STOCK MARKET WATCH, Thursday February 12

[ozymandius]

Source: du

STOCK MARKET WATCH, Thursday February 12, 2009

Bush Administration Officials Under Indictment = 0
Financial Sector Officials Under Indictment = 0
Financial Sector Officials In Prison = 1

AT THE CLOSING BELL ON February 11, 2009

Dow... 7,939.53 +50.65 (+0.64%)
Nasdaq... 1,530.50 +5.77 (+0.38%)
S&P 500... 833.74 +6.58 (+0.80%)
Gold future... 944.50 +30.30 (+3.21%)
30-Year Bond 3.45% -0.08 (-2.21%)
10-Yr Bond... 2.76% -0.09 (-2.99%)

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U.S. FUTURES & MARKETS INDICATORS
NASDAQ FUTURES..............................................S&P FUTURES

Market Conditions During Trading Hours

GOLD, EURO, YEN, Loonie and Silver

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Read more: du

[ozymandius]

1. Market WrapUp

"YES WE CAN'T"
BY CHRIS PUPLAVA

The reaction by the market yesterday to Treasury Secretary Geithner’s comments was clearly buy the rumor and sell the news as the markets began to sell off before it became clear his speech was void of any details. A week or so ago Rick Santelli from CNBC on air held up a sign that said, “Trade the TARP,” as that has been the dominant action in the markets, buy the rumor sell the news.

I think what is also weighing on the markets and leading to more of a trading mentality instead of holding stocks here is that there are some legitimate fears that the stimulus plan put forth by the government will be wholly inadequate to stem the tide of deleveraging in the economy, with the bulk of the stimulus spent after this year and the possible need for TARP II and TARP III. This year will certainly be rough and many participants are uncertain if the worst is behind us and if a retest of the November lows is possible at a minimum.

Anyone who places a high certainty on their predictions for the markets in 2009 should be treated as highly suspect as there are far too many unknowns to make accurate forecasts in regards to direction and timing of market turns. I believe leaning on the cautious side is quite warranted as the news is quite dark and those that dismiss the economic news commentary as fear mongering will be unprepared if/when the markets move to retest last year’s lows or worse. One prominent investor that has been in the business for decades said now is not the time to be fearful and used comments from news snippets during the last two mild recessions that said that those recessions were the worst since the Great Depression. The last two obviously weren’t, and he suggested to look past these comments as the current recession will also not prove to be the worst recession since the Great Depression.

.....

What has me concerned for the economy and supports the notion that this time really IS different is what we are seeing in the service-producing sector. Typically the greatest contractions in employment have come from the goods-producing sector as our economy has shifted away from a manufacturing economy to a service and financial economy. With each recession less of the manufacturing jobs that are lost come back while the service sector expands on new economic upswings. During recessions the deepest employment contractions come from the goods-producing sector, while the service-producing sector may not see negative employment growth rates at all and simply decelerate, acting to help stabilize total employment.

Well, not this cycle, this time it’s different! As shown in the figure below, the service-producing sector is witnessing an outright contraction not seen in a quarter century and the pace is accelerating to the downside. The 1973 recession saw a strong EXPANSION in service employment during its recession with the 1980 recession also seeing an expansion. The 1981, 1990, and 2001 recessions saw minor contractions in service-producing employment. The current experience is truly in a league of its own.

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

[Demeter]

19. Do Look At This Link!

It is chock full of horrifying graphs of employment data for various recessions. Quite lengthy, but worthy of your attention.

[Dr.Phool]

24. I read that last night before I went to bed.

Long and scary. And it looks like it's just starting to pick up a downside head of steam.

[DemReadingDU]

44. lots of employment graphs, bad

again, from the article
What has me concerned for the economy and supports the notion that this time really IS different is what we are seeing in the service-producing sector. Typically the greatest contractions in employment have come from the goods-producing sector as our economy has shifted away from a manufacturing economy to a service and financial economy. With each recession less of the manufacturing jobs that are lost come back while the service sector expands on new economic upswings. During recessions the deepest employment contractions come from the goods-producing sector, while the service-producing sector may not see negative employment growth rates at all and simply decelerate, acting to help stabilize total employment.

http://www.financialsense.com/Market/cpuplava/2009/0211.html

No kidding it's different this time. We don't produce much of anything anymore. How many cashiers and waiters are we going to need, when retail and restaurants implode?

[ozymandius]

2. Today's Reports

08:30 Initial Claims 02/07
Briefing.com 600K
Consensus 610K
Prior 626K

08:30 Retail Sales Jan
Briefing.com -0.6%
Consensus -0.3%
Prior -2.7%

08:30 Retail Sales ex-auto Jan
Briefing.com -0.6%
Consensus -0.4%
Prior -3.1%

10:00 Business Inventories Dec
Briefing.com -1.2%
Consensus -0.6%
Prior -0.7%

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

[UpInArms]

35. Initial Claims @ 623,000 - last wk rev'd up 5,000

08. U.S. Jan. retail sales rise 1.0% vs. -0.4% expected
8:30 AM ET, Feb 12, 2009

09. U.S. Jan. retail sales ex-autos rise 0.9% vs. -0.3% expected
8:30 AM ET, Feb 12, 2009

10. U.S. retail sales increase for first time in 7 months
8:30 AM ET, Feb 12, 2009

16. U.S. retail sales down 9.7% in past year
8:30 AM ET, Feb 12, 2009

17. Most retail sectors show higher sales in January
8:30 AM ET, Feb 12, 2009

18. U.S. Jan. gas station sales rise 2.6%
8:30 AM ET, Feb 12, 2009

19. U.S. weekly initial jobless claims down 8,000 to 623,000
8:30 AM ET, Feb 12, 2009

20. U.S. 4-week avg. jobless claims up 24,000 to 607,500
8:30 AM ET, Feb 12, 2009

21. U.S. continuing jobless claims up 11,000 to record 4.81 mln
8:30 AM ET, Feb 12, 2009

22. U.S. 4-week avg. ongoing claims up 73,750 to record 4.75 mln
8:30 AM ET, Feb 12, 2009

[burf]

36. It will be interesting

to see how the talking heads spin the retail sales numbers increase. Wasn't it in January when they were marking down stuff 70%? I remember one "analyst" saying if it wasn't 70% off shoppers weren't even looking at an item.

Good day to everyone!

[Pale Blue Dot]

42. My local Circuit City (in liquidation) was PACKED over the weekend.

Right now there are still some people with money to spend, but they want discounts. And I would imagine that Best Buy's numbers are going to suffer because of it.

[Dr.Phool]

I stopped in one last week (weekday)

It was pretty slow. And the deals weren't that great either.

Even with their markdown, I bought Turbo Tax cheaper at Costco.

[ozymandius]

51. Rarely does liquidation serve the customer.

The liquidator has an interest in extracting every ounce of meat from the company carcass. I rarely find deals on stuff I actually want when the store is being sold with a second party's interest in mind.

[UpInArms]

67. U.S. Dec inventories decline biggest since 2001 (ugly report)

http://www.reuters.com/article/economicNews/idUSN1153216220090212

WASHINGTON, Feb 12 (Reuters) - U.S. business inventories in December recorded their biggest monthly drop since 2001 and sales fell again, according to a report on Thursday that provided more evidence the economy likely shrank at a faster pace in the fourth quarter than initially estimated.

The Commerce Department said inventories fell 1.3 percent, the largest drop since October 2001, after falling by a revised 1.1 percent in November.

Analysts polled by Reuters had forecast business inventories to fall 0.9 percent in December.

Government data on Tuesday showed wholesale inventories fell by a record 1.4 percent in December. Analysts said this made it likely that the government estimate of the economy in the fourth quarter contracting at a 3.8 percent annual rate would have to be revised to an even slower pace.

The Commerce Department said business sales dropped 3.2 percent in December after plunging by a record 5.7 percent in November, which was previously reported as a 5.1 percent drop.

That took the inventories-to-sales ratio, which measures how long it would take to empty shelves at the current pace of sales, up to 1.44 months' worth, the highest since April 2001. This compared with an inventories-to-sales ratio of 1.41 months' worth in November.

...more...

[ozymandius]

3. Oil lingers near $36 as investors mull inventories

SINGAPORE – Oil prices lingered near $36 a barrel Thursday in Asia, following a steep fall overnight, as surging crude inventories in the U.S. stoked investor concern that consumer demand will continue to fall amid a deep recession.

Light, sweet crude for March delivery rose 31 cents to $36.25 a barrel by late afternoon in Singapore on the New York Mercantile Exchange. The contract fell $1.61 overnight to settle at $35.94.

U.S. crude oil inventories have jumped in recent weeks as rising unemployment erodes spending on gasoline.

A weekly report Wednesday from the Energy Information Administration showed that crude inventories jumped by 4.7 million barrels for the week ended Feb. 6, more than an increase of 3.4 million barrels expected by analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos.

....

In other Nymex trading, gasoline futures rose 1.52 cents to $1.29 a gallon. Heating oil gained 1.36 cent to $1.33 a gallon, while natural gas for March delivery jumped 5.0 cents to $4.58 per 1,000 cubic feet.

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

[ozymandius]

4. Japan's Pioneer to cut 10,000 jobs globally

TOKYO – Japanese electronics company Pioneer Corp. will cut 10,000 jobs globally to cope with sinking sales of car audio equipment and flat-screen TVs. It will also withdraw from its money-losing plasma display business.

.....

Hit by the collapse in demand for car audio equipment and plasma TVs, Pioneer said its net loss in the current fiscal year to March will swell to 130 billion yen ($1.4 billion) from its previous estimate of a 78 billion yen net loss. It will be the fifth straight annual loss for Pioneer.

.....

The Tokyo-based company said it will slash 6,000 full-time salaried workers at home and abroad, accounting for 16 percent of the company's global work force of 36,900. It will also cut 4,000 contract workers at its Japanese and foreign plants.

http://news.yahoo.com/s/ap/20090212/ap_on_bi_ge/as_japan_pioneer

edit: Just heard on the radio that a plant in southern California will be closed.

[ozymandius]

5. Foreclosures fall from December to January

WASHINGTON – The number of Americans on the verge of losing their homes fell in January but was still up from the same month a year ago. The numbers would have been higher if not for efforts to stall the foreclosure process.

Nationwide, more than 274,000 homes received at least one foreclosure-related notice last month. That was down 10 percent from December, but still 18 percent higher than a year ago, according to RealtyTrac Inc., an Irvine, Calif-based foreclosure listing service.

Contributing to the monthly drop was a decision by government-controlled mortgage finance companies Fannie Mae and Freddie Mac to suspend foreclosure sales during the winter holidays. Plus, Florida Gov. Charlie Crist brokered a deal in which lenders in that state agreed to a 45-day halt to new foreclosure petitions.

But those efforts may not have much of an impact in the long run.

.....

More than 2 million American homeowners faced foreclosure proceedings last year, and that number could soar as high as 10 million in the coming years, according to a report last month by Credit Suisse, depending on the severity of the recession.

http://news.yahoo.com/s/ap/20090212/ap_on_bi_ge/foreclosure_rates

[ozymandius]

6. U.S. banks tell lawmakers will help homeowners, for now

WASHINGTON (Reuters) – The biggest U.S. banks on Wednesday agreed to halt foreclosures on delinquent homeowners for at least a few weeks, until the U.S. government launches a $50 billion aid program for homeowners.

At a congressional hearing on the use of government aid to banks, lawmakers sought commitments from the chiefs of eight big financial institutions to temporarily stop foreclosure efforts.

....

The U.S. Office of Thrift Supervision, which largely regulates mortgage lenders, urged its regulated institutions on Wednesday to halt foreclosures until a government plan is in place.

....

Banks that service mortgages sold to investors have long complained about lawsuits they face if they modify mortgages held by others. They welcomed legislation being crafted by Frank aimed at providing banks with legal protections.

http://news.yahoo.com/s/nm/20090212/bs_nm/us_financial_bailout_ceos_modification_1

[ozymandius]

7. Deal reached on $789 billion stimulus bill

WASHINGTON (MarketWatch) -- Handing President Barack Obama a key legislative victory, negotiators from the House and Senate reached an agreement on a $789 billion economic stimulus plan, Senate Majority Leader Harry Reid said Wednesday.

The agreement has the support of three key Republican senators and moderate Democrats whose votes are essential to winning approval in the Senate. Obama has plowed enormous political capital into the bill, saying it's necessary to kick-start the economy and get millions of unemployed Americans working again.

.....

Details haven't been released yet. But The Wall Street Journal reported that the White House agreed to trim a payroll tax holiday, reduce proposed aid to ailing state governments and scale back initiatives to provide health care for laid-off workers. In exchange, White House and congressional negotiators restored some $9 billion in funds for school modernization, which had been stripped out the Senate bill, the Journal reported, citing people familiar with the talks.

.....

The support of those three Senate Republicans -- Specter, Collins and Snowe -- will be critical to ensuring the passage of the bill when it goes back to the Senate. Democrats need the support of at least two Republicans in the Senate.

http://www.marketwatch.com/news/story/deal-reached-789-billion-stimulus/story.aspx?guid={963F08F9-A5DD-46AE-A38F-FFB89ABF2A41}&dist=msr_29

[radfringe]

8. Screwed: More companies resist paying jobless benefits

More companies resist paying jobless benefits
PETER WHORISKEY; The Washington Post
February 12th, 2009

WASHINGTON – It’s hard enough to lose a job. But for a growing proportion of U.S. workers, the troubles really set in when they apply for unemployment benefits.

More than a quarter of people applying for unemployment compensation have their rights to the benefit challenged as employers increasingly act to block payouts to former workers.

The proportion of claims disputed by former employers and state agencies has reached record levels in recent years, according to the Labor Department numbers tallied by the Urban Institute.

Under state and federal laws, employees who are fired for misbehavior or quit voluntarily are ineligible for unemployment compensation. When jobless claims are blocked, employers save money because their unemployment insurance rates are based on the amount of the benefits their workers collect.

[ozymandius]

9. Munger on Reform, Pain, Leveraged Speculation

from The Big Picture

Great quote this morning in WaPo from Warren Buffet’s better half, Charlie Munger:

“Sensible reform cannot avoid causing significant pain, which is worth enduring to gain extra safety and more exemplary conduct. And only when there is strong public revulsion, such as exists today, can legislators minimize the influence of powerful special interests enough to bring about needed revisions in law.

Many contributors to our over-the-top boom, which led to the gross bust, are known. They include insufficient controls over morality and prudence in banks and investment banks; undesirable conduct among investment banks; greatly expanded financial leverage, aided by direct or implied use of government credit; and extreme excess, sometimes amounting to fraud, in the promotion of consumer credit. Unsound accounting was widespread.

There was also great excess in highly leveraged speculation of all kinds. Perhaps real estate speculation did the most damage. But the new trading in derivative contracts involving corporate bonds took the prize. This system, in which completely unrelated entities bet trillions with virtually no regulation, created two things: a gambling facility that mimicked the 1920s “bucket shops” wherein bookie-customer types could bet on security prices, instead of horse races, with almost no one owning any securities, and, second, a large group of entities that had an intense desire that certain companies should fail. Croupier types pushed this system, assisted by academics who should have known better. Unfortunately, they convinced regulators that denizens of our financial system would use the new speculative opportunities without causing more harm than benefit.”

Uncommon common sense . . .

---

The comments above were clipped from the Washington Post.

And what do other movers and shakers have to say about derivatives?

Warren Buffett, 2003: (Derivatives are) “financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.”

Alan Greenspan, 2004: “Not only have individual financial institutions become less vulnerable to shocks from underlying risk factors, but also the financial system as a whole has become more resilient.”

[ozymandius]

10. Ballmer likens economy to depressions of 1837, 1873, and 1929

Microsoft Chief Executive Steve Ballmer sketched a dire portrait of the world economy on Friday, likening it to market conditions in 1837, 1873, and 1929, each of which involved bank failures, high unemployment, and a depression.

....

Ballmer said that economic growth in the last 25 years was fueled by innovation, globalization, and debt--and that the current levels of debt were unsustainable. "In 1929, for example, just before the stock market crash, the private debt-to-GDP ratio was 160 percent," he said. "Last year, private sector debt as a percentage of the GDP: 300 percent, far more leverage."

His warning of a protracted downturn that could become a depression comes amid a stock market that is down by more than 40 percent from its October 2007 peak, and housing prices in many metro areas that have been falling consistently since July 2006--a feat not equalled since the Great Depression.

http://news.cnet.com/8301-13578_3-10158959-38.html

[Pachamama]

12. Morning Ozymandius - this statement has me awake...

Sigh...I better go get some coffee because I won't be able to sleep anymore this morning. I know Ballmer and he's a smart astute person who if he is coming out and saying this, then he has read the tea leaves and it isn't good..... :hi:

[ozymandius]

16. He is in prime position to see how much discretionary spending has

either increased or dropped, how the customers paid (either credit or debit). Ballmer can see what sort of items were sold like small ticket purchases to keep older systems running or newer purchases to replace old systems. He is also privy to information locating, geographically, where in the world these items were being shipped, etc, etc.

Microsoft has also just laid off a bunch of people. That is wildly extraordinary.

[Hugin]

46. He was also slated to be high up in a McCain administration.

Frankly, I have no use for the guy... He's plain and simple an economic hit-man.

[ozymandius]

50. Alas, 'tis true.

Microsoft is the very definition of predatory entrepreneurship. I remember reading about the company's predatory practices years ago and finding no reason to disbelieve what I read. The speculative part of the accounts focused on whose personality drove Microsoft to such dastardly extremes. Hands down - consensus says Ballmer.

[Hugin]

53. That's not to say I don't appreciate your posting these things Ozy.

As part of the many voices making up the ongoing dialog.

Vigilance! :upraisedfist:

[Demeter]

62. It's "Constant vigilance!"---Mad-Eye Moody

[Ghost Dog]

49. Cuba launches own Linux variant to counter U.S.

(More-or-less relevant here, I thought - and in today's Reuters 'most read' list)...

HAVANA (Reuters) - Cuba launched its own variant of the Linux computer operating system this week in the latest front of the communist island's battle against what it views as U.S. hegemony.

The Cuban variant, called Nova, was introduced at a Havana computer conference on "technological sovereignty" and is central to the Cuban government's desire to replace the Microsoft software running most of the island's computers.

The government views the use of Microsoft systems, developed by U.S.-based Microsoft Corp, as a potential threat because it says U.S. security agencies have access to Microsoft codes.

Also, the long-standing U.S. trade embargo against the island makes it difficult for Cubans to get Microsoft software legally and to update it.

...

According to Hector Rodriguez, dean of the School of Free Software at Cuba's University of Information Sciences, about 20 percent of computers in Cuba, where computer sales to the public began only last year, are currently using Linux.

...

"I would like to think that in five years our country will have more than 50 percent migrated (to Linux)," he said.

...

Apart from security concerns, free software better suits Cuba's world view, he said.

"The free software movement is closer to the ideology of the Cuban people, above all for the independence and sovereignty."

/... http://www.reuters.com/article/newsOne/idUSTRE51A77S20090211

[DemReadingDU]

13. more about the panics of 1837, 1873, 1929 and bubbles

from Wikipedia...

Stock Market Crash in 1929
http://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929

Panic of 1873
http://en.wikipedia.org/wiki/Panic_of_1873

Panic of 1837
http://en.wikipedia.org/wiki/Panic_of_1837

South Sea Bubble in 1720
http://en.wikipedia.org/wiki/South_Sea_Bubble

Tulip mania in 1637
http://en.wikipedia.org/wiki/Tulip_mania



I think the financial credit bubble that we are in now, will eventually burst into an epic crash, such that people will be talking about it for centuries, like the above.

[Pachamama]

18. The question is in what form and how this bubble will burst and crash..

That's what is keeping me up at night....

The thing is, based on all that I see happening and "the unknown knowns and unknown unknowns" - aka what we aren't being told that they know, I am really worried that its going to come in the form of literally 90% of Americans waking up one morning and finding out that not only is every single one of their investments in the form of stocks, mutual funds, their 401k investments, property etc. that is basically worthless and the prospect of it coming back (if ever) is decades away - as in many decades away. And at the same time, they will be losing their income and jobs in mass numbers and that debt they own on the properties - well, the banks that are getting our Billions in taxpayer handouts - they will want their money from you that you owe for the mortgage or your out of a home. And while this happens - the US dollar becomes worth less than the paper they can't print fast enough. Its a financial death sentence. Can you imagine the amount of homeless people and people trying to figure out where they are going to have a roof over their head and how to eat?

What happens after that kinda of morning in America? I shudder at the thought. Riots? Debtor Prisons? I can only imagine what lies ahead and I keep trying to think about what can possibly bring us out of this and I am not finding any information or signs and indicators that we can avert this coming financial and economic apocolypse. The reason is that the system has failed and unless the system is changed and the people truly protected from losing it all, they will lose it all. There are only so many slices of the pie and some parties (legally and illegally) took a big piece and there isn't much left for all the hard-working Americans who thought at the end of the day their work would earn them their tiny slice and instead are being told that they have to cough up the pie they already got. And the very same persons who got the biggest slices and who were promised even more of the pie and claim they are still owed pie are expecting to get it and are taking it any way they can. And where is that pie going to come from if it doesn't exist?

PS: Sorry for my rant and I hope its making sense because I'm completely sleep deprived and my brain is running at 160mph right now but needs a rest and can't get it.

[Demeter]

20. Under Those Circumstances, there's Only One Possible Result

And that is revolution.

There aren't enough weapons, fascists and cannon fodder to subdue this country. Any PTB that thinks so is fooling himself. It's a big country, full of healthy, educated, and currently well-fed people with independent ideas who won't put up with that nonsense.

It's collapsing far too fast for any Hitler to take advantage. Germany suffered through a debilitating war on its soil and 12 years of further deterioration before succumbing. Even Reagan and Bush don't weigh that heavily on the people. They just destroyed every institution in the land, and tried to dumb down the population, but they haven't physically destroyed us, yet.

[Pachamama]

23. I know that is the only possible result...its why there is a shortage of bullets right now..

Spoke to a friend who is in law enforcement and they said there is a shortage even for them. And I wouldn't be surprised if its because people have been stockpiling that along with food. Rumor has it that it was all the right wing nuts freaking out after Obama won. But I think its much more than that. I meanwhile feel sick as I read your post because in my family history, my family lived through Nazi Germany and survived, but it was awful and they were the lucky ones. I don't want our country to go through and suffer something like this. But while I agree with you about our big country having lots of smart, educated, healthy and well-fed people with independent ideas who won't put up with nonsense (and I think living here in California I feel we have a surplus of those people), I also know that this country has a lot of ignorant, uneducated people who don't read and know history or even remember events in recent years (just the propaganda fed to them from cable tv) and those people might also have lots of guns and they might find themselves very hungry and angry and easily manipulated by someone with ill intent. Desperate people will do desperate things. In Germany my grandparents told me how neighbors and friends would turn on each other if it meant that they could eat.

[DemReadingDU]

31. Oh Pachamama, I have been there worrying too

losing sleep, losing weight, totally stressed out. At first, the more I read, the more stressed I got. And spouse is telling me, stop worrying, there's nothing we can do to prevent what's coming.

But I finally found a few web sites that helped put things in perspective, how to prepare. And I get up every morning for exercise and eat healthy to keep up my strength. I figure if I'm not strong and healthy, I'm not going to be of much use to anyone else when the bubble bursts and crashes.

Here is what helped me the most...

The Chris Martenson Crash Course videos are excellent. They provide you with a baseline understanding of the economy, energy, environment so that you can better appreciate the risks that we all face. This is a series of 20 video chapters, each video is between 3 and 18 minutes in length, meaning that all 20 chapters should take about 3 hours, but they need not be watched all at the same time. Try an hour a day for 3 days.
http://www.chrismartenson.com/crashcourse

About Chris Martenson, PhD.
Executive summary: Father of three young children; author; obsessive financial observer; trained as a scientist; experienced in business; has made profound changes in his lifestyle because of what he sees coming.
In his bio, Martenson goes into detail how he arrived at his conclusions and opinions, and why he's dedicated to communicating them via this excellent series of videos and additional articles.
Please click the link to read the rest of his bio...
http://www.chrismartenson.com/about

home page link
http://www.chrismartenson.com/



My favorite blog for financial info is The Automatic Earth. Co-editors are ilargi and stoneleigh. They don't sugar-coat anything, but at the same time, have written some excellent articles how we got into this bubble, and how to prepare for when it bursts.

The format is a picture, followed by an intro, usually by ilargi, sometimes by stoneleigh or a guest, then there are related articles from around the world, followed by a comments section.
Be sure to check out the primers located on the right side of the blog. The primer 'How to Build a Lifeboat, is excellent.
http://theautomaticearth.blogspot.com/


The best any of us can do, is to be aware and do some preparations. Keep our family close, and be friendly with the neighbors. No one really knows what the future is, but working together sharing ideas, we be able to handle whatever is to come.


:hi:

edit for a typo

[Pachamama]

40. You are such an awesome resource of information!

Thank you so much for the info you post on DU in general, but what you just provided me in introducing me to Chris Martenson's website and theautomaticearth! :hi:

Meanwhile, LOL that your spouse kept saying to stop worrying, probably also told you to stop reading! Mine does that too! But I don't like the Ostrich with the head in a hole approach to dealing with things. I need info, crave it and need to always have a Plan B and Plan C.

But your absolutely correct about the importance of good health because without it, your no use to the people who need you. I say that as I am sleep deprived and need to take better care of myself, especially right now as I battle Melanoma cancer and am going through immniotherapy. So thank you for that important reminder. :hug:

[DemReadingDU]

48. Like you, I want to know enough, that I won't be shocked and stunned

It's that so many people are still clueless, thinking this is just a blip, nothing to worry about, the stock market always comes back. Um, not this time. Total denial. Well, I think we here at SMW are going to be better for having read and shared information. Good luck to us all!

Take care of the melanoma now, so you can become healthier for when we really need our strength.

:hug:

[InkAddict]

38. Stop it...you're depressing me...so see what some entrepreneurs

are doing with elephant pie...environmentally friendly. LOL

http://poopoopaper.com/

[DemReadingDU]

21. Link to Steve Ballmer's Comments at Democratic Caucus Retreat

Steve Ballmer's Comments at Democratic Caucus Retreat

U.S. House of Representatives Democratic Caucus Retreat
Microsoft Chief Executive Officer Steve Ballmer
Williamsburg, Virginia, February 6, 2009

STEVE BALLMER: Well, I want to thank Jay, I want to thank the speaker and all of you for the opportunity to be here today and chat with you. It's a real honor to have a chance to share some thoughts on the economy and on innovation, and hopefully spur some thoughts on how we all participate in restarting long term economic growth.

As Jay was telling my story, so to speak, I thought I'd put in one parenthetic that might be of interest. When I got to Microsoft and we were this tiny little company, we didn't have the budget to put people up in hotels, so I lived with Bill. And every time I sat down, in every corner, nook and cranny of couches, tables, I'd find these little yellow pieces of paper with Bill's writing that had a bunch of people's names and companies' names and numbers.

So, finally -- I think of myself as pretty good pattern matching. Actually I was sitting next to Congressman Frank, and we were both trying to see which of the six states that are going to be still bigger than North Carolina by 2015. So, we're going through the pattern matching game, and I just couldn't figure out what these numbers were.

So, finally I said to Bill, what is this? He says, Steve, I'm really always worried about whether we're going to have enough cash to pay people. So, every night I write down everybody who works for us and how much we pay them, and every contract we have and how much it's worth. I've got to count the pennies tightly and that's why you're here now.

In this economic climate, whether you're talking about businesses or consumers, everybody I think is having the little yellow sheets of paper out, and counting pennies pretty tightly.

rest of speech, very good
http://microsoftontheissues.com/cs/blogs/mscorp/pages/steve-ballmer-comment-s-at-democratic-caucus-retreat.aspx

[Hugin]

45. I could've gone all day without hearing what Ballmer thinks.

Seriously.

[ozymandius]

11. Stress Test: Almost 100 Regulators at Citigroup

From Eric Dash at the NY Times: Bank Test May Expand U.S. Regulators’ Role

Nearly 100 federal banking regulators descended on Citigroup in New York on Wednesday morning. Dozens more fanned out through Bank of America, JPMorgan Chase and other big banks across the nation.
...
(E)xams for 18 or so of the biggest banks are set to begin immediately, and the first results could arrive within weeks. They are not expected to be made public for every institution.
...
Regulators plan to assess the potential losses a bank could face over the next two years, rather than the typical one year ... They are also expected to look at banks’ exposure to derivatives and other assets normally carried off their balance sheets ... Their assumptions will be guided on a “worst case” basis.

It sounds like the stress tests could be completed within "weeks" at some banks, and I think 30 days is sufficient for all 18 or so banks with $100 billion in assets.

The banks will probably fall into one of three categories:

1) No additional assistance required. These banks will definitely want this publicized!

2) The banks in between that will need additional capital. This is where the Capital Assistance Program comes in.

3) Banks that will need to be nationalized or sold.

more here

[ozymandius]

14. Yves Smith says this is a joke, an empty gesture.

Bank Stress Testing: Less Than Meets the Eye

This strikes me as grossly inadequate. I've had big banks as clients (including the then Citibank) and know what it is like to work with internal client data. It often takes a fair bit of digging and rectification to put what you'd think would be simple analyses together.

In the early 1990s, when Citi almost went under, it had 160 bank examiners working SOLELY on its commercial real estate portfolio (Citi has a lot of junior debt against buildings that turned out to be see-throughs).

I would welcome reader input (especially from bank examiners and accountants), but it is pretty clear 100 people and a few weeks (or even a few months) is grossly inadequate for a bank the size and complexity of a Citigroup. Citi has operations in over 100 countries. All 100 examiners can do is make queries along narrow lines, and work with the data presented. This scale of operation won't allow for any verification or recasting of data. There isn't remotely enough manpower.

And do you think these examiners are in any position to assess the risks of CDS, CDOs, swaps, foreign exchange exposures, Treasury operations, prime brokerage, to name just a few? I cant imagine US bank examiners have much competence in FX risk (Citi trades in a lot of exotic currencies, too), and that's one of the easier to assess on the list above.

So we're supposed to feel better now? What about the other five mega-banks with toxic goo rotting their vaults?

[Festivito]

15. Debt: 02/10/2009 10,721,365,792,566.28 (UP 3,639,591,718.14) (Tiny once again.)

(Three tiny days for public debt.)

= Held by the Public + Intragovernmental(FICA)
= 6,410,177,089,722.80 + 4,311,188,702,843.48
UP 388,825,726.33 + UP 3,250,765,991.81

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

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 306-Million person America.
If every American, man, woman and child puts in $3.27 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.81, ABOUT TEN BUCKS for a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is the federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)

PERSONALIZED DEBT:
Every 14 seconds we net gain a another American, so at the end of the workday of this report, there should be 305,776,543 people in America.
http://www.census.gov/population/www/popclockus.html
Currently, each of these American's owe $35,062.75.
A family of three owes $105,188.24. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 22 reports in the last 30 to 32 days.
The average for the last 22 reports is 5,073,055,679.96.
The average for the last 30 days would be 3,720,240,831.97.
The average for the last 32 days would be 3,487,725,779.97.
There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 75 reports in 112 days of GWB's part of FY2009 averaging 8.03B$ per report, 5.38B$/day.
There were 15 reports in 21 days of Obama's part of FY2009 averaging -0.29B$ per report, -0.14B$/day so far.
There were 90 reports in 133 days of FY2009 averaging 7.74B$ per report, 5.24B$/day.

PROJECTION:
There are 1,440 days remaining in this Obama 1st term.
By that time the debt could be between 12.7 and 18.3T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
02/10/2009 10,721,365,792,566.28 BHO (UP 94,488,743,653.20 so far since Obama took office.)

Fiscal Year ends: Sep 30
Borrowed in FY1993: (Maybe later.)
Borrowed in FY1994: 281,261,026,873.94
Borrowed in FY1995: 281,232,990,696.07
Borrowed in FY1996: 250,828,038,426.34
Borrowed in FY1997: 188,335,072,261.61
Borrowed in FY1998: 113,046,997,500.28
Borrowed in FY1999: 130,077,892,735.81
Borrowed in FY2000: _17,907,308,253.43 Bill alone
Borrowed in FY2001: 133,285,202,313.20 Bill and George
Borrowed in FY2002: 420,772,553,397.10 All George
Borrowed in FY2003: 554,995,097,146.46
Borrowed in FY2004: 595,821,633,586.70
Borrowed in FY2005: 553,656,965,393.18
Borrowed in FY2006: 574,264,237,491.73
Borrowed in FY2007: 500,679,473,047.25
Borrowed in FY2008: 1,017,071,524,650.01
Borrowed in FY2009: 696,640,895,653.80 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
01/21/2009 -000,225,946,840.81 ---
01/22/2009 -010,383,446,466.83 -
01/23/2009 -000,119,553,441.75 ---
01/26/2009 -001,004,948,620.76 -- Mon
01/27/2009 +000,188,054,837.85 ------------********
01/28/2009 -000,240,130,414.24 ---
01/29/2009 +014,335,901,611.96 ------------**********
01/30/2009 +007,363,512,286.86 ------------*********
02/02/2009 +046,334,807,167.90 ------------********** Mon
02/03/2009 -000,138,225,404.41 ---
02/04/2009 -000,068,491,025.50 ----
02/05/2009 +046,668,131,793.54 ------------**********
02/06/2009 +000,340,839,567.98 ------------********
02/09/2009 -000,572,980,736.98 --- Mon
02/10/2009 +000,388,825,726.33 ------------********

102,866,350,041.14 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,056,733,989,307.21 in last 145 days.
That's 1,057B$ in 145 days.
More than any year ever, including last year, and it's 104% of that highest year ever only in 145 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 145 DAYS NOT 365.

For a prettier and more explanatory view of our nation's debt:
http://www.brillig.com/debt_clock

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3733404&mesg_id=3733550

[Festivito]

100. Debt: 02/11/2009 10,713,124,215,572.20 (DOWN 8,241,576,994.08) (Run of Tinies.)

(Four tiny days for public debt.)

= Held by the Public + Intragovernmental(FICA)
= 6,409,955,329,202.02 + 4,303,168,886,370.18
DOWN 221,760,520.78 + DOWN 8,019,816,473.30

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

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 306-Million person America.
If every American, man, woman and child puts in $3.27 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.81, ABOUT TEN BUCKS for a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is the federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)

PERSONALIZED DEBT:
Every 14 seconds we net gain a another American, so at the end of the workday of this report, there should be 305,782,715 people in America.
http://www.census.gov/population/www/popclockus.html
Currently, each of these American's owe $35,035.09.
A family of three owes $105,105.26. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 23 reports in the last 30 to 33 days.
The average for the last 23 reports is 4,494,158,607.18.
The average for the last 30 days would be 3,445,521,598.84.
The average for the last 33 days would be 3,132,292,362.58.
There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 75 reports in 112 days of GWB's part of FY2009 averaging 8.03B$ per report, 5.38B$/day.
There were 16 reports in 22 days of Obama's part of FY2009 averaging -0.47B$ per report, -0.24B$/day so far.
There were 91 reports in 134 days of FY2009 averaging 7.56B$ per report, 5.14B$/day.

PROJECTION:
There are 1,439 days remaining in this Obama 1st term.
By that time the debt could be between 12.7 and 18.1T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
02/11/2009 10,713,124,215,572.20 BHO (UP 86,247,166,659.12 so far since Obama took office.)

Fiscal Year ends: Sep 30
Borrowed in FY1993: (Maybe later.)
Borrowed in FY1994: 281,261,026,873.94
Borrowed in FY1995: 281,232,990,696.07
Borrowed in FY1996: 250,828,038,426.34
Borrowed in FY1997: 188,335,072,261.61
Borrowed in FY1998: 113,046,997,500.28
Borrowed in FY1999: 130,077,892,735.81
Borrowed in FY2000: _17,907,308,253.43 Bill alone
Borrowed in FY2001: 133,285,202,313.20 Bill and George
Borrowed in FY2002: 420,772,553,397.10 All George
Borrowed in FY2003: 554,995,097,146.46
Borrowed in FY2004: 595,821,633,586.70
Borrowed in FY2005: 553,656,965,393.18
Borrowed in FY2006: 574,264,237,491.73
Borrowed in FY2007: 500,679,473,047.25
Borrowed in FY2008: 1,017,071,524,650.01
Borrowed in FY2009: 688,399,318,659.80 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
01/22/2009 -010,383,446,466.83 -
01/23/2009 -000,119,553,441.75 ---
01/26/2009 -001,004,948,620.76 -- Mon
01/27/2009 +000,188,054,837.85 ------------********
01/28/2009 -000,240,130,414.24 ---
01/29/2009 +014,335,901,611.96 ------------**********
01/30/2009 +007,363,512,286.86 ------------*********
02/02/2009 +046,334,807,167.90 ------------********** Mon
02/03/2009 -000,138,225,404.41 ---
02/04/2009 -000,068,491,025.50 ----
02/05/2009 +046,668,131,793.54 ------------**********
02/06/2009 +000,340,839,567.98 ------------********
02/09/2009 -000,572,980,736.98 --- Mon
02/10/2009 +000,388,825,726.33 ------------********
02/11/2009 -000,221,760,520.78 ---

102,870,536,361.17 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,048,492,412,313.13 in last 146 days.
That's 1,048B$ in 146 days.
More than any year ever, including last year, and it's 103% of that highest year ever only in 146 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 146 DAYS NOT 365.

For a prettier and more explanatory view of our nation's debt:
http://www.brillig.com/debt_clock

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3735100&mesg_id=3735162

[Demeter]

17. Happy Lincoln's birthday, Ozy and Gang!

Either nobody's sleeping these days, or this thread attracts insomniacs like me, or something.

Ten recs. by 7:35 am Eastern!

Do the DU PTB have any idea what you've created, Ozy?

[ozymandius]

32. Good morning Demeter!

Do the DU PTB have any idea what you've created, Ozy?

I am oblivious to any notion that this thread holds any special regard to the DUPTB. Not a word. Not that I really expected any. The special place this thread holds in the LBN forum was negotiated years before radfringe handed the reigns of responsibility to me.

Insomniacs truly have a haven here. It's hard to sleep knowing that the devils spit in yer kettle.

[Hugin]

47. It's odd for me to be recommending at the double digits...

I'm usually third or fourth, but, not lately!

[alterfurz]

73. today's Lincoln quote

"I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country...corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed."
-- Abraham Lincoln, letter to Col. William F. Elkins, Nov. 21, 1864
source: The Lincoln Encyclopedia (New York : Macmillan, 1950)

[Demeter]

90. Yeah, Well, We All Know How that Story Ended

We are in the epilogue, finally...

[Demeter]

22. Global demand for oil faces biggest contraction since 1982

http://www.independent.co.uk/news/business/news/global-demand-for-oil-faces-biggest-contraction-since-1982-1607264.html

Demand for oil will drop by 1.2 per cent this year, the biggest annual contraction since 1982, the International Energy Agency (IEA) warned yesterday.

The IEA has revised its oil consumption forecasts downwards for the third time as the credit crunch continues to batter economies across the world. Global oil demand is now expected to drop to just 84.7 million barrels per day this year, 1 million daily barrels fewer than in 2008.

In the US, the world's biggest consumer, economic problems are dragging consumption down to the same level as a decade ago, and oil use is now forecast at 19 million barrels per day in 2009, some 2.9 per cent lower than last year, which was itself 5 per cent down on 2007. Even developing economies are not helping, says the IEA. China will demand just 0.7 per cent more oil in 2009 than in 2008, the slowest rate of growth in nearly two decades.

"In retrospect, last summer's $140 per barrel price triggered demand destruction in the face of inelastic supply, but widespread financial and economic collapse are now the key brakes on global demand," the IEA said yesterday....

[Demeter]

25. Sweden may not be a model (That US Wants or Is able To Follow) By: Leif Pagrotsky

http://www.eurointelligence.com/article.581+M5b55b38d58a.0.html

The idea of a Bad Bank appears to get more and more popular day by day as a solution to all kinds of problems in countries suffering from banks paralysed by toxic assets. Often the Swedish experience of bad banks in the early 1990’s is used as an example of how great this idea is. Some times the lessons derived from our experience are based on misunderstandings of what we actually did, and how our system worked.



The initiative to set up a bad bank in Sweden was taken not by politicians, but by the management of Nordbanken. Following years of mismanagement and reckless lending, the bank was the first big victim of the decline of the commercial property market in 1990. It had become fully state-owned and a new management was in place to put the bank on track for a viable future. It soon turned out they had little time to spend on its core banking business as handling an enormous variety of assets took a disproportionate part of their focus. And every quarter new disappointing write-offs ruined efforts to rebuild the bank’s reputation and morale. The radical solution was to separate all the assets that were alien to the core business of the bank, mainly companies in real estate, but also manufacturing, construction or service industries.



The new company, Securum, the bad bank, needed an enormous injection of capital from the owners, the Government, but was then in a position to recruit staff with relevant skills, to manage the assets cleverly with the goal to maximise value when markets recovered, and to be in a financial position to await the recovery of markets. The rest of Nordbanken turned around and became a great success under today’s name Nordea, the largest bank in the Nordic area.



Most other Swedish banks followed the example and set up bad banks, but with no participation of the state.



In contrast to today’s situation, the assets were not bonds, but usually entire companies. But like today’s toxic assets, there was no market and a rapid disinvestment would have triggered dramatically low prices that would have sent values of all assets in the economy tumbling, with more bank failures as a result.



Furthermore, this was not a way to help private banks get rid of their troubled assets, although it is obvious that it had enormous positive side-effects on all banks. My view is that this solution was only possible because the Government was already in possession of all the assets. The hopelessly difficult issue of pricing the assets thus became unimportant. With a private owner, I don’t believe taxpayer’s money could have been used without very big subsidies that would have been totally unacceptable. Either the assets would have been transferred far above what they could have fetched on the market with taxpayers subsidizing the previous, failed owners, or the private bank would not have been helped at all. A Government sponsored bad bank for private assets is thus, I believe, a very bad idea.



In 1994 I became State Secretary for Financial Affairs in the Ministry of Finance, at a time when the recovery from the crisis appeared on the horizon, following the abolition of the fixed exchange rate, the ensuing large depreciation of the Krona and lower interest rates. The new Government put in place an effective and very big program to get rid of a budget deficit of some 12% of GDP. Gradually, this started to affect confidence, and the interest rate markets began to function again. As opportunities opened we started reprivatising the assets again, and within a few years the company was closed. With hindsight, I believe we were carried away by the new possibility to sell, instead of waiting until prices got better. Taxpayers could have recovered more of their losses if we had had more patience, as prices continued to rise for a long time. But the stigma of socialism was stronger than the instinct to make profits.

For today's debate, the following points seem relevant to me:

1. A bad bank can a be an effective instrument in the recovery of losses and of the business of banks.

2. Our experience has nothing to do with bonds or similar financial instruments, only with shares in companies used as collateral for credit. But I expect this situation to arise in many countries today as the crisis continues. As the crisis continues more companies will go bankrupt and banks will recall their collateral and take possession of shares in indebted companies. This can take the form of both bad companies as well as healthy companies that have been used as collateral for credits to their owners or for investments in other parts of the group.

3. Government subsidies for private bad banks, or public bad banks to support private banks with toxic assets is a bad way for taxpayers to tranfer money to troubled banks compared to normal capital injections. All subsidies should be transparent, and public/private bad banks are not.

4. Its key to staff bad banks with professional and experienced management who are untainted by prevoius scandals. Our experience is encouraging, it was easier to recruit good people tha we expected, good people wanted to work for this pioneering state-owned bad bank. it was perceived to be a unique challenge to participate in this endeavour in the public interest.

5. Taxpayers economic interest must be the guiding principle, not ideology or political considerations. The public should be in no doubt about this, and their trust is necessary.

Leif Pagrotsky is a Social Democrat member of the Swedish Parliament, who held the positions of Minister for Industry and Trade and Minister for Education under prime minister Göran Perrson. During 1994 he was State Secretary for Financial Affairs in the Finance ministry.

[Demeter]

26. At Least ONE Congressman Gets It!

http://www.youtube.com/watch?v=FLtieiyCFMw&eurl=http://jessescrossroadscafe.blogspot.com/2009/02/todays-congressional-hearing-on-banks.html&feature=player_embedded


Thorough chewing out of bank execs.(why aren't you guys in jail yet?) Entertaining and enlightening and a source of hope.

[Dr.Phool]

54. Awesome!

I would have liked to have seen the looks on their faces during that ass-chewing.

[Demeter]

27. Madoff’s wife took $15.5m ahead of arrest (Details!)

http://www.ft.com/cms/s/0/62d4c6e0-f86c-11dd-aae8-000077b07658.html

By Joanna Chung in New York and Brooke Masters in London

Published: February 11 2009 18:59 | Last updated: February 11 2009 18:59

Bernard Madoff’s wife Ruth pulled $15.5m out of a Massachusetts brokerage that funnelled clients to her husband in the three weeks before his December 11 arrest, according to court documents filed by Massachusetts securities regulators.

Mrs Madoff withdrew $5.5m from Cohmad Securities on November 25 and an additional $10m on December 10, according to two wire transfer receipts attached to a complaint filed by William Galvin, the Massachusetts secretary of state.

Federal investigators have alleged in a criminal complaint that Mr Madoff confessed to his sons on December 10 that he was running a $50bn “Ponzi” scheme.

The wire transfer orders are the first pieces of public evidence that any member of Mr Madoff’s family was gathering cash right before his New York investment firm collapsed. Mr Galvin, is seeking to revoke Cohmad Securities’ registration in Massachusetts for failing to co-operate with his investigation.

Mr Galvin said many of the Massachusetts investors who believe they lost money to Mr Madoff sent their money to the New York broker through Cohmad. Mr Madoff is a co-founder and shareholder of Cohmad. Ira Sorkin, lawyer for Bernard and Ruth Madoff, declined to comment.

The Massachusetts filing may shed new light on the relationship between Mr Madoff and Sonja Kohn, the president and majority shareholder of Bank Medici, which was taken over by Austrian authorities after it revealed more than $2.1bn in exposure to Mr Madoff.

The filing by Mr Galvin says Mrs Kohn received about $526,000 in “payments” from Madoff Securities that were “filtered” through Cohmad Securities.

A spokeswoman for Bank Medici said they had just learned of the filing and could not comment. The bank said Mrs Kohn was not available. Cohmad officials declined to discuss the payments with Mr Galvin’s office.

The filing came as federal prosecutors were granted another extension, until mid-March, to file an indictment or present evidence against Mr Madoff. Mr Madoff’s attorney and prosecutors have been in discussions about “a possible disposition” of the case, according to a court document filed on Wednesday. This could mean that prosecutors and the defence are attempting to work out a deal before trial.

Mr Madoff has already agreed to a partial settlement with civil authorities.

[DemReadingDU]

41. When that large amount of money is withdrawn

It says wire transfers.

Where is that money wired to? Another bank? Another fund? Another account in another country? You can't wire yourself cash dollars, and obviously, that large amount is tracked by the authorities!

[UpInArms]

28. Is Stanford Financial's Offer Too Good to Be True?

http://www.businessweek.com/magazine/content/09_08/b4120022131798.htm?chan=top+news_top+news+index+-+temp_top+story

Financier Robert Allen Stanford makes investors an enticing offer: He sells supposedly super-safe certificates of deposit with interest rates more than twice the market average. His firm says it generates those impressive returns by investing the CD money largely in corporate stocks, real estate, hedge funds, and precious metals.

State and federal regulators are now taking a hard look at Stanford's operation and CDs, whose underlying investments look shaky. Over the past 12 months those categories lost huge value, even as Stanford Financial Group continued to pay out above-average returns and boosted assets by 30% to more than $50 billion.

BusinessWeek has learned that the Securities & Exchange Commission; the Financial Industry Regulatory Authority, a major private-sector oversight body; and the Florida Office of Financial Regulation are all investigating Stanford Financial. The probes are focusing on the high-yield CDs sold by Stanford Financial and the investment strategy. According to people close to the investigations, the three agencies are also looking at how the firm could lavish large bonuses, luxury cars, and expensive trips on employees selling CDs, which are generally a low-margin business.

Stanford Financial defends its investment strategy and business practices vigorously. "All three have stated to us they were visiting our offices as part of routine examinations," says company spokesman Brian Bertsch. The firm "follows industry standards for marketing and generating sales."

...more...

hat-tip to malaise and this DU thread http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x5034272

[tclambert]

37. Yeah, red flags are flying. If your underlying investments are losing

value, how does your overall operation make such a nice return? That is the question that brought Madoff down. In fact, any time you hear "super safe" and "higher than average payout," get suspicious. Low risk goes with low yield. Higher yield means higher risk. There are no exceptions to this rule.

Maybe Stanford Financial has been really, really lucky. But anyone making a decent return in today's investment marketplace deserves very close scrutiny.

[ozymandius]

52. Did you hear about the graph showing returns on Madoff investments?

The testimony I heard says it was a straight line. No variation. And it only went up at a forty-five degree angle. Nothing does that. That is the graphical fingerprint of a ponzi scheme.

Has anyone taken Stanford Financial's fingerprints lately?

[Ghost Dog]

55. Billionaire Stanford’s Firm Said to Face U.S. Probe of CD Sales

Feb. 12 (Bloomberg) -- Stanford Group Co., a Houston-based investment firm led by billionaire R. Allen Stanford, is under investigation by U.S. securities regulators over sales of certificates of deposit in its affiliated offshore bank and the consistent, above-average returns those investments pay.

Investigators from the Financial Industry Regulatory Authority visited six Stanford Group offices last month, downloaded information from computer hard drives and looked through files, people familiar with the events said. Two former Stanford financial advisers were questioned last month by the Securities and Exchange Commission, according to the people, who declined to be identified because they didn’t want to put their current jobs at risk.

The agencies are investigating Stanford’s sales of certificates of deposit issued by its Antigua-based affiliate, Stanford International Bank Ltd., according to the former employees. The agency has asked former employees about the bank’s stated returns on investment, between 10.3 and 15.1 percent every year from 1995 until last year, according to documents and annual reports on the bank’s Web site. SIB has $8.5 billion in assets and 30,000 clients, according to the site.

“That type of return ignores the business cycle,” said L. Burke Files, principal of Financial Examinations & Evaluations Inc., a Tempe, Arizona-based financial investigation firm. “His returns fall outside the bell curve of probability.”

‘Routine Exam’

The visits by Finra and the SEC were part of a “routine exam,” said Brian Bertsch, a spokesman for Stanford. Finra spokesman Herb Perone said the agency doesn’t confirm or deny investigations.

...

“There are just a whole lot of subtle clues at Stanford that when you look at it tell you to run away,” Files said in an interview. He cited the consistent investment returns and the use of an Antigua-based auditor.

Stanford International Bank lists C.A.S. Hewlett & Co., based in St. John’s, Antigua, as its auditor. The firm reports offices in Antigua and London on its web site. No one answered the telephone yesterday at either number.

“If you have $8 billion in assets, and you’re taking deposits from all over the world, you would really like to have someone signing those balance sheets that someone has heard of,” Dalmady said.

Four former investment advisers interviewed by Bloomberg said the Stanford Group offers incentives for those who steer their clients’ money into the bank CDs. The company paid a 1 percent fee to the advisers, held contests and offered trips and bonuses of up to $125,000, based on how much money went into Stanford International Bank, according to the former employees and e-mails provided to Bloomberg News. Those incentives weren’t paid for investments in other securities, they said.

/... http://www.bloomberg.com/apps/news?pid=20601068&sid=aaPjhkWJAAoE&refer=economy

[ozymandius]

58. Ooh. Somebody's in trouble.

This has 'take the money and run' written all over it.

Antigua? People put their money in trust to someone with an accounting office in Antigua? *cough* *cough*

[Robbien]

63. Stanford's auditor is a one man firm in Antigua

He died last month

SIB has been audited by a local Antiguan firm, CAS Hewlett, the chief executive of which, Charlesworth Hewlett, died last month. A spokesman for the firm could not comment on SIB and said the auditing business was being taken over by one of Mr Hewlett’s children, currently based in Britain.

http://ftalphaville.ft.com/blog/2009/02/12/52384/as-stanford-allegations-fly-the-sec-investigates/

A $50B secretive firm audited by one man. Now where have we heard that before.


By the way, Stanford Bank was supposed to be supplying the money for the Emageon and Health Systems merger. All papers were signed and arrangements finalized. Stanford Bank was a no show on the day the money was supposed to switch hands. Stanford stalled them for two or three days and today came out with a notice that they were backing out of the deal.

[Demeter]

29. Buyback halts may spell more trouble for Wall St.

http://www.reuters.com/article/ousiv/idUSTRE5197OH20090210

By Ellis Mnyandu - Analysis

NEW YORK (Reuters) - If the rising tide of suspended share buyback programs is any indication, corporate America is now in survival mode...The list of companies putting their share buyback plans on hold since the start of 2009 has raised concerns that the stock market could be in the throes of losing a key underpinning. The amount of announced share repurchases so far this year is less than one tenth what had been announced in the same time period last year...

Strained credit markets have made it tougher for corporations to borrow, driving companies to conserve cash for more urgent uses and drying up a source of funding for share purchases...Around this time last year, corporate America had more than $63 billion of share repurchases announced, but through February 5 there have been $4.32 billion of announced buybacks, according to data from market research firm Birinyi Associates.

[Zenlitened]

59. If share buybacks were a "key underpinning" of the stock market...

... as the article states... well, doesn't that just tell ya everything ya need to know?

Charles Ponzi lacked imagination and ambition, it seems clear now. Compared to today's operators, he was a nickel-shoe-shine boy.

[Demeter]

106. Another Name for This Practice Is "Price Support"

and indeed, it does tell you all you need to know about the markets of recent years. The only question is: when did it start?

[Demeter]

30. Don’t believe what they (Bankers) say

http://brontecapital.blogspot.com/2009/02/dont-believe-what-they-say.html


Calculated Risk points us towards a slide in the presentation that JP Morgan made when it purchased Washington Mutual. Calculated risk (falsely I think) indicates that it is relatively easy to quickly put up a stress test scenario as to end losses for various types of loan.

Anyway – back to the slide which you can find here.




It presented three scenarios up to and including a “severe recession”. It is now clear that the unemployment rate will exceed the severe recession scenario in the slide. However home price appreciation (well really depreciation) from peak to trough is still considerably less than the severe recession scenario in the slide and it is still not clear we will get outcomes that bad.

When that slide was presented I thought it overly – indeed insanely bearish on housing losses – and I still do. WaMu had loan balances of 176 billion and JPM was predicting a loss over the history of those loans of 54 billion in its severe recession scenario.

To get that loss more than half the loans WaMu made had to default. If you assume any reasonable recovery the default rate probably had to be north of sixty percent.

Even in a severe recession that seemed unlikely to me. I know a few WaMu customers (middle class, northern California, financially stressed) and whilst some might default it seemed unlikely that half would.

There is – in America – a core group of people who believe that you should pay your home loan. It is bad out there – but WaMu did have some old loans in its book – which even with 40 percent house price depreciation were going to have positive equity. Also WaMu’s book was at least in part diversified by states.

If you believed in $54 billion in losses (and I don’t) then it is right that WaMu equity was worthless or near worthless even if Sheila Bair had granted some forebearance.

Why financial institutions lie

Most the time problematic banks have an incentive to spin their position as better than it is. Banks lie about the quality of the assets on their book. They do it all the time because if their capital appears adequate their cost of funds will be lower and the availability of funds will be higher. Having funds available at low cost is central to bank profitability.

Most banks have huge and responsive investor relations functions – because continuously convincing the market of their credit worthiness is a core operating function. The guys staffing these IR departments are usually nice enough – but unless you can piece together their statements over a period of years then you are probably best advised not to believe much they tell you.

Bank IR and financial management are very practiced at spin.

They will really get to lying if the Government chooses to buy bad assets from them. I can just imagine the scene – lying bankers (there is no other kind) on one side – and suckers – also known as taxpayers – on the other.

There are exceptions to the rule that financial institutions spin the positive. Ambac (a credit insurance company) is a company that is brutally bearish with you if you go do an investor relations meeting. I have done that – and you come out wanting to slash your wrists. Ambac is writing no business. It is trying to settle old claims presumably for less than the present value of the claims that they will have to pay. If they can convince people that there is a high probability they will not be around in six years to pay the claim then claimants might settle for 60 cents on the dollar now. Indeed the only reason why you wouldn’t settle for 60c on the dollar now on an Ambac claim is that you haven’t taken the hit in your own balance sheet.

Anyway because Ambac is trying to settle claims they have an incentive to make their credit look worse than it really is – that way you get to settle the claims cheaper.

The incentives on JP Morgan

Consider the situation that JP Morgan was in when they were negotiating with Sheila Bair to convince her to confiscate WaMu and to hand it to them. JP Morgan had previously been willing to buy WaMu for $8 a share. They had done due diligence on it twice. But here was the opportunity to buy it for less-than-nothing – if you could get it confiscated first.

Bluntly JP Morgan had an incentive that few banks actually have – which is to high-ball the loss estimates. Their job was convince Sheila Bair to confiscate the bank. How do you do that? Well you tell bad stories. You have to make it seem that even in modest recessions (their severe recession case was a modest recession by current standards) that the losses would be enormous.

So – consistent with incentives – they high-balled the losses to Sheila Bair – and then – to be consistent – they highballed the losses in the public presentation. They were of course doing what bankers do – which is lying when they have the incentive to lie.

Calculated Risk swallowed that lie. They know better than to swallow overly bullish lies. They should also know better than to swallow overly bearish ones.

General rule: believe nothing bankers say when their incentive is to lie. Verify everything you can. If you can’t verify then discount veracity appropriately. If they are investment bankers they lie more convincingly than regional bankers – though both are pretty convincing.

[ozymandius]

33. So I started a another thread yesterday that related a worthy quote.

The thread, relating to Obama and nationalization of the banks, can be found here.

On this day, Abraham Loncoln's 200th birthday, we can find a wellspring of wisdom to help guide us in these troubled times from President Lincoln's 1862 Annual Message to Congress.

We can succeed only by concert. It is not “can any of us imagine better?” but, “can we all do better?” The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise — with the occasion. As our case is new, so we must think anew, and act anew. We must disenthrall ourselves, and then we shall save our country.

When did we last face such perilous economic circumstances? 1932. When have extraordinary measures been necessary on such a massive scale? FDR's first term.

Team Obama needs to stop thinking about this merely as a debt crisis. This is a labor crisis. The banks can be forced to start lending money to consumers. But what mechanism will support the consumer? Reinflating bubbles will lead us nowhere. The depth of our troubles is systemic and reaches back thirty years to a tectonic shift in how we think of wealth creation in this country.

Time to think anew, again.

[jxnmsdemguy65]

65. Great post ozy

This is certainly the most valuable thread on DU...look forward to it each morning.... surfing the web since I'm out of work!

[Demeter]

34. "Canada's banking system the healthiest in the world."

pampango posted this in GD


"Guess which country, alone in the industrialized world, has not faced a single bank failure, calls for bailouts or government intervention in the financial or mortgage sectors. Yup, it's Canada. In 2008, the World Economic Forum ranked Canada's banking system the healthiest in the world. America's ranked 40th, Britain's 44th."

"Over the past 15 years, as the United States and Europe loosened regulations on their financial industries, the Canadians refused to follow suit, seeing the old rules as useful shock absorbers."

"you've heard American politicians wax eloquent on the need for these expensive programs—interest deductibility alone costs the federal government $100 billion a year—because they allow the average Joe to fulfill the American Dream of owning a home. Sixty-eight percent of Americans own their own homes. And the rate of Canadian homeownership? It's 68.4 percent."

"Its health-care system is cheaper than America's by far (accounting for 9.7 percent of GDP, versus 15.2 percent here), and yet does better on all major indexes."

http://www.newsweek.com/id/183670

[tclambert]

39. There used to be a commercial that said, "America borders on the magnificent . . .

Canada."

[Pachamama]

43. This makes me happy!

Atleast I'll know that my bank account in Canada and the property I own will probably be okay when it all crumbles here....hopefully the Canadians will let us enter their borders when it breaks down here....

[Dr.Phool]

56. I think they'll regard us as the new Mexicans.

And want to build a wall.

I had a high school friend who fled to Canada during the Vietnam war. When he returned a few years later, after amnesty, he said that the Canadians despised the immigrants.

The rhetoric was pretty much the same then as it is now. "They're taking our jobs"!

[GliderGuider]

57. It's one thing to be fleeing an immoral war

But quite another to be Tom Joad heading north.

My parents in Ontario took in a draft dodger in the early 70s. I doubt they would extend the same welcome to a downsized Qwik-E-Mart clerk today.

[antigop]

60. US Fed chief Bernanke puts his trust in Canadian bonds

http://www.independent.co.uk/news/business/news/us-fed-chief-bernanke-puts-his-trust-in-canadian-bonds-874937.html

Never regarded as the raciest of figures, the chairman of the United States Federal Reserve, Ben Bernanke, has revealed an especially dull personal approach to investment, with Canadian Treasury bonds forming a key element in his portfolio.

[Birthmark]

61. He needs to change jobs or change his portfolio. eom

[Demeter]

64. He Needs To Fix His Performance

Bernanke has only one tool in his toolbox, and he's hammered everything in sight with it, and it hasn't improved anything.

[Robbien]

66. Today is the day HSBC announces their bonuses

so says the Dealbreaker blog.
http://dealbreaker.com/2009/02/bonus-watch-09-hsbc.php

First comments on the blog are made by banking employees griping about how long it takes to get their bonus money.

Last post is a guy saying "Hey I actually make stuff. I'm in manufacturing. What's a bonus?"

[UpInArms]

68. Britain's Serious Fraud Office probing AIG unit

http://www.reuters.com/article/governmentFilingsNews/idUSLC61729220090212

LONDON, Feb 12 (Reuters) - Britain's Serious Fraud Office (SFO) has launched a preliminary inquiry into suspected irregularities at a British unit of American International Group Inc (AIG.N), the SFO said on Thursday.

The probe into dealings at the London office of AIG Financial Products Corp (AIGFP) does not concern the insurance operations of AIG in Britain or elsewhere, the SFO said.

"It is right for us to look into the UK operations of AIG Financial Products Corp to determine if there has been criminal conduct," Richard Alderman, director of the SFO, said in a statement.

"We will use our full range of powers to seek information and to speak to those with an inside knowledge of the company's operations," he added.

The SFO probe widens a multi-agency investigation into how AIGFP valued a derivatives portfolio that took heavy bets on toxic mortgage debt. Also investigating the company are the U.S. Securities and Exchange Commission, the U.S. Department of Justice and Britain's Financial Services Authority (FSA).

An AIG spokesman said the company was cooperating with the SFO investigation and would continue to cooperate with the other investigations.

AIG, once the world's biggest insurer by market value, averted bankruptcy last year after a $152 billion rescue package from the U.S. government.

Its troubles stemmed from losses within the Financial Products group.

AIG is winding down the businesses and portfolios of AIGFP and its subsidiaries. The unit is based in Connecticut and has a large office in London.

...more...

methinks AIG is fraud-based :shrug:

[nc4bo]

69. Isn't AIG the black hole where 2 trillion USD disappeared into? nt

[Demeter]

70. Could this be the beginning of the end of AIG?

I sincerely hope so. One less black hole sucking up treasure would be a blessing, and a lesson to the others. Just as Lehmans was a lesson to them!

[tclambert]

80. The Serious Fraud Office makes me laugh every time.

I can't help wondering what the Silly Fraud Office is investigating. "Counterfeit Monty Python videotapes, you say? Gracious me, we may have to form a task force. Right, everyone, Task Force formation! Look lively, there, Snigglesworth. No, sorry, old chap, it's Bigglesby's turn to top the pyramid."

[Hugin]

71. Midway files Chapter 11 protection for U.S. operations (UPDATE 1)

"NEW YORK, Feb 12 (Reuters) - Midway Games Inc (MWY.N) said it and its U.S. subsidiaries filed for Chapter 11 bankruptcy protection, saying it could not repay looming debt triggered by the sale of Sumner Redstone's stake in the video game maker.

Midway, famous for its "Mortal Kombat" franchise, was obligated to repurchase $150 million in notes by today, a condition caused by a change of control that occurred in November when a group controlled by media mogul Redstone sold a 87 percent stake they held.

Redstone sold the stake to Acquisition Holdings Subsidiary I LLC, whose sole member is little-known investor Mark Thomas.

In documents filed in a a Delaware bankruptcy court, Midway listed assets of about $167.5 million and liabilities of about $281 million. The Chicago-based company warned last year that it might not be able to make the payments to its bondholders.

In the bankruptcy filing, Midway said it "anticipated it would be unable to satisfy" that obligation, and that the filing gives it time to explore alternatives."


Rest of it here: http://www.reuters.com/article/marketsNews/idUSN1245269720090212
_____________________________________________________________________________________

;(

[specimenfred1984]

72. I thought the Wall St. "press" was calling for a huge rally? lol

Could that have just been corporate whore propaganda (whodda thought)? I just watched a little MSNBC and the pretty lady was interviewing a suit, they were discussing "toxic assets". Actually, "toxic assets" should be called what they are, BANK FRAUD. But ohhhhhh nooooo, we can't say bad things about the U.S. financial system, that really hurts them while they steal 100s of billions at a time.

[Ghost Dog]

78. 3 P.M. Pump back in action there, I see. n/t

[Dr.Phool]

79. Yep.

It was down in the triple digits a few minutes ago, and almost finished in the green.

[tclambert]

82. About 240 point rise in the DJIA in the last hour.

Did a really hopeful piece of news appear right around 3 o'clock?

[tclambert]

84. Well, TC, how about this one from MSNBC?

"White House may move to buy bad mortgages - By John W. Schoen

"The White House is considering a proposal to head off potentially millions more home foreclosures by using federal funds to buy up at-risk loans and then refinance them with more affordable terms.

"Treasury Secretary Timothy Geithner and other Obama administration officials met Wednesday with a group of top bankers, community groups and financial industry representatives to discuss the plan.

"So far, government efforts to prevent foreclosures have focused on pressing the lending industry to work with at-risk homeowners voluntarily and provide them with more affordable payment terms. But the new proposal signals a shift to a more direct government approach, according to John Taylor, president of the National Community Reinvestment Coalition, who attended the meeting with Geithner, Housing and Urban Development Secretary Shaun Donovan and other Obama administration officials."

. . .

"Under the proposal, the government would draw on $50 billion in funds already approved for the financial bailout to buy up millions of mortgages at a discount. A $300,000 mortgage on a house now worth $200,000, for example, might be bought at a 30 percent discount.

"The homeowner then would be able to refinance the smaller mortgage with lower monthly payments. The government could then sell the loan back to investors, freeing money to buy more loans.

"The new approach could eliminate one of the biggest roadblocks that has stymied the government efforts to buy up so-called “toxic assets” that are clogging the financial system. Trading in these securities — backed by thousands of loans — has all but shut down because banks, investors and potential buyers are unable to predict their future value. But individual loans are much easier to value, making government purchases more practical, according to the plan’s proponents.

"Taylor estimates that of the roughly 10 million to 12 million households facing foreclosure over the four years, about 4 million to 5 million would be able to keep their homes."

more at: http://www.msnbc.msn.com/id/29146768

Sounds like an attempt to get closer to the root of the problem. Helping 4 to 5 million people avoid foreclosure has got to be good.

[tclambert]

85. Briefing.com supports that hypothesis. Good catch.

The story according to them: http://www.briefing.com/Investor/Public/MarketSnapshot/StockMarketUpdate.htm

[tclambert]

86. Thanks, TC, a pleasure chatting with you.

[Tansy_Gold]

89. That still leaves 4 to 8 million in foreclosure.

WHEN WHEN WHEN are they going to get it through their thick skulls that the only way out of this is to let force the banks to write down their toxic assets to their real value, which is -0-, and get on with it. Their shareholders will take the loss, but they'll be back in business.

STOP PROTECTING THE STOCK HOLDERS.

I'm about to have a stroke.



Tansy Gold

[Demeter]

92. Which Is Unlikely To Generate Positive Results on the Markets

Markets don't like to hear about little people getting help.

[Ghost Dog]

102. Odd. Does Geithner know about this? From Reuters

(which reads like they're somehow partly responsible):

Obama eyes home loan subsidies in rescue plan-sources
Thu Feb 12, 2009 6:52pm EST

WASHINGTON (Reuters) - The Obama administration is hammering out a program to subsidize mortgages in a new front to fight the credit crisis, sources familiar with the plan told Reuters on Thursday, boosting financial markets.

In a major break from existing aid programs, the plan under consideration would seek to help homeowners before they fall into arrears on their loans. Current programs only assist borrowers that are already delinquent.

Wall Street stock indexes quickly retraced earlier losses on the report, with the blue-chip Dow Jones industrial average jumping 245 points, or 3.0 percent, to close just 6 points lower on the day. Earlier in the session, stock prices had been testing lows seen last November on investor worries about the economy.

Under the evolving plan, sources said homes would undergo a standardized reappraisal and homeowners would face a uniform eligibility test.

The administration may also lower the trigger level that decides who would be eligible for relief. Under an existing program, loans are reworked if a borrower is spending more than 38 percent of their gross income on their mortgage.

...

The Treasury Department, which is taking the lead role in financial rescue efforts, did not respond to a request for comment.

...

Homeowners would have to make a case of hardship to qualify for new loan terms, according to the sources.

Officials weighed, but have shelved for now, another plan that would have the government stand behind low-cost mortgages of between 4.0 percent and 4.5 percent, the sources said.

Howard Glaser, a housing official in the Clinton administration, said the type of program under discussion would give officials more "bang for the buck" than the government would get by guaranteeing troubled loans.

"Federal purchase or guarantee of these same distressed mortgages would be vastly and prohibitively expensive," he said.

Subsidizing existing mortgages would have the added benefit of using the mortgage companies' existing infrastructure, rather than creating a new bureaucracy.

/... http://www.reuters.com/article/politicsNews/idUSTRE51B6B620090212?sp=true

(And, I think "the markets" knew about this possibility already yesterday).

Edit: See also http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3736200

[tclambert]

87. What? You guys never talk to yourselves?

Ha! I say.

[Demeter]

93. All Right, I Apologize

Anything to keep you from talking to yourself. I get enough of that from my autistic kid, who is always arguing with herself (or her imaginary friends) and losing the argument. It is hard to bear.

[Tansy_Gold]

104. GhostDog does it all the time.

See post #74 below.

:hi:

[Demeter]

105. That's Chaining Related Posts, Not Talking to Oneself!

[Demeter]

91. I Noticed that, With Dismay

T'was nice to have a couple of days with no obvious fairy dust...sort of like we had a free market, doncha know?

[Ghost Dog]

74. European Stocks Retreat for Third Day; EDF, Diageo Lead Drop

Feb. 12 (Bloomberg) -- European stocks fell for a third day as companies from Electricite de France SA to Diageo Plc posted disappointing results and investors speculated U.S. measures won’t revive the global economy.

EDF, the biggest operator of nuclear reactors, and Diageo, the largest liquor maker, sank more than 3 percent. Fortis dropped 16 percent shareholders rejected the state-organized breakup of what was once Belgium’s largest financial-services company. Volkswagen AG led a slump in automakers after American jobless claims climbed to a record and U.S. Treasury Secretary Timothy Geithner said he needs time to work out details of a bank-rescue plan.

The Dow Jones Stoxx 600 Index slipped 1.3 percent to 190.64. The gauge had rallied 4.3 percent in the first six days of this month on optimism that global stimulus packages, a financial- rescue plan from Barack Obama’s administration and interest-rate cuts would help lift the U.S., Europe and Japan out of recessions.

...

National benchmarks fell in 17 of the 18 western European markets. The U.K.’s FTSE 100 lost 0.8 percent. Germany’s DAX slid 2.7 percent, while France’s CAC 40 retreated 2.1 percent.

/... http://www.bloomberg.com/apps/news?pid=20601085&sid=adzgTO65fVqo&refer=europe

[Ghost Dog]

75. European industry output dives, Japan deflation looms

LONDON/TOKYO, Feb 12 (Reuters) - Euro zone industrial output suffered a record plunge and Spain reported on Thursday its worst economic contraction in 15 years, heralding dire GDP data expected tomorrow from Europe's biggest nations.

Japan highlighted the risk of damaging deflation and only China -- whose companies are seeking bargains from heavily-indebted western firms -- offered any hope with a big rise in bank lending.

Policymakers around the globe are fighting to prevent their economies, great and small, from diving deeper into crisis.

...

Erkki Liikanen, a policymaker at the European Central Bank (ECB), warned people to expect more bad news.

"The economic crisis seems to be lasting longer and spreading," he said in remarks published on Thursday. "I would not say that the worst is over yet, though in some parts of the financial markets improvement has begun to be seen." (For details please double-click on)

Euro zone industrial production proved his point, plunging a record 12 percent year-on-year in December, the EU statistics office Eurostat reported on Thursday.

"The economy took a breathtaking turn for the worse at the end of last year in the aftermath of the near collapse of the financial system," said Nick Kounis, economist at Fortis.

RECESSION

Spain reported its economy shrank 1 percent quarter-on-quarter in the last three months of 2008, sending it into recession for the first time since 1993.

Madrid has already launched a fiscal stimulus package worth over 70 billion euros ($90 billion) and yet its unemployment has risen to the highest level in the European Union.

Meanwhile Germany, France, Italy and the wider euro zone report GDP figures on Friday which are all expected to show contraction. Overall, the economy of the 16-nation euro zone is expected to have shrunk 1.3 percent in the final quarter of last year, significantly worse than a 0.2 percent drop in the previous three months.

/... http://www.reuters.com/article/marketsNews/idINSP39240320090212?rpc=44&sp=true

[Ghost Dog]

77. Europe Industrial Production Declines Most on Record

Feb. 12 (Bloomberg) -- European industrial production dropped the most on record in December, pointing to a deepening economic slump in the fourth quarter.

Output in the euro region fell 12 percent from the year- earlier month after an 8.4 percent decline in November, the European Union’s statistics office in Luxembourg said today. The December drop was larger than the 9.5 percent median estimate of 19 economists in a Bloomberg survey and was the biggest since the data series began in 1986. From the previous month, production fell 2.6 percent, the most in almost 20 years.

Companies across Europe are cutting back output as the global financial crisis derails purchases of everything from cars to factory equipment. Renault SA today joined fellow French carmaker PSA Peugeot Citroen in reporting a wider-than-expected loss amid the worst auto slump in 15 years. With the euro-area economy forecast to contract 1.9 percent this year, the European Central Bank has indicated it may cut interest rates further.

“The extremely sharp fall in industrial production in December reinforces pressure on the ECB to deliver the interest- rate cut that it has hinted is likely at its March meeting,” said Howard Archer, chief European economist at IHS Global Insight in London. “Euro-zone manufacturers will continue to find life very difficult over the coming months.”

Machine Makers

In Germany, Europe’s largest economy, plant and machine makers plan to reduce output and cut as many as 25,000 jobs this year as sales falter, the VDMA machine makers association said this week. Production may fall 7 percent in 2009 after rising 5.4 percent last year, the Frankfurt-based association said. Overall German output fell 12.4 percent in December from a year earlier and was down 4.9 percent from November, today’s report showed.

...

The euro-region economy probably contracted 1.3 percent in the fourth quarter from the previous three months, according to the median estimate of 31 economists in a Bloomberg survey. The data are scheduled for release tomorrow at 11 a.m. in Luxembourg.

“The latest data and survey indicators point to a substantial decline in real gross domestic product in the fourth quarter,” ECB Vice President Lucas Papademos said yesterday in London. “Stormier weather may still lie ahead,” he added, warning of “continued weakness” in the first half of 2009.

/... http://www.bloomberg.com/apps/news?pid=20601068&sid=aaPjhkWJAAoE&refer=economy

[Ghost Dog]

76. French growth tumbles in Q4, govt sees 2009 in red

PARIS, Feb 12 (Reuters) - France's economy shrank at the fastest pace in 34 years in the fourth quarter of 2008 as business investment and exports collapsed, prompting the government to say it expected negative growth this year.

National statistics office INSEE said on Thursday gross domestic product fell 1.2 percent in the last three months of last year compared with the previous quarter, more than expected, bringing economic growth for 2008 to 0.7 percent.

Economists had predicted a quarterly fall of 1.1 percent after growth of 0.1 percent in the third quarter.

"This bad figure reflects in large part a very significant destocking by companies, which indicates a wait-and-see attitude in the face of uncertain growth and the crisis in the automobile sector," Economy Minister Christine Lagarde said in a statement.

The figures were published a day early after a group of statisticians leaked them in protest at the government's early announcement of some statistics.

The announcement by the euro zone's second biggest economy came a day before fellow heavyweights Germany and Italy were expected to announce their own steep GDP falls, and it followed a similarly grim statement by Spain.

Spain's economy shrank 1 percent in the fourth quarter, its biggest quarterly fall in 15 years, pushing it into recession for the first time since 1993.

Lagarde said she expected GDP to fall by at least 1 percent in 2009 but took heart from the fact that household consumption, a key driver of French growth, had held up in the last quarter of 2008, rising 0.5 percent.

/... http://www.reuters.com/article/marketsNews/idUKLC11195820090212?rpc=44

[Dr.Phool]

81. Maybe Sarkoczy should call Palin again.

She knows how to run an economy.

[Dr.Phool]

83. Judd Gregg just withdrew his nomination for Commerce Sec.

If Obama wants to nominate another clown, I think Phil Gramm is looking for work.

Or Balmer. Yeah, that's the ticket.

[Tansy_Gold]

88. Plan B

I just sent this on the "contact us" at whitehouse.gov

Even though I'm sure no one there reads them. . . .


So Senator Judd Gregg has withdrawn from the nomination for Secretary of Commerce. Did you ever think of appointing someone who isn't an elected official? Why not appoint a real Progressive? I mean, as the economy is going down the tubes, what sense is there in putting another Republican in a key economy position? Why not try something different FOR A CHANGE? Someone who doesn't have a political agenda or an ideological axe to grind. Why not try someone who has been successful in business?



These comments are limited to 500 characters. So far, 2 of my 3 have been 500 on the nose. (The other one was 497, I think.)


Tansy Gold, who would gladly take the position of Commerce Secretary if she didn't have to leave Apache Junction to do it. :rofl: :evilgrin:

[Demeter]

95. It might have helped if you named a few names, Tansy

I think the White House is still a bit clueless...

[Tansy_Gold]

99. Okay, then let's all get together and brainstorm this.

Who would the SMWers nominate for Commerce Secretary?

You can nominate anyone, but you MUST provide some kind of resume so those of us who are not as well informed as others (i.e. me and some of the lurkers) will have at least as much of a clue as the white house.



Tansy Gold, who has no resume other than her blatherings on DU

[ozymandius]

103. Okay. I'll think of a serious candidate choice.

It may be tomorrow morning before I can think of one solid choice. But consider the line of thought that supported Volker as Treasury Secretary. He would have been the choice with the implied intention that he would only stay two years on account of his age. That being said - Lee Iacocca jumps to mind as someone who would serve, as implied, about two years, has a good record in labor issues and understands the administrative duties of Commerce Secretary.

[Demeter]

94. Did He Really? How Interesting!

the GOP convinced Gregg he could be a bigger pain in the neck in the senate--and that he might lose his seat for good if he got up for a spell?

Well, there's always the electoral way to shift his ass out of power. NH has come a long way since I left it.

[Dr.Phool]

101. I just got off the phone with a close friend who served in the NH legislature.

She said Gregg is toast next year anyway. The repuke party is in shambles up there. I told her she should move back and run for his seat. She said that the Fudd would never allow it. She goes to a gourmet pet food shop and buys him treats.

[ozymandius]

96. I nominate John Waters for Commerce Secretary.

At least he's honest.

[ozymandius]

97. Here's how the silliness ended.

Dow 7,932.76 Down 6.77 (0.09%)
Nasdaq 1,541.71 Up 11.21 (0.73%)
S&P 500 835.19 Up 1.45 (0.17%)
10-Yr Bond 2.727% Down 0.035
NYSE Volume 6,818,301,000
Nasdaq Volume 2,481,243,500

4:30 pm : Word that the Obama administration is working on a plan to subsidize mortgage payments for troubled homeowners spurred a late rebound in the major indices. That helped the stock market turn a 3% loss into a modest gain.

Stocks traded with broad-based weakness for much of the session. The downbeat tone was an extension of the stock market's inability to sustain an advance since tumbling Tuesday in the wake of Treasury's disappointing bank rescue plan.

The Dow actually fell to its lowest level since registering a bear market low on Nov. 21, while the S&P 500 approached its January lows.

Declines were led by financial stocks, which remain central to the concerns for the broader stock market. Financials were down more than 7% at their session low, but finished the session with a 1.3% loss.

Stocks put together a rebound after Reuters reported the Obama administration is working on a plan to subsidize mortgage payments for troubled homeowners that pass certain tests. Fannie Mae and Freddie Mac would reportedly play a supporting role. Market participants cheered the news since stemming foreclosures is considered central to restoring the mortgage market, which will help stop bank write-downs.

Meanwhile, investors remain largely unimpressed by the $789.5 billion economic stimulus bill, which is expected to come to a vote by this weekend. Critics contend the bill is unlikely to lead a recovery in the short-term.

Investors looked past the latest batch of quarterly announcements. Coca-Cola (KO 44.39, +3.12) led the way by announcing better-than-expected results. Its rival, Pepsico (PEP 52.00, +1.39), announces tomorrow. Waste Management (WMI 29.26, +0.81) and Aetna (AET 33.06, +0.82) both topped expectations as well. Network Appliances (NTAP 16.40, +1.20) performed in-line with estimates, while Las Vegas Sands (LVS 3.49, -0.49) disappointed with a loss. Overall, the announcement failed to have much influence in the broader market.

Market participants found little inspiration from a better-than-expected January retail sales report. The report showed January retail sales jumped 1%, which is the first increase since a 0.1% gain in July.

However, the report is being treated with skepticism amid ongoing reminders of poor macro conditions. Jobless claims for the week ending Feb. 7 totaled 623,000, which is a bit more than expected, but down slightly from the prior week. Initial claims are at their highest level in more than 25 years.

Meanwhile, 4.81 million continuing claims were filed. That is the highest level recorded since records began in 1967.

Separately, businesses inventories dropped a larger-than-expected 1.3% in December. That is the largest drop since 2001. DJ30 -6.77 NASDAQ +11.21 NQ100 +1.3% R2K +0.6% SP400 +0.5% SP500 +1.45 NASDAQ Adv/Vol/Dec 1328/2.15 bln/1276 NYSE Adv/Vol/Dec 1414/1.48 bln/1609

[Demeter]

98. I think It more likely the PPT or an automatic buying point triggering preprogrammed purchases.

the markets never like anything that helps the worker bees.