STOCK MARKET WATCH, Thursday December 30

[ozymandius]

Source: du

STOCK MARKET WATCH, Thursday December 30, 2010

AT THE CLOSING BELL ON December 29, 2010

Dow 11,585.38 +9.84 (+0.09%)
Nasdaq 2,666.93 +4.05 (+0.15%)
S&P 500 1,259.78 +1.27 (+0.10%)
10-Yr Bond... 3.34 -0.02 (-0.45%)
30-Year Bond 4.43 -.00 (-0.09%)

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Market Conditions During Trading Hours

Euro, Yen, Loonie, Silver and Gold

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Handy Links - Market Data and News:Economic Calendar    Marketwatch Data    Bloomberg Economic News    Yahoo! Finance    Google Finance    Bank Tracker    
Credit Union Tracker    Daily Job Cuts

Handy Links - Economic Blogs:
The Big Picture    Financial Sense    Calculated Risk    Naked Capitalism    Credit Writedowns
Brad DeLong      Bonddad    Atrios    goldmansachs666    The Stand-Up Economist

Handy Links - Government Issues:
LegitGov    Open Government    Earmark Database    USA spending.gov

Handy Links - Videos:
The Coming Collapse of the Middle Class    Charlie Rose talks with Roubini    Charlie Rose talks with Krugman
    William Black: This Economic Disaster    Bill Moyers with Kevin Drum and David Corn

Bush Administration Officials Convicted = 2
Names: David Safavian, James Fondren
Dishonorable Mention: former House majority leader, Tom DeLay

Bush Administration Officials Charged = 1
Name(s): Richard Lopez Razo

Financial Sector Officials Convicted since 1/20/09 = 11

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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

[xchrom]

1. recommend

[DemReadingDU]

3. You are fast with your recommend today!

[xchrom]

14. lol! there were still two ahead of me --

they were just polite enough to let me say it first?

[Hugin]

4. Seconded!

On this bitter-sweet day of Ozy's retirement.

[ozymandius]

6. Tomorrow is the last.

This is my last day of providing Reports and OIl Prices for the SMW. I feel wistful about that.

[Hugin]

7. If I'm a no show tomorrow...

It's not a snub... I'm having :ahem: issues with my telecommunications. Once again... Every time there's weather on the horizon. :/

[Demeter]

10. You mean, weather is a sometime thing out your way?

Hmmm...we have weather every day, usually adverse this year. Spring and Fall were but concepts.

[Hugin]

23. Yep, weather is a pretty homogeneous thing here...

Monotonous at times, even.

That humidity goes over 15% and the 40+ year old phone cables go haywire. Whoooweee!

If it didn't have PII in it I'd post my router logs from last night. The mother-ship connected and disconnected over a 100 times... and each time my land-line phone went, BLOOP! That's why I'm up so early. :hangover:

On those rare occasions when I can get through the labyrinth of denial at off-shored call-center-sweat-shops and schedule a person who can physically come out and do repairs... They do a line check and show up at the front door with a sad-puppy look on their face to inform me that my line is crap and needs some sort of line-replacement crew to come out at some undefined future date and put in a new line for the entire neighborhood. It never happens... My service works a little better for awhile and then doesn't again a little later. (My theory on this is that there is, but, a few working line-pairs in the trunk and they swap them out... Sort of like an old operator's plug box. I'm thinking mine stopped working because someone else in the neighborhood got broadband for X-mas.)

:sigh:

[UpInArms]

28. I got a line replacement this summer

and my telephone/DSL finally doesn't go off with the least bit of moisture - my line used to connect through my neighbor's hog lot ... and now it doesn't

I'm so sorry for your troubles - they do get wearisome

[Hugin]

38. SMW Theme-o-the-day: Green Acres

"Green Acres" -- Vic Mizzy.

http://www.youtube.com/watch?v=Mbk81X6WHA4

"Green acres is the place to be
Farm living is the life for me
Land spreading out,
so far and wide
Keep Manhattan,
just give me that countryside.

New York
is where I'd rather stay
I get allergic smelling hay
I just adore a penthouse view
Darling, I love you,
but give me Park Avenue.

The Chores

The Stores

Fresh air

Times Square

You are my wife. Goodbye city life.

Green Acres, we are there!"

Courtesy of: http://www.maggiore.net/greenacres/gatheme.asp (Nice site... Few pop-ups and other distractions.)

[UpInArms]

44. yeah, I still miss that stuff

you know, culture - live theater - good food ....

oh well

all the snow melted last night - it's 54 degrees and is supposed to rain.

Mud is my future.

[dixiegrrrrl]

78. That is the identical story we got for 6 years in So. san Francisco.

EVERY person who came out had a different reason it could not be fixed, except the 2 people who simply...disappeared.

As much as I would love to bitch about Frontier in our new location, they actually SHINE compared to Pac Bell in SF.

[ozymandius]

2. Today's Reports

[ozymandius]

8. Stocks point slightly lower ahead of economic data

Ahead of the opening bell, Dow Jones industrial average futures are down 11 points, or 0.1 percent, to 11,521. S&P 500 futures are down 1, or less than 0.1 percent, to 1,255. Nasdaq composite futures are down 1, or less than 0.1 percent, to 2,228.

more

Year-end doldrums weigh on sentiment.

[ozymandius]

20. Unemployment benefit applications drop sharply

The Labor Department says applications dropped by 34,000 to 388,000, the lowest number since the week of July 12, 2008. The level of applications has either fallen or remained unchanged in five of the past six weeks.

Unemployment applications below 425,000 signal modest job growth. But economists say applications need to fall to 375,000 or below to indicate a significant decline in unemployment. Applications for unemployment benefits peaked during the recession at 651,000 in March 2009.

http://news.yahoo.com/s/ap/20101230/ap_on_bi_go_ec_fi/us_economy

Edit: Last week's initial claims number was revised up by 2,000.

[fasttense]

27. Over a million and a half unemployment applications a month.

Happy Days are here again. :sarcasm:

[ozymandius]

33. Continuing UE Claims Revised Upwards

Dec 30 08:30 Continuing Claims 12/18
Actual 4128K
Briefing 4000K
Consensus 4060K
Prior 4071K
Revised from 4064K

Read more: http://www.briefing.com/Investor/Public/Calendars/EconomicCalendar.htm#ixzz19bTZsMh0

[ozymandius]

5. Crude Oil Price

N.Y. Crude Oil Futures Advance 0.5% to $91.48 a Barrel

[Demeter]

9. 5th Rec, and Happy to Be Here to Make It

Came off the ice-slicked roads of Ann Arbor; finished delivering the ersatz paper an hour late. I figure I've used up all my good luck for the year today.

I spent 30 minutes trying to get out of one driveway....walking wasn't a good option, either. Sigh. Freezing rain is the worst weather for this job, next to a blizzard.

I've got champagne for New Years on ice...and a lot of hopes and dreams. Sis yelled at Dad in the hospital...Massive neurosis is crippling, but not a sufficient reason for power of attorney to kick in, despite a demonstrated inability/unwillingness to keep oneself alive and healthy. Dad is turning into a larger than life version of Woody Allen....it creeps us all out.

[ozymandius]

13. How did the crown procedure go?

Grief-free, I hope.

[Demeter]

16. It went well

the Kid will have a gold tooth--at age 27. She grits her teeth so hard you can hear it while she sleeps. Sounds like crickets. She won't wear a mouth guard, either.

The dentist said he did it just in time before the decay hit the root, so she doesn't need a root canal, and he thinks she never will....we will see.

Sometime later we will have to do the molar on the other side of the jaw, which is equally worn, but not decaying...yet.

[ozymandius]

18. You all are very lucky.

You caught that in the nick of time to avoid a root canal. You have a tough row to hoe.

[AnneD]

25. Glad it went well for the kid....

Sometimes you have to work with, sometimes work around. She is lucky to have you to care for her. :hug:

[Tansy_Gold]

15. 9th Rec and worried about icy roads myself after. . . .

heavy rain that started about 2:00 yesterday afternoon and continued until about 5:00 a.m., which has left everything saturated. We have a freeze warning in effect for tonight and possibly tomorrow night as well, which wouldn't mean much for driving if it hadn't been for all the rain. And NO ONE HERE KNOWS HOW TO DRIVE IN WET/SLICK CONDITIONS. Those who do or did at one time promptly forget everything as soon as they reach the Valley of the Sun and think for some reason that rain isn't wet here or something.

[Po_d Mainiac]

35. Roads ain't supposed to be covered with snow and ice?

I didn't know that
:rofl:

[Demeter]

80. Well, Po, You Wouldn't

I left NH to get a longer growing season---I have flash-frozen rosebuds still outside.

[Roland99]

37. Is there where I'm supposed to keep quiet about our 70F today and warmer tomorrow?

;-)


Drive safely out there!

[Tansy_Gold]

41. Nah, Roland, you go right ahead and gloat.

I do it every chance I get! :evilgrin: It's a personality flaw that afflicts many of us who have left colder climes for the various regions of the Sun Belt.

And I only gloat affectionately, because I spent many a winter morning scraping the snow and ice off a car that never saw the inside of a garage. I still have photos to remind me of the day we chipped inch-thick ice off the hill so we could drive off our side road and onto the highway. I don't miss it, and I will grin evilly when the sun returns along with 60 degree weather (Monday), but I completely understand the hazards of winter.

And for those of you who LIKE snow and ice, well, more power to ya, and enjoy!


TG, TT

[Roland99]

43. I keep hearing local tv talk about this being the coldest Dec on record for central FL

SO glad I was here to experience it...

:silly:

[UpInArms]

45. wow, TG - the weather tables have flipped

you have a freeze warning and we are supposed to have thunderstorms.

:hi:

[Demeter]

11. Bellagio discontinues $25,000 chip after robbery

SHADES OF OCEAN'S 13!

http://www.salon.com/news/feature/2010/12/29/us_bellagio_hold_up/index.html

In response to $1.5 million heist, MGM Resorts International will not redeem the red and gray tokens as of April...I WONDER IF THE IRS WILL ACCEPT THEM?


Las Vegas casino bosses are serving notice to the bandit who made off with $1.5 million in chips from the Bellagio: Try to redeem those worth $25,000 soon or they'll become worthless.

Bellagio owner MGM Resorts International is giving public notice that it's discontinuing its standard chip valued at $25,000 and calling for all gamblers holding the chips to redeem them by April 22.

After that, gambling regulators say each red chip with a gray inlay won't be worth more than the plastic it's cast from.

"The bottom line is that they're not money," said David Salas, deputy enforcement chief for the Nevada Gaming Control Board...

[Demeter]

12. How "Killer B" and "Deadly D" Strategies Allow Companies To Repatriate Billions And Find Higher IRR

http://www.zerohedge.com/article/how-killer-b-and-deadly-d-strategies-allow-companies-repatriate-billions-and-find-higher-irr

One of Zero Hedge's greater contributions to society in 2010 was finally putting the "cash on the sidelines" BS that was every emptyheaded pundit's go-to line when cornered and with nothing else to retort, in the trash bin of intellectual sophistry where it belonged. What surprised us is that it took as long as it did before someone dared to point out the flagrantly obvious. That said, today Bloomberg has released a terrific piece of investigative reporting, that may very well refute much of what we said, since it appears that contrary to legal permissions, companies have been very busy using the gray area in the tax code (the same that gets ordinary citizens in lots of trouble with the IRS but not mega corporations, never mega corporations) to repatriate tens, if not hundreds of billions in the past few years. Meet the "Killer B” and “the Deadly D" just two of the strategies that have allowed the following to happen: Merck & Co. bringing more than $9 billion from abroad without paying any U.S. tax to help finance its acquisition of Schering-Plough Corp.; Pfizer Inc. importing more than $30 billion from offshore in connection with its acquisition of Wyeth and taking steps to minimize the tax hit on its publicly reported profits; Eli Lilly & Co. carrying out many of the steps for a tax-free importation of foreign cash after its roughly $6.5 billion purchase of ImClone Systems Inc. in 2008. In other words, despite America's deplorable budget condition, where every dollar in organic revenue is matched by one dollar of debt issuance, companies are doing more than ever to avoid paying any taxes... anywhere.

From Bloomberg:

At the White House on Dec. 15, business executives asked President Obama for a tax holiday that would help them tap more than $1 trillion of offshore earnings, much of it sitting in island tax havens.

The money -- including hundreds of billions in profits that U.S. companies attribute to overseas subsidiaries to avoid taxes -- is supposed to be taxed at up to 35 percent when it’s brought home, or “repatriated.” Executives including John T. Chambers of Cisco Systems Inc. say a tax break would return a flood of cash and boost the economy.

What nobody’s saying publicly is that U.S. multinationals are already finding legal ways to avoid that tax. Over the years, they’ve brought cash home, tax-free, employing strategies with nicknames worthy of 1970s conspiracy thrillers -- including “the Killer B” and “the Deadly D.”

....

“Sophisticated U.S. companies are routinely repatriating hundreds of billions of dollars in foreign earnings and paying trivially small U.S. taxes on those repatriations,” said Edward D. Kleinbard, a law professor at the University of Southern California in Los Angeles. “They devote enormous resources first to moving income to tax havens, and then to bringing those profits back to the U.S. at the lowest possible tax cost.”

....

U.S. companies overall use various repatriation strategies to avoid about $25 billion a year in federal income taxes, he said.

Then again, that is about two months' worth of unemployment benefits to those who actually pay taxes. But when one has the sheep happily paying their share of corporate tax evasion, and the Fed even more happily monetizing debt, why should the IRS care?

And since it is now obvious that (tax) laws are meant to be if not broken, then certainly bent, one can now speculate just why companies such as Microsoft have to misrepresent their tax reality and claim they are issuing bonds when in fact they do have full recourse to all that lovely offshore cash:

“The fact that they have these cash hoards suggests that investment is not being constrained by lack of cash,” Slemrod said.

U.S. multinationals boost earnings by shifting income out of the country via transfer pricing, a system that allows them to allocate costs to subsidiaries in high-tax countries and profits to tax havens. Google Inc., for example, cut its taxes by $3.1 billion in the last three years by moving most of the income it attributed overseas ultimately to Bermuda, Bloomberg News reported in October.

The tax benefits from such profit shifting can have a greater impact on share price than boosting sales or cutting other expenses, since the reduced rate goes straight to the bottom line, said John P. Kennedy, a partner at Deloitte Tax LLP, speaking at the conference in Philadelphia Nov. 3.

In other words, in the biggest of paradoxes, as long as companies are allowed to use tax schemes to defraud America, they will have even less of an interest to actually hire, as the IRR to the bottom line from tax evasion is greater than that from organic growth! Please reread this sentence as it is critical, and goes to the heart of America's gradual transition to what some call a fascist corporatocracy, coupled with ever increasing unemployment. For all those wondering why the unemployment is and continues to be sky high, look no further than the corrupt tax gatherers.

And some memorable buzzwords to should allow the peasantry to grasp and recall just how big the worries of corporate treasurers are when it comes to tax avoidance (and evasion):

The “Killer B” maneuver is named for section 368(a)(1)(B) of the Internal Revenue Code, which deals with tax-free reorganizations. A U.S. company using the technique would sell its shares to an offshore subsidiary, bringing cash back to the U.S. tax-free. The offshore unit could then use the stock to make an acquisition. In 2006, the IRS issued a notice aimed at shutting down the maneuver.

The “Deadly D,” also named for a section of tax law, allows a U.S. company to attach the high tax basis in a newly acquired company to one of its existing foreign units. In some cases, doing so enables the U.S. parent to pull cash from the subsidiary up to the amount of the recent purchase price tax-free. The Obama administration has proposed changing the provision that enables the maneuver.

And since nothing is ever covert in any newly developed Banana Republic, here is how tax-deminimis status is spun at fully open and public gatherings:

Willens, the independent tax adviser, said the steps indicated a likely D reorganization, or another method “to extract earnings from overseas without tax consequences -- of course.” Lilly had no comment beyond its filings, said David P. Lewis, the company’s vice president for global taxes.

The KPMG panel discussion in Philadelphia, called “Global Cash Tax Management Plans and Repatriation Planning,” dissected other techniques, including one that took six slides to explain. It works like this:

Soon after a U.S. multinational has purchased another U.S. company, the new unit promises to pay the parent a large amount of cash pursuant to a note agreement. Since both parties are U.S. companies, there is no tax bill for the parent under current U.S. law.

Then the new acquisition converts to a foreign company. So when the payment pursuant to the note is made, it comes from overseas. That means the foreign cash is treated as a nontaxable payment under the note, instead of a taxable dividend.

Going Offshore

The newly converted foreign subsidiary could access the multinational’s existing offshore cash by borrowing from a foreign sister unit, said Glenn, the KPMG tax partner. He and Zollo were joined by colleague Frank Mattei, as well as Don Whitt, a Pfizer tax official.

“This basic transaction is something that at least a couple of taxpayers have done, and I know a number of others have evaluated,” Glenn said. The strategy’s name follows the alphabetic tradition of Bs and Ds. It’s called “the Outbound F.”

Remember: if US individuals even think of doing something as tax evasive as the abovementioned, the thought police will be knocking at your door. So unless one is a corporation, preferably a monopoly, and best of all: so massively leveraged (think GE) it needs its own propaganda station, and endless Fed and taxpayer backstops, don't even try to visualize a world in which the rules that apply to corporations can even remotely be applicable to ordinary US peasants. Perhaps this is why those who are bored and actually look at the final 2010 Treasury Direct Statement will find that the US government collected $1.3 trillion in individual incomes taxes net of refunds...and $160 billion in corporate.

LINK TO BLOOMBERG'S FULL ARTICLE:

http://www.bloomberg.com/news/2010-12-29/dodging-repatriation-tax-lets-u-s-companies-bring-home-cash.html

[InkAddict]

42. I note that zerohedge cites multinational drug companies as

engaging in these methods of American "tax evasion" upon repatriation of $. What or how does this figure in with multinational drug companies' agreements to fund programs that provide their "patent" or "patent pending" HIV drugs in Third World nations around the world and/or in our very own collapsing government programs of assistance in this general area of pharmaceutical health care or simply in other more direct government services that cannot now be funded for lack of collected taxes from corporations as they play these loopholes in the Tax Code?

[Demeter]

81. It doesn't matter if the drug is "legal" or Not

Crime pays.

[ozymandius]

17. World stocks mixed in holiday-thin trading

HONG KONG – World stock markets fluctuated in narrow ranges Thursday as fewer investors participated in the market ahead of the New Year holiday while Japan's Nikkei index fell on the last trading day of the year due to a firming yen.

In Europe, the FTSE-100 index of leading British shares was down 2.72 points, or less than 0.1 percent, to 5,993.64, while Paris' CAC 40 index was down 5.17 points, or 0.2 percent, to 3,885.48. Germany's DAX lost 9.31 points, or 0.1 percent, to 6,986.43.

It was the last full trading day of the year for many major Asian and European markets. Bourses in Australia, New Zealand, Hong Kong, Singapore, France and Britain will have a shortened session on Dec. 31 while those in Japan, South Korea and Germany will be closed all day, with trading resuming on Jan. 4.

more

Typically, U.S. markets will have a short session on New Year's Eve. Definitive information about that has not been easy to find.

[AnneD]

19. Morning Marketeers...

:donut: and lurkers

First rec :woohoo: :woohoo:

Some days it doesn't get much better. Daughter will be flying in from Ca. late tonight. First time to see her in well over a year. Really miss the stinker. Her boyfriend will be coming in later to surprise her, and meet with me and hubby. I have talked with him over the phone and can't wait to meet him. He has already passed the first mom test ( the one where I tell him that I did time for shooting someone and that I can do time standing on my head-oh and by the way what are your intentions toward my daughter). That really separates the wheat from the chaff.

I have been doing so much work on my time off, I hate to go back to work. It rained all day yesterday so I stayed in. I have been looking at property and have one spot scoped out. Hubby and I are looking at it today. It is in Tomball-a small town outside of Houston (hometown of Lyle Lovett). It is affordable and has potential. It also has property next to it that we might buy. It is a good starter property and rural enough. No zoning and the neighbors down the way are a bit trashy, but that is why I want the property next door. A large garden and fence makes for nice insulation.

Well, have to walk the dogs and get hubby up. He must have had some interesting dreams last night. He was talking and shouting in Hindi-that was why I was up so early. Never a dull moment in this household.

Happy hunting and watch out for the bears.

[ozymandius]

30. Good morning, Anne.

:donut: :donut: :donut:
What a marvelous weekend you have planned. Best of luck with the boyfriend's visit!

[AnneD]

34. Thanks......

Hope you enjoy your time with the family. I am sure the lil Oz is having a good time. Does he still believe in Santa-they are so precious at this age.

[Roland99]

40. I kinda preferred comedian Jeff Altman's first greeting of the boyfriend....

something like this...

First boy that comes to the door, *Blam!* shotgun blast. Leave the body laying across the porch. The first boy that has the guts to step *over* the body and ring the doorbell? He's alright.

[AnneD]

46. LOL LOL LOL....

spoken like a true father.

My daughter breaking the news of her first serious beau-the young man visiting us....."Mom, you know I have gone on a lot of first dates, I have gone on some second dates. But you know mom, I have only gone on a hand full of 3rd dates. Mom...I have been dating him for three months now and I think this is serious."

He seems to be as smitten with her as she is with him. I suspect that they are waiting for her graduation next year. Just a hunch. She still has her apartment at the school but she seems to go to LA a lot on the weekends.

His family is from Bermuda and she spent a month this summer visiting them. Of course they loved her. As I said, I think this is serious. He seems nice and respectful and I trust her judgement. We will see what happens.

[Demeter]

21. Breakfast with Jamie (Dimon)

http://www.zerohedge.com/article/breakfast-jamie-dimon

Want to front-run the Fed? If you're Obama's favorite banker, Jamie Dimon, president of JP Morgan Chase, there's no need to parse FOMC statements or obscure speeches by Fed governors. No need to analyze hundreds of Treasury securities to make an educated guess as to just which ones Brian Sack (of the NY Fed) will buy any given week. Even hiring expert networks staffed with ex-Fed officials is unnecessary.


No, if you're Jamie Dimon, you go straight to the top and break bread with William Dudley, ex-Goldmanite president of the NY Fed. It just so happened that Dimon dined thrice with Dudleyover the January 2009 to September 2010 period (plus one conference call), according to a document released by the NY Fed today. And perhaps only coincidentally, these encounters all occurred surrounding major changes in announced Fed policy...


SOURCE LINK
http://english.economicpolicyjournal.com/2010/12/breakfast-with-jamie-dimon.html

[Po_d Mainiac]

36. Prof Black is back to trashing the regulators!

2011 Will Bring More de Facto Decriminalization of Elite Financial Fraud

http://www.huffingtonpost.com/william-k-black/the-role-of-the-criminal_b_802115.html

[Demeter]

22. Were US Auditors Told to Fudge Opinions of TBTF Banks?

http://www.nakedcapitalism.com/2010/11/were-us-auditors-told-to-fudge-opinions-on-tbtf-banks.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

...I’m about as shocked to read this (ACCOUNTING GAME-PLAYING IN UK) as learning that there is gambling in Casablanca. But what is more interesting is seeing that the UK, despite having a banking sector that is bigger in terms of GDP than the US, and hence presumably more powerful, still has processes in place that allow this sort of thing to become public.

By contrast, as McKenna correctly points out, we’ve had no such revelations in the US. She wonders whether accountants here got similar orders guidance from the officialdom. I find it hard to believe they didn’t, given that the Paulson-Bernanke-Geithner troika was working far more fist in glove with the financial services industry than their counterparts in the UK. In addition, it was clear from the outset of the Obama administration that they had decided to cast their lot with the banksters.

Even with the will to turn over some rocks, given the ritualization of Congressional hearings (it isn’t hard for witnesses to obfuscate and run out the clock), I doubt we’d see this sort of dirt information come out. Audit the Fed, one avenue that might have shed some light, was watered down to a data dump of credit extended during the crisis. That’s better than nothing, but vastly short of understanding what was done and why at crucial junctures during the crisis....

[Demeter]

24. Shadow banks, shadow sovereigns

http://ftalphaville.ft.com/blog/2010/11/25/415116/shadow-banks-shadow-sovereigns/

This is not your usual sovereign contagion post.

We’ve argued once before that Ireland’s failed bondholder bailout has unleashed contagion that does not just threaten the eurozone. Sudden illiquidity could also strike banking systems across the core, returning markets to volatility last seen during the late-2008 crisis.

That moment in the market witnessed an intense dollar shortage for European banks, requiring the establishment of central bank swap lines. Trouble reappeared over Greece in May 2010 and dollar swaps were again pressed into service. Interesting to observe the current pressure on euro basis swaps, even if it’s nothing like at levels of the recent past:

AWESOME GRAPHIC PORN AND MASSIVELY MORE AT LINK

[Demeter]

26. Who bankrupted Ireland?

http://golemxiv-credo.blogspot.com/2010/11/who-bankrupted-ireland.html

Now across Europe the great blame game will rumble back into play. Our banks, your banks, their banks, or is it your feckless householders or ours, certainly can't be theirs, they're still doing well in Germany. Expect lots more national stereotypes to be wheeled out for ritual defamation.

So let's ask who it was took a dump in Ireland?

First, the suspects.

Ireland has three big insolvent banks and several other smaller, equally insolvent financial institutions we won't bother to mention by name.

Ireland also has a large number of subsidiaries of European, British and American Banks. These subsidiaries are often registered as Irish and therefore on Ireland's tab not the nation of the parent bank. This often gets forgotten in the excitement. But it is KEY.

Ireland also houses a very large chunk of the world's Special Investment Vehicles (SIV's) which are the shell companies which house trillions and trillions of dollars and Euros and pounds worth of Collateralized Debt Obligations (CDOs). These are what Warren Buffett described as "weapons of financial mass destruction'" And they are in their own way as hard to find and disarm as the ones we had a fraudulent war over. Anyway I digress....

MUST READ

CONCLUSION:

DO NOT allow the bankers to set us against each other as a cover for their crime and guilt.

[DemReadingDU]

32. Golem blog as some really interesting sccop about Europe, n/t

[Ghost Dog]

49. Zerohedge favorite Gonzalo Lira comments:

As I pointed out, Spain is twice the size of Greece, Ireland and Portugal combined—Spain is roughly half the size of Germany—Spain has a fiscal deficit of over 11% of GDP for 2010, and a total debt of over 80% of GDP, data here (I am counting the accumulated debt of comunidades autónomas, which is so far 10.2% of GDP and steadily rising; data here)—Spain has an unemployment of over 20%—

—in short, Spain is trouble.

Not “Spain is in trouble”—that’s obvious, but that’s not my point: Spain is trouble. Trouble for the German banks that own so much of the Spanish debt. Trouble for Germany, which is propping up its insolvent banks (What, you think German politicians are any less craven than American politicians?). Spain is trouble for the European Union, for what a German banking crisis might mean for the EU as a whole and as an institution.

More than anything, Spain is trouble for the European Financial Stability Facility, because Spain is too big to be saved—and there’s really no way to finesse that hard fact.

You know what a lynchpin is? Actually, I didn’t—I had to look it up. According to the dictionary, a lynchpin is “a pin passed through the end of an axle to keep the wheel in position”. Hence the figure of speech: Without a lynchpin, the wheel comes off, and the whole vehicle crashes.

In the case of Europe, the lynchpin can come off awfully fast—think of Ireland. A few impolitic words from Angela Merkel, and suddenly the Irish bond market panics. Suddenly, Ireland is teetering on the brink of insolvency, unable to meet its funding needs. And that was Ireland—all due respect to those wonderful people, but we’re talking a GDP of a paltry $227 billion. Ben Bernanke takes a morning dump bigger than that. What’s Ireland’s $227 billion when compared to Spain’s economy of $1.5 trillion?

Spain: During 2011, Spain will be the flash-point—so you want to keep one eye on Spanish sovereign bond spreads, and one eye on Brussels:

/... http://gonzalolira.blogspot.com/2010/12/lull-before-storm-whats-coming-in-2011.html

(Long article goes on to discuss US tricks and treats in this area, eg: "So . . . a $1.3 trillion shortfall . . . and $1 trillion in money printing . . . Now you get the picture—in 2010, the Federal Reserve successfully began monetizing over 75% of the U.S. Federal government’s yearly deficit.").


Hmm. Spain's GDP nearly half that of Germany (without measuring much of the 'informal economies' of either). Germany's population nearly twice that of Spain. Makes ya think...

[Ghost Dog]

47. Do not allow the bankers... Nor these children at the FT blog

to set us against each other:

[Hotler]

48. Yell it from the mountains

The last line.
"DO NOT allow the bankers to set us against each other as a cover for their crime and guilt."

Were the CDOs and CDS started here and then sold to the UK and Europe, or was it a group effort by the major world banks?

[xchrom]

51. a quick perusal of even a place like DU shows we are divided.

right along the lines of 'political heroes' it seems.

trying not to be impolitic here.

[xchrom]

29. Canada discovers trickle-up economics

http://www.thestar.com/opinion/columns/article/911829--canada-discovers-trickle-up-economics

'There was always skepticism about claims that, as the rich became richer, income would “trickle down” to others. What wasn’t perhaps foreseen was that the trickling would actually be in the other direction, and that it would be more of a torrent than a trickle.

But the evidence is now clear. Over the last three decades, the tables of the rich have overflowed, with barely any scraps falling off. On the contrary, there’s been a massive transfer of income and wealth from Canada’s middle and lower class to the rich.'

[Demeter]

31. A BIT OF HUMOR: Investors wonder: Is the stock market rigged?

http://www.rawstory.com/rs/2010/11/investors-stock-market-rigged/

"A large part of trading has to do with trust, and I don't have it," says Mark Swenson, a 43-year-old plumber from New Hampshire who refuses to buy individual stocks.

"When a stock moves up 10 percent, you don't know why," he added. "We can pretend that everyone has access to the same information, but they don't."

[AnneD]

50. The best you can hope to be.....

is a gnat on the elephants ass.

[Roland99]

39. Why Fed Money Creation Hurts the Poor Population

http://dailyreckoning.com/why-fed-money-creation-hurts-the-poor-population/

And so while quantitative easing to create mountains of new money, and massive government deficit-spending to distribute the money, may do wonders for keeping asset prices up and thus benefit the part of the population that owns inflated financial and housing assets, the Price To Be Paid (PTBP) is higher inflation in consumer prices, which is paid in terms of sheer deprivation, misery and suffering by the many, many poor employed people, the many, many poor unemployed people and the many, many poor unemployable people.

The only hope for these poor people, who insist on electing morons who deficit-spend money which they allow the Federal Reserve to create, thus making their miserable plight worse, is if they manage to squeeze out enough money each month to buy some silver.

But they won’t buy silver, even though most of them can and know they should, and they won’t stop voting for the deficit-spending morons because they don’t know that they shouldn’t, although they should know that they shouldn’t, making their whole sad situation doubly their own fault.

So while there is nothing to be done about the poor since they insist on always making themselves more miserable, those who buy silver every month will not have to worry about such things as poverty, and instead will merrily spend their time whistling a happy tune they call, “Whee! This investing stuff is easy!”

[AnneD]

52. The wealth talk about the death tax...

I refer to it as the estate or (Paris Hilton) tax. But I call inflation the Poor or Unseen tax. It truly hurts the poor hardest of all. Yes, everyone gets a haircut, but the poor end up with a buzz cut!

[Ghost Dog]

72. Yeah. The 'moron' (or 'moran') label is not useful, I'd like to insist.

Smacks of 'liberal elitism', I'd like to suggest, and is counter-productive.

'Propaganda victims' would be a more helpful term, I calculate. Accurate, points the finger at the wall-to-wall propaganda MSM the USA appears to suffer from, and at a compromised education system (for the 'masses' at least), and yet leaves room for, um, some hope and change... sometime somewhere down the road.

[TexasObserver]

53. Looks like my predictions for the Stock Market have come true.

I recall when it was below 11K several months ago predicting in this thread it would rise above 11K and end the year safely above 11K.

I also recall many here scoffing at that and promising to revisit the issue at year's end.

Well, here it is. Tomorrow is the end of the year, and the DOW is above 11.5K.

The collapse of the economy is not near. That's bollocks. The economy is recovering, slowly.



The stock market will be higher at the end of 2011, too, but I'll save that for next year.

Sound economic planning isn't "buy gold, sell stocks, amass ammo, and head for the hills."

[bread_and_roses]

55. And we all know that has translated into increased well-being and security for everyone!

yeah!

Do I need a sarcasm thingy?

[TexasObserver]

57. A recovery is a recovery. I've discussed this concept before.

The worst recession in 70 years is a trench that won't be overcome for many years. But we are in recovery.

Recovery doesn't mean what many want it to mean, never has, and never will.

The problem is some want the word to mean something it doesn't mean.

When the economy is well, it's not in recovery.

[Name removed]

56. Deleted message

Sub-thread removed by moderator. Click here to review the message board rules.

[ozymandius]

58. Reminder: the stock market is not the economy

The averages are merely wallpaper that obscure any nuance in measurements that really mean anything. GDP was up in Q3 by 2.6%. What that 2.6% average stat will not tell you (without some digging) is that the jobs market refuses to grow under these conditions. Productivity remains high. Yet GDP will not accelerate to the point at which sustainable employment gains materialize.

Sound economic footing will remain elusive without robust full-time job creation.

You may also ask the question, "Why would averages rise at the end of the year?" There are a couple of reasons that are rooted in real world experience.

(1) Volume is at an historic low. When trading volume rests at the lowest levels of the year then you will see price volatility. Volatility trends upward at the end of the year with the ridiculous Santa Claus rally.

(2) The markets are irrational.

The numbers we have seen over the past six weeks benefit index traders, some financials and oil speculators.

End of the world? Nah. I will repeat: The benefits of rising averages are a poor indicator of ground-level economic performance. You may recall reports of the folly of oil traders. It is absolutely laughable when oil traders use the stock market to gauge future economic trends like consumption and production. It's even more fun to watch them go broke.

[TexasObserver]

59. Reminder: This is the Stock Market Watch thread.

You don't contest what I said in my post, do you?

[ozymandius]

61. Actually, I do.

You have made a connection between the performance of the stock markets and improving economic conditions. There may be a correlation, but there is no direction in the correlation.

[TexasObserver]

62. Which of my statements in that original post do you disagree with?

Please have the integrity to go line by line of my original post and state whether you agree or not.

I have observed that the stock market is better and that the economy is in recovery. That's true.

Do you dispute that the stock market is better and that the economy is in recovery?

--------------------------------------------------------------------

Here it is, so you can make easy reference to it.

I recall when it was below 11K several months ago predicting in this thread it would rise above 11K and end the year safely above 11K.

True or not?

I also recall many here scoffing at that and promising to revisit the issue at year's end.

True or not?

Well, here it is. Tomorrow is the end of the year, and the DOW is above 11.5K.

True or not?

The collapse of the economy is not near. That's bollocks. The economy is recovering, slowly.

True or not?

The stock market will be higher at the end of 2011, too, but I'll save that for next year.

True or not?

Sound economic planning isn't "buy gold, sell stocks, amass ammo, and head for the hills."

True or not?

[ozymandius]

63. The Salient Points

I recall when it was below 11K several months ago predicting in this thread it would rise above 11K and end the year safely above 11K.

Well, here it is. Tomorrow is the end of the year, and the DOW is above 11.5K.

Congratulations on the call. I am still curious as to your reasoning behind that assertion.

The collapse of the economy is not near. That's bollocks. The economy is recovering, slowly.

Again, how? Do seasonal employment numbers factor into that assessment? What information do you have to suggest that holiday hiring will sustain employment after the seasonal hires have been released?

I am looking at employment data, consumer credit levels, worker productivity, industrial productive capacity, detailed GDP analysis and the metrics examined in the Chicago Fed Economic Activity Index. Aggregate data presents an uneven picture of economic recovery. This "recovery" also appears to be expressed on paper, also known as a "jobless" recovery. Jobless recoveries do not exist. That phenomenon is only a numbers game.

Metrics of little merit to me are stock valuations, seasonally adjusted averages, "core" anything, and rhetorical evidence. Those elements just make good stories.

The rest of your missive is, again, another prediction and cannot be weighed against relevant data until the time when it is released over the course of a year.

[Name removed]

64. Deleted message

Sub-thread removed by moderator. Click here to review the message board rules.

[TexasObserver]

73. Tomorrow I'll make economic recommendations to a board of directors.

It's a large foundation. I'll tell them what I think they should do with their port folio for the next year.

They'll listen, because I've been right for them so many times.

Being paid for economic advice is part of my life.

Good luck with yours, in whatever you do for a living.

[Foo Fighter]

86. Before you do that, perhaps you should take note that it's a

"portfolio" and not a "port folio."

[Po_d Mainiac]

84. U can't talk sense to an ignored Oz.

Those piddly DOW points came at one hellova cost through QE, but you'll never hear that little tidbit mentioned.

YMMV

[xchrom]

60. +1

[DoBotherMe]

68. You are correct!

Unless a person is a member of the top 10% of wealth owners (including stocks) the current economic conditions are going from bad to worse for the rest of us. I and the small engineering firm that I manage would be in real financial straights if I hadn't paid attention to this thread after the telecom market failure in 2001. Thank you everyone from SMW. Dana ; )
http://sociology.ucsc.edu/whorulesamerica/power/wealth.html

[ozymandius]

79. What a great story.

Thank you for saying so.

[mbperrin]

69. How long before it returns to the July 2007 high of nearly 14,000?

Hard for me to see how progress is made by a loss of value of 2000+ basis points in 3-1/2 years, not accounting for inflation, which would account for nearly another 1,000 basis points. Unadjusted, a loss of more than 14% or around 5% or so annually. That's some investment.

At least it is according to the pot-stirrers who have no other product to sell and continue to draw 6% commissions for taking their clients down the garden lane.

Or perhaps you do not think it necessary for investments to actually increase in value to be good ones? Is that what you're saying?
And for growth for 2011, are you saying the market will be at 15,000 or above, because that is what it will need to be to be level with 2007, adjusted for inflation, 14,000 without.

What growth rate do you aim for on your investments? If it's greater than zero, it's certainly not stocks, is it?

Just curious.

[Tansy_Gold]

76. I am curious also, mbperrin. If I may be so bold as to ask ---

First: It seems to me -- and of course I could be totally wrong -- that there is a difference between the "growth" of the DJIA and the increased value of any individual investment or portfolio of investments. Is that not true?

So regardless how "the market" performs -- DJIA, Nasdaq, S&P, whatever -- the investor must actually invest in individual stocks. And this holds true also for what might be termed "aggregate" secondary investors such as mutual funds, pension funds, etc. Or even perhaps hedge funds?? :shrug: I don't know enough about that latter group to know for sure.

But the point is, a rise in "the markets" does not equal and/or guarantee that any individual investor or portfolio will also rise. In times of rising markets, any given stock might drop dramatically, thus losing the stockholders' investment, which they are not able to simply shift to another stock. They've just lost that money. Conversely, in times of falling markets, some stocks may outperform the average, thus bringing profits, or at least potential profits, to those stockholders.

Second: Are there not (at least) two different categories of investors, being on the one hand those who put money into certain investments with the intention of collecting dividends from the profits of well-performing (financially, at least) companies, and those on the other hand who look to make their own profit from the buying and selling of the stock itself? The first category one would expect to comprise those who examine and evaluate the enterprises in which to invest based on the probability of profit distribution over the long term, meaning at least the five to ten years required to see anything in the way of reasonable return on investment.

The second investor category, however, would seem to be made up of individuals whose interest is not in the performance of the company but the performance of the stock. Rather than investors for the long term, they are essentially gamblers, betting that the stock they've purchased has in fact been purchased at a lower price than they can sell it for later, and the sooner they can sell it at a profit the better. Dividends and earnings are far less important to them than making the quick buck off the sale of the stock.

But again, I could be totally wrong about this.

Or I could just be



Tansy Gold

[mbperrin]

82. Hi Tansy-better-than-gold!

I always enjoy your postings here. You make many of the points I agree with and would like for the Observer to consider when he counts the DJIA as a sign of overall financial health.

You are completely correct on all counts. I am too chicken to buy stocks since we got out in 1999, and we left banks behind in 1978. Those super-conservative German-Swiss-Prussian genes cannot be ignored.

I teach economics and one of the thing we do is allow the students to discover how like gambling stocks are and how much more perception counts than reality in valuing most of them most of the time.

Thanks for the super-smart reply!

[ozymandius]

83. mbperrin, I will certainly miss your posts after I'm gone.

The exchange with 'Ignored' earlier today missed the point that you have made so eloquently. There is a schism between the world of economics and that of finance.

An economic argument focuses on the stock market as a pretty daft way to gauge future economic performance. What the hell does the Dow average have to do with productive capacity, unemployment rates, GDP and the like? Not a damned thing.

On the other hand, thinking of the world of finance, how do stock market averages weigh on the real value of individual stocks, index funds and mutual funds and the like? Little to nothing. Currency denominations are the currency of trade. As such, they are subject to value manipulations and the corrosive effects of inflation, as you've said.

In sum, you have deftly shown what can be discerned when one does the math.

[bread_and_roses]

54. Many thanks and good wishes, Ozy, in case I'm absent tomorrow

Surely though we'll see you making a contribution, at least now and then? Hope so, anyway. Best wishes for the New Year to all the SMW and WE crew - the best little salon on DU.

[jtuck004]

65. Some days it's just cold...

Looking over our garden this morning, and realized that when even the windmill is frozen, it's chilly.
Reminds me of our job growth...

Gonna miss ya' Ozy - hope you will still be around to post.

And looking forward to what PBD brings...

[ozymandius]

66. Thank you, jtuck.

I will miss the camaraderie here. But, alas, time to go. PBD will do a fine job.

That is a stunning photo. What's the temperature there?

[jtuck004]

67. It's 25 today, 16 tomorrow,

That windmill has been frozen in position for about week.

[girl gone mad]

70. Underneath the Happy Talk, Is This As Bad as the Great Depression?

I can't really do any reasonable kind of excerpt of this. It's a really good summary of our current woes, including many statistical measures in which we appear to be under-performing the Great Depression era economy.

http://www.nakedcapitalism.com/2010/12/guest-post-underneath-the-happy-talk-is-this-as-bad-as-the-great-depression.html

[bread_and_roses]

71. staggering - but hey, be happy - stocks above 11,000!

this is not the first - and i'm sure won't be the last - such summary i've read, but i find myself slack-jawed every time. But no matter! We are assured that the stock market recovery is all that matters. Wait - did i take the red pill or the blue pill?

[Tansy_Gold]

74. LOL and +11,569.71!!!

:hi:

[ozymandius]

77. Red pill? Blue pill?

I must've missed the reference. Was this something 'Ignored' said?

[girl gone mad]

85. It's from "The Matrix"

Neo has to choose either the red pill to see reality or the blue pill to stay plugged in to the fantasy world, though I may have it backwards.

[RUMMYisFROSTED]

75. +15, -15

Is anybody fooled?

:shrug: