STOCK MARKET WATCH, Thursday, March 10, 2011

[Pale Blue Dot]

Source: du





STOCK MARKET WATCH, Thursday, March 10, 2011

AT THE CLOSING BELL ON March 9, 2011

Dow 12,213.09 -1.29 (-0.01%)
Nasdaq 2,751.72 -14.05 (-0.51%)
S&P 500 1,320.02 -1.80 (-0.14%)
10-Yr Bond... 3.45 -0.02 (-0.49%)
30-Year Bond 4.60 -.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    
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Handy Links - Economic Blogs:
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Handy Links - Government Issues:
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Handy Links - Videos:
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    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

[Pale Blue Dot]

1. Today's Reports

Mar 10 08:30 Initial Claims 03/05 370K 382K 368K
Mar 10 08:30 Continuing Claims 02/26 3750K 3750K 3774K
Mar 10 08:30 Trade Balance Jan -$41.5B -$41.5B -$40.6B
Mar 10 14:00 Treasury Budget Feb -$223B -$196B -$220.9B

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

[Pale Blue Dot]

28. Stocks open lower as unemployment claims rise

Stocks are down sharply after the government reported a rise in new unemployment claims and a jump in the trade deficit.

The Labor Department said new applications for unemployment benefits rose by 26,000 to a seasonally adjusted 397,000 for the week ending March 5. Analysts had expected claims to rise by 12,000.

Separately, the Commerce Department said the trade deficit increased 15.1 percent to $46.3 billion in January, as higher oil prices drove up imports.

Crude is down $1.83 to $102.55 a barrel as Libyan leader Moammar Gadhafi looks to recapture ground from rebels.

http://www.latimes.com/business/la-fiw-markets-20110310,0,4812703.story

[Pale Blue Dot]

2. Oil rises to $105 as Libya crude output drops

SINGAPORE – Oil prices rose to nearly $105 a barrel Thursday in Asia after Libya said its crude production has fallen more than previously estimated amid fresh battles near key oil installations.

Benchmark crude for April delivery was up 41 cents at $104.79 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract lost 64 cents to settle at $104.38 on Wednesday.

In London, Brent crude was up 51 cents at $116.45 a barrel on the ICE futures exchange.

Libya's oil production has been cut to 500,000 barrels a day from 1.6 million since a rebellion against Moammar Gadhafi began last month, National Oil Corp. chief Shukri Ghanem said Wednesday. Ghanem had previously estimated the OPEC nation's output had been reduced by about half.

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

[xchrom]

4. I think we live at the start of 'interesting times' re: oil.

Now that word comes out that the saudi's probably
Can't make up the difference.

[Roland99]

26. A Simple Rule Of Thumb Regarding Oil And How It Impacts The Economy

http://www.businessinsider.com/oil-impact-on-the-economy-2011-2

Worth repeating.

I might even add it to my sig.

[jtuck004]

40. Recessions follow oil price increases

http://wallstreetpit.com/57346-oil-shocks-and-economic-recessions

Wo what happens if you are in a recession people refuse to acknowledge, supported by government funding
that is increasing the "national debt", with 27 million people underemployed, and oil begins to climb?

We are learning...

[tclambert]

51. But the CEO of Exxon Mobil said . . .

that it wouldn't hurt the economy. He thinks rising oil prices are a good thing.

Clearly, his interests and the interests of Exxon Mobil do not coincide perfectly with the interests of the American economy. But try to get a Republican from Texas to admit that.

Oil going up. Bankers getting millions in bonuses. Governors proposing austerity budgets in every state, yet giving businesses big tax breaksn ($1.8 billion here in Michigan, while everybody else is asked to "sacrifice"). Union busting becoming a popular sport. Robert J. Samuelson in Newsweek calls Social Security "Middle Class Welfare." http://www.newsweek.com/2011/03/06/social-security-is-middle-class-welfare.html (Samuelson has been stupidly, stupidly wrong on everything lately.)

With all that going on, it's a tough time to be a working stiff.

[bread_and_roses]

3. First Rec! (waves hi to everyone)

I've been busy - hope all are well and weatherproofed.

[Festivito]

5. Debt: 03/08/2011 14,193,176,753,471.62 (UP 7,007,949,791.15) (Tue, UP a little.)

(Good day.)
Ashes on the forehead.
(Debt under Obama seems to jump up big then drop slowly maybe up a little and down a little for days--repeat.)
= Held by the Public + Intragovernmental(FICA)
= 9,571,514,785,739.56 + 4,621,661,967,732.06
UP 276,984,022.19 + UP 6,730,965,768.96

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 312-Million person America.
If every American, man, woman and child puts in $3.21 THAT'S 1B$, and $3,210.03 makes 1T$.
A family of three: Mom, Dad, Child: $9.63, ABOUT TEN BUCKS for a 1B$ 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 12 seconds we net gain another American, so at the end of the workday of the report, there should be 311,523,392 people in America.
http://www.census.gov/population/www/popclockus.html ON 10/04/2010 04:37 -> 310,403,677
Currently, each of these Americans owe $45,560.55.
A family of three owes $136,681.65. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 20 reports in the last 30 to 28 days.
The average for the last 20 reports is 4,137,797,170.47.
The average for the last 30 days would be 2,758,531,446.98.
The average for the last 28 days would be 2,955,569,407.48.
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$/day.
There were 174 reports in 253 days of Obama's part of FY2009 averaging 7.33B$ per report, 5.07B$/day so far.
There were 249 reports in 365 days of FY2009 averaging 7.57B$ per report, 5.16B$/day.
There were 251 reports in 365 days of FY2010 averaging 6.58B$ per report, 4.53B$/day.
There were 109 reports in 159 days of FY2011 averaging 5.79B$ per report, 3.97B$/day.
Above line should be okay

PROJECTION:
There are 684 days remaining in this Obama 1st term.
By that time the debt could be between 15.1 and 17.7T$.
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)
03/08/2011 14,193,176,753,471.62 BHO (UP 3,566,299,704,558.54 so far since Obama took office.)

FISCAL YEAR DEBT CHANGE, Sep 30 prior year to Sep 30 named year:
(One "* " for each 40B$ reached)
FY1994 +0,281,261,026,873.94 ------------* * * * * * * WJC
FY1995 +0,281,232,990,696.07 ------------* * * * * * * WJC
FY1996 +0,250,828,038,426.34 ------------* * * * * * WJC
FY1997 +0,188,335,072,261.61 ------------* * * * WJC
FY1998 +0,113,046,997,500.28 ------------* * WJC
FY1999 +0,130,077,892,735.81 ------------* * * WJC
FY2000 +0,017,907,308,253.43 ------------WJC
FY2001 +0,133,285,202,313.20 ------------* * * C&B
01-WJC +0,053,598,528,417.78 ------------* WJC 31% of FY, 40% of FY-Debt
01-GWB +0,079,686,673,895.42 ------------* GWB 69% of FY, 60% of FY-Debt
FY2002 +0,420,772,553,397.10 ------------* * * * * * * * * * GWB
FY2003 +0,554,995,097,146.46 ------------* * * * * * * * * * * * * GWB
FY2004 +0,595,821,633,586.70 ------------* * * * * * * * * * * * * * GWB
FY2005 +0,553,656,965,393.18 ------------* * * * * * * * * * * * * GWB
FY2006 +0,574,264,237,491.73 ------------* * * * * * * * * * * * * * GWB
FY2007 +0,500,679,473,047.25 ------------* * * * * * * * * * * * GWB
FY2008 +1,017,071,524,649.92 ------------* * * * * * * * * * * * * * * * * * * * * * * * * GWB
FY2009 +1,885,104,106,599.30 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * B&O
09GWB +0,602,152,152,000.60 ------------* * * * * * * * * * * * * * * GWB 31% of FY, 32% of FY-Debt
09-BHO +1,282,951,954,598.70 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * BHO 69% of FY, 68% of FY-Debt
FY2010 +1,651,794,027,380.00 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * BHO
FY2011 +0,631,553,722,579.90 ------------* * * * * * * * * * * * * * * BHO
Endof11 +1,449,793,136,740.02 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * BHO

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
02/15/2011 +048,146,191,309.44 ------------**********
02/16/2011 +000,114,208,468.26 ------------********
02/17/2011 -011,510,944,063.77 -
02/18/2011 +000,193,465,100.84 ------------********
02/22/2011 +000,575,498,293.73 ------------******** Tue
02/23/2011 +000,604,643,024.49 ------------********
02/24/2011 -006,532,296,295.79 --
02/25/2011 +025,792,712,781.54 ------------**********
02/28/2011 +054,201,582,504.95 ------------********** Mon
03/01/2011 -002,977,641,960.04 --
03/02/2011 +000,044,996,229.28 ------------*******
03/03/2011 +008,400,855,808.94 ------------*********
03/04/2011 +000,116,571,384.45 ------------********
03/07/2011 +000,111,602,744.60 ------------******** Mon
03/08/2011 +000,276,984,022.19 ------------********

117,558,429,353.11 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
http://www.usdebtclock.org/
DUer primer on National debt

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=4762073&mesg_id=4762104

[Festivito]

48. Debt: 03/09/2011 14,182,663,848,364.00 (DOWN 10,512,905,107.62) (Wed, UP a little.)

(Good day.)
House with no keys and a house with an incinerator.
(Debt under Obama seems to jump up big then drop slowly maybe up a little and down a little for days--repeat.)
= Held by the Public + Intragovernmental(FICA)
= 9,572,070,258,391.50 + 4,610,593,589,972.50
UP 555,472,651.94 + DOWN 11,068,377,759.56

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 312-Million person America.
If every American, man, woman and child puts in $3.21 THAT'S 1B$, and $3,209.96 makes 1T$.
A family of three: Mom, Dad, Child: $9.63, ABOUT TEN BUCKS for a 1B$ 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 12 seconds we net gain another American, so at the end of the workday of the report, there should be 311,530,592 people in America.
http://www.census.gov/population/www/popclockus.html ON 10/04/2010 04:37 -> 310,403,677
Currently, each of these Americans owe $45,525.75.
A family of three owes $136,577.25. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 20 reports in the last 30 to 28 days.
The average for the last 20 reports is 4,193,736,729.13.
The average for the last 30 days would be 2,795,824,486.09.
The average for the last 28 days would be 2,995,526,235.10.
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$/day.
There were 174 reports in 253 days of Obama's part of FY2009 averaging 7.33B$ per report, 5.07B$/day so far.
There were 249 reports in 365 days of FY2009 averaging 7.57B$ per report, 5.16B$/day.
There were 251 reports in 365 days of FY2010 averaging 6.58B$ per report, 4.53B$/day.
There were 110 reports in 160 days of FY2011 averaging 5.65B$ per report, 3.88B$/day.
Above line should be okay

PROJECTION:
There are 683 days remaining in this Obama 1st term.
By that time the debt could be between 15.1 and 17.7T$.
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)
03/09/2011 14,182,663,848,364.00 BHO (UP 3,555,786,799,450.92 so far since Obama took office.)

FISCAL YEAR DEBT CHANGE, Sep 30 prior year to Sep 30 named year:
(One "* " for each 40B$ reached)
FY1994 +0,281,261,026,873.94 ------------* * * * * * * WJC
FY1995 +0,281,232,990,696.07 ------------* * * * * * * WJC
FY1996 +0,250,828,038,426.34 ------------* * * * * * WJC
FY1997 +0,188,335,072,261.61 ------------* * * * WJC
FY1998 +0,113,046,997,500.28 ------------* * WJC
FY1999 +0,130,077,892,735.81 ------------* * * WJC
FY2000 +0,017,907,308,253.43 ------------WJC
FY2001 +0,133,285,202,313.20 ------------* * * C&B
01-WJC +0,053,598,528,417.78 ------------* WJC 31% of FY, 40% of FY-Debt
01-GWB +0,079,686,673,895.42 ------------* GWB 69% of FY, 60% of FY-Debt
FY2002 +0,420,772,553,397.10 ------------* * * * * * * * * * GWB
FY2003 +0,554,995,097,146.46 ------------* * * * * * * * * * * * * GWB
FY2004 +0,595,821,633,586.70 ------------* * * * * * * * * * * * * * GWB
FY2005 +0,553,656,965,393.18 ------------* * * * * * * * * * * * * GWB
FY2006 +0,574,264,237,491.73 ------------* * * * * * * * * * * * * * GWB
FY2007 +0,500,679,473,047.25 ------------* * * * * * * * * * * * GWB
FY2008 +1,017,071,524,649.92 ------------* * * * * * * * * * * * * * * * * * * * * * * * * GWB
FY2009 +1,885,104,106,599.30 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * B&O
09GWB +0,602,152,152,000.60 ------------* * * * * * * * * * * * * * * GWB 31% of FY, 32% of FY-Debt
09-BHO +1,282,951,954,598.70 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * BHO 69% of FY, 68% of FY-Debt
FY2010 +1,651,794,027,380.00 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * BHO
FY2011 +0,621,040,817,472.30 ------------* * * * * * * * * * * * * * * BHO
Endof11 +1,416,749,364,858.69 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * BHO

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
02/16/2011 +000,114,208,468.26 ------------********
02/17/2011 -011,510,944,063.77 -
02/18/2011 +000,193,465,100.84 ------------********
02/22/2011 +000,575,498,293.73 ------------******** Tue
02/23/2011 +000,604,643,024.49 ------------********
02/24/2011 -006,532,296,295.79 --
02/25/2011 +025,792,712,781.54 ------------**********
02/28/2011 +054,201,582,504.95 ------------********** Mon
03/01/2011 -002,977,641,960.04 --
03/02/2011 +000,044,996,229.28 ------------*******
03/03/2011 +008,400,855,808.94 ------------*********
03/04/2011 +000,116,571,384.45 ------------********
03/07/2011 +000,111,602,744.60 ------------******** Mon
03/08/2011 +000,276,984,022.19 ------------********
03/09/2011 +000,555,472,651.94 ------------********

69,967,710,695.61 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
http://www.usdebtclock.org/
DUer primer on National debt

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=4763554&mesg_id=4763581

[Demeter]

6. The Myth Of The Exploding US Money Supply

In recent weeks some hyperinflationists have succumbed to the reality that QE2 isn’t really adding net new financial assets to the private sector – it is indeed just an asset swap. But this hasn’t stopped them from claiming that QE2 directly results in an exploding money supply. This convoluted thinking claims that QE is directly funding government spending (as if the US government would have stopped spending money and folded up shop without QE2). So now the theory is that QE is really resulting in excess of $1.5T in new money in the form of deficit spending. This is flawed for reasons I have previously explained, but let’s not theorize about the money supply – let’s allow the facts to speak for themselves.

Over the years many have been quick to cite the monetary base as the direct transmission mechanism that would lead to the great hyperinflation. We all know the story – the Fed’s balance sheet explodes, the monetary base shoots higher and money starts flowing out of bank vaults like a volcanic overflow. But regular readers are all too aware that the monetary base has no correlation with the broader money supply. The reasoning is simple – the money multiplier is a myth. So, it doesn’t matter how many apples (reserves) the Fed puts on the shelves. It doesn’t result in more apple sales (loans). Banks are never reserve constrained. The explosion in reserves and continuing decline in loans makes this crystal clear. The Fed can continue to stuff banks with reserves and unless we see a substantive increase in lending the expansion of the monetary base will continue to be insignificant.



But what about M2? Isn’t it also exploding higher now? Not really. In a recent article Erwan Mahe, an asset allocation and options strategist with OTCexgroup, posted this excellent chart comparing M2 growth across the big three economies. He said:

“As you can see in this graph, China literally allowed its money supply to skyrocket, compared to that of the U.S. or the eurozone, with annual growth averaging +17.4% between 1996 and 2008, which compares to +7.1% in the eurozone and +6.3% in the United States.

Above all, since the beginning of 2009, this divergence has actually widened, despite the Fed’s QEs and 0% interest rates, since Chinese M2 has been growing at 26.6% per annum (!), versus +3.5% in the U.S. and +2.3% in the eurozone.

So, I wonder, is Bernanke truly responsible for the hike in world commodity prices and the ensuing popular upheavals?”



The story here couldn’t be more self explanatory. The US M2 money supply is simply not expanding anywhere close to its historical rate. The only country where the M2 money supply is seeing any sort of substantive growth is in China. And so it’s not surprising to see the combination of commodity hungry China and enormous money supply growth result in higher commodity prices. While I don’t think it’s incorrect to blame some speculative aspect of this rally on the Fed it is entirely incorrect to blame the Fed for the commodity rally due to their “money printing”. The fact is, the USA is not expanding the money supply at an alarming rate. China controls their own money supply. If they desire to print money in order to maintain their flawed currency peg then that’s a policy only they can control. Blaming the Fed for China’s flawed monetary policy is not even remotely fair.

Although the USA stopped issuing M3 we can still measure M3 through various independent sources. Hyperinflationists are often quick to point out Shadow Stats when anyone cites the CPI. Ironically, according to their data the M3 money supply is still shrinking at an annualized rate:



So yes, the US government is running a massive $1.5T deficit, however, by any metric of money supply we can see that this is barely offsetting the continued de-leveraging that is occurring across the US economy. We are certain to see higher rates of inflation in 2011 (especially if oil prices surge higher), however, it is not an accurate portrayal of reality to conclude that the USA is “printing money” uncontrollably and flooding the world with dollars that will lead to hyperinflation. That is simply not the case and the data speaks for itself. At best, we are barely printing enough to offset the destruction of de-leveraging….

----------

Read more: http://www.businessinsider.com/the-myth-of-the-exploding-us-money-supply-2011-3?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+clusterstock+%28ClusterStock%29#ixzz1GCJhVlp1

[Po_d Mainiac]

57. The chairsatan couldn't have said it better..n/t

[Demeter]

59. THE THING IS...

Does this constant flood of money prevent a proper deleveraging? Does it merely keep the balloon from shrinking, regardless of the size of the puncture?

And all the instruments of fraud are busy at work. Still.

[Po_d Mainiac]

63. Deleveraging is the myth..n/t

[Demeter]

7. Banks Beef About Fraudclosure Settlement As Stocks Rise on the News

http://www.nakedcapitalism.com/2011/03/banks-beef-about-fraudclosure-settlement-as-stocks-rise-on-the-news.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

I’ve pointed out how effective a non-negotiable posture can be, at least until the other side pulls out its ammo or threatens to walk from the deal. Most people in negotiations go on the assumption that the other side is reasonable or at least sincere (even if sincerely deluded) and will offer concessions on the assumption the other side will reciprocate.

The poster child of the usual outcome of offering concessions to a party who is non-negotiable is can be summarized in one word, as in “appeasement” circa 1939. And the ridiculous part is that the banks are being allowed to cop a ‘tude when the other side holds all the cards.

Let’s get this straight: this “settlement” should not be a negotiation. Virtually all the items in the 27 page outline of mortgage settlement terms that was leaked yesterday simply restates existing law or existing contractual obligations. If the officialdom wants to rely on mechanisms beyond the courts (since some judges are more pro-bank than others, which can produce the dreaded disease of “uncertainty”), the same results could be achieve by rulemaking without regulators or state attorneys general providing any releases from legal liability to the banks.

As banking/mortgage expert Josh Rosner said in an e-mail to clients:

Very high level sources within the CFPB point out that every item in this AG proposal could be required of servicers by CFPB rule-making. This begs the question, why release servicers and banks from claims and tie state Attorneys General for items that can be had free?

Following on that point, Iowa AG Tom Miller has apparently been unwilling to discuss the substance (even with the AGs) of the releases of claims he is asking the AG’s to sign onto. From the term sheet is seems that it is likely he is seeking to release claims not only related to robosigning but to other servicer practices and likely to front end assignment and underwriting issues.

The White House has supposedly begun to assist Miller in an arm twisting campaign to pressure state AGs to sign onto the agreement and release claims. We have heard that President Obama supposedly had a private meeting with Tom Miller and at least one Democrat AG who has been on the fence regarding the deal. For the White House to pressure state representatives appears to blur the lines between federal and state interests.

But instead of recognizing that their days of rule-breaking might be coming to an end, servicers are complaining bitterly, as Kate Berry tells us in an American Banker article:

Privately, mortgage servicers are fuming.

The proposed settlement agreement with state attorneys general and federal regulators, the companies will tell you, is unfair and impracticable.

I’ll spare you several paragraphs of the “but they were deadbeats and no one was hurt by robo-signing and all our foreclosures were warranted.” Well, if you normally operate as judge, jury, and executioner, and it’s too costly for borrowers to counteract predatory servicing, in your little self-referencing world, everything will look hunky-dory and challenges to your authority will be deemed to be improper and unwarranted. For borrower to fight “servicer driven foreclosures” on the issue of erroneous charges and the impermissible fee pyramiding requires hiring costly expert witnesses. That’s something beyond the reach of broke borrowers. So they fight the cases based on issues of standing, which allows the banks to preserve the myth that their records are always accurate. Estimates I’ve gotten from attorneys fighting foreclosures of how many cases they handle are the result of servicer driven foreclosure ranges from 50% to 70% (note that people who fight foreclosure more often than not feel they are the victim of origination or servicing abuse, and they want a mod, not a free home).

The interesting next bit is that Berry undermines the banks’ biggest excuse for not giving mods (emphasis ours):

Lawyers for the servicers maintain that the proposal does not distinguish between loans a bank services for itself and a loan it services for others. And servicers insist they don’t have the authority under the pooling and servicing agreements governing securitizations to do a great deal of what the proposal calls for them to do.

The servicers say they are not authorized by PSAs to make principal reductions on loans held in private-label securities, as the draft settlement calls for them to do, so the companies argue it is unclear if a proposed government settlement would override such contracts.

Industry lawyers are saying the AGs are “shooting the messenger.” But the industry has been pinning the blame for the glacial pace of loan mods on the alleged straightjacket of the PSA for several years now. And when pressed, officials quietly acknowledge that no one at a servicer ever goes back to the investors asking for authority. (It’s also worth noting that the regulators’ term sheet does try to address the issue. If a borrower requests a modification and the servicer believes the PSA prevents one, the servicer must still perform a net present value test and, when that test indicates a mod would be less costly than foreclosure, present that result to trustees or other authorized parties to obtain consent for a modification.)

Some PSAs do prohibit mods, some limit them, and some have no restrictions. The fact that the industry has never mad any effort to reduce principal is due to two reasons. First, their fees are set as a percentage of outstanding principal, so a principal mod works directly against their economic interests. Second, as we have discussed before, writing down a first mortgage would require a writedown of a second mortgage, and banks usually hold seconds on their own books. That writedown would be a hit to capital.

But it appears investors think this settlement is a great deal. And it is. Even if the banks wind up incurring the dreaded $20 billion among them and get a broad waiver from liability (not private suits, but regulators and AGs are far more logical parties to pursue some actions than others), this will be a steal.

As Barry Ritholtz pointed out:

Today’s bank rally lets you know exactly what the Street thinks about the proposed mortgage settlement. The big up could reflect the belief that it is a giveaway/bailout, and lets the banks get off scot-free from their criminality.

[Demeter]

8. Tom Adams: Fraudclosure Settlement Largely Repeats 2003 FTC Servicing Settlement

http://www.nakedcapitalism.com/2011/03/tom-adams-fraudclosure-settlement-largely-repeats-2003-ftc-servicing-settlement.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Back in 2003, Fairbanks Capital billed itself as the largest servicer of subprime mortgages. It was also a stand alone servicer, in that it was not in the business of lending.

In a high profile case within the mortgage industry, the Federal Trade Commission brought an action against Fairbanks for violating the FTC Act, the Fair Debt Collection Practices Act, the Fair Credit Reporting Act, and the Real Estate Settlement Procedures Act (RESPA) . Fairbanks was accused of a host of improper servicing activities that will sound remarkably familiar to anyone following the foreclosure and servicing issues in today’s mortgage markets. Among the transgressions, Fairbanks was alleged to have:

-failed to post payments in a timely manner, resulting in additional late fees or interest,
-charging for forced place insurance,
-assessed improper fees, such as for attorneys, service, appraisals, FedEx,
-misrepresented the amounts owed by borrowers,
-submitted misleading or false information to credit reporting agencies,
-failed to report disputed charges to credit reporting agencies,
-failed to respond to borrowers written requests for information or investigation into charges, and
-failed to make timely payments of escrow funds for insurance and taxes.

The FTC intended the settlement with Fairbanks to provide guidance for the mortgage servicing industry for the boundaries of acceptable business practices for the treatment of borrowers, deadbeat or otherwise. The case introduced the notion of “predatory servicing” to an industry that had been previously more familiar with the notion of predatory lending. Following the settlement, mortgage servicers developed best practices based on the deal terms and, for a few years, it appeared that servicers generally followed them.

Roughly eight years later, the state Attorneys General are working on a settlement that covers remarkably similar ground as the Fairbanks settlement. In 2003, Fairbanks was enjoined from various activities, and the settlement terms included: SEE LINK

-requiring the servicer to accept partial payments,
-requiring the servicer to apply borrowers payments first to interest and principal (ie a provision against fee pyramiding),
-prohibiting forced place insurance when the borrower already has insurance,
-prohibiting unauthorized fees to be charged to the borrowers, including continuing to charge late fees after foreclosure has been commenced,
-requiring the servicer to acknowledge, investigate and resolve consumer disputes in a timely manner,
-requiring the servicer to provide timely billing including itemization of fees charged,
-prohibiting the servicer from initiating foreclosure unless they’ve confirmed the borrower’s delinquency and no disputes remain outstanding,
-prohibiting the servicer from piling on late fees,
-prohibiting the servicer from enforcing certain forbearance agreements,
-prohibiting the servicer from violating the Fair Debt Collection Practices Act, Fair Credit Reporting Act and RESPA,
-requiring the servicer to correct wrongly classified accounts and credit reports, and
-requiring the servicer to audit and monitor its practices to ensure compliance with the settlement

In addition, the servicer was fined $40 million, which was used to establish a fund for harmed borrowers, and Fairbanks’ CEO and founder was fined $400,000 (and he was fired from the company).

Despite the tough regulatory enforcement action taken by the FTC back in 2003, many of the same “predatory servicing” practices have made a comeback. How likely are they to return again after the settlement put together by the attorneys general, which is less punitive than the FTC were in 2003, goes through?

[xchrom]

16. IMHO -- all of those people should go to jail just for creating such convoluted horse shit.

i read it and i re-read it and i still don't understand it.

[hamerfan]

22. That's how they want it,

xchrom. Put out crap reports with enough gobbledygook to confuse even the most astute. Mission Accomplished! :crazy:

[xchrom]

24. ...

:spray: very true!

[Demeter]

9. BofA “Bad Bank” for Legacy Assets: Will This Eventually Be First Use of Dodd Frank Resolution Power?

http://www.nakedcapitalism.com/2011/03/bofa-bad-bank-for-legacy-assets-will-this-eventually-be-a-first-use-of-dodd-frank-resolution-powers.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

In a move not noticed much three weeks ago, Bank of America announced that it was segregating its crappy mortgages into a “bad bank”. It got more attention today by virtue of being discussed long form in an investor conference call (see related stories at Bloomberg and Housing Wire).

The use of a “bad bank” is strongly associatied with failed institutions. Some of the big Texas banks that went bust in the 1980s (Texas Commerce Bank and First Interstate) used “good bank/bad bank” structures to hive off the dud assets to investors at the best attainable price, and preserve the value of the performing assets. The Resolution Trust Corporation, the workout vehicle in the savings and loan crisis, was effectively a really big bad bank. The FDIC is (and I presume was) able to sell branches and deposits pretty readily; the remaining bad loans and unsellable branch operations reached such a level that the FDIC was forced to go hat in hand to Congress and get funding while it worked out the dreck. A similar structure was used in in the wake of the banking crisis in Sweden in the early 1990s.

I am told by mortgage maven Rosner and others that this move is not meant as a legal separation, but a mere financial reporting measure, so that BofA can declare, “See, we do have this toxic waste over here, but we are chipping away at it and we’ll have that resolved in some not infinite time frame” (the current talk is 36 months) “and look at how the rest of the bank looks pretty good!.” So I may be accused of being cynical, but I read more into it than that. One distinction I like to make is between “stated truth” and “operative truth”...As we all know, shareholder presentations are a realm where stated truths are used routinely to mask operative truths. So the question is: can we infer the operative truths behind the BofA move?

What is striking is the tension between Bank of America saying that this is a measure designed provide more transparency to investors and put dedicated resources on a festering problem to get it resolved versus the specific and loaded terminology they used to describe it, “good bank/bad bank”. Normally, you’d assume that an investor presentation by a big public would be a deliberate affairs. But as Chris Whalen said to me by phone, “I wouldn’t assume that the people at Bank of America are being any more logical than they have ever been. They are just making this up as they go along.”

MORE AT LINK

[Demeter]

10. US budget talks turn more heated

The fight over the US budget intensified, as two competing proposals to fund the government until the end of September were rejected in the Senate and lawmakers traded heated accusations

Read more >>
http://link.ft.com/r/DHGUVV/LQ4XAM/IEP5S/V19XBS/FX01MM/7V/t?a1=2011&a2=3&a3=10

[Demeter]

11. Brics becoming billionaire factory

Rapid economic growth in emerging markets is driving personal wealth in the Brics - Brazil, Russia, India and China - as the number of billionaires in those countries is quickly closing in on the US and has surpassed Europe

Read more >>
http://link.ft.com/r/DHGUVV/LQ4XAM/IEP5S/V19XBS/GKCL4Y/7V/t?a1=2011&a2=3&a3=10

NOW, THAT'S JUST WRONG.

[Demeter]

12. Tchenguizes arrested in Kaupthing probe

Investigation into collapse of Kaupthing, the Icelandic investment bank, targets high-profile entrepreneurs with dawn raids in London and Reykjavik

Read more >>
http://link.ft.com/r/KC2844/M9WXT2/3CWTA/72HN2I/V1EMNR/82/t?a1=2011&a2=3&a3=10

[Demeter]

13. Pimco cuts US Treasuries holdings to zero

Bill Gross warns ‘yields may have to go higher to attract buying interest’ as the world’s biggest bond fund cuts its holdings of US government-related debt

Read more >>
http://link.ft.com/r/KC2844/M9WXT2/3CWTA/72HN2I/5CUQ8L/82/t?a1=2011&a2=3&a3=10

[TalkingDog]

18. I was going to post this.

I'm not fluent in "financial", but I know "rats deserting a sinking ship" when I hear it.

[Demeter]

29. We Have Gotten This Signal Every Day This Week

I'm waiting for Geithner and Bernanke to bail....

[Demeter]

14. JPMorgan highlights leverage anomaly

JPMorgan reports that hedge funds are more cautious on leverage than US banks amid debate sparked by criticism of the role played by hedge funds and other market investors

Read more >>
http://link.ft.com/r/KC2844/M9WXT2/3CWTA/72HN2I/18FDTN/82/t?a1=2011&a2=3&a3=10

[DemReadingDU]

15. anybody have a good toon today?

[Tansy_Gold]

17. everything's too depressing n/t

[TalkingDog]

20. here's something to fit the mood

[Roland99]

23. not related to the markets but.....

[Demeter]

32. Oliphant, Perhaps?

http://imgsrv.gocomics.com/dim/?fh=ceb91d126ece756d4f863d4dada19835&w=750.0

http://www.gocomics.com/patoliphant/2011/03/09/

http://imgsrv.gocomics.com/dim/?fh=d75188942f1edbb4a103979f4b82d62f&w=750.0

http://www.gocomics.com/patoliphant/2011/03/08/

[Hugin]

39. Oliphant is always the ticket for me.

:)

:thumbsup:

[Roland99]

19. Index Futures - Who pissed in the markets' Wheaties?

S&P 500 1,311.00 -4.70 -0.36%
DOW 12,125 -49.00 -0.40%
NASDAQ 2,309 -23.25 -1.00%

[xchrom]

21. libya?

and the fact that the saudis can't make up the difference.

[Roland99]

25. looks like jobs and trade data

http://www.marketwatch.com/story/us-stock-futures-head-lower-after-jobs-and-trade-data-2011-03-10?dist=beforebell

Oil inventories were surprisingly up the other day (not that that really matters to the greedy and the speculators)

[Demeter]

30. The fact that the Saudis Are Losing Their Kingdom

You don't need a weather man to know which way this wind is blowing.

[Fuddnik]

33. Is there anyone more deserving?

I have a friend who spent 2 years over there with her husband. She's a very liberal, anti-death penalty, progressive activist.

She says if there's one place on earth that needs to be turned into glass, it's Saudi Arabia.

[xchrom]

37. it's gonna be riveting to see what the hell happens there. nt

[Fuddnik]

27. Somebody shit in the punch bowl.

Where's Tansy?

Dow -217 so far.

[bread_and_roses]

35. I'll say it -

Burn, baby, Burn!!!!!!

though I notice it's creeping back since you posted

[MilesColtrane]

61. Tomorrow, March 11th - The first, so-called, "Day of Rage" in Saudi Arabia.

[Fuddnik]

31. When in doubt......

[Demeter]

34. Such Good Doggies!

Sara looks like she's full-grown, already.

[Demeter]

36. Roubini Sees Double Dip for Advanced States If Oil Hits $140

http://www.bloomberg.com/news/2011-03-08/roubini-says-oil-prices-at-140-may-result-in-double-dip-in-some-nations.html

Nouriel Roubini, the economist who predicted the global financial crisis, said an increase in oil prices to $140 a barrel will cause some advanced economies to slide back into recession.

Underlying how fragile the global economic recovery is, Roubini said the European Central Bank may be making a mistake by raising interest rates “too soon” when debt-ridden countries on the euro region’s periphery struggle to restore the competitiveness of exports.

“If you had the oil price going up to where it was in the summer of 2008, at $140 a barrel, at that point some of the advanced economies will start to double dip,” he told reporters in Dubai today. “In the U.S., where growth is accelerating fast, a 15 to 20 percent increase in oil prices, there won’t be double dip, but growth reaching a stalled speed again.”

Popular revolts sweeping the Middle East and North Africa, home to more than half of the world’s proven oil reserves, have pushed Brent crude-oil prices close to $120. Goldman Sachs Group Inc. raised its forecast for Brent crude in the second quarter of the year to $105 a barrel amid fighting in Libya between Muammar Qaddafi and rebels seeking to end his four-decade rule...

I REALLY THINK WE ARE PAST THE POINT OF NO RETURN, AND THE ONLY WAY OUT IS FORWARD INTO REAL CHANGE EVERYBODY CAN BELIEVE IN, STARTING IN DC...

[mrdmk]

38. K & R, at this moment it looks like someone let the air out of the gasbags representing Wall Street

:shrug:

DOW: -160.56

OPPSSEY

[Fuddnik]

41. Piss my pants, roll in the floor. JOKE OF THE DAY!!!

I'm going to see Lewis Black tonight, but I don't think he can top this guy.

http://tpmdc.talkingpointsmemo.com/2011/03/barton-free-market-oil-subsidies-necessary-to-keep-exxon-from-going-out-of-business.php?ref=fpblg

Barton: Govt Subsidies Necessary To Keep Exxon From Going Out Of Business


Check out this interview of Rep. Joe Barton (R-TX) -- he of apologizing to BP fame -- by ABC on Wednesday. Pressed repeatedly by Jon Karl to stake out a position on tax credits enjoyed by offshore oil companies, Barton argued that the subsidies represent equal treatment, and are required to keep the companies like Exxon-Mobil from going out of business.

"Over time if you put so many disincentives against any U.S. manufacturing or production company, or oil and gas exploration company, they'll go out of business," Barton said.

Barton, perhaps the oil and gas industry's staunchest support on Capitol Hill, says the subsidies for the industry should remain unchanged "so long as you believe that you believe in the free market capitalist system and they should be headquartered in the United States."

Democrats have proposed eliminating the oil and gas subsidies as part of a deficit reduction and spending cut package. The White House estimates that repealing the tax credits would save about $46 billion over 10 years.

Republicans, and some Democrats, have rejected that proposal.

Watch the interview:

[tclambert]

53. Save $46 billion over ten years? Isn't that Exxon's profit for ONE year?

How I loathe Exxon Mobil.

[Roland99]

56. Well, hell...$46billion buys a crapload of "free market capitalism"!

[TalkingDog]

42. Fuddnik your doggies are too sedate for today's market. Here's today's Market Doggie avatar

[Fuddnik]

43. I never saw a Meth Lab before!

Just yellow, black and chocolate.

[TalkingDog]

49. Your visual guide to: Lab Breeds

[tclambert]

45. "Jus' lemme at that groomer. Jus' lemme at 'im."

or b) "Who stole my pants?"

[DemReadingDU]

47. That is one scary dog!

[Roland99]

55. Dude! Holy crap! That's almost the exact image of some weird creature that was in a dream of mine!

some weird thing with long, teeth that stuck out forward rather than down, though.

[Roland99]

44. 3:35pm - Ain't nobody happy

Dow 11,985 -228 -1.86%
Nasdaq 2,699 -53 -1.93%
S&P 500 1,295 -25 -1.90%
GlobalDow 2,141 -42 -1.91%
Gold 1,412 -17 -1.21%
Oil 102.63 -1.75 -1.68

[DemReadingDU]

46. but will the DOW close above 12,000?

[TalkingDog]

50. unless something changes, the magic 8 ball sez:

[tclambert]

52. That's a no. No, it did not. 11,984

But gold and silver are down today, too. I thought if stocks take a beating, gold and silver usually rose.

[Roland99]

54. Like I said...ain't nobody happy.

[maddogesq]

60. This being a new progressive investor stuff can be heartbreaking.

I had to bail on one of stocks today because of bad news in Euroland.

http://www.pv-tech.org/news/ecd_expects_financial_hit_production_slowdown_due_to_french_italian_solar_p

It seems the French and Italian governments are cutting their perks for solar, and this wonderful Michigan company sez they are going to reduce their production this quarter by half. I feel heartborken, but this stock dropped another 73 cents after hours.

My Michigan heart sez stay in, but my head took over and I sold the stock. I'll throw it into my quiet bond fund. Booooooring.

Maybe I should just pull it all and put it into the savings, or stuff it under a mattress.

[Demeter]

58. The Fed's Credit Report; No Light in the Tunnel By Mike Whitney

http://www.informationclearinghouse.info/article27646.htm

On Monday, the Federal Reserve released its Consumer Credit Report which showed that consumer credit rose at an annual rate of 2.5% in January. That might sound impressive, but things are not what they seem. Non-revolving credit increased at a rate of 7% per anum, while revolving credit decreased at an annual rate of 6.5%. So, people are taking out more loans, but keeping their credit cards tucked away in their wallets. But there's more to this story than meets the eye, and it's important, because economists monitor credit expansion closely to see how the economy is doing. You see, when wages stagnate--as they have for the last 30 years---the only way that working people can increase their spending is by borrowing. And since consumer spending is roughly 70% of GDP, if consumers don't borrow, then the economy doesn't grow.

So, what's in the report that's so disturbing?

Well, for one thing, the two main areas of improvement are auto loans and student loans. And, both sectors are built on foundations of sand. After all, the reason that auto sales are booming is that the big car dealers are giving-away-the-farm to people with poor credit. As Autonation's President Michael Maroone said last week on the Nightly Business Report:

"The big driver of the recovery in 2010 was the restoration of credit. The change in 2011 is we`re now seeing an improving environment for sub-prime. So last year prime and near prime were more normal and this year we`re starting to see the sub- prime segment come along and that`s very important for our industry." (The Nightly Business Report)

So, we're back to "Square 1", right? GM is offering "72 months zero percent financing" to people with dodgy credit. And then the dodgy loans are being chopped up, glued together, and sold to as bonds to "yield seeking" institutional investors around the world. That's the way the new financial system works, and that's why the system broke down when investors tried to ditch these crappy bonds in the autumn of '08. It triggered a run on the shadow banking system that led to worst financial crisis in 70 years. Now car dealers are back for a double-dip reviving subprime loans to inflate another bubble.

The uptick in auto sales has nothing to do with "organic demand" for autos. That's baloney. It's about getting anyone who can fog a mirror to sign on the dotted line so the contract can be sold to gullible investors looking for higher yield.

Even so, sales did increase on the month, so, technically speaking, there was a boost in credit. The question is whether subprime auto lending is a sign of recovery or not? The answer is "No".

The other area of nonrevolving credit that improved was student loans, which basically represented all of the increase in non-revolving credit aside from auto sales. Think about that for a minute. In other words, the commercial banks, finance companies, credit unions, savings institutions, nonfinancial business and pools of securitized debts all barely squeaked-by or lost ground in January. That's amazing. Virtually every area of non-revolving credit is still flat on its back a full 30 months after Lehman Bros collapsed except for student loans. And the media tries to spin this as good news?

The credit issued via student loans soared from $317 billion to $342 billion from December to January, a $25 billion windfall in just one month. But, as we pointed out in an interview with Professor Alan Nasser, the student loan business is the biggest swindle of all. Bigger than subprime by many orders of magnitude. Here's an excerpt from the interview:

MW--Is it fair to say that the student loan industry is a scam that targets borrowers who will never be able to repay their debts?

Professor Alan Nasser---It's as fair as fair can be....How many of these students are subprime borrowers? That is, how closely do student loans resemble junk mortgages? The answer hinges on three factors: how these loans are rated, how likely the borrower is to repay, and the default rate on student loans.

The ratings of student loans are supposed to reflect the "health" of those loans, defined as the likelihood that the borrowers will default.....In September 2008, then-Secretary of Education Margaret Spellings announced in a news release that default rates on federal loans were "historically low": only 5.2 percent of recent grads were in trouble. Spellings used the cohort-default rate to arrive at this figure. But the Department's Inspector General Office employed a more realistic method in its 2003 audit, which calculated lifetime risk. It estimated that over their lifetime between 19 and 31 percent of college freshmen and sophomores would default on their loans (depending on the type of loan and when it was taken on). For community college students, the prospects were grimmer still: between 30 and 42 percent were expected to default. And the future was most discouraging for students at for-profits: between 38 and 51 percent were anticipated to default.

You can see that the default rate among student borrowers is expected to be higher than that for subprime home mortgages."

Repeat: A default rate of 51%. This is predatory lending writ large.

.....................
Don't believe the "Happy Day's Are Here Again" blabber. The country is still in the throes of a severe multi-year depression. The Fed's Credit Report just provides more proof.

[hamerfan]

62. Joke Time!

A public union employee, a tea party activist, and a CEO are sitting at a table with a plate of a dozen cookies in the middle of it. The CEO takes 11 of the cookies, turns to the tea partier and says, 'Watch out for that union guy. He wants a piece of your cookie.'