STOCK MARKET WATCH, Thursday September 10

[ozymandius]

Source: du

STOCK MARKET WATCH, Thursday September 10, 2009

Bush Administration Officials Under Indictment = 2
Financial Sector Officials In Prison = 6

AT THE CLOSING BELL ON September 9, 2009

Dow... 9,547.22 +49.88 (+0.53%)
Nasdaq... 2,060.39 +22.62 (+1.11%)
S&P 500... 1,033.37 +7.98 (+0.78%)
Gold future... 997.10 -2.70 (-0.27%)
10-Yr Bond... 3.47 -0.01 (-0.23%)
30-Year Bond 4.33 +0.01 (+0.23%)

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

Market Conditions During Trading Hours

GOLD, EURO, YEN, Loonie, Silver and US$

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This thread contains opinions and observations. Individuals may post their experiences, inferences and opinions on this thread. However, it should not be construed as advice. It is unethical (and probably illegal) for financial recommendations to be given here.

Read more: du

[ozymandius]

1. Market Observation

"History does not repeat itself, but it does rhyme"
BY CHRIS PUPLAVA

The above quote comes from Mark Twain, the pen name for American author and humorist Samuel Clemens. While it is true that no point in time is exactly the same as another, there can be some uncanny resemblances that, as Mr. Twain pointed out, appear to mimic the past. It appears that 2009 is doing just that with 2002-2003. Today’s article is an update to the two prior articles listed below on gold and the USD, in which the seasonality of both gold and the USD were analyzed.

Gold & Gold Stocks Setting Up for a Strong Second Half? (07/29/09)
The Sacrificial Lamb? (08/05/09)

Seasonality

In the two articles above, the seasonality for both gold and the USD Index were analyzed this decade, and it was shown that gold typically has a strong second half while the USD Index’s seasonality pattern is mixed. To bring further clarity to the USD Index’s seasonality, the years in which the USD finished positive and negative were then separated and averaged, with the data normalized to 100 at the start of the year. What was seen is that the USD Index’s path for 2000-2008 does not appear to diverge much from year to year until mid way through the second quarter. It is from this point that it appears the USD Index’s fate for the year is decided, with the bullish years averaging a 10% gain for the year while the bearish years averaged a 10% decline as seen below.

-see chart-

.....

When History Doesn’t Repeat…

While the USD and gold appear to be following the same pattern as they did in 2002-2003, how do they compare to their historical action after the end of recessions? This was the question that the always insightful Brian Pretti from ContraryInvestor.com was asking earlier this week in his article, “Dollar Daze.” In the article Mr. Pretti points out that the typical pattern in the post recession environment for the USD has been either flat to positive twelve months out. As shown in the table below, the 2001 experience stands as a clear outlier. Conversely, a strong USD post recession conclusion typically leads to weak gold prices as investors shun gold for equities. This was the case after the conclusion to the 1973 and 1981 recessions, with 2001 showing how gold along with the USD diverged from prior post recessionary norms.

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

[ozymandius]

2. Today's Reports

08:30 Initial Claims 09/05
Briefing.com -565K
Consensus -560K
Prior -570K

08:30 Continuing Claims 09/29
Briefing.com 6150K
Consensus 6200K
Prior 6234K

08:30 Trade Balance Jul
Briefing.com -25.5B
Consensus -27.3B
Prior -27.0B

13:00 Crude Inventories 09/04
Briefing.com NA
Consensus NA
Prior -372K

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

[UpInArms]

21. Initial claims @ 550,000 - last wk rev'd up 6,000 - trade gap widens 16.3% to $32.0 bln

U.S. initial jobless claims fall 26,000 to 550,000
8:30am Today

U.S. continuing claims off 159,000 to 6.09 million
8:30am Today

U.S. continuing jobless claims lowest since April
8:30am Today

Total jobless claims 9.69 million in Aug. 22 week
8:30am Today

U.S. July trade gap widens 16.3% to $32.0 bln
8:30am Today

U.S. July trade gap above consensus of $27.5 bln
8:30am Today

U.S. July trade gap widening largest since Feb 99
8:30am Today

U.S. July imports up record 4.7% led by autos
8:30am Today

[CatholicEdHead]

26. Jobs reports are always revised up and not down

they always underestimate the number of jobs lost.

[TheWatcher]

62. There is no underestimation involved.

It's by DESIGN.

They get their feel good headline of "Less Bad, Let's Party", and then revise them up toward a more realistic number (That is still probably fudged) the next week so no one will pay attention, too distracted by the new "Less Bad, Let's Party" Headline.

Pretty Standard MO for Propaganda.

[ozymandius]

3. Oil climbs above $72 as US dollar slumps

SINGAPORE – Oil prices rose above $72 a barrel Thursday in Asia amid a slumping U.S. dollar and steady OPEC production levels.

Benchmark crude for October delivery was up 84 cents at $72.15 a barrel by late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. On Wednesday, the contract rose 21 cents to settle at $71.31.

.....

In other Nymex trading, gasoline for October delivery was steady at $1.83 a gallon, and heating oil gained 0.95 cent to $1.80 a gallon. Natural gas rose 4.3 cents to $2.87 per 1,000 cubic feet.

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

[ozymandius]

7. IEA Raises 2009, 2010 Oil Demand Forecasts on Growth in China

Sept. 10 (Bloomberg) -- The International Energy Agency raised its global oil demand estimate for next year for a second consecutive month, citing growth in Chinese consumption and stronger-than-expected oil use in the U.S.

World oil consumption is likely to average 85.7 million barrels a day next year, 450,000 barrels a day more than previously estimated, the adviser to 28 nations said today in its monthly report. Demand growth next year, at 1.27 percent, is lower than previously forecast after the outlook for 2009 was also increased.

.....

Oil futures in New York have advanced 62 percent this year and traded today above $72 a barrel, as global stock markets rallied on growing optimism about the world’s economic recovery. The surge prompted ministers from the Organization of Petroleum Exporting Countries to maintain production quotas at a meeting in Vienna that ended early today, the third time in 2009 the group has met without changing output.

.....

The group also raised its forecast for North America this year and next by about 180,000 barrels a day, after data for gasoline and heating oil consumption in June showed a “hefty” increase. Demand in the region is now forecast to shrink 4.4 percent this year, compared with last month’s forecast 5.1 percent, and increase 0.8 percent in 2010.

http://www.bloomberg.com/apps/news?pid=20601087&sid=abmz8y9WRlXo

---

I wonder if they are basing the consumption forecast on China's cooked numbers.

[ozymandius]

4. Fed survey shows US recession may be over

WASHINGTON – The recession is ending and the economy is finally growing again. That's the message implicit in the Federal Reserve's latest survey of businesses around the country, which found economic activity stabilizing or improving in most regions.

Economists warn the expansion is fragile and will have staying power only if consumers start spending more money. Rising unemployment that keeps Americans cautions could make for a plodding recovery in the months ahead.

.....

Businesses in most Fed regions said they were "cautiously positive" about the economic road ahead. The survey, known as the Beige Book, does not include precise figures.
Analysts predict the economy is growing in the current quarter, which ends Sept. 30, at an annual rate of 3 percent to 4 percent. That's mostly because businesses, which had slashed investments during the recession, are spending more.

.....

The problem for the economy is that the expected growth this quarter comes mainly from the auto companies and other manufacturers, which are refilling their depleted stockpiles.

http://news.yahoo.com/s/ap/20090910/ap_on_bi_ge/us_economy

[Dr.Phool]

15. Soon to be a series on the Sci-Fi Channel.

Comedy Central rejected it.

[Robbien]

17. The guys who did not see the recession until 14 months after it began

are now saying that self same recession is over.

And those are the guys who are getting the big bucks.

[Ghost Dog]

19. U.S. recession ends, jobless outlook bleak: survey

Thu Sep 10, 12:42 am ET WASHINGTON (Reuters) – The U.S. employment picture will stay bleak well into next year long after the recession ends, but the worst of the labor market crisis is over, top private economists said on Thursday.

Private economists polled for the Blue Chip Economic Indicators September survey say the unemployment rate will reach at least 10 percent in early 2010 and "recede from that level only grudgingly over the second half of the year".

More than 80 percent of the 52 private forecasters polled say the recession that started in December 2007 has ended. They look for gross domestic product to expand at a brisk 3.0 percent annual rate in the third quarter of 2009 and rise 2.4 percent in the fourth quarter.

This compares to growth rates of 2.2 percent and 2.3 percent respectively forecast in the previous survey.

For the year as a whole, the economy is expected to shrink 2.6 percent, the same consensus for July and August. In 2010 the economy will likely expand at a 2.4 percent pace, the survey said.

/... http://news.yahoo.com/s/nm/20090910/bs_nm/us_usa_economy_bluechip

Psycho(path)-factors rule.

[Hugin]

35. ...

:rofl:

What-a bunch of cards... Those Fed guys crack me up.

[ozymandius]

5. Japanese machinery orders slid 9.3 percent

TOKYO – Japanese machinery orders, a closely watched indicator of corporate capital spending, fell back in July after rising the previous month, the government said Thursday, suggesting the outlook for the world's No. 2 economy remains murky.

Core private sector machinery orders plunged 9.3 percent from a month earlier to 664.7 billion yen ($7.3 billion), according to the Cabinet Office report. It was the lowest level since the government started compiling data in 1987, a Cabinet Office official Tetsuya Igarashi said. The "core" figure excludes often-volatile orders from shipbuilders and electric power companies.

Declines in orders at manufacturers, including steelmakers and transport equipment companies, contributed to the fall.

.....

The drop was a big turnaround from the 9.7 percent jump recorded in June — the first increase in four months. It was also a larger decline than the 3.6 percent fall forecast in a Kyodo News agency market survey.

http://news.yahoo.com/s/ap/20090910/ap_on_bi_ge/as_japan_economy

[rfranklin]

31. More green shoots!

It's like springtime!

[ozymandius]

6. U.S. Aug. foreclosures off 1% from July, up 18% vs. year ago

TEL AVIV (MarketWatch) -- U.S. foreclosure filings in August fell less than 1% from July and rose 18% from the year-earlier month, the real-estate consultants RealtyTrac reported.

Foreclosure filings -- defined as default notices, scheduled auctions and bank repossessions -- were reported on 358,471 U.S. properties during the month, the Irvine, Calif., firm said. That's 1 of every 357 U.S. housing units.

Real estate owned by banks dropped 13% in August compared with July, which had marked the monthly high for 2009. But at the same time, a record number of properties entered default or were scheduled for foreclosure auction in August, RealtyTrac Chief Executive James J. Saccacio said in a statement late on Wednesday.

http://www.marketwatch.com/story/us-foreclosures-off-1-vs-july-up-vs-year-ago-2009-09-10

[ozymandius]

8. Bank of China’s Zhu Sees ‘Bubbles’ in Asset Markets

Sept. 10 (Bloomberg) -- Bank of China Ltd., which led the nation’s $1.1 trillion lending spree in the first half, said ample liquidity has caused “bubbles” in stocks, commodities and real estate.

“The potential risk is that a lot of liquidity goes to the asset market,” Vice President Zhu Min said in an interview in Dalian today. “So you see asset bubbles in commodities, stocks and real estate, not only in China, but everywhere.”

China’s record credit expansion, which helped the country’s economy expand 7.9 percent in the second quarter, has raised concerns that bank loans have been diverted and used to buy stocks and real estate, fueling unsustainable gains in equity and property markets.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aPOHjduHTfFg

---

Jeebus! It's like 1927 all over again. The very same thing happened in the United States in 1927 when the Federal Reserve lowered its lending rate from 4% to 3.5%. And we know where these easy money policies took the world back then. History, it seems, is looking for a rhyme.

[Ghost Dog]

38. But at least this time China's policymakers are seeing it

and acting fast?

[Ghost Dog]

67. Riding the Fed's Trading Train

... The game is on. And we all know it. According to China Investment Corporation Chairman Lou Jiwei (HT Baseline Scenario):

"It will not be too bad this year. Both China and America are addressing bubbles by creating more bubbles and we're just taking advantage of that. So we can't lose," he said.

When will it come crashing down, as all free money pyramids eventually do? As always, when some aspect of policy or economic activity makes a fundamental shift. We need to be on the watch those changes. Renewed financial crisis that sparks a flight to safety, assuming the Dollar is still considered safe? But what is the likelihood of true counterparty risk when US policymakers have effectively implemented a too-big-to-fail policy that will soon evolve into a too-big-to-regulate policy - even as, according to the Wall Street Journal, the appetite for risk of the top five banks has risen to record levels. Sure, if your counterparty is Podunk Bank in Nowhere, North Dakota, you have risk. But Bank of America (BAC) or Morgan Stanley (MS)? Get real - they have tighter security than President Obama. Domestic policy change?

The Fed is trying to get credit flowing to consumers, but the data is saying that just is not happening. Would the situation improve by raising rates? No, and assuming the jobless recovery scenario emerges, there will be no pressing domestic reason to rush to tighten. And if markets stumble as the Fed winds down its purchases of Treasuries and mortgage securities, the best bet is that the Fed would reverse course and expand the balance sheet further. Lack of political will to maintain US stimulus? Goodness knows that when push comes to shove, the US Congress loves to spend as much as any drunken sailor. External changes? China becomes unwilling to hold its Dollar portfolio in response to rising protectionism and makes a bid for the Renminbi to supplant the Dollar as the global reserve currency? Or rising commodity prices foster foreign inflation, which in turn prompt foreign central banks to raise rates and choke off growth?

The Fed is fueling a nice little train of trading, if not economic, activity. The Fed will fuel the ride until inflation pressures truly emerge, a ride that can last for a long time given the current state of the labor market. Everyone should join in for that ride. But train rides fueled by cheap money always end the same - we pretend the ride can continue indefinitely, but eventually the train moves on to a track that policymakers can not tolerate. We need to be watching for that track. The risk: That track could be a ways off, and we will become complacent before we get to it.

/... http://seekingalpha.com/article/160732-riding-the-fed-s-trading-train

[Roland99]

9. U.S. Index Futures Pare Gains; Monsanto Drops as Yahoo Advances

U.S. Index Futures Pare Gains; Monsanto Drops as Yahoo Advances
http://www.bloomberg.com/apps/news?pid=20601057&sid=auwVHKgHb4JQ

Sept. 10 (Bloomberg) -- U.S. stock-index futures pared earlier gains as a lower earnings forecast from Monsanto Co. helped offset Bank of America Corp.’s upgrade of Yahoo! Inc.

Futures on the Standard & Poor’s 500 Index expiring this month were unchanged at 1,032.50 as of 10:48 a.m. in London. The gauge closed at an 11-month high yesterday as Goldman Sachs Group Inc. recommended industrial companies and investor Michael Price said he’s finding value in American equities.

Monsanto slid 3.1 percent to $80.92 in Germany. The world’s biggest seed maker said full-year earnings per share will be at the “low end” of a previously announced range of $4.40 to $4.50.

Yahoo climbed 3.1 percent to $15.24 after Bank of America lifted its recommendation to “buy” from “neutral.”

Futures right now are just slightly to the red side.

[Ghost Dog]

10. GLOBAL MARKETS-Stock rally undeterred at 11-month high

Thu Sep 10, 2009 4:10am EDT LONDON, Sept 10 (Reuters) - The 2009 stock market rally continued unabated on Thursday with world equities at an 11-month high, emerging market stocks moving further beyond pre-Lehman demise levels and Japan's index up nearly 2 percent.

...

"The markets go from strength to strength. As we reach highs, the herd mentality of investors may well see the markets move further north," said John Murphy, analyst at ODL Securities.

MSCI'S all-country world stock index .MIWD00000PUS was up 0.3 percent having hit a new 2009 high, matching levels of October last year. It has now risen around 65 percent since hitting a low on March 9.

The benchmark MSCI emerging market stock index .MSCIEF, was up three-quarters of a percent after reaching a new 12-month high.

Japan's Nikkei .N225 earlier closed up 1.95 percent and he pan-European FTSEurofirst 300 .FTEU3 gained 0.1 percent.

Investors have become increasing willing to take on riskier assets like stocks and emerging currencies in their portfolios over the past six months as signs of economic recovery or at least a slowdown in decline have boosted sentiment.

ODL's Murphy, however, reflected a common view that the rally will not continue as it is. "One needs to recognise that markets never move in straight lines, and we are approaching October, historically the month for crashes," he said.

/... http://www.reuters.com/article/marketsNews/idINLA63229820090910?rpc=44&sp=true

[Ghost Dog]

12. Europe shares turn negative as banks fall; BOE eyed

Thu Sep 10, 2009 5:52am EDT LONDON, Sept 10 (Reuters) - European shares turned negative in morning trade on Thursday, as weakness in banks and retailers outweighed gains in technology and engineering firms, with investors awaiting a rate decision from the Bank of England.

By 0944 GMT, the FTSEurofirst 300 .FTEU3 was down 0.2 percent at 985.92 points, retreating from an 11-month high set earlier in the session and after the index had gained for four straight days.

/.. http://www.reuters.com/article/marketsNews/idCALA71552520090910?rpc=44

[Ghost Dog]

16. Sterling jumps, gilts pare gains after BoE holds rates

LONDON, Sept 10 (Reuters) - Sterling hit a near three-week high against the dollar and gilts pared gains on Thursday after the Bank of England held interest rates steady, reassuring some in the market who had been bracing for the possibility of more quantitative easing measures.

The BoE held its benchmark lending rate at a record low of 0.5 percent for the sixth month running and said it would keep its 175 billion pound asset-buying programme in place

Most analysts had been expecting rates to be kept on hold, but some strategists had seen an outside chance it would either increase its asset buying amount or cut the interest rate it pays banks holding reserves with it to encourage them to lend rather than park money at the central bank.

Shortly after the announcement, sterling GBP=D4 jumped as high as $1.66, its highest level since Aug. 21. The pair rallied more than half a cent from $1.6520 before the announcement.

...

Britain's FTSE 100 .FTSE was little changed, down 0.8 percent after the BoE announcement.

/... http://uk.reuters.com/article/idUKLA3268420090910?rpc=401&


... The effectiveness of the Bank’s quantitative easing programme, under which it is purchasing most gilts from the market using newly-created central bank reserves, has been criticised as ineffective, because it appears to have done little to stimulate lending to households and businesses.

There are few signs that credit is becoming more available. Earlier this month, the Bank released data showing that outstanding loans to companies and individuals declined at a record pace in July, in a worrying sign for the prospects of economic recovery.

Moreover, private non-financial corporations – the backbone of the economy – paid down £8.4bn of debt during the month. That represented a 1.7 per cent overall drop in their bank credit, the largest decline since records began in 1997.

/... http://www.ft.com/cms/s/0/bc2330e2-9df3-11de-8de8-00144feabdc0.html


..."The governor stated that QE would take six months before it was possible to assess whether it was working. The six months are now up.

"On the positive side, QE has depressed gilt yields (enhanced gilt prices) by as much as 50 to 100 basis points and corporate bond yields by even more. QE has also boosted UK equities, although it is difficult to quantify how much money investors have switched into shares from gilt sales.

"On the negative side, there have been few signs of an increase in bank lending. Money from gilt sales remains stuck in the banking system. Commercial bank reserves at the Bank of England have risen from £45bn (in March 2009) to £161bn (in July 2009), the latest available date. Furthermore, net lending in July 2009 fell at its fastest pace since records began in 1993, whilst M4 lending to the private non-financial companies remained anaemic.

"The failure of the banks to lend can be attributed to the lack of solvency amongst the banks themselves, the fear of incurring more bad debts in weak economy, or the desire not to borrow on the part of indebted households and companies.

"Significantly there was no reference made to lowering the rate paid by the Bank of England on commercial banks reserves that was alluded to in the August 2009 meeting."

/... http://www.guardian.co.uk/business/2009/sep/10/interest-rates-economists-say


WRAPUP 1-Cbanks keep rates at record low; 1 signals sea change

LONDON, Sept 10 (Reuters) - Britain, South Korea and New Zealand left interest rates at record lows on Thursday, with Canada expected to follow suit, but in Asia at least there were signs that thoughts are turning to tighter policy.

/--> http://www.reuters.com/article/marketsNews/idUSLA64787420090910?rpc=401&

[ozymandius]

11. Corus Bank: "The Great Enabler of Condo Madness"

From Eric Dash at the NY Times: In Florida, Vestiges of the Boom

On the corner of Flamingo Road and Pink Flamingo Lane ... a soaring monument to the great condominium bust bakes under the Florida sun.

The Tao Sawgrass ... built on the western fringes of Fort Lauderdale with easy money from the now tottering condo king of American finance: Corus Bancshares of Chicago. Only about 50 of the 396 units have been sold.

... The primary regulator of Corus, the Office of the Comptroller of the Currency, failed to sound the alarm until Corus was deeply troubled. ... Corus will go down as the great enabler of condo madness, and its travails are a harbinger of the pain yet to come in the troubled world of commercial real estate.

...regulators are moving to cleave the bank in two and sell its banking operations and condominium loans separately. The hope is to clinch a deal by the end of the month.

More to read at Calculated Risk...

[Robbien]

20. Cleave the bank in two, banking operation and condo loans

Another good bank/bad bank scenario. Any wonder who gets the bad bank part.

Chief accountant quit and Corus has no plans to replace her. Auditing firm (E&Y) also quit. Back in June, the Chairman & COO started dumping all his stock in Corus as well as has all his family members.


And the OTCC had no clue the bank was a problem?

[AnneD]

30. I would not mind the taxpayers picking up this one if....

we could do a nation wide lottery for a time share for 2 weeks or

some homeless family that was caught in the sub prime mortgage scandal are entered in a lottery to get the condo (with a few rules of course).

Banks are not to profit from this other than the fact that despite their business stupidity and greed-they get to survive another day.

[ozymandius]

13. A comment on the Deficit and National Debt (Calculated Risk takes a bow)

.....

President Bush argued in February 2001 that his fiscal policy "returns ... the surplus to the American taxpayers". In his 2001 testimony to Congress, then Fed Chairman Alan Greenspan supported President Bush by offering projections of "an on-budget surplus of almost $500 billion ... in fiscal year 2010". The National Debt would soon be retired and the Boomer's retirements secure. Greenspan offered a projection of "an implicit on-budget surplus under baseline assumptions well past 2030 despite the budgetary pressures from the aging of the baby-boom generation, especially on the major health programs."

Mr Bush also said in February 2001: "After paying the bills, my plan reduces the national debt, and fast. So fast, in fact, that economists worry that we're going to run out of debt to retire. That would be a good worry to have."

I disagreed strongly with President Bush and Mr. Greenspan's projections. I argued the surpluses were a mirage, and the tax policies would create a significant structural deficit.

.....

Eliminating the recessionary deficit requires the economy to recover, and unfortunately the recovery will most likely be choppy and sluggish, but eventually a recovery will happen. Eliminating the structural deficit will be much more difficult and will require hard choices, but now is not the time.

The time to concerned about the structural deficit was in 2001 through 2006, and hopefully again starting in 2011 or 2012.

http://www.calculatedriskblog.com/2009/09/comment-on-deficit-and-national-debt.html

[4dsc]

51. No recovery is possible

They built the economy on the back of the housing industry(because they shipped all the good paying manufacturing jobs overseas). There is an oversupply that could last for years.. There is not a housing recovery nor a manufacturing recovery..

So where is this recovery going to take place?? No where..

[ozymandius]

14. pre-open numbers and goodbye

S&P 500 -2.20 1030.30 9/10 6:40am

NASDAQ -1.25 1664.75 9/10 6:19am

Dow Jones -10.00 9528.00 9/10 6:27am

---

I hop you have an easy day. I'll check back when there's time.

:hi:

[UpInArms]

18. dollar watch

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

Last trade 77.004 Change -0.013 (-0.02%)

Dollar Struggles as a Return of Liquidity Redoubles the Focus on Deficits, Growth

http://www.dailyfx.com/story/topheadline/Dollar_Struggles_as_a_Return_1252545148644.html



The Economy and the Credit Market



The summer doldrums are traditionally considered to be at an end after the extended, Labor Day holiday for the US. However, with the return of liquidity hasn’t been a positive milestone for the dollar. In fact, since the market’s ranks have filled back out, the dollar has been driven to a new a new low for the year. Yet, even with the bearish pressure, it is clear that the market is still hesitant to build momentum behind a bearish trend that is already six months in the making. The fundamental considerations are still the same. What economy is recovering from its recession the quickest and with the least amount of damage; whose interest rates will recovery first; and what long-term weights have been saddled during the worst of the of the financial crisis that will in turn prevent a healthy revival in capital markets. The US seems to be a laggard on all three fronts. A fresh 26-year high in the jobless rate points to a strained return of growth at the very least. What’s more, history has shown us that policy officials have waited a year or more after unemployment has peaked before returning to rate a hawkish policy. From a market perspective, record deficits are just one facet of a recent report that shows America losing its investment appeal. While it may be a very remote possibility in the near term, the attack on the dollar’s reserve status is still certainly tangible.

...more...

US Dollar May Gain as Stocks Position to Turn Lower

http://www.dailyfx.com/story/market_alerts/technical_alert/US_Dollar_May_Gain_as_1252563168842.html

The US Dollar may gain in the days ahead as equity markets reverse lower, boosting demand for the safety-linked currency. The MSCI World Stock Index is showing a Rising Wedge bearish reversal formation, with confirmation offered by negative divergence on the RSI oscillator. The US Dollar Index is now -91.3% inversely correlated with the MSCI metric.



...more...

[Tansy_Gold]

22. Advice -- Invest in health insurers. They're gonna make a killing

(pun intended, of course)

the giveaway to Aetna and UHG and the other ghouls will be monumental. Get your slice while you can. You may need it if you get sick. . . . .



Tansy Gold, who honestly did not think a Dem could come up with such a disgusting piece of "free market" drivel

[spotbird]

24. Was there anything hopful in the speech?

I turned it off after a while. There doesn't seem to be much positive buzz here, or elsewhere. So I assume he threw us under the bus again.

[Tansy_Gold]

28. OH, there's plenty of the usual "support"

I've been flamed on several threads already this morning for daring to suggest it isn't just totally wonderful like a big fat ice cream cone with sprinkles on top.

it sucks. The PO is a last resort for those who can't get "affordable" insurance from the insurance companies. the PO is a means to an end? What end? I thought that WAS the end, the goal, the objective.

I've been depressed and discouraged before. And I admit I'm in pain again today which doesn't help my outlook. but jebus h keerist on a pogo stick, there is NOTHING in O's "plan" -- which isn't set to take effect for four fuckin' years anyway -- that isn't a hand-out to the insurance companies. NOTHING. There are subsidies and tax credits so the poor can buy from insurance companies. There's an "exchange" made up of insurance companies. The "public option" won't be funded by the public and it won't be an option for most people, only for those who can't get something from "the exchange."

it sucks. It sucks dead toads. It's a piece of spray painted horse shit trying to pretend its jewelry.

Waht a bunch of crap.


Tansy Gold, who doesn't even care about typos this morning

[spotbird]

29. It might be better to stay in this

thread if you want to avoid being flamed. It isn't kosher to talk about, but I suspect many of the enforcers aren't just politically interested bloggers in their living rooms. They don't want to talk issues, they only want to insult and spam with the talking points. It's hard to guess whose mind they hope to change, maybe the point is simply to stifle dissent.

The speech didn't look like it was going to have a happy ending. Today's story seems to be the heckler.

[Tansy_Gold]

32. Thanks for the warning, but I've been flamed on this board

since 11/25/08 and I'm still breathin'!

:hi:


Tansy Gold, who does take refuge and comfort in the special company of SMW and WEE

[AnneD]

39. I'm with you Tansy....

I refuse to eat a crap sandwich because 'it is better than nothing'.

Will was right-

"Out, out, brief candle!
Life's but a walking shadow, a poor player
That struts and frets his hour upon the stage
And then is heard no more: it is a tale
Told by an idiot, full of sound and fury,
Signifying nothing."

As a Nurse working in the health care field, I say it is well past time for universal coverage and time to get the insurance companies and the business model out of health care. Take a page from the GOP and give it a patriotic new name but it has to be passed. The mortality rate in the US is beginning to climb because a growing number of folks don't have health care and are dieing for lack of care. Even those WITH insurance really don't have adequate coverage.

[Robbien]

42. My fear is that the stupid thing is going to pass

This healthcare reform bill is worse than the awful system we have today. It is likely that the Dems may just all pull together and get this thing done for the president.

And that sucks.

[spotbird]

50. It will pass because it is worse

The reason it is worse is a boon for insurance, so there is no way it won't pass.

Everything else is noise. Including the heckler.

[Hugin]

34. As, we're already under the bus... There was no need to throw us under again.

Always the pragmatist. :eyes:

But, a sharp stick was used to poke at us.

If anyone needs me, I'll be down on the Oncology Ward telling the patients there that... IF! They can hold on for another four years there will be an Insurance Exchange set-up and via the magic of 'Free Market' Ideology at some indeterminate time thereafter (Gawd willing) they might be able to afford to buy a Health Insurance Policy. (If they get off their lazy butts, pull themselves up by the gown straps, and get a job to pay for it) However, it's not advisable for people in their condition to hold their breath.

That's it... That's the word from the top.

If you're looking in my statement above for something about HEALTH CARE... Well, it isn't there. This is all about Health Insurance and maintaining the status quo.

[Tansy_Gold]

36. Oh, Hugin, now you've got me confused

Did you used to be Prag? Who used to be PaleBlueDot?



IT'S NOT FAIR



or so said Ashton Hilary Akbar Pelham-Martyn, who probably knew a lot more about Afghanistan, too.





Tansy Gold

[DemReadingDU]

40. FinnFan was PaleBlueDot

What Happened?

and what happened to antigop?

[Hugin]

45. Yeah, where is antigop?

I do see an occasional post linked to The World News Trust. Which, I think antigop had something to do with, but, I haven't seen antigop post since his swansong post several months ago.

and radfringe... Where's radfringe! :/

[Dr.Phool]

46. Antigop just said good-bye, and that was it.

No reason or explanation.

[Hugin]

44. My former moniker used to be...

Prag. Derived from Pragmatic. However, the meaning of the word pragmatism (like the meaning of so many other things in this Brave New World) has been subverted to refer instead to opportunism and is now in the service of opportunists.

I'm not sure who PBD became.

[Dr.Phool]

47. He's still PBD. Used to be FinnFan.

[Tansy_Gold]

48. Thanks to you all

Yes, Prag became Hugin, the whispering crow if I remember correctly.

FinnFan became PaleBlueDot.


And I'm still




Tansy Gold, who has long known what "scumbag" really means. . . ..

[Hugin]

55. Was there something in my summary of 'The Plan' that confused you?

I hope my paraphrasing of what was said was accurate. Because, I approached it with a fairly open mind and that's what I heard... Loud and Clear. :/

[Tansy_Gold]

57. No no no no no.

You said something about pragmatic and then I couldn't rmeember if you used ot be Prag or if it was PaleBlueDot who used to be someone else. That's all.


In my best Emily Latella voice, "Never mind."



:hi:

[Ghost Dog]

41. This?

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=385x368646

[DemReadingDU]

25. It's all about keeping the status quo

They gotta make sure the lobbyists, politicians, wealthy, and big business, do not have any disruption in their lifestyles.

I think I will 'invest' in stockpiling vitamins and aspirin.

[wordpix]

68. you got that right & don't forget the Incumbent Party

[Ghost Dog]

33. No.

Not for me, thanks very much. :(

No more than I would invest in the Pratt & Whitney JSF (now exclusive, thanks to Congress) engines Goldman Sachs recommended yesterday,

or the like.

(edit: cf. United Technologies and the "US manufacturing improving" story yesterday...

http://bx.businessweek.com/united-technologies/stocks-news-us-goldman-upgrades-multi-industry-sector/9195841497317894347-db427bc4cd05a1f824204e1d05e5b2a7/
http://www.thestreet.com/story/10596236/1/ge-industrials-up-on-geeky-goldman-call.html
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x4051453 ).

[Robbien]

23. UBS employees referred to CDOs internally as 'crap' and 'vomit.'

Court orders UBS to post $35 million bond in fraud case
http://www.reuters.com/article/ousivMolt/idUSTRE5890RU20090910

NEW YORK (Reuters) - A Connecticut court ordered UBS (UBSN.VX) to pledge assets or post a $35 million bond after finding "probable cause" that the bank committed securities fraud in a deal with Pursuit Partners, the hedge fund's lawyers said on Wednesday.

Superior Court Judge John Blawie found probable cause that UBS used secret insider information obtained from its relationship with ratings agencies Moody's (MCO.N) and Standard & Poor's to commit securities fraud in the sale of collateralized debt obligation notes to Pursuit.

"The court takes UBS employees at their word when they referenced their Notes, these purported investment grade securities which they sold, as 'crap' and 'vomit', for UBS alone possessed the knowledge of what their product was truly worth," lawyers for the plaintiff quoted the judge's statement as saying.

The Court's order was issued at the conclusion of a one-week hearing and took testimony of various UBS employees and reviewed documents, including internal UBS e-mails.

[Hugin]

37. That's nothing compared to what I've called them...

But, then again... I'm not trying to sell them to rubes customers who are relying on my cynicism honest evaluation and greed advice before they buy.

[Ghost Dog]

43. Where there is fraud, contracts are null and void. n/t

[Tansy_Gold]

49. does not apply to banks, investment houses, hedge funds or

other wealthy things in the US.


-

[Festivito]

27. Debt: 09/08/2009 11,787,419,577,736.69 (UP 2,391,350,779.69) (Debt down 1/5B$.)

(Debt down about one-fifth billion, FICA side up two-and-a-half billion.)

= Held by the Public + Intragovernmental(FICA)
= 7,475,870,463,047.58 + 4,311,549,114,689.11
DOWN 191,031,319.46 + UP 2,582,382,099.15

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 307-Million person America.
If every American, man, woman and child puts in $3.25 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.76, ABOUT TEN BUCKS for a 1B$ 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 10 seconds we net gain a another American, so at the end of the workday of the report, there should be 307,392,501 people in America.
http://www.census.gov/population/www/popclockus.html ON 08/24/2009 13:24 -> 307,261,605
Currently, each of these Americans owe $38,346.48.
A family of three owes $115,039.43. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 21 reports in the last 30 to 32 days.
The average for the last 21 reports is 6,152,708,052.39.
The average for the last 30 days would be 4,306,895,636.67.
The average for the last 32 days would be 4,037,714,659.38.
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$/day.
There were 158 reports in 231 days of Obama's part of FY2009 averaging 7.30B$ per report, 5.02B$/day so far.
There were 233 reports in 343 days of FY2009 averaging 7.57B$ per report, 5.14B$/day.

PROJECTION:
There are 1,230 days remaining in this Obama 1st term.
By that time the debt could be between 13.5 and 18.1T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
09/08/2009 11,787,419,577,736.69 BHO (UP 1,160,542,528,823.61 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: 1,762,694,680,824.20 so far this fiscal year, broken down below:
Borrowed in FY2009: 0,602,152,152,000.59 in part from time during Bush reign.
Borrowed in FY2009: 1,160,542,528,823.61 in part since Obama takes over.


LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
08/17/2009 +012,224,191,599.44 ------------********** Mon
08/18/2009 +036,282,270,009.21 ------------**********
08/19/2009 +000,703,521,737.77 ------------********
08/20/2009 +001,088,553,104.23 ------------*********
08/21/2009 +000,333,547,281.04 ------------********
08/24/2009 +000,472,040,908.69 ------------******** Mon
08/25/2009 +000,287,748,587.67 ------------********
08/26/2009 -000,466,043,865.86 ---
08/27/2009 +008,131,449,864.04 ------------*********
08/28/2009 +000,123,059,531.85 ------------********
09/01/2009 +087,210,147,628.98 ------------********** Tue
09/02/2009 +000,313,556,741.81 ------------********
09/03/2009 -005,471,580,596.27 --
09/04/2009 +000,000,664,126.38 ------------*****
09/08/2009 -000,191,031,319.46 --- Tue

141,042,095,339.52 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008 while Bush was in power JUST BEFORE fiscal year end.
Bush admin borrowed $962,245,245,654.01 in those last 124 days in office crossing two fiscal years.
$360,093,093,653.42 in last 12 days of FY2008, and $602,152,152,000.59 in subsequent 112 days before leaving office.

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=post&forum=102&topic_id=4050971&mesg_id=4051100

[Tansy_Gold]

52. Health Insurers Stocks Rise

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=132x8644146

tip to quantass there for

http://www.reuters.com/article/marketsNews/idINN1038450020090910?rpc=44


HMO shares rise after Obama health reform speech


* No "game changers" seen in speech

* UnitedHealth, WellPoint, Aetna climb

By Lewis Krauskopf

NEW YORK, Sept 10 (Reuters) - Shares of U.S. health insurers climbed on Thursday as analysts said President Barack Obama's highly anticipated speech urging Congress to act on health reform revealed no "game changers."

Analysts also deemed the possibility of a public plan that would seriously undermine the companies as unlikely following the speech.

Obama called for quick action on a broad healthcare overhaul in his primetime address on Wednesday night , but the speech contained nothing unexpected, said Steve Shubitz, an analyst with Edward Jones.

"There wasn't anything said that is drastically changing the outlook as to what might come out of Congress," Shubitz said.

The prospect of dramatic overhaul of the healthcare system has pressured health insurer shares throughout the year.

Shares of UnitedHealth Group (UNH.N) and WellPoint Inc (WLP.N), the two largest health insurers each edged up less than 1 percent in morning trading. Other insurers rose more sharply, with Aetna (AET.N) up more than 1 percent and Cigna Corp (CI.N) rising more than 3 percent.

Obama "demonized insurers several times but didn't add anything new to the debate," Wells Fargo analyst Matt Perry said in a research note. "Overall we view the speech as neutral to insurers."

Shubitz said the plan resembled the framework proposed earlier this week by Senator Max Baucus, head of the powerful finance committee, indicating that Baucus' formal bill will be crucial for investors to watch.

"It's very clear that this is the route they're going to use to get something out there," Shubitz said.

Obama made his case for a public health plan that he said would lead to more competition in the private market. The controversial public plan idea has prompted fear from investors that companies would be unable to compete against it and eventually beget a government takeover of healthcare.

Obama said he had "no interest in putting insurance companies out of business" and would remain open to other ideas that ensure Americans have an option to secure affordable coverage.

Ana Gupte, a Sanford Bernstein analyst, said in a research note she was "even more confident after the Obama speech that the legislative outcomes will be moderate with no threat of a Medicare-like public plan."


more at link

[Robbien]

53. See, even the insurance companies and Wall Streeters are positive Obama doesn't

want the public option.

Why is it that so many DUers still believe Obama is on their side on this issue? The greatest page is full of threads of support for that speech.

[Tansy_Gold]

54. Because it's what they want to believe.

Truth is a very harsh mistress. Most of us really don't want to face it. And when we get our hopes up and we think we've seen the answer to our prayers, it's even harder to admit the truth.

It's especially hard to admit we were wrong.

One of the benefits to being raised in a family where my every decision was treated as wrong and my every accomplishment as worthless was that I have no illusions about the validity of my choices. I question everything. I doubt everything. I have no self confidence, but I also have no self-importance, the ITYS rubber stamp notwithstanding.

So when I figure out something is RIGHT, it's because I've worked it out for myself, not taken someone else at their word. And if it turns out not to be right, well, I'm not surprised.


But I did put some faith in Obama. I have no problems admitting I was philosophically more in tune with Kucinich and would have preferred Hillary, but I also have no problem admitting that I came onto the Obama bandwagon with no reservations. I felt that both he and Clinton had their strengths and their weaknesses, and I was content with the party's wishes to put Obama on the ticket. I do not, therefore, appreciate those who call me a PUMA -- I did finally find out what it meant -- because I did believe in the strength of unity, that a solid electoral mandate for change would lead to real change.

That's where the disappointment comes from. it isn't just my disappointment; it's that Obama, with a whole lot of help from Emanuel and a bunch of other insiders, let us ALL down.

I understand the mindset of the rightwingers who fall in line. I know that they are afraid of things that logic cannot mitigate. They fear change, any change in their worldset, and we can't stop change.

And yes, I can understand the greed that keeps people like Obama and Biden from really working for the people. They get into a comfort zone and they hear what they want to hear. They fear the loss of all those ins. co. jobs and don't realize that most of those jobs will simply move into the omnicare administration. All that will be lost is stockholder equity and CEO salaries. Can the nation live that way? Yes, it can. But they can't see it. And they know there are enough of the electorate who can't see it either.

I'm discouraged today. Very discouraged. And I should be ENcouraged, because I was right on this one. At least so far.


I told you so.



Tansy Gold

[Robbien]

56. Back in the 90's I went through what you are experiencing today

When Obama ran for Illinois state senator I worked hard and spent many many hours on his campaign because I believed.

Then when he got in office I watched him as he spoke about supporting the people all the while working in private for corporate interests. We had a good shot at getting universal coverage back in 2002 until Obama got involved. Disillusioned I didn't work for his campaign when he ran for US Congress and then again didn't when he ran for President.

So far in this presidency there have been no surprises.

But I do remember being discouraged when the hope faded back then, so you have my sympathies.

[spotbird]

58. Explain him

There is such a disconnect between his bluster and actions, does he consciously know of the contradictions? Is he just seduced by the powers he has now become a part of?

I didn't support Hillary because she seem too corporately connected. Little did I know.

[Robbien]

60. Explain him?

Now how can I do that. I've only talked to him a few times over ten years ago. The guy was happy to see us working for his campaign and wanted to keep us interested in doing so. Can't say I know him.

But watching him over the past decade or so I can say he is not full of contradictions. He just knows how to say things which mean one thing but comes across to his supporters as something else. Just like the speech last night. It was a validation to corporate America that he was on their side. What progressives heard (but not what Obama said) was that Obama supported them and the public option.

It is easier to understand what Obama means if you don't listen to him speak but just read the transcript.

[Tansy_Gold]

61. You've just posted one of the scariest posts I've read on DU in a long time

There does seem to be something charismatic about Obama. he is a fantastic speaker. A very seductive one.

I didn't see the speech last night. I only read the transcripts and the stuff posted on the website. I wasn't seduced.


I used to think boooosh had the potential to become another Hitler, and I did not and do not say that lightly. The fact that he was NOT charismatic -- and cheeeeney even less so -- may have saved us.

Who or what will save us from Obama????




:scared:


Tansy Gold

[DemReadingDU]

63. very frightening

So many people blindly follow the charismatic Obama and don't really hear what he is saying. I fear when the market crashes, these same people will be like sheep, and will continue to blindly follow Obama, not realizing what they are responding to. Does this makes sense? Like the 'Shock Doctrine Syndrome'...In times of heightened/perceived fear, policies and laws are enacted for controlling people. Scary.

[Tansy_Gold]

64. time to reread Goldhagen n/t

[DemReadingDU]

65. I just need to read for the 1st time

http://en.wikipedia.org/wiki/Daniel_Goldhagen

[Ghost Dog]

66. So, when is his great speech on the need for total war

due?

[DemReadingDU]

69. Well,

We all know the markets are due for a big plunge. But something has to occur to blame the downfall. Whether it be a war, a big bank failure, the H1N1 flu to quarantine people to their houses, another katrina hurricane, not sure what, but something will happen, something that no one could have foreseen, and then markets will crash.

[Tansy_Gold]

70. Allow me to explain

I felt from the beginning of the booosh era -- meaning before the 2000 campaign -- that their policies were frightening. The heightened military stuff, the religious stuff, the anti-woman stuff. I put more emphasis on the policies and less on the persons. As it turned out, with the hindsight of 2009, I think the policies were there and could have been implemented much more thoroughly had either boooosh or cheeeney been a stronger personality. Both of them were unable to pull in the strong mass emotion that could have led to real disaster. (mild :sarcasm:)

With Obama, I kept looking at the policies. I didn't worry about the personality. So when the post came along about how charismatic Obama is -- and I've seen it for myself but to a much lesser degree -- and I added that to my own fears about policy, well, it made me step back a bit.


I don't think Obama is a tool of the fundie right wing.

But I've been wrong before.


Tansy Gold

[spotbird]

71. Thanks, I didn't mean to

sound so sharp.

You've watched him for such a long time that I supposed you had insights, which you do. Basically, he isn't interested in the progressives, except on election day and he knows that they don't have much in common with his political philosophy. What do you think he believes?

[Hawkowl]

72. Seconded

I watched his campaigns from the sidelines in the 1990's from Chicago and he has always been a corporate stooge. It is all he knows. The one thing he improved has been his oratory. He used to be no great orator and simply studied and practiced. He is all hot air with no substance.

My great fear is that he is shaping up to be the Democrats Herbert Hoover. This will become more then evident on the inevitable double dip (I think of it rather as whiplash) recession.

[DemReadingDU]

59. Money Market Mutual Fund Guarantee Expires September 18

9/10/09 Money market guarantee program expiring

The government's temporary guarantee program for money market funds is set to expire on Sept. 18. There is little chance the year-old program, put in place during the height of the financial crisis, will be extended past next week.

The guarantee applies only to money funds that paid premiums to participate in the Treasury Department's insurance fund. Almost all funds did initially, although some that invest only in U.S. government securities later dropped out. The guarantee covered balances that were in participating taxable and tax-free money funds when the program started Sept. 19.

"It's extremely unlikely" the program will be extended past next week, says Mercer Bullard, president of Fund Democracy. "The whole idea is for it to quietly expire unnoticed."

Peter Crane of Crane Data says the program probably could not be continued without congressional action. Fund companies are not clamoring for an extension. "The industry feels that with government assistance would come a heavier regulatory hand," Crane says.

The program was put in place three days after the Reserve Primary Fund became the second money fund in history to break the buck, or fall below $1 per share. The day before, Lehman Bros. had filed for bankruptcy. The Reserve fund had about 1 percent of its assets in Lehman debt, mainly short-term commercial paper.

Calculating share price
At the end of each trading day, mutual funds divide the value of their assets by their number of shares and report the price per share. Unlike stock and bond funds, whose share prices fluctuate daily, money funds try to maintain a stable $1 per share, thereby ensuring their investors will never lose money. They do this by sticking with safe, short-term investments that barely fluctuate in value. Any income these investments generate is paid out as dividends.

When Lehman filed for bankruptcy on Sept. 15, investors immediately began withdrawing from money funds that held its debt. The Reserve fund, whose investors were primarily institutions, was hit harder and faster than other funds.

The next day, the fund announced that its share price had dropped to 97 cents and that it was temporarily halting redemptions. Other money funds also held Lehman debt, but their parent companies injected cash or took other steps to prevent them from breaking the buck.

Before last year, the only money fund that had ever broken the buck was a tiny one in 1994. But the Reserve fund had $62 billion in assets shortly before its collapse and its founders had invented the money fund.

Its failure sparked a run on money funds. To meet redemptions, some funds had to sell assets including commercial paper, which companies use to finance their day-to-day operations. If money funds stopped buying commercial paper, business could grind to a halt.

more...
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/09/10/BU6K19KNOF.DTL


Edit: I wonder if this is another reason that the markets are kept propped up? Once this guarantee expires, how many mutual funds will 'break the buck' when the market crashes? The speculators getting out this week get the gains, and the investors will be left holding the empty bag.