STOCK MARKET WATCH, Monday June 9

[ozymandius]

Source: du

STOCK MARKET WATCH, Monday June 9, 2008

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 226
DAYS SINCE DEMOCRACY DIED (12/12/00) 2696 DAYS
WHERE'S OSAMA BIN-LADEN? 2421 DAYS
DAYS SINCE ENRON COLLAPSE = 2712
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 10
Enron execs conveniently deceased = 3
Other Arrests of Execs = 54

---

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

---

AT THE CLOSING BELL WHEN BUSH TOOK OFFICE on January 22, 2001
Dow - 10,578.24
Nasdaq - 2,757.91
S&P 500 - 1,342.90
Oil - $27.69/bbl
Gold - $266.70/oz.

AT THE CLOSING BELL ON June 6, 2008

Dow... 12,209.81 -394.64 (-3.13%)
Nasdaq... 2,474.56 -75.38 (-2.96%)
S&P 500... 1,360.68 -43.37 (-3.09%)
Gold future... 899.00 +23.50 (+2.61%)
30-Year Bond 4.65% -0.08 (-1.69%)
10-Yr Bond... 3.94% -0.09 (-2.16%)






GOLD,EURO, YEN, Loonie and Silver

---

PIEHOLE ALERT

Heads Up!
Preliminary info on appearances by Bush & Co. throughout the country. Details & links are added as they become available so check back. And if you know more, are organizing something, or would like to, contact [e-mail]

For information on protests and other actions Citizens For Legitimate Government

---

Read more: du

[ozymandius]

1. Market WrapUp: The Many Faces of Inflation

BY BRIAN PRETTI

One of the key debates among investors at the moment is that of greater macro inflation versus deflationary forces. Go ahead and check out investment message boards/forums focusing on gold, commodities in general, housing, etc., and the debate is hot and furious. You’ll see the same thing in the divergently opposing outlooks of many headline financial market commentators. For most, it's simply a black or white choice, with about zero potential for any gray to enter the picture. Personally, I believe in coexistence. Really going back to the beginning of this decade, my macro investment credo has been that both proactive sector and asset class selection, as well as equally important selective and proactive sector avoidance, is key to successful investment outcomes in the current environment. As we stand here today, there is absolutely no reason to alter this philosophical outlook. That means in both sector and broader asset class characterizations, we can indeed experience both inflation and deflationary nominal pricing pressures, dependent, of course, on the individual sector or asset class being analyzed. So, although I want to hopefully provide some perspective on headline inflationary trends and how those trends directly relate to our investment activities in the here and now, in no way will this be a debate over definitive macro inflationary or deflationary pricing outcomes. Why? Because of the expectation that both are to occur simultaneously, as we have been directly experiencing over the last few years.

Very quick definitional tangent. In academic terms, inflation is an expansion in the money supply and theoretically has little to do with "prices" per se. Asset or commodity specific price changes are a symptom of monetary expansion or contraction, as well as being driven by real world supply and demand forces. But you know the general public and so many on the Street don't equate monetary policy and nominal prices in the same sentence, so to speak. When talking about inflation in this discussion, it refers to popular perceptions of price. Why? Because that's how the consensus thinks of inflation. Regardless of academic definitions, we all need to put ourselves in the shoes of the consensus, of the broad population of investors that do indeed set financial asset prices each and every day. For the academic purists out there, just wanted to make that clear.

Having said all of this, let's cut right to the chase and get to the issue most important, and hopefully most helpful in our here and now investment activities as far as headline inflation is concerned. Point blank, periods of rising headline inflationary pressures have been associated with periods of contracting equity valuations. Important point being, if we are to look for a better tone to the equity market any time ahead, a key structural support to that better tone would be inflationary pressures that are declining on a rate of change basis. To be honest, history is very supportive of this idea. Below is a chart that tracks both the year over year rate of change in headline CPI set against the longer term S&P 500 P/E multiple. A quick tangent. Historical Robert Shiller P/E data is being used in the chart. Yes, we know the Shiller data can be controversial. No, it's not a forward P/E multiple history, so as you look at the chart, you see a current valuation level higher than what you'd see if you were looking at current price relative to forward S&P analyst earnings estimates of the moment. To be honest, using Shiller data or some other type of P/E multiple methodology for the sake of this exercise is virtually immaterial. Directional rhythm of so many P/E valuation series are similar.

.....

Face The Music And Dance?

Certainly one of the key questions of the moment is whether what is happening with clearly meaningful upside pressure in global food and energy price inflation will ultimately flow into core inflation trends, and if so by what magnitude. The chart below is very simple. It’s the year over year rate of change in headline CPI subtracted from the year over year change in core CPI. What are we essentially looking at? Food and energy price inflation in isolation. You know, the stuff that the Fed and friends tell us not to look at. About as simple as the day is long. As is clear, there have been some very meaningful upward and downward spikes in this relationship over time. Anomalistic, spikes upward or downward in this simple ratio were meaningful tip-offs, or leading indicators, of very important financial market and economic change to come. Secular change.

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

[ozymandius]

2. Today's Report

10:00 Pending Home Sales Apr
Briefing.com NA
Consensus -1.0%
Prior -1.0%

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

[ozymandius]

3. Oil prices fall but choppy path ahead

Oil prices fell Monday, retreating from a record surge late last week, and traders said the market would remain choppy amid jitters about supplies, growing global demand and a weak U.S. dollar.

But the average price of a gallon of gasoline in the United States hit $4 for the first time ever Sunday, according to AAA and the Oil Price Information Service. Record prices threaten to shake consumers who are spending and increasingly large share of paychecks on transportation.

By midday in Europe, light, sweet crude for July delivery was down $1.21 to $137.33 a barrel. The contract was volatile, trading between $135.27 and $138.25 so far in the session.

Crude futures made their biggest single-day jump ever Friday, soaring nearly $11 for the day to $138.54 a barrel, a rise of more than 8 percent that battered stocks on Wall Street. That came after an increase Thursday of almost $5.50, taking oil futures more than 13 percent higher in just two days, easily a record on the New York Mercantile Exchange.

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

[ozymandius]

4. Gas hits national average of $4 for the first time

NEW YORK - The average price of regular gas crept up to $4 a gallon for the first time over the weekend, passing the once-unthinkable milestone just in time for the peak summer travel season.

Prices at the pump are expected to keep climbing, especially after last week's furious surge in oil prices, which neared $140 a barrel in a record-shattering rally Friday.

While Americans who have to drive will feel the biggest squeeze, the increased prices also translate into higher costs for consumers and businesses, who will be forced to shoulder increased costs for food and anything else that needs to be transported.

....

A number of factors are behind oil's ascent.

(I've truncated this part. - ozy)
Soaring demand in Asia and elsewhere is ensuring global supplies remain tight even as Americans cut back; A tumbling dollar is also contributing to the increase; The rapid increase has also enticed speculators, frustrated by low returns elsewhere, looking to make a quick profit.

http://news.yahoo.com/s/ap/20080609/ap_on_bi_ge/gas_at4

[ozymandius]

5. Gas taxes set to rise in some states

ATLANTA - All of the talk among political candidates about a federal gas tax holiday to offset soaring prices at the pump misses a critical fact: state taxes are, for the most part, even more costly for drivers.

And in some states, gas taxes are rising even higher, with a handful set to jump at the height of the summer driving season.

The average state sales tax on gasoline is 28.6 cents a gallon, according to the American Petroleum Institute. That's a dime more than the federal gasoline tax of 18.4 cents a gallon.

.....

Some lawmakers have talked about providing relief by suspending the gas tax, but few proposals have gone anywhere. States rely on gas tax dollars to build and repair infrastructure. With many roads and bridges crumbling, elected officials are reluctant to give that money up.

.....

Minnesota's needs for infrastructure repair were highlighted by a bridge collapse last year that left 13 people dead. State lawmakers summoned enough votes to override a gubernatorial veto and boost the gasoline tax by 8 1/2 cents over five years.

Florida, North Carolina and West Virginia, Kentucky and Maine are also seeing gas tax increases this year. Nebraska could see a gas tax hike as well, state officials there said.

http://news.yahoo.com/s/ap/20080608/ap_on_bi_ge/gas_tax

---

Otherwise - my stupid governor Perdue did something reasonable. This, as the article says, will cause a shortfall in transportation projects. However when one considers that the majority of these projects is tied to more roads being built, it's hard to fret. If you're wondering how Goobernor Perdue feels about mass transit - he's against that.

[ozymandius]

13. What Mr. Crude Oil Sees Ahead

IN 2004, ARJUN N. MURTI, A TOP ENERGY ANALYST AT GOLDMAN SACHS, published a report predicting "a potentially large upward spike in crude oil, natural gas and refining margins at some point this decade." It was a controversial call, with crude around $40 a barrel at the time. But it was right on the money.

Four years later, crude is trading around 139.

Murti sees energy in the later stages of a "super spike," in which prices rise to a point where demand drops off. In a note last month, he wrote that "the possibility of $150-to-$200-per-barrel oil seems increasingly likely over the next six to 24 months."

.....

Longer-term, what's driving crude to such high levels?

Spare capacity throughout the energy complex seems very limited, whether for OPEC crude oil, natural gas or refining. In all of those areas, capacity is limited. And it's getting very difficult for companies and countries to boost supply -- something that became increasingly apparent to us over the first half of this decade.

http://online.barrons.com/article/SB121279317214553377.html?mod=googlenews_barrons

---

ARJUN MURTI: Gas may have to hit $5.75 a gallon before consumption cools enough to take the heat off fuel prices.

subscription required

[UpInArms]

22. Oil seen hitting $150 this summer: Goldman analyst

http://www.reuters.com/article/businessNews/idUSSP3969220080609?feedType=RSS&feedName=businessNews

KUALA LUMPUR (Reuters) - Oil prices are likely to hit $150 a barrel this summer season, the global head of commodities research at Goldman Sachs said on Monday, as tighter supplies outweigh weakening demand.

"I would suggest that the likelihood of that happening sooner has increased tremendously ... sometime in summer," Jeffrey Currie told an oil and gas conference in the Malaysian capital, referring to oil at $150 a barrel.

Goldman Sachs, the most active investment bank in energy markets and one of the first to point to triple-digit oil more than two years ago -- a once unthinkable level -- said last month oil could shoot up to $200 within the next two years as part of a "super spike."

Forecasts that oil could head towards $150 and above have multiplied over the past month as prices broke through several records, the latest being last Friday, when oil soared more than $11 a barrel on Friday, its biggest one-day gain ever.

Oil hit an all-time high of $139.12 on Friday on the back of a weak U.S. dollar and mounting tensions between Israel and Iran.

Goldman Sachs forecast almost a month ago that U.S. crude would average $141 a barrel in the second half of 2008, up from a previous projection of $107, due to tight supplies.

...more...

[CatholicEdHead]

36. $200 in the next two years? At this rate it will be Labor Day

As $4/gal was first predicted for early fall and it hit late May (or sooner) across the country. If we hit $139/barrel last Friday, $150 can come mid-June and before the 4th of July. This bubble seems to be growing twice as fast as the recent predictions have said.

[ozymandius]

41. Consider that $139/bbl oil hasn't been delivered to the gas stations yet.

It's an uncertain calculus - but it leaves me wondering how much this will be reflected at the pump.

[CatholicEdHead]

44. Only one way to go and that is up at the pump

We could be pushing $4.50/gal national average with $139/bbl when that hits the pump, even with the falling demand. If we hit $200/bbl It may be a $5.25-5.50/gal national average with some rural California stations well over $6/gal pushing $7/gal. Gas spikes up when oil goes up but takes 30-60 days after the price per barrel falls to begin to go down.

[happyslug]

52. 200/42=$4.76 a gallon add 50 cents in Taxes and 18 cent distribution cost $5.44 a gallon

42 gallons to a Barrel of oil, average state AND Federal Gasoline tax about 50 cents, Distribution is about 18 cents (Will go up as oil goes up, but 18 cents is an approximate price). All told that comes to $5.44 a Gallon at $200 a Barrel oil.

Tax rates:
http://www.api.org/statistics/fueltaxes/
http://www.api.org/statistics/fueltaxes/upload/GAS_TAX_MAP_JANUARY_2008_2.pdf
http://www.fhwa.dot.gov/ohim/mmfr/dec07/index.cfm

I derived Distribution cost by this method. First I take the PRESENT cost of oil per barrel ($139 per gallon) divided by 42 gallons in a Barrel of Oil. Or 139/42=$3.31 per gallon. I then add the 50 cents my home state charges in taxes to come to $3.81 cents per gallon. I then subtract that from what my local gasoline station is charging ($3.99 per gallon) to come to 18 cents per gallon in distribution costs. I then accept that that 18 cents is wrong, for the price of Gasoline I an paying now was set six weeks ago when the local gas station bought the gasoline on the market, but it is the best price I can get for distribution costs (and that includes ALL cost from the point the oil hits the US, is refines and shipped to my local gasoline station AND includes the cost of my local station just to sell the gasoline, including paying the electric bill for the pumps).

[ozymandius]

6. Uneasy Wall Street eyes oil, retail data this week

NEW YORK - That economic rebound in the second half of the year so many experts have predicted — including Federal Reserve Chairman Ben Bernanke himself — is starting to look dicey.

Wall Street has just three weeks left until July starts, and signs of trouble keep surfacing.

Sure, there have been a few upbeat readings recently, including better-than-expected sales figures from some retailers and strong first-quarter worker productivity. But last week culminated in a spike in the unemployment rate and a huge leap in oil prices that returned to record levels — two pieces of news that drove the Dow Jones industrials down nearly 400 points Friday.

With jobs growing scarcer and energy costs still climbing, Wall Street's big worry is that Americans are going to keep tightening their budgets — a shrewd move on the part of consumers, but an alarming prospect for companies that depend on them.

http://news.yahoo.com/s/ap/20080608/ap_on_bi_ge/wall_street_week_ahead

[ozymandius]

7. Fewer, pricier flights and job cuts: airlines' response to oil prices

PARIS (AFP) - As oil prices soar, airlines are coming back down to earth with a bump -- cutting routes and capacity, ramping up prices and axing jobs as bosses freely admit the industry is in the "worst crisis since 9/11."

Oil prices on Friday broke through the 139-dollar-a-barrel level for the first time in New York and 138 dollars in London, powered by a wilting dollar.

A weakening US currency lowers the cost of dollar-priced goods, such as oil, for foreign buyers and drives up demand.

With sober analysts such as Goldman Sachs suggesting the price could reach 200 dollars a barrel within two years, the aviation industry appears to be in a nose-dive.

http://news.yahoo.com/s/afp/20080608/bs_afp/worldairlineoil

[ozymandius]

8. Lehman to raise $6 billion in capital

NEW YORK - Lehman Brothers says it will raise $6 billion through a stock issuance, and expects a second-quarter loss of approximately $2.8 billion due to more pain from the credit crisis.

http://news.yahoo.com/s/ap/20080609/ap_on_bi_ge/lehman_brothers_capital

---

This is on top of losing more than $5/share during the past quarter.

[ozymandius]

12. Lehman Cuts $130 Billion of Assets to End Bear Stigma (Update1)

June 9 (Bloomberg) -- It's been at least 10 years since Lehman Brothers Holdings Inc. Chief Executive Officer Richard Fuld watched his company's share price drop 50 percent from the peak, assets on the books shrink 15 percent from their highs, and his bankers rush to raise enough capital to withstand any run on his firm.

As Lehman reports its first loss since the New York-based company's spinoff from American Express Co. in 1994, Fuld is doing everything he can to ensure that Lehman survives another year as the fourth-largest securities firm if not the next 10. Trouble is he's discarding some of the elements that enabled Lehman to report faster earnings growth from 2002 to 2007 than any of his competitors except Goldman Sachs Group Inc.

Lehman posted a record second-quarter loss of $2.8 billion today and said in a statement that it plans to raise $6 billion from outside investors. To reduce market risks, the company unloaded about $130 billion of holdings during the quarter. At least $18 billion of the assets were tied to mortgages and leveraged-buyout loans that plummeted in value, said a person with knowledge of matter, who declined to be identified because the figures haven't been disclosed.

.....

Hedge fund manager David Einhorn, who has bet Lehman's shares will fall, has criticized the firm's accounting techniques, saying it hasn't taken realistic markdowns on its mortgage portfolio. Although an index of commercial mortgage-backed bonds fell 10 percent in the first quarter, Lehman's writedowns on its $39 billion portfolio was 3 percent, Einhorn said in a speech last month. While Einhorn expects Lehman's losses to increase as it takes further asset writedowns, he said last week that he doesn't expect the company to collapse.

http://www.bloomberg.com/apps/news?pid=20601009&refer=commodities&sid=aUaJYcbwzbjI

[ozymandius]

9. U.S. Treasuries Fall, Led by Two-Years, Before Bernanke Speech

June 9 (Bloomberg) -- Treasuries fell, led by two-year notes, on speculation Federal Reserve Chairman Ben S. Bernanke will reiterate his concern inflation is accelerating, strengthening the likelihood of an interest-rate increase.

The gain in two-year note yields caused the spread with the 10-year security to narrow to the least in a week. Bernanke, who will speak on inflation at a Boston Fed conference today at 8:15 p.m. local time, said last week increasing evidence the public expects prices to rise is a ``significant concern'' for the central bank. Oil rose to a record $139.12 a barrel on June 6.

Two-year yields, which are more sensitive to interest-rate changes, today rose 6 basis points to 2.44 percent by 7:03 a.m. in New York, according to bond broker BG Cantor Market Data. The 2.625 percent security maturing May 2010 fell 4/32, or $1.25 per $1,000-face amount, to 100 11/32.

Ten-year yields were little changed at 3.92 percent.

http://www.bloomberg.com/apps/news?pid=20601103&sid=arM_t_.vE9Xk&refer=us

[ozymandius]

10. Corn Jumps to Record on U.S. Midwest Rain, Crude Oil, Dollar

June 9 (Bloomberg) -- Corn jumped to a record as rain in the U.S. Midwest flooded fields, delaying planting and threatening to reduce crops. Soybeans, wheat and rice also gained as soaring oil costs and the dollar's drop boosted demand for an inflation hedge.

Thunderstorms plagued areas from the central Plains to the Midwest yesterday, bringing more than four inches (10 centimeters) of rain to parts of Iowa, Massachussetts-based Meteorlogix LLC said in a report. Further storms are forecast for the next five days, it added. Corn and soybeans planted in wet, cool soils develop shallow roots, increasing the threat of damage from hot, dry weather in July and August.

Corn prices have advanced 47 percent this year, gaining for a fourth straight year, as demand surged for feed and biofuels, reducing global inventories to a 24-year low. Wheat, soybeans and palm oil also reached records this year, and rice has risen 9.4 percent in the last three days, stoking concern that food shortages may worsen and spur inflation.

.....

Corn for July delivery rose as much as 22.25 cents, or 3.4 percent, to $6.73 in after-hours trading on the Chicago Board of Trade and stood at $6.675 at 4:38 p.m. Singapore time. The contract gained 8.6 percent last week, the biggest weekly gain in 10 weeks. New-crop December corn traded today as high as $6.985 a bushel, while later deliveries breached $7 on June 6.

http://www.bloomberg.com/apps/news?pid=20601009&sid=aRT0a6qnmxwg&refer=commodities

[ozymandius]

11. SEC May Ban Moody's, S&P From Structured Finance Consulting

June 9 (Bloomberg) -- The U.S. Securities and Exchange Commission may recommend this week that Moody's Investors Service, Standard & Poor's and Fitch Ratings be prohibited from advising investment banks on how to earn top rankings for asset- backed securities, according to people familiar with the matter.

SEC staff may also propose at a June 11 meeting in Washington that the companies disclose all the data that goes into a rating so competitors can grade bonds even if they weren't compensated by the underwriter, said the people, who declined to be identified because the rules aren't final. Moody's, S&P and Fitch help design securities backed by a stream of payments, making it impossible for them to be impartial raters, a May 2007 study by academics Joseph Mason and Joshua Rosner concluded.

The SEC, which has been investigating the credit-rating industry since last year, is seeking to eliminate conflicts of interest between credit raters and investment banks that pay them to grade securities. Moody's, S&P and Fitch have downgraded or put under review more than 20,000 mortgage bonds in 2008, contributing to $389 billion of writedowns and losses at the world's largest banks and securities firms.

``They basically sold ratings to the highest bidder without any regard to the performance of the rated securities,'' Mason, a former U.S. Treasury Department economist...

http://www.bloomberg.com/apps/news?pid=20601009&refer=commodities&sid=aREApKiIb.pY

[ozymandius]

14. Asian stocks tumble

HONG KONG (AP) -- Asian stock markets fell sharply Monday, tracking Wall Street's losses amid growing concern over record oil prices and sluggishness in the U.S. economy.

Japan's Nikkei 225 index dropped 308.06, or 2.1%, to 14,181.38. Markets in South Korea, Taiwan, Thailand and New Zealand were all down 1 percent or more.

Indian shares were hardest hit, with the benchmark Sensex falling as much as 4.4% before recovering some. By midday, it was down 3.6% at 15,023.21.

Investors were spooked after figures released Friday showed the U.S. jobless rate jumped from 5% to 5.5% in May, the biggest gain in more than 20 years - stoking fears about the health of the world's largest economy and a vital Asian export market.

http://money.cnn.com/2008/06/09/news/international/asia_stocks.ap/index.htm?postversion=2008060904

[ozymandius]

15. (cheerleading squad checks in) Stocks aim for recovery

Futures nudge higher after massive selloff on Wall Street; Lehman plans to raise $6 billion and expects $2.8 billion quarterly loss.

NEW YORK (CNNMoney.com) -- Stock futures rose Monday as investors aimed to recover from a dramatic selloff on Wall Street and digested news coming out of investment banking giant Lehman Brothers.

At 7:11 a.m. ET, Nasdaq and S&P futures were higher and indicating a positive start for stocks.

.....

At 10 a.m., the National Association of Realtors reports on pending home sales for April, a measure of housing contract activity. Sales are expected to have dipped 1%.

Also at 10 a.m., the Conference Board, a business research organization, is expected to issue a new report on the economy.

http://money.cnn.com/2008/06/09/markets/stockswatch/index.htm

[formercia]

16. Giant Calif. land partnership files for Chapter 11

http://biz.yahoo.com/ap/080609/calpers_land_partnership.html

AP
Giant Calif. land partnership files for Chapter 11
Monday June 9, 7:16 am ET
15,000-acre Calif. real estate business files for Chap. 11; Public pension is main investor

LOS ANGELES (AP) -- A 15,000-acre California real estate partnership that has the nation's largest public employees pension fund as its main investor has filed for Chapter 11 bankruptcy protection.

LandSource Communities Development LLC issued a news release late Sunday to announce the bankruptcy filing in U.S. Bankruptcy Court in Delaware. The partnership's assets include 15,000 acres of undeveloped land north of Los Angeles in the Santa Clarita Valley, making it one of the largest land deals to falter amid the national housing glut.

The California Public Employees' Retirement System, its main investor, did not immediately return calls early Monday.

--snip--

[ozymandius]

20. I smell lawsuits. Lots of lawsuits.

This is the first reason why no phone calls were returned - no comments on pending litigation. And besides, anyone authorized to speak publicly about this matter was probably conferring either with an attorney or an irate fund manager.

Anyway, the rules say that the first to file is the first in line to receive compensation when the company is sold in whole or in part, after a judge has ordered it so. Judges in California are public employees. Impartiality will be difficult.

[formercia]

35. Those judges are going to be really happy campers

when they look at the prospects of their retirement going down the proverbial rat hole. Let's see who is left without a chair when the music stops.

[happyslug]

54. No they won't, most Bankruptcy Judges have NO investment in the state system

Remember, these are FEDERAL BANKRUPTCY JUDGES, some may have been in the state system before becoming a Federal Bankruptcy Judges, but presently are on the FEDERAL pension system.

[happyslug]

53. This is Bankruptcy, a FEDERAL System NOT a State System

Thus the Bankruptcy Judges will NOT be affected by the fact this affects the STATE employee pension funds. Furthermore this is Bankruptcy, NOT an action in State Court. Bankruptcy is an Equity action and as such All creditors will be treated the same. Given this is a Chapter ii not a Chapter 7, the Creditors will be put into different classes, the Stock holders will probably get nothing, but more senior creditors will get something (Corporations can only file Chapter 11, even if the plan is to dissolved the Corporation).

[ozymandius]

17. Has the Fed Painted Itself in a Corner?

Without a doubt, the Federal Reserve now faces the most difficult financial and economic climate in our collective memory. And it is increasingly apparent that its options are constrained. Although it is premature to arrive at definitive judgments, it's nevertheless worth asking whether some of these limitations were unwittingly self-created.

Friday's market rout, triggered by the one-two punch of an unexpectedly large rise in unemployment and an $11 spike in oil prices, put paid to the idea that the Fed might put through a wee interest rate increase before year end. We didn't expect anything more than 25 basis points, since the second leg of the credit crunch, this time dragging down regional and local banks, is underway. And Wall Street has not hit bottom either.

But as Wolfgang Munchau tells us in the Financial Times, for the first time in modern memory, a foreign central bank's stance, in this case, the ECB's, is limiting the Fed's scope of action:

In the past, European central bankers tended to follow the US Federal Reserve, often with delay, never perfectly, but generally in the same direction.....The policy response to our most recent financial crisis has been different. While the Fed cut by an accumulated 325 basis points, the Europeans first refused to follow, and they are now moving in the opposite direction.... the ECB is now likely to raise interest rates by 25 basis points next month, and I suspect this could be followed by another rate increase later this year....

This suggests that in terms of global monetary policy, we are in the middle of a shift from a unipolar to a bipolar world. In the past, the Fed’s policy alone used to determine the global monetary policy stance – via the dollar, the global anchor currency. Through long periods of loose monetary policies, including lengthy episodes of negative real interest rates, the Fed contributed directly to the rise in global inflation....

.....

As monetary policy of the world’s two largest economies moves in starkly opposite directions, interesting possibilities are opening up. One is whether the dollar will decline prematurely as a global currency – an issue on which economists are divided. Differential inflation rates could plausibly trigger such a shift. As US inflation rises, more and more countries may unpeg from the dollar to avoid imported inflation. If this trend persisted, the US would risk losing its exorbitant privilege – the ability to live beyond its means thanks to a globally domineering currency.

Bernanke has treated the dollar with benign neglect, but now that the oil has become a preferred dollar hedge. Even if oil would fall to $110, it would still put brakes on the economy, and oil above $130 or higher will suck any remaining life out of the economy. The high prices haven't yet worked their way through to the pump, and the secondary effects, such as the price effects of higher shipping costs, are only beginning to kick in.

But how did the Fed get itself here? There are different ways to frame the problem. We're of the view that the central bank took rates too low and left them low for too long in the dot-bomb era, and cut too deep, too fast this time. Former Fed economist Richard Alford explains that those decisions were the product of a flawed analytical framework....

http://www.nakedcapitalism.com/2008/06/has-fed-painted-itself-in-corner.html

[UpInArms]

18. dollar watch

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

Last trade 72.301 Change -0.042 (-0.06%)

Dollar Ambushed by Weak Jobs and Strong Trichet

http://www.dailyfx.com/story/topheadline/Dollar_Ambushed_by_Weak_Jobs_1212959778776.html

What a rollercoaster week for the US dollar! On Tuesday Ben Bernanke surprised greenback bears by producing one of the most overtly pro-dollar speeches by any Fed chairman in a very long time. On Thursday, his ECB counterpart Jean Claude Trichet surprised euro shorts by hinting that the central bank may raise rates next month. And on Friday everyone was shocked by the massive rise in the unemployment rate which spiked from 5.1% to 5.5% in one month. The net result - a complete turnaround for dollar's fortunes. The EURUSD which had traded as low as 1.5363 rallied to a high of 1.5703 in the wake of Friday's news.

The sharp rise in unemployment is likely to have a very negative impact on the psyche of the US consumer. While few people in US pay much attention to the intricacies of BLS accounting, most are keenly aware of the direction in the unemployment rate and Friday's report makes clear that it is moving in the wrong direction. As we noted in our post NFP analysis, "The next key data point for the US economy will be Retail Sales due Thursday June 12th at 12:30 GMT. Given the fact that employment has suffered its fifth consecutive month of losses, the US consumer is likely to retrench spending. For the time being sentiment is heavily skewed in euro's favor, especially after yesterday uber-hawkish comments by ECB President Jean Claude Trichet. If next week's economic data proves as disappointing as today's NFP – the EURUSD may mount another challenge on its recent record highs. "

The one bright spot on the US calendar may be the Trade Balance data. Although it is forecast to print worse than last month, the favorable exchange rate could create an upside surprise in both exports and imports, but the help to the greenback is likely to be minimal as fears of a much more severe downturn in the US economy will now grip the market.-BS



...more...

Dollar Woes Continue With the New Week – Back to 1.60?

http://www.dailyfx.com/export/sites/dailyfx/story/bio2/Dollar_Woes_Continue_With_the1213005990494.html

After Friday’s poor NFP results, the greenback started the week off much the same way it went out - by losing yet more ground to the euro and the pound and the Swiss franc. The EURUSD rallied as high as 1.5844 in early European trade before the failure to take out the 1.5850 barriers triggered a wave of profit taking. On the economic calendar German Trade Balance printed far better than expected at 18.7 Billion versus 15.6 forecast helping to underpin the run through 1.5800.

Despite very challenging conditions German exports managed to rise by 1.2% in April on demand from Non-EU countries. The Trade Balance news underscores Germany’s key role in fueling growth in the overall EZ economy and shows the vulnerability of the region to any potential slowdown in German output. Germany continues to be the engine that pulls Europe forward but with energy costs skyrocketing and exchange rates within several cents of all time highs the question forward is can the country’s economy sustain this pace for much longer? Latest labor data indicates that a slowdown is occurring and future numbers may not be as rosy.

In UK the PPI data printed an ultra hot reading of 1.6% versus 0.8% on a month to month comparison indicating that price pressures are in fact escalating rather than abating. If the PPI increases pass through to the consumer level, the BoE will find it very difficult to even consider the idea of rate cuts despite clear evidence of weakening consumer demand. As a result of the news cable rallied to within 12 points of the 1.9800 level and performed even better on the crosses as carry trade demand for GBPJPY lifted the pair nearly 300 points higher since the start of trade in Asia.

Finally, Swiss data also produced strong results with Swiss unemployment rate declining to 2.4% on a seasonally unadjusted level. With ECB President Trichet hinting at another possible rate hike this summer, traders are also paying careful attention to the SNB. Over the past two years, the Swiss monetary authorities have essentially shadowed their much larger neighbors and therefore there is some speculation in the market that Mr. Roth may follow suit should Mr. Trichert produce a rate hike. The SNB chairman is scheduled to speak later today at 14:00 GMT and traders will watch for any hawkish bias in his remarks. Meanwhile in a testament to tightening rate expectations, the Swissie has performed considerably better than its anti-carry partner the yen with CHFJPY cross having recently taken out a very long term resistance level at 103.00

In the North American session, the US calendar only carries the Pending Home Sales for April which are forecast to decline yet again by –0.3%. As we noted in our weekly, “If (this) week's economic data proves as disappointing as the NFPs – the EURUSD may mount another challenge on its recent record highs.” For the time being that appears to be the path of least resistance.

...more...

[ozymandius]

23. As I ws just thinking - "Tricky" Trichet has a stronger hand than Chopper Ben.

I'm sure he's loving it. As the post from Naked Capitalism says, the central bank here and the central banks there have diverged in terms of interest rate and currency policy (Bernanke being late to class). Not blaming them at all - who would want to ride shotgun with Bernanke the buffoon?

[UpInArms]

27. wanting a smarter leader? Fed's Geithner seeks global banking framework: paper

http://www.reuters.com/article/businessNews/idUSN0841964720080609?feedType=RSS&feedName=businessNews?sp=true

NEW YORK (Reuters) - Banks crucial to the global financial system should operate under a unified regulatory framework with appropriate requirements for capital and liquidity, the president of the New York Federal Reserve wrote in the Financial Times.

"We are examining what framework of facilities will be appropriate in the future, with what conditions for access and what oversight requirements to mitigate moral-hazard risk," the president, Timothy Geithner, wrote in the article on Sunday.

"Some of these could become a permanent part of our instruments. Some might be best reserved for the type of acute market illiquidity experienced in this crisis."

In the article titled "We can reduce risk in the financial system", Geithner laid down a series of areas that needed attention.

The "shock absorbers held in normal times against bad macroeconomic and financial outcomes" needed to be increased, he wrote.

"This will require more exacting expectations on capital, liquidity and risk management for the largest institutions that play a central role in intermediation and market functioning," Geithner wrote.

...more...

nah - they just want to screw up all the worlds' banks :eyes:

[ozymandius]

29. as Billy Joel sang: "We'll all go down together."

That starts when U.S. risk becomes overseas risk. Do you think he wants to re-write Bretton Woods?

This also rhymes with John Thain's (when he was at the NYSE) drive to consolidate the U.S. and overseas markets into one big shell game.

[Ghost Dog]

34. Oh, Monsieur Trichet is definitely the right man for the job.

The key to it all has been basically to (I won't say "ignore") recognise the, um, lets say divergence of interests, between Mainland Europe and the Yanks/Brits.

I'm reporting from "the road" (a 5-star probably mafia-owned hotel) today, after another "misunderstanding" with my girl, sorry, lady/señora. Hope it won't last. Everything seems upside-down these last days, except, of course, Mr. Obama and supporters. :)

Anyway, I was going to quote/comment:

GLOBAL MARKETS-World stocks tumble to 1-1/2 month low
Mon Jun 9, 2008 7:43am EDT


* Lehman Q2 loss estimate keeps stocks near 1-1/2 month low

* ECB rate hike speculation boosts euro, long-dated bonds

* Oil eases, but within $3 of last week's record

(Updates with Lehman, Wall Street outlook)

By Natsuko Waki

LONDON, June 9 (Reuters) - World stocks fell towards a 1-1/2 month low hit earlier on Monday as Lehman Brothers (LEH.N: Quote, Profile, Research)' estimate of a second-quarter loss renewed concerns about the health of the bank sector.

The euro and euro zone government bonds extended last week's dramatic repricing of interest rate expectations, with the region's long-dated yields falling sharply on expectations the European Central Bank's strong anti-inflation stance would tame prices in the long term.

...

"The backdrop is still unfavourable," Chris Iggo, strategist at Axa Investment Managers.

"Along with some of the macro things that are happening - inflation, ECB raising interest rates -- you can't see equities doing particularly well in that environment and I would expect us to see further losses over the summer."

/Read on... http://www.reuters.com/article/marketsNews/idINL0964722820080609?rpc=44&sp=true

[UpInArms]

33. Dollar fate in focus before G8

http://www.reuters.com/article/bondsNews/idUSL0711532420080609?sp=true

LONDON (Reuters) - The fate of the U.S. dollar will be pivotal for global financial markets this week as the world's two most powerful central banks battle the commodity-driven inflation that has been spurred by the greenback's long slide.

The dollar has been left on a knife edge after a week in which the Federal Reserve and the European Central Bank seemingly competed for the prize of the toughest inflation fighters.

And as a stream of global economic data sent conflicting signals on rising inflation and slowing growth, the outlook for all financial markets has rarely been hazier.

"Concerns about inflation have increased considerably among all central banks. Both (the Fed and the ECB) have signaled they will have tighter monetary policy than people had expected," said Dale Thomas, head of currency management at UK-based fund Insight Investment.

Thomas said the desire to have a strong U.S. dollar was undermined by the fact that the rest of the world is tightening policy when the U.S. isn't.

"It wants all things without taking pain," he added, referring to the U.S. position.

...more...

[UpInArms]

19. IRS targets Anschutz in capital gains move: report

http://news.yahoo.com/s/nm/20080609/bs_nm/anschutz_dc

NEW YORK (Reuters) - Tax authorities are trying to force billionaire Philip Anschutz to pay $143.6 million in back taxes as part of a broader move against strategies used to defer paying capital-gains taxes, The Wall Street Journal reported on Monday.

Anschutz says about $429 million of deals in question from 2000 and 2001 were not completed sales for tax purposes, the Journal said, citing filings in U.S. Tax Court in Washington.

As a result he has not paid capital-gains taxes on the transactions, it reports.

In February, the agency issued an advisory to its agents declaring that some versions of prepaid forward contracts should trigger immediate taxes, the Journal said.

Anschutz's deals involve shares of Union Pacific Corp (UNP.N) and Anadarko Petroleum Corp (APC.N) that netted him cash, returns on future profit and protection from losses, it said.

It said top corporate executives and company founders like prepaid forward contracts because they help limit the risk of holding a sizeable chunk of their personal wealth in their own company's stock.

In an arrangement like the one used by Anschutz, the executive agrees to turn over his shares to an investment bank on a specific future date, and loans the bank the same amount of stock in exchange for cash up front, as much as 80 percent of the shares' fair market value, the paper said.

...more...

[ozymandius]

26. Sounds similar to Cheney's situation.

He is a deferred compensation employee at Halliburton. He will realize a sizable income from Halliburton's performance after Cheney leaves office reflective of the time when Cheney's no-bid policies looted the treasury.

[UpInArms]

21. Corn soars to record high, set to climb further

http://news.yahoo.com/s/nm/20080609/bs_nm/markets_grains_dc

LONDON (Reuters) - Corn prices rose to record highs on Monday and looked set to climb further as torrential rains threatened to reduce further U.S. crop prospects in a market already facing tight supplies and surging demand.

The lead July 2008 corn futures contract rose as high as $6.73 per bushel, up more than 3 percent and a record for a spot contract. It closed on Friday at $6.50-3/4 while the July 2009 contract scaled an all-time peak of $7.20.

"We've got some rain in the United States that could reduce some of the plantings and yields for corn. Combine that with the drive into ethanol and you can see why corn is going to spike up," said analyst David Hart of Fat Prophets.

Strong demand for corn from U.S. biofuel producers has contributed to supply tightness in the corn market. The U.S. Department of Agriculture has forecast about a third of this year's crop will be consumed by the biofuel sector.

"I am still very bullish. I think $7, $8, $9 corn is well within reach," said Commerzbank analyst Edward Hands.

"The mandated biofuel side continues to weigh heavily on the corn balance sheet and the plantings this year seem to be very late," he added.

...more...

[TalkingDog]

24. SMW Summer Fun Theme Song

You know, it's unfortunate that we have been born into a world where materialism and acquisition take precedence over kindness and human decency. Sometimes we can do something about those inequities, sometimes we are powerless to do so.

And sometimes the enormity of the problems weigh so heavily on us that we forget that we can always choose to address pain with an easy patience rather than mere pragmatism. We can choose to enjoy the world without owning it. We can choose to move through our lives lightly and with ease. And although our centeredness cannot diminish suffering on the whole it may, by example, help others find ease.

With that in mind, I offer the following as the SMW Summer Fun Theme Song. When life seems a bit hectic, remember this:

"Soak Up The Sun"

My friend the communist
Holds meetings in his RV
I can't afford his gas
So I'm stuck here watching TV
I don't have digital
I don't have diddly squat
It's not having what you want
It's wanting what you've got


I'm gonna soak up the sun
Gonna tell everyone
To lighten up
Gonna tell 'em that
I've got no one to blame
For every time I feel lame
I'm looking up
I'm gonna soak up the sun
I'm gonna soak up the sun

I've got a crummy job
It don't pay near enough
To buy the things it takes
To win me some of your love
Every time I turn around
I'm looking up, you're looking down
Maybe somethings wrong with you
That makes you act the way you do
Maybe i am crazy too



I'm gonna soak up the sun
While it's still free
I'm gonna soak up the sun
Before it goes out on me

Don't have no master suite
I'm still the king of me
You have a fancy ride, but baby
I'm holdin' the key
Every time I turn around
I'm looking up, you're looking down
Maybe somethings wrong with you
That makes you act the way you do
Maybe I am crazy too



I'm gonna soak up the sun
Got my 45 on
So I can rock on.


Have a good one. I'll check in when I can.

[UpInArms]

25. AP IMPACT: Poll says debt stress tears at body

http://news.yahoo.com/s/ap/20080609/ap_on_bi_ge/stressing_over_debt?_ylt=Ak93TgLGPBI_XGd4EZP7By6b.HQA

WASHINGTON - The stress from deepening debt is becoming a major pain in the neck — and the back and the head and the stomach — for millions of Americans.

When people are dealing with mountains of debt, they're much more likely to report health problems, too, according to an Associated Press-AOL Health poll. And not just little stuff; this means ulcers, severe depression, even heart attacks.

Take Edward Driscoll, 38, of Braintree, Mass. He blames debt — $10,000 worth — for contributing to his ulcers and his wife Kimberly's panic attacks. "Just worrying, worrying, worrying, you know, where the next payment of this is going to come from," he says.

Although most people appear to be managing their debts all right, perhaps 10 million to 16 million are "suffering terribly due to their debts, and their health is likely to be negatively impacted," says Paul J. Lavrakas, a research psychologist and AP consultant who analyzed the results of the survey. Those are people who reported high levels of debt stress and suffered from at least three stress-related illnesses, he says.

...more...

[UpInArms]

31. you have to read a long way into the article to see this nugget:

Indeed, the survey found that upwardly mobile, middle-class families were among those who had the most debt stress. Others were women, couples with small children, low-income working families, Democrats and those who graduated high school but haven't taken college courses. Those least likely to be stressed from debt include men, retirees, empty nesters, college graduates and Republicans.

[54anickel]

38. I dunno, I'm not buying into that political party divide - just makes no sense to me. I don't see

how your political party affiliation comes into play. Your economic situation may or may not sway your political affiliation but the other way around? I don't think so, yet it seems that's how they'd like you to read it. :shrug:

[Warpy]

40. Makes sense to me

Republicans can't do math. It's as simple as that.

Besides, they all have a simpleton's faith in party dogma, that if they keep doing the wrong thing long enough, it'll all turn out right.

Men aren't stressed because they generally don't do the grocery shopping. They can't see the whole picture.

[UpInArms]

28. Fewer, pricier flights and job cuts: airlines' response to oil prices

http://news.yahoo.com/s/afp/20080608/bs_afp/worldairlineoil

PARIS (AFP) - As oil prices soar, airlines are coming back down to earth with a bump -- cutting routes and capacity, ramping up prices and axing jobs as bosses freely admit the industry is in the "worst crisis since 9/11."

Oil prices on Friday broke through the 139-dollar-a-barrel level for the first time in New York and 138 dollars in London, powered by a wilting dollar.

A weakening US currency lowers the cost of dollar-priced goods, such as oil, for foreign buyers and drives up demand.

With sober analysts such as Goldman Sachs suggesting the price could reach 200 dollars a barrel within two years, the aviation industry appears to be in a nose-dive.

Airlines are particularly susceptible to hikes in the oil price, as jet fuel makes up a substantial part of their operating costs.

For customers, already facing escalating food prices, and, at least in Europe, rising inflation and higher interest rates thanks to a credit-crunch, the effect is likely to be steep rises in ticket prices.

"The industry needs to raise average fares 15 percent to 25 percent to be profitable with crude at 125 dollars," according to an analysis by Credit Suisse.

...more...

[ozymandius]

30. McDonald's May same-store sales rise 7.7 percent (redefines meaning of "food")

OAK BROOK, Ill. (AP) -- McDonald's Corp., the nation's No. 1 hamburger chain, said Monday its global same-store sales rose 7.7 percent in May.

The company said U.S. same-store sales, or sales at locations open at least a year, grew 4.3 percent.

McDonald's said U.S. sales were helped by its breakfast offerings, new menu items including a Southern Style Chicken biscuit and sandwich and the chain's "emphasis on everyday affordability."

http://biz.yahoo.com/ap/080609/mcdonald_s_may_sales.html

[ozymandius]

32. Futures Up as Lehman Lags, Oil Stumbles

U.S. stock index futures were pointing to a higher opening on Wall Street despite Lehman Brothers confirming its weak financial standing.

.....

Crude retreated to under $137 a barrel on Monday as frantic buying eased.

But in financial news, Lehman Brothers is getting close to raising $5 billion in new capital and may resort to a rights issue, according to published reports. Lehman is expected to announce its results this week and provide details on how it will raise capital, CNBC reported last week.

Lehman shares were indicating lower by about 8 percent in premarket trading.

There is no economic data scheduled before the bell, but the National Association of Realtors will release pending home sales numbers, at 10 am New York time. Analysts surveyed by Briefing.com expect the index to have dropped by 1 percent in April, the same decline as in March.

http://www.cnbc.com/id/25055437/site/14081545?__source=yahoo|headline|quote|text|&par=yahoo

[Viva_La_Revolution]

37. Beige Book report comes out tomorrow

:scared:

http://www.federalreserve.gov/fomc/beigebook/2008/

[ozymandius]

39. Split trading at 1:09

Dow 12,271.28 Up 61.47 (0.50%)
Nasdaq 2,454.17 Down 20.39 (0.82%)
S&P 500 1,362.88 Up 2.20 (0.16%)
10-Yr Bond 4.0250% Up 0.0870
NYSE Volume 1,854,697,620
Nasdaq Volume 952,131,500

1:00 pm : The split nature of today's stock market persists with the Nasdaq holding in negative territory and the blue chip averages sporting gains.

The advance in the broader market has been spearheaded by the energy and materials sector, but unlike Friday's broad-based sell-off, the participation on the upside today isn't that pronounced. This evidence presents itself in the advance-decline line at the NYSE, which actually favors declining issues by a small margin at this juncture.

As far as participation goes, the financial sector (-0.7%) is the most conspicuous laggard. Its performance will be watched closely in afternoon trading since the sector has the influence either to help the broader market build on today's modest gains or to see those gains evapaorate.DJ30 +100.06 NASDAQ -12.20 SP500 +6.62 NASDAQ Dec/Adv/Vol 1700/1081/886 mln NYSE Dec/Adv/Vol 1603/1385/504 mln

12:30 pm : Investors are hesitant to send the market higher, as the major indices continue to trade in a mixed and choppy fashion. Financials (-0.5%) are trading near session lows, although some financial names are showing strength.

Global commercial finance company CIT Group (CIT 9.92, +0.73) is getting a nice boost after announcing this morning that it has agreed to a $3 billion long-term committed financing facility provided by Goldman Sachs. CIT believes the transaction will help strengthen its balance sheet. The company has been hit hard by the credit market turmoil, with its stock down 84% from its 52-week high.DJ30 +91.76 NASDAQ -16.61 SP500 +5.80 NASDAQ Dec/Adv/Vol 1680/1030/834 mln NYSE Dec/Adv/Vol 1568/1406/486 mln

[ozymandius]

42. Faith is leaving the building.

1:20
Dow 12,244.74 Up 34.93 (0.29%)
Nasdaq 2,447.27 Down 27.29 (1.10%)
S&P 500 1,359.22 Down 1.46 (0.11%)
10-Yr Bond 4.0110% Up 0.0730
NYSE Volume 1,953,525,620
Nasdaq Volume 1,002,133,810

[Demeter]

50. Faith Is Chasing Sisters Hope and Charity

who left the building in the Reagan administration.

[Joanne98]

43. Lehman Bombshell: Erasing Eight Years of Gains

http://finance.yahoo.com/tech-ticker/article/25540/Lehman-Bombshell%3A-Erasing-Eight-Years-of-Gains

[Joanne98]

45. Corn Rises to Record, Soybeans Gain as Floods Hurt U.S. Crops

June 9 (Bloomberg) -- Corn rose to a record for a third straight session and soybeans surged as the worst flooding in 15 years drowns Midwest plants, increasing the chance that some U.S. fields will be abandoned.

Unusually heavy June rains left Midwest fields under a flood warning and more precipitation is expected this week, the National Weather Service said. Farms in Iowa, Illinois, Indiana and Nebraska received as much as 12 inches (30 centimeters) of rain this month, pushing 30-day rainfall totals to more than four times the normal amount, the weather service said.

``Areas where the water has receded revealed a lot of dead corn and soybean plants, which are likely popping up all over the Midwest,'' said Jim Gerlach, president of A.C. Trading in Fowler, Indiana, after touring fields across the northern part of the state yesterday. ``It's becoming quite obvious that this year's crops are off to a horrible start now, rivaling 1993 when traders were also slow to react to massive flooding.''

Corn futures for July delivery rose 10.25 cents, or 1.6 percent, to $6.61 a bushel at 12:02 p.m. on the Chicago Board of Trade, after earlier touching a record $6.73. Most-active futures have jumped 73 percent in the past year on surging demand for feed and biofuels, which the government said will cut global inventories before the harvest to a 24-year low.

Soybean futures for July delivery rose 4.5 cents, or 0.3 percent, to $14.62 a bushel in Chicago, after touching $14.895, the highest in three months. Most-active futures have gained 78 percent in the past year, reaching a record $15.865 on March 3.

http://www.bloomberg.com/apps/news?pid=20601082&sid=abUVtsSXorFU&refer=canada

[CatholicEdHead]

46. We may see a repeat of the 80's Farm Crisis over this

With high crop prices, the land prices are also going up. Some of the few remaining independent farmers will be getting loans which are too good to be true and will be in a hole when the eventually come down again. That will mean even more consolidation of farms across the heartland of the US.

http://www.folkmusic.com/record/r_like.htm#farmer

Ask Any Farmer
©1988 by John McCutcheon. Published by Appalsongs (ASCAP).

Come fill up your glasses and gather on around
And I'll tell you the truth what's a going on down
All through the country people sounding the alarm
Everyone's a-wondering what's happening on the farm
The businessman says, "Let the strongest ones survive"
But if he ain't got food how's he gonna stay alive
And the politician says, "Everything's a-getting better"
But you might as well be standing 'hind a compost spreader

CHORUS

Just ask any farmer in Kansas
Ask any farmer in Carolina, too
Out in Dakota, Kentucky, Minnesota
And I guarantee you'll find that what I'm telling you is true

Now, I believe it all started 'bout a dozen years ago
Everybody scratching just to make a little dough
The bankers saw the land prices go high
So they went to the farmer, said, "Buy, buy, buy
"Don't you need a little money? Don't you need a little loan?
"Don't you need some new machinery? A mortgage on your home?"
Then the land went down till everything's a debit
And the banker came back, said, "You ain't got the credit
"And I'd really like to help you, but it's out of my control"
And now the farmer's in hock, but the banker's on a roll

CHORUS

But all through time, I'm telling you
Trouble on the farm ain't nothing new
It's the fever or the government,
The flooding or the drought,
Hard times is something every farmer know about
How the cost goes up and the price goes down
Till you don't get nothing when you haul it into town
But nobody's worried yet, you got to understand
And now I'm gonna tell you when it really hits the fan:
When the farmer can't pay for the low, low prices
And the banker's in trouble, then we got a crisis
Uncle Sam steps in and the banker's in clover
And the newspapers tell us that the trouble's all over
And they call it a solution but the facts all mock it
'Cause the money all stays in the pin-striped pocket
....

(Worth going to the link and reading all of it.

[Tansy_Gold]

48. I worked for the farm credit system in the late '80s

Through the whole crisis, the loan officers I worked with were in complete denial that any of their policies or practices had ANYTHING WHATSOFUCKINGEVER to do with small farmers going under and selling out to big corporate operations.

Those same loan officers didn't get bonuses based on how much their clients were able to repay on their loans; they got bonuses based on how much they lent out. They made their bad loans look good, until the farmers just plain couldn't pay and sold out to avoid losing everything. The ones who stayed small, who didn't give in to temptation, were the ones who survived. They may not have prospered, may not have taken their families on ski trips to Switzerland or bought each of the kids a new Cadillac convertible for Christmas every year, but they survived and are still doing what they enjoy doing.

But the loan officers insisted they didn't "tempt" the farmers or try to steer them into anything they couldn't repay. Oh, no, not at all.

"Oh, Mr. CottonFarmer, would you like to qualify for an additional $50,000 in operating expenses? We can qualify you if we include your wife's teaching salary as part of your income, but we WON'T include it in your repayment plan. And we can include your home mortgage as part of your expenses, even though we won't include the house in your assets. See, now you have all that extra cash, and we'll just reappraise your farmland to cover it!"

And how did they reappraise the farmland? Oh, they'd do just like Charlie Keating of Lincoln Savings was doing in Arizona at the same time, and sometimes on the same pieces of property! You get a friend to buy a little piece at an inflated price, and then you make all the property for miles around worth the same amount! Never mind that no one on the planet was going to buy any of it at that price; as long as SOMEONE had bought ONE acre, all the other millions of acres were worth that much too!

And let me tell you, folks, farming in Arizona ain't like farming in Nebraska or Iowa or Indiana or Minnesota. We don't have the same kind of weather risks here; the big crop is cotton, and it's so heavily subsidized it isn't funny. I think it was a couple of years ago I posted here about bales and bales and bales and bales of cotton sitting outside a gin on Buckeye Road in Phoenix, about 43rd or 51st Avenue for those who are familiar with the area, and those bales were just rotting in the sun. It's not edible, so no one was starving, so who cares?? :puke: Total waste of all the petroleum-based fuels and pesticides and fertilizers, total waste of the thousands of gallons of precious water. But the cotton farmers live well in Johnny McCain's state, very well indeed.

We do cattle here, too, both dairy and beef. Highly subsidized by the government, both of them.

Citrus I'm not sure about, though I know most of Arizona's oranges are for juice, not fresh eating.

Sad thing is, most small farms are far more productive, far less polluting, than factory farms, regardless the crop/stock. But I'm not the only one saying that, and no one is listening anyway.


Tansy Gold

[RUMMYisFROSTED]

47. Natural gas.

[ozymandius]

49. End to the volatile, lop-sided trading

Dow 12,280.32 Up 70.51 (0.58%)
Nasdaq 2,459.46 Down 15.10 (0.61%)
S&P 500 1,361.76 Up 1.08 (0.08%)
10-Yr Bond 3.9920% Up 0.0540
NYSE Volume 4,410,594,000
Nasdaq Volume 2,133,839,750

4:25 pm : After a volatile day of trade Monday, the major indices ended the session in mixed fashion. The S&P 500 gained one point, as strength in energy (+2.7%) helped offset weakness in financials (-2.3%).

This result is somewhat disappointing, considering the S&P 500 could only muster a 0.1% gain after falling more than 3% on Friday -- especially taking into consideration that the session's economic data topped expectations and that crude prices posted a steep decline.

Large-cap tech was under pressure, which caused the Nasdaq to fall 0.6%. A better-than-expected same-store sales report from McDonald's (MCD 59.33, +2.38) and speculation that Alcoa (AA 42.17, +2.95) could be a takeover target helped lift the Dow to a 0.6% gain.

Selling interest within financials was fueled by a disappointing earnings preannouncement from Lehman Brothers (LEH 29.62, -2.67). Lehman expects a massive $2.8 billion second quarter loss and plans to raise $6.0 billion in new capital in common and preferred stock offerings -- which is on the high end of previous speculation. The $4.0 billion common stock offering was priced at $28 per share, a 13% discount to Friday's closing price. The firm also priced a $2.0 billion public offering of 2 million shares of 8.75% noncumulative mandatory convertible preferred stock.

The financial sector traded as high as 0.8% in a rebound bid following Friday's decline of roughly 5%, but plummeted to a new five-year low after New York Fed President Geithner said global inflation will probably require tighter policy.

This isn't an earth-shattering revelation since Geithner is simply stating the obvious. Nevertheless, his remarks fit neatly with commentary of late from other Fed officials who are sounding more hawkish about keeping inflation in check than they have in the recent past.

There were some positive items on Monday. Crude oil fell 2.9% to $134.54 as investors took some profits following Friday's 8.4% spike. The dollar gained 0.65% in the wake of hawkish Fed comments, which also played a role in crude's retreat. A Saudi official said the current price of oil is not supported by fundamentals, although OPEC has been expressing this view long before oil hit $100.

In economic news, April pending home sales unexpectedly rose 6.3% on a seasonally adjusted annual rate, according to the National Association of Realtors. Economists expected sales to fall 0.4%.

In corporate news, Honeywell (HON 54.81, +0.80) announced that it signed a definitive agreement to sell its Aerospace Consumable Solutions business to B/E Aerospace (BEAV 29.96, +2.98) for $1.05 billion. Honeywell feels the Consumables Solutions unit no longer fits with Honeywell Aerospace's focus on advanced technologies.

Apple (AAPL 181.61, -4.03) traded in a volatile manner leading up to and following its unveiling of the new iPhone, which is set for release on July 11. AT&T (T 37.56, -0.65), which will remain the exclusive carrier of the phone, got clipped after announcing it expects the phone will pressure its margins and earnings. DJ30 +70.51 NASDAQ -15.10 NQ100 -0.5% R2K -0.7% SP400 -0.1% SP500 +1.08 NASDAQ Dec/Adv/Vol 1952/913/2.13 bln NYSE Dec/Adv/Vol 2004/1111/1.36 bln

[Loge23]

51. Bernanke passes the graveyard

I have gotten uncomfortably used to the statements out of Washington the past seven years. Clearly, nothing is as they say.
But today's pronouncement from Fed Chair Bernanke is either shamefully deceitful or blissfully ignorant of what's really happening in America these days.
In case you missed it, here's one bon mot from the de facto CFO of the USA: Bernanke said “the risk that the economy has entered a substantial downturn appears to have diminished over the past month or so.”
He said this today, Monday June 9, 2008.

Now nothing would cheer me up more than if this were true, but at least in my corner of the world, SE FL, I don't see anything even close to this. It appears to me that we're still falling and falling fast. But what do I know? I only live here.

...and what was he whistling anyway? "Happy Days Are Here Again"?

http://www.msnbc.msn.com/id/25068662/