STOCK MARKET WATCH, Monday July 13

Source: du

STOCK MARKET WATCH, Monday July 13, 2009

Bush Administration Officials Under Indictment = 2
Financial Sector Officials In Prison = 3

AT THE CLOSING BELL ON July 10, 2009

Dow... 8,146.52 -36.65 (-0.45%)
Nasdaq... 1,756.03 +3.48 (+0.20%)
S&P 500... 879.13 -3.55 (-0.40%)
Gold future... 912.50 -3.70 (-0.40%)
10-Yr Bond... 3.30 -0.10 (-3.06%)
30-Year Bond 4.20 -0.10 (-2.26%)

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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

Going With the Flow
BY BRIAN PRETTI

The Fed Flow of Funds report for 1Q 2009 hit the Street a while back. And there has already been plenty of coverage concerning consumer net worth (which is simply out of date at this point), the character of systemic leverage, etc. Let’s skip the generic views of life and highlight key data points which importantly relate directly to bigger picture equity and fixed income market themes and potential outcomes of the moment, as well as important benchmarks against which we hope to assess the forward progress, or otherwise, of the US economy itself. Probably too many graphic views of life to come, so I’ll try to keep the commentary very short and directly on point.

First major macro theme that will influence economic outcomes ahead is the continued contraction of the asset backed securities markets. Not surprisingly, 1Q 2009 experienced the deepest nominal dollar contraction in the asset-backed markets both on record and so far in the current cycle. You already know that it was largely the shadow banking system that both defined the character of and drove the prior economic expansion in the US post the 2001 recession. It was not a typical business cycle upon which the US (and really the global economy) was running, but rather a credit cycle. The asset backed securities markets were the key underpinning to the character of the prior economic cycle. Over the last six quarters, contraction in the ABS markets has been close to $600 billion. It's no wonder residential mortgage markets have been gasping for breath and the Fed has so obligingly agreed to spend a generational magnitude of taxpayer dollars compensating for the implosion you see below.

.....

It should be no surprise to anyone that household leverage contracted again in 1Q. We now have the two largest quarters of back-to-back contraction in nominal dollar household leverage on record. In fact, at least over the near six decades shown in the chart below, this has never happened two quarters in a row. THE most important watch point in the current cycle is the character of the household balance sheet recession. The household deleveraging cycle is still in its early stages. Unfortunately labor market and wage pressure of the moment make it very tough for households to "hurry" the needed deleveraging process. The longer the labor markets remain weak, the more drawn out will be the household deleveraging process, and by default the longer it will take for the rate of change in consumption to recover adequately to spur self-sustaining macro economic growth. Throwing in an increased household savings rate does nothing to brighten the consumption picture.

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

14:00 Treasury Budget Jun
Briefing.com NA
Consensus -$77.5B
Prior $33.5B

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

SINGAPORE – Oil prices slid to near $59 a barrel Monday in Asia, extending a two-week sell-off fueled by growing investor pessimism about global economic growth and crude demand.

Benchmark crude for August delivery was down 47 cents to $59.42 a barrel by late afternoon Singapore time, after falling as low as $58.88, in electronic trading on the New York Mercantile Exchange. On Friday, the contract fell 52 cents to settle at $59.89.

Prices have fallen $14 a barrel, or 19 percent, since June 30 after poor unemployment data from the U.S. and Europe sparked investor doubts that the global economy was poised for strong recovery this year.

....

Traders will be looking this week to the first big batch of second quarter corporate results for clues about economic growth. Investors will also be eyeing data on housing starts, retail sales and industrial production.

....

In other Nymex trading, gasoline for August delivery was steady at $1.64 a gallon and heating oil dropped 1 cent to $1.52. Natural gas for August delivery slid 4.7 cents to $3.30 per 1,000 cubic feet.

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

I filled up today at $2.01. Oklahoma City.

Timmy? Hank? You there?

:hi:

Irrespective of my avatar. SMW always gets a :thumbsup: from me. :hi:

I've noticed the recommendation number going up and down this morning. Not that I take it personally - it's just curious to see how many negative hits this thread attracts.

Naturally, I am inclined to think that people who 'unrec' the SMW possibly belong to the throngs of boot-licking devotees of Milton Friedman, Reagan, Bush/Cheney, Greenscam, Bernanke and the Goldman Sachs junta.

I usually don't think to - not out of lack of appreciation, just because it's sort of a "fixture" in my mind, and because I rarely post anything in it. I'd bet there are any number like myself, who read here every day but don't post. Hard to imagine why anyone would hit "unR" on this - aside from your own description (how many such boot-lickers could there possibly be here, anyway?) - why would anyone un-R this thread? Are people just running amok na-na-na-na-na-ing like grade-schoolers around here?

some real thinking about the markets. I will make sure to rec each day.

I teach economics in high school, and I will assure you that you would be amazed what a preponderance of my students come to class with the rosy Randian outlook, even those who come from families with nothing to show for a lifetime of work.

My first task always: deprogramming.

Just wanted to add a little appreciation, because I feel a lot of it!

:thumbsup:

:yourock:



Keep up the good work!




Tansy Gold, great admirer of teachers

:blush:

A great admirer of Tansy Gold.

:blush:






Tansy Gold, who probably shoulda been a teacher :-(

Kids today just about can get whatever they want, whenever. It's like it's Christmas all year round.

Years ago, I watched a program (PBS?) called Affluenza...

Affluenza is a one-hour television special that explores the high social and environmental costs of materialism and overconsumption. Here you can learn more about the show, get an Affluenza diagnosis and check out resources for treatment. Don't miss our Teacher's Guide, available only on this Web site.

more...
http://www.pbs.org/kcts/affluenza/

site map for affluenza
http://www.pbs.org/kcts/affluenza/map/map.html

Occasionally I post, but mostly I lurk. This is my favorite thread most days, and from now on, if I get to the 'puter, I recommend this.

Thanks to all of you regulars for your excellent work over the years.

When I want the unadulterated truth of our economy, the SMW thread is where I go.

Keep truth telling Marketeers and a big thank-you!!

:patriot:

The Dow is really at 12,000 right now, and happiness is just around the bend.

One of these days we'll wake up and see the light.

And WEE on Friday night or Sat morning.

Maybe they are just trying out the buttons?

We'll have to see if there's a continuing trend.

One even came back three times with sock puppets. They're out there. We tend to identify them pretty quickly and ease them on their way.

I've heard that there are people who, as a matter of principle, would "U" every single post but did not think it would extend to your excellent reports.

At least the sane DUers took over

:hi:

Most of Wall Street, and America, is still waiting for an economic recovery. Then there is Goldman Sachs.

Up and down Wall Street, analysts and traders are buzzing that Goldman, which only recently paid back its government bailout money, will report blowout profits from trading on Tuesday.

....

Startling, too, is how much of its revenue Goldman is expected to share with its employees. Analysts estimate that the bank will set aside enough money to pay a total of $18 billion in compensation and benefits this year to its 28,000 employees, or more than $600,000 an employee. Top producers stand to earn millions.

....

Goldman Sachs is betting on the markets, but the markets are also betting on Goldman: Its share price has soared 68 percent this year, closing at $141.87 on Friday. The stock is still well off its record high of $250.70, reached in 2007.

http://www.nytimes.com/2009/07/13/business/13goldman.html

---

This is a fairly stupid and breathless, tail wagging article about GS. Conspiracy theories notwithstanding - the article does not even venture close to any analysis of GS's success. Instead, it just hops along with a bubble-headed "magic of the marketplace" dizziness.

and Madoff made off with the money for more than 20 years before he was caught with his Ponzi scheme.

Geithner to focus on investment, economic recovery

WASHINGTON – On his first trip to the Middle East as Treasury Secretary, Timothy Geithner's message this week will be similar to the one he delivered to Chinese officials a month ago: your investments in the United States are safe.

Geithner is expected to repeat assurances that the government's soaring budget deficits will not trigger a devastating bout of inflation that sinks the value of the dollar and foreigners' holdings.

Geithner is scheduled to hold high-level meetings on Tuesday and Wednesday with top government officials and leading business executives in Saudi Arabia and the United Arab Emirates.

In advance of those meetings, Geithner stressed in an interview broadcast Sunday that the administration was committed to protecting the value of the dollar and maintaining investor confidence in the U.S. financial system.

more...

---

Of course, what the article does not say is that when Geithner made the "foreign assets are safe" comment - the Chinese in audience laughed out loud at him.

I don't remember Greenspan doing this...but then he probably traveled in secret. Maybe this is the new "transparency."

that we know of...

Fareed, to his credit, was trying to get Li'l Timmy to say whether or not the banks were lending a sufficient amount of money to business and consumers. Fareed asked the question a couple of ways, but Timmy would only say that the balance sheets of the banks are better and that we avoided a worldwide meltdown. It was just so clear that Timmy either doesn't care about business activity or jobs or that he really sees the economy as equal to the balance sheets of Goldman, JPMorgan, Citi and BOA.

Fareed also went after him about the 100% payout to AIG's CDS counterparties. Again despite consistent efforts, Timmy refused to explain why it was necessary to make those counterparties 100% whole. Timmy went on and on about the sanctity of contract, but Fareed never reminded Timmy that contractual obligations are settled every day by compromise at less than 100% performance, but then Fareed is neither a businessperson nor a lawyer.

Frankly, I was surprised that Fareed had Timmy on and that he really went at him. Zakaria always has struck me as an internationalist rather than a populist, but perhaps he does harbor some thoughts of international populism that came out yesterday.

I wonder if Timmy thought that he would be talking about his upcoming overseas pep talks instead of being nailed on the failures of his policy here.

(A sort of normal debt rise. Good day, good week to all.)

= Held by the Public + Intragovernmental(FICA)
= 7,181,012,709,229.66 + 4,345,291,349,595.88
UP 10,396,425,012.59 + UP 843,409,303.13

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 306,832,742 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 $37,565.43.
A family of three owes $112,696.29. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 23 reports in the last 30 days.
The average for the last 23 reports is 5,862,817,538.98.
The average for the last 30 days would be 4,494,826,779.89.

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$/day.
There were 117 reports in 170 days of Obama's part of FY2009 averaging -0.21B$ per report, -0.06B$/day so far.
There were 192 reports in 282 days of FY2009 averaging 7.82B$ per report, 5.32B$/day.

PROJECTION:
There are 1,291 days remaining in this Obama 1st term.
By that time the debt could be between 13.3 and 18.4T$.
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)
07/09/2009 11,526,304,058,825.54 BHO (UP 899,427,009,912.46 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: 1,501,579,161,913.10 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
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 --
06/26/2009 +000,335,751,413.22 ------------********
06/29/2009 +000,126,971,012.08 ------------******** Mon
06/30/2009 +084,349,097,965.60 ------------**********
07/01/2009 -009,218,801,329.89 --
07/02/2009 -025,885,550,566.82 -
07/03/2009 -000,017,140,719.16 ----
07/06/2009 +029,989,200,037.82 ------------********** Mon
07/07/2009 +000,215,166,015.48 ------------********
07/08/2009 +000,621,025,720.38 ------------********
07/09/2009 +010,396,425,012.59 ------------**********

53,386,212,514.74 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,861,672,255,566.47 in last 294 days.
That's 1,862B$ in 294 days.
More than any year ever, including last year, and it's 183% of that highest year ever only in 294 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 294 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=3962519&mesg_id=3962536

(Small moves down.)

= Held by the Public + Intragovernmental(FICA)
= 7,180,648,435,929.38 + 4,343,957,854,235.66
DOWN 364,273,300.28 + DOWN 1,333,495,360.22

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 306,839,942 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 $37,559.02.
A family of three owes $112,677.05. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 23 reports in the last 30 days.
The average for the last 23 reports is 6,113,855,870.70.
The average for the last 30 days would be 4,687,289,500.87.

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$/day.
There were 118 reports in 171 days of Obama's part of FY2009 averaging -0.26B$ per report, -0.08B$/day so far.
There were 193 reports in 283 days of FY2009 averaging 7.77B$ per report, 5.30B$/day.

PROJECTION:
There are 1,290 days remaining in this Obama 1st term.
By that time the debt could be between 13.3 and 18.4T$.
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)
07/10/2009 11,524,606,290,165.04 BHO (UP 897,729,241,251.96 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: 1,499,881,393,252.60 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
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 --
06/26/2009 +000,335,751,413.22 ------------********
06/29/2009 +000,126,971,012.08 ------------******** Mon
06/30/2009 +084,349,097,965.60 ------------**********
07/01/2009 -009,218,801,329.89 --
07/02/2009 -025,885,550,566.82 -
07/03/2009 -000,017,140,719.16 ----
07/06/2009 +029,989,200,037.82 ------------********** Mon
07/07/2009 +000,215,166,015.48 ------------********
07/08/2009 +000,621,025,720.38 ------------********
07/09/2009 +010,396,425,012.59 ------------**********
07/10/2009 -000,364,273,300.28 ---

53,338,300,889.86 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,859,974,486,905.97 in last 295 days.
That's 1,860B$ in 295 days.
More than any year ever, including last year, and it's 183% of that highest year ever only in 295 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 295 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=3966304&mesg_id=3966320

http://www.pbs.org/nbr/headlines/US_Obama_Economy/index.html

It figures... The new Know-Nothing party is at it again.
Good morning, Ozy!

:donut: :donut: :donut:
That historical parallel is on the mark. Talk about a bunch of "know-nothings". Today's Republican party clings to ignorance as though their lives depend on it. Like their predecessors, today's Know Nothings cannot articulate a national vision and direction. Nevermind the incoherent ramblings of their leaders.

http://www.apa.org/journals/features/psp7761121.pdf

Unskilled and Unaware of It: How Difficulties in Recognizing One's Own
Incompetence Lead to Inflated Self-Assessments


People tend to hold overly favorable views of their abilities in many social and intellectual domains. The authors suggest that this overestimation occurs, in part, because people who are unskilled in these domains suffer a dual burden: Not only do these people reach erroneous conclusions and make unfortunate choices, but their incompetence robs them of the metacognitive ability to realize it. Across 4 studies, the authors found that participants scoring in the bottom quartile on tests of humor, grammar, and logic grossly overestimated their test performance and ability. Although their test scores put them in the 12th percentile, they estimated themselves to be in the 62nd. Several analyses linked this miscalibration to deficits in metacognitive skill, or the capacity to distinguish accuracy from error. Paradoxically, improving the skills of participants, and thus increasing their metacognitive competence, helped them recognize the limitations of their abilities.



***********


There's a lot of "industry jargon" that may be a bit unfamiliar and confusing to some, but it's a pretty interesting article. And if it only "proves" what we already know, at least we now know we're not incompetent.



Tansy Gold, who doesn't always understand the jargon but generally manages to get the point

That description fits her (and the remains of the once mighty GOP)to a T.

Seriously, if you combine this article with Altemeyer's "The Authoritarians," you get a stunning portrait of the pukes. It's quite scary.


The authors of this study, however, found that in some cases, the 'incompetent' can be trained/educated to see their misperceptions. And in doing so, they become competent. . . .

No kidding!



TG

My grandmother was a teacher in Detroit.

The article even goes into how people can be "educated" and still not know how much they don't know.


The volunteers were all college students, so they weren't totally ignorant, and the stats generated by breaking results into quartiles, so even the lowest quartile from a group of college students is probably going to get higher raw scores than a similar group of, say, high school drop-outs in their mid 40s. EVEN SO, those in the lowest quartile had far less awareness of how poorly they had performed than the other quartiles, and the highest quartile tended to UNDERESTIMATE its performance.

But in an education system that awards credit for effort, that grades on a curve, that avoids labeling anyone a failure, there's a lot of untruthiness going around and making a mark on the perceptions of its graduates.



TG

July 13 (Bloomberg) -- U.S. stock-index futures fell, indicating the Standard & Poor’s 500 Index may extend four weeks of losses, after Treasury Secretary Timothy Geithner said there are still “enormous challenges” for the economy.

Chevron Corp. fell in Europe as crude oil retreated for a second day. Bank of America Corp. dropped as people close to the matter said the bank is trying to avoid paying billions of dollars in fees to U.S. taxpayers for guarantees against losses at Merrill Lynch & Co. Goldman Sachs Group Inc. may be active as Meredith Whitney Advisory Group LLC advised buying the stock before the bank reports earnings tomorrow.

S&P 500 Index futures expiring in September slid 0.4 percent to 870.9 at 9:54 a.m. in London, having fallen as much as 1 percent earlier. Dow Jones Industrial Average futures dropped 0.3 percent to 8,058 and Nasdaq-100 Index futures decreased 0.5 percent to 1,409.

....

Bank of America fell to $11.83 from $11.88. The bank is trying to avoid paying billions of dollars in fees to U.S. taxpayers for guarantees against losses at Merrill Lynch, saying the rescue agreement was never signed and the funding never used.

http://www.bloomberg.com/apps/news?pid=20601103&sid=aSd1L4yhNAlo

July 13 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke probably will show how the central bank will exit the biggest monetary expansion in history when he reports to Congress next week, economists said.

The Fed pumped $1 trillion into the banking system over the past year through bond purchases and emergency loans, doubling assets on its balance sheet. Reassuring investors that inflation won’t exceed forecasts once the recession ends will give the Fed more credibility, said Dean Maki, chief U.S. economist at Barclays Capital Inc. While policy makers have spoken about specific tools they may use, they haven’t laid out a strategy.

....

Unemployment is also surging: The jobless rate will exceed 10 percent early next year and average 9.8 percent for 2010, according to a Bloomberg News survey published last week. The rate was 7.6 percent in January.

Fed officials will begin to lift the benchmark interest rate in the third quarter of next year and take it to 1 percent in the final three months, the Bloomberg survey showed. The previous month’s survey estimated the Fed would hold the rate near zero until the fourth quarter of next year.

....

The Fed has expanded credit through increased loans to banks to provide liquidity and rescues of financial companies such as American International Group Inc. It’s also begun market backstops such as the Commercial Paper Funding Facility, which holds $109.2 billion in short-term IOUs issued by corporations, and the Term Asset-Backed Securities Loan Facility, which has lent $24.9 billion to investors to buy securities tied to auto and other consumer and business loans.

http://www.bloomberg.com/apps/news?pid=20601068&sid=aNU.UkT9EB68

---

This is pretty much a non-story as described by the headline and opening paragraphs. This article does, however, have a good rundown of the activities the Fed has enacted over the past year.

Ben is a bigger phony than the Wizard of Oz.

A kind word is always appreciated. :hi:

Found at Calculated Risk

Ozy here: I bet this case will be in a law school textbook someday.

7/13/09 Flint, Mich.: Growing Stronger By Growing Smaller?
by Anthony Brooks

Dan Kildee wants to save the city where he was raised by shrinking it. The city is Flint, Mich., in Genesee County, where Kildee is treasurer.

"There's an obsession with growth and expansion," Kildee says. "I'm not against growth, but what we really have to recognize is that we have already shrunk. And because we are not growing does not mean we can't be a good city."

The concept of "shrinking cities" is not new. The idea is to bulldoze entire neighborhoods. The smaller city would then be cheaper to run and help pave the way for better times ahead, advocates say.

Today, Kildee says, his hometown "looks like the Lower 9th Ward in New Orleans — a sort of a slow-motion Katrina."

Empty houses and vacant lots can be seen on block after block. The numbers tell the story of a dying city. At its peak, Flint was home to General Motors, with a growing population of some 200,000 people and 80,000 auto industry jobs. Today, the population is about half what it once was, and only a few thousand auto jobs remain. More than one-third of the homes in Flint have been abandoned.

As the county treasurer, Kildee heads the County Land Bank, which has been buying up thousands of abandoned and foreclosed properties. He has control of large portions of Flint — which gives him a powerful tool to reshape the city.

"What we really need is a new map, literally a design of the city that looks at every block in every neighborhood, and then makes decisions about where it makes sense to either let nature take the land back or to create some intentional open green space," Kildee says. "So that 100,000 people can live in a city that does not look half-empty."

more...
http://www.npr.org/templates/story/story.php?storyId=106492824

edit: audio is posted

Downsizing can be good for you.



Which reminds me, I need to clean out some "weeds" -- I'm a bit of a pack-rat at times (okay, all the time) and I really need to jettison some of this "stuff."




Tansy Gold

Every year, the local Catholic church has a fundraiser festival: rides for the children, carnival-type games, a bit of gambling for the adults, music, entertainment, used books, homemade crafts, and lots of food. The highlight is turning the school into a giant garage sale, called 'Trash and Treasures'. It's amazing the things that are donated, and the prices are very reasonable too. so I've gone thru my house and found a bunch of stuff to donate. I wonder what treasures I will come home with this year. lol

Found the graham cracker crumbs and a few popsicles, took inventory, and dumped out a gallon of water when it was all over.

The Younger Kid asked me if I was supplying a small Ethiopian village. It's the liberal education she got here in A2.

From Treasury Secretary Geithner (via Tom Petruno at the LA Times):


From Brad Delong: Fiscal Policy: The Obama Administration Is Not Making Much Sense These Days


....

From Paul Krugman: Vegematic policy advocacy:



Ozy here: There's much more to this post at Calculated Risk. As for me - I recall putting myself on record, for what it's worth, saying that a second stimulus would be absolutely necessary when the $750 billion bank welfare stimulus bill was passed. Reason being that the original bill was too small and that it would do nothing for anyone who is neither a bank nor a banker. Geithner, in all his idiocy and cowardice, will not take the initiative for a second stimulus because he and his boss would lose face.

according to Ilargi, at The Automatic Earth

7/12/09 Ilargi said...
The 2nd stimulus is a very difficult topic for Obama vis à vis Congress, with much of 1.0 not even committed, let alone spent, and many voices against additional spending.

That means it has to be talked about now, and at the same time sort of denied. Axelrod and Biden have said it's premature to talk about it, Tyson has said it IS time, some Congressmen have vented "opinions". That clears the stage for Obama to deny it.

He could not even have mentioned it out of the blue without the others having brought it up. The overall picture now is one of confusion, while the topic IS out there, which makes it much more palatable to return to it later. They don't want 2.0 right now, but they do want it down the road, so it needs to be part of the public conscience and vocabulary, but not as an immediate issue.

Hence, when the "worse than expected" numbers start coming in, likely as soon as next month, it'll be much easier for Obama and Geithner to start discussing the plan for real.

They'll say: when Tyson and Biden brought it up in June/July, it was too early to talk about it, but in view of the new numbers, which nobody did or could foresee, we now need to spend another $1 trillion.

I'm sure it will keep on coming up in talk shows with various Washington figures, as well as a Krugman or two, as we go along, in order to keep it out there in the public mind. Don't let people forget it, but keep denying till the pivotal moment of your own choosing, i.e. as a reaction to new, "unforeseen" and terrible numbers

http://theautomaticearth.blogspot.com/2009/07/july-11-2009-full-spectrum-ignorance.html

No, Ozy, it's not evenabout losing face.

It's that any second stimulus might be directed at real people, and that doesn't directly benefit TPTB. It won't happen. They don't do nothin' that don't put nothin' in their own pockets.



Assholes.





Tansy Gold

Until we get leadership dedicated to the proposition that not only are all people created equal, but that they should all be equally supported in their efforts--until being Middle Class is again the optimum state, we aren't going to be a democracy or a leader in anything worth bragging about.

It was the chance to become middle class that brought our ancestors here, unless they were descendant of British aristocracy in Virginia, to get out of grinding poverty and powerlessness.

And it's a chilly one: 46F. In July. Global warming, go figure.

Well, we had Fun, Fun, Fun this Weekend Economists thread. I even got all the email from June scanned and posted....only by listening to all the Beach Boys numbers I could find...this says a lot about growing up in Detroit in the 60's.

Here's hoping that no media circus erupts this week--I'm not sure the circuits of my brain could take any more hype.

I dropped in to place my recommendation and to scan the news and commentary. The Goldman Sachs code theft has captivated my attention for the moment. It's a sure bet that the story will get additional scrutiny after GS unveils its $2B profit report. Remember: the world never sucks for Goldman Sachs. They can even make an unprofitable month simply disappear.

My new computer should arrive either today or tomorrow. Until then - I continue limping along with the old fossil that freezes up on occasion.

Morning, hope you enjoy

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=114&topic_id=67227&mesg_id=67227

It received my recommendation. I hope that someday Cramer will have the decency to deprecate himself for all of his bad calls by disrobing on-air and throwing himself into a vat of Jello. This singular act would firmly cement his clown image.

I figure when piling on to JC gets old, I can move on to Kudlow and Kneale. :evilgrin:

Be sure to provide a link in a SMW post each day so we can cross-train.


Asshats, all of 'em. Total asshats.





Tansy Gold, who isn't quite sure what an "ass hat" is and doesn't wanta know!

but still, I found it interesting, particularly the "gold" stuff in the Loud Paradigm Shift Rumblings.

Recently Orlov gave a talk in Dublin about the coming collapse. He talks about different ways of looking at food, shelter, transportation and security. It's appx 1 hour in length.
http://cluborlov.blogspot.com/2009/07/video-of-public-lecture.html

The video is in QuickTime format (and it takes a long time to download), but in the comments, someone has posted a link in mp3 format.

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

Last trade 80.180 Change +0.022 (+0.03%)

US Dollar Looking For a Catalyst to Break Congestion

http://www.dailyfx.com/story/currency/eur_fundamentals/US_Dollar_Looking_For_a_1247272881119.html

Though price action for the world’s reserve currency remained extraordinarily volatile this past week; the heightened activity wouldn’t translate into direction. Aside from the Japanese yen, the dollar’s exchange rates with its major counterparts were ultimately little changed from the previous Friday’s close, reflecting a general lack of market-moving economic data and a tempered interest in risk appetite as the G8 deliberated on the path the world’s financial leaders will take in tending to the global recovery. Looking ahead, the dollar will start the new week in a relatively tight range with its most liquid pairings, looking for the fundamental spark that can encourage a breakout and reignite a trend. What could be that motivating factor? There are more than a few notable indicators populating the docket, fine tuning forecasts for the pace of recovery; but as usual, the true driver will likely come through sentiment and risk appetite.

Over the past month, risk appetite has leveled off and is even threatening to retrace the rally in optimism that began back in March. There are two considerations here for those trading the dollar. First, determine what is will drive sentiment; and then determine how the greenback will respond to the shift. It shouldn’t come as a surprise that the currency’s reaction will depend on what is moving the market. Should the global financial markets be thrown into panic, the dollar will take on the title of safe haven. On the other end of the scale, if there is a broad recovery in investor sentiment, it will be a more discriminating scale. Looking out over the coming week, there are few critical events scheduled – but this sort of thing usual comes out of the blue. More likely, the market’s bearing will feed off bigger trends. Carry over from the G8 meeting over the second half of this past week has increased the rivalry to be the first country to see positive growth and financial stability. In its comments, the group suggested there were early signs of economic “stabilization,” yet there were still hurdles and the commitment would remain with “fiscal sustainability.” This has been the motto for a few months now which only further breeds speculation. Should the calls to recapitalize “viable” banks and deal with distressed debt be taken seriously, the US is already ahead of the curve. However, beyond the short-term, America’s budget deficit dwarfs most of its counterparts; and policy officials remained staunchly opposed to moving on to the next step for a recovery – the government’s graceful exit from the financial markets.

But, when the financial seas are quiet and speculation over some other region is accelerating its exit strategy is settled, the fundamental crowd will turn back to benchmarking the United States’ relative pace of economic recovery. It is important to remember that it doesn’t necessarily matter how quickly one economy returns to positive growth or its pace thereafter. What is important is whether the US is going to pull itself out of recession and push up the throttle on expansion before its global counterparts. For this purpose, we have a slew of economic releases filling out the economic calendar. The most encompassing report to cross the wires will be the FOMC minutes. While their multi-year growth and inflation forecasts are not expected to be updated until the minutes released in August; this will nonetheless provide the short-hand version of their opinion on growth and financial markets. Less comprehensive – but more likely to stir volatility – are advanced retail sales, industrial production and housing starts. These three indicators will offer a status report on three of the most essential regions of growth. Also, though it may be under the radar, an eye should be kept on the monthly budget. The government’s ability to fund its stimulus efforts and the amount of debt they ultimately take on are critical at this point.



...more...

Euro, Pound Remain Vulnerable As Concerns Grow Over Corporate Earnings, Yen Finds Support

http://www.dailyfx.com/story/bio1/Euro__Pound_Remain_Vulnerable_As_1247478695672.html

The Euro continues to remain range bound and with an empty economic docket the single currency has volatility has been driven by risk sentiment. European stocks started the day lower but have flirted with positive territory which has provided some support for the single currency. The EUR/USD found support at the 50-Day SMA at 1.3878 as technical levels continue to have significant influence on directionless price action. Support at 1.3784 the 38.2% Fibo of 1.2884-1.4340 remains the key level as the pair has remained above it since mid May.

We may continue to see range price action for the duration of the month as the ECB remains on hold as they assess the impact of their cover bind purchase program. We could start to see rhetoric from committee members as we get closer to the next policy decision in support of keeping rates unchanged at the current record low 1.00%. The central bank is reluctant to go lower and it would take a shift in expectations for them to take the aggressive action. President Trichet has maintained that deflation isn’t a concern and that growth is expected to rerun by mid 2010. However, there are concerns that the troubles of the developing nations in Eastern Europe could have a weighing factor on the economy and increase the downside risks to growth. German Zew this week will present the most significant event risk. We have started to see sentiment indicators indicate that optimism is abating which would add weight to the single currency.

The pound ran into resistance at the 20-Day SMA at 1.6363 as growth concerns and expectations that the BoE will add to their quantitative easing efforts at their August meeting when they release their quarterly inflation report. Tomorrow’s CPI report is forecasted to show inflation falling below the MPC’s 2% target to 1.8% which will increase speculation for the expansion . The central bank has maintained that prices will fall below their target and remain there for the remainder of 2009 which could threaten any growth prospects and derail any potential recovery.

The dollar started to give back its gains as risk appetite returned during European trading but growth concerns has continued to generate support for the greenback. The economic calendar is relatively empty today with only the monthly budget ahead which is expected to show a -$86 billion as budget cuts pare spending. The main focus this week will be on the beginning of earnings season with Goldman Sachs, IBM and GE highlighting the list of those reporting. The concern is that we will see companies report modest gains as the benefits from their cost cutting start to dissipate. U.S. retail sales latter in the week is expected to show a modest rise, but millions of jobs lost over the past year is expected to limit domestic demand going forward. Therefore, the prevailing uncertainty and growth concerns should continue to be a supportive factor for the dollar.

...more...

July 6 (Bloomberg) -- The dollar and U.S. Treasuries are both likely to slide as soaring government debt in the world’s biggest economy undermines confidence in its assets, according to Jim Rogers, chairman of Rogers Holdings.

“The government is printing lots of money and borrowing even more; that’s not the basis for a sound currency,” he said in a telephone interview today from Singapore. “The idea that anybody would lend money to the U.S. government for 30 years at 3 or 4 or 5 or 6 percent interest is mind-boggling to me.”

Rogers, the author of books including “Investment Biker” and “Adventure Capitalist”, said he holds fewer dollars than a year ago and plans to “short U.S. government bonds someday.” A short bet involves selling a security you don’t own with a view to buying it back after the price has fallen.

The U.S. is stepping up debt sales to finance a record budget deficit as it tries to spend its way out of a recession and that’s causing the supply of the securities to balloon. After more than doubling note and bond offerings to $963 billion in the first half, another $1.1 trillion may be sold by year-end, according to Barclays Plc, one of the 16 primary dealers that are obligated to bid at Treasury auctions.

U.S. debt lost 4.46 percent through June, according to Merrill Lynch & Co.’s U.S. Treasury Master index.The yield on benchmark 30-year notes reached 4.84 percent on June 11, the highest since 2007, and was 4.31 percent as of 2:02 p.m. in Tokyo. It sank to 2.51 percent in December, the lowest since sales of the security began in 1977, as the economic slump fueled demand for the relative safety of government bonds.

more... http://www.bloomberg.com/apps/news?pid=20601213&sid=ahJP3jqGJ_PM

OH, anybody have any idea why someone would be OBLIGATED to bid at Treasury auctions?

Saw something on MarketWatch but can't spend time looking into it. *sigh*

Back to work I go!

CIT in talks to secure liquidity

LONDON (MarketWatch) -- CIT Group officials were scrambling over the weekend to improve the group's funding position amid fears that nervous customers could start withdrawing their funds, according to media reports, and as Treasury Secretary Timothy Geithner said he's closely following the saga.

The Wall Street Journal reported over the weekend that CIT /quotes/comstock/13*!cit/quotes/nls/cit (CIT 1.19, -0.34, -22.22%) , which specializes in lending to small and medium-sized businesses, had retained counsel to prepare for a possible reorganization in bankruptcy court.

....

LONDON (MarketWatch) -- CIT Group officials were scrambling over the weekend to improve the group's funding position amid fears that nervous customers could start withdrawing their funds, according to media reports, and as Treasury Secretary Timothy Geithner said he's closely following the saga.

The Wall Street Journal reported over the weekend that CIT /quotes/comstock/13*!cit/quotes/nls/cit (CIT 1.19, -0.34, -22.22%) , which specializes in lending to small and medium-sized businesses, had retained counsel to prepare for a possible reorganization in bankruptcy court.

---

Getting harder to read stuff on this phone!. :-)

I think I need glasses now.

But, I must have seen the same report, when I walked past a TV at the gym. I thought the banner said,"Citi fights for survival". Either I read it wrong, or they wrote it wrong. It was CNBC.

7/13/09 Wobble Time by James Howard Kunstler

The cat coming out of the bag this week -- a frazzled, flaming, rabid, death-dealing cat -- is the news that Goldman Sachs will announce impressive second-quarter profits, and set aside $18 billion or so for employee bonuses averaging $600,000 per head (though, of course, not evenly distributed among them). There probably are not fifty-three people in the USA who can explain how this development figures in with last fall's bailout gift from the US treasury, or the $13 billion GS received on the backside of US gift payments to the failed AIG insurance company, plus the reams of necrotic securitized debt paper rotting in the back of the GS vaults. This is a company playing with the fire of world history.

It brings back the question, which has loomed dimly at the margins of America's collective consciousness, as to whether we can get through the long emergency ahead without going through a wringer of domestic political convulsion. At this rate, sooner or later, anything identified with wealth could become a target for the wrath of the unemployed and foreclosed. The first rock that flies through an East Hampton window, or the first firebomb tossed into the lobby of Goldman Sachs Manhattan headquarters could ignite a chain of events that shoves all economic policy out of the political arena and quickly divides everyone at the center of power into armies out for blood.

What the nation -- including President Obama -- can't seem to get through its head is that the USA has entered a period of epochal economic contraction. Instead of growth, as measured in conventional econometrics, we can only expect (in the best case) transformation to a different economy within the limits of real contraction. The president has got to stop promising renewed growth. While this would affect the perceived "standard-of-living" as measured in things like shopping mall sales and vehicle miles driven, it would not necessarily mean diminished "quality-of-life." It would mean different ways-of-life for a lot of people -- for instance, young adults who had expected lifetime employment as corporate executives but who, instead, find themselves ten years from now working at farming. We have an awful lot to get real about.

A genuine reorganization of the US economy seems beyond the ken not just of all US politicians but of the entire US news media and business leadership. A wonderful example last week was the idiotic press conference by General Motors marketing chief, Bob Lutz, who thinks he can revive the American Dream with electric cars. (By the way, this is pretty much the same thinking I encountered at the Aspen Environmental Forum among the Green celebrities.)

From a purely practical standpoint, the electric car is absurd. If they were produced on a mass basis, they would crash the electric grid -- assuming that the masses could afford to buy them, which assumes a lot. We simply don't have the electric generating capacity to run even one-quarter of the current car fleet on volts, and building the necessary nuclear or coal-fired power plants in five years is also an absurdity. (Don't expect wind, solar, biomass, or anything else to pick up the slack.) If electric cars were produced as just a niche product for the elite (e.g. Goldman Sachs employees), they would soon provoke the resentment of the non-elite left to the mercy of the oil markets.

Anyway, America's motoring dilemma has gone beyond the issue of how we power the cars -- and even beyond the insanity of blindly maintaining our extreme car dependency per se. The continuation of Happy Motoring now hinges on two other big quandaries: 1. the likelihood that there will be far less capital available for car loans, and 2.) the likelihood that there will be far less government money for road maintenance. The problem of Peak Oil -- and the prospect of price-jackings and shortages -- is just the cherry on top.

By the way, for practical purposes Bob Lutz of GM is an employee of the US taxpayers now, since the US owns 60 percent of the "new" General Motors, so he must be considered a spokesman for national policy. Since a transformation of the US car fleet to electric vehicles is absurd, what would be an appropriate response to profound economic contraction? How about walkable communities connected by public transit? Why is that not a focus of the "new" General Motors? In 1941 the company made the transformation from cars to armaments in a matter of months; why can't it produce the rolling stock for a renewed passenger rail system? Or trams? Is this not enough of a crisis? The answer is that there is no leadership in this direction. If President Obama declared this to be a policy objective, and stuck to it for more than one business day, he could drag the sleepwalking American public in this direction, and the rest of national leadership in government, business, and media with it.

This kind of thing is what prompts casual observers to wonder if the president is a cynical shill for business as usual, or a victim of the worst conventional thinking with no real vision, or just another clueless sleepwalking bozo with a charming veneer.

In circles that pass for "progressive" these days, the natives are getting restless. Their agitation seems pretty inchoate for the moment -- still resting on vague, poorly-defined wishes for "change." These vague promptings need to be focused on specific action that is realistic within the context of comprehensive contraction and transformation. A big piece of this would be the recognition that our suburban sprawl economy is dying, and that we now have to bend our efforts to reorganizing American life on the most fundamental physical terms. We have to inhabit the landscape differently, move around it differently, generate food out of it differently, and make things on it again. Whatever remaining real capital there is in the system can't be squandered on cash bonuses for Wall Street employees.

I'm not ready to capitulate to cynicism. There is something in the political wind this summer. I think events will force Mr. Obama to assert some real leadership and take the national debate on our predicament in another direction, even if it is an uncomfortable direction for him and everybody else. Despite the massive disappointment being expressed by so many Obama voters these days, I believe the president will redeem himself before long.

Attorney General Eric Holder announced over the weekend that he will commence an investigation into the Bush regime's misconduct with terrorism suspects. His department is capable of running more than one investigation at a time. Why doesn't President Obama direct him to open an investigation of Goldman Sachs's behavior in the area of securities fraud, insider trading, and misuse of goverment funds? Without an official inquiry into financial misconduct of this company, and others, I believe public anger will overwhelm any attempts to transform our contracting economy and the president's ability to manage it.

http://kunstler.com/blog/2009/07/wobble-time.html

She's of the opinion that humanity will be extinct in a couple generations due to the lack of clean water. Or at least a large portion of it in minimally subsistent places.

I have read that some communities won't have the funds to properly purify their water, and there could be thousands of people getting sick from drinking the bad water. I'm not that doomy to believe all humanity will become extinct, but I do think there could be some die from germs in improperly purified water.

The other thing I read is that some communities will privatize the water such that those companies will charge us dearly to buy the water that flows out of our household faucets.
:(


edit: That's amazing you have someone who thinks about these things. Everyone in my family is still clueless, dreaming of green shoots, recovery, and stock market ramping to new highs.

who drink water we fastidious birds would consider "unclean." Somehow, they survive.


Just somethin' to think about.





TG

FRSPs, if you know what I mean.

It's almost like he's giving people ideas, for whatever reason most people aren't able to think nowadays.

You know the stiff-necked thieves and overlords are anti-democratic to the core, and they would rather be beheaded than bend to the will and the need of humanity.

Today was another perfect textbook Example of Market Manipulation.

The Futures opened down nearly 100 Points last night, but an overnight Stick Save and now this steaming pile of Bullshit means the Economy is just fine.

Financials pull stocks higher ahead of earnings

Stocks surge ahead of earnings reports as analyst upgrades Goldman Sachs; Dow jumps 185

NEW YORK (AP) -- Investors are betting that strength in banks :rofl: could juice the entire economy.

Rising financial stocks propelled the stock market to its biggest one-day gain in six weeks Monday after an influential banking analyst raised her rating on Goldman Sachs Group Inc. The bank reports earnings on Tuesday.

Meredith Whitney said also on CNBC that hard-hit Bank of America Corp. is inexpensive given the assets on its books. :wtf: :rofl:

Her upbeat, albeit still cautious, tone on banks helped lift the Dow Jones industrial average 185 points in relatively thin trading volume. It was the best performance for the blue chips since June 1 and follows a month of often directionless trading in which investors looked for any fresh sign that the economy was improving, not simply licking its wounds.

Goldman has long been considered the strongest bank amid the economic downturn, but Bank of America has been one of the hardest hit by loan losses. Any improvement in banks' profits could shore up their financial position and free money for lending.

http://finance.yahoo.com/news/Financials-pull-stocks-higher-apf-1742403052.html?x=0&sec=topStories&pos=1&asset=&ccode=

I really don't know why I even bother to point out and highlight the Propaganda anymore, because I think most of the "Rebel Fascists" who post here pretty much understand the environment we are in.

We no longer have functioning Markets, just a Manipulated Casino. We no longer have a Real, Functioning Economy, just a Service Based Ponzi Structure run by a Mafioso.

Nearly all of the economic news is lies, bullshit, and Propaganda.

I think we are at a point where those who can see and know what's going on are going to need to rely on each other and ourselves, and our instincts and smarts to figure out what's really going on, so we can adapt and prepare for ourselves, our families, and even our friends and loved ones to survive whatever is coming.

It is clear The People no longer matter.

Mainstream Economic news is a waste of time.

You have to keep your eyes open, your ear to the ground, and figure it out for yourself, and seek the truth on your own.

Because WE ARE ON OUR OWN.

Welcome To Hell.

But, if we look out for ourselves and each other, as Bon Scott of AC/DC once said, maybe "Hell Ain't A Bad Place To Be."

Seeing some actual justice and a return to reason and logic wouldn't be half bad though.

"S&P 500 components earnings expected to be 15% lower than same quarter last year".

And what happened? Goldman must have rolled out their Super-Duper Manipulamatic Machine.

http://market-ticker.denninger.net/authors/2-Karl-Denninger


Watch about 1 minute into the interview:

"The underlying core earnings power of these banks is negligible."

"Its a crazy positive momentum based on zero fundamentals."

Guess when? Two months ago.

And Merideth, you haven't changed your macro forecast one iota; you still expect much higher unemployment (13% U3 .vs. in the mid 9s now) and yet you start talking about write-ups, issuing buy calls into stocks that have more than doubled in price with, in your own words, zero fundamentals and negligible earnings power?

Are you insane? To take a write-up you must first have taken a write-down! Yet that's the problem with all these OptionARMs and other exotic mortgages in particular - they are being carried at insane valuations; the lowest I could find was in the low 80 cent range, and that was at Wells Fargo.

This is pure fantasy; these loans are at best worth 50 cents on the dollar and some are in fact worth zero, as I noted (with math, thank you very little) in the other Ticker. Silent seconds and HELOCs behind these are worth essentially zero as they're subordinate and when they're getting anything in a reorganization its in the range of a nickel to a dime on the dollar, and then only as a sop to get the second holder to sign off.

This entire rally off the 666 lows was fueled by nothing more than accounting fraud writ large. Banks are not modifying mortgages or foreclosing because they have to take the marks if they do. In addition most of the time the outcome for the bank is worse if they modify, given that half the time the homeowner re-defaults! Now they get to eat the loss and the effort and time put into the modification.

At the end of the day the fact remains that the consumer is 70% of the economy and until consumers have de-leveraged and gotten rid of the excessive debt it is mathematically impossible for consumer spending to return to a normal level.

Our government's policy of looking the other way on blatant accounting farces through FASB changes, refusing to force banks to mark defaulted loans at the current market value of the underlying asset and outright handouts of taxpayer money through AIG as a conduit is outrageous, and worse, it guarantees that the economy will not and cannot recover as the debt still remains in the system!

Yes, I know, your comments this morning were made in such a fashion that whether the market goes up or down you can claim to be right - never mind that you got 1/3rd of your claimed move in the financials in one day. Congratulations.

Oh, one final question, given this chart as context, from today:

Was your commentary on CNBC disseminated to your clients before your appearance aired?

Just curious.....

oh, wait

No seriously, just using your post as an excuse to recommend ;-)
keep it up with your lightly acidic posts

regards
bmc

http://www.startribune.com/business/50679912.html?

Fastenal Co., a supplier of industrial and construction materials, remained on the front lines of the global recession Monday as it reported earnings that fell 43 percent to $43.5 million.

CEO Willard Oberton characterized the second quarter results as "very disappointing."

Earnings dropped from 51 cents a share in the second quarter of 2008 to 29 cents. The Winona-based company missed Wall Street analysts' earnings expectations by 4 cents per share.

Oberton said company executives thought they'd see some improvement in economic activity in the spring quarter, but he told analysts "the economy just continued to deteriorate."

This is another good guidepost to the health of the economy. Industrial tools and supplies are way down, so things are rough out there.