STOCK MARKET WATCH, Monday August 31

Source: du

STOCK MARKET WATCH, Monday August 31, 2009

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

AT THE CLOSING BELL ON August 28, 2009

Dow... 9,544.20 -36.43 (-0.38%)
Nasdaq... 2,028.77 +1.04 (+0.05%)
S&P 500... 1,028.93 -2.05 (-0.20%)
Gold future... 958.80 +11.50 (+1.21%)
10-Yr Bond... 3.44 -0.01 (-0.23%)
30-Year Bond 4.20 -0.02 (-0.50%)

---

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

Market Conditions During Trading Hours

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

---

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

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

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

Handy Links - Videos:
The Coming Collapse of the Middle Class    Charlie Rose talks with Roubini    Charlie Rose talks with Krugman

---

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

Could We Have Another 1987-Like Crash in the Not Too Distant Future?
BY CHRIS PUPLAVA

There are many market participants out there whose nerves appear to be pricking up lately as we approach the two worst months of the year, more so given the fact that the S&P 500 has risen more than 50% from the March lows and is overdue for a correction. Last year should have made the point that in terms of the financial markets, anything and everything is possible as we appeared to be on the brink of a systemic collapse. However, while anything is possible, how likely is another 1987-like sell off in the weeks ahead, or even a sell off similar to the 1998 Asian Currency Crisis?

Whether one looks at seasonal patterns over the last 20, 50, or even 100 years, September has consistently proven to be THE worst month of the year by a sizable margin as the enumerable folks at Bespoke Investment Group show below.

-see chart-

.....

Using the same type analyses one can look at the stock to bond ratio (SB) to determine whether one asset class has moved too far relative to the other. Looking at the SB ratio back in 1987 showed a very dramatic rise in stocks relative to the bond market that reached an extreme condition and warned that stocks had likely ventured too far too fast. The relative strength index (RSI) of the ratio on a monthly basis reached just over 75 at the market's peak, a severely overbought condition and warned that stocks were ripe for a selloff relative to bonds.

So what does the SB ratio tell us about the current situation? The weekly RSI of SB ratio earlier in the year was pointing to a similar setup as the 2002-2003 market bottom as the RSI was failing to put in new lows to confirm the lower lows made in the SB ratio from the October lows to the March 2009 bottom, which correctly heralded a market bottom. The weekly RSI is currently near 60 and reaching overbought territory near 70, but there is no divergence yet to suggest a major market top is approaching as momentum is confirming price.

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

We would be lucky to have 1987 part 2. But this is 1929-1937 part 2.

Maybe he forgot the definition of a crash. We've been living through a 'W' shaped crash over the past six years. 1987's Dow crash was a mere 20% of value -albeit in one day, mind you. We have seen 20% losses in average indices value over the past year with only anemic recovery.

and meditate a little on the overall picture. The real-time driven daily rat race the rest of the time allows most "players" only to focus on the most immediate (often media-driven) one-thing-at-a-time.

(edit to finish thought) So when September comes, longer-term strategy decisions tend to be taken and implemented.

Do these guys ever study THE ECONOMY?

Or do they just look at the numbers on the stock page and look for "patterns" in the ups and downs?


"Look, everyone, stock in Lumpty Dumpty has been going up steadily for six months. There was a slight correction in June before the upward trend continue. This is slow and steady, not a meteoric rise heading for a crash."

Never mind that Lumpty Dumpty has long been rumored to be fudging its books, that it's in the middle of a lawsuit over patent infringement, and its chief executive has been dumping stock for the past two weeks. It's almost as if THAT kind of information doesn't matter. Only THE NUMBERS.

Is this true? Is this how they operate? I mean, I read some of these articles and they make no sense to me, but since I don't have anything directly invested in the market, I'm not as concerned as I probably ought to be. But even so, it seems as if there is less emphasis placed on the analysis of the company an investor wants to invest in and much MORE emphasis placed on the market in general and various large sectors (transportations, utilities, etc.) in particular.

Which of course then leads me to believe, as I have for some time, that it's all speculation and damn little real investing.

But what do I know?




Tansy Gold

http://www.fundsupermart.com/main/research/viewHTMLPrint.tpl?articleNo=3657

China fell through the floor today, with the A share market P/E in enviable territory compared to that of the S&P 500. (charts in above link)

To get to the level of the Asian markets, (if my math is right) the S&P 500 would require a "retrenchment" :nuke: back to the lows of last year. To get to the historic bear market P/E's, often placed in the range of 10, would "shave" :sarcasm: another 450 or so points from the index.

But you won't get to those numbers using the saccharinated (new word I think) numbers tossed out by the MSM. You will if you use the real earnings filed with the SEC.

YMMV

09:45 Chicago PMI Aug
Briefing.com 48.1
Consensus 47.2
Prior 43.4

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

SINGAPORE – Oil prices fell to near $72 a barrel Monday in Asia as China's stock market tumbled and commodities investors questioned whether the U.S. economy can recover strongly in the second half.

Benchmark crude for October delivery was down 67 cents to $72.06 a barrel by late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract Friday added 25 cents to settle at $72.74 after tumbling from near $75 earlier in the week.

Sinking Asian stock markets, led by a 6.7 percent fall in China's benchmark, provided a negative cue for crude. Oil investors often look to stock markets as a barometer of sentiment about the economy.

.....

In other Nymex trading, gasoline for September delivery was up 0.82 cent at $2.07 a gallon and heating oil fell 0.77 cent to $1.85 a gallon.

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

Morning Ozy. It's 45F. In August. In SE Michigan, an hour from Toledo. I think we'll be seeing the return of the Great Lakes Glaciers in a decade....

Good morning, Demeter. :donut: :donut: :donut: I'm sorry to hear about the insomnia. Weather is a little wacky here too - now that we are seeing Fall temperatures this weekend and through the middle of the work week. It is going to be in the mid 70's today - so I'm inspired to think of the Six Million Dollar Man starring Lee Majors. (My apologies for the lame humor.)

I hope you can grab a nap at some point today.

:P

It was a photo finish!

Glaciers,eh? Well...you'll be able to play hockey outside more then!

It's 82 right now, at 6:00 a.m.

High yesterday was 109. And yes, it's a dry heat. A *very* dry heat.




Tansy Gold, still not missin' the midwest after 24 years and one day in Arizona.

Nice and ninety here yesterday. With low humidity.

I'm getting ready to start opening the windows at night again. We went outside Sat. night at midnight to watch the shuttle launch. From all the way across the state, we could see it about 30 seconds after blast off, all the way up to shutdown. Beautiful ball of fire in the sky.

That plus the remnants of acres upon acres of vaporized dry brush filling the air (smoke for those who are not poetically inclined) has made things just marvelous.

My heat tolerance has dropped something fantastic. But I was hoping 45F would wait until late October....I was afraid I'd have frost on the car, which sits outside because the roofers messed up the garage and I can't get it straightened out while they careen around with cranes and forklifts and the house shakes.

It's a mess out here. Hope it will be over this week. One could go mad.

By Katherine Burton

Aug. 31 (Bloomberg) -- Cerberus Capital Management LP plans to raise money in the fourth quarter to buy distressed companies and securities after losses on investments such as Chrysler LLC and GMAC LLC led to $4.77 billion in client redemptions.

The withdrawal requests, representing 60 percent of the $7.9 billion in its Cerberus Partners LP and Cerberus Institutional LP funds, came mostly from other managers who need to pay off investors, according to Mark Neporent, the New York- based firm’s chief operating officer and general counsel. Institutions and wealthy individuals are still looking to invest with Cerberus, which oversees $24.3 billion, including a $1 billion fund raised last month, he said.

“These redemptions are not a reflection of a lack of confidence, but a reflection of demands of liquidity” from the funds of funds that had placed clients’ cash with Cerberus, Neporent said in an Aug. 29 interview.

Cerberus, founded in 1992 by former Drexel Burnham Lambert Inc. banker Stephen Feinberg, stayed out of the limelight as it focused on buying troubled companies, debt and real estate. It stumbled with its two highest-profile deals: leading separate groups that invested almost $15 billion combined for controlling stakes in automaker Chrysler and GMAC, the former finance arm of General Motors Co.

More morning schadenfreude ... http://www.bloomberg.com/apps/news?pid=20601103&sid=aoiMh_sEJYP4

I would hate to see him go hungry. :sarcasm:

good one:evilgrin:

And you'd need 3 bowls to feed him.

he's hahmless. Just play'im some music, cahms him right daown.

TOKYO – Japan's likely next prime minister rushed to select Cabinet ministers Monday after his party trounced the ruling conservatives in elections and inherited a mountain of problems, including how to revive the world's second-largest economy.

Yukio Hatoyama spoke only briefly with reporters before huddling with party leaders. In a victory speech late Sunday, he said he would focus on a quick and smooth transition and make a priority of choosing Japan's next finance minister.

.....

Although the nation gave the Democratic Party of Japan a landslide win, most voters were seen as venting dissatisfaction with the LDP and the status quo.

The staunchly pro-U.S. LDP — teaming up with big business, conservative interests and the powerful national bureaucracy — governed Japan for virtually all of the past 54 years. Their election loss has been attributed primarily to frustration with the economy, which is in its worst slump since World War II.

.....

The Democrats' solution is to move Japan away from a corporate-centric economic model to one that focuses on helping people. They have proposed an expensive array of initiatives: cash handouts to families and farmers, toll-free highways, a higher minimum wage and tax cuts. The estimated bill comes to 16.8 trillion yen ($179 billion) when fully implemented starting in the 2013 fiscal year.

http://news.yahoo.com/s/ap/20090831/ap_on_re_as/as_japan_politics

their US bond holdings and use the money at home.
Morning :donut:

Japanese industrial production has fallen a long way (although has rebounded a little) and unemployment is high.

The initial estimate of Japan’s Industrial Production showed that output added 1.9% in July from the previous month, more than economists expected but the least in four months. In annual terms, the pace of decline moderated to -22.9%, the slowest rate of contraction since December 2008. Output has rebounded over recent months firms replenished inventories that were depleted after sagging overseas demand for Japanese cars and electronics prompted sharp cuts in production as the global crisis reached a boiling point last year. Indeed, the Nomura/JMMA PMI gauge printed at 53.6 in August, showing that the manufacturing sector expanded for the second consecutive month. However, a sustainable upturn will have to come with growth in underlying demand, which is arguably destined to remain sluggish for some time.

/.. http://www.dailyfx.com/story/market_alerts/fundamental_alert/Japan_s_Industrial_Production_Tops_Expectations__1251678025844.html

Democratic Party of Japan leader Yukio Hatoyama, fresh from a sweeping election victory, may have limited options to address record unemployment and deflation that threaten the nation’s economic recovery.

The DPJ won power for the first time yesterday on a pledge to support households battered by two decades of economic stagnation. Hatoyama has also said he’ll avoid more bond sales, so new spending will depend on his success in shrinking the bureaucracy and public works programs, which formed the core of the former Liberal Democratic Party government’s stimulus effort.

The expansion that began last quarter may already be in danger: the jobless rate rose to a record 5.7 percent in July, household spending dropped the most in five months and a report today showed factory output growth slowed. That leaves Japan “more dependent on exports that it’s ever been,” said Hugh Patrick, a professor at Columbia University in New York.

/... http://www.bloomberg.com/apps/news?pid=20601080&sid=ajHjfZIoKeVM

(WSWS) The Democrats' plan to give families 26,000 yen ($275) a month per child through junior high is meant to ease parenting costs and encourage more women have babies. Japan's population of 127.6 million peaked in 2006, and is expected to fall below 100 million by the middle of the century. The Democrats are also proposing toll-free highways, free high schools, income support for farmers, monthly allowances for job seekers in training, a higher minimum wage and tax cuts. The estimated bill comes to 16.8 trillion yen ($179 billion) if fully implemented starting in fiscal year 2013 — and critics say that will only further bloat Japan's already massive public debt.

/... (via DU) http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x6429178

LONDON (Reuters) – The Federal Reserve has made $14 billion in profits on loans made in the last two years, The Financial Times reported on Monday, citing officials close to the matter.

The U.S. central bank also earned about $19 billion from interest and fees charged to institutions that tapped liquidity facilities during the global financial crisis, the report said.

http://news.yahoo.com/s/nm/20090831/bs_nm/us_fed_profitpickup

WASHINGTON (Reuters) – Rep. Barney Frank, the chairman of the U.S. House of Representatives Financial Services Committee, said he plans legislation to restrict the Federal Reserve's emergency lending powers and subject the central bank to a "complete audit."

At a recent town hall meeting, Frank said the House would pass a bill to use an audit to crack open the central bank's books more widely, but in a way that will not encroach on the central bank's monetary policy independence.

In addition, he said the House would move to rein in the authority that allows the Fed to lend to a wide range of non-bank firms in "unusual and exigent circumstances."

A bill sponsored by Texas Republican Rep. Ron Paul that would allow the Government Accountability Office, a federal watchdog agency, to audit Fed interest-rate decisions has won the co-sponsorship of more than half of the House.

http://news.yahoo.com/s/nm/20090830/bs_nm/us_usa_fed_audits_3

---

Bernanke, as you might guess, is opposed to these ideas.

Still about $1.75 Trillion in the hole.

They're talking profit down in the noise here!

In the other article they were touting a $35 Million 'profit' off of the smaller banks. :rofl:

Hey, you've got to hand it to these guys... They REALLY want their bonuses. :eyes:

Nothing about the banks' structure has substantially changed. IMO, it is only a matter of time before we revisit where we were one year ago.

to put any of that money back into the US Treasury or pay back any of the trillions stolen from the taxpayers.

Just funny numbers. To make Ben look good.

They'd need something on the order of THAT kind of magnification to see a $4 Billion 'profit' inside of the $1.75 Trillion sloshing around via the Treasury and the Fed... Seriously.

:|

Not even on paper, probably.

Aug. 31 (Bloomberg) -- The bond market isn’t buying all the optimism over the end of the global recession.

While the International Monetary Fund said last week the economic recovery will be faster than it forecast in July, investors pushed yields on government debt to the lowest level since April, according to the Merrill Lynch & Co. Global Sovereign Broad Market Plus Index. The gauge, which tracks $15.4 trillion of bonds worldwide, gained 0.73 percent this month, the most since 1.02 percent in March.

Debt investors can’t see a recovery strong enough to spur central bank interest rates anytime soon, especially with the Obama administration forecasting that unemployment in the U.S. - - the world’s largest economy -- will rise above 10 percent in the first quarter. After stripping out the effects of the U.S. government’s “cash for clunkers” program to buy new cars, consumer spending was unchanged in July, according to Commerce Department data released on Aug. 28.

.....

Two-year Treasury note yields fell 7 basis points, or 0.07 percentage point, last week to 1.02 percent, and are down from this month’s high of 1.36 percent on Aug. 7, according to BGCantor Market Data. The 1 percent security maturing on August 2011, sold by the government Aug. 25, ended the week at 99 31/32.

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

Federal Reserve and Treasury officials are scrambling to prevent the commercial-real-estate sector from delivering a roundhouse punch to the U.S. economy just as it struggles to get up off the mat.

Their efforts could be undermined by a surge in foreclosures of commercial property carrying mortgages that were packaged and sold by Wall Street as bonds. Similar mortgage-backed securities created out of home loans played a big role in undoing that sector and triggering the global economic recession. Now the $700 billion of commercial-mortgage-backed securities outstanding are being tested for the first time by a massive downturn, and the outcome so far hasn't been pretty.

.....

The other kind of hurt is coming from the inability of property owners to refinance loans bundled into CMBS when these loans mature. By the end of 2012, some $153 billion in loans that make up CMBS are coming due, and close to $100 billion of that will face difficulty getting refinanced, according to Deutsche Bank. Even though the cash flows of these properties are enough to pay interest and principal on the debt, their values have fallen so far that borrowers won't be able to extend existing mortgages or replace them with new debt. That means losses not only to the property owners but also to those who bought CMBS -- including hedge funds, pension funds, mutual funds and other financial institutions -- thus exacerbating the economic downturn.

.....

Indeed, many property developers and investors complain there is no way to identify the investors that hold their debt and that it is difficult to negotiate with CMBS servicers. In light of the complaints, the Treasury is considering guidance that would allow servicers to start talking about ways to avoid defaults and foreclosures sooner, according to people familiar with the matter. But investors in CMBS bonds argue that the servicers are ultimately bound contractually to the bondholders.

http://online.wsj.com/article/SB125167422962070925.html

Aug. 31 (Bloomberg) -- The Federal Reserve will be unable to prevent the trillions of dollars in government stimulus pumped into the U.S. economy from stoking inflation later this decade, a survey of business economists showed.

The price gauge tracked by the central bank will rise 3 percent a year on average from 2014 through 2018, according to the median estimate in a poll taken by the National Association for Business Economics. The rate exceeds the 2 percent pace that the respondents said was the Fed’s unofficial target.

The report is in line with surveys of consumers and indicates the central bank may have to work harder to damp inflation expectations after pouring more than $1 trillion into credit markets in a strategy known as quantitative easing. Economists in the survey also said the Obama administration’s $787 billion stimulus program would push consumer prices higher.

.....

The price measure that tracks consumer spending and excludes food and fuel costs, the Fed’s favorite, rose 1.4 percent in July from the same month last year, the smallest gain since 2003, a Commerce Department report showed last week. The last time it exceeded 3 percent was in 1992.

http://www.bloomberg.com/apps/news?pid=20601103&sid=a6BvsAteUyRc

---

Inflation is already happening in my area. If one considers the expenses that everyone has - but the Fed likes to ignore (i.e. food and fuel) - we are approaching an 18% cost increase in just the past three months.

Using completely meaningless statistics to destroy ordinary people. What a country this is!

It's not the Wall Street moguls and quants who are destroying the country, the economy, the middle class.

We've wondered here for at least as long as I've been poking my ignorant little nose into SMW WHY are they doing it, and we haven't really had an answer.

I think -- I think -- we should take a closer, harder, deeper look at the religious right.

Disclaimer -- Tansy Gold loves to read and sometimes she gets caught up in what she's reading and later sees it differently when she's had some time for reflection and perspective-gaining.

The more I've read of Jeff Sharlet's "The Family," the more I've been able to put that picture together. Behind the scenes, out of the Jerry Falwell and Pat Robertson and Ted Haggard spotlight, the real powers that be have been working for 70 years to help "God" create a "Christian" aristocracy. Behind the scenes they have courted the powerful with the temptation of more power, dangling almost unlimited earthly power -- political and/or economic -- in front of them to induce favorable actions to further a distinctly American new world order.

They see power as the mark of God's blessing, and the destruction of the world is a small price to pay for that. They do not care about the poor or the working class or even the middle class. Those people are not worthy because God didn't favor them.

Of course it's not rational, not to us. And that's why there is no sense in wasting time attempting to reason with the irrational.

They are out to destroy us. But they aren't who we thought they are.



Tansy Gold, who will slink back into her bedroom and read some more

Aug. 31 (Bloomberg) -- New York Federal Reserve Bank President William Dudley said the Fed has the tools to prevent inflation from accelerating and doesn’t need to begin trimming its balance sheet.

“It’s a little bit premature to be so confident that you want to pull all these things back right now, because the economy still isn’t growing very fast and we do have a very high unemployment rate,” Dudley said today in an interview on CNBC.

...

The Fed’s lending programs have led to a large expansion in the reserves banks keep at the central bank. Dudley said those reserves can be drained from the system before leading to an increase in lending and worsening inflation.

“My view is we have tools to manage our balance sheet so we’re not going to have an inflation outcome, a bad inflation outcome,” Dudley said.

There is no sign the Fed’s actions spurred a rise in prices. Consumer prices were unchanged in July, and compared with a year earlier, they were down 2.1 percent, the biggest 12- month decrease since 1950.

Planning for Exit

Dudley said the Fed is “far along” in its planning for an exit from the extraordinary policy actions of the past year. Along with paying interest on excess reserves, the central bank may also do reverse repurchase agreements, lending securities into the market in exchange for cash, and create special interest-bearing accounts at the Fed for banks to deposit their excess reserves.

The timing for various aspects of the exit “remains to be seen” because the Fed will need to weigh the desired impact on parts of the market: mortgage rates or short- or long-term rates, he said. “We’re going to base it on the facts at this time, which I think is quite a long period away.”

The New York Fed president said he wouldn’t give in to any political pressure to keep interest rates low for too long.

/... http://www.bloomberg.com/apps/news?pid=20601103&sid=ao8sbwmo1HIg

HONG KONG — The Shanghai composite index plunged 6.75 percent on Monday to close out August with a drop of 21.8 percent, the worst performance for the month among the world’s major exchanges.

Monday’s fall, coupled with a drop of nearly 3 percent last Friday, has made for “a huge, huge decline,” said Dariusz Kowalczyk, chief investment strategist at SJS Markets in Hong Kong.

The overall index was down 192.94 points on Monday to finish at 2,667.75, the lowest closing figure in more than three months. Shares on the Shanghai exchange had rocketed more than 90 percent this year until they began to fall back about three weeks ago.

.....

Chinese banks, acting at the government’s behest, unleashed a flood of lending this spring and early summer as part of its efforts to stimulate the economy. Some of those funds were channeled into equity markets, at least temporarily, leading some analysts to warn of an asset bubble.

http://www.nytimes.com/2009/09/01/business/01markets.html

The Shanghai gauge slumped 22 percent this month as banks reined in lending to avert asset bubbles and policy makers advised industries such as steel and cement to curb overcapacity. The decline stopped a rally that had sent the measure up 103 percent from a November low on prospects the government’s 4 trillion yuan ($586 billion) stimulus program and a record amount of new loans will ensure the economy grows at least 8 percent this year.

The benchmark index lost 192.94 to 2,667.75, a three-month low. Today’s slump was the most since June 10, 2008, when the index tumbled 7.7 percent after the central bank ordered lenders to set aside record reserves to curb credit growth and inflation. The CSI 300 Index dropped 7.1 percent to 2,830.27.

“The plunge reflects investor pessimism over short-term liquidity rather than any changes in the fundamentals of the economy,” said Leo Gao, who helps oversee about $600 million at APS Asset Management Ltd. in Shanghai. “It’s panic selling.”

/more ... http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aM784KwzTghM

http://www.bloomberg.com/apps/quote?ticker=SHCOMP%3AIND

for doing its job.

The alternative - the 'my country first, right or wrong' attitude - is simply (a) xenophobia, and (b) unhealthy for your own country and your own state of mind... Let me as a Brit assure you of that.

:hug:

LONDON (CNNMoney.com) -- U.S. stocks were poised to tumble Monday morning, as another sharp fall in Chinese stocks knocked back investor confidence.

At 4:47 a.m. ET, the Dow Jones industrial average, Nasdaq 100 and Standard & Poor's 500 futures were sharply lower.

Futures measure current index values against their perceived future performance and offer an indication of how markets may open when trading begins.

http://money.cnn.com/2009/08/31/markets/premarkets/index.htm?postversion=2009083105

---

S&P 500 -6.10 1021.30 8/31 6:07am
Fair Value 1028.04 8/28 7:54pm
Difference* -6.74

NASDAQ -11.50 1631.00 8/31 5:51am
Fair Value 1643.19 8/28 7:54pm
Difference* -12.19

Dow Jones -65.00 9471.00 8/31 6:02am

Don't point fingers at the US business culture and the useless governmental agencies that don't regulate them.

Naked Capitalism

By Andrew Kaplan, a hedge fund manager:


much more at link...

should not be considered savings at all, of course.

The category "savings" should be reserved for safe rock-solid holdings with-or-without guaranteed returns. Anything else implies speculative play.

This is a good, long read. - ozy



http://www.theatlantic.com/doc/200909/bank-of-america

---

Edited to add this part, a fine explanation of the controversy surrounding the merger:

http://news.yahoo.com/s/nm/20090831/bs_nm/us_usa_economy_nabe_survey_1



WASHINGTON (Reuters) – The U.S. economy does not need a second fiscal stimulus package, instead the government should cut spending over the next two years, according to a survey of business economists released on Monday.

Most economists in the National Association for Business Economics (NABE) semi-annual poll were concerned about the outlook for the U.S. government budget. Also, they doubted health-care reforms proposed by the Obama administration would lower costs while increasing access and maintaining quality.

"This is one of the fastest-moving and most controversial economic policy environments we have experienced in a generation," said NABE president Chris Varvares. "The more vexing policy challenges about which there is less agreement are federal health-care ... budget policies."

The government early this year stepped in with a $787 billion package of spending and tax cuts to break the worst recession since the Great Depression of the 1930s. Separately, it bailed out banks to prevent the financial system from collapsing.

Those actions left the economy saddled with a $1.58 trillion budget deficit in fiscal 2009, and a shortfall of about $9 trillion between 2010 and 2019.

The ballooning budget deficit is causing alarm and feeding into opposition to President Barack Obama's central policy priority of overhauling the U.S. health-care system, whose price tag is $1 trillion.

While economists in the NABE survey acknowledged that the stimulus package had helped to brake the pace of the economy's decline in the second quarter, only 35 percent viewed fiscal policy as being "about right".

Half of the respondents saw fiscal policy as too stimulative. About 266 members took part in the poll which was conducted between August 3-18. The U.S. economy contracted at a 1.0 percent annual rate in the second quarter after collapsing 6.4 percent in the first three months of the year.

"Fully 76 percent do not believe a second stimulus package is needed. Three-quarters responded that they would like to see fiscal policy become more restrictive over the next two years, but only 28 percent expect that it will be," the NABE said.

"In fact, the largest share, nearly 42 percent, expects fiscal policy to become even more stimulative than it is now."

Just over half believed that fiscal stimulus would add between 0.5 and 1.5 percentage points to gross domestic product growth in the second half of 2009, while over a third saw it as adding less than half a percentage point.

About 58 percent felt the stimulus would add between half and 1.5 percentage points to growth from the fourth quarter of 2009 to the fourth quarter of 2010, the survey showed.

Nearly 70 percent of economists believed that monetary policy was "about right". About 56 percent of respondents expected the Federal Reserve to keep interest rates unchanged over the next six months, while 44 percent saw an increase.

The Fed has cut interest rates almost to zero and pumped around $1 trillion into financial markets via a range of credit easing measures to prevent lending from freezing up, amid a global credit crisis sparked by the collapse of the U.S. housing market.

"Half of the economists do not believe quantitative easing actions of the Fed will be inflationary over the next couple of years, while 41 percent think they will," the NABE said.

I'M GUESSING THERE ARE NOT ENOUGH UNEMPLOYED ECONOMISTS, YET.

"Three-quarters responded that they would like to see fiscal policy become more restrictive over the next two years, but only 28 percent expect that it will be,"

At least they see clearly on that point.

(Debt up eight billion, FICA side up over three-quarters of a billion.)

= Held by the Public + Intragovernmental(FICA)
= 7,393,885,646,934.29 + 4,331,592,189,156.56
UP 8,131,449,864.04 + UP 782,949,695.42

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

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 307-Million person America.
If every American, man, woman and child puts in $3.25 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.76, ABOUT TEN BUCKS for a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is the federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)

PERSONALIZED DEBT:
Every 10 seconds we net gain a another American, so at the end of the workday of the report, there should be 307,288,821 people in America.
http://www.census.gov/population/www/popclockus.html ON 08/24/2009 13:24 -> 307,261,605
Currently, each of these Americans owe $38,157.84.
A family of three owes $114,473.52. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 24 reports in the last 30 to 31 days.
The average for the last 24 reports is 4,903,770,467.13.
The average for the last 30 days would be 3,923,016,373.70.
The average for the last 31 days would be 3,796,467,458.42.
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$/day.
There were 152 reports in 219 days of Obama's part of FY2009 averaging 7.18B$ per report, 5.02B$/day so far.
There were 227 reports in 331 days of FY2009 averaging 7.49B$ per report, 5.14B$/day.

PROJECTION:
There are 1,242 days remaining in this Obama 1st term.
By that time the debt could be between 13.4 and 18.1T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
08/27/2009 11,725,477,836,090.85 BHO (UP 1,098,600,787,177.77 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: 1,700,752,939,178.40 so far this fiscal year, broken down below:
Borrowed in FY2009: 0,602,152,152,000.59 in part from time during Bush reign.
Borrowed in FY2009: 1,098,600,787,177.77 in part since Obama takes over.


LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
08/07/2009 +000,290,467,707.81 ------------********
08/10/2009 +000,222,135,743.03 ------------******** Mon
08/11/2009 +000,246,752,500.45 ------------********
08/12/2009 +000,081,638,592.29 ------------*******
08/13/2009 +004,096,319,823.99 ------------*********
08/14/2009 +000,017,806,259.60 ------------*******
08/17/2009 +012,224,191,599.44 ------------********** Mon
08/18/2009 +036,282,270,009.21 ------------**********
08/19/2009 +000,703,521,737.77 ------------********
08/20/2009 +001,088,553,104.23 ------------*********
08/21/2009 +000,333,547,281.04 ------------********
08/24/2009 +000,472,040,908.69 ------------******** Mon
08/25/2009 +000,287,748,587.67 ------------********
08/26/2009 -000,466,043,865.86 ---
08/27/2009 +008,131,449,864.04 ------------*********

64,012,399,853.40 Total of 15 above reports.

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

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

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=4036155&mesg_id=4036958

(Debt up an eighth of a billion, FICA side down well over six billion.)

= Held by the Public + Intragovernmental(FICA)
= 7,394,008,706,466.14 + 4,324,750,235,164.76
UP 123,059,531.85 + DOWN 6,841,953,991.80

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

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 307-Million person America.
If every American, man, woman and child puts in $3.25 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.76, ABOUT TEN BUCKS for a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is the federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)

PERSONALIZED DEBT:
Every 10 seconds we net gain a another American, so at the end of the workday of the report, there should be 307,297,461 people in America.
http://www.census.gov/population/www/popclockus.html ON 08/24/2009 13:24 -> 307,261,605
Currently, each of these Americans owe $38,134.9.
A family of three owes $114,404.71. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 24 reports in the last 30 to 31 days.
The average for the last 24 reports is 4,418,812,338.91.
The average for the last 30 days would be 3,535,049,871.13.
The average for the last 31 days would be 3,421,016,004.32.
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$/day.
There were 153 reports in 220 days of Obama's part of FY2009 averaging 7.09B$ per report, 4.96B$/day so far.
There were 228 reports in 332 days of FY2009 averaging 7.43B$ per report, 5.10B$/day.

PROJECTION:
There are 1,241 days remaining in this Obama 1st term.
By that time the debt could be between 13.4 and 18.1T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
08/28/2009 11,718,758,941,630.90 BHO (UP 1,091,881,892,717.82 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: 1,694,034,044,718.50 so far this fiscal year, broken down below:
Borrowed in FY2009: 0,602,152,152,000.59 in part from time during Bush reign.
Borrowed in FY2009: 1,091,881,892,717.82 in part since Obama takes over.


LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
08/10/2009 +000,222,135,743.03 ------------******** Mon
08/11/2009 +000,246,752,500.45 ------------********
08/12/2009 +000,081,638,592.29 ------------*******
08/13/2009 +004,096,319,823.99 ------------*********
08/14/2009 +000,017,806,259.60 ------------*******
08/17/2009 +012,224,191,599.44 ------------********** Mon
08/18/2009 +036,282,270,009.21 ------------**********
08/19/2009 +000,703,521,737.77 ------------********
08/20/2009 +001,088,553,104.23 ------------*********
08/21/2009 +000,333,547,281.04 ------------********
08/24/2009 +000,472,040,908.69 ------------******** Mon
08/25/2009 +000,287,748,587.67 ------------********
08/26/2009 -000,466,043,865.86 ---
08/27/2009 +008,131,449,864.04 ------------*********
08/28/2009 +000,123,059,531.85 ------------********

63,844,991,677.44 Total of 15 above reports.

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

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

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=4039738&mesg_id=4039804

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

Last trade 78.511 Change +0.191 (+0.25%)

US Dollar Consolidation Bound to Yield Breakout This Week

http://www.dailyfx.com/story/currency/eur_fundamentals/US_Dollar_Consolidation_Bound_to_1251496629548.html

The US dollar ended the past week on a mixed note across the majors, losing against the New Zealand dollar, Australian dollar, and Japanese yen, but rising versus the Swiss franc, euro, Canadian dollar, and British pound. Ultimately, this amounted to little more than a continued period of consolidation, as the US dollar index remains above a rising trendline connecting the July 2008 and August 2009 lows. Nevertheless, trading conditions have been extremely difficult, even for those that thrive on range trading, as the low volumes so often associated with the “summer doldrums” create highly choppy price action, and this may remain the case throughout next week ahead of the US Labor Day holiday.

There are a number of indicators due out over the next week that could trigger breakouts for the US dollar. On Tuesday, the ISM manufacturing index is projected to rise above 50 – the point of neutrality – for the first time since January 2008, which would suggest that the sector is finally experiencing a legitimate recovery in business activity. Indeed, the US government’s “cash for clunkers” program has been a boon for the auto industry and for manufacturers in general, but since the program formally ended on August 24, there could be a noticeable drop in output in coming months. Regardless, a strong ISM manufacturing reading would bode well for the US dollar.

The main event risk for the US dollar on Wednesday will be the release of the minutes from the Federal Reserve’s last meeting on August 12. Following that meeting, the policy statement eventually led to a quick return to risk-taking that pushed the greenback lower, as the Federal Open Market Committee (FOMC) said that the current "policy actions…will contribute to a gradual resumption of sustainable economic growth" and that they had decided to gradually slow the pace of Treasury securities purchases. A reiteration of these statements has the potential to lift risk appetite further, but on the other hand, indications that FOMC members are feeling uneasy about the outlook for growth or the need to expand quantitative easing down the road could do quite the opposite.

On Thursday, ISM non-manufacturing is anticipated to rise to an 11-month high of 48.0 for the month of August from 46.4. While stronger readings are always a positive, anything below 50 will continue to signal a further contraction in activity and will ultimately highlight the lack of consumer spending growth in the US.

On Friday, the US non-farm payroll (NFP) report is forecasted to show job losses for the twentieth straight month in August, though the rate of decline is anticipated to slow further. Bloomberg News is currently calling for NFPs to decline by 227,000, which would be the smallest drop in a year. Meanwhile, the unemployment rate is projected to edge up to 9.5 percent from 9.4 percent, but ultimately, the NFP result will be the event to watch as it is extremely volatile and is one of the sole reports that impacts the US dollar from a pure fundamental point of view.



...more...

Bank Research Consensus Weekly 08-31-09

http://www.dailyfx.com/story/special_report/special_reports/Bank_Research_Consensus_Weekly_08_31_09_1251717327241.html

This week's Congressional Budget Office (CBO) mid-year budget outlook highlights the problems inherent in conducting an “independent” monetary policy and an effective exit strategy in a subpar economic recovery. The CBO expects relatively weak real economic growth of 1.7 percent in 2010 and sees the unemployment rate reaching 10.2 percent. Their 10-year Treasury rate forecast is 4.10 percent compared to today's rate of 3.48 percent.

The Message from Jackson Hole

Stephen Roach, Head Economist, Morgan Stanley

The Grand Tetons' timeless beauty once again provided a relaxed backdrop in which to debate and reflect on the state of the global economy and financial markets at the Kansas City Federal Reserve's annual Monetary Policy Symposium this weekend in Jackson Hole, Wyoming. Gone were last year's gloomy acceptance by policymakers and market participants that continued downside risks for the global economy and financial markets would persist, along with the huddled meetings to deal with the gathering storm. In their place was relief that the worst of the crisis was now past and that economies were stabilizing or showing early signs of recovery, and hope that the outlook for recovery was good.

Full Story

FX: Central Banks and FX

Niels-Henrik Bjørn Sørensen, Senior Analyst, Danske Bank

The all-dominating theme in the FX market over the past six months has been the stabilisation and prospect of renewed growth in the global economy. Improvements came first in the forward-looking indicators such as the ISM and PMI, and over the past six months the situation has improved for orders and actual production too. Major industrial nations like Germany, France and Japan have all reported economic growth in Q2.

Full Story

Fiscal Policy is Monetary Policy

E. Silvia, Ph.D. Chief Economist, Wachovia

This week's Congressional Budget Office (CBO) mid-year budget outlook highlights the problems inherent in conducting an “independent” monetary policy and an effective exit strategy in a subpar economic recovery. The CBO expects relatively weak real economic growth of 1.7 percent in 2010 and sees the unemployment rate reaching 10.2 percent. Their 10-year Treasury rate forecast is 4.10 percent compared to today's rate of 3.48 percent. The CBO estimates the federal deficit at $1.38 trillion for 2010. In this context, decision-makers will need to be vigilant in assessing how independent and how effective any exit strategy will be in the year ahead.

Full Story

United States - This Time It's Different?

Steve Chan, Economist, TD Bank Financial Group

With the release of the Bureau of Economic Analysis’ preliminary estimate of the second quarter GDP growth and an increasing number of signs that growth will return to positive territory in the third quarter, it is an appropriate time for a “preliminary” post-mortem look at the U.S. Great Recession. The discussion can only be preliminary because the history books are still being written on the medium and long-run ramifications of the financial crises of 2007 and 2008 and subsequent global recession. At this point at least, we can say that the 2008-09 recession in the United States lasted 18 months – from January of 2008 to June 2009 and resulted in a 3.9% reduction in real GDP. While a number of elements of the recession were unique from previous recessions, in terms of its duration and depth this recession was only slightly worse than the 1973-75 recession, which lasted 16 months and saw a peak-to-trough decline in real GDP of 3.2%, and the recession of 1981-82, which also went 16 months and saw real GDP decline by 2.9% peak-to-trough.

Full Story

...more...

For starters, no one knows who holds what. In the boom era of lending between 2005 and 2007, banks didn’t just write a check and wait for the interest to accrue-they syndicated it out through CLOs, which were purchased by hedge funds. When faced with a workout situation, these nontraditional holders are less likely to “take their medicine,” as one source put it, by taking a writedown on the company and right-sizing its debt load. They’d rather take control of the company through the bankruptcy courts .

Lenders have taken to “kicking the can down the road,” or extending debt maturities in exchange for more onerous terms on companies that are struggling to service their crippling debt loads. Some buyout pros believe these “amend and extend” policies are responsible for holding back the tidal wave of bankruptcies that bankruptcy professionals predicted at the beginning of this year.

Another development specific to the recent cycle is the prominence of second lien debt. Pre-buyout boom-era capital structures didn’t have a separate slice of debt at the top of the capital structure which is separate from the senior lenders but above the sub lenders. The presence of a third entity in workout negotiations has made inter-creditor agreements that much trickier.

Both of those factors contributed to the sticky situation facing U.S. Shipping Partners, a former portfolio company of Sterling Investment Partners. As we covered yesterday, the bankrupt company’s fate is not ending in a logical solution. Rather than retire some of its $450 million debt load and merge with strategic buyer Rand Logistics, the company has chosen to continue with 9.1x leverage and its lenders at the steering wheel. In Rand Logistics’ plan, 75% of the company’s debt would be retired, meaning debt holders would have to write down their holdings instead of seeing them to maturity.

But according to two sources close to the situation, the steering committee just isn’t looking out for the first lien senior lenders. The firms on the steering committee own second lien debt as well.

By dominating the steering committee, the lenders have made it possible to “kick the can down the road,” thereby avoiding writedowns on their second lien debt or retiring it early. That may work out great for the lenders, except holding debt in a company that’s levered 9x is much riskier than the lenders “taking their medicine” now. If the the company buckles under its debt load and stumbles into Chapter 22, the outcome will be even less attractive.

http://www.pehub.com/48207/kicking-the-can-down-the-road-when-broken-companies-dont-ever-really-get-fixed/


Banksters doing everything they can to avoid writing down assets to their true worth. Let the next guy take the hit.

many more hedge funds, banks, LBO funds, going to sleep with the fishes, just like Cerberus. the entire Kleptocracy, crashing to the ground like the WTC, in a "controlled" demolition of the Debt House of Cards.

I hope it's soon enough so that people survive.

will eventually end up owning the whole company by default. :sarcasm:

One of the knocks on General Motors has long been that the company is arrogant and out of touch with the needs of its customers.

Has that changed since the company went into bankruptcy and pledged that it was building a new, more nimble car company? Exhibit A in the "Nothing has changed" file is this: the feedback rating for GM's eBay account. . . four positive and two negatives. And if you think that's bad, there's more: Three of the positive feedback ratings come from a user with the ID "661henryglen" who left this glowing review after purchasing a 2009 Chevy Cobalt: "THIS IS A VERY SIMPLE PROCESS."

That feedback was left on Aug-20-09 at 16:51. The auction ended on Aug 20, 2009 at 16:48:01 PDT. That raises a fantastic question: How does a person buy a car on eBay and then complete the transaction in less than three minutes, allowing enough time to log back in and leave feedback? That must have been a simple process indeed!

Fascinating -- and suspicious -- stuff.

http://www.walletpop.com/blog/2009/08/31/general-motors-brings-its-legacy-of-bad-service-to-ebay/

Before condos in Williamsburg started selling at a loss and weekend flights to L.A. dropped to under $200, New York's cocaine dealers were supplying good times to people who indulged like the party wouldn't end. Before the recession, "I was making deliveries every night of the week," says Eddie, a middle-aged man who exclusively deals cocaine. (All names have been changed.) At the height of his career, in early 2008, Eddie sold eight-balls to hipsters, financiers, and Upper West Side high-school students. "Back then, I could afford to pick and choose. If I didn't know the address — forget it. If I didn't like their accent — forget it. On most nights, there were more people wanting than I could get to." Sammy, another coke dealer, was equally aloof. "On weekends, I was making twenty house calls per night," he says, "And there were always 20 to 25 that got shafted."

Then the stock market crashed, and people started losing Sammy’s number. But he didn’t lose theirs. "It was a 646 number," says Nate, 26, who works at an investment bank; he got three calls from Sammy in one week. (Sammy's contacts — five years' worth — are stored in a small black notebook with cross streets, physical descriptors, and even sketches corresponding to each name.) When Nate called back, Sammy picked up right away: "He was like, Hey Nate, it's me, Sammy, where ya been?" Last November, Nate was forced to switch jobs, and took a notable pay cut. "It's not all fun and games anymore. I told him thanks but no thanks."

Damien, 27, who quit doing coke almost two years ago, has been contacted by three different cocaine dealers, all wanting his business, since June. "None of my friends mess with that anymore," Damien says, "It's like they grew up overnight when the banks died." Eddie was one of the dealers who has recently contacted Damien. When demand first dropped, Eddie took a vacation. But when the situation failed to improve, he decided to call every name in his phone book until he'd arranged a deal. "It worked," he says. "I'll keep doing it until it stops working. But I don't like small talk. I don't like having to ask them how their day was."

Having to reach out to customers isn’t the worst of it. "I see high-end guys hawking in parks now," says Sammy. "And these are guys that used to sell to Paris Hilton's crowd." For Tim C., a longtime street dealer whose headquarters are in Washington Square Park, the problem has trickled down. He’s now competing with those guys who used to do deliveries only: "They come in like they own the place, and take all my business." Things have been made worse by the fact that NYU freshman and other passersby are more resistant to his pitch. "These kids are clean," Tim says. "It sucks. You're gonna find me at the post office if this goes on for much longer."

http://nymag.com/daily/intel/2009/08/hit_by_recession_cocaine_deale.html


Sad to think that all the people leading the liquidity parade were high on dope.

And frankly, they HAD to be on drugs to think they were doing something good, smart, useful, etc.

the Coke...because it got them through the "trading day" and they could "believe." :-(