STOCK MARKET WATCH, Tuesday February 17

[ozymandius]

Source: du

STOCK MARKET WATCH, Tuesday February 17, 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 13, 2009

Dow... 7850.41 -82.35 (-1.05%)
Nasdaq... 1,534.36 -7.35 (-0.48%)
S&P 500... 826.84 -8.35 (-1.00%)
Gold future... 942.20 -7.00 (-0.74%)
30-Year Bond 3.68% +0.22 (+6.35%)
10-Yr Bond... 2.88% +0.16 (+5.68%)

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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

We've Only Just Begun?
BY BRIAN PRETTI

Yeah, that’s pretty much how we see it at this point. We’re referring to the process that is macro or systemic deleveraging. It was way back in March of 2007 that we penned a discussion entitled, “It’s Delightful, It’s Delovely, It’s Deleverage”. At that time very few folks were talking about deleveraging as a concept and economic force to come. Fast forward to the present and it’s now consensus thinking. Although the theme has been very much popularized in the mainstream press, we see very little attention to specific detail. So, in that spirit, this discussion is all about a check in on the concept and detail as to where we now stand. Nothing like the facts to illuminate the true picture, no?

To the point, deleveraging is not an event, but a process. As we've explained in the past, the multi-decade credit cycle phenomenon was key to economic and financial market outcomes in the US, as well as globally for close to three decades. The whole concept of deleveraging dramatically interrupts, or really derails that cycle. Coincidentally, the Fed/Treasury/Administration are in do or die reflation mode at present. Reflation really meaning an attempt to restart what is a critically wounded credit cycle. Mortally wounded? We’re going to find out. In this light, monitoring the process that is deleveraging becomes very meaningful in terms of trying to interpret just what the financial markets are pricing in at any point in time. We believe it's also helpful in terms of trying to monitor the economic slowdown magnitude and duration issues so key to near term investment outcomes.

Looking at the hard data, it's our interpretation that deleveraging has barely begun when looking at the economy and financial market broadly. Below are a number of highlight data points. Through the third quarter of last year, US consumers have not yet gone into a net debt contraction mode, but have slowed their borrowing dramatically YTD. It's a darn good bet net debt contraction is here now and will show up in quarterly numbers very shortly as official 4Q numbers are published.

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

[Hugin]

3. I started 'deleveraging' before there was a word for it.

Now, I'm all trendy!

Ah, good... The SMW is up. :hi: Ozy!

[ozymandius]

4. Good morning Hugin and all.

:donut: :donut: :donut:

Deleveraging: all the cool kids are doing it. :hi:

[Demeter]

24. Morning, Ozy! Good Morning Boys and Girls!

I got caught flat-footed yesterday. I didn't know it was a holiday!

Since Monday is still my worst day, I wasn't able to post anyway....but there's tons of good stuff up on WEE, including the estimate that 40% of the paper wealth has evaporated, and that half of all asset- based securities are worthless.

This is really gonna hurt the "wealthy". The poor had precious little in the way of paper assets to begin with, so those losses are by the big boys and girls, who will find their power diminishing as the well-earned contumely of the public lashes their souls....

Read all about it here:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=103x425152

[54anickel]

52. I'll have to disagree with you on who really gets hurt here. Sure, on paper it looks like

a blow to the wealthy, but they aren't going to be putting off retirement, working 5 instead of 3 part time low paying jobs or standing in bread lines. It didn't hurt them all that much the last time around and actually most made out pretty well acquiring real assets and property, especially farm land, for pennies on the dollar on the steps of courthouses across the country.

The middle working class were the most invested through 401Ks, mutual funds, their pensions (there are still quite a few pensions out there, especially union and gov't workers) - all investments have become toxic, not just the exotic ones. Then there's the currency issues, even those with no investment or savings at all are rapidly loosing purchasing power. Not to mention the job losses.

So no, this is really going to hurt the middle class and probably leave the poor for dead as they get bumped out of the job market completely, charity becomes nothing more than an old "biblical" notion and the last remaining safety nets established long ago are determined no longer feasible by our corporate overlords as they put all of their resources into maintaining the status quo of capitalism and free-markets. Remember our government is still in their pocket of resources. We are entering an epic battle that will make the Great Depression look like a freaking cakewalk.

http://www.youtube.com/watch?v=DxVeLY3HFi8

be sure to read the transcript: http://snltranscripts.jt.org/97/97pfunhouse.phtml

[Demeter]

67. We the Poor have Been Hurting All Along

but this is the kind of damage that the wealthy dare not try to recoup from us. They are running scared because not only are they not the once all-powerful they thought they were, we the poor are demonstrably stronger than we've been led to believe...and we intend to use that power to bring about change and justice and equity.

The Masters of the Universe are losing ground much faster--and they haven't got anything behind them as a backstop. They overplayed their hand--and in the end they are the losers. If we don't do anything really stupid, we will be winners, as we were in 1776.

[54anickel]

76. I certainly hope you're correct, but the domination system has pretty much mastered the "divide and

conquer" theory Adam Smith actually warned against in his "Wealth of Nations" back in 1776. All you ever hear quoted from that writing is the pro free-trade crap. You never hear about how he also railed against the ideology behind division of labor that lead to today's "piece work" manufacturing. To me, this isn't some sort of "us against them" class warfare, but rather trying to undo a systemic bias that favors corporate capitalism at all costs --- the domination system --- it's all we've really ever known.

Adam Smith is credited with promoting the modern version of "division of labor." Previously, division of labor meant some people worked on the farm, while others specialized in making various goods, but the craftsperson made the item in its entirety. In its modern form, division of labor means that many workers work on the same item, each rapidly performing a small simple repetitive operations on a production line. However, if you read his book, Wealth of Nations (1776), you will find that he actually denounces this form of division of labor. He wrote that it would make us "as stupid and ignorant as it is possible for a human creature to become." Personally, this is not what I want to become, but those in power in a domination system love the idea! "Division of labor" is just another way of saying "divide and conquer" because now no one worker knows even how to make the item in its entirety. Because each step was simple and a worker was easily trained, the workers themselves became an interchangeable part of the production line and easily replaced if necessary. The worker could now be paid less and so became even more powerless, and essentially a wage slave of the dominant few. Mohandas Gandhi said "Poverty is the worst form of violence."

Corporate capitalism betrayed Adam Smith so that even the whole factory is now an interchangeable part. Even if all the workers of the whole factory do not feel like doing the work, well, there is always another factory in another country willing to do it as cheaply or even cheaper. And the history of how large corporations in America built their enterprises on the backs of the poor, is explained in many of Noam Chomsky's writings, such as in this interview "On violence and youth."

[Hugin]

84. TPTB have an aversion to Collective Bargaining, for instance.

Much like Vampires and Garlic.

[Hugin]

83. I read on the WEE that the 1%-ers -NEED- the labor inequality situation to maintain their wealth.

I hadn't thought of it quite that way before, but, I think it's true. Much like the Robber Barons of times past needed the food/resource inequalities that drove the status-quo engines they built their empires upon.

This explains the huge amount of hot propaganda gasses being expelled by the Corporate Media calling 'PROTECTIONISM'.

Scary indeed, 54anickle.

It's not a pretty situation we find ourselves in.

[Ghost Dog]

87. Pretty? Even for L'Oréal, the economy is getting ugly

The beauty business long seemed recession-proof. Economic downturns weren't supposed to decrease customers' desires to look better. They might even pay up in adversity. Makeup can help make a face look brave. So the news that revenue at L'Oréal actually fell in the final quarter of 2008 can be taken as a sign that the current slump is serious.

L'Oréal, the French cosmetics company, long prided itself on double-digit growth in earnings per share. But its markets are declining in the United States, stagnant in Europe and slowing fast in the emerging economies of Eastern Europe and Asia.

Customers are trading down from its luxury lines like Lancôme and Armani perfumes, perhaps finding that lower-cost offerings provide as much beauty for their cash. With mass-market products holding up well, L'Oréal managed to rake in almost €2 billion of profit last year - but that was down 27 percent from 2007. And it is looking at an uninspiring 2009, starting with what the chief executive, Jean-Paul Agon, calls a "very difficult" first quarter.

Agon is borrowing from the traditional toolbox to address the crisis. There will be cost-cutting, an overhaul of distribution channels and a focus on more promising products and markets.

He will also fork out 41 percent of profit in dividends. That money might have been better spent within the company, but L'Oréal has peculiar shareholders. The French billionaire Liliane Bettencourt owns 32 percent and Nestlé holds 30 percent, and they are interested in a steady cash flow.

Agon's plan will work if customers around the world return to their previous spending habits once the recession ends. It could fall short if the crisis marks the beginning of a major change in spending patterns. Customers could realize that they don't have to succumb to the marketer's pitch - that you have to pay up to be truly beautiful. If superfluous spending stays out of fashion, L'Oréal's profit will remain depressed for some time to come.

/. http://www.iht.com/articles/2009/02/17/business/views18.php

[Warpy]

80. I've always been 5 years ahead of the curve

and warned folks to start deleveraging in 2003.

I'm glad it's finally cool. It's just a little late for a lot of people.

[sendero]

20. I never..

... leveraged to begin with, I'm risk averse! B-) B-)

[ozymandius]

2. Today's Reports

08:30 Empire State Mfg. Feb
Briefing.com -24.0
Consensus -24.0
Prior -22.2

09:00 Net Long-Term TIC Flows Dec
Briefing.com NA
Consensus $20.0B
Prior -$21.7B

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

[UpInArms]

105. U.S. Feb. Empire State index falls to new record low - negative 34.7% (was negative 22.2% in Jan)

http://www.marketwatch.com/news/story/us-feb-empire-state-index/story.aspx?guid=%7B943A4365%2DC6BA%2D4F62%2D8653%2DD7AEB8BFECBA%7D&dist=msr_14

WASHINGTON (MarketWatch) -- Manufacturing activity in the New York area contracted at a record pace in February, the New York Federal Reserve Bank said Tuesday. The bank's Empire State Manufacturing index fell to negative 34.7 in February from negative 22.2 in January. While 16% of respondents said conditions had improved, 51% said that they had worsened. New orders also fell to a record low. Shipments improved to negative 8.1 from a negative 13.1. The Empire State index is relatively new, having started in 2001. The index is of interest to investors and economists primarily because it's seen as an early indicator of what the Institute for Supply Management's February national factory survey due out in two weeks may show. In January, the ISM manufacturing index rose slightly to 35.6%, raising hope that worst of the decline in manufacturing was over.

[UpInArms]

106. RPT-TABLE-US Dec net capital inflows $74.0 bln

http://www.reuters.com/article/bondsNews/idUSTRU00037320090217

Feb 17 (Reuters) - Treasury Department international
capital data release, in billions of dollars except where
noted. Figures are not seasonally adjusted.

                      Dec       Nov      Oct

Monthly Net
TIC Flows              $ 74.0      61.3   273.1
  Private              $ 65.7      70.2   261.3
  Official             $  8.2      -9.0    11.9
Net foreign buys of
long-term securities   $ 24.4     -37.6   -15.2
  Stock swaps, other   $-10.4     -12.0   -14.8
Long-term securities
  transactions         $ 34.8     -25.6    -0.4
Domestic Securities,
purchased net          $ 22.4     -60.1   -36.6
  Private              $ 25.2     -22.9   -19.4
  Official             $ -2.8     -37.1   -17.2
Total net foreign buys of:
Treasuries              14.98    -25.81    32.87
Agencies               -37.45    -22.49   -50.22
Equities                 3.87      4.44    -6.21
Corporates              41.00    -16.21   -13.06
Holdings of major foreign
 holders of Treasuries:
China                   696.2     681.9    652.9
Japan                   578.3     577.5    582.0
United Kingdom          355.9     356.5    357.2
Caribbean banking ctrs  213.3     220.8    219.3
Oil exporters           197.0     198.0    187.6
Brazil                  120.5     129.6    134.5

seems that none of the central banks are buying - just private money

.... hmmmm

the pirates of the caribbean again?

[ozymandius]

5. Oil hovers near $37 as demand for crude wanes

SINGAPORE – Oil prices hovered near $37 a barrel Tuesday in Asia as a deepening global slowdown weighed on expectations for crude demand.

Light, sweet crude for March delivery fell 37 cents to $37.12 a barrel by afternoon in Singapore on the New York Mercantile Exchange after settling at $37.51 on Friday. The contract rose 11 cents Monday in Asian and European trading while U.S. markets were closed for the Presidents Day holiday.

....

Japan, the world's second-biggest economy, is also hurting. It said Monday its economy shrank 3.3 percent in the fourth quarter from the previous quarter, the worst performance since 1974.

"The economic and inventory data paint a bleak picture for oil demand," said Victor Shum, an energy analyst at consultancy Purvin & Gertz in Singapore. "Since the beginning of the year, the outlook has worsened."

....

In other Nymex trading, gasoline futures rose 0.35 cents to $1.21 a gallon. Heating oil fell 2.80 cents to $1.27 a gallon, while natural gas for March delivery dropped 14.9 cents to $4.30 per 1,000 cubic feet.

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

[FarCenter]

57. That is only the price for West Texas Intermediate

Tapis, which is the price for crude oil in Asia, is $47.69 / barrel.

Minas is $50.04.

Dubai is $41.63.

Oman is $43.68.

Even Louisiana Sweet is $41.45.

[Demeter]

90. Ozy, can You Find a Graph that Isn't Texas Intermediate Light Sweet?

I think that the one used in the posting is not very helpful for pricing, and only partly so for price trends....

[ozymandius]

111. Good charts are hard to find.

Believe me. I've spent hours looking for a good chart that will fit on the OP and not clog dialup connections. If you run across one that regularly (intra-day) updates then please let me know.

[Demeter]

124. Okay, I will look.

How do you like that Greenspan announcement?

[ozymandius]

6. Trump Entertainment files for Chapter 11

(Reuters) – Trump Entertainment Resorts Inc, Donald Trump's casino group, filed for Chapter 11 bankruptcy protection on Tuesday, court documents show.

The casino operator had assets of about $2.1 billion and total debts of about $1.74 billion on December 31, 2008, it said in its filing with the U.S. Bankruptcy Court for the District of New Jersey.

http://news.yahoo.com/s/nm/20090217/bs_nm/us_trump

---

"Money! Nada!"

[Demeter]

25. Half a Billion here, Half a Billion There

Pretty soon you're talking cement overshoes!

[wordpix]

116. $2.1 billion in assets, $1.7 billion in debt - how is that bankruptcy? The difference is

more money than I've ever seen in my life, and I'm not bankrupt.

[ozymandius]

7. World stock markets slump amid financial fears

HONG KONG – Asian stock markets fell sharply Tuesday, with benchmarks in Hong Kong and South Korea down about 4 percent, as renewed financial fears sent banks across the region tumbling. European shares slid in early trade.

....

Banks and insurers were in the spotlight amid concerns there was more pain ahead for the global financial industry.

....

Japan's Nikkei 225 stock average sank 1.4 percent to 7,645.51, as investors digested news Japan's finance chief was stepping down because of health problems after facing allegations he was drunk at last weekend's Group of Seven finance ministers' meeting in Rome.

....

Elsewhere, Hong Kong's Hang Seng dropped 3.8 percent to 12,945.40, and South Korea's Kospi plummeted 4.1 percent to 1,127.19. Markets in Australia, India and Singapore also declined.

In China, where shares have surged in recent weeks on hopes its economy can sustain strong growth, the Shanghai benchmark lost 2.9 percent to 2,319.44. Mainland investors sold amid reports that regulators were looking into whether the country's recent surge in bank lending might raise financial risks.

During early trading in Europe, Britain's FTSE 100 lost 1.3 percent, Germany's DAX was off 1.7 percent and Frances CAC-40 fell 1.9 percent.

http://news.yahoo.com/s/ap/20090217/ap_on_bi_ge/world_markets

[ozymandius]

8. Nearly 800 jobs axed at Delphi's steering division

BUENA VISTA TOWNSHIP, Mich. – Nearly 800 jobs are being eliminated at the steering division of Delphi Corp. near Saginaw, Mich.

The cuts announced Monday are hitting 425 hourly workers and 350 employees who are on salary at the Delphi complex in Buena Vista Township. They will kick in March 1.

....

Blue-collar workers who volunteer to leave will get a severance. Workers with low seniority can leave and get a severance or put their name on a recall list.

The white-collar layoffs are in all departments, including engineering, purchasing, manufacturing and sales. Before the cuts, Delphi's steering division had 3,600 employees.

http://news.yahoo.com/s/ap/20090216/ap_on_bi_ge/delphi_layoffs

[ozymandius]

9. Crippled US auto firms (GM, Chrysler) to report on restructure plans

WASHINGTON, (AFP) – Major carmakers in the crippled US auto industry were to report to the government Tuesday on their restructuring plans, a condition of a 17.4-billion-dollar auto industry bailout funded by taxpayers.

General Motors and Chrysler are to detail their plans one day after President Barack Obama said he would set up a high-level task force to steer restructuring as his administration assumes control of the fate of the "Big Three" carmakers.

The White House said the multi-agency operation would report to Treasury Secretary Timothy Geithner and top presidential economic aide Lawrence Summers, confirming that no single "car czar" would shepherd the ailing industry.

....

Administration officials are expected to study the auto industry plans to cut costs and restructure for several weeks before deciding a course of action.

The final plan will serve as a basis for the Treasury's decision, due by March 31, to call in or extend the loans.

http://news.yahoo.com/s/afp/20090217/bs_afp/useconomyautounioncompanygmchrysler

[radfringe]

10. Criminal Probe in Pequot/Microsoft Case - this one is heating up

---Criminal Probe in Pequot/Microsoft Case
wired.com - February 16, 2009

Federal prosecutors have opened a criminal investigation related to possible insider trading in Microsoft stock by Pequot Capital Management, the hedge fund run by Arthur Samberg, the transcript of a recent court hearing shows.

The U.S. Attorney's office in Manhattan is leading the criminal investigation with help from the Federal Bureau of Investigation, according to information in the transcript and lawyers involved in the case.

As Portfolio.com reported in January, new evidence of more than $2 million in payments from Pequot to a former Microsoft employee had already prompted the Securities and Exchange Commission to reopen its civil investigation of the trading. The agency had closed the probe in 2006 without taking action.

That original SEC investigation, which also had looked into whether Samberg had acquired inside information on a different company from Morgan Stanley CEO John Mack, received considerable public criticism after it was closed. The SEC fired its lead investigator on the case, who had pressed to keep the investigation going.

[ozymandius]

11. Another case in which the SEC maintained the status-quo.

By doing nothing during the Bush years.

This will be an interesting case to follow, at least, for any blowback onto current and former SEC officials.

[radfringe]

13. GMTA... ;) n/t

[radfringe]

12. regarding firing of SEC lead investigator....

couple that with testimony by the whistleblower on Madoff saying SEC wouldn't follow-up, and investigators were pulled off...

now think back to US Attorney firings

makes you wonder how much of the bush-cheney politics played a part... more dots? How many other SEC investigators left or were let go and for what reason?

:tinfoilhat: ? maybe, but I don't think so

[ozymandius]

15. No. No tinfoil helmets.

Dismantling of the government's ability to enforce law and the selective enforcement of law was systematic during Bush's tenure. I believe it was Gore Vidal who put these precedents in proper order and qualification:

One incident could be just coincidence; Two incidents may be just a coincidence; Three events are enemy action.

Occam's Razor applies here. Years of patterns fitting the description of 'enemy action' have infected our governmental structure.

[Demeter]

28. And No Signs to Date That Obama Is Cleaning House and Re-regulating or Prosecuting, Either

I believe in sneaking up and the big stick and all that, but I also believe in sooner rather than later.

There is a question of priorities, here. Instead of playing with the tin soldiers and palling around with GOP legislators, clean house!

[InkAddict]

49. Yup, per the cartoon, I like the Pete Rose fix...banned for life. n/t

[glinda]

92. Yep. And CNBC is raging against Obama and holding up Walmart today. CNBC needs to be investigated.

[wordpix]

117. CNBC owned by GE - follow the money

but GE stock has plummeted along with other high flyers.

[Dr.Phool]

34. I think that was Ian Fleming, in Goldfinger.

"Once is happenstance, twice is coincidence, three times is enemy action".

[ozymandius]

44. Truly a classic. Thanks!

Maybe it was Gore Vidal quoting Ian Fleming. :shrug: It's a classic observation that holds true.

[Dr.Phool]

46. I think I read too much as a kid, to remember something like that.

[Warpy]

82. Harpo Marx

If somebody crosses you once, it's a mistake. If it happens twice, it's the beginning of a bad habit. If it happens three times, they're dead and we don't speak ill of the dead.

I'm paraphrasing, read his book when I was a kid and that's one of the things that stayed with me.

[UpInArms]

41. memory lane walk here:

Congress Investigates S.E.C. Investigation of Pequot and John Mack of Morgan Stanley

October 23, 2006

Internal S.E.C. emails obtained by The New York Times refer expressly to John Mack's "political clout" and his lawyers' "juice." This is the "Big Shot" exemption from the federal securities laws practiced by the S.E.C. in America today. John Mack is simply too powerful and Morgan Stanley a fortiori is so powerful that they are above the law. We're not talking about grabbing headlines with Martha Stewart making $40,000 on insider trading and offering the public a "high-profile" but low-power celebrity to maintain the charade that every person is equal before the law. John Mack apparently is more equal than others; he and Morgan Stanley have "The Power" to squelch action by the federal government against them.

Now it's hit the partisan political fan, with supposedly outraged politicians who accept campaign contributions from Morgan Stanley and the other major securities brokerage firms acting "shocked" that John Mack and Morgan Stanley have "political clout" and enough "juice" to be above the law. It's straight out of the Humphrey Bogart classic "Casablanca"..."Gambling in Rick's Place? I'm shocked, shocked, shocked" proclaims Claude Raines as a corrupt cop turning a blind eye to crime right in front of his eyes.

The S.E.C. staffer is still not back at his job, and he won't be any time soon. The Congressional public hearings will come and go with no real change in the reality that John Mack and Morgan Stanley are so rich and powerful that they are above the law, because the lawmakers were elected with Morgan Stanley's money and the money from their friends. In the IPO Antitrust Case, the S.E.C. has sided with Morgan Stanley against the public investors whom the S.E.C. is supposed to protect.

So federal agency leaders and politicians are in bed with the subjects of their jurisdiction. I don't know why this "Dog Bites Man" story has legs, but I'm glad that it does, because such exposure of abuse of power is the only hope for change, whether now or in the future. In the interim, we will continue to fight the good fight in the IPO Cases in federal court, where the public investors have a fair forum, despite the "political clout" of John Mack and Morgan Stanley and their lawyers' "juice", because our Founding Fathers had the wisdom to create checks and balances, including an independent judicial system with ultimate decision-making power. It's tragic that the investing public's best interest is solely represented by private lawyers working on a contingent-fee basis, but it is what it is and we have to accept this reality even while hoping that, in the future, the S.E.C. will revert to its historical role as a regulator with teeth.

Morgan Stanley CEO John Mack: Quintessential Crook in a Gucci Suit. Welcome to Slabbed

October 7, 2008

Alright folks you want to know the type of people that are benefiting from the rescue package? I’m going to profile one in current Morgan Stanley CEO John Mack. I don’t have much time to compose this post so I’ll be featuring the work of others on this subject. I hope some of the general public anger can be channeled to the worst of the offenders like Mr Mack. We start our tale couresty of the UK Independent:

John Mack, the chief executive of Morgan Stanley, is at the centre of an insider-dealing storm, after allegations from a former investigator at the Securities and Exchange Commission that he passed trading tips to the head of one of Wall Street’s oldest hedge funds.

Morgan Stanley said yesterday the allegations, reported in The New York Times, were simply not true. The hedge fund involved, Pequot Capital, said it had been investigated by the SEC but had never done anything wrong.

The SEC investigator, Gary Aguirre, claims he was ousted from the organisation after insisting it subpoena Mr Mack, a powerful ally and fundraiser for President George Bush.

Mr Aguirre said in a letter to senior members of Congress his inquiry into Pequot had led him to the conclusion that a senior Wall Street executivehadbeen passing information to the hedge fund at the beginning of the decade. Mr Mack was the president of Morgan Stanley until 2001 and then co-chief executive of CSFBfrom 2002 to 2004. The letter does not refer to Mr Mack by name but it has since emerged he is the figure to whom Mr Aguirre was referring.

His superiors did not agree Mr Mack should be subpoenaed and, after rowing over the issue, Mr Aguirre was sacked in September. A spokesman for Morgan Stanley said: “We have no reason to believe the SEC has any interest in Mr Mack in connection with this matter and he has never been contacted on this matter by the SEC.”

It is no secret in finance circles that the US Securities and Exchange Commission is largely a toothless watchdog. The law blog of Sirota and Sirota LLP added additional color and made some predictions:

Morgan Stanley CEO John Mack is under scrutiny regarding an alleged insider-trading scheme by hedge fund Pequot, which Mack ran after Purcell forced him out of Morgan and Mack joined the $7 billion Pequot hedge fund. Mack is back at Morgan after Purcell’s ouster. Pequot allegedly made an illegal $18 million profit through an inside-information scheme in a particular stock. The SEC investigator who worked up the case against Pequot was fired in what the ex-SEC investigator claims was retaliation for his insistence that the SEC take Mack’s testimony, a claim that, needless to say, is vigorously denied by SEC Chairman Cox. The alleged attempted cover-up is itself being investigated, and the SEC is now arranging to interview Morgan Stanley’s CEO to take a peek behind the scenes at Pequot during Mack’s watch.

I wouldn’t expect more than a slap on the wrist from the SEC in a worst case, and I wouldn’t expect the Bush administration to come out on the side of the ex-investigator. The SEC will side with Morgan Stanley just as the SEC has in the IPO Antitrust Case in the federal courts, siding with the securities industry, particularly the Big Kahunas like Morgan Stanley, against the interests of the investing public whom the SEC is supposed to be protecting. That’s why the SEC tried to block New York State Attorney General Elliot Spitzer’s jurisdiction, fortunately unsuccessfully, so that Spitzer would not have been able to “interfere” with the status quo, in which the more money you have, the more the feds turn a blind eye to your transgressions. Morgan Stanley and the SEC have actually lied to the United States Supreme Court that the IPO Antitrust Case challenges underwriting syndicates per se, and if the Second Circuit decision is upheld, it will destroy the American capital-formation system, when it is beyond any doubt that the IPO Antitrust Case does not challenge the syndicate system, it does challenge specific unlawful practices by certain underwriting syndicates in certain IPOs. Morgan Stanley’s IPO manipulations in the 1999-2000 period were always unlawful since 1934, and if you’re Robert E. Brennan of defunct First Jersey Securities, or Blinder “Blind ‘Em & Rob’em” Robinson’s Meyer Blinder, or Stratton Oakmont shtuppingthen NY Senator Alphonse D’Amato with pre-arranged IPO first-day profits at manipulated aftermarket prices, the US government has long since put you out of business for the very same illegal acts as the sacred cow “Big Firms” like Morgan Stanley.

So don’t expect John Mack to get much of a grilling from the federal agency charged with enforcing the federal securities laws, and don’t expect more than a slap on the wrist for Pequot even if they did trade on inside information. Don’t expect the ex-SEC investigator to be vindicated and reinstated. Most of all, don’t expect anything much to happen to John Mack of Morgan Stanley. Nobody said Life was fair, and it’s not.

S.E.C. Inquiry on Hedge Fund Draws Scrutiny

October 22, 2006

By the evening of June 20, 2005, the government’s investigation of possible insider trading by Pequot Capital Management, a prominent hedge fund, had reached a critical stage.

Throughout the day, Robert Hanson, a branch chief in the Washington office of the Securities and Exchange Commission, had been questioning his lead investigator in the case about taking the testimony of John J. Mack, an influential Wall Street executive.

The investigator, Gary J. Aguirre, was trying to find out if Mr. Mack had obtained inside information about a merger and passed it to his friend, Pequot’s founder, Arthur J. Samberg.

<snip>

In the documents, S.E.C. officials argued that Mr. Aguirre was not justified in taking Mr. Mack’s testimony because he could not show that Mr. Mack had inside information or a clear motive for giving it to Mr. Samberg. But Mr. Aguirre said he was only asking for permission to interview Mr. Mack, not bring charges.

The file portrays the S.E.C. as a place where stock exchange referrals of suspected insider trading can languish for years without serious investigation.

[ozymandius]

14. Stocks poised to plunge

NEW YORK (CNNMoney.com) -- Stocks are poised to open significantly lower on Tuesday, as investors worry that the new stimulus plan - expected to be signed into law later in the day - won't help breathe new life into the economy.

....

Enthusiasm over the stimulus plan and bank bailout have been tempered by an ongoing barrage of bad corporate and economic news. Last week, the Dow shed 5.2%, the S&P 500 fell 4.8% and the Nasdaq stumbled 3.6%.

http://money.cnn.com/2009/02/17/markets/stockswatch/

---

Actually, I believe the anxiety that Wall Street feels stems from the new "stress test" now being performed on the big banks. This test, btw, happens to coincide with the stimulus' passage.

[ozymandius]

16. Bank of East Asia Posts First Loss in Four Decades (Update2)

Feb. 17 (Bloomberg) -- Bank of East Asia Ltd., the Hong Kong lender that suffered a run on deposits in September, had its first loss in at least four decades after writing down the value of credit-market investments.

The HK$855 million ($110 million) deficit for the six months ended Dec. 31, derived by subtracting first-half earnings from full-year numbers reported by the company today, compares with profit of HK$2.26 billion a year earlier.

Chairman David Li said he’ll “fast track” measures to cut costs after expenses rose 23 percent last year and bad-loan charges more than doubled. Bank of East Asia’s shares tumbled 61 percent in the past year, and the September run on the lender spurred Hong Kong’s central bank to guarantee all bank deposits.

....

The lender hasn’t posted a loss since at least the 1960s, spokeswoman Vera Lung said today before results were posted, without being more specific. The bank, Hong Kong’s third-largest by market value, booked HK$3.5 billion in charges after selling its holdings of collateralized debt obligations last year.

http://www.bloomberg.com/apps/news?pid=20601087&sid=asAY6xWn4dIU&refer=home

[Festivito]

17. Debt: 02/12/2009 10,759,196,587,563.44 (UP 46,072,371,991.24) (Fairly big.)

(Four tiny days for public debt, then, today, one fairly big day.)

= Held by the Public + Intragovernmental(FICA)
= 6,453,765,915,043.27 + 4,305,430,672,520.17
UP 43,810,585,841.25 + UP 2,261,786,149.99

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 305,788,886 people in America.
http://www.census.gov/population/www/popclockus.html
Currently, each of these American's owe $35,185.05.
A family of three owes $105,555.14. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 23 reports in the last 30 to 31 days.
The average for the last 23 reports is 6,495,908,980.65.
The average for the last 30 days would be 4,980,196,885.17.
The average for the last 31 days would be 4,819,545,372.74.
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$/day.
There were 17 reports in 23 days of Obama's part of FY2009 averaging -0.05B$ per report, 0.06B$/day so far.
There were 92 reports in 135 days of FY2009 averaging 7.98B$ per report, 5.44B$/day.

PROJECTION:
There are 1,438 days remaining in this Obama 1st term.
By that time the debt could be between 12.7 and 18.6T$.
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)
02/12/2009 10,759,196,587,563.44 BHO (UP 132,319,538,650.36 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: 734,471,690,651.00 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
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 ---
02/12/2009 +043,810,585,841.25 ------------**********

157,064,568,669.25 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,094,564,784,304.37 in last 147 days.
That's 1,095B$ in 147 days.
More than any year ever, including last year, and it's 108% of that highest year ever only in 147 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 147 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=3737082&mesg_id=3737646

[ozymandius]

18. Governor prepares to send out 20,000 pink slips

In an apparent effort to increase pressure on lawmakers negotiating an end to California's fiscal crisis, Gov. Arnold Schwarzenegger is preparing to send pink slips to 20,000 state workers.

....

With his layoff plan, Schwarzenegger hopes to eliminate 10,000 jobs, but is sending out more notices in case the state meets with obstacles, legal or otherwise, in laying off certain workers.

Layoffs can take about six months to implement, because of union contracts and other required steps.

Also today, the administration announced that on Tuesday it will shut down the final 276 public works projects that had been allowed to continue operating during the state's cash crisis.

http://www.latimes.com/news/local/la-me-budget17-2009feb17,0,1851008.story

[DemReadingDU]

19. Kansas may delay tax refunds, paychecks

2/17/09
TOPEKA - Income tax refunds and state employee paychecks could be late after Republican leaders and the Democratic governor clashed Monday over how to solve a cash-flow problem.

Payments to Medicaid providers and schools also could be delayed.

"We are out of cash, in essence," state budget director Duane Goossen said.

The move places state taxpayers, workers and schoolchildren in the middle of a political battle over budget cuts.

Republicans, who hold majorities in both chambers, blocked Gov. Kathleen Sebelius’ proposal to borrow $225 million from healthy state funds to cover shortages in accounts used to meet the state’s payroll and issue tax refunds.

GOP leaders said they won’t approve the IOUs until Sebelius either cuts the current budget herself or signs the bill they passed last week slashing $326 million — including $32 million for education — to balance the budget.

Republican leaders said they had no choice, that by law the state can’t borrow any more money from itself.

Sebelius and Democrats disagree and accuse the GOP of playing politics with people’s paychecks.

"Through their refusal to act today, the Republican legislative leadership is jeopardizing our citizens' pocketbooks for no other reason than to play political games — games in which the only ones set to lose are Kansas families, workers and schools," Sebelius said in a written statement.

more....
http://www.kansas.com/news/story/701750.html

[FarCenter]

59. Does Kansas pay using checks or warrants?

A warrant looks like a check, but it is actually a collection item. That is, instead of being written against funds in an account, it is a right to collect the money at a future date when it becomes available.

Many states write warrants instead of checks.

[DemReadingDU]

62. Not sure at that

I knew states having problems were California, Michigan, Ohio. Kansas? Who knew there were problems in Kansas? I think we will be finding that there are other states having money issues too.

[ozymandius]

21. Community Banker: Break Up Big Banks

from Calculated Risk

"The money is going to sit on the sidelines until (regulators) announce they’re going to do something with these (big banks). Nobody is going to put fresh capital into the banking business when your major competitor is going to be continuously bailed out by the United States government with more and more money.”

Rusty Cloutier, the president and CEO of MidSouth Bank

From Diana Golobay at Housing Wire: Break Up Big Banks, Says Community Banker

Rusty Cloutier, the president and CEO of MidSouth Bank, recently told major news outlets that “(c)oncentration is a bad thing” and called for the feds to break up the “miserable eight” largest banks that, he said, control 60 to 64 percent of the country’s assets, restoring competition to the banking industry and restoring investor confidence in the system.

This is an excellent point. Most of the big banks can't raise capital because investors are afraid of nationalization preprivatization. And small banks can't raise capital because investors are concerned that their competitors (the large banks) will be continuously bailed out by the government.

[ozymandius]

22. 4 Failed Banks Cost FDIC $342 Million

On the day of the most bank closings so far in 2009, regulators closed four more banks late Friday and named the Federal Deposit Insurance Corp. as receiver. The announcement brought total closings to 13 for the year as of Feb. 13. The estimated cost of all four banks to the Deposit Insurance Fund will be some $341.6, the FDIC said.

Sherman County Bank of Loup City, Neb., naming the FDIC receiver. The banks four offices are set to reopen as branches of Wood River, Neb.-based Heritage Bank on Tuesday.

...

The Florida Office of Financial Regulation closed Cape Coral-based Riverside Bank of the Gulf Coast, naming the FDIC as receiver.

...

The Division of Banking, Illinois Department of Financial Regulation closed Corn Belt Bank and Trust Co. The two offices of the Pittsfield, Ill.-based bank are set to reopen as branches of The Carlinville National Bank on Tuesday after the holiday.

...

The Oregon Division of Finance and Corporate Securities shut down Beaverton, Ore.-based Pinnacle Bank, the sole office of which will reopen Tuesday as a branch of Washington Trust Bank.

http://www.housingwire.com/2009/02/16/4-failed-banks-cost-fdic-342-million/

[Ghost Dog]

23. German ZEW Investor Confidence Survey Beats Expecatation, Trade Deficit Unexpectedly Narrows

Tuesday, 17 February 2009 09:19:22 GMT The German February ZEW investor survey jumped to -5.8 from -31 in January. This was much better than our median of -25 and the sharp improvement, which is the fourth consecutive rise in the ZEW, confirms that confidence has bottomed out. The negative reading means pessimists are still outnumbering optimists, which is consistent with ongoing negative growth in Q1 and Q2 this year, but the renewed improvement backs hopes for a gradual stabilization and improvement in overall GDP growth in the second half of the year. The surprisingly strong number will not prevent a March rate cut, but it will back the ECB's reluctance to cut the refi rate close to zero.

Meanwhile, the Euro-Zone posted a sa December trade deficit of EUR 0.3 bln, up from a sa deficit of EUR 4.0 bln in the previous month. Exports dropped 0.9% m/m, but import an even stronger 3.9% m/m. The latter is likely to be largely a reflection of lower oil prices in December and real developments will look somewhat less negative than imports.

/.. http://www.dailyfx.com/story/market_alerts/fundamental_alert/German_ZEW_Investor_Confidence_Rises_1234865967413.html

[Ghost Dog]

26. Swiss franc climbs to new multi-week high against European currency

(RTTNews) - During early deals on Tuesday, the Swiss franc climbed to a new multi-week high against the European currency. On the other hand, the Swiss currency declined to a 1-week low against the US dollar and a 4-day low versus the British pound and the Japanese yen.

Switzerland's inflation adjusted retail sales in real terms rose 2.9% in 2008 compared with the previous year, the Federal Statistical Office said today. In December, retail sales rose 3.6% year-on-year in real terms and 4.5% in nominal terms.

Against the US dollar, the Swiss franc edged down during early deals on Tuesday. At 2:25 am ET, the franc declined to a 1-week low of 1.1781 against the dollar, compared to 1.1599 hit late Monday. The dollar-franc pair is currently trading at 1.1717 with 1.193 seen as the next target level.

The Swiss franc lost ground against the British pound after hitting a high of 1.6571 at 4:00 am ET Tuesday. The franc that closed Monday's deals at 1.6587 against the pound touched a 4-day low of 1.6742 within about an hour. The next downside target level for the Swiss currency is seen around 1.749.

...

Against the European currecny, the Swiss franc edged higher during today's early trading. At 4:55 am ET, the franc climbed to 1.4772 versus the euro, compared to Monday's closing value of 1.4848. This set the highest point for the Swiss currency since January 21, 2009. On the upside, 1.45 is seen as the next target level for the franc. The euro-franc pair is now worth 1.4798.

The euro declined on fresh worries about western European banks' exposure to troubles in Eastern Europe as S&P rating agency warned it could cut the sovereign ratings of Ukraine due to refinancing concerns.

The Eurostat said in a report that the Euro zone trade deficit stood at EUR 0.7 billion in December, narrowing from a revised EUR 5.8 billion deficit in the previous month. Economists were looking for a deficit of EUR 5.3 billion. A year ago, the trade deficit was EUR 3.9 billion.

The Centre for European Economic Research, or ZEW, said its economic sentiment indicator for Germany rose 25.2 points to minus 5.8 points in February from minus 31 recorded in January. The improvement in the indicator exceeded the consensus forecast of minus 25.

The assessment of the current economic situation in Germany continued to worsen in February. The corresponding indicator dropped 9.1 points to minus 86.2 points, while economists had expected a reading of minus 82.

Economic expectations for the Euro zone increased 22.1 points to minus 8.7 points. Economists had expected an improvement to minus 27.5. At the same time, the indicator for the current economic situation decreased 6.3 points to minus 91.

/... http://www.nasdaq.com/aspxcontent/NewsStory.aspx?cpath=20090217\ACQRTT200902170614RTTRADERUSEQUITY_0381.htm

See also "Forex failure continues in Poland/It’s getting bleaker by the minute in Eastern Europe": http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x5070686
____

[Ghost Dog]

27. Pound Gains Against Euro as Inflation Slows Less Than Forecast

Feb. 17 (Bloomberg) -- The pound rose for a third day against the euro after the rate of inflation fell last month by less than economists forecast, prompting speculation the Bank of England may slow the pace of interest-rate cuts.

The U.K. currency also rebounded from a two-week low versus the dollar as a government report showed price growth slowed to 3 percent, higher than the 2.7 percent median forecast of economists surveyed by Bloomberg. The pound declined earlier as slumping stock markets around the world prompted investors to buy the safest assets.

“The report means rate cuts may not come as quickly as the market expected and that has given some support to the pound,” said Lutz Karpowitz, a Frankfurt-based currency strategist at Commerzbank AG, Germany’s second-biggest bank. “There will be more cuts, but they may come slower.”

The pound rose as much as 1.3 percent to 88.44 pence per euro and was at 88.50 pence as of 10:23 a.m. in London. The U.K. currency was little changed at $1.4268, after earlier dropping 1.2 percent to $1.4125, the lowest level since Feb. 2. It was little changed at 131.13 yen.

The pound may decline to $1.30 and 96 pence per euro by the end of March as the recession deepens, Karpowitz said.

/. http://www.bloomberg.com/apps/news?pid=20601083&sid=awtUowdKqtUk&refer=currency

[Ghost Dog]

29. 3-mth euro Libor rate hits record low; dlr steady

Tue Feb 17, 2009 6:56am EST LONDON, Feb 17 (Reuters) - The interbank cost of
borrowing euro funds for three months fell on Tuesday to its
lowest since the euro's 1999 launch, while dollar funds held
steady, the latest British Bankers Association's daily
fixing showed.

The spread of three-month London interbank offered rates
over OIS rates for dollars, euros and sterling were stable.

<Table...>

/... http://www.reuters.com/article/marketsNews/idUKLH53372020090217?rpc=44

[Ghost Dog]

30. LEAP: Phase 5 of the global systemic crisis: phase of global geopolitical dislocation

- Public announcement GEAB N°32 (February 16, 2009) - Beginning of Phase 5 of the global systemic crisis: phase of global geopolitical dislocation

Back in February 2006, LEAP/E2020 estimated that the global systemic crisis would unfold in 4 main structural phases: trigger, acceleration, impact and decanting phases. This process enabled us to properly anticipate events until now. However our team has now come to the conclusion that, due to the global leaders’ incapacity to fully realise the scope of the ongoing crisis (made obvious by their determination to cure the consequences rather than the causes of this crisis), the global systemic crisis will enter a fifth phase in the fourth quarter of 2009, a phase of global geopolitical dislocation.

According to LEAP/E2020, this new stage of the crisis will be shaped by two major processes happening in two parallel sequences:

A. Two major processes:
1. Disappearance of the financial base (Dollar & Debt) all over the world
2. Fragmentation of the interests of the global system’s big players and blocks

B. Two parallel sequences:
1. Quick disintegration of the current international system altogether
2. Strategic dislocation of big global players.

We had hoped that the decanting phase would give the world’s leaders the opportunity to draw the proper conclusions from the collapse of the global system prevailing since WWII. Alas, at this stage, it is no longer possible to be optimistic in this regard (1). In the United States, as in Europe, China and Japan, leaders persist in reacting as if the global system has only fallen victim to some temporary breakdown, merely requiring loads of fuel (liquidities) and other ingredients (rate drops, repurchase of toxic assets, bailouts of semi-bankrupt industries,…) to reboot it. In fact (and this is what LEAP/E2020 means ever since February 2006 using the expression « global systemic crisis”), the global system is simply out of order; a new one needs to be built instead of striving to save what can no longer be saved.

...

History is not known to be patient, therefore the fifth phase of the crisis will ignite this required process of reconstruction, but in a harsh manner: by means of a complete dislocation of the present system, with particularly tragic consequences in the case of several big global players, as described in this 32nd issue of the GEAB (see the two parallel sequences).

According to LEAP/E2020, there is only one very small launch window left to prevent this scenario from shaping up: the next four months, before summer 2009. Practically speaking, the April 2009 G20 Summit is probably the last chance to put on the right tracks the forces at play, i.e. before the sequence of UK and then US defaults begin (2). Failing which, they will lose their capacity to control events (3), including those in their own countries for many of them; and the world will enter this phase of geopolitical dislocation like a “drunken boat”. At the end of this phase of geopolitical dislocation, the world will look more like Europe in 1913 rather than our world in 2007.

Because they persisted in bearing the ever-increasing weight of the ongoing crisis, most states, including the most powerful ones, failed to realise that they were planning their own trampling under the weight of History, forgetting that they were merely man-made organisations, only surviving because they matched the interest of a large majority. In this 32nd edition of the GEAB, LEAP/E2020 has chosen to anticipate the fallout of this phase of geopolitical dislocation so far as it affects the United-States, EU, China and Russia.


US Monetary base - (12/2002 – 12/2008) - Source US Federal Reserve / DollarDaze

It is high time for the general population and socio-political players to get ready to face very hard times during which whole segments of our societies will be modified (4), temporarily disappear or even permanently vanish. For instance, the breakdown of the global monetary system we anticipated for summer 2009 will indeed entail the collapse of the US dollar (and all USD-denominated assets), but it will also induce, out of psychological contagion, a general loss of confidence in paper money altogether (these consequences give rise to a number of recommendations in this issue of the GEAB).

Last but not least, our team now estimates that the most monolithic, the most « imperialistic » political entities (5) will suffer the most from this fifth phase of the crisis. Some states will indeed experience a strategic dislocation undermining their territorial integrity and their influence worldwide. As a consequence, other states will suddenly lose their protected situations and be thrust into regional chaos.

/.. http://www.leap2020.eu/GEAB-N-32-is-available!-4th-quarter-2009-Beginning-of-Phase-5-of-the-global-systemic-crisis-phase-of-global-geopolitical_a2805.html

+ Thanks for hearts :hug: :( ... They're increasingly pessimistic here, for the reasons indicated. Maybe it's time I subscribed to this publication after all.

[InkAddict]

42. Will you miss me when I'm gone as per #4?

Let me know how 60+ folks without jobs are going to pay off Stafford+ loans and attend to activities of daily living and increased medical necessities. Bye-bye. (Juging by "hearts"-not so much).

[Tansy_Gold]

108. We'll pay out of our social security

Or at least I will.


Tansy Gold, in default (so what else is new?)

[TalkingDog]

72. Per Footnote: only if you promise to unsubscribe if they get too optimistic...

:P

[Ghost Dog]

78. .

:P

- Hell, I'd even thought previously of offering them my (paid) services as a translator or at least editor of translations into better-quality English (from the original French, I was guessing) - but they seem to have that little problem licked now...

There's a probably fairly serious US-EU spat brewing, I fear. Eg. ref. http://www.atimes.com/atimes/Global_Economy/KB18Dj05.html

[Demeter]

31. Decade at Bernie’s By PAUL KRUGMAN

http://www.nytimes.com/2009/02/16/opinion/16krugman.html?_r=2


By now everyone knows the sad tale of Bernard Madoff’s duped investors. They looked at their statements and thought they were rich. But then, one day, they discovered to their horror that their supposed wealth was a figment of someone else’s imagination.

Unfortunately, that’s a pretty good metaphor for what happened to America as a whole in the first decade of the 21st century.

Last week the Federal Reserve released the results of the latest Survey of Consumer Finances, a triennial report on the assets and liabilities of American households. The bottom line is that there has been basically no wealth creation at all since the turn of the millennium: the net worth of the average American household, adjusted for inflation, is lower now than it was in 2001.

At one level this should come as no surprise. For most of the last decade America was a nation of borrowers and spenders, not savers. The personal savings rate dropped from 9 percent in the 1980s to 5 percent in the 1990s, to just 0.6 percent from 2005 to 2007, and household debt grew much faster than personal income. Why should we have expected our net worth to go up?

Yet until very recently Americans believed they were getting richer, because they received statements saying that their houses and stock portfolios were appreciating in value faster than their debts were increasing. And if the belief of many Americans that they could count on capital gains forever sounds naïve, it’s worth remembering just how many influential voices — notably in right-leaning publications like The Wall Street Journal, Forbes and National Review — promoted that belief, and ridiculed those who worried about low savings and high levels of debt.

Then reality struck, and it turned out that the worriers had been right all along. The surge in asset values had been an illusion — but the surge in debt had been all too real.

So now we’re in trouble — deeper trouble, I think, than most people realize even now. And I’m not just talking about the dwindling band of forecasters who still insist that the economy will snap back any day now.

For this is a broad-based mess. Everyone talks about the problems of the banks, which are indeed in even worse shape than the rest of the system. But the banks aren’t the only players with too much debt and too few assets; the same description applies to the private sector as a whole.

And as the great American economist Irving Fisher pointed out in the 1930s, the things people and companies do when they realize they have too much debt tend to be self-defeating when everyone tries to do them at the same time. Attempts to sell assets and pay off debt deepen the plunge in asset prices, further reducing net worth. Attempts to save more translate into a collapse of consumer demand, deepening the economic slump.

Are policy makers ready to do what it takes to break this vicious circle? In principle, yes. Government officials understand the issue: we need to “contain what is a very damaging and potentially deflationary spiral,” says Lawrence Summers, a top Obama economic adviser.

In practice, however, the policies currently on offer don’t look adequate to the challenge. The fiscal stimulus plan, while it will certainly help, probably won’t do more than mitigate the economic side effects of debt deflation. And the much-awaited announcement of the bank rescue plan left everyone confused rather than reassured.

There’s hope that the bank rescue will eventually turn into something stronger. It has been interesting to watch the idea of temporary bank nationalization move from the fringe to mainstream acceptance, with even Republicans like Senator Lindsey Graham conceding that it may be necessary. But even if we eventually do what’s needed on the bank front, that will solve only part of the problem.

If you want to see what it really takes to boot the economy out of a debt trap, look at the large public works program, otherwise known as World War II, that ended the Great Depression. The war didn’t just lead to full employment. It also led to rapidly rising incomes and substantial inflation, all with virtually no borrowing by the private sector. By 1945 the government’s debt had soared, but the ratio of private-sector debt to G.D.P. was only half what it had been in 1940. And this low level of private debt helped set the stage for the great postwar boom.

Since nothing like that is on the table, or seems likely to get on the table any time soon, it will take years for families and firms to work off the debt they ran up so blithely. The odds are that the legacy of our time of illusion — our decade at Bernie’s — will be a long, painful slump.

[fasttense]

54. Some people argue that WWII actually slowed down recovery from the Great Depression.

That "Some People" is Thom Hartmann. Sometimes (like when Krugman screamed at Greenspan to Lower interest rates) Krugman goes off and gets it totally wrong. Remember Krugman won the same nobel prize that Milton Friedman won.

[Demeter]

32. GM to set tougher targets for revamp

http://www.ft.com/cms/s/0/f8d69d10-fc51-11dd-aed8-000077b07658.html



General Motors will on Tuesday unveil aggressive restructuring targets as it seeks to convince US politicians and taxpayers it can survive the global car industry’s deepening downturn.

In revamped viability plans taking into account tougher business conditions than expected, GM and its smaller rival Chrysler will make clear they need more government support than the $17.4bn approved in December. The government was set to release $4bn of that money on Tuesday.

GM will say that over the next 18 months it plans to speed up plant closures, close dealerships and sell or restructure some of its eight brands, notably Hummer, Saab and Saturn.

Chrysler’s latest strategy will outline $3.8bn in cuts to fixed costs, higher than December’s estimate of $3.1bn. It now estimates that it will cut annual production capacity by 1.3m vehicles, up from the 1.2m outlined.

The targets are in part a result of the deterioration in global car markets in the two months since the troubled carmakers secured the loans. GM’s US sales were down 49 per cent year-on-year in January, and Chrysler’s fell 55 per cent.

Both companies were in talks on Monday with the United Auto Workers’ union on securing cuts in labour costs. Talks stalled last week over the two carmakers’ contributions to employee-managed healthcare funds for retirees. GM’s bondholders are resisting its push to cut its unsecured debt by two-thirds, a condition of the bail-out. GM, Chrysler and the UAW declined to comment on the talks....


SOMEBODY PLEASE EXPLAIN TO ME WHY THE AUTO MANUFACTURERS ARE WATERBOARDED, WHILE THE BANKERS DINE AT THE RITZ? PLEASE?

WHERE ARE THE STRICT GUIDELINES FOR RESTRUCTURING BANKING OPERATIONS, INCLUDING PROHIBITING CDOS AND SIVS AND ALL THAT ALPHABET CRAP?

WHERE ARE THE MOVES ON EMPLOYEES, SQUEEZING CONCESSIONS OUT OF THE CEOS AND THEIR IMMEDIATE STAFF? TAKING BACK BENEFITS, ETC, ETC?

ARE GM AND CHRYSLER ORPHANED STEP-CHILDREN?

[Demeter]

33. Monty Python Predicted Such a Dichotomy Years Ago

http://www.youtube.com/watch?v=grbSQ6O6kbs

Watch the cameo of the Banking Industry at the very end....

[Lost in CT]

63. That cheered me up this morning thank you. nt

[Demeter]

35. Detroit looks to revive used-car market

http://www.ft.com/cms/s/0/9b57dbd0-fb8a-11dd-bcad-000077b07658.html

By John Reed in Detroit

Published: February 15 2009 18:11 | Last updated: February 15 2009 19:11

This weekend, car salesmen around the US have donned Abraham Lincoln wigs and beards in a bid to tempt reluctant buyers back into dealerships for Presidents Day sales.

The long weekend traditionally kicks off the industry’s spring buying season, and General Motors, Honda and Toyota are among the carmakers offering aggressive sales and marketing promotions.

As they do, producers and dealers are seizing on a rare positive indicator: the used-car market is reviving. Prices and volumes of used vehicles have been rising in the US and major western European markets since the end of last year.

“The used-car market has come roaring back,” Jim Farley, Ford Motor’s head of marketing, said last week. “That shows that there is some credit availability out there.”

The trend, if it continues, would be welcomed by both carmakers suffering massive drops in demand and financially endangered dealer groups, many of which have been selling new vehicles at little or no profit, but can earn better margins on used ones. “It’s a glimmer of hope for the industry,” says Jesse Toprak, senior analyst with Edmunds.com, the US car buying website.

After suffering their largest monthly decline ever in October, average wholesale prices for used vehicles in the US, the world’s largest car market, rose in November and December and were up another 3 per cent month-on-month in January, according to Adesa, one of America’s biggest vehicle auction houses....Some of the spike in demand reflects recession-squeezed consumers trading down to used cars from new ones. Used-car prices are down year-on-year.

[FarCenter]

60. Are people keeping cars that come off lease?

This would reduce the used car supply.

There should also be a lot fewer sales from fleets, as fleet owners stretch out their replacement schedules.

[Demeter]

70. What Happened Was That All Those Leased SUVs Came Back

and sat on the dealers' lots. Aside from the Mercedes brand, they couldn't even ship them overseas.

So they discontinued the leasing programs...

[Dr.Phool]

61. Why does Chrysler need a bailout, anyway?

They're owned by Cerberus, which is a private equity group, and has plenty of money anyway.

[Demeter]

36. G7 Are Clueless---G7 sets sights on new world economic order

http://news.yahoo.com/s/afp/20090214/bs_afp/financeeconomyg7_20090214164005

[Ghost Dog]

58. UK Mandelson: G20 The New G7; Protectionism April Mtg Focus

Tue, Feb 17 2009, 14:32 NEW YORK -(Dow Jones)- Emerging market leaders play an increasingly important role in resolving the global economic crisis, U.K. Secretary of State for Business, Enterprise and Regulatory Reform Peter Mandelson said Tuesday in remarks before the Council on Foreign Relations in New York.

He said it was very clear from the Group of Seven leading nations meeting over the weekend that it was merely a "staging post" for the Group of 20 summit in London in April.

...

He cited criticism by China's premier of the Western banking system as a reflection of the shift in the global economic balance.

"We need to rethink some of the basic frameworks for finance and banking at the global level," he said, including Basel II and Bretton Woods.

"We must have China, India and other emerging economies around all these tables," said Mandelson, adding that the basic management model of the Bretton Woods System is "no longer fit for the purpose."

He also said that the only reason global growth is not at zero is demand from the emerging world.

At the April G20 summit, Mandelson said the top focus must be to resist protectionist pressures.

...

"Protectionism might seem to treat the symptoms of the downturn, but it is a poison as far as global recovery is concerned because it puts a structural check on future economic growth," he said.

Mandelson added that encouraging to buy local is different than pushing foreign goods away.

/... http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=f92904cb-5650-48f6-b7cb-f0ce970d1704

[DemReadingDU]

37. Mike Whitney: Eastern Europe is about to Blow

2/17/09 Eastern Europe is about to Blow by Mike Whitney
a few snippets

Eastern Europe is about to blow. If it does, it could take much of the EU with it. It’s an emergency situation but there are no easy solutions. The IMF doesn’t have the resources for a bailout of this size and the recession is spreading faster than relief efforts can be organized. Finance ministers and central bankers are running in circles trying to put out one fire after another. Its only a matter of time before they are overtaken by events. If one country is allowed to default, the dominoes could begin to tumble through the whole region. This could trigger dramatic changes in the political landscape. The rise of fascism is no longer out of the question.

An economic crisis is quickly turning into a political crisis. Riots have broken out in capitals across Eastern Europe. Mr. Geithner had better be paying attention. The prospects for political upheaval are growing. Public anxiety can spill out onto the streets at a moments notice. Governments must act quickly and with resolve. These countries need hard currency and guarantees of support. If they don’t get help, the simmering public fury will turn into something much more lethal.

The global economy is decelerating at the fastest pace on record. 40 percent of global wealth has been wiped out. The banking system is insolvent, unemployment is soaring, tax revenues are falling, the markets are in shock, housing is crashing, deficits are soaring, and consumer confidence is at its lowest point in history. This is no time to cling to half-baked ideology. The global economy is undergoing a massive system-wide contraction which could spin out of control and plunge us into another world war. Political leaders need to grasp the urgency of the moment and keep the vehicle from careening into the ditch.

more...
http://dandelionsalad.wordpress.com/2009/02/16/eastern-europe-is-about-to-blow-by-mike-whitney/

[ozymandius]

39. Why not ask Alan Greenspan? He'll know what to do.

:sarcasm: :eyes:

[Tansy_Gold]

109. ha ha ha ha ha. I needed the laugh

I'll be quiet the next few days, dealing with minor health issue (back spasms). Your suggestion is a winner!

[ozymandius]

115. Thanks.

I'm sorry about your back Tansy. I hope you're able to rest easily.

[Demeter]

125. The Laugh's on Us; Greenspan Says Nationalize!

Did lightning strike?

[DemReadingDU]

128. Take care

Hope you feel better soon

:hi:

[DemReadingDU]

40. Bloomberg: Eastern Europe economies weakening

2/17/09
Feb. 17 (Bloomberg) -- Stocks in Europe and Asia dropped and U.S. futures slumped on concern banks may face rating downgrades and further losses as the recession deepens. Gold climbed to a seven-month high, while Treasuries gained.

Banks from Sweden, Italy, Austria, France, Belgium, Germany and Sweden account for 84 percent of western European bank loans in eastern Europe. The region’s economies are weakening, with the International Monetary Fund already offering aid to Latvia, Hungary, Serbia and Ukraine.

“Central Europe has now been in focus for a number of weeks,” said Beat Siegenthaler, chief emerging-markets strategist at TD Securities in London. “Anything connected with these markets has been under pressure. Banks have been very active and very aggressive in the region. At the moment it doesn’t look good.”

more...
http://www.bloomberg.com/apps/news?pid=20601085&sid=a_Oq4.saMqTU&refer=europe

edit: changed subject

[DemReadingDU]

45. Telegraph: Eastern European currencies crumble as fears of debt crisis grow

2/17/09 Eastern European currencies crumble as fears of debt crisis grow
By Ambrose Evans-Pritchard

Currencies have crumbled across Eastern Europe on mounting fears of a debt crisis as foreign creditors withdraw from the region.

Hungary’s forint fell to an all-time low on Monday, and Poland’s zloty slumped to the lowest in five years on plunging industrial output. Half of all loans to the private sector in Poland are in foreign currencies so borrowers face a severe debt shock after the 40pc fall of the zloty against the euro since August.

“We’re nearing the level were things could get out of hand,” said Hans Redeker, currency chief strategist at BNP Paribas.

The mushrooming crisis has already started to spill over into Germany's debt markets, lifting credit default swaps on German five-year bonds to a record 70 basis points. The gap between French and German CDS spreads has narrowed abruptly for the first time since the credit crisis began.

“Investors are beginning to ask whether Germany is going to have to pay for the rescue of Eastern and Central Europe,” he said.

A report by Moody’s released on Tuesday said the region’s banks were coming under severe stress as the property bust combines with a rising debt burden. “Local currency depreciation is a major risk to East Europe banks,” it said.

more...
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/4642259/Eastern-European-currencies-crumble-as-fears-of-debt-crisis-grow.html

[Ghost Dog]

69. Steinbrueck Says Euro States May Bail Out Members

Feb. 17 (Bloomberg) -- German Finance Minister Peer Steinbrueck said euro-region countries may be forced to bail out cash-strapped members of the 16-nation bloc, going further than his counterparts in saying euro states can’t be allowed to fail.

“Some countries are slowly getting into difficulties with their payments,” Steinbrueck said late yesterday in a speech in Dusseldorf. “The euro-region treaties don’t foresee any help for insolvent countries, but in reality the other states would have to rescue those running into difficulty.”

Steinbrueck’s comments underscore mounting investor concerns as European nations pile on debt to bail out banks and counter the deepest recession since World War II. The EU governing treaty says member states aren’t liable for other members’ obligations.

...

The European Commission predicts budget shortfalls this year of 11 percent of gross domestic product in Ireland, 3.7 percent in Greece, 6.2 percent in Spain and 3.8 percent in Italy, compared with 2.9 percent in Germany. The EU ceiling is 3 percent.

...

EU rules don’t “really constrain the ability of euro area countries to support one another during a period of exceptional stress,” David Mackie, chief European economist at JPMorgan Chase & Co. in London, said in a research note. “It’s hard to imagine that the region as a whole wouldn’t come up with a package of measures to support the individual economy.”

Governments including Germany’s may call in help from international organizations first before committing funds and pushing their own budgets deeper into the red to help others.

...

The German government, presiding over Europe’s biggest economy, is “very unlikely” to provide help to troubled euro- region members by selling bonds jointly, Juergen Michels, an economist at Citigroup Inc. in London, said in an interview, adding that it would be a “very expensive solution.”

“The most likely option is that the European Investment Bank or some other multinational organization will start supporting these countries by buying government bonds or by providing direct support,” Michels said. “That would help narrow spreads and reduce refinancing costs.”

/... http://www.bloomberg.com/apps/news?pid=20601068&sid=an8El62.Qlds&refer=economy

[Demeter]

75. Making the European Common Market Live Up To Its Name and Promise!

Gee, if we could get the Red States on board.....

[Ghost Dog]

79. Heh. Be aware the above refers to 'eurozone' countries (EZ)

- the 16 countries at present sharing the Euro currency - as somewhat distinct from the 27 countries of the entire European Union that share what was originally termed the 'Common Market' (EU).

EU: http://en.wikipedia.org/wiki/List_of_European_Union_member_states
EZ: http://en.wikipedia.org/wiki/Eurozone

I've been researching this area for some hours, off-and-on, today, and I see that I must delve much deeper...

One problem, of course, is the high degree of partisanship manifested by the various writers on these topics...

For now, here's one to think about: http://fistfulofeuros.net/afoe/economics-and-demography/santanders-banif-fund-suspends-payments/#more-4695 - (I can supply some further background from multiple Spanish-language sources on the Santander Banif fund referred to if anyone's interested).

[UpInArms]

38. dollar watch

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

Last trade 87.435 Change +0.052 (+0.07%)

Dollar Honeymoon

http://www.bktraderfx.com/site/fx-weekly-reports/fx-weekly-021309-022009-dollar-honeymoon-over

When I used to be a headhunter during the Internet bubble days of the 1990’s, I had colleague from the deep south with whom I would chat at least once a week. We couldn’t have been more different in outlook and temperament but we got along well and always enjoyed each others company. Although Jimmy was a good ole Southern boy who lived deep in country 100 miles away from Atlanta, his understanding of human nature was far sharper than that of most urban sophisticates. Whenever I’d ask his opinion on some latest, wacky, software start-up we were sourcing for, he’d pause, consider it and then say in his Southern drawl, “Baaaaaris, I think they got lots a heat but little light,” and then break into deep baritone laugh.

Lots of heat but little light is exactly what we have going on the currency market, as no one really knows how to combat the financial crisis and authorities continue to blow more more hot air on an increasingly impatient public. Nothing was more embarrassing then the performance of Tim Geithner this week whose Richie Rich youthful looks and smarmy, pontificating delivery only highlighted the fact that he is completely unprepared for the challenge that confronts us all. The warmed over financial prescriptions from the Obama administration were nothing but a version of Bush lite - hardly the reason the country elected the man and if Barak Obama continues on this dithering path of appeasing his enemies rather working for his friends, he -not George Bush- will be known as the Herbert Hoover of the 21st century.

Ask anyone who is a professional on Wall Street and there is almost uniform agreement agreement on the proper policy solution for the financial sector - nationalize the big four banks (Citi, BoA, Wells Fargo, JPM) that control 80% of all deposits in the country. Guarantee the depositors, bankrupt the shareholders, ram down 50% haircuts to bondholders, recapitalize, stabilize and privitize with new management. Let the vulture hedge funds bid on all the asset backed paper sitting on the bank’s books at whatever price they want (I think most people will be surprised by the strength of the bids) and let’s just get this over with. In short as Steve Ballamer of Microsoft said, the whole system needs a reset. Welcome to capitalism 2.0.

However, instead of revolutionary change we have an incremental, technocratic approach of the Obama administration where all hope now rests on the “Hail Mary pass” strategy of the stimulus package. Yet fiscal stimulus without contemporaneous reform of the financial system is a prescription for disaster. It makes the former ineffective while doing nothing about the problems caused by the later.

For now the markets continue to give the benefit of doubt to the dollar. In one of the great ironies of financial life, the worse investors feel about the prospects for a quick US recovery, the better the dollar does as risk aversion flows continue to support the greenback - but how long will this dynamic last? For now the risk aversion/risk assumption trade remains in place, but we’ll watching for any early signs of its rupture which could signal that the dollar honeymoon is over. Certainly the Obama honeymoon is.

...more...

US Dollar May Find Itself As The Top FX Safe Haven And Growth Leader

http://www.dailyfx.com/story/currency/eur_fundamentals/US_Dollar_May_Find_Itself_1234582169486.html

While the dollar exhibited incredible volatility this past week; for the most part, the increase in price action would not come with any defined direction from the world’s most liquid currency. Instead, the majors would further carve prominent wedge formations that will ultimately demand breakouts and a decision for direction some time soon – and that resolution may come this week. First, we need to take a look at price action to understand the building stress behind the markets. Both EURUSD and USDJPY have worked their way into terminal wedges that will force the market into a decision. However, from a fundamental standpoint, these two pairs highlight very different roles for the US dollar. When measured against the euro, direction will come from a bias in growth forecasts. Far more unique among the majors, USDJPY pits the market’s top two safe haven currencies against each other – and long-held rules may change.

It is well known that the Japanese yen is the go to currency for safety of funds concerns. This has been the case for more than a decade as Japan has kept its lending rates at or near zero (deriving an anti-carry interest) and the economy has floated large surpluses and savings. However, with global interest rates plunging towards zero and world-wide growth expected to hit its worst pace since WWII; investors are left to rethink where their capital is safest – and where it could also generate return when conditions do turn around. For the United States’ part, there little room for yields to deflate any further (they are also near zero). More importantly, though, they are far ahead of the curve on efforts to stabilize the domestic markets and economy. Constant liquidity injections, government guarantees, critical bailouts, proposals to draw out toxic debt that is clogging the credit system, the introduction of massive stimulus plans and endeavors to develop regulation for the long-term make for a strong foundation that few other economy’s can match. It is simply a matter of time before these cumulative stimulus catches up with the greenback.

The safe haven dynamic of the world’s most liquid currency (backed by the world’s most liquid ‘risk-free’ asset) has been a clear driver in all of the majors outside of the yen’s purview. However, as global policy makers attempt to put out the fires and interest rates near zero; we are slowly seeing a shift away from panic to growth. With global interest rates quickly approaching zero and more than three months of congestion under the market’s belt, fundamental speculation is focusing on gauging the world’s economies’ position on the recession curve. For those that are looking at relatively shallow and short contractions (and therefore expected to recover first), investors see the potential for return when risk has been fully exercised. The US is certainly a ways off from finding a true bottom in its own recession; but compared to Japan and the United Kingdom – its prospects look much better. Alternatively, when set against the Euro Zone, we are met with real debate. We will keep an eye on the round of second-tier data due this week, but the true shift in sentiment will likely be more closely linked to the efforts of the government to recharge the economy.



...more...

[Demeter]

43. The Fiscal Stimulus Will Pay For Itself

http://www.huffingtonpost.com/ann-pettifor/the-fiscal-stimulus-will_b_167119.html


Rachel Maddow gets it. Economists and Republicans don't.

I watched Prof. Jeffrey Sachs on Rachel Maddow's show the other day. She asked whether the fiscal stimulus would work. "No" he said emphatically, it would not. "No one has the tools....to fix this......the fiscal hole will cripple us for the long-term."

She tentatively mentioned 'the multiplier.' He brushed this aside with a counsel of despair. "We might have a few more jobs in the short-term but a massive deficit in the long-term..."

Scant consolation for 13 million unemployed and underemployed Americans. Their lives could be transformed by this fiscal stimulus.

And anyway, as Keynes once noted, in the long term we're all dead.

Sachs's analysis is overwhelmingly shared by mainstream economists. And by Republicans. These have been whipping voters into a frenzy with talk of 'generational theft.' Future generations, they argue, will be paying for this fiscal stimulus for decades to come. That is simply not true, as I will show below.

Meantime, these points are truly rich coming from the Republicans. Readers no doubt know that during the Bush-Cheney years the US national debt doubled from $5,700bn in 2001 to $10,700bn today. Others may recollect that Mr. Cheney said in 2001: "Reagan proved that deficits don't matter."

So let's not hear any more from Republicans about deficits mattering or about 'generational theft.'

But to get back to history. The fiscal stimulus of the 1930's was positive -- both in the US and the UK. It dramatically lowered unemployment after 1933.





Second, it is simply wrong to suggest that the fiscal stimulus 'will cripple us long-term.' It will not. The fiscal stimulus will pay for itself. Here's how.

At times of high unemployment tax cuts may be saved and not spent into the economy. But when the government invests the bulk of $789 billion in real, productive economic activity - it always gets its money back - plus some.

It works like this. Government invests in labor-intensive programs e.g. $40 billion in energy efficiency and renewable energy programs, including $2.9 billion to weatherize modest-income homes. $27 billion for highway and bridge construction and repair and $11.5 billion for mass transit and rail projects; $4.6 billion for the Army Corps of Engineers; $5 billion for public housing improvements; $6.4 billion for clean and drinking water projects.

The energy efficiency/transportation/public housing programs hire American workers - some highly skilled, some not so skilled. These programs also purchase materials - from factories. Some foreign, but mostly American.

Next, something called 'the multiplier' kicks in. It's the ABC of economic science and works like this.

The workers get pay checks. They use the income to pay taxes - direct to the US government. So immediately the government can use these tax revenues to fix the budget. Then workers purchase goods and services - boosting the economy. Companies hire more workers to deal with demand for materials from stimulus-sponsored programs. More employed workers equals more taxpayers.

Ever-rising tax revenues drop into the Treasury's coffers.

Because government spending is financed by bank money or credit, income increases. Eventually savings are generated to match the original stimulus expenditure - so there is no 'crowding out' by government. But savings too can find a way back to the US Treasury, because savers could end up investing in US Treasury bonds.

If workers or factories spend money on goods made in China - then some will leak out to China. But experience shows that investment in public works tends to be local investment. By weatherizing the homes of the poor, strengthening flood defenses, growing forests to act as pollution 'sinks' and subsidizing organic farming - investment stays at home.

But investing in this kind of economic activity is not the only revenue source for the US government.

A massive improvement to the budget will be in savings made in unemployment payments.

I looked up the Congressional Budget Office's estimates for expenditure on unemployment compensation and food stamps for the years 2009 - 2015. Their estimates are optimistic. The Congressional Budget Office thinks unemployment is going to decline after 2009. Nevertheless, even under its conservative estimates expenditures on unemployment compensation and food stamps rise to a massive $818 billion between now and 2015.

If the numbers of unemployed people were cut, and if Americans had enough income not to rely on food stamps - Congress would make massive savings to the budget. If we add those savings to the tax revenue generated thanks to the 'multiplier effect' - the outlook is positively rosy for a surplus on the budget as the economy recovers.

So lets not have any more talk of the 'crippling effects' of the American Recovery and Reinvestment Act of 2009.

If there is a complaint it's the one the non-economist Rachel Maddow made to Prof. Sachs. The fiscal stimulus is just not big enough. $789 billion will not be enough to fill the $2 trillion collapse in output since the crisis started.

So, it's more strength to your elbow President Obama. And Congress, get ready for phase two of the fiscal stimulus.

[earthside]

55. So, Cheney was correct ...

... deficits don't matter.

(According to Ann Pettifor.)

If the federal government weren't already eleven trillion dollars in the hole, (and banks and corporations trillions of dollars in the hole, too) the classical counter-cyclical strategy might work. But, unless the U.S. is going to eventually repudiate the government's debt, interest payments are going to have to be paid.

Those interest payments maybe soon be close to what the government revenue stream provides ... then what? Print money? Default? Have a Jubilee?

It is a Bushian faith-based reality to assert that massive debt just doesn't matter ... that we can create our own reality by believing real hard that the magical "multiplier effect" will eliminate trillions of dollars of debt and restore insolvent banks and corporations to solvency.

Dream on ... we are in real trouble. The stimulus package may seem to be a necessary tactic, but to claim that it is going to come without pain or consequences is just ... la-la.

[Dr.Phool]

64. The difference is between tax cuts and jobs.

Jobs and infrastructure improvements provide the multiplier effect. Yax cuts are at best, break-even or even negative.

[Demeter]

65. A Stimulus Is Not a Deficit Due to Blowing Things Up

like war.

A stimulus is an investment in the country and its people. A REAL investment, not a con game. Like planting corn.

[goforit]

94. Everyone needs to pull together to make it work. The Gov't can not be the only answer.

[Ghost Dog]

47. China seeks "more active" use of forex reserves

(Xinhua) Updated: 2009-02-17 19:44 The power of China's huge foreign exchange reserves, which stand at nearly $2 trillion, might start to be felt more around the world as the country seeks to use those funds "more actively" as the global economic crisis grinds on, experts said.

"The government has sent clear signals," said Yin Jianfeng, deputy director of the Institute of Finance and Banking of the Chinese Academy of Social Sciences, a government think tank.

He said Beijing was likely to shift its strategy from passive to active reserve management, a change he said was especially urgent and an obvious response to the financial crisis.

Premier Wen Jiabao said in an interview with the Financial Times during the Davos forum that the country was exploring more efficient ways to use its reserves to boost domestic development.

China's reserves hit a record $1.95 trillion at the end of 2008, the largest in the world and far exceeding those of Japan, the second-largest foreign exchange holder with $1.03 trillion.

To play it safe, China's huge reserves have usually been invested in low-risk but low-yield assets, such as US government bonds.

According to the US Treasury, China held $681.9 billion worth of US government bonds as of November.

...

"We hope to use the money to buy equipment and technology, which are urgently needed for the country's development," Wen told the Financial Times.

Forex reserves must be spent on foreign trade and overseas investment, he said.

GOOD POSITION

Massive reserves have put China in a good position to increase imports to meet domestic demand, said Yin, and this was very likely to be a major way to effectively use the money.

Imports fell for the four months ended in January, often faster than exports declined, as global trade shrank amid the economic and financial crisis. The reserves could be used to reverse that trend.

China's imports and foreign investment have been limited to date, to some extent, by restrictions imposed by other countries. However, the crisis has prompted some nations with much-needed technology to ease those restrictions.

The United States and China signed an agreement on Jan 13 that allows US exporters to sell certain dual-use items to China without acquiring permission from the government. Dual-use refers to products that can have either civilian or military uses.

Wen also revealed during his trip to Europe last month that China would send a delegation there to procure advanced equipment and technology.

BOOST TO WORLD

Importing more advanced equipment and technology would boost China's domestic investment and provide effective economic stimulus, said Zuo Xiaolei, chief economist of China Galaxy Securities Co Ltd.

"China's increase of imports will surely contribute to the economy of the exporters and thus help the world economy recover," Zuo said.

She warned that it would be dangerous either to use the reserves for budgeted spending or subsidies to boost consumer spending. Either use could fuel inflation or a depreciation of the yuan.

Zhao Xijun, deputy director of the Institute of Finance and Securities at Renmin University, said China had other choices. Apart from purchasing crucial technology, equipment and resources, it could also make direct investments through commercial banks or support State-owned enterprises' overseas acquisitions.

...

"To buy more strategic assets, energy and resources would also be a very important way to efficiently use the reserves. It would help preserve and enhance the value of the reserves," Zhao said.

NEW DESTINATIONS

Zhou Xiaochuan, governor of China's central bank, the People's Bank of China, has also said that China should consider diversifying the destination of its reserves.

Speaking on the sidelines of an Asian central bankers' meeting earlier this month in Malaysia, Zhou asked: "is it time for China to consider using the reserves somewhere else, instead of concentrating too much on the United States?"

That could be a hint that China will shift the use of its reserves to put more into developing countries and emerging markets. These countries offer growth potential, richer resources and lower labor costs but they need funds for development, analysts said.

/... http://www.chinadaily.com.cn/bizchina/2009-02/17/content_7485649.htm

[Demeter]

102. China, Heal Thyself First

when and if you start to resemble the worker's paradise, then you can "manage" other nations.

[54anickel]

104. Spend it before it's worth less, or completely worthless. More bang for the buck now. n/t

[Ghost Dog]

107. Ding ding!

I'm about two-thirds of the way through, so far this evening, of this well-made video on the history of the modern banking system:

The Money Masters - How International Bankers Gained Control of America (and not only America). Be aware, it's over three and a half hours long.

On pause at the moment at this quote from V.I. LENIN:

The State does not function as we desired. The car does not obey. A man is at the wheel and seems to lead it, but the car does not drive in the desired direction. It moves as another force wishes.

[54anickel]

132. Thanks GD! I'm bookmarking for later. That quote sounds mighty eerie these days! n/t

[Demeter]

48. Advice to the President: Abolish the Commerce Department

http://www.huffingtonpost.com/derek-shearer/advice-to-the-president-a_b_167223.html


President Obama has had a difficult time finding a new Secretary of Commerce. He shouldn't worry about it any longer. There is a simple solution--just abolish the post.

The Commerce Department, as presently constituted, is a hodge podge of agencies with no central purpose. It's not a job with great policy influence. The Big Dogs on economic policy are in the White House and at the Treasury. It has become tradition or habit for the President to give the post of Commerce Secretary to one of his chief fundraisers and close friends, or to a politician in need of a payback, or sometimes to a token appointee from the opposition party. President Obama has already unsuccessfully looked at all three options with fundraiser and Chicago friend Penny Pritzker, New Mexico Governor and primary supporter Bill Richardson, and most recently with Republican Senator Judd Gregg. These kinds of appointees are not expected to do much except meet and greet visitors in the huge Secretary's office, almost the size of a sports field. They also encourage the kind of cynicism about government that President Obama wants to combat.

When the Commerce structure was built in 1932, it was the largest office building in the world. It is immense, and visitors often get lost in its long hallways and byways. The National Aquarium, somewhat strangely, is located in the basement. The building was auspiciously named after Herbert Hoover during the Reagan administration (he served as Commerce Secretary as well as President).

Working there, as I did for a time as Deputy Under Secretary, is an odd experience, and does not bring back happy memories. Friends who visited me remember having trouble finding my huge office, then being amazed that the heating and cooling system seemed so out of wack that I was always opening and shutting my windows.

This is not so say that the Commerce Department and its over 30,000 employees does not do useful things. Under its domain, are such valuable public agencies as the National Weather Service, the National Hurricane Center, the Bureau of the Census, and the Patent Office. Abolishing the current Department of Commerce does not mean eliminating these vital government services.

President Obama can shift the political playing field on the Commerce Secretary issue by announcing in his February 24 address to Congress that he is going to rethink the Department's mission and organization. He is going to break it up, and reorganize it in a more effective way as part of his strategy for reviving and rejuvenating the American economy and building a new foundation for economic growth.

Here's how it might be done.

One of the hot issues troubling Senator Gregg and many Republicans has to do with possible political influence over the census. To alleviate that concern and to improve national statistical analysis, the Bureau of the Census and the Bureau of Economic Analysis (which compiles national economic statistics) could be spun off as an independent agency called Statistics USA, led by a highly regarded social scientist just as NIH is headed by a leading scientist. Obama might even credit the example from our neighbor to the north, Canada, where the federal agency Statistics Canada (affectionately known as "StatCan") is the most highly regarded statistical agency in the world. StatCan offers a world class bench mark for independence, professionalism and transparency. A new independent Statistics USA might also fold in other government statistical units such as the Bureau of Labor Statistics.

Like its space cousin NASA, the National Oceanic and Atmospheric Administration (NOAA) could easily become an independent agency run solely by professionals. NOAA includes the National Weather Service, the National Marine Fisheries (with its very cool website "FishWatch" that provides useful facts on seafood), the National Hurricane Center, and the All Hazards Monitor Service. NOAA is one of those government agencies whose services form a foundation for economic and social activity.

Another Commerce office easy to spin off is the National Institute of Standards and Technology. Established in 1901, this office manages highly regarded and necessary labs that provide testing and standardization for American industry, especially in manufacturing and engineering.

The remaining agencies in Commerce deal with the economy, but have had little national policy impact. When I worked there, I invited Laura Tyson, head of the Council of Economic Advisors, over to the Hoover Building to speak to my staff. They told me that it was the first time such a top economics official had ever visited the building. These economic agencies need to be streamlined, given a clearer mission, and placed in a new Cabinet level department called the US Department of Industry and Trade. Being appointed the Secretary of Industry and Trade would be a job worth having, and one for which the President would appoint a serious person. The new Secretary would be a player on the first string of the President's economic team.

The newly constituted Department of Industry and Trade would include the existing National Telecomunications and Information Administration, the International Trade Administration, the Bureau of Industry, the Patent Office, and a rethought Economic Development Administration. It would have both domestic and international economic focus--a necessity in this globalized economy. To promote trade, the Secretary would overhaul and upgrade the US Commercial Service which currently has offices in 100 cities and overseas posts in 80 countries (usually housed in US embassies). In addition to promoting American exports, the commercial service would be charged with greater sharing of innovative ideas on business, technology and economic development, and would work cooperatively with US and foreign business schools to teach entrepreneurship and business skills to citizens in poorer communities at home and abroad. The trade negotiating authority of USTR (currently a stand along office answering to the President) should be moved into the new department, adding influence to the Secretary and insulating trade negotiations from Presidential politics such as rewarding countries with Free Trade Agreements for supporting US foreign policy (a common practice under the Bush administration).

The new Secretary of Industry and Trade would also become an influential player on industrial policy. A revived and modernized set of industry offices would provide the government with top flight analysis of major industries and emerging ones. The Secretary would have the staff expertise necessary to oversee a revamping of the auto industry, to cite a current pressing need, and to advise the President effectively on the state of other American industries--to benchmark them in best practices against foreign competitors--and to assist industries with research grants, loans, and consultative studies--not to pick "the winners" in specific fields, but to assure that America's industrial base remains strong and vital for the 21st Century.

The new US Department of Industry and Trade would quickly become a career destination for the best MBA and economics graduates, and the US Commercial Service would become as competitive (and as exciting) to join as the US Foreign Service. It would no longer be viewed as a backwater in the Federal government.

Following this course of action or a variant would provide yet another example of President Obama's boldness in making change, and demonstrate his determination to advocate a smart, forward looking economic strategy for the nation. And, in the spirit of bi-partisanship, he could name the National Aquarium in the basement after departed President George W Bush.

[Dr.Phool]

50. Take a look at gold this morning. +24.20 965.80

Meanwhile, futures looking ugly.

S&P -16.30
Nazquack -23.75
Dow -109.00

[Mr. Hyde]

51. Dow futures were down 172 at 0857 today. Not a good sign.

[JNelson6563]

66. Now up 29.10! (11:30)

[RedEarth]

53. Dow off 163 in first three minutes

[SlowDownFast]

56. Dow support of 7600 has broken, technically.

The battle to hold this today will be interesting.

If it doesn't hold, we will probably slide another 300-400pts in the next week or two.

Gold and silver are shining brightly, though. Dollar up and oil down has not phased them, really.

[specimenfred1984]

68. Just watched TV's Kudlow banging his little table while ranting like a lunatic

TV land thinks creating tension is the way to sell their crap when all it does is make people turn them off like a bad sitcom. Over the long weekend, the worthless boob tube was also obsessed with the sextuplet mom, nevermind that the entire U.S. financial system is collapsing, we're letting war criminals go, the treasury was looted and is still being looted and and everybody is losing their job, what little health care they had and their home.

The movie Idiocracy was on though, that seemed very fitting.

[specimenfred1984]

71. Let's use words like "worried", "beleaguered", "toxic assets"

instead of calling it what it is, CRIMINAL BANKS.

[RetailSlave]

73. I'd give you a heart...

heck, I'd give you a whole bunch of them if I had two dimes to rub together right now... My roommate is paying all of the rent right now, but I've still not got much scratch for food, and I'm going to pawn anything I can get my hands on to help pay the electric bill.

Be kind to your local retail staff; they may be spending their (many) non-working hours in the library keeping warm.

But I'm sending invisible karmic hearts to all the regulars!

[Hugin]

88. Aw, that's the best kind of heart!

<3

:D

[Demeter]

74. Mark Fiore On the Conservative Viewpoint

http://www.markfiore.com/new_deal_or_no_deal_0

[Dr.Phool]

93. That's the best I've seen in a long time!

[antigop]

77. SEC charges R. Allen Stanford

http://online.wsj.com/article/SB123489071311201021.html

The Securities and Exchange Commission today charged Robert Allen Stanford and three of his companies for orchestrating a fraudulent, multi-billion dollar investment scheme centering on an $8 billion CD program.

Stanford's companies include Antiguan-based Stanford International Bank (SIB), Houston-based broker-dealer and investment adviser Stanford Group Company (SGC), and investment adviser Stanford Capital Management. The SEC also charged SIB chief financial officer James Davis as well as Laura Pendergest-Holt, chief investment officer of Stanford Financial Group (SFG), in the enforcement action.

Pursuant to the SEC's request for emergency relief for the benefit of defrauded investors, U.S. District Judge Reed O'Connor entered a temporary restraining order, froze the defendants' assets, and appointed a receiver to marshal those assets.

[Ghost Dog]

81. Wow. n/t

[Ghost Dog]

85. European shares hit 3-wk closing low; banks drop

Tue Feb 17, 2009 12:46pm EST LONDON, Feb 17 (Reuters) - European shares fell to their lowest close in three weeks on Tuesday, with banks down on worries of further losses and the impact of a recession in emerging Europe and energy stocks tracking lower oil prices.

The FTSEurofirst 300 .FTEU3 index of top European shares fell 2.5 percent to 765.43 points, its lowest close since Jan. 23. It has lost 8 percent this year, following a 45 percent decline in 2008.

Ratings agency Moody's said the recession in emerging European economies would be more severe than elsewhere due to large imbalances and would put the financial strength ratings of local banks and western parents under pressure.

Rival ratings agency Standard & Poor's (S&P) echoed this view, saying difficulties faced by Western banks in supplying their subsidiaries in emerging Europe with funding could prompt an overall ratings review for the region's banks.

Banks took most points off the index. Societe Generale (SOGN.PA) fell 9.6 percent to its lowest close in more than 10 years, ahead of results on Wednesday. HSBC (HSBA.L) fell 6.8 percent after Morgan Stanley said it was staying underweight on the stock and becoming more bearish on the outlook for profit in 2009 and 2010.

"There's a lack of good news out there," said Howard Wheeldon, strategist at BGC Partners, in London. "There are a lot of things going on, but no quantifiable certainty that anything such as the Obama package will make a real difference soon enough." "There's nothing for a bull to hang his hat on."

Raiffeisen (RIBH.VI) and KBC (KBC.BR) fell 13.5 and 12.9 percent respectively, while Standard Chartered (STAN.L) lost 8.9 percent, Santander (SAN.MC) fell 6.7 percent and UBS (UBSN.VX) lost 5.5 percent.

"The news on emerging Europe is important, especially for countries like Austria and Germany and for certain banks. The focus today is on the banks but it is also valid for the manufacturing sector," said Gerhard Schwarz, head of global equity strategy at UniCredit in Munich.

INSURERS SLIDE

Insurers were also among the biggest casualties on worries about more writedowns, as more companies default on loans. Shares in Aegon (AEGN.AS) fell 11.4 percent, after the Dutch company reported a bigger than expected preliminary loss of 1.2 billion euros in the fourth quarter.

ING (ING.AS), which reports fourth-quarter results on Wednesday, fell 8.5 percent. Allianz (ALVG.DE) closed 6.7 percent lower.

Across Europe, the FTSE 100 index .FTSE, Germany's DAX .GDAXI and France's CAC 40 .FCHI fell between 2.4 and 3.4 percent.

/... http://www.reuters.com/article/marketsNews/idCALH56835220090217?rpc=44&sp=true

Edit: Those ratings agencies. Uh huh.

[Demeter]

91. The Good News Is: The Crooks Are Squirming, Looking for Exits, and Losing!

[Karenina]

96. "There's nothing for a bull to hang his hat on."

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

Re: that AT piece... The writer ASSUMES TROTW will continue to perceive Uncle Sam a "safe haven." I question that premise.

[lovuian]

86. Scary news from You tube

http://pimpinturtle.com/2009/02/17/red-alert-fx-dislocation-in-process.aspx



MARKET TICKER DENNINGER

8:17 CT

I do not know what is going on here, and I don't think I want to.

Someone, apparently someone in Asia, wants dollars. A LOT of dollars. There is a forced-liquidation event underway that is massive, it is against all asset classes and it is spreading.

It originated at approximately 7:15 CT this evening and originated out of Asia somewhere. All of the primary currency crosses got hit at once - Euro, Pound, Yen - all weakened dramatically against the dollar and it is still going on. The Asian stock markets got walloped at the same time in coordinated waves of forced selling.

At the same time the US futures markets got nailed as well, down some six handles on the /ES in a near-vertical drop. While this sounds "not that big" to move these markets in a coordinated fashion like this is a trillion-dollar enterprise - this is not some small company that went bankrupt, or even a large company.

There is no news coverage at the present time identifying the source of this but it is not small and contrary to some reports it is not "automatic selling"; this is forced liquidation.

Folks, if this translates into Eastern Europe where there are severe instabilities already brewing literally everything in the financial world could come apart "all at once."

The worse news is that if this happens Bernanke will have killed us (in the US) by extending those swap lines all over the planet during the last six months. These will become utterly uncollectable and they are massive, in the many hundreds of billions of dollars.

To those who are reading this, I hope if you're in the markets you are prepared for extreme levels of violence. You must expect that the authorities will try to arrest the destruction if they are able, but you must also be prepared for the possibility that we have reached a "critical mass" point beyond which "duck and cover" is the only winning strategy.

Unfortunately.

I hope I'm wrong; this is going to be a long night.

[Danascot]

89. Frontline "Inside the Meltdown" on PBS tonight

This has been posted on the Greatest page, but in case some denizens of SMW missed it, it looks like something well worth watching.

http://www.pbs.org/wgbh/pages/frontline/meltdown/

It's on at 9 pm where I am but check your local listings.

[Roland99]

101. Thanks for the heads up!

[Roland99]

123. They kept it rather high-level but I thought it was a decent summary of last year's events.

Wish they'd do a show that followed the creation of these CDS, SIVs, etc.

[antigop]

95. agents raided Stanford offices in Houston.

http://online.wsj.com/article/SB123489015427300943.html

The Securities and Exchange Commission charged R. Allen Stanford with an $8 billion fraud centered around the sale of certificates of deposit, saying the flamboyant businessman hoodwinked investors by promising high and seemingly safe returns.

As the SEC charges were made public Tuesday morning, U.S. marshals and Federal Bureau of Investigation agents raided Stanford offices in Houston.

The SEC said that Stanford Investment Bank sought to lull investors into thinking their investments were safe, providing assurances that the bank invested the money in liquid financial instruments that were monitored by a team of more than 20 analysts.

But those assurances were false, the SEC said. Instead of ultra-safe investments, a substantial portion of the portfolio was placed in real estate and private equity, the SEC said. The investments weren't monitored by a team of analysts, but instead by two people, Mr. Stanford and James Davis, chief financial officer of the bank.

It was the second huge alleged fraud to emerge in three months, following the SEC's charges in December against Bernard Madoff, who was accused of carrying out a $50 billion Ponzi scheme.

[Danascot]

97. Bank solvency and the "Geithner Plan"

Warning – a very long and wonky post - and possibly a little self indulgent. Don’t bother reading it unless you are really interested in banks and the crisis. More an essay than a blog post. If you are going to read it give me the courtesy of reading it to the end. If you are a direct report of Mr Geithner please read it now (the stuff you want is at the end).

http://brontecapital.blogspot.com/2009/02/bank-solvency-and-geithner-plan.html

[antigop]

98. Krugman: Geithner and Summers are smart guys but they need to get out more

http://krugman.blogs.nytimes.com/2009/02/17/the-geithner-delay/

The WaPo reports that Tim Geithner realized late in the day that the approaches to financial rescue originally developed by the Obama team weren’t workable — hence the vagueness of last week’s announcement.

In a way, that’s encouraging: we were spared Hankie Pankie II. But it’s a bit alarming that it took so long for the team to figure out the problems — and that they apparently spent a long time going down a route that led to a dead end. Many of these issues had been hashed out in public discussion last fall, when Paulson made his play. And I can’t believe that the discussions would have gone so off the rails if any of the high-visibility outsiders had been in the loop — Joe Stiglitz, Nouriel Roubini, Simon Johnson, etc. (No, I wasn’t in the loop either.)

So what the WaPo report seems to suggest is a worrisome insularity. Geithner and Summers are smart guys — but they need to get out more.

The Washington Post article he refers to is here:
http://www.washingtonpost.com/wp-dyn/content/article/2009/02/16/AR2009021601180.html?nav=hcmodule

Just days before Treasury Secretary Timothy F. Geithner was scheduled to lay out his much-anticipated plan to deal with the toxic assets imperiling the financial system, he and his team made a sudden about-face.

According to several sources involved in the deliberations, Geithner had come to the conclusion that the strategies he and his team had spent weeks working on were too expensive, too complex and too risky for taxpayers.

They needed an alternative and found it in a previously considered initiative to pair private investments and public loans to try to buy the risky assets and take them off the books of banks. There was one problem: They didn't have enough time to work out many details or consult with others before the plan was supposed to be unveiled.

The sharp course change was one of the key reasons why Geithner's plan -- his first major policy initiative as Treasury secretary -- landed with such a thud last Tuesday. Lawmakers, investors and analysts expressed dismay over the lack of specifics. Markets tanked, and fresh doubts arose about the hand now steering the country's financial policy.

[Demeter]

103. "Get Out More": It's Called a Reality Check!

[truedelphi]

121. What a sad state of affairs: this last sentence or so.

Article concludes:
"And ambiguity, the officials concluded, would make the plan an easier sell on Capitol Hill, as congressional leaders could be brought into the discussions of details rather than be presented a detailed plan as fait accompli."
####
Isn't it great knowing that ambiguity is what sells the COngress critters on the crucial solutions needed? Then when the solutions don't pan out, everyone who voted for the disaster can say "But we didn't have time to consider the essentiel elements. We were just told to sign on the dotted line so we did."

Is there any other nation on earth that operates like this? No wonder Canada is far from being financially troubled, while our economy heads to the toilet.

[Roland99]

99. At the close - .31 above Nov low for the Dow

IA 7,552.45 -297.96 -3.80%
Nasdaq 1,470.66 -63.70 -4.15%
S&P 500 789.17 -37.67 -4.56%
Global Dow 1,317.32 -61.00 -4.38%
Dow Util 347.77 -17.60 -4.82%
NYSE 4,939.11 -267.65 -5.14%
AMEX 1,364.46 -36.66 -2.62%
Russell 2000 428.90 -19.46 -4.34%
Semcond 205.87 -13.77 -6.24%
Gold future 967.50 +25.30 +2.69%
30-Year Bond 3.49% -0.20 -5.32%
10-Year Bond 2.66% -0.22 -7.63%

[Roland99]

100. Maria Bartiromo still cheerleading in the face of today's selloff

"Have we seen the bottom?"

"Where do we invest to make money?"



:puke:

[Individualist]

110. What is a good website for following the Asian markets?

[antigop]

112. Major indices here...

http://finance.yahoo.com/intlindices?e=asia

[Individualist]

113. Thank you.

:thumbsup:

[Ghost Dog]

119. More detail via Yahoo:

http://asia.news.yahoo.com/business/

[closeupready]

126. Am I misremembering?

I seem to recall days back in the 80's or 90's when the Nikkei was 23,000 and the DJIA was 5,000 or 6,000. Now here they are both at 7550. Do I have that wrong?

[UpInArms]

114. here's an after hours page

http://money.cnn.com/data/premarket/

[Individualist]

118. Thanks.

[Roland99]

133. I usually check Bloomberg

http://www.bloomberg.com/?b=0&Intro=intro3

it's cellphone-friendly, too. :-)

[TheWatcher]

120. Actually, Believe it or not, today was pretty artificial and managed in itself

Remember, manipulation and artificial support is not limited to those miracle Stick Save rallies.

We had the huge dump at the open, then a managed, flat-line trading range for the rest of the day. We even had a little brief Fairy Action at 3:27 PM, because 7500 just HAD to be saved.

Just your usual Free Market at work. (I have the deed for the bridge too, when I can find a buyer) :)

A normal Market would have been down 6-8% with all the news out of Asia and Eastern Europe last night. Last night was for real, and it is getting much harder for those in control to hide what is going on.

With the Futures soaring after hours (+48) I suspect the Mafioso will be back at it tomorrow with a full court Press, complete with Goebbels-like Cheerleading from the Media, Directing the herd's focus on the Stimulus being signed, or whatever bullshit rumor they come up with to "Save The World." It will of course be retracted by Geithner, or whoever is in charge of propaganda management, a few days later, explaining away that "Oh, it would have been too costly, so we had to abandon that idea," or whatever the latest boilerplate Bullshit phrase of the day is.

Meanwhile, another support level has been broken, and we are ONCE AGAIN at the November lows.

Manipulation Cheerleaders and "Thank God They Keep Passing These Bailouts And Scheme Packages!!!!!!11111" Apologists should take note.

After all the Bailouts, All The BS, All The Propaganda, All The Manipulation And Artificial Support, After all the Mafioso Shenannigans......

We have netted Exactly ZERO BENEFIT from it.

Meanwhile, even here at DU, people continue to bleat loudly at, shout down, and Burn At The Stake anyone who DARES bring up the fact Congress didn't read the Stimulus Bill before it was voted on, or any other questioning of The Infallible Deities that now lead us. I have seen some wild disconnect before, but this is getting scary. It appears that independent and critical thinking, reasonable scrutiny, and accountability have been cast by the wayside for Blind Fellowship, and "Support The Football Team No Matter What" mentality.

Didn't we used to ridicule and warn of the dangers of this to the mouth-breathers on the other side when their team was destroying the country?

As John once Said:

Strange Days Indeed.....

On Edit: After discussing the possibilities of Bankruptcy and a New Company over the long weekend, GM, who was supposed to present it's plan to the Government on how it will become profitable and get back on it's feet, and moving forward again, outlined it's plan in great detail before the Throne Of Uncle Sugar.....

"We're Working On It. Give Us Another $14 Billion."

There will be NO RECOVERY within six months.

[Roland99]

122. Yeah...today's chart was eerily flat after the initial drop.

[TheWatcher]

127. Well, it shouldn't surprise any of us.

By now, we know what TPTB are going to do, and they will keep doing it every day.

Because it's the only thing left they can do.

They've probably got about another month to play "Hide The Meltdown", before things become a bit clearer in April, when the large institutions report their 1st Quarter results.

Unless those results are going to be entirely made up, which would not surprise me at this point, we are probably going to get a peek at just how dire things really are.

That seems to be the whole game at this point. Hide the reality of the nature of the problem for as long as possible. The Media has been explicitly ordered it seems not to report ANYTHING going on in the rest of the world, especially in regards to Iceland, Greece, France, and now Ireland, who announced over the weekend that they would probably have to default on all of their debts, and ANOTHER thing that has slipped their mind today is that they forgot to tell you that the Russian Exchanges are now closed, both MICEX and the RTS, lock limit down, until further notice. I can't get any update on that info either.

Things just continue to deteriorate, and we keep getting told that some rabbit in some hat is going to Save Us, the World, and Mankind, and everything will be great again, and we can all hold hands and buy SUV's. :wtf:

Update: The initial surge in the futures has halved itself and is weakening, but there seems to be coordinated effort to limit the bleeding in the Asian Markets. It's working somewhat, so far.

I will be watching with great anticipation tomorrow to see what kitchen sink is thrown next.

This is going to get ugly.

But not as ugly as April.

Let's see them pull THAT off.

if they do, I will be eternally impressed.

Mind you, it probably won't help you and me that much at all, but it will make for some great ranting. :)

Peace Be, Marketeers.

[DemReadingDU]

129. Recovery?

There will be NO RECOVERY this year.

:(

[TheWatcher]

130. Maybe none for the next five years.

And that's if we are lucky. :(

[specimenfred1984]

131. Just checking the boards late, I call it "the fascist float" when it goes nowhere

like that. It was clearly propped up. Another interesting prop in reverse, the GoLD market: http://finance.yahoo.com/q/bc?s=^DJI&t=5d&l=on&z=m&q=l&c=gld

[TheWatcher]

134. Probably the most Rigged Market of all time, that of Gold.

But it has quietly gone up to near $1000/oz. again.

It's getting harder for Da Boyz to keep their control on everything.

Not that that will stop them from trying.

Meanwhile, in the completely non-propped, transparent, "Free Market" that is Equities the Overnight Meth Party Continues (+56), and Asia is magically treading water.

There must be MASSIVE intervention on a highly coordinated level going on tonight just to keep this facade from simply collapsing in on itself the whole world over.

I await the vomit-inducing details that the Tele-Screens will spew at us tomorrow to get us all numbed up to reality and back into our Cathode Catatonia Coma again.

This is looking like a Groundhog Week.

Collapse on Tuesday, Happy Carnival Wednesday and Thursday, and Casual Dip Friday.

The only question left is how long they can keep this Circus up.

I know, I know. Probably longer than most of us can stay solvent. :)