STOCK MARKET WATCH, Friday June 26

Source: du

STOCK MARKET WATCH, Friday June 26, 2009

Bush Administration Officials Under Indictment = 2
Financial Sector Officials Under Indictment = 0
Financial Sector Officials In Prison = 2

AT THE CLOSING BELL ON June 25, 2009

Dow... 8,472.40 +172.54 (+2.04%)
Nasdaq... 1,829.54 +37.20 (+2.08%)
S&P 500... 920.26 +19.32 (+2.14%)
Gold future... 939.50 +5.10 (+0.55%)
10-Yr Bond... 3.54 -0.14 (-3.91%)
30-Year Bond 4.34 -0.09 (-2.03%)

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

Market Conditions During Trading Hours

GOLD, EURO, YEN, Loonie and Silver

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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

Risk Trade Under Pressure
BY DANIELLE PARK

This week the risk trade continues to be under attack with the US dollar strengthening against other more emerging economies. As I have pointed out a few times in the past couple of months, the over-exuberance in emerging markets, commodities and their currencies, has been primarily speculation against the US dollar and not in response to increasing global demand or economic expansion. These sentiment driven speculations can be wild and reckless; capital protective strategies are needed.

A few key themes are slowly seeping into the collective consciousness at this point:

1. A flood of bonds for sale has driven existing bonds prices down and bond yields up over the past few weeks. This is pushing up rates across the curve.

2. Mortgage rates have followed suit and ballooned out. The Freddie Mac measure of U.S. 30-year mortgage rates shows that there has been a sharp 77 basis point increase in rates over the past three weeks, reaching a level of 5.59%. Other measures suggest an even larger increase. This is the highest level since November of last year.

3. Rate pressures have been equivalent to a 133bps rate hike by the Fed in the US and a 20bps rate hike by the BOC in Canada. The gap between the fed funds rate and the 30-year mortgage rate is now huge, with the release of the June data it will rise back towards record-high territory of around 5.39%. As recently as May 2007 it was less than 1.00%. So while fed fund rates are at record lows of just 0.00-0.25%, mortgage rates have managed to very significantly decouple from the central bank’s actions. This has effectively removed a significant portion of the stimulus efforts for recovery that the governments have been working to implement.

4. Although rates still may seem relatively low on a historic basis, it is the absolute increase in rates that has the hardest impact on over-levered companies and people. A loan rate of 5.6% may sound low, but not if you were levered to the max when rates spreads were 1%. It amounts to more than a 500% increase in carrying costs.

5. The next wave of mortgage resets and delinquent commercial loans are about to take another swipe at corporate earnings both for banks and most other companies. It’s very hard for any sector to escape the depth and breadth of this broad recession.

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

and it says the Fed is screwed. But we knew that. The govt. should have bought those mortgages off the banks when it had some money...instead of just a gift to the banksters.

08:30 Personal Income May
Briefing.com 0.2%
Consensus 0.3%
Prior 0.5%

08:30 Personal Spending May
Briefing.com 0.3%
Consensus 0.3%
Prior -0.1%

08:30 PCE Core May
Briefing.com 0.2%
Consensus 0.1%
Prior 0.3%

09:55 Mich Sentiment-Rev Jun
Briefing.com 68.8
Consensus 69.0
Prior 69.0

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

U.S. May consumer spending up 0.3%
8:33am Today

U.S. May incomes up 1.4% on stimulus checks
8:31am Today

just wait 'til they get the bills!

Here, this Bloomberg article appears to contradict itsef:


But consumers are not really spending as much as they are paying down debt. There was a lull in credit card defaults due to the stimulus and tax return payments from Treasury. That is not the same as wages and additional stimulus outflows from people spending a portion of what they earn.

This article has forced jollity naïveté written all over it.

Data showed that while consumer spending and income both rose in May as the government stimulus spread through the economy, much of the money was being stored away. Savings jumped to a record annual rate of $768.8 billion, the highest level since record keeping began in 1959.

/... http://www.reuters.com/article/hotStocksNews/idUSTRE5501YF20090626

First rec: I haven't done that in a long while!

How did you like Bernanke's performance in Congress yesterday? What a waste of time.

:donut: :donut: :donut:

I missed the live Bernanke performance, unfortunately. The accounts I've read create a picture that leaves me thinking, "what the hell else was he going to say?" I never thought that he would have hand delivered signed confession outlining his role in the Merrill Lynch debacle. He denied everything. I have a glimmer of hope that he perjured himself.

What did you make of it?

so they could "look" like they were doing something useful. If they really wanted to make a difference, there would have been some significant data-gathering besides a few emails, and some lower-level witnesses first.

Congress won't dislodge Bernie, nor will the banksters. Obama will need to be urged to fire him by the grassroots. And we all know it can happen, but must we constantly micromanage? What do we pay these people for, if we have to point out the obvious all the time?

It isn't going to put much pressure on anybody. I'm really alarmed by Danielle Park's latest--that's our crystal ball, right there, our future staring us in the face. That's Bernanke's true accomplishment--NOTHING.

I begrudgingly appreciate that sense of schadenfreude over Bernanke's efforts rendered to squat. His past and present decisions have just made our problems worse because of a sense of misplaced priorities.

WASHINGTON (Reuters) – Federal Reserve Chairman Ben Bernanke, facing his toughest grilling yet by U.S. lawmakers, said on Thursday he had never threatened to fire Bank of America's management if they pulled the plug on a planned merger with Merrill Lynch.

During a tense three-hour hearing, lawmakers repeatedly pressed Bernanke on whether he had coerced Bank of America chief Kenneth Lewis in December to go forward with the deal despite Merrill's quickly deteriorating finances.

....

Bernanke also said neither he nor other Fed officials had "ever directed, instructed, or advised" the bank to withhold information about Merrill's mounting losses from the public, another charge lawmakers have leveled at the central bank.

....

During the hearing, lawmakers cited an e-mail written by Richmond Federal Reserve Bank President Jeffrey Lacker as possible evidence of undue Fed pressure on Lewis. In the e-mail, Lacker said Bernanke had told him he planned to make it clear that pulling back from the merger could result in managers losing their jobs if Bank of America ended up needing aid.

http://news.yahoo.com/s/nm/20090625/bs_nm/us_financial_bankofamerica

---

The bold print is really interesting. Later in the article, Bernanke is quoted to say that if BoA had pulled out of the merger by citing the "materially adverse clause" and later needed government aid then there could have been a repercussion.

It's a familiar old saw: Bernanke makes the case that his words were simply "misunderstood". It sounds a but like the argument he has made to sell those shitty "legacy assets" to pension funds.

June 26 (Bloomberg) -- Chairman Ben S. Bernanke’s grilling by legislators over Federal Reserve conduct in Bank of America Corp.’s takeover of Merrill Lynch & Co. may reduce the odds the central bank will win new powers in a regulatory overhaul.

Bernanke failed to resolve some lawmakers’ questions on whether the Fed bullied executives and stepped over other regulators in the name of financial stability in a three-hour congressional hearing yesterday. Republicans asserted the Fed interfered with commercial decisions, and Democrats said it should have wrung more concessions in return for taxpayer aid.

Criticisms by members of both parties are likely to diminish support for the Obama administration’s plan to make the Fed the single agency responsible for the largest and most interconnected financial institutions. The proposal, part of a broad revamp of bank regulation, would give the Fed power to dictate standards on capital, liquidity and risk management.

“It may be more important for us to find another systemic risk regulator,” Representative Paul Kanjorski, a Pennsylvania Democrat and member of the House Oversight Committee where Bernanke appeared, said in a Bloomberg Television interview after the hearing. Congress should “hesitate to put any more authority on the back of the Federal Reserve,” he said.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a.iry_6hC88s

I never expected the hearings to result in any concrete direct action towards the Fed or Bernake. However, if the hearings prevent Obama from turning the Fed into some super regulatory sham, than Congress might have inadvertently accomplished something!

It sounds to me like Congress may not have a smoking gun - yet. Of course, they may, but reserve to reveal their evidence until after testimony is completed. A smart prosecutor would operate that way if working under rules of a hearing, rather than a trial.

SINGAPORE – Oil prices rose above $71 a barrel Friday in Asia as investors mulled mixed signs about the strength of the U.S. economy and crude demand.

Benchmark crude for August delivery added 92 cents to $71.15 a barrel by midday Singapore time in electronic trading on the New York Mercantile Exchange. On Thursday, it gained $1.56 to settle at $70.23.

....

Moltke-Leth said the oil price will likely rise to $75 a barrel before drifting to near $60 by the end of the year as investors become disillusioned by a sluggish economic recovery.

....

In other Nymex trading, gasoline for July delivery rose 1.44 cents to $1.91 a gallon and heating oil gained 1.39 cents to $1.79. Natural gas for July delivery climbed 1.6 cents to $3.86 per 1,000 cubic feet.

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

I wonder how many volunteers would step forward to light the fuse.

http://www.marketwatch.com/story/japan-reportedly-to-suspend-some-citigroup-ops?siteid=yahoomy

Sanction comes as company moves to sell some Japanese assets

By Lisa Twaronite, MarketWatch

TOKYO (MarketWatch) -- Financial regulators sanctioned Citigroup Inc.'s Japanese unit Friday for the second time in five years, demanding it suspend some of its retail-business operations because of inadequate controls in place to prevent money laundering.

Japan's Financial Services Agency ordered Citibank Japan to suspend sales activities, including advertising, at its retail businesses, from July 15 to Aug. 14. The suspension doesn't restrict transactions initiated by customers and doesn't apply to the company's corporate-banking division.

The FSA assailed the bank's monitoring system to detect possible transactions with criminals.

"Control systems necessary for the detection, monitoring, and follow-up of suspicious transactions have not been developed," the financial watchdog said in a statement.

These include the bank's system to make notification of suspicious transactions, including money laundering, which it said relies mainly on the screening of databases. The FSA noted that "input data is extremely limited; in addition, the database has not been updated since 2004."

Therefore, it said, the screening "has become meaningless; moreover, it is found that procedures to control any dealing with anti-social forces have not been developed."

In a statement, Citibank Japan said it "takes this administrative action very seriously" and apologized to customers and other parties concerned.

"Since an initial incident was first identified and reported voluntarily to the FSA, Citibank Japan has subsequently been cooperating with the FSA and has already begun to take actions to address issues raised," the bank said.

It promised to comply with the regulators' order to submit a plan for improvement by the end of July...

In 2004, in one of the severest penalties ever imposed on a bank in Japan, the FSA ordered Citibank Japan to suspend business operations at four branches that dealt with private banking, after it was found to have breached securities regulations. The action essentially discontinued the bank's private-banking business.

Several weeks after the FSA's 2004 sanctions, then-Chief Executive Charles Prince came to Tokyo and publicly bowed before reporters and television cameras to apologize personally for the bank's transgressions...

According to Citibank Japan's Web site, the unit that handles retail and corporate banking operations had 299 billion yen ($3.1 billion) in net assets and 1,548 employees as of the end of March.

Bailed out by Washington to the tune of billions of dollars, Citigroup has been selling some of its Japan holdings to raise cash.

WHY IS CITIGROUP IN JAPAN, YOU MIGHT ASK? WHY WOULD THE US GIVE CITIGROUP ANY TAXPAYER MONEY, IF IT IS OPERATING OVERSEAS? AND WHY DOES JAPAN LET IT OPERATE, IF IT CAN'T FOLLOW JAPANESE LAW ANY BETTER THAN IT DOES US LAW? WORLD-WIDE CORRUPTION!

ORION TOWNSHIP, Mich. – Michigan has snatched back a few of its fast-disappearing auto jobs, winning a high-stakes competition with two other states to build General Motors Corp.'s next-generation subcompact car.

The news is a bright spot in an otherwise gloomy Michigan economy that has seen unemployment hit a nation-leading 14.1 percent, lots of housing foreclosures, unpaid furlough days for state workers and uncertainty for thousands of others worried about whether they'll still be getting a paycheck in the months ahead.

....

GM is likely to announce that its Pontiac parts stamping plant will be retooled to make parts for the new car, based on the Chevrolet Spark. About 1,000 jobs could be saved there, more good news for Oakland County.

http://news.yahoo.com/s/ap/20090626/ap_on_bi_ge/us_gm_small_car_plant

---

Some good news is a rare thing. I am curious to see if any of these idled plants will be used for production of mass transit vehicles.

This sounds more like a publicity stunt.

UPDATED: 1:20 pm EDT June 26, 2009
BIRMINGHAM, Mich. -- General Electric Co. said Friday it will build a $100 million manufacturing technology center in Michigan that will eventually employ about 1,200 workers.

The Advanced Manufacturing and Software Technology Center will include a GE research and development facility with scientists and engineers who will develop manufacturing technologies for GE's renewable energy, aircraft engine, gas turbine and other products.

The center, which is expected to open later this year in Van Buren Township, Mich., also will develop software, networking and other services.

Hiring is expected to begin later this year.

GE, which is based in Fairfield, Conn., says it will build a 100,000-square-foot facility to house the manufacturing center. The state of Michigan is providing $74 million in incentives over the next 12 years to support the center, which is expected to yield $146 million in income taxes and other revenue over the same period, Gov. Jennifer Granholm said.

Granholm, appearing with GE CEO Jeff Immelt on the CNBC cable network Friday, said the new center will bring high-skilled jobs to Michigan, which has been reeling from the recession and the downturn in the auto industry.


http://www.clickondetroit.com/money/19867748/detail.html

DETROIT -- City Councilmember Monica Conyers, the wife of powerful Democratic Congressman John Conyers, pleaded guilty Friday to accepting cash bribes in exchange for supporting a sludge contract with a Houston company.

Conyers, 44, was charged with one count of conspiracy to commit bribery in connection with accepting two payments from a Synagro Technologies official in late 2007, including one in a McDonald's parking lot.

She entered her plea before Judge Avern Cohn at 10 a.m. with her attorney Steven Fishman.

Conyers was solemn in court, having to be asked three times by the judge to speak up.

http://www.clickondetroit.com/news/19867343/detail.html

___________________________________

She faces up to 5 years in prison.

The biggest shock: They had to ask her to speak up. She normally speaks very loudly, won't shut up, and says the most entertaining things. Ken Cockrel, Jr., chairing a meeting, once asked her to shut up, and she called him "Shrek." He does look a little like Shrek:

Monica Conyers recently told another councilmember, "You need to get a man." That was during a council meeting.

The civility of debate in city council meetings should increase significantly, at the price of increased boredom.

and that was the "Official" number for the "Best employment area" in the state.

http://www.ft.com/cms/s/0/f945db44-6182-11de-9e03-00144feabdc0.html

By Francesco Guerrera in New York

Published: June 25 2009 13:29 | Last updated: June 26 2009 02:28

AIG took a small step in the long road to recovery on Thursday, clinching a $25bn debt for equity swap with the Federal Reserve that will give the authorities a large stake in two of the government-owned insurer’s most prized businesses.

Under the agreement, the New York Fed will receive $16bn in preferred equity in American International Assurance (AIA), AIG’s Asian arm, and $9bn in preferred shares of American Life Assurance Company (Alico), an international life assurer.

Once the deal closes this year, it will cut AIG’s $40bn debt to the Fed by $15bn. And it will reduce the size of its $60bn available loan facility to $35bn.

AIG has so far drawn $40bn from this facility and has received a $40bn capital injection from the troubled asset relief programme (Tarp).

The arrangement was announced in March, when the US government had to bail out the stricken insurer for the fourth time, but it took months to complete because of the complexity of spinning off the two large businesses into separate vehicles.

The agreement with the Fed is expected to pave the way for the listings of both AIA and Alico.

AIG has said it wants to list the two units, which were once at the heart of a financial empire that spanned the globe and was ruled with an iron fist by Hank Greenberg, former chief executive.

AIA should be listed first and its initial public offering on the Hong Kong stock market, which is likely to take place next year, could be one of the world’s biggest in the past two years.

This month, AIG picked Deutsche Bank and Morgan Stanley to arrange the $5bn-plus offer.

The deal with the Fed offered no clues as to the probable valuation of AIG as the insurer failed to disclose the stake the authorities would take, saying simply that it would be valued at $16bn.

AIA, one of the largest insurers in Asia, is expected to raise $5bn-$10bn depending on the precise stake sold.

AIG hopes a successful IPO of AIA will increase the chances of a similar partial sale of Alico.

The agreement with the New York Fed came as AIG investors, which still include Mr Greenberg, prepared to gather at the annual meeting next week.

The government owns about 80 per cent of AIG.

THE ELEPHANTS ARE DANCING--TAKE COVER, MICE!

http://www.ft.com/cms/s/0/0e237946-6196-11de-9e03-00144feabdc0.html

By Sheila McNulty in Houston

Published: June 25 2009 17:57 | Last updated: June 26 2009 02:51

Sir Allen Stanford, the Texan billionaire, pleaded not guilty on Thursday to 21 criminal charges, including running a $7bn (€5bn, £4.3bn) Ponzi scheme and buying the co-operation of a senior Caribbean regulator.

The flamboyant businessman – whose lavish lifestyle helped clients believe that his business was booming – sat up straight in a courtroom packed with family and friends, giving occasional small smiles and nods to different people.

He held a file over his hands, making it difficult to see if he was wearing handcuffs. His baggy, bright orange prison outfit left no doubt, however, that he was in court to face fraud and obstruction charges. If convicted, he faces up to 250 years in prison.

Sir Allen’s voice was strong, and he towered confidently over the clutch of lawyers and three former executives who pleaded not guilty alongside him, including Laura Pendergest-Holt, who had been his chief investment officer. They gathered with him at the front of the courtroom when he entered his plea: “Not guilty, your honour.”

Prosecutors spent the day arguing whether Sir Allen was a flight risk, saying they had uncovered a “secret Swiss bank account” and $1bn in Stanford group funds were unaccounted for. Sir Allen’s lawyer, Dick DeGuerin, objected to the word, “secret”, arguing top executives knew of the account and noting prosecutors may not not be able to account for some Stanford monies because they did not have access to Stanford records in countries ranging from Antigua to Venezuela.

“There’s a large amount of records you just don’t have,” Mr DeGuerin said. He insisted there was no evidence the funds went to Sir Allen, whom he said had no access to money for bail.

The magistrate initially set Mr Stanford’s bail at $500,000 with a $100,000 cash deposit but ordered a stay on the order until Friday afternoon after the US Justice Department said it planned to appeal, Reuters reported.

.....
Sir Allen, several company executives and Mr King are also separately named in a civil complaint by the US Securities and Exchange Commission, which brought the first civil charges in the case in February.

......

The court set August 25 as the start of the Stanford trial, but Mr DeGuerin said, “Even the government doesn’t have all the records yet. It’s going to take at least a year to prepare.” The trial, he said, would run six months.

June 26 (Bloomberg) -- UBS AG, the European bank with the biggest losses from the credit crisis, raised about 3.8 billion Swiss francs ($3.5 billion) by selling shares and said it expects a second-quarter loss.

The bank sold 293.3 million shares for 13 francs apiece to a “small number of institutional investors,” the Zurich-based company said in a statement late yesterday. UBS declined as much as 3 percent in Swiss trading.

UBS decided to raise the funds to bolster confidence in the bank following record losses, client defections and a U.S. probe into possible tax evasion by wealthy Americans. The company had further withdrawals from all of its money-management divisions in the second quarter. The Swiss central bank said last week that UBS needs to further increase reserves and cut assets.

....

UBS said the second-quarter loss is mostly tied to reorganization costs and charges on the company’s own debt, while operating earnings improved from the first quarter on better market conditions. The bank is scheduled to publish second-quarter earnings on Aug. 4.

http://www.bloomberg.com/apps/news?pid=20601087&sid=arZG1hYMf7W0

http://www.ft.com/cms/s/0/67bf237c-61a7-11de-9e03-00144feabdc0.html

By Catherine Belton in Moscow

Published: June 25 2009 18:04 | Last updated: June 26 2009 02:48

Russia is looking at a bail-out of its banks that would go further than the emergency action taken by the US, amid growing fears that bad loans could paralyse the country’s economy.

Igor Shuvalov, deputy prime minister, will consider taking stakes in troubled banks when a group of experts on the financial crisis meets on Friday to discuss ways to recapitalise Russia’s banking system, according to a draft proposal seen by the Financial Times.

The proposal, one of several under consideration, would see the government issue OFZ treasury bills, a type of bond, to boost the balance sheets of the biggest banks. In return, the state would receive preferred shares.

Unlike the US bank bail-out, the Russian scheme would see the government take board seats and have veto rights.

Analysts said such a plan would allow banks to declare the true level of their bad loans and, once their balance sheets were cleaned up, enable them to start lending again in 2010.

About $100bn in domestic loans fall due by the end of the year and the central bank has said bank profits would be wiped out if non-performing loans reached 10-12 per cent of the total.

With high interest rates and a dearth of new credit, bankers say they fear non-performing loans could hit as much as 20 per cent of overall credit portfolios by the end of the year.

Ratings agencies Standard & Poor’s and Moody’s have warned that Russia could need to spend $40bn recapitalising the banking system.

The recapitalisation funds would be limited to the top 55 banks in Russia’s 1,100-strong banking system, analysts said. The draft bill says only banks with a minimum of Rbs50bn ($1.6bn) in assets would be eligible.

IN THE BANK RACE, I THINK RUSSIA HAS TOTALLY OUTCLASSED THE US.

http://www.ft.com/cms/s/0/031dabb2-60be-11de-aa12-00144feabdc0.html

By Megan Murphy

Published: June 24 2009 15:29 | Last updated: June 24 2009 20:15

The ranks of the world’s super-rich have been shredded by the credit crunch, undermining the theory that the wealthy are better at holding on to their money.

The global population of “ultra high net worth individuals” – defined as those with at least $30m (€22m) to invest – shrank by nearly 25 per cent in 2008 to 78,000, according to the latest World Wealth Report produced by Merrill Lynch and Capgemini. The collective net wealth of these super-rich slumped by 24 per cent after a year of bank crises, government bail-outs and stock market routs.

High net worth individuals – worth $1m, excluding their homes – fared poorly as well but not quite as severely, suffering a 19.5 per cent decline in their wealth. The population of these individuals fell by 15 per cent.

The unprecedented declines wiped out two years of robust growth, reducing both the total number of rich people and their wealth to levels last seen in 2005.

There were no “safe havens” for investors as markets across the world plummeted, said Nick Tucker, market leader for UK & Ireland in Merrill’s wealth management arm. However, in spite of 2008’s negative results, overall wealth is expected to top $48,000bn by 2013, as global economies recover.

China is expected to drive much of this expansion. The world’s fastest-growing major economy surpassed the UK for the first time in the report’s rankings of the total number of rich people by country.

There are an estimated 364,000 dollar millionaires in China, the fourth-largest population in the world. In contrast, the ranks of high net worth individuals in Britain fell 131,000 to 362,000, owing largely to the turmoil in the financial services industry and the decreasing value of investment properties.

June 26 (Bloomberg) -- Saks Fifth Avenue is cutting orders 20 percent after posting losses in the last four quarters. Kia Harris says some customers at the Washington shoe store where she works are buying one pair rather than three.

In the recession following a borrowing binge that sent consumer debt to the highest level ever, Americans are shutting their wallets and building their nest eggs at the fastest pace in 14 years.

While the trend will put the country’s finances in better balance and reduce its dependence on Chinese investment, it may also restrain economic growth in 2010 and beyond, said Lyle Gramley, a senior economic adviser with New York-based Soleil Securities Corp. and a former Federal Reserve governor.

....

Americans’ newfound frugality is pinching airlines such as Chicago-based UAL Corp., which is cutting staff amid dwindling demand for leisure travel. Donations to charities dropped last year for the first time since 1987, and they’re in danger of declining further in 2009.

Banks are benefiting. Deposits grew 1.7 percent in May, the ninth-biggest monthly rise since 1973.

http://www.bloomberg.com/apps/news?pid=20601109&sid=aMl2N_xsMPT4

---

This is going to be a tough balance to find. If people conserve their money, the economy falters. If the American consumer accesses more credit lines to finance consumption, the economy is, again, imperiled.

That's a much more worthy marker for the national report card.

Greenspan is a True Believer in Randism, still

Published: June 25 2009 15:49 | Last updated: June 25 2009 15:49

The rise in global stock prices from early March to mid-June is arguably the primary cause of the surprising positive turn in the economic environment. The $12,000bn of newly created corporate equity value has added significantly to the capital buffer that supports the debt issued by financial and non-financial companies. Corporate debt, as a consequence, has been upgraded and yields have fallen. Previously capital-strapped companies have been able to raise considerable debt and equity in recent months. Market fears of bank insolvency, particularly, have been assuaged.

Is this the beginning of a prolonged economic recovery or a false dawn? There are credible arguments on both sides of the issue. I conjectured over a year ago on these pages that the crisis will end when home prices in the US stabilise. That still appears right. Such prices largely determine the amount of equity in homes – the ultimate collateral for the $11,000bn of US home mortgage debt, a significant share of which is held in the form of asset-backed securities outside the US. Prices are currently being suppressed by a large overhang of vacant houses for sale. Owing to the recent sharp drop in house completions, this overhang is being liquidated in earnest, suggesting prices could start to stabilise in the next several months – although they could drift lower into 2010.

In addition, huge unrecognised losses of US banks still need to be funded. Either a stabilisation of home prices or a further rise in newly created equity value available to US financial intermediaries would address this impediment to recovery.

Global stock markets have rallied so far and so fast this year that it is difficult to imagine they can proceed further at anywhere near their recent pace. But what if, after a correction, they proceeded inexorably higher? That would bolster global balance sheets with large amounts of new equity value and supply banks with the new capital that would allow them to step up lending. Higher share prices would also lead to increased household wealth and spending, and the rising market value of existing corporate assets (proxied by stock prices) relative to their replacement cost would spur new capital investment. Leverage would be materially reduced. A prolonged recovery in global equity prices would thus assist in the lifting of the deflationary forces that still hover over the global economy.

I recognise that I accord a much larger economic role to equity prices than is the conventional wisdom. From my perspective, they are not merely an important leading indicator of global business activity, but a major contributor to that activity, operating primarily through balance sheets. My hypothesis will be tested in the year ahead. If shares fall back to their early spring lows or worse, I would expect the “green shoots” spotted in recent weeks to wither.

Stock prices, to be sure, are affected by the usual economic gyrations. But, as I noted in March, a significant driver of stock prices is the innate human propensity to swing between euphoria and fear, which, while heavily influenced by economic events, has a life of its own. In my experience, such episodes are often not mere forecasts of future business activity, but major causes of it.

For the benevolent scenario above to play out, the short-term dangers of deflation and longer-term dangers of inflation have to be confronted and removed. Excess capacity is temporarily suppressing global prices. But I see inflation as the greater future challenge. If political pressures prevent central banks from reining in their inflated balance sheets in a timely manner, statistical analysis suggests the emergence of inflation by 2012; earlier if markets anticipate a prolonged period of elevated money supply. Annual price inflation in the US is significantly correlated (with a 3½-year lag) with annual changes in money supply per unit of capacity.

Inflation is a special concern over the next decade given the pending avalanche of government debt about to be unloaded on world financial markets. The need to finance very large fiscal deficits during the coming years could lead to political pressure on central banks to print money to buy much of the newly issued debt.

The Federal Reserve, when it perceives that the unemployment rate is poised to decline, will presumably start to allow its short-term assets to run off, and either sell its newly acquired bonds, notes and asset-backed securities or, if that proves too disruptive to markets, issue (with congressional approval) Fed debt to sterilise, or counter, what is left of its huge expansion of the monetary base. Thus, interest rates would rise well before the restoration of full employment, a policy that, in the past, has not been viewed favourably by Congress. Moreover, unless US government spending commitments are stretched out or cut back, real interest rates will be likely to rise even more, owing to the need to finance the widening deficit.

Government spending commitments over the next decade are staggering. On top of that, the range of error is particularly large owing to the uncertainties in forecasting Medicare costs. Historically, the US, to limit the likelihood of destructive inflation, relied on a large buffer between the level of federal debt and rough measures of total borrowing capacity. Current debt issuance projections, if realised, will surely place America precariously close to that notional borrowing ceiling. Fears of an eventual significant pick-up in inflation may soon begin to be factored into longer-term US government bond yields, or interest rates. Should real long-term interest rates become chronically elevated, share prices, if history is any guide, will remain suppressed.

The US is faced with the choice of either paring back its budget deficits and monetary base as soon as the current risks of deflation dissipate, or setting the stage for a potential upsurge in inflation. Even absent the inflation threat, there is another potential danger inherent in current US fiscal policy: a major increase in the funding of the US economy through public sector debt. Such a course for fiscal policy is a recipe for the political allocation of capital and an undermining of the process of “creative destruction” – the private sector market competition that is essential to rising standards of living. This paradigm’s reputation has been badly tarnished by recent events. Improvements in financial regulation and supervision, especially in areas of capital adequacy, are necessary. However, for the best chance for worldwide economic growth we must continue to rely on private market forces to allocate capital and other resources. The alternative of political allocation of resources has been tried; and it failed.

The writer is former chairman of the US Federal Reserve

Shouldn't he be hiding under a bridge, waiting for the odd Billy Goat Gruff to happen by.

Does he actually NOT realize that most of this is due to his idiotic ideas?

Private market forces will rescue us! Unbelievable! This man could not recognize failure if it bit him on the ass and spat in his face.

Greenscam should be confined to Bazooka Joe comics.

The UK is probably rubbing our noses in it.

(Down an awful lot for one day's report. Liking it.)

= Held by the Public + Intragovernmental(FICA)
= 7,092,956,714,512.70 + 4,272,696,225,343.63
DOWN 34,732,231,983.69 + DOWN 7,588,589,311.00

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

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 307-Million person America.
If every American, man, woman and child puts in $3.26 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.78, ABOUT TEN BUCKS for a 1B$ 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 a another American, so at the end of the workday of the report, there should be 306,724,742 people in America.
http://www.census.gov/population/www/popclockus.html ON 05/25/2009 01:14 -> 306,504,012
Currently, each of these Americans owe $37,054.89.
A family of three owes $111,164.68. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 22 reports in the last 30 to 33 days.
The average for the last 22 reports is 2,908,046,046.70.
The average for the last 30 days would be 2,132,567,100.91.
The average for the last 33 days would be 1,938,697,364.47.
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$/day.
There were 106 reports in 155 days of Obama's part of FY2009 averaging -0.62B$ per report, -0.36B$/day so far.
There were 181 reports in 267 days of FY2009 averaging 7.41B$ per report, 5.02B$/day.

PROJECTION:
There are 1,306 days remaining in this Obama 1st term.
By that time the debt could be between 13.2 and 17.9T$.
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)
06/24/2009 11,365,652,939,856.33 BHO (UP 738,775,890,943.25 so far since Obama took office.)

Fiscal Year ends: Sep 30
Borrowed in FY1993: (Maybe later.)
Borrowed in FY1994: 281,261,026,873.94
Borrowed in FY1995: 281,232,990,696.07
Borrowed in FY1996: 250,828,038,426.34
Borrowed in FY1997: 188,335,072,261.61
Borrowed in FY1998: 113,046,997,500.28
Borrowed in FY1999: 130,077,892,735.81
Borrowed in FY2000: _17,907,308,253.43 Bill alone
Borrowed in FY2001: 133,285,202,313.20 Bill and George
Borrowed in FY2002: 420,772,553,397.10 All George
Borrowed in FY2003: 554,995,097,146.46
Borrowed in FY2004: 595,821,633,586.70
Borrowed in FY2005: 553,656,965,393.18
Borrowed in FY2006: 574,264,237,491.73
Borrowed in FY2007: 500,679,473,047.25
Borrowed in FY2008: 1,017,071,524,650.01
Borrowed in FY2009: 1,340,928,042,943.90 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
06/04/2009 +011,755,789,483.75 ------------**********
06/05/2009 -000,226,149,345.97 ---
06/08/2009 +000,015,040,049.19 ------------******* Mon
06/09/2009 +000,025,670,087.48 ------------*******
06/10/2009 +000,124,232,779.18 ------------********
06/11/2009 +000,484,710,305.16 ------------********
06/12/2009 +000,342,814,514.03 ------------********
06/15/2009 +022,279,783,785.91 ------------********** Mon
06/16/2009 +000,300,303,919.12 ------------********
06/17/2009 -000,017,732,893.60 ----
06/18/2009 -005,859,665,194.24 --
06/19/2009 -000,316,361,675.40 ---
06/22/2009 +000,024,707,752.58 ------------******* Mon
06/23/2009 +000,354,103,704.29 ------------********
06/24/2009 -034,732,231,983.69 -

-5,444,984,712.21 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,701,021,136,597.26 in last 279 days.
That's 1,701B$ in 279 days.
More than any year ever, including last year, and it's 167% of that highest year ever only in 279 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 279 DAYS NOT 365.

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

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3938446&mesg_id=3938488

(Down a bit for today after a lot down for yesterday. I'm liking it a bit more. FICA can do what it wants.)

= Held by the Public + Intragovernmental(FICA)
= 7,090,100,564,668.36 + 4,273,413,799,696.85
DOWN 2,856,149,844.34 + UP 717,574,353.22

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

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 307-Million person America.
If every American, man, woman and child puts in $3.26 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.78, ABOUT TEN BUCKS for a 1B$ 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 a another American, so at the end of the workday of the report, there should be 306,731,942 people in America.
http://www.census.gov/population/www/popclockus.html ON 05/25/2009 01:14 -> 306,504,012
Currently, each of these Americans owe $37,047.05.
A family of three owes $111,141.16. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 23 reports in the last 30 to 34 days.
The average for the last 23 reports is 2,688,627,718.97.
The average for the last 30 days would be 2,061,281,251.21.
The average for the last 34 days would be 1,818,777,574.60.
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$/day.
There were 107 reports in 156 days of Obama's part of FY2009 averaging -0.67B$ per report, -0.38B$/day so far.
There were 182 reports in 268 days of FY2009 averaging 7.36B$ per report, 5.00B$/day.

PROJECTION:
There are 1,305 days remaining in this Obama 1st term.
By that time the debt could be between 13.2 and 17.9T$.
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)
06/25/2009 11,363,514,364,365.21 BHO (UP 736,637,315,452.13 so far since Obama took office.)

Fiscal Year ends: Sep 30
Borrowed in FY1993: (Maybe later.)
Borrowed in FY1994: 281,261,026,873.94
Borrowed in FY1995: 281,232,990,696.07
Borrowed in FY1996: 250,828,038,426.34
Borrowed in FY1997: 188,335,072,261.61
Borrowed in FY1998: 113,046,997,500.28
Borrowed in FY1999: 130,077,892,735.81
Borrowed in FY2000: _17,907,308,253.43 Bill alone
Borrowed in FY2001: 133,285,202,313.20 Bill and George
Borrowed in FY2002: 420,772,553,397.10 All George
Borrowed in FY2003: 554,995,097,146.46
Borrowed in FY2004: 595,821,633,586.70
Borrowed in FY2005: 553,656,965,393.18
Borrowed in FY2006: 574,264,237,491.73
Borrowed in FY2007: 500,679,473,047.25
Borrowed in FY2008: 1,017,071,524,650.01
Borrowed in FY2009: 1,338,789,467,452.80 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
06/05/2009 -000,226,149,345.97 ---
06/08/2009 +000,015,040,049.19 ------------******* Mon
06/09/2009 +000,025,670,087.48 ------------*******
06/10/2009 +000,124,232,779.18 ------------********
06/11/2009 +000,484,710,305.16 ------------********
06/12/2009 +000,342,814,514.03 ------------********
06/15/2009 +022,279,783,785.91 ------------********** Mon
06/16/2009 +000,300,303,919.12 ------------********
06/17/2009 -000,017,732,893.60 ----
06/18/2009 -005,859,665,194.24 --
06/19/2009 -000,316,361,675.40 ---
06/22/2009 +000,024,707,752.58 ------------******* Mon
06/23/2009 +000,354,103,704.29 ------------********
06/24/2009 -034,732,231,983.69 -
06/25/2009 -002,856,149,844.34 --

-20,056,924,040.30 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,698,882,561,106.14 in last 280 days.
That's 1,699B$ in 280 days.
More than any year ever, including last year, and it's 167% of that highest year ever only in 280 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 280 DAYS NOT 365.

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

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3940385&mesg_id=3940423

Volcker: We Need Radical Regulatory Reforms - which comes to us by way of The Big Picture...

There is a long article at Bloomberg very much worth reading about Tall Paul: Volcker Gets Less Than He Wants in Curbing Wall Street Excesses.

Consider the following:

“If Volcker is at one end of the spectrum arguing for tougher financial rules, Summers and Geithner are at the other. Summers pushed for deregulation while Treasury secretary under President Bill Clinton, advocating the repeal of the Glass- Steagall Act, which had separated investment and commercial banking for more than 60 years. Geithner was president of the Federal Reserve Bank of New York during a period when banks ratcheted up their leverage.

Both men are proteges of Robert Rubin, a former Clinton Treasury secretary who served on Citigroup Inc.’s board from 1999 until this year and has been criticized for allowing the bank to pile up $544 billion of derivatives and securities before it became the recipient of more government assistance than any other bank. Rubin declined to comment.”

When it comes to regulatory reform, the Geithner Summers pairing are the phlegmatic duo.

.....

What is it that Volcker wants?

-Impose capital requirements on trading parties, people familiar with his thinking say.

-Make bigger banks smaller

-Reduce the role of an overstretched Fed

-Force Derivatives to be traded on exchanges

-Transparent investor prices of Derivatives;

-More-aggressive capital reserve requirement

-Bigger role for exchanges.

This is exactly what the big Wall Street banks do not want.

Carter appointed him, but Volcker did such a good job, Reagan re-appointed him. In that partisan atmosphere, how did Volcker pull THAT off? Beating inflation was probably easier.

http://www.motherjones.com/politics/2009/06/madoff-twist-big-winner-youve-never-heard

It appears that the biggest winner in Madoff's scheme may not have been Madoff at all, but a secretive businessman named Jeffry Picower.

It is rare these days to see Bernard Madoff's name in print unaccompanied by the word "Ponzi." Yet recent allegations raise the possibility of one key difference between Madoff's crimes and those of legendary con artist Charles Ponzi. While Ponzi's scam was under way, Ponzi himself was its biggest beneficiary. It now appears that the biggest winner in Madoff's scheme may not have been Madoff at all, but a secretive businessman named Jeffry Picower.

Between December 1995 and December 2008, Picower and his family withdrew from their various Madoff accounts $5.1 billion more than they invested with the self-confessed swindler, according to a lawsuit filed by the trustee who is trying to recover money for those Madoff defrauded.

In contrast, shortly after he confessed, Madoff declared his household net worth to be between $823 and $826 million, according to court documents. While the Madoffs clearly lived opulently, no evidence has emerged that their combined assets and expenditures approached the amount the Picower family is alleged to have withdrawn from the scheme...

The Picowers' withdrawals from Madoff accounts peaked at over $1 billion in 2003. Click on link to see full chart. The complaint states that the Picowers were beneficiaries of the Ponzi scheme for more than 20 years. The withdrawals listed between 1995 and 2008 reveal a pattern of large quarterly disbursements, transferred to Picower-controlled accounts by check or sometimes wire, that peak in 2003. Three years later something happens that causes the amount to drop precipitously. It recovers slightly the following year, but the highest-flying days are over for good.

One question is the role that Picower's charitable giving played in all of this. The amount Picower withdrew for his foundation is separate from the quarterly withdrawals for his personal accounts. During the 1995-2008 time span, Picower took out about $291 million from Madoff for the foundation account. During the same period, the foundation doled out a little under $207 million in donations, according to tax forms.

Perhaps the most pertinent question: If Picower withdrew $5.1 billion in "profit" from Madoff, where did all the money go? The Picowers own a home in Palm Beach that is appraised at a little over $28 million. They also have a 28.4-acre compound in Connecticut valued at $4.5 million. A search of numerous online sources, both aggregate databases and county property records for the couple, their daughter, and the companies named in the complaint, reveals few other major assets. If someone needed the skills to hide billions of dollars, few would be better equipped than Picower, an attorney and accountant who has been described as a "tax shelter expert." Even so, it's curious our search did not even uncover a boat or plane under the Picower name.

...............

Picower, 67, began his career as an accountant and lawyer in New York but seems to have made much of his fortune as an investor in the medical industry. He has avoided media interviews and, with a few notable exceptions, succeeded in keeping a low profile. If the Picowers were recognized at all, prior to their Madoff notoriety, it was through praise for their philanthropy. Yet even here, their ties to Madoff loomed large. The growth of their largest foundation was attributed to their Madoff investments. Madoff himself served as a trustee on another Picower foundation.

The court-appointed trustee makes a powerful, albeit still largely circumstantial, case in court filings that Picower knew Madoff's fund was illegitimate. Although Madoff ostensibly produced eerily consistent 10-12 percent annual returns for his clients, the returns he provided Picower were other worldly:

* In 14 instances between 1996 and 2007, a group of Picower trading accounts experienced annual returns of more than 100 percent. On 25 occasions, the annual return exceeded 50 percent. During this same period, the biggest annual gain in either the Dow Jones Industrial Average or the S&P 500 was 31 percent, for the S&P in 1997. The S&P 500's annual average for that period was slightly under 9 percent.
* The annual rate of return for two of Picower's regular trading accounts in the four years between 1996 and 1999 ranged from about 120 percent to more than 550 percent annually.
* In 1999, one account earned 950 percent.

Each quarter, the Picowers would withdraw various sums from Madoff from different accounts. Usually the total for each quarter’s withdrawals amounted to round numbers. Click to see the full listing of the Picowers' withdrawals from Madoff accounts. Picower belonged to a select group of Madoff investors who received souped-up returns. A Wall Street Journal story published in May cited unnamed sources saying that prosecutors were looking into eight investors who appear to have received special treatment from Madoff. Among the eight named, Picower seems to have withdrawn the most money, with the bulk of it coming from an account called "Decisions, Inc." According to the Madoff trustee's court filings, "the account reflected little trading activity and relatively few holdings," yet Picower took hundreds of millions out of it. At the time of Madoff's arrest, the account had a reported negative net cash balance of more than $6 billion...


Who is Jeffry Picower?

The Picowers' generosity to deserving charities, particularly in New York, Florida, and Massachusetts, has earned them admiration and respect. However, the image belies a more complex reality.

The Picowers gave to a host of worthy causes from the Children's Aid Society to the New York City Ballet, but Jeffry Picower's passion centered on health issues, particularly funding for medical research. On December 1, 2005, the couple made a rare public appearance at a ceremony at the Massachusetts Institute of Technology to dedicate a new center to study the brain, the Picower Institute for Learning and Memory. The Picowers' gift of $50 million, spread over five years, was the single largest in the school's history. In a video of the ceremony, Nobel Prize winning Japanese scientist Susumu Tonegawa told the crowd that without the Picowers there would be no institute. The Picowers stood by silently as Tonegawa unveiled a portrait of the couple to conclude the ceremony.

The Picowers' portrait, as it hangs in the Picower Institute for Learning and Memory at the<br /> Massachusetts Institute of Technology. The Picower Foundation gave $50 million to MIT, the school's single largest gift from a private foundation. (Photo by Ryan Mark) The gift to MIT was the largest single donation to an outside entity the Picower Foundation had ever made, according to tax forms the foundation filed. Prior to late 1995, when Madoff trustee Picard's records start tracking Picower's Madoff activity, the Picower Foundation was relatively small in size and scope. At year's end in 1994, it had assets of just under $75 million and had donated $375,754. By 2007, it was reporting about $958 million in assets and about $23.4 million in donations for the year.

Picower's attention to cutting-edge medicine was the sole focus of a second foundation, The Picower Institute for Medical Research, created to find cures for human diseases. He launched the Institute in 1991 with a $10 million donation from the Picower Foundation. Madoff served as a trustee of the Institute.

In 2001, the St. Petersburg Times revealed that Picower used both his foundations and a private corporation called PharmaSciences, of which he was the majority shareholder, to gain control of a potentially lucrative medical discovery. In 1999, Picower merged PharmaSciences with a for-profit spinoff of his institute called Cytokine Networks, essentially negotiating with himself. The merged company called Cytokine PharmaSciences had the rights to develop a new drug that could help minimize such illnesses as arthritis and multiple sclerosis. The newspaper raised the question of whether Picower had shortchanged his nonprofit in the deal.

An IRS audit concluded that the Picower Foundation had not jeopardized its tax status or incurred extra liability during the period in question. The Foundation's lawyer William Zabel provided ProPublica with a letter from the IRS dated September 2006 that he said "cleared the Foundation." Addressed to Barbara Picower, the letter is from the IRS' Office of Exempt Organizations and formally accepts the Foundation's tax returns. Zabel also said that shares Picower received from the merger were given to other charitable organizations.

The publicity-shy Picower is no stranger to lawsuits or regulators, a trip through several decades of legal and regulatory filings reveals. In 1984, the SEC cited him for a late disclosure over how much he owned in a company called Bradford National Corporation. The SEC filing alleged that Picower was part of a scheme to take over the company.

A year later Picower had to pay out a $21-million settlement when shareholders sued over the collapse of Physicians Computer Network. Picower controlled 45 percent of the stock and chaired the company before it went belly up. In 1989, Picower paid an undisclosed settlement over a questionable tax shelter he helped set up years earlier for a client. In 1990, it was Picower's turn to recover money – from a settlement involving infamous insider trader Ivan Boesky. Picower had been one of his investors.
....

Picower's legal and regulatory history was outlined in an article by Forbes Magazine. The 2002 article, which didn't mention Picower's activities with Madoff, said Picower was "worth at least $300 million." That same year, the trustee reports, Picower's quarterly withdrawals from Madoff totaled $895 million.

Get in early, and get out before the collapse. The people in at the end get burned. In theory, the authorities may require those who profited from the illegal scheme to pay back their profit, but good luck trying to find it. How trustworthy are the records? Does anyone think Madoff kept honest records? 'Cause, ya know, Picower's attorneys won't have too much trouble questioning Madoff's credibility.

This looks like Pincower had a power over Madoff to force him into a life of crime.

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

Last trade 79.813 Change -0.561 (-0.72%)

US Dollar, Japanese Yen Lag as Risk Appetite Sends Carry Trades, Equities Higher

http://www.dailyfx.com/story/dailyfx_reports/daily_fundamentals/US_Dollar__Japanese_Yen_Lag_1245964282007.html

The US dollar and Japanese yen fell this afternoon as risk appetite picked up on reports that the Federal Reserve has decided to scale back some of their liquidity programs, suggesting that conditions have improved. Meanwhile, the Commerce Department said that the final reading of US Q1 GDP was revised up to -5.5 percent from -5.7 percent. However, there weren't many bright spots in the report as changes to the components included revisions in personal consumption to 1.4 percent from 1.5 percent, gross private investment to -48.9 percent from -49.3 percent, exports to -30.6 percent from -28.7 percent, and change in inventories to -$87.1B from -$91.4B.

At the same time, the Labor Department reported that initial jobless claims jumped by 15,000 to a 5-week high of 627,000 during the week ended June 20, while continuing jobless claims rose by 29,000 to 6,738,000 during the week ending June 13. All told, the news runs counter to the optimism surrounding last week's jobless claims and suggests that the next round of US non-farm payrolls will continue to reflect job losses and a rising unemployment rate.

On Friday morning, the Commerce Department is anticipated to say that both personal income and personal spending results for the month of May improved by 0.3 percent. That said, traders should be skeptical of the income result: past increases have been purely the result of rising transfer payments, which include retirement, disability, and employment insurance, while wage and salary compensation has either fallen or stagnated since September 2008. At the same time, the savings rate has surged in recent months, which helps to explain why spending has fallen negative during the past two months. With both demand for and supply of credit still fairly tight, rising savings and lower spending are likely to become persistent trends.

...more...

USD Sold on More China Reserve Currency Talk (Morning Slices)

http://www.dailyfx.com/story/market_alerts/fundamental_alert/USD_Sold_on_More_China_1246013973758.html

A data light overnight session failed to dissuade traders from selling their USDs and buying back into currencies, with Sterling leading the charge. Middle Eastern names and model fund accounts were rumored to be driving Cable back above 1.6500, while CTA stops were tripped in Eur/Usd above 1.4080. German import prices hardly factored into price action after coming in on the weaker side and putting in the biggest annual drop since March of 1987. Meanwhile, the Swiss KOF leading indicator came in better than forecast, but also failed to influence directional moves. China was back on the wires talking down the USD reserve currency status after calling for the world to cut its reliance on a small set of reserve currencies through the creation of a super-sovereign currency. Elsewhere, ECB Sramko was rather downbeat after saying that uncertainty remained high and a recovery was seen deeper into 2010. Kiwi has been the laggard on the session, weighed down by the weaker overnight GDP reading. US equity futures point to a lower open, while commodities are bid, led by oil back above $71. Looking ahead, personal consumption (0.1% expected), personal income (0.3% expected) and personal spending (0.3% expected) are all due at 12:30GMT, followed by Michigan confidence (69 expected) at 14:00GMT.

...more...

That would not suit their plans, would it?

I'd surely like to see some explanation of that.

Consider how the population skews with age.

sorted by gender, at ages 20-29 with those at 40-49. In that case, the longer lives of women would not come into play very much at all considering the youth and early middle age of the two cohorts.

What am I missing?

http://rawstory.com/08/news/2009/06/23/obama-warns-of-worse-economy-to-come/

President Barack Obama painted a bleak picture Tuesday of the economy, warning unemployment will get worse, and vowed to act on climate change and health care as long-term solutions.

In a wide-ranging White House news conference, Obama also said he had no plans for a fresh stimulus package, hoping to give time to see the impact of the 787-billion-dollar economic plan approved shortly after he took office.

“We’re still not at actual recovery yet. So I anticipate that this is going to be a difficult, difficult year,” Obama said.

“I think it’s pretty clear now that unemployment will end up going over 10 percent,” he said, explaining it would take time for an economic recovery to translate into job growth.

The jobless rate in the world’s largest economy surged to 9.4 percent in May, with the figure shooting to a record high 11.5 percent in the most populous state of California.

“What’s incredible to me is how resilient the American people have been and how they are still more optimistic than the facts alone would justify,” said Obama, who has largely held onto his high popularity ratings.

TRANSLATION: WHAT A BUNCH OF SHEEP!

Japan Succumbs to Deflation as Consumer Prices Fall Record 1.1%

June 26 (Bloomberg) -- Japan’s consumer prices fell at a record pace in May, adding to the risk that deflation will become entrenched and hamper a rebound from the nation’s worst postwar recession.

Prices excluding fresh food slid 1.1 percent from a year earlier after dropping 0.1 percent in the preceding two months, the statistics bureau said today in Tokyo. It was the sharpest decrease since comparable figures were first compiled in 1971.

Bank of Japan Governor Masaaki Shirakawa said last week that price declines will accelerate through the middle of the fiscal year as demand slackens and crude oil continues to trade lower than last year’s record. Retailers including Aeon Co. are cutting prices to attract customers as falling wages and the worsening job outlook damp spending.

....

Worldwide inflation is easing as energy costs retreat and the worst global recession since the Great Depression forces companies to charge less. Consumer prices failed to rise in the euro area for the first time in at least a decade in May, and in the U.S. they fell 1.3 percent, the most since 1950.

more...

http://informationclearinghouse.info/article22887.htm

By MICHAEL HUDSON

June 22, 2009 "Counterpunch" -- In reaching across the aisle for Republican support – and no doubt future campaign contributions from the financial sector - Pres. Obama is morphing into Joe Lieberman. There also is a touch of Boris Yeltsin in his sponsorship of a financial “reform” ominously similar to what advisor Larry Summers backed in Russia – relinquishing government power to a banking elite. The Financial Regulatory Reform proposal promotes Wall Street’s “product,” debt creation, at the expense of the economy at large, and lets financial chieftains continue to self-regulate the debt industry – and to keep scot-free all their gains from the past decade’s worth of fraudulent lending.

Confronting the wreckage of a debt crisis worse than any since the Great Depression, Mr. Obama has achieved what no Republican could have: rescuing the Bush Administration’s pro-creditor policies that fostered the Bubble Economy in the first place. “Most of the financial sector lobby community is happy with what has emerged,” the Financial Times summarized. A spokesman for the Financial Services Forum, a major Wall Street lobbying organization, called the proposals “careful and balanced.”1/ With such endorsements, victims of predatory lending have good reason to worry. The Obama plan is just the opposite from reforming the financial system along lines that progressive Democrats and other critics have urged.

The plan’s six most fatal flaws are apparent in its preamble, which lays out a false diagnosis of the financial problem in a way that whitewashes Wall Street (in contrast to Mr. Obama’s nice televised populist speech giving verbal criticism to “culture of irresponsibility”). A false diagnosis must lead to wrong-headed cures – rarely by accident. There invariably is a financial beneficiary who gains from blind spots in a legal “reform” package.

1. Regulatory capture. Preparing the ground for future Alan Greenspan “free market” ideologues



2. Failure to give meaningful teeth to fraud reduction



3. Failure to reverse the shift to pro-creditor bankruptcy laws



4. Failure to re-introduce Glass Steagall or otherwise limit lenders “too big to fail”


5. Failure to deter credit default swaps and other “casino capitalist” gambles


6. Failure to reform the tax system that has distorted the financial system to promote predatory extractive debt, not productive industrial credit

DETAILS AT LINK

Come back for more tonight on Weekend Economists Thread with special secret theme (no, I haven't got a clue either, but I'm open to suggestion).

I feel as if I'm living in another dimension
http://en.wikipedia.org/wiki/The_Twilight_Zone

edit for quote
"You unlock this door with the key of imagination. Beyond it is another dimension - a dimension of sound, a dimension of sight, a dimension of mind. You're moving into a land of both shadow and substance, of things and ideas. You've just crossed over into the Twilight Zone."

something either funny or uplifting. But it's a suggestion, thanks!

I've always taken the Twilight Zone to be more focussed on irony with horror as a secondary effect; but I can see your point.

The irony I see today on the economic front concerns Bernake and the congressional hearings. It looks like Summers and Giethner are trying to throw Bernake under the bus so Summers can be appointed Fed "KING OF THE WORLD!" under the new regs proposed by Obama.

The irony takes place in the near future where the public becomes so disgusted, and the congress becomes so wary of the Fed, that Elizabeth Warren is appointed a super regulator above the Fed and Summers ends up indicted.

Now that is ironic AND science fiction!

Is Bernanke Toast? If he is, Summers is a shoo-in


When Larry Summers no longer inhabits the corridors of power in Washington (or an even tastier dream: when he no longer roams the exterior of a cave) we will find ourselves breathing a little easier.

This man has ridden on the coattails of political opportunism his entire career. What has he done to justify his current position and continue to merit the prospects of a higher, more powerful one? That's a rhetorical question, of course. Intelligent people whose agenda does not focus on their ego can be found just about anywhere. One does not even have to look very hard. The major problem that I have with Summers' behavioral pattern is that he still believes those breathy press clippings written about him during the Clinton administration. Evidence suggests that he worships dutifully at the altar of Rand, Rubin and Mammon.

Summers should be dumped post haste. Let him fend for himself outside the government cradle - minus the helm of the Federal Reserve.

Or Paul Krugman

Or Meredith Whitney

Or bring back Paul Volcker


Obama needs to dismiss both Bernanke and Summers. And Geithner too.

I've hated, really hated Larry since his women can't do science and math moment. He's just careening down the cliffs of disaster, taking chunks out of whatever he touches. He's bad news. He's Brownie all over again.