STOCK MARKET WATCH, Monday August 25

[ozymandius]

Source: du

STOCK MARKET WATCH, Monday August 25, 2008

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 149
DAYS SINCE DEMOCRACY DIED (12/12/00) 2773 DAYS
WHERE'S OSAMA BIN-LADEN? 2498 DAYS
DAYS SINCE ENRON COLLAPSE = 2789
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.
$1 USD = EUR 1.06678
$1 USD = JPY 116.6200

AT THE CLOSING BELL ON August 22, 2008

Dow... 11,628.06 +197.85 (+1.73%)
Nasdaq... 2,414.71 +34.33 (+1.44%)
S&P 500... 1,292.20 +14.48 (+1.13%)
Gold future... 833.50 -5.50 (-0.66%)
30-Year Bond 4.46% -0.00 (-0.04%)
10-Yr Bond... 3.87% +0.03 (+0.76%)






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: (Tim Wood ponders a good question.)

And he, of course, takes the question very, very personally.

Is the Dow Jones Industrial Average Relevant?

This past week I was listening to an interview with an analyst who said that she had some 27 years of experience. In this interview she claimed that the Dow Jones Industrial Average was irrelevant. When I heard this I cringed. Now this is not to say that I don’t see the argument behind this statement. Most people that make such statements are merely referring to the fact that the Dow Jones Industrial Average is comprised of only 30 stocks, and that because of its narrow cross section of the market, it is not reflective of the entire market. I have heard this argument countless times and hearing it once more really didn’t surprise me. However, the Dow Theory itself has proven that such statements are in fact erroneous.

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

[ozymandius]

2. Today's Report

10:00 Existing Home Sales Jul
Briefing.com 4.95M
Consensus 4.90M
Prior 4.86M

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

[ozymandius]

10. Existing Home Sales in the U.S. Probably Rose From Decade Low

Aug. 25 (Bloomberg) -- Sales of existing houses in the U.S. probably rose in July from a 10-year low as declining prices helped stabilize demand, economists said before a report today.

Resales gained 0.9 percent to a 4.91 million annual rate, according to the median forecast of 69 economists surveyed by Bloomberg News.

Record foreclosures have pushed property values down even more, luring some bargain hunters into the market. Still, tougher lending rules, rising unemployment and a glut of unsold houses signal the outlook for residential real estate remains grim.

...

Resales account for about 85 percent of the market, while purchases of new homes make up the rest.

http://www.bloomberg.com/apps/news?pid=20601103&refer=us&sid=akFU9JuCJExk

[Tansy_Gold]

21. Devil in the details

These figures would mean more if we knew how many of those resales were of homes in foreclosure, short sales, etc., and how many were just people selling their home for the normal reasons. I doubt very many fall into the latter right now.


Tansy Gold, not sellin' nothin' these days

[Dr.Phool]

33. The St. Pete Crimes had an article on house values yesterday.

Supposedly, property values dropped over 40% in my area since 2005. I just don't see it. They said a major contributing factor was Wachovia and a few other banks dumping foreclosures at fire sale prices.

It doesn't matter to me. I'm here to stay.

[UpInArms]

37. U.S. existing home sales down 13.2% in past year

08. U.S. existing home sales down 13.2% in past year
10:00 AM ET, Aug 25, 2008

09. U.S. July existing home sales rise 3.1% to 5.0 million pace
10:00 AM ET, Aug 25, 2008

10. U.S. July inventory of existing homes at record high
10:00 AM ET, Aug 25, 2008

[ozymandius]

3. Oil steady as dollar offsets Russia tension

SINGAPORE - Oil prices were steady Monday in Asia above $114 a barrel as a strengthening dollar offset continuing tensions between the U.S. and Russian over the conflict in Georgia.

Light, sweet crude for October delivery was down 5 cents at $114.54 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore. The contract tumbled $6.59 on Friday to settle at $114.59 a barrel.

...

Speaking at an economic conference Friday, Federal Reserve Chairman Ben Bernanke said he would "act as necessary" to control inflation comments which helped strengthen the dollar against rival currencies.

...

In other Nymex trading, heating oil futures rose 0.39 cent to $3.135 a gallon, while gasoline prices fell 1.86 cent to $2.85 a gallon. Natural gas futures increased 3.0 cents to $7.873 per 1,000 cubic feet.

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

[ozymandius]

4. SocGen lowers oil price forecasts

LONDON (Reuters) - Societe Generale (SOGN.PA) has cut its 2008 and 2009 crude oil price forecasts, joining other banks in trimming estimates following a drop in prices from a record high hit last month.

The bank expects U.S. crude to average $113.78 a barrel in 2008 and $120.42 in 2009, it said in a research note dated August 22. The previous forecasts were $124.78 and $128.75 respectively.

http://news.yahoo.com/s/nm/20080825/bs_nm/oil_socgen_dc_1

[ozymandius]

6. Gas prices nationally drop 15 cents in 2 weeks

CAMARILLO, Calif. - A national survey shows gas prices have dropped 15 cents a gallon in the last two weeks.

The average price of a gallon of regular gasoline at self-serve stations was $3.70 Friday. Mid-grade was at $3.83 and premium was at $3.95.

That's according to the Lundberg Survey of 7,000 gas stations nationwide, released Sunday.

http://news.yahoo.com/s/ap/20080825/ap_on_bi_ge/gas_prices

[Tandalayo_Scheisskopf]

24. ""act as necessary" to control inflation comments"

Everything you need to know about Helicopter Ben, in one short bit of prose.

[Ghost Dog]

28. ie. to control the message (comments) rather than inflation itself. n/t.

[AnneD]

60. Morning Marketeers....

:donut: and lurkers. We must be on the same wavelength, GD. I listened to all the nonsense about the large number of protesters out at the convention on the news this morning. I listened to McCain's weak assed, pot stirring attack ad about Hillary. I listened to the news casters saying that inflation was under control because WS had a good day Friday and because Bernanke said it was under control :eyes: and in the very next breath mention that groceries were going up esp wheat.:crazy: The only thing they said in the newscast that was true is that school starts today and I know that is true because I work there. God Bless America. And we wonder how the informed public votes the way they do.

Happy hunting and watch out for the bears.

[Dr.Phool]

36. That is a pretty stupid statement.

Like acknowledging inflation is going to cause it.

[UpInArms]

29. October crude up 63 cents to $115.22 a barrel on Globex

09. October crude up 63 cents to $115.22 a barrel on Globex
8:18 AM ET, Aug 25, 2008

[ozymandius]

5. This week, investors eye oil prices, spending data

NEW YORK - It was another seesaw week on Wall Street, but it ended with a jolt of good news: a $6-a-barrel tumble in oil. This week, investors will be watching to see if crude extends its drop or bounces back up again.

Stocks have been moving largely in an opposite lockstep with oil for the past few months. Financial sector developments, of course, can thwart the pattern — investors react to practically any report involving such names as Fannie Mae, Freddie Mac or Lehman Brothers Holdings Inc. — but Wall Street has made it clear: It likes when oil prices fall.

Wall Street has been upbeat about the pullback in energy prices because it hopes lower fuel costs will help take some pressure off consumers. This week, economists surveyed by Thomson Financial/IFR expect the Commerce Department to report that personal spending rose by 0.2 percent but that personal income slipped by 0.1 percent. They also predict that month-over-month inflation at the personal spending level will edge up 0.3 percent.

http://news.yahoo.com/s/ap/20080824/ap_on_bi_ge/wall_street_week_ahead

[Tandalayo_Scheisskopf]

26. In reading last night's energy news on BB...

It is apparent that the majority of analysts polled about the coming week were trying to either start a rally or at least set a hard deck on prices. Oil is presently up about 2.00 over Friday's close.

CLV08.NYM Crude Oil Oct 08 115.16 8:24am ET Up 0.57 (0.50%)
HOU08.NYM Heating Oil Sep 08 3.1582 8:22am ET Up 0.0271 (0.87%)
NGU08.NYM Natural Gas Sep 08 7.772 8:23am ET Down 0.071 (0.91%)
PNU08.NYM Propane Gas Sep 08 1.68 6:36am ET 0.00 (0.00%)
RBU08.NYM RBOB Gasoline Sep 08 2.88 8:16am ET Up 0.0114 (0.40%)

[ozymandius]

7. US grain exports snagged by infrastructure delays

Across the country, from grain elevator to grain elevator, golden wheat and corn are piled in towering mounds, waiting for a rail car to haul them to market.

Some grain can sit for a month or more on the ground, exposed to wind, rain and rats.

It's the dark side of the booming global demand for U.S. corn, wheat and soybeans. The surge in exports is revealing inefficiencies in the country's railways, highways and rivers that carry the grain that helps feed the world. And those bottlenecks are costing farmers, shippers and ultimately consumers millions of dollars a year.

....

Fixing the bottlenecks will take billions of dollars in investment over several years. In the meantime, exports are forecast to increase, with corn shipments expected to grow every year over the next decade from 54 million metric tons to 77 million metric tons, according to the Food and Agricultural Policy Research Institute.

http://news.yahoo.com/s/ap/20080825/ap_on_bi_ge/grain_bottleneck

[Ghost Dog]

30. Hmmm.

...The Association of American Railroads estimates it will cost about $148 billion to expand rail lines over the next 30 years to handle increased demand. But the group says railroad companies can only afford to fund about 70 percent of that.

The AAR and farm industry groups are backing legislation that would offer tax credits for investments in freight rail expansion.

Barges floating down the Mississippi have long been a cheaper shipping alternative for farmers who aren't landlocked. But the barge traffic is hampered by Depression-era locks and dams.

A modern sized barge tow is typically 1,100-feet long — but the locks they must pass through are roughly half that length. The means the barges must split in two to get through, with the back half waiting for the first half to make the passage before rejoining it on the other side.

The delays add about 50 hours of travel time along the upper stretch of the Mississippi, said Corps Manager Scott Whitney. The barges must burn fuel and pay workers as they wait, racking up an estimated $725.6 million in extra costs along the Illinois and Mississippi Rivers between 1996 and 2005.

Congress authorized the Army Corps last year to update locks and dams along the Mississippi. But Congress must approve funding for the project, which is estimated to cost $2.21 billion over more than 20 years.

One of the tightest bottlenecks happens at busy U.S. ports, where crops are loaded onto oceangoing vessels.

Over the years, exporters have increasingly shipped grain by renting empty containers that brought consumer goods to the United States from overseas markets like China. But as those imports have fallen, exports are having to wait longer, and pay more, to find space on outward-bound vessels, said Jansky, the grain trader in Portland.

Jansky said the cost of renting a 20-foot container has more than doubled to $1,700 in the last 10 months alone.

"All of the sudden, grains are starting to have to pave their own way," he said. "All of the sudden, we're grabbing for vessels now."

Hmmm. Problem seen in Canada too:

...Canada's two railways, CN and CP, have enjoyed a booming business in recent years, but some customer groups, particularly grain shippers, say service levels have deteriorated while rates have climbed... http://www.reuters.com/article/companyNews/idUKN1251580020080812?symbol=CP.TO

[Tansy_Gold]

31. Hmmmm. . . . Where's Taggart Transcontinental and the Rio Norte Line

when you need 'em?

"You asked for it, brother."



Tansy Gold

[Ghost Dog]

50. That's it, and any old steel will do!

Damn' novel does resonate with the economics news these days, doesn't it. But then I guess that's inevitable when you have "shruggers in charge".

[Dr.Phool]

39. When CSX and NS bought Conrail a few years ago,

They abandoned thousands of miles of track, because they didn't want to maintain it, and forced all the traffic onto a few lines.

Even earlier, the Feds allowed then to remove parallel tracks nationwide to save on maintenance costs, which is one reason Amtrak can't increase service. They have to share one track with freight moving in both directions.

[Tansy_Gold]

45. Spiking the railroads?

The linked article is a 10th anniversary recap of the Amtrak derailment in Arizona in 1995.

http://www.ble.org/pr/news/headline.asp?id=14688

When the article states that the saboteurs removed 29 spikes holding the rails in place, what they don't mention is that the spikes are so loose they can be removed with a thumb and forefinger. The (rusted) plates that hold the rails to the ties have three holes for spikes, but most contain only one or two loose spikes. The railbed is littered with the golfball sized steel bearings that fall out of wheels, as well as spikes that have been pulled or rattled out of the ties. I've rockhounded in Quail Springs Wash and I've walked along those tracks, so these are first-hand observations.

What's painfully ironic is that here in Apache Junction, AZ, there's an ongoing local battle over the use of cargo containers, the kind often used on railcars, as backyard storage sheds.


Tansy Gold

PS -- The linked article has an interesting couple of sidebar links about Joe Biden and Amtrak. . . .

[Hugin]

47. Storage sheds!?!?

Heck, around here those are considered upscale housing. 8\

[Dr.Phool]

48. I've seen that first-hand also. (31 years as a Locomotive Engineer).

Although I worked for a small intra-city steel mill railroad, we did switching and interchange with the big ones. You could tell when we crossed from our tracks to their property. The rail got all bumpy and wavy. Even when our track was in it's worst condition, it was better than their best.

It's funny how we used to win the Gold or Silver Harriman Award every year, for the safest railroad in the country (The rules were, you couldn't win the Gold in consecutive years). After they instituted mandatory random drug and alcohol testing, we never won so much as an honorable mention. Go figure.

[ozymandius]

8. KDB warned against buying Lehman

South Korea’s top financial regulator on Monday warned that Korea Development Bank should take a “cautious” approach to buying an overseas bank, following the state-run group’s expression of interest in Lehman Brothers .

Jun Kwang-woo, chairman of the Financial Services Commission, said he was “aware” that KDB was considering the possibility of buying a global investment bank, but he stressed that such a deal should be led by private lenders.

.....

The Financial Times reported last week that KDB had talked to Lehman about buying a 50 per cent stake but failed to reach an agreement, according to people familiar with the negotiations.

On Friday, a spokesman from KDB told reporters that buying Lehman was still a “possibility”, news which sent Lehman shares up as much as 13 per cent.

.....

Lehman is considering a variety of options to raise cash before its mid-September earnings report, which analysts expect to include writedowns of up to $4bn. The possibilities include a sale of a stake in Lehman itself or the sale of all or part of its asset-management arm or its commercial real estate portfolio.

http://www.ft.com/cms/s/0/ca816bd6-727f-11dd-983b-0000779fd18c,dwp_uuid=e8477cc4-c820-11db-b0dc-000b5df10621.html

[ozymandius]

9. Libor Signals Tighter Credit as Banks Balk at Lending (Update1)

Aug. 25 (Bloomberg) -- Most of the bond strategists and salesmen that Resolution Investment Management Ltd.'s Stuart Thomson talked to last August expected the credit crunch to be long over by now. Instead, money markets show there's no end in sight, and it may even worsen.

.....

The premium banks charge for lending short-term cash may approach the record levels set last year, based on trading in the forward markets, where financial instruments are sold for future delivery. Back then, concern about the health of the banking system led investors to shun all but the safest government debt, sparking the biggest end-of-year rally for Treasuries since 2000.

Banks are charging each other a premium of 77 basis points over what traders predict the Federal Reserve's daily effective federal funds rate will average over the next three months to lend cash. The spread is up from about 24 basis points in January, and may widen to 85 basis points, or 0.85 percentage point, by mid-December, prices in the forwards market show.

http://www.bloomberg.com/apps/news?pid=20601103&sid=aa9qsN2KBb0Y&refer=us

[ozymandius]

11. Hamilton on Recession Indicators

From Professor Hamilton at Econbrowser: Recession indicators

Many people may not care whether our current situation meets the formal definition of a recession, but as I've explained previously, you should. ...

I do think there's a pretty strong case, based on the employment and unemployment numbers, that we are currently in a recession. ... the whole reason I'm interested in this question of whether our current difficulties should be classified as a recession, is that if we are in a true recession, the process is going to feed on itself, and more bad things are ahead of us. If it's a real recession, it should be evident in the 2008:H2 GDP numbers.

See Jim Hamilton's graphs.

I believe the economy is in recession and the negative feedback loops have started to kick-in. Good examples are less business investment and less local government spending - both impacting employment. These will be classic symptoms of a recession.

http://calculatedrisk.blogspot.com/2008/08/hamilton-on-recession-indicators.html

[janetblond]

15. The Definition of Recession:

-Decline in GDP for two or more consecutive quarters.
-GDP growth is negative for two or more consecutive quarters.
So .....,
Was the GDP down the last 2 quarters?
Anyone know?
Pls. post url.
Thanks.

[Hugin]

23. It all depends on who's numbers you're using...

Try to keep in mind the group charged with calling an 'official' recession is a privatized group headed by
a shrugger stooge.

So, I use how many houses in my neighborhood are being foreclosed on. No link.

[Ghost Dog]

35. Note the (weird?) numbers quoted in #22 and #27 below;

and consider how much of the (massaged, as Prag points out) GDP numbers could be (more than?) accounted for by inflation.

(Should the GDP numbers used in the recession definition be inflation-adjusted?)

[ozymandius]

12. Number 9: Columbian Bank and Trust

The ninth bank to fail this year was announced by the Federal Deposit Insurance Corp. late Friday: The Columbian Bank and Trust Company, located in Topeka, Kansas. The FDIC said the failed bank had total assets of $752 million and total deposits of $622 million, of which there were approximately $46 million in uninsured deposits.

The bank’s insured deposits were purchased by Chillicothe, Missouri-based Citizens Bank and Trust, according to a statement by the FDIC; Columbian’s nine branches will reopen Monday as branches of Citizen.

http://www.housingwire.com/2008/08/22/number-9-columbian-bank-and-trust/

[pokercat999]

20. On Sunday a friend and employee of Wachovia Bank told me

they were on shaky ground. Anyone know anything about this rumor? I've been doing all my banking with Wachovia for years, should I consider switching my personal checking and savings account to say Bank of America? If a bank collapses how long does it take for the FDIC to kick in? Would there be a delay in withdrawing funds?

[DemReadingDU]

25. Ensure you have less than $100,000 at Wachovia

That is the limit for FDIC insurance.


From the last bank that failed, Columbian, you can read info and find answers at the FDIC site
http://www.fdic.gov/bank/individual/failed/columbian.html

P.S.
I am in Ohio, we have several large regional banks at-risk. I haven't done anything with my accounts, because I don't know where to move them because I don't know which banks might fail. I did open an account at a credit union, as an alternative to a bank.

[Pale Blue Dot]

40. Try this:

http://www.bankrate.com/brm/safesound/ss_home.asp

You can search banks and credit unions by state. The ones that have failed recently have all been rated one star. Avoid those. Good luck!

[Pale Blue Dot]

43. Oops! I was wrong.

According to this thread:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=114x42398

this bank that failed on Friday had 3 stars. Now I'm even more afraid.

[Hugin]

44. What? Do they like draw lots?

Oh, I know... They play "Pin the tail on the Donkey."

:scared:

I'm still waiting for SSBX to bubble-up. No sign of it yet and their stock price was back down to $0.50 range last
week.

[Dr.Phool]

49. And I just checked my bank (Wachovia).

2 stars.

Uh-oh.

:scared: :hide:

[CatholicEdHead]

34. There have been SMW stories about Wachovia the past couple of months

and none of them has been encouraging. It always talked about big losses. I think in either last Thurs or Fri's SMW thread Wachovia was mentioned as one of the banks in dire trouble and are for all practical purposes, circling the drain.

[wishlist]

63. Hope they pull through. No errors in 30 yrs on my checking account there

Shame their management got greedy and carried away during the housing/mortgage bubble and gambled away so much of their assets. My local bank has been 100% reliable and accurate over more than 30 years of constant transactions. I currently have a 5% CD there, hope I don't have to draw it out anytime soon. I never had a CD there until this year though because they never paid high enough interest until their huge capital losses occurred.

[ozymandius]

13. Good morning all.

:donut: :donut: :donut:

Have a wonderful day. I'll check in after the close.

:hi:

[Hugin]

19. And... off to the Greatest Page.

:hi:

[UpInArms]

14. dollar watch

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

Last trade 76.812 Change +0.068 (+0.09%)

Has Euro Formed a Bottom?

http://www.bktraderfx.com/site/uncategorized/fx-weekly-0822-2908-has-euro-formed-a-bottom

Looks like Russia’s foray into old style Soviet imperialism is coming to an end and so is the dollar’s rally. This whole past week the price action has been nothing but chop as EURUSD tried to carve out a sustainable bottom after losing nearly 1000 pips over the past month. Traders however paid scant attention to economic data and instead the FX market followed the oil market almost tick by tick. Oil in turn produced a schizophrenic performance of its jumping 5 dollars on Thursday and then dropping back nearly 6 dollars on Friday after the news that the Baku-Tibilisi pipeline reopened for business.

The wild action in the oil pits wreaked havoc for breakout traders as reversals were the order of the day. Nevertheless when the dust settled the euro held the lows and now appears to be in the midst of carving out a sustainable bottom. However, the unit saw very little help on the economic front last week with flash PMI readings and Industrial orders numbers decidedly dour still much of the decline has already been factored into the price so the impact was minimal.

Next week with Russian troops slowly pulling out of Georgia, attention should shift back to micro rather than macro concerns. German IFO, US Durable Goods and Q2 GDP will be the key event risks of the week. With market expectations already modest, any downside surprises are unlikely to generate much follow through. On the other hand any upside news could create enough fuel the test either side of the 1.4600-1.4900 range. With most of the primary dealers tanning themselves on the beaches of St. Tropez or the Hamptons the action may be remarkably quiet as everyone tries to enjoy the last bit of summer sunshine.

No sunshine for cable bulls however, as UK data turned from bad to worse. As we wrote on Friday “UK Q2 GDP was revised downward to 0.0% from 0.1% expected indicating that the economic growth has come to an absolute standstill amidst ravages of the credit crunch, the collapse of the housing sector and the skyrocketing costs of energy. The news sent pound plummeting by more than 2 cents in early London trade reversing all of yesterday’s gains.

Cable now finds itself perilously close to the 1.8500 level once again as traders continue to price in the increasing possibility of not one but two rate cuts by the BoE before the year end. This week’s MPC minutes revealed little new information regarding the BoE’s posture towards monetary policy, but as the drumbeat of dour UK economic news continues to hit the screens, the pressure on Mr. King and Company to ease will become immense.

...more...

Washington Is Quietly Repudiating Its Debts

http://online.wsj.com/article/SB121936581501662161.html?mod=opinion_main_commentaries

Will the U.S. Treasury repudiate its obligations to its creditors, be they citizens or investors around the world? Most observers would answer "no" without hesitation. But Congress, with the complicity of the White House and the Fed, has arguably embarked on a stealth repudiation.

In his famous treatise, "The Wealth of Nations," Adam Smith noted there had never been a "single instance" of sovereign debts having been repaid once "accumulated to a certain degree." We may have reached Smith's threshold.

The bond markets are certainly not protecting creditors from the risk of what Smith called "pretended payment" through inflation. Nor did they do so until far into the great inflation of the 1970s. Not until late 1977 and into 1978 did the bond market fully incorporate the reality of the debased dollar, by demanding higher long-term interest rates.

How can this happen? Markets are supposed to be forward-looking and efficiently price in all relevant risks. Yet monarchs have been repudiating debt explicitly and implicitly throughout recorded history.

Many years ago, the Austrian economist Ludwig von Mises offered an explanation. He suggested that while you can't, in Abraham Lincoln's words "fool all of the people all of the time," you can fool all of the people at least some of the time. And this is easier to do if a central bank has in the past earned credibility in fighting inflation.

In the 1980s, Ronald Reagan and Paul Volcker worked together to get inflation under control. They were greatly assisted by the "bond vigilantes," traders who were by then exerting discipline in bond markets by bidding up interest rates to double-digit levels. The outcome of the Reagan/Volcker policy of tight money and low marginal tax rates was not only a great economic expansion, but also a great boost to the Fed's credibility. The Fed proved it was able and willing to withstand political heat in the fight against inflation.

Alan Greenspan built on the Volcker legacy and, at least in the early years of his long tenure, continued the fight against inflation. In the 1990s, when Mr. Greenspan faced his own banking crisis, he was able to adopt a policy of comparatively low short-term interest rates. Banks used the opportunity to borrow cheaply and lend profitably to grow their way out of the crisis. Credibility allowed the Fed to engineer a recovery without stoking inflation fears.

...more...

[Ghost Dog]

22. U.S. dollar rallies as Europe, Asia fade

Mon Aug 25, 2008 8:36am EDT

WASHINGTON (Reuters) - The U.S. dollar is enjoying its strongest rally in three years largely because of bad news abroad rather than good news at home.

Just as the greenback's swift decline earlier in the year set off alarm bells with world policy-makers who worried that it was contributing to overheating inflation, a swift rise that hurts U.S. exports would not be welcome either.

Currencies are typically viewed as proxies for their underlying economies, and the dollar is no exception. What makes it somewhat unusual is that it is the dominant currency of global trade. Its movements are intricately linked to the price of oil, which in turn is vital to the world economy.

Economists widely think the second quarter was the high water mark for the U.S. economy this year, and a fourth-quarter contraction is not out of the question. If anything, the outlook has worsened in recent weeks as credit concerns spike and investors worry that the government may have to bail out mortgage finance giants Fannie Mae and Freddie Mac.

So why has the dollar climbed 7 percent against a basket of currencies since July 15? It's all relative. The U.S. economic outlook may be grim, but that of the rest of the developed world is rapidly deteriorating.

"This spreading weakness abroad -- and it is worse now in Europe and Japan than it is in the USA -- is the primary reason for the dollar's recovery," Merrill Lynch economist David Rosenberg said.

Data released on Friday showed that Britain's economy generated zero growth in the second quarter. The euro zone recorded its first ever contraction during that period.

Revised figures due on Thursday are expected to show the U.S. economy grew at a solid 2.7 percent annual rate in the second quarter, according to economists polled by Reuters, well ahead of the 1.9 percent pace that was initially reported.

/... http://www.reuters.com/article/hotStocksNews/idUSN2228558920080825?sp=true

[54anickel]

55. Thought it might be a good time to resurrect the e-book by Dean Baker....

Sort of a nice counter point to the praise of St Ronny in that BSJ article
(Reagan and Volcker worked together - humph! I hate revisionism, especially when it's tied to Reaganism)

http://www.conservativenannystate.org/
The Conservative Nanny State
How the Wealthy Use the Government to Stay Rich and Get Richer


I like to follow his Beat The Press Blog over at The American Prospect http://www.prospect.org/csnc/blogs/beat_the_press

[Demeter]

65. ...and Wall Street Doesn't Say Boo About It...

because their debts are being repudiated at the same time!

[UpInArms]

16. A New Qualitative Capitalism

http://www.safehaven.com/article-11045.htm

A few months ago I penned an article titled: The End of Capitalism as We Know it; as we were witnessing the collapse of many widely held beliefs about our economic system, it seemed appropriate to take a moment and reflect on the underlying dynamics. In all fairness, the philosophical approach to such analysis had been floating in my head for years; since the early part of this last decade, I had uncomfortably witnessed the unstoppable force of economies of scale and economic leverage take over every aspect of our system in complete disregard for any other social aspect. What started to worry me initially was the hijacking and the manipulation of good theories and socio-economic analyses to justify excesses and imbalances that were clearly unsustainable. Milton Friedman's free market theories were never meant to justify cowboy economics especially when picked ad hoc and in a vacuum from his conservative monetarist approach. For that matter, John Maynard Keynes was abducted as well to justify consistent and uncontrolled fiscal and monetary policy manipulation. However, it was not until this "quantity over quality" takeover engulfed the cultural fabric of our society that I started to really question the viability of Mass Capitalism going forward.

Until then only pathetic and factually wrong rehashes of socialistic theories had surfaced to ignite the debate along side discussions simply anchored around the concept of an environmentally sustainable economic process. My previous piece was meant to lay the philosophical foundations for a different approach to economic change: a qualitative economic process; a set of dynamics that would encompass the understanding of capitalism success so far, the understanding of practical human behavior as opposed to ideological and untrue assumptions and the understanding of multi-factor economic sustainability. My starting point was the recognition that every successful economic and social system should retain the personal profit motive and should promote personal freedom and systemic security. Capitalism and freedom, to quote Friedman, are still in my view the two principal characteristics of a successful system; however, it is the unsustainable degree of "quantity and mass production" that can provoke the systemic collapse. We see the takeover of quantity over quality in every aspect of our system: from the credit bubble to the McMansion factor, from the overproduction of generally useless consumable items to the watering down of our educational system, from the energy inefficiency problem to Reality TV shows. Practically every aspect of our social system is now dominated by quantity and suffering potential systemic ruin thanks to such domination.

For the purpose of this new analysis, I intend to explore four concrete areas of intervention that may restructure in the intermediate term the imbalances of today's capitalism and morph it into a more sustainable social system: Qualitative Capitalism. Such four areas I believe are:

1. Monetary policy
2. Education
3. Globalization Management
4. Disclosure and transparency in the regulatory process

...more...

[Ghost Dog]

17. Asia stocks rebound but risk ...

... Asian stocks rebounded from a two-year low as the drop in oil prices back below $120 a barrel lifted shares of companies sensitive to energy prices, though trading volumes across the region were quite thin, suggesting a lack of conviction among investors.

Japan's Nikkei share average .N225 ended up 1.7 percent, after shares of Japan's second-largest car maker, Honda Motor Co (7267.T: Quote, Profile, Research, Stock Buzz), led the way higher.

The MSCI pan-Asia stocks index .MIAS00000PUS was up 1.6 percent, after hitting the lowest since July 2006 on Friday. The MSCI Asia-Pacific ex-Japan index .MIAJP00000PUS rose 1.2 percent. Australia's benchmark share index was up 1.7 percent, helped by rallying shares of the country's top banks.

Hong Kong's Hang Seng index .HSI led the region, up 3 percent after plumbing a one-year low on Thursday and being closed on Friday for a typhoon. Shares of offshore Chinese oil producer CNOOC (0883.HK: Quote, Profile, Research, Stock Buzz) were up 4.3 percent and among the biggest boosts to the index, with the company expected to report solid first-half results on Wednesday.

...

Still, regional risk measures show investors frozen in cautious mode rather than ready to dive back into markets in search of bargains. The iTRAXX Asia ex-Japan index of high-yield credit default swaps <ITAHY5UA=GFI> has been stable in the last month, between 515 and 560 basis points.

That range is smack in the middle of a record high hit in March amidst the meltdown of Bear Stearns and a low in May when stock markets recovered. Credit default swaps are insurance-like contracts that protect against corporate defaults and restructuring.

"Even with oil prices down, the global liquidity crunch remains very much with us," said Clive McDonnell, regional strategist with BNP Paribas in Hong Kong.

"U.S. and European portfolio managers continue to reduce risk in their portfolios; emerging markets are the higher risk asset class, hence we are suffering disproportionately," he said.

/... http://www.reuters.com/article/marketsNews/idINSP7682520080825?rpc=44&sp=true

[Ghost Dog]

18. European shares turn positive as insurers gain

LONDON, Aug 25 (Reuters) - European shares turned positive in afternoon trade on Monday as insurers gained on talk that Commerzbank (CBKG.DE: Quote, Profile, Research, Stock Buzz) was racing to seal a deal to buy Dresdner, owned by insurer Allianz (ALVG.DE: Quote, Profile, Research, Stock Buzz).

At 1156 GMT, the FTSEurofirst 300 index of top European shares was up 0.1 percent at 1,176.84 points. It notched up a 1.8-percent gain on Friday.

/... http://www.reuters.com/article/marketsNews/idCALP61428220080825?rpc=44

[Ghost Dog]

56. European stocks fall, led by financials, energy

FRANKFURT, Aug 25 (Reuters) - European shares fell on Monday, led by financials amid ongoing worries about the health of the sector and energy majors as crude oil prices CLc1 LCOc1 extended the previous session's steep slide.

Activity was subdued because of a holiday in Britain which meant that markets in London, Europe's top financial centre, were closed.

The FTSEurofirst 300 index of top European shares ended unofficially 0.6 percent lower at 1,169.35 points. It has lost almost 22.5 percent this year compared with a 17 percent slide for the MSCI World index .MIWD00000PUS.

/... http://www.reuters.com/article/marketsNews/idCALP65584220080825?rpc=44

[Ghost Dog]

27. IMF trims outlook for world growth - source

Mon Aug 25, 2008 8:33am EDT
(This story is filed without a dateline to protect the anonymity of its source)

Aug 25 (Reuters) - The International Monetary Fund has trimmed its forecasts for 2008 and 2009 world economic growth in a note prepared for a meeting of the Group of 20 (G20) nations, a G20 finance official told Reuters on Monday.

The IMF is forecasting world growth this year of 3.9 percent, down from an estimate of 4.1 percent in its World Economic Outlook last month, said the official, who is involved in planning for the meeting and spoke on condition of anonymity.

It forecasts 2009 growth of 3.7 percent, down from 3.9 percent.

The IMF left unchanged its forecast for U.S. growth this year at 1.3 percent, said the official. It shaved its forecast for 2009 U.S. growth to 0.7 percent from 0.8 percent.

The IMF trimmed its forecast for euro zone growth this year to 1.4 percent from 1.7 percent in July. It estimated 2009 growth at 0.9 percent, down from 1.2 percent.

/.. http://www.reuters.com/article/marketsNews/idINMAT00850520080825?rpc=44

[Tandalayo_Scheisskopf]

32. And as expected, once The Kasino opened...

CLV08.NYM Crude Oil Oct 08 114.97 9:38am ET Up 0.38 (0.33%)<--==This is, in fact, a drop from pre-NYMEX price
HOU08.NYM Heating Oil Sep 08 3.1452 9:38am ET Up 0.0141 (0.45%)<--==As is this.
NGU08.NYM Natural Gas Sep 08 7.756 9:38am ET Down 0.087 (1.11%)
PNU08.NYM Propane Gas Sep 08 1.68 6:36am ET 0.00 (0.00%)
RBU08.NYM RBOB Gasoline Sep 08 2.8596 9:38am ET Down 0.009 (0.31%)

[Hugin]

38. Unka Dick is headed down to Georgia...

Look for a sharp jump in September/October time frame. Falling just in time for the Elections.

Then (depending on the outcome of the elections) a sharp rise. (Or a stable decline to a reasonable and
regulated level should the adults win)

[Dr.Phool]

41. Is that today's song?

Even if it was done by a wing-nut?

"The Devil Went Down to Georgia".

[Hugin]

42. The irony of using that song would be blinding.

I say go for it! :headbang:


Hey, even an unset digital VCR clock is correct off and on 120 times a day.

[Demeter]

58. Maybe He'll Meet His Fate There

in the mystic Orient. For want of a nail, and all that.

[antigop]

46. A better bang for the buck: the economic efficiencies of DB plans

A report from the National Institute for Retirement:

http://www.nirsonline.org/index.php?option=content&task=view&id=121

Worries about retirement security abound. Families fear that they won’t have enough to support an adequate retirement income as home values and financial markets plummet. Dwindling profit margins have employers looking to cut costs.

And governments are concerned about delivering on the promises that they have made to their citizens and to their employees as tax revenues shrink amid a weakening economy. In this environment, some have proposed replacing traditional defined benefit (DB) pensions with 401(k)-type defined contribution (DC) retirement savings plans in an effort to save money.

But decision-makers would be wise to look before they leap. To deliver the same level of retirement benefits, a DB plan can do the job at almost half the cost of a DC plan. Hence, DB plans should remain an integral part of retirement income security in an increasingly uncertain world because they offer employers and employees the best bang for the buck.

Full report is here:
http://www.nirsonline.org/storage/nirs/documents/Bang%20for%20the%20Buck%20Report.pdf

antigop
--a firm supporter of defined benefit pensions-- the OLD kind, not the cash balance crap

[Ghost Dog]

52. (Somewhat related) Uninsured pay $30 billion for health care: study

WASHINGTON (Reuters) - Americans who go without health insurance for any part of 2008 will spend $30 billion out of pocket for health care and they will get $56 billion worth of free care, according to a report released on Monday.

Government programs pay for about three-quarters, or roughly $43 billion, of the bills for these uninsured people, Jack Hadley of George Mason University in Virginia and a team at the Urban Institute reported.

"Physicians' donated time and forgone profits amount to $7.8 billion. After government payments to hospitals are subtracted, private philanthropy and profit margins are responsible for at least an additional $6.3 billion," they wrote in the report, published on the Internet at www.healthaffairs.org/.

"From society's perspective, covering the uninsured is still a good investment. Failure to act in the near term will only make it more expensive to cover the uninsured in the future, while adding to the amount of lost productivity from not insuring all Americans," Hadley said in a statement.

...

Current estimates show that 47 million Americans lack any health insurance, and 28 million have gone without for some part of the year. The U.S. Census bureau is scheduled to release new estimates on Tuesday.

/... http://www.reuters.com/article/topNews/idUSN2540397020080825

[TrogL]

51. Loonie Watch

Highlights

Current:



30-day and 90-day vs.greenback:



30-day vs. Euro, Yen, UK Pound and Swiss Franc




Currency Comparison: http://members.shaw.ca/trogl/looniewatch.html

Detailed analysis: http://quotes.ino.com/exchanges/?r=CME_CD

Up-to-the-minute graph: http://quotes.ino.com/chart/?s=CME_CD.Y%24%24&v=s&w=5&t=l&a=1

Historical values http://www.x-rates.com/d/USD/CAD/data30.html

2008-07-14 Monday, July 14 0.994036 USD
2008-07-15 Tuesday, July 15 0.998502 USD
2008-07-16 Wednesday, July 16 0.998004 USD
2008-07-17 Thursday, July 17 0.998203 USD
2008-07-18 Friday, July 18 0.994728 USD
2008-07-21 Monday, July 21 0.998104 USD
2008-07-22 Tuesday, July 22 0.991768 USD
2008-07-23 Wednesday, July 23 0.991277 USD
2008-07-24 Thursday, July 24 0.988728 USD
2008-07-25 Friday, July 25 0.983574 USD
2008-07-28 Monday, July 28 0.978474 USD
2008-07-29 Tuesday, July 29 0.974659 USD
2008-07-30 Wednesday, July 30 0.976562 USD
2008-07-31 Thursday, July 31 0.974564 USD
2008-08-01 Friday, August 1 0.975515 USD
2008-08-04 Monday, August 4 0.965717 USD
2008-08-05 Tuesday, August 5 0.959233 USD
2008-08-06 Wednesday, August 6 0.95511 USD
2008-08-07 Thursday, August 7 0.951475 USD
2008-08-08 Friday, August 8 0.936593 USD
2008-08-11 Monday, August 11 0.936944 USD
2008-08-12 Tuesday, August 12 0.939761 USD
2008-08-13 Wednesday, August 13 0.938262 USD
2008-08-14 Thursday, August 14 0.941531 USD
2008-08-15 Friday, August 15 0.942596 USD
2008-08-18 Monday, August 18 0.943129 USD
2008-08-19 Tuesday, August 19 0.942863 USD
2008-08-20 Wednesday, August 20 0.940999 USD
2008-08-21 Thursday, August 21 0.956572 USD
2008-08-22 Friday, August 22 0.956389 USD

Current values

http://quotes.ino.com/exchanges/?r=CME_CD)

Market            Open   High    Low   Last  Change    Pct 
CD.Y$$ Cash     0.9568 0.9569 0.9551 0.9551 +0.0005 +0.05% 
CD.U08 Sep 2008 0.9568 0.9568 0.9540 0.9540  0.0000  0.00% 
CD.Z08 Dec 2008 0.9545 0.9545 0.9545 0.9532 -0.0022 -0.23% 
CD.H09 Mar 2009 0.9519 0.9519 0.9519 0.9531 -0.0025 -0.26% 
CD.M09 Jun 2009 0.9880 0.9880 0.9880 0.9532 -0.0031 -0.33% 
CD.U09 Sep 2009 0.9540 0.9540 0.9540 0.9533 -0.0033 -0.35% 
CD.Z09 Dec 2009 0.9845 0.9845 0.9845 0.9534 -0.0035 -0.37%  

Other combinations: (http://quotes.ino.com/exchanges/?c=currencies)

Market          Open    High    Low     Last    Change   Pct 
AUSTRALIAN $/CANADIAN $ (CME:ACD)
ACD.U08 Sep 2008 0.9056 0.9056 0.9056 0.9056 -0.0110 -1.21%  
EURO/BRITISH POUND (NYBOT:GB)
GB.U08.E Sep 2008 (E) 0.79815 0.79815 0.79690 0.79880 +0.00460 +0.58%    
EURO/JAPANESE YEN (NYBOT:EJ)
EJ.U08.E Sep 2008 (E) 161.78 162.03 161.25 161.25 -0.77 -0.48%     
EURO/US$ (SMALL) (NYBOT:EO)
EO.U08.E Sep 2008 (E) 1.4749 1.4777 1.4749 1.4766 +0.0012 +0.08%    

Blather (from http://quotes.ino.com/exchanges/?r=CME_CD)

The September Canadian Dollar was higher overnight as it consolidates above the 20-day moving average crossing at 95.25. Stochastics and the RSI remain bullish signaling that additional strength is possible near-term. If September extends last week's rally, broken support marked by April's low crossing at 96.74 is the next upside target. Closes below the 10-day moving average crossing at 94.53 would confirm that a short-term top has been posted. First resistance is last Thursday's high crossing at 95.97. Second resistance is broken support marked by April's low crossing at 96.74. First support is the 20-day moving average crossing at 95.25. Second support is the 10-day moving average crossing at 94.52.

Analysis

Noticed the DOW is taking a beating and the greenback's on a slide as well, which bodes well for the TSE and loonie.

I can't remember the last time I saw the Euro lose against Sterling. Is the Pound dead?

[Joanne98]

53. Indiana sues Countrywide over lending practices

Monday August 25, 10:52 am ET

Indiana becomes latest state to sue Countrywide over alleged misleading lending practices

INDIANAPOLIS (AP) -- Indiana has sued Countrywide Financial Corp., becoming the latest state to take the mortgage lender to court over its lending practices.
Indiana Attorney General Steve Carter said in a news release Sunday that a state investigation had uncovered a "pattern of misleading and questionable practices" by Countrywide Home Loans Inc. and its parent company.

http://biz.yahoo.com/ap/080825/in_countrywide_lawsuit.html?.v=1

[Joanne98]

54. Sector Snap: Insurance stocks fall, led by AIG

Monday August 25, 12:20 pm ET
Insurance stocks dragged down by AIG, Tropical Storm Fay floods


CHARLOTTE, N.C. (AP) -- Shares of major insurance companies traded lower Monday, dragged down by bearish comments on American International Group Inc. and the fallout from Tropical Storm Fay.
Shares of AIG hit their lowest point in nearly 13 years as a Credit Suisse analyst cut his price target on the world's largest insurer and a possible downgrade from a ratings agency loomed.

http://biz.yahoo.com/ap/080825/sector_snap_insurance.html?.v=1

[Demeter]

57. Down 221 Points at 2:21 PM

Nice bit of coincidence. Looks like a refreshing plunge into the pool of insolvency today. Of course, some fool will try to jack it back up to the mystical, magical 11,600.

I think Lehman Bros. is toast. It's all over but the fire engines.

[Tandalayo_Scheisskopf]

59. The Kasino Update

CLV08.NYM Crude Oil Oct 08 114.54 1:32pm ET Down 0.05 (0.04%)
HOU08.NYM Heating Oil Sep 08 3.1423 1:32pm ET Up 0.0112 (0.36%)
NGU08.NYM Natural Gas Sep 08 7.727 1:32pm ET Down 0.116 (1.48%)
PNU08.NYM Propane Gas Sep 08 1.68 6:36am ET 0.00 (0.00%)
RBU08.NYM RBOB Gasoline Sep 08 2.853 1:32pm ET Down 0.0156 (0.54%)

ALQ08.CMX Aluminum Aug 08 1.265 1:28pm ET 0.00 (0.00%)
HGQ08.CMX Copper Aug 08 3.525 1:41pm ET Up 0.0165 (0.47%)
ZGQ08.CBT Gold 100 oz. Aug 08 822.10 12:58pm ET Down 4.30 (0.52%)
GCQ08.CMX Gold Aug 08 819.80 1:42pm ET Down 7.60 (0.92%)
PAU08.NYM Palladium Sep 08 286.00 1:47pm ET Down 3.00 (1.04%)
PLU08.NYM Platinum Sep 08 2,040.10 6:36am ET 0.00 (0.00%)
ZIQ08.CBT Silver 5000 oz. Aug 08 13.475 Jul 30 0.00 (0.00%)
SIQ08.CMX Silver Aug 08 13.365 1:36pm ET Down 0.105 (0.78%)

CU08.CBT Corn Sep 08 580.25 2:23pm ET Down 6.25 (1.07%)
OU08.CBT Oats Sep 08 365.00 1:23pm ET 0.00 (0.00%)
RRU08.CBT Rough Rice Sep 08 18.25 2:14pm ET Up 0.25 (1.39%)
SMU08.CBT Soybean Meal Sep 08 365.20 2:16pm ET Up 4.90
BOU08.CBT Soybean Oil Sep 08 54.50 2:03pm ET Up 0.35 (0.65%)
SU08.CBT Soybeans Sep 08 1,338.00 2:15pm ET Up 17.00 (1.29%)

FCQ08.CME Feeder Cattle Aug 08 113.10 2:15pm ET Up 0.25 (0.22%)
PBQ08.CME Frozen Pork Bellies Aug 08 79.95 2:15pm ET Down 0.05 (0.06%)
LHV08.CME Lean Hogs Oct 08 74.00 2:15pm ET Up 0.25 (0.34%)
LCQ08.CME Live Cattle Aug 08 102.00 2:15pm ET Up 0.15 (0.15%)

CCU08.NYB Cocoa Sep 08 2,836.00 1:48pm ET Up 42.00 (1.51%)
KCU08.NYB Coffee Sep 08 139.10 1:47pm ET Down 1.15 (0.82%)
CTV08.NYB Cotton Oct 08 67.08 1:02pm ET Down 0.34 (0.50%)
LBU08.CME Lumber Sep 08 255.90 2:15pm ET Up 0.40 (0.16%)
OJU08.NYB Orange Juice Sep 08 108.00 1:53pm ET Up 2.20 (2.08%)
SBV08.NYB Sugar #11 Oct 08 14.00 2:06pm ET Down 0.13 (0.92%)
SEX08.NYB Sugar #14 Nov 08 22.76 Aug 22 0.00 (0.00%)

Natural Gas Declines on Speculation Supplies to Approach Record

By Reg Curren

Aug. 25 (Bloomberg) -- Natural gas in New York fell to the lowest in more than six months amid speculation inventories of the furnace fuel will be adequate for winter heating demand starting in November.

Production is increasing while seasonal temperatures limit the need for gas to produce electricity to power air conditioners. U.S. power-plant output decreased 3 percent to 83.5 million megawatt-hours in the week ended Aug. 21, according to an analysis by Genscape Inc. Supplies rose 88 billion cubic feet to 2.655 trillion for the week ended Aug. 15, the Energy Department said Aug. 21.

``Storage is headed to 3.5 trillion, maybe more,'' said Scott Hanold, an analyst at RBC Capital Markets in Minneapolis. ``That reality isn't fully in the market,'' so prices may decline ``as gas storage continues to inch up.''

Natural gas for September delivery declined 17.7 cents, or 2.3 percent, to $7.666 per million British thermal units at 1:19 p.m. on the New York Mercantile Exchange. Futures earlier fell to $7.617, the lowest intraday price since $7.58 on Feb. 4. Gas has tumbled 44 percent since closing at $13.577 on July 3, a 30-month high, and is selling below its 200-day moving average of $9.592.

http://www.bloomberg.com/apps/news?pid=20601072&sid=a0mNHhhLyOPU&refer=energy

[Dr.Phool]

61. Oh goody! Another tropical storm in the carribean. Gustav!

We don't need any global warming to put Florida under water. The storms might do it for us.

http://www.msnbc.msn.com/id/26367291/

[AnneD]

68. I remember Fla. use to be....

a big agricultural place. They competed with Idaho in growing potatoes. Never heard of that? Well you wouldn't know because the 1929 Hurricane blew so much ocean water (salt) on to the land as to ruin the soil for further cultivation for many years.

[ozymandius]

62. I leave for a few hours and.. OH! Just look at this mess!

Dow 11,386.25 Down 241.81 (2.08%)
Nasdaq 2,365.59 Down 49.12 (2.03%)
S&P 500 1,266.84 Down 25.36 (1.96%)
10-Yr Bond 3.7910% Down 0.0760
NYSE Volume 3,439,857,750
Nasdaq Volume 1,442,022,620

4:20 pm : The stock market started the week on a sharply lower note in the lightest trading volume of the year. Overall it was a slow news day, although there were several negative headlines out of the financial sector.

Trading volume was very light with only 865 million shares exchanging hands on the NYSE, so it is not clear how much conviction was behind this session's move. Still, buyers showed little interest, considering that 95% of stocks within the S&P 500 posted a loss. All ten economic sectors declined at least 1%.

Although weakness was widespread, the financial sector (-3.1%) took the brunt of the selling pressure. Shares of AIG (AIG 18.78, -1.09) fell to their lowest level in 13 years after the company had its third quarter earnings estimate cut to a loss of $0.86 per share at Credit Suisse. The insurance giant also had its credit ratings placed on a negative watch at Fitch Ratings.

Lehman Brothers (LEH 13.54, -0.87) struggled after South Korean regulators told the Korea Development Bank to take a cautious approach before making an acquisition of an overseas bank, according to the Financial Times. The state-run bank expressed interest in Lehman during the previous week.

Regional bank Columbian Bank and Trust Company was closed by banking regulators over the weekend. While the bank only has $752 million in assets, it is still a reminder that more bank failures are a real possibility.

Only three of the financial sector's 89 components posted a gain. Freddie Mac's (FRE 3.32, +0.51) $2 billion debt offering received increased interest from investors, sending shares of the struggling government-sponsored enterprise sharply higher. Fannie Mae (FNM 5.31, +0.31) rose in conjunction with Freddie. Bond insurer MBIA (MBI 10.83, +0.63) rose on no specific news item.

Other sectors that posted large losses include consumer discretionary (-2.4%), materials (-2.3%) and telecom (-2.2%).

The defensive-oriented utilities sector (-1.1%) outperformed on a relative basis, benefiting from a rally in the long end of the Treasury yield curve, with the 10-year note climbing 23 ticks and the 30-year bond gaining 38 ticks.

The energy sector (-1.5%) also outperformed on a relative basis, after crude oil prices posted a modest gain of 0.5% to $115.12 per barrel in volatile trade.

In economic news, the National Association of Realtors existing home sales report for July was mixed, but signals that a bottoming process in housing industry is taking shape. The number of home sales rose by a larger-than-expected amount, while home prices declined and the amount of unsold inventory rose to the highest level since at least 1999.

Specifically, July existing home sales rose 3.1% month-over-month to a seasonally adjusted 5.00 million annual rate, which follows the 2.8% decline in June. This tops the median economist estimate that called for 1.1% growth to 4.91 million.

Existing home sales are down 13.2% year-over-year, and have an inventory supply of 11.2 months, compared to the 2007 average inventory supply of 8.9 months. The inventory of single family homes, however, improved to a 10.6 months supply from 11.0, which indicates that falling prices are helping to stimulate demand.

The median sales price fell 1.3% month-over-month to $212,400, and is down 7.1% compared to last year. DJ30 -241.81 NASDAQ -49.12 NQ100 -2.2% R2K -2.3% SP400 -2.0% SP500 -25.36 NASDAQ Adv/Vol/Dec 603/1.44 bln/2212 NYSE Adv/Vol/Dec 710 mln/865 mln/2424

[Hugin]

64. Mistakes were made.

:chuckle:

[AnneD]

69. innocent people blamed

:rofl:

[Demeter]

66. Snippet of History From DailyReckoning.com

http://www.dailyreckoning.com/Issues/2008/DR082508.html


“You can criticize the American economy for a number of reasons,” responded a French economist. “But it has done a marvelous thing. It absorbed millions of immigrants – often with no skills, often who didn’t even speak English. The U.S. population went from about 250 million people just a few decades ago to around 300 million now. We saw what happened to Germany when it was unified. The cost of bringing the East Germans into the modern economy was very high...and it depressed the German economy for a decade. But the U.S. economy was able to provide jobs for millions of immigrants – many of them illegal – and still grow. No other economy could have done such a thing...”

Yes, that was the great achievement of the U.S. economy. It took in the tired, the poor, the huddled masses of newcomers and put them to work. These marginal workers – slaving away at minimum wage jobs – pushed down the general level of incomes, so that the average hourly employee saw no wage gains for the last 40 years. And today, thanks also the strength of the euro, the typical employee in America today earns less than the typical Frenchman or the typical German.

But what did all these new workers in the United States do? They swept floors, stocked shelves and changed bedpans. More than that – they helped build the scaffold for the whole consumption economy. They ricked up boxes at Wal-Mart – where people can buy jumbo quantities of things they don’t need at Everyday Low Prices. They greased the grills at Appleby’s, where the hardworking, two-income families could get fat on credit cards. They cleaned pools and trimmed hedges...parked cars...replaced roofs...and lugged granite countertops all across the country.

[Demeter]

67. And a Word From Mogambo!

WORTHLESS MONEY, WORTHLESS ECONOMY
by The Mogambo Guru

There comes that “Kodak moment” (elsewhere referred to as that “Wile E. Coyote moment” when he has run off the cliff and is surprised to see himself momentarily suspended in mid-air) when burgeoning governments and the dysfunctional economies that grow up around them have grown and evolved into their final, grotesque, bloated maximum by constantly expanding their spending via debt and taxes to the maximum, and then one day they suddenly cannot do that silly crap anymore.

I know that the audience is dying to ask, “Why not, oh Wonderful Mogambo Master (WMM), when it is you who counsels that with a fiat currency, it will always be possible to finance infinite amounts of spending?”

I look at them with pity, as the answer is simplicity itself; they literally run out of money because money is being lost so fast! Unfortunately, I can’t say anything, as my guts are churning so badly at the prospect of universal bankruptcy that it is all I can do NOT to puke my guts out in fear, which I prevent only with Heroic Mogambo Control (HMC) so that I will not get a lot of angry people demanding their money back, which they paid for this stupid seminar, as I already lost most of it in a crap game with the kitchen staff before we even got started. Oops! Damn!

So I say nothing, but smile hopefully enigmatically and point them to Bloomberg.com, where they can read for themselves the horrible news that “Wall Street’s mortgage losses have grown so large that some firms may pay little or no taxes for years, widening New York City and state deficits and challenging their ability to provide services, Mayor Michael Bloomberg said.” Gaaaaahhhh!

The one industry that makes most of the money, the financial services industry, will pay no taxes! And even worse, “Some companies are seeking refunds from the city on taxes they prepaid, saying losses have cut their tax liability to zero.”

So not only are they not going to pay any taxes, but they want the city to send them some money back! They can do this because they already paid too much, as, “The banks pay tax on 110% of earnings in advance as a ‘safe harbor,’ protecting against penalties for underpayment.”

The mayor dryly admitted, “I think it will be a number of years before Wall Street starts paying taxes again” because “They will carry forward all of those losses” and not pay any tax for a long, long time.

And, as if you need something else to worry about, ditto federal tax revenues going down because massive losses will result in zero tax due. No wonder Obama is proposing all these higher tax rates!

And if you think it won’t happen, then I laugh in scorn at your misplaced optimism, because it is already happening! The federal budget deficit tripled in July to a record $102 billion, taking government spending up by a massive 27% from this time last year, which is bad enough, but then everything is made Much, Much Worse (MMW) by the stunning news that revenue was down 6%! Gaahhhh!

After $150 billion borrowed, put into stimulus checks, sent and spent, tax revenue was still down 6%? Staggering! The economy is so bloated, indebted and dysfunctional that $150 billion of additional raw spending produces 6% less taxable income? Hahaha! We are so freaking doomed!

And it is not just here, either, as Peter Schiff of Euro Pacific Capital reports that we Americans are “defaulting on hundreds of billions of dollars of existing loans underwritten by lenders around the world.”

This may have something to do with the Wilshire Trust Universe Comparison Service reporting that, according to Bloomberg.com, “The return for all institutional investment portfolios turned negative for the 12 months ended June 30”, and “the median contraction for master trusts, which includes pension plans, foundations and endowments, was 4.49% during the year.”

And you still think that you can fund a retirement by investing all your money into the stock market? Hahaha!

And this does not even take into account, according to Agora Financial’s 5-Minute Forecast , that the Federal Reserve opening the bank to any and all borrowers resulted in the eye-popping news that the “Fed’s TAFs and TSLFs have now dedicated over $1.6 trillion to quelling the credit crunch”! $1.6 trillion dollars! My God! We are freaking doomed!

Perhaps Junior Mogambo Ranger (JMR) Len M. sums it up best when he says, “Honest government, honest money. Dishonest government, dishonest money. Worthless government, worthless money.”

The worst part is that this is also true: worthless money, worthless economy. I wish I could find a laugh in there, but I can’t. Plenty to weep about, though! And plenty of time to repent at leisure, too!

Unless you have gold, silver and oil, of course, but don’t get me started on their virtues or how obnoxious I will be when I am rich, rich, rich from owning them and how far, far, far away the kids will be in some boarding school, and how much fun, fun, fun life can be again, as I never tire of thinking about it and I have far, far, far too much work to do.

[Dr.Phool]

70. I think Mogumbo is sugar-coating things.

Think of the ramifications for the next president and congress.

New York (city and state) are going to get hit hard enough, but what happens to federal revenue when the biggest sector of our economy pays NO taxes? Might as well put the Pentagon in bankruptcy right now.