has been bailed I guess. Screw the individuals.

[Roland99]

58. DJIA hits +120...now at +86.

speculative joy that something will come out of today's hearing?

[dweller]

60. okay, i'm just curious

earlier this morning i took a look at the link i visit to see some of the details of yesterday's market maneuvering: http://finance.yahoo.com/q/cp?s=%5EDJI

and note AIG volume at xxx,xxx and it was going up then (7:30ish) and went to 1,xxx,xxx and continued climbing. So over the next hour before the market opened checked often and it was steadlly climbing to 4,xxx,xxx by market opening.

it is now at 25,xxx,xxx and climbing like crazy. So AIG is the next new big deal? Weren't they just floundering like yesterday?

dp, now it's 28,xxx,xxx in the time i typed this.

[antigop]

61. Article from yesterday's SMW

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3503637&mesg_id=3504528

[dweller]

62. thanks

so, they are trying to stay OUT of the bailout...interesting.

dp

[antigop]

64. yw--dang, it's hard to keep up with all of this, isn't it? Thanks to everyone on the SMW. n/t

[antigop]

65. deleted -- posted in wrong spot n/t

[Dr.Phool]

67. They said yesterday that they were going to try to raise fresh capital.

Maybe new stock?

[dweller]

69. whatever it is

it's working, volume just passed 60,xxx,xxx

dp

[antigop]

66. Hammering home the Keating Five message (video)

From Sirota's blog:
http://action.credomobile.com/sirota/2008/09/hammering_home_the_keating_fiv.html

I went on Fox News on Monday to discuss the financial meltdown. After taking a sober look at the bipartisan nature of Wall Street deregulation, I forced the discussion to focus on John McCain's Keating Five past. It was actually a pretty incredible debate. Both the Fox News anchor and the GOP spokesman basically freaked out and offered up the "nothing to see here, move along" deflection. They want to hide the undebatable fact that McCain was rebuked by the Senate Ethics Committee for intimidating regulators on behalf of one of his biggest campaign donors, Charles Keating.

[antigop]

68. Paulson's conflicts of interest spark concern

http://www.huffingtonpost.com/2008/09/22/paulsons-conflicts-of-int_n_128476.html

As the financial markets took a turn for the worse over the past few weeks, conventional wisdom on Wall Street and Washington was that Hank Paulson, the Treasury Secretary, was the right man for the difficult job. A seasoned hand on financial matters, the former Goldman Sachs head had an acute understanding about how markets work, and had earned accolades from both political parties for his willingness to take a level-headed approach on these matters.

Now, however, confidence in Paulson is eroding, with critics questioning whether the Treasury Secretary's Wall Street connections have impacted his approach to the current crisis. Both progressive and conservatives and sounding the alarm.

"Some are saying that we should simply trust Mr. Paulson, because he's a smart guy who knows what he's doing," wrote Paul Krugman of the New York Times. "But that's only half true: he is a smart guy, but what, exactly, in the experience of the past year and a half -- a period during which Mr. Paulson repeatedly declared the financial crisis 'contained,' and then offered a series of unsuccessful fixes -- justifies the belief that he knows what he's doing? He's making it up as he goes along, just like the rest of us."

Then there was conservative pundit Michelle Malkin, hardly of the same ideological ilk of Krugman, who declared on Fox News: "I think that Hank Paulson's corporate...record is very important. While he was a Goldman Sachs, the company was buying up a lot of Chinese banks in particular, and at the time of his nomination, there were very serious questions raised about the conflicts of interest involved, and where his priorities are, and who he really is looking after."

Malkin was referencing the stipulation, in Paulson's bailout plan, for the U.S. Treasury to help prop up some foreign banks. But the main thrust of her point -- that Paulson's past mattered -- was echoed among economists, analysts, and lawmakers throughout Monday. Some of Paulson's former associates and colleagues are the very people he now is in position to help aide with taxpayer dollars. As McClatchy News reported, "Paulson's former assistant secretary, Robert Steel, left in July to become head of Wachovia, the bank based in Charlotte, N.C., that has hundreds of millions of troubled mortgage loans on its books."

[Tandalayo_Scheisskopf]

71. Kasino Kutups sit on their hands.

Not a lot of movement right now.

PETROLEUM ($/bbl)
PRICE* CHANGE % CHANGE TIME
Nymex Crude Future 108.74 -.63 -.58 10:23
Dated Brent Spot 102.78 -1.33 -1.28 10:53
WTI Cushing Spot 112.83 -8.09 -6.69 09:05


PETROLEUM (¢/gal)
PRICE* CHANGE % CHANGE TIME
Nymex Heating Oil Future 301.90 -2.40 -.79 10:23
Nymex RBOB Gasoline Future 263.60 -6.78 -2.51 10:23


NATURAL GAS ($/MMBtu)
PRICE* CHANGE % CHANGE TIME
Nymex Henry Hub Future 7.99 .33 4.35 10:23
Henry Hub Spot 7.68 -.14 -1.79 09/22
New York City Gate Spot 7.93 -.07 -.88 09/22


ELECTRICITY ($/megawatt hour)
PRICE* CHANGE % CHANGE TIME
Mid-Columbia, firm on-peak, spot 57.45 .80 1.41 09/22
Palo Verde, firm on-peak, spot 53.50 -.55 -1.02 09/22
Bloomberg, firm on-peak, day ahead spot/West Coast

[antigop]

72. Can you trust a Wall Street veteran with a Wall Street bailout?

http://www.mcclatchydc.com/227/story/52856.html

Making the rounds on the Sunday morning talk shows, Treasury Secretary Henry Paulson repeatedly said today's financial problems were long in the making. He should know. He was part of the Gold Rush that has brought the global financial system to the brink of collapse.

Paulson presided over one of the most profitable runs on Wall Street as chairman and chief executive officer of investment banking titan Goldman Sachs & Co. from 1999 until President Bush nominated him on May 30, 2006 to take over the Treasury Department.

Back then, Bush saw Paulson's Wall Street experience as a plus. "Hank will follow in the footsteps of Alexander Hamilton and other distinguished Treasury secretaries who used their talents and wisdom to strengthen our financial markets and expand the reach of the American Dream," Bush said at the time.

But with Paulson now seeking virtually unfettered authority to administer the largest bailout of the financial industry in U.S. history, many are wondering whether Paulson also doesn't come with enormous potential conflicts of interest.

That was one reason Democrats on Sunday expressed reluctance to approve the administration's draft legislation that would leave to Paulson virtually all authority over the proposed $700 billion bailout. The legislation would allow him to decide which securities to buy, from whom to buy them, and which outside companies and people to hire to help him do so.

[Dr.Phool]

73. Obama, Democrats, about to get punked by Karl Rove again.

Folks, dumb as rocks Dodd, Reid, and Pelosi are about to snatch defeat from the jaws of victory....again. All the very worst legislation, designed to separate them from their base, always comes out right before a recess, and it's always an "emergency".

Republicans have baited the hook, and we're ready to chomp on it, with a few minor revisions. And they'll throw it in our faces for the next six weeks continuously.


Bush-Pelosi bailout plan
by kos
Mon Sep 22, 2008 at 03:29:44 PM PDT

Like Digby says, this is very crafty framing from conservative Patrick Ruffini:

Republican incumbents in close races have the easiest vote of their lives coming up this week: No on the Bush-Pelosi Wall Street bailout.

God Himself couldn't have given rank-and-file Republicans a better opportunity to create political space between themselves and the Administration. That's why I want to see 40 Republican No votes in the Senate, and 150+ in the House. If a bailout is to pass, let it be with Democratic votes. Let this be the political establishment (Bush Republicans in the White House + Democrats in Congress) saddling the taxpayers with hundreds of billions in debt (more than the Iraq War, conjured up in a single weekend, and enabled by Pelosi, btw), while principled Republicans say "No" and go to the country with a stinging indictment of the majority in Congress....

In an ideal world, McCain opposes this because of all the Democratic add-ons and shows up to vote Nay while Obama punts.

History has shown us that "inevitable" "emergency" legislation like the Patriot Act or Sarbanes-Oxley is never more popular than on the day it is passed -- and this isn't all that popular to begin with. All the upside comes with voting against it.

If Democrats want to throw away this election, there's no better way to do it than to join Bush in his "Chicken Little" act, and raid the treasury to bail out those incompetent and greedy Wall Street assholes.

Ed Kilgore riffs further:

For McCain and other Republicans, voting "no" on Paulson without accepting the (snip)

More at.http://www.dailykos.com/storyonly/2008/9/22/15256/2632/465/606678

[antigop]

74. I think so...and as I stated upthread, that staffer at my repug Senator's office said NO to bailout

The senator is up for re-election. The staffer emphatically said the Senator WOULD NOT vote for the bailout.

[Roland99]

76. The Politics of Fear has reared its head yet again

[Ghost Dog]

75. Europe shares end lower on anxiety over US plan

Tue Sep 23, 2008 11:42am EDT LONDON, Sept 23 (Reuters) - European shares ended sharply lower for the second straight day as investors fretted about the fate of a $700 billion financial sector bailout plan that the United States is trying to push through Congress.

The pan-European FTSEurofirst 300 index ended 1.5 percent lower at a provisional 1,109.93 points, adding to a 2.1 percent loss on Monday after a record surge on Friday when news of the plan emerged and several countries instituted short selling bans.

Banks took most points off the index, with UBS (UBSN.VX: Quote, Profile, Research, Stock Buzz) falling 7.9 percent and Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz) losing 5.9 percent.

Miners also fell sharply, tracking metal prices. Anglo American (AAL.L: Quote, Profile, Research, Stock Buzz) was the heaviest-weighted individual loser on the index, falling 8.2 percent, while Rio Tinto (RIO.L: Quote, Profile, Research, Stock Buzz) lost 5.1 percent.

/... http://www.reuters.com/article/marketsNews/idCALN51753420080923?rpc=44

[Roland99]

77. 12:35pm - Not a lot of action...flat now after +120

Dow 11,033.45 +17.76
Nasdaq 2,183.57 +4.59
S&P 500 1,206.38 -0.71
10-year 3.82% 0.00
Oil $107.10 -$2.27
Gold $896.00 -$13.00

[Dr.Phool]

78. Ooops! There it went. Down 35pts. Below PIL 11,000 again.

[Roland99]

84. -102 now...220pt turnaround. Just above 10,900!

[nolabels]

80. They have all hedged their bets and are waiting to see if the US Congress makes a move

The fishing bob isn't moving but they are waiting for it to. The bright side of this is maybe the fish is too big for them to reel in or the whooper they want to get on the line is satisfied and comfortable on how things sit for the next six weeks and doesn't bite

[Dr.Phool]

81. I just got off the phone with Bill Nelson's office.

He seems to want too much tacked onto the bill, that Wall Street will find repugnant. I urged his staff to hold hearings and investigations, and to not do anything before the recess.

[nolabels]

82. The farther away from ground zero one gets the more people see it for what it is

Many of these investment bankers have sold their companies souls and now they expect taxpayers to save them from the wolfs. It's just tough luck for them. It would be a rare case if there was somebody who has not been a victim of business going under. We may pay in the short term but it's better that way than mortgaging everybody into it for the long term.

People knew there were no Federal guarantees in those investment banks and so if they loose their shirts they should not be surprised

[CatholicEdHead]

83. Wow, I first see it at +120 today and now it is -122

[nolabels]

85. My google news says "Dow 10,857.83 -157.86 (-1.43%)"

But who's counting, do you own stock shares personally?

We all might get screwed but people believed and messed around in the stuff will really get screwed, hopefully at their own expense :shrug:

[ozone_man]

86. I was counting.

It's my pool day, and would like nothing better than a nice dip. ;)

[CatholicEdHead]

89. I am going by my Vista Stock Market Widgit

20min Delay from IDC Comstock.

It is -163 as I type and probably heading lower.

[nolabels]

99. My 15 min delayed google news now says "Dow 10,993.63 -22.06 (-0.20%)"

My bet it's stays at around 11,000 at close :-)

[radfringe]

87. REAGAN REVISED

http://www.worldnewstrust.com/wnt-reports/commentary/toon-the-radical-fringe-dory-hippauf.html

[Dr.Phool]

88. Bailin' and Palin.

[RUMMYisFROSTED]

91. Wha' happened?

Note to self: Remember to insure pony shipment.

[radfringe]

92. lol... market to fragile too n/t

[Demeter]

93. Lazarus Got Up and Walked

It's a miracle!

[Demeter]

126. Ooops! Had a Relapse

You CAN keep a good man down.

[RUMMYisFROSTED]

94. Boo! What's Congress going to do?

SM in holding pattern to see if threats worked.

[Dr.Phool]

95. David Kay Johnston: Reporters start your skepticism

I x-posted this from the Editorials Forum. I found it over at TPM. This removes all doubt that this is a phony, manufactured, scare campaign.

If this was really as bad as Poulson and Bernanke say, why are they still offering these "toxic" loans?



From DAVID CAY JOHNSTON: Journalists, start your skepticism.

In covering the proposed $700 billion bailout of Wall Street don't repeat the failed lapdog practices that so damaged our reputations in the rush to war in Iraq and the adoption of the Patriot Act. Don't assume that Congress must act instantly, as so many news stories state as if it was an immutable fact. Don't assume there is a case just because officials say there is.

The coverage of the Paulson plan focuses on the edges, on the details. The focus should be on the premise. And be skeptical of what gullible Congressional leaders, most of them up before the voters in a few weeks, say after being given a closed-door meeting on supposed horrors.

The Administration has scared the markets and some key legislative leaders, but it has not laid out a coherent, specific and compelling need for this enormous proposal, which is the equivalent of a one-time 55 percent income tax surcharge. (Instead the money will be borrowed, so ask from whom and how this much can be raised so quickly if the credit markets are nearly seized up with fear.)

Ask this question -- are the credit markets really about to seize up?

If they are then lots of business owners should be eager to tell how their bank is calling their 90-day revolving loans, rejecting new loans and demanding more cash on deposit. I called businessmen I know yesterday and not one of them reported such problems. Indeed, Citibank offered yesterday to lend me tens of thousands of dollars on my signature at 2.99 percent, well below the nearly 5 percent inflation rate. That offer came after I said no last week to a 4.99 percent loan.

If the problem is toxic mortgages then how come they are still being offered all over the Internet? On the main page AOL generates for me there is an ad for a 1.9% loan (which means you pay that interest rate and the rest of the interest is added to your balance due.) Why oh why or why would taxpayers be bailing out banks that are continuing to sell these toxic loans?

(snip) more

http://poynter.org/forum/view_post.asp?id=13611

[antigop]

104. I think we ought to all be calling for Paulson's and Bernanke's resignation. n/t

[Demeter]

127. I Want Them Jailed! Asset Stripping Never Sounded So Right!

[antigop]

96. Kos: It's a feature, not a bug

http://www.dailykos.com/storyonly/2008/9/23/14111/2568/498/607662

In my last post, I was trying to figure out why we're concerned about conditions on the bailout that would reduce participation.

Sources familiar with the Treasury's thinking said warrants would limit participation in the program. Only failing banks would be willing to give the government stock in exchange for buying up their bad assets, these sources said. But key Democrats said the point was critical.

As commenter heart of quince asked:

Why do we want to help banks that AREN'T failing?

That's a damn good question, and I thought, "well, maybe that's a mis-paraphrase by a reporter". But it's not. Straight from the horses' mouth, the White House's press lackey:

With respect to executive pay, again, I'm not going to get into specific, point-by-point details on what our views are on that, other than the Secretary of Treasury said it would make more difficult to make this plan work and effective if you provide disincentives for companies and firms out there who are holding mortgage-backed securities and other securities from participating in the program. You have to remember, these are not all weak or troubled firms that own mortgage-backed securities. A lot of them are very successful banks and investment houses that have done very well, have been responsible, are holding performing assets that have value. They were not necessarily irresponsible players, and so you have to be careful about how you deal with them.

[Demeter]

100. Another Mystery Explained! Thanks antigop!

Just another BushCo frat party....who'd have thunk it?

[Demeter]

97. Bernanke Climbing the Heights of Chutzpah:Bernanke: Recession more likely without bailout

http://news.yahoo.com/s/ap/20080923/ap_on_bi_ge/financial_meltdown_601
By JULIE HIRSCHFELD DAVIS and JEANNINE AVERSA, Associated Press Writers




Federal Reserve Chairman Ben Bernanke bluntly warned reluctant lawmakers Tuesday they risk a recession with higher unemployment and increased home foreclosures unless they act on the Bush administration's $700 billion plan to bail out the financial industry.

Despite the warning, influential lawmakers in both parties demanded changes in the White House-backed proposal, and conservative Republicans recoiled at the prospect of federal intervention into private capital markets.

Six weeks before the elections, both major party presidential contenders also insisted on alterations in the administration's prescription for the worst financial crisis in decades.

WOLF!WOLF!


YEAH, WE KNOW, BERNANKE---WHERE WERE YOU LAST YEAR? THE WOLF'S EATEN THE FLOCKS ALREADY.

OH, YOU MEAN YOUR WEALTH IS IMPERILED? WELL, WE'LL GET RIGHT ON IT. (CLICK)

[Demeter]

98. Senate attack on bailout lacks explicit threat

http://news.yahoo.com/s/nm/20080923/ts_nm/us_financial_bailout_senate_news_1
By Kevin Drawbaugh and Richard Cowan



Many members of the Senate blasted the Bush administration's Wall Street bailout plan on Tuesday, but no senator has come forward so far with an explicit pledge to kill the $700 billion proposal.

The rules of the Senate, unlike the House of Representatives, give individual lawmakers substantial power to delay or halt legislation, but three Senate aides said there were no clear signs yet of that power being exercised.

As the Senate Banking Committee held a hearing on the plan put forward by the Treasury Department, aides said much would depend on Alabama Sen. Richard Shelby, the committee's top Republican, who was sharply critical at the hearing.

The outlook for Treasury's plan would dim greatly if Shelby were to move to block the bill that is expected to emerge soon from congressional debate over the plan, the aides said.

The Democrat-controlled Congress and the Republican Bush administration are in negotiations over specifics of the bailout bill, with the House aiming to get legislation to a floor vote possibly on Friday.

Vice President Dick Cheney was spending much of Tuesday on Capitol Hill trying to address the concerns of his fellow Republicans in the House and Senate.

A senior Republican aide said House Minority Leader John Boehner told his rank-and-file party colleagues that the "economy hangs in the balance" and that a bill is needed.

Boehner also has expressed opposition to some provisions that Democrats want to add to the administration's request for sweeping authority to buy troubled assets off the books of financial companies.

Meanwhile, House Majority Leader Steny Hoyer pressured the White House to take more responsibility for the bailout in this election year, saying President George W. Bush should make a nationally-televised address to explain "why we're here, why it's necessary to take the action that they (the administration) have requested."

STOPPING SHORT

Other senators, including Republicans Jim Bunning of Kentucky and Jim DeMint of South Carolina, have expressed strong concerns. But the aides said these lawmakers also have stopped short of warning they would work to block the bill.

In a hearing room swarming with financial industry lobbyists and sign-carrying protesters, Sen. Mike Enzi said the plan presents "enormous cost and enormous risk ... if approved in its current form, this plan will cost every man, woman, and child in this country approximately $2,300."

But Enzi, a Wyoming Republican, added, "Unfortunately, the only plan more costly would be doing nothing at all."

Treasury Secretary Henry Paulson offered a plan on Saturday to authorize the government to use taxpayer funds to buy up billions of dollars in bad mortgage-backed securities that were created by investment banks during the home price bubble.

Now that the bubble has popped, many U.S. homeowners saddled with mortgages they cannot afford are defaulting. As a result, securitized debt instruments that depended on those homeowners being able to repay their loans are now broken.

Banks and other institutions have recorded massive losses from their bad bets on these instruments, many of which are so complex that the banks themselves and the capital markets are unable to estimate accurately the potential for more losses.

FEAR AND CONFUSION

Fear and confusion has spread through world capital markets, making banks unwilling to make new loans and threatening the stability of a global financial system that relies heavily on unprecedented amounts of leverage.

Paulson's plan would shift the broken securities into a huge government portfolio, which he says would allow capital markets to resume working.

At the hearing, Shelby complained that the Treasury's plan has little for those outside of the financial industry. He said it aims to rescue the same institutions that created the crisis with "sloppy underwriting and reckless disregard for the risks they were creating, taking, or passing on to others."

Shelby said Wall Street bet the government would rescue them if they got into trouble. "It appears that bet may be the one that pays off," he said.

"What troubles me most is that we have been given no credible assurances that this plan will work. We could very well spend $700 billion and not resolve the crisis."

(Additional reporting by Patrick Rucker; Editing by Tim Dobbyn)

[Demeter]

102. You Know, Benanke and Paulson Have Just Lost Whatever Credibility They Had Left

I think we'll see some resignations (voluntary or not) but whether before or after the elections, I don't know.

They could try to crash the economy (like they haven't been doing that for 8 years now) but the damn thing won't stay dead....

[TalkingDog]

105. Did anybody else hear that?

Not watching today, but a friend e-mailed to say:

"I don't know if you listened to the Senete hearing today on the financial bailout, but the one key sentence from Bernanke which I found key was the one where he said the Gov't planned to by the bank assets at maturity value and not market value. "


Quelle surprise, N'est Pas?

[antigop]

108. See post #107 n/t

[antigop]

101. Republicans express more skepticism on bailout plan

http://thehill.com/leading-the-news/republicans-express-more-skepticism-on-bailout-plan-2008-09-23.html

House Republicans expressed skepticism about the administration’s plan for bailing out Wall Street during a closed-door meeting with Vice President Cheney and other administration officials Tuesday.

Lawmakers leaving the hour-and-a-half-long meeting said Cheney was told that the plan lacked the details they needed to grant swift approval for the Treasury to be given $700 billion to purchase failing mortgage-related securities from banks and other financial institutions.

“Just because God created the world in seven days doesn't mean we have to pass this bill in seven days," said Rep. Joe Barton (R-Texas). Barton said he did not appreciate being told he had to vote for legislation with only one week to review complicated terms with which he was not familiar.

In the Senate, some Republicans said they also had doubts about the plan.

Sen. Orrin Hatch (R-Utah) said he has not yet made a decision but is hearing “all negative” feedback from voters in Utah about Treasury Secretary Henry Paulson’s plan.

Wanna bet the new talking point to go out is...."It's not a bailout." ?

[antigop]

103. Paulson: I didn't suggest oversight in the bailout plan because it would be presumptuous

http://thinkprogress.org/2008/09/23/paulson-oversight/

In his opening statement, Paulson struck a defensive tone, blaming Congress for misunderstanding him in thinking he didn’t want robust oversight. He just didn’t want to be “presumptuous,” he explained:

We gave you a simple, three-page legislative outline and I thought it would have been presumptuous for us on that outline to come up with an oversight mechanism. That’s the role of Congress, that’s something we’re going to work on together. So if any of you felt that I didn’t believe that we needed oversight: I believe we need oversight. We need oversight.

What about Section 8?

[Roland99]

106. 3:48pm - Faith no more...

Dow 10,858.15 -157.54
Nasdaq 2,158.68 -20.30
S&P 500 1,190.18 -16.91
10-year 3.84% +0.02
Oil $106.61 -$2.76
Gold $891.20 -$17.80

[nolabels]

111. Still got about 269 points to go

Looks like the floor has broke open, The 11,000 fishing float is now underwater and something is sinking with it (could it be the crooks re-election futures are really going down the drain). It's bad to think some will have to take a bath before they wake up but that is how it's looking

Six weeks should be plenty of time to get back from where Bush left from, or at least it sounds that way :shrug:

[antigop]

107. Bernanke: Government will buy assets above the 'fire-sale' market value

http://www.propublica.org/article/bernanke-govt-will-buy-assets-above-market-value-923/#When:14:07:00Z

As we noted this morning, a big question mark remains on the administration's bailout proposal: how much the government will pay for the distressed assets.

At the hearing before the Senate banking committee today, Fed Chairman Ben Bernanke and Treasury Secretary Hank Paulson have said that they don't yet know how they will value the assets, except to say that they will use "market-driven mechanisms as much as possible" and many experts will be consulted. But in his opening remarks, Bernanke did provide some clarity. The point of the intervention, he said, is for the government to step in and buy the assets above the "fire sale" prices they would fetch if sold today.

The securities have "two different prices," Bernanke explained in his opening statement: the fire-sale price and the "hold-to-maturity" price. The fire-sale price is "the price a security would fetch today if sold quickly into an illiquid market." The alternative is "what the security would be worth eventually when the income from the security is received over time."

The government is planning to buy these securities at the "hold-to-maturity" price, he explained, which would "give the market good information about what the hold-to-maturity price is." Buying at that price, he added, would "minimize" taxpayer risk -- presumably meaning that the government would not be buying at too high a price to recoup the investment along down the line.

[Roland99]

109. And then *sell* them at fire-sale prices. Buy High, Sell Low!!!

[ticked]

134. Yep that about sums it up.

That is what Paulson and I'm sure all the wall street fat cats are hoping for. So they all make out and we all lose. That is the perfect solution to our financial crisis.

[Roland99]

110. At the close - What a mess...

Dow 10,853.85 -161.84
Nasdaq 2,153.34 -25.64
S&P 500 1,188.22 -18.87
10-year 3.84% +0.02
Oil $106.61 -$2.76
Gold $891.20 -$17.80

[Hugin]

112. Has it settled yet?

:hide:

[ozymandius]

114. Here's the settled numbers and blather.

Dow 10,854.17 Down 161.52 (1.47%)
Nasdaq 2,153.33 Down 25.65 (1.18%)
S&P 500 1,188.22 Down 18.87 (1.56%)
10-Yr Bond 3.841% Up 0.015
NYSE Volume 5,255,960,500
Nasdaq Volume 2,021,973,375

4:15 pm : Stocks ended lower Tuesday in a volatile session that was dominated by testimony from key financial officials.

The S&P 500 settled with a loss of 1.6%, near session lows, following a late-session surge in broad-based selling interest. All ten of the economic sectors ended the day in negative territory. Volume was on the light side, with only 1.2 billion shares exchanging hands on the NYSE.

Fed Chairman Bernanke, Treasury Secretary Paulson, SEC Chairman Cox and OFHEO director Lockhart testified on the current financial turmoil to the Senate Banking Committee, which included prepared remarks and a question and answer session. The majority of focus was on Paulson and Bernanke regarding the Treasury's proposed plan to alleviate the credit market turmoil by buying up to $700 billion in illiquid assets from financial firms.

Bernanke said urgent action from Congress is required to stabilize the situation, or there may be "very serious consequences for our financial markets and for our economy." The Federal Reserve supports the Treasury's proposal.

There was a substantial amount of banking committee member contention regarding the plan, which sparked some volatility in the stock market on concerns the size of plan may be limited, or it will take longer-than-expected to pass.

The financial sector fell 1.5%.

Influential Oppenheimer analyst Meredith Whitney cut her earnings estimates on several financial firms, including Bank of America (BAC 33.58, -0.57), Citigroup (C 19.52, -0.49) and Wachovia (WB 14.79, -1.81). Whitney believes any government plan has "little hope of improving core fundamentals over the near and medium term."

The industrials sector (-2.5%) was a laggard. General Electric (GE 24.84, -1.31) was downgraded to Neutral from Buy at Merrill Lynch. The downgrade was prompted by Merrill's projection that GE Commercial Finance and GE Money will each see earnings fall 15% next year. As a result, GE's 2009 and 2010 earnings estimates were lowered at Merrill.

The energy (-2.9%) and materials (-3.2%) sectors also saw steep declines as oil and other commodities went on the decline.

Crude fell 2.3% to $106.83 per barrel this session, which followed yesterday's extremely volatile action. The Energy Information Administration confirmed that yesterday's rally in crude for October delivery, which saw prices spike as much as $25.45 to $130.00 per barrel, was due to short-covering or market manipulation.

Commodities as whole declined 1.6% as the dollar gained 0.5%.

Looking ahead, the Treasury's proposed $700 billion plan will once again be in focus Wednesday, with Treasury Secretary Paulson and Fed Chairman Bernanke appearing before the House Financial Services at 2:30 PM ET.DJ30 -161.52 NASDAQ -25.64 NQ100 -1.1% R2K -1.6% SP400 -1.2% SP500 -18.87 NASDAQ Adv/Vol/Dec 915/1.99 bln/1902 NYSE Adv/Vol/Dec 879/1.15 bln/2276

[ozymandius]

117. The Meredith Whitney part is particularly striking.

Whitney believes any government plan has "little hope of improving core fundamentals over the near and medium term."

I'm searching for a link to the quote in context. Has anyone found one?

[Hugin]

121. Here ya go, Ozy.

http://www.reuters.com/article/wtMostRead/idESBNG6521320080923

It's at the top of page two of the article.

"Credit market disruption has had under-appreciated consequences on the economy... what started last summer has accelerated and intensified so much so that we believe any government bailout plan has little hope of improving core fundamentals over the near and medium term," Whitney said."

Edited to add extended quote.

[ozymandius]

122. Thank you Prag!

So, to boil it down, we're screwed either way. What say anybody?

[Hugin]

124. I say we keep the Constitution intact.

But, you knew that'd be my answer.

(I shall cogitate up a more complete response shortly.)

[Demeter]

128. I Second the Notion, and Add Vive La Revolution!

sorry, i never took French, because I knew I would never be able to spell anything in it.

[Hugin]

130. Now, here's some stones!

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x4071058

My sentiments exactly.

[Ghost Dog]

113. Sarkozy wants summit to overhaul "crazy" finance

UNITED NATIONS, Sept 23 (Reuters) - French President Nicolas Sarkozy called on Tuesday for a summit of world leaders in November to examine ways to overhaul a "crazy" financial system in the wake of the crisis that has rocked global markets.

In a speech to the U.N. General Assembly, Sarkozy called on major powers to devise a new form of regulated market economics that would prevent the excesses behind the current credit crisis which felled investment bank Lehman Brothers.

"Let us build together a regular, regulated capitalism, where entire sections of financial activity are not subject solely to the assessment of market operators," he said, calling for greater transparency in market transactions.

"It is the responsibility of heads of state and government of the countries most directly concerned, to meet before the end of the year to examine together the lessons that can be drawn from the financial crisis, which is the worst the world has seen since that of the 1930s," he added.

...

Sarkozy stopped short of outlining a plan of how to reform the system, but he criticised hedge funds and credit ratings agencies for their roles in the current crisis and denounced pay practices in investment banks and elsewhere, adding that all those issues should be discussed in November.

HEDGE FUNDS

"I am told 'We don't know who is responsible.' Oh yeah? Well let me tell you that when things were going well, we knew who got bonuses. What a strange system," he told a news conference after his speech. "How can you claim to be responsible for success and not responsible for failure?" he said, denouncing "a crazy system which has been our system for years".

He said the crisis began with hedge funds and called for closer regulation of credit ratings agencies.

"Let us build a capitalism where ratings agencies will be subject to controls and punished when necessary, where transparency of transactions will replace opaqueness. The opaqueness is such today that we have difficulty understanding even what is happening," he said in his speech.

He also repeated a call he made on Monday night for those who were responsible for the current crisis to be punished, but did not go into specifics. "Let those who have put people's savings in danger be punished and finally assume their responsibilities," he said.

/... http://www.reuters.com/article/marketsNews/idINLN52915220080923?rpc=44&sp=true

[Hugin]

135. There goes Sarkozy, making sense again. n/t

[dweller]

115. AIG volume for the day 245,259,186

and then there's this:http://biz.yahoo.com/ap/080923/aig_dividend.html

AIG suspends quarterly dividend
American International Group suspends quarterly dividend of 22 cents per share

NEW YORK (AP) -- American International Group Inc. said Tuesday it is suspending dividend payments on its common stock to help shore up its finances a week after the government provided the insurer an $85 billion loan to help it stay in business.

The insurer had previously paid a quarterly dividend of 22 cents per share. It most recently paid out a dividend on Sept. 3. As recently as May, AIG increased the dividend to 22 cents from 20 cents.

One of the world's largest insurers, AIG was bailed out by the government last week as it faced a liquidity crunch amid the latest downturn in the financial sector that saw investment bank Lehman Brothers Holdings Inc. file for bankruptcy protection and Merrill Lynch & Co. sell itself to Bank of America Corp.

As part of a deal completed with the government, AIG received a two-year, $85 billion loan. In return, the government was given options to purchase a nearly 80 percent stake in the company.

Also as part of the agreement, AIG replaced its chief executive, naming Edward Liddy chairman and CEO. Liddy replaced Robert Willumstad, who took over as CEO in June.

Shares of AIG rose 27 cents, or 5.7 percent, to $4.99 in afternoon trading. Shares fell as low as $1.25 last week as the government stepped in to provide support for the embattled insurer. The stock traded at a year high of $70.13 last October.


dp

[Demeter]

116. I Can See It All Clearly Now--Bear With Me

After my lunchtime communal with SMW, I was out on my afternoon contract, and it all coalesced.

HOW DO YOU DROWN A GOVERNMENT IN A BATHTUB?

Why, you get the taxpayers to voluntarily (or not) open their veins to create the biggest civil bloodbath ever known to economics, (the BAILOUT) and take away the powers of the Executive, Legislative and Judicial branches (the DROWNING OF THE GOVERNMENT)

and then you, Harry Paulson and Ben Bernanke and your assigns and heirs, have created a slave state out of the greatest nation in the world.

It is simple. It is breath-taking. It is consummately EVIL. THEY ARE ABSOLUTE TRAITORS.


Somewhere in the backwaters of the country, I hope some judge has empanelled a grand jury, started collecting witnesses and preparing warrants to arrest every last member of the Bush Administration, the GOP, and Wall St. on Inaugural Day, if not before. And I hope there's enough rope, bullets, and humane poisons to handle them all.

[ozymandius]

119. I agree. Without means, you take away its sovereignty.

You also remove its self-determination when that "goddamn piece of paper," (namely: The Constitution of the United States) as President Stupid refers to it, says that the federal government must repay its debts. With interest.

It's a plan hatched in the bowels of traitors' hell. No convenience nor comfort should be provided to them should they be found guilty of these heinous crimes.

[Hugin]

120. I'm surprised the ransom note they passed Congress wasn't assembled from Magazine Clippings.

As I said in another thread.

[DemReadingDU]

123. They know what's coming, a depression of the largest magnitude

plus a civil war and a world war

The Republicans are ensuring they have all our money before the banks collapse. And the banks are going to collapse even without passage of Paulson's bill

Watch the excellent Dr. Chris Martenson Crash Course videos tomorrow (he's moving to a faster server tonight!)
http://www.chrismartenson.com/crashcourse

[DemReadingDU]

125. May there be a special place in hell for Paulson, Bernanke, Bush & Cheney

and all the rest of this cabal

[Demeter]

129. It's In Guantanamo, And It's Newly Renovated!

[dweller]

132. FBI investigating possible fraud- Fannie, Freddie, Lehman, AIG

and their executives

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3507100

well, waddya know?
dp

[Hugin]

133. I'm shocked! Shocked I tell you!

*faint*

[Demeter]

136. Sometimes I Wonder If Any of BushCo Ever Sleeps

Or if I and a handful of others (all of whom post on this thread) are the only ones NOT involved in the vast right-wing, fascist conspiracy to defraud, denude and destroy America.

[OakCliffDem]

137. Dupe Delete