STOCK MARKET WATCH, Wednesday October 8

[ozymandius]

Source: du

STOCK MARKET WATCH, Wednesday October 8, 2008

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 104
DAYS SINCE DEMOCRACY DIED (12/12/00) 2815 DAYS
WHERE'S OSAMA BIN-LADEN? 2540 DAYS
DAYS SINCE ENRON COLLAPSE = 2831
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

In recognition of those prescient of the Dow's precipitous return of Bush values (9/29/08): JuneBourder and AnneD

AT THE CLOSING BELL ON October 7, 2008

Dow... 9,447.11 -508.39 (-5.11%)
Nasdaq... 1,754.88 -108.08 (-5.80%)
S&P 500... 996.23 -60.66 (-5.74%)
Gold future... 882.00 +15.80 (+1.82%)
30-Year Bond 4.03% +0.08 (+2.13%)
10-Yr Bond... 3.51% +0.08 (+2.34%)






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

[Birthmark]

1. Morning, ozy!

So, will it be a blood-letting on Wall St again today?

[ozymandius]

4. Good morning Birthmark and 54anickel.

:donut: :donut: :donut:

Economic conditions around the world appear just as uncertain as they were yesterday. The Fed did no overtly cut interest rates and continues throwing dollars out of helicopters (which, unwittingly, are swept down storm drains). Iceland teeters on the brink of destruction among everything economic. The Nikkei melts more than nine points of value.

Yep. I'd say we're going to see some horribly rude numbers. I imagine some sharks will be in the water to feed off the carrion just to make things interesting.

[54anickel]

17. Yeah, I went snoping around looking at where the 10 year has been this past year

http://finance.yahoo.com/q/bc?s=%5ETNX&t=1y&l=on&z=m&q=l&c=

Looks like the last flight to quality that took rates below 3.5 was back in March. Couldn't remember what was going on so I googled and came up with this....I realize it's WH BS, but how did we go from 92% paying their mortgages on-time to this crisis level that is supposedly due to people not paying their mortgages? What happened to that HOPE NOW plan? :shrug:

http://www.whitehouse.gov/news/releases/2008/03/20080314-4.html

Secretaries Paulson and Jackson facilitated the creation of the private-sector HOPE NOW Alliance, which has developed multiple strategies to help distressed homeowners. HOPE NOW is a cooperative effort among mortgage counselors, servicers, investors, lenders, and trade associations to maximize outreach efforts to struggling homeowners in distress and to help homeowners who want to stay in their homes. HOPE NOW membership covers over 90 percent of the subprime mortgage market.

HOPE NOW reports that the number of borrowers receiving work-outs is rising faster than the number entering foreclosure. The loan modification rate doubled in the fourth quarter of 2007, compared to the rate in the third quarter.

As of the fourth quarter of 2007, 92 percent of American homeowners with mortgages – about 51 million households – were paying their mortgages on time. Only two percent were in foreclosure.

Last month, HOPE NOW announced the Project Lifeline initiative, which will help even more Americans stay in their homes by giving servicers a new tool to reach out to seriously delinquent homeowners. Project Lifeline offers, where appropriate, to "pause" the foreclosure process for 30 days while other longer-term solutions are explored.

In the last three months, HOPE NOW members have sent more than one million letters to at-risk homeowners who had previously been unresponsive to other outreach efforts. Before HOPE NOW, the response rate for letters like this was about two percent; now, the response rate to Alliance letters is closer to 20 percent. This higher response rate means almost 200,000 borrowers have reached out to HOPE NOW for help.

All HOPE NOW servicers are contacting subprime adjustable-rate mortgage borrowers 120 days before their interest rate resets. It is important to remember that at-risk borrowers need to do their part and respond to these outreach efforts.

HOPE NOW's nationwide hotline (888-995-HOPE) has been publicized and expanded. The HOPE NOW hotline is staffed by hundreds of trained foreclosure prevention counseling professionals who are able to work with at-risk borrowers to evaluate their situation and to help connect them with mortgage servicers to work on a possible solution.

Servicers and investors are now providing funds for housing counseling; previously, the Federal Government and foundations were the main sources.

The Federal Government is acting to make the housing market more transparent and fair in the long run. In order to increase safeguards for homeowners, Federal regulators have proposed new guidelines that would require lenders to provide borrowers with complete and accurate information about their mortgages – including the possibility of changes in future interest rates.



Lots of interesting "Fact Sheets" in the archives..... http://www.whitehouse.gov/infocus/economy/archive.html

[ozymandius]

23. Good question.

What happened to that HOPE NOW plan?

Guess it's like every other plan the WH has conjured: it fails. Remember the Jobs Czar? That's gotta be a cushy job when the expectations to perform are set lower than FEMA's Brownie.

[ozymandius]

24. Another case in point about White House failure -

From a speech back in 2004 comes this telling quote:

"One other thing I've done, is I've called on private sector mortgage banks and banks to be more aggressive about lending money to first-time home buyers. And the response has been really good. There's a lot of people in this -- our communities around the country that deeply care about the issue of homeownership, and they've been responsive."

- George W. Bush, U.S. President, March 26, 2004.

Posted at The Big Picture

[54anickel]

37. Oh yeah, I laugh at my Repub friends all the time as they continue to play blame the victim. I take

them for a trip in the Way-back machine, it's a very short trip afterall, to Greenspin pimping ARMs in concert with Shrubya's Ownership Society BS. Snow and Greenspin didn't start complaining about Fannie and Freddie behaving like they were too big too fail until they helped them become too big to fail. Raines and his corrupt little band of merry-men was simply a side show. They were doing what everyone on Wall Street was doing, they just got caught (that's not to say I condone it). But it distracted folks and diverted attention away from the investment banks deriving artifical wealth from mere bets placed on repackaged mortgages gathered from Aunt Fann and Uncle Fred.

[Roland99]

43. Heckuva job, Georgie!

Guess he jawboned them to open the spigots?

[54anickel]

55. Now he's telling us to just Hang in There, have faith, when the going gets tough

divert all blame to Fannie and Freddie

http://news.yahoo.com/s/ap/20081007/ap_on_go_pr_wh/meltdown_bush

snip>

The government's unprecedented plan to buy up Wall Street's failed assets has not kept the stock market from plunging or the credit crisis from imperiling financial markets around the globe. That, in turn, has exacerbated the confusion of the public, which was told repeatedly that the government plan was a rescue.

So the White House, led by Bush, is sending this message: Hang in there, America. The massive federal intervention will just take time to work.

The aim is to temper any expectations that a quick fix is coming.

"I wish I could snap my fingers and make what happened stop," the president said at an office supply plant in Chantilly, Va., a Washington suburb. "But that's not the way it works."

Bush said about a half-dozen times, in one form or another, that "it's going to take a while" to get credit flowing again to businesses and consumers. He sought to explain in plainspoken and realistic terms that banks eventually will build up capital and gain the freedom to recharge the economy with credit.

"It took a while to get it frozen," Bush said of the nation's credit system. "It's going to take a while to get it unstuck."

Meanwhile, many people feel as if they don't have a while. The tanking of the stock market has particularly hurt those whose retirements plans have sunk and who don't have years of working time to recover. Americans' retirement plans have lost as much as $2 trillion in the past 15 months, the head of the Congressional Budget Office said Tuesday.

Asked directly about the fate of these popular 401(k) plans, Bush said they'll be fine in the long run. In the short term? "They're going to take a hit," he said.

snip>

His goal is to reassure, explain and show engagement. Tuesday marked the 18th time in 20 days that he has spoken in some fashion about the economy.

"We're a productive country. We're an entrepreneurial country. The small business sector is strong," Bush said. "And right now, we're in tough, tough times, no question about it. But you can't convince me that, in the long run, that we're not going to get back on our feet again."

The president has refrained from pointing blame at the government for having a hand in the crisis, which began with questionable mortgages that helped sink the housing market. But on Tuesday, he offered that the mortgage giants, Fannie Mae and Freddie Mac, were "basically unregulated to the point where they wrote a lot of product that was untrustworthy over time."

more...

[radfringe]

63. why do I suddenly have an image

of a noose?

[54anickel]

68. My reply to Dimson - Give Up!....

[Dr.Phool]

124. I hope you're psychic!

[Dr.Phool]

121. What a frickin' idiot.

"The small business sector is strong".

You haven't been to my neighborhood, you asshole!. Small businesses are going under left and right. All of their customers are losing their jobs!

I shudder to think of where we're at, the day your moronic ass finally leaves office.

Edited to add:

Good morning all. Rough, late night, last night.

[Roland99]

127. And look at Russell2K

[dixiegrrrrl]

158. and I guess that Iraq war thingy will be success, real soon.

prolly right after we get Bin what's his name, right, Bushie?

[Demeter]

30. Morning, Folks!

I won't say "good" because it probably won't be, no matter how we wish it.

And it's hardly morning before 7 AM in these waning days of the year, but---

what are we all doing up, anyway??!!!





I especially like the miniscule Sarah Palin in this caricature!

[ozymandius]

32. Can't sleep.

I was awake again last night. Great clueless Sarah Palin there. Never get in a fight with Pat Oliphant and expect to win.

[Roland99]

44. I'm up to get my daughter off to school (on her bday! hehe)

[ozymandius]

56. Happy Birthday to her!

:party:

[Roland99]

125. Thanks! 14 today. *sigh* They grow so fast!

:-)

[AnneD]

159. Congrats to her...

:party: you're getting old Pops.

[dweller]

96. one shoe has fallen

awaiting the other...

dp

[54anickel]

2. Morning Ozy. Looks like another rough one ahead. Think I'll go start the coffee.

[ozymandius]

3. Market WrapUp

Key Signals and the CDS Cascade
BY FRANK BARBERA, CMT

As close observers of market behavior, we continue to view with great alarm the ferocity of what appears to be a still building credit market contagion. With a potency of almost biblical dimensions, this 100 year flood continues to amass, forming a tidal wave which is carving out an intercept course with some of Wall Street's most acutely fragile derivative instruments. At the moment, the $54 Trillion Dollar Credit Default Swap market is directly in the cross-hairs, with this month featuring several major settlement days for institutions like Lehman, AIG, and Washington Mutual. Dates include Lehman CDS deals on October 10th, and WaMu deals on October 23rd. For many insurance companies, these CDS Contract settlement dates could be a kind of ‘waterloo,’ where billions of dollars in losses could come home to roost. A gander at the destruction wreaked on insurance company share prices shows a steep downside acceleration in the last few weeks with names like Conseco Inc (CNO), Allianz SE (AZ), Progressive (PGR), Hartford Financial (HIG), CAN Financial (CNA), MetLife (MET), Prudential Financial (PRU), Sun Life (SLF), Lincoln National (LNC) and Aegon (AEG) all falling sharply. While the true potential exposure remains unclear in most cases, the deep seated distrust that now prevails within capital markets seems to be a "shoot first and ask questions later” mentality where the equities are involved. Likewise, we continue to see bearish chart configurations on a number of leading CDS players including General Motors and Ford, which we have pointed out in several prior comments. Just look at the downside acceleration in these equity prices which show the same type of exponential declines seen during the demise of so many other institutions in recent months.

-dramatic chart-

In addition, as was the case with AIG, and WaMu and Lehman, the Credit Default Swap rates for both auto makers have been moving exponentially higher with the GM rate above 4000% and the Ford rate closing on 3000%. In my view, this spells humogous trouble dead ahead. In his book, “Manias, Panics and Crashes,” Charles Kindleberger alludes to ‘acute panic, crisis and danger' the point of recognition and virtual epicenter of a financial storm. In my view, we are in the very heart, the very ‘eye’ of the storm, with the CDS market packing Category 5 force winds.

....

With the Federal Reserve now ballooning its balance sheet in parabolic fashion, one can only wonder where the crisis will finally end. For the last few months, the debt bomb has been primarily affecting the credit markets, more recently spilling into the equity markets. In my view, the risk from here continues to build that vanishing credit, and vanishing confidence unleashes this contagion into the currency markets which have been torn between an interventionist money printing Fed on the one hand, and a static, unable to see eye to eye, European Central Bank on the other. While the talk in most circles has been about little more then deflation in recent days, if the credit market contagion goes airborne and infects the currency markets, then the outcome could rapidly reach an inflection point in which it could pivot on a dime, and morph into an inflationary nightmare virtually overnight. While many are applauding the Federal Reserves move to prop up the Commercial paper market at ‘all costs,’ this may be one of those times where the phrase “at all costs’ is more telling than most would really believe. How does the Fed plan a reverse exit strategy once CP is weaned to life support? And with other lifelines drawing more and more capital by the day, at what point does the Central Banks deteriorating credit quality become the over-arching focal point? What then?

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

[Demeter]

34. And NOBODY is Talking of Making Such Derivatives Illegal!

Nobody except us. Well, me, anyway.

[Alpharetta]

66. I don't want them illegal, I just want them visible

Publically traded companies should be required to report their positions in ALL financial contracts on a quarterly basis.

Right now, we don't know what any of these "distressed" institutions are holding. They won't tell us and they don't have to.

Regulation? Common sense. Basic accounting standards. That would return some confidence to the markets. And it would help the SEC stop the hoarding and the flight to private equity.

[Tansy_Gold]

81. If they were visible, they'd probably be illegal.

This all goes back to Enron. Maybe later today, if I have some time, I'll dig out my personal archives from the Enron collapse in '00. The whole thing was a sham, and it was all based on derivatives. Lay & Cie. jacked the stock price up, then cashed out. They were "the smartest guys in the world" until AIG and Lehman and Bear Stearns and Merrill and everyone else did them one better. And they did it THE SAME FUCKING WAY, by creating Potemkin investments. Like Tom Sawyer they conned everyone in town into whitewashing the fence that hid the gaping empty hole that was the financial economy.

I'm not an economist. I don't know diddly about this shit. But I knew back in '08, watching all the blubbering Enron retirees who had lost what they thought were secure investments turn out to be worthless pieces of paper while Lay and Fastow and the others walked away with billions in real money.

I didn't even check on my 401K before I cashed it out yesterday. It was never big to begin with, and 90% of it was direct contributions from my husband and his employer. This wasn't a fast-growth account. It would have netted us, had he lived long enough to reach early retirement, a tiny supplement to social security. After his death, it was a tiny security cushion for me as I struggled to get by on what little insurance was left after paying off his bills. Gainful employment in a crummy market is hard to come by when you're late 50s.

My cushion is now gone. I have a subsistence job. I may make it. And I know I'm better off than a lot of folks. But if things get very much worse, and it looks like they will, where will I be? Where will you be? Where will these multi-billion CEOs and hedge fund managers and spewing idiots like Gramm and Dobbs be?


It's the derivatives, stupid. It was the derivatives in '00 and they haven't gone away.


Neither has


Tansy Gold

[Hugin]

91. Good to see you here...

Tansy_Gold.

:hi:

[Tansy_Gold]

105. Hi back atcha, prag and 54!

I've been busy. I've been lurking but haven't had time -- or heart -- to post much.

Someone said a few weeks ago, maybe it was Bill Moyers, that the U.S. survived the 30s Depression. and yes, it was the wartime "economy" that laid the groundwork for the properity of the 50s and 60s and into the 70s, until Reagan came along in 80 and put an end to that.

But the boom of the 50s, and I'm not trying to wax nostalgic because there was a lot of bad social bullshit in the 50s, too, but the economic boom COULD be resurrected.

IF -- huge if -- the world learns from this mistake, and that's going to mean some second and third and fourth and fifth world countries being brought in as full partners, the whole thing could be turned around and it could be turned around pretty quickly. What's going to stand in the way, and you can watch it happen if you like, is the religious fundamentalists on any and all sides. They've gone into a denial of human agency, human will, human worth. THEY WANT THE WORLD DESTROYED and they're hell-bent (pun obviously intended) on destroying it.

It's up to us to stop them.


:hi:

TG

[54anickel]

100. Or there would be no demand. What would be the point? Good to see you Tansy.

:hug:

[Demeter]

160. Tansy, You Have a Room in my House Any Time

if you tolerate cats. Just say the word. Ann Arbor is a nice little place.

[ozymandius]

5. Today's Reports

10:00 Pending Home Sales Aug
Briefing.com NA
Consensus -1.2%
Prior -3.2%

10:35 Crude Inventories 10/04
Briefing.com NA
Consensus NA
Prior NA

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

[UpInArms]

128. U.S. August pending home sales index up 7.4%: NAR (huh?)

01. U.S. August pending home sales index up 7.4%: NAR
10:01 AM ET, Oct 08, 2008

[Dr.Phool]

131. Doesn't that figure include the ones who go to the bank

And get laughed out of the place?

[UpInArms]

134. did you notice that the "mortgage applications" Wednesday release

was never "released"?

hmmmm.....

[UpInArms]

133. more info:

http://www.marketwatch.com/news/story/pending-home-sales-index-rises/story.aspx?guid=%7BAC6E09EB%2D9D5A%2D4139%2D9542%2D8C514DB37764%7D&dist=hplatest

WASHINGTON (MarketWatch) -- Despite a credit crunch that has driven world central banks to slash interest rates, the National Association of Realtors reported Wednesday that an index of sales contracts on previously owned U.S. homes rose 7.4% in August from the prior month. The index, which is considered a leading indicator of existing home sales, was up 8.8% from the prior year. In August pending home sales rose in all four regions, with a gain of 18.4% in the West, 8.4% in the Northeast, 3.6% in the Midwest and 2.3% in the South. The July pending home sales index was revised to a decline of 2.7% from a prior estimate of a 3.2% fall. It's unclear to what extent contract activity will be impacted by the credit disruptions, said Lawrence Yun, NAR's chief economist.

so these numbers are like ... what ... 3 to 4 months behind today?

and this is relevant to the current crisis how?

oh, that's right - it's really NOT.

[Roland99]

142. Includes foreclosure auctions.

At least according to comments on article at MarketWatch.

Plus..."pending"? How may actually closed?

[UpInArms]

151. Petroleum Inventories (huge increase)

01. U.S. crude supply up 8.1 mln brls last week: Energy Dept.
10:36 AM ET, Oct 08, 2008

02. U.S. distillate supply down 500,000 brls: Energy Dept.
10:36 AM ET, Oct 08, 2008

03. U.S. gasoline supply up 7.2 mln brls: Energy Dept.
10:36 AM ET, Oct 08, 2008

[Roland99]

157. RBOB has touched $1.99. Nationwide gas is still, what, $3.50/gal? GOUGING!

[ozymandius]

6. Oil falls below $87 on economic slowdown fears

SINGAPORE - Oil prices fell below $87 a barrel Wednesday in Asia on investor concerns that the credit crisis that began in the U.S. will trigger a prolonged global economic slowdown and hurt crude demand.

Light, sweet crude for November delivery was down $3.26 to $86.80 a barrel in electronic trading on the New York Mercantile Exchange by midafternoon in Singapore. The contract overnight rose $2.25 to settle at $90.06.

....

Investors are watching for signs of slowing U.S. demand in the weekly oil inventories report to be released later Wednesday from the U.S. Energy Department's Energy Information Administration. The petroleum supply report was expected to show that oil stocks fell 1 million barrels, according to the average of analysts' estimates in a survey by energy information provider Platts.

The Platts survey also showed that analysts projected gasoline inventories rose 2 million barrels and distillates went up 1 million barrels last week.

....

In other Nymex trading, heating oil futures fell 4.24 cents to $2.46 a gallon, while gasoline prices dropped 4.28 cents to $2.02 a gallon. Natural gas for November delivery fell 9.3 cents to $6.67 per 1,000 cubic feet.

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

[ozymandius]

7. Asian stocks plunge on fears of global recession

TOKYO - A meltdown in confidence strangled Asian stock markets Wednesday on accelerating fears that the widening financial crisis could spawn a global recession.

After a miserable day on Wall Street when the Dow Jones industrials lost more than 500 points, investors from Tokyo to Mumbai, Seoul to Sydney dumped shares in a broad regional sell-off.

Anxious investors in Tokyo sent shares into a free-fall, with the benchmark Nikkei 225 stock average plunging 9.4 percent — its biggest drop in 21 years — to 9,203.32, a five-year low.

....

Indonesian authorities shut down trading for the day on the country's exchange after the key index plunged more than 10 percent, driven by huge losses in commodities stocks. Investors dismissed comments by the central bank governor Tuesday that Indonesia will avoid the worst of the global credit crisis. They also reacted negatively to a quarter-point rate hike announced Tuesday to rein in inflation.

....

Hong Kong's blue chip Hang Seng index shed 5.2 percent, and India's Sensex sank 4.3 percent. Seoul's Kospi lost 5.8 percent, Taiwan's key index fell 5.8 percent, and Singapore's benchmark tumbled 5.5 percent.

Australia's benchmark S&P/ASX200 closed down 5 percent, wiping out gains Tuesday after the country's central bank cut its key interest rate by a bigger-than-expected 1 percentage point.

http://news.yahoo.com/s/ap/20081008/ap_on_bi_ge/world_markets

[Ghost Dog]

26. Hong Kong cut rates by 1% and there's plenty of talk of global cuts...

Earlier posts on Tokyo close, UK banks, more:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3533005

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3533033

(and more all over this board...)

Me, I'm planning to work mostly outside, today, on nice physical jobs around the house. But I'll look in. :hi:

Umm:

[ozymandius]

38. Indonesia Closes Stock Exchange Indefinitely (Yes, indefinitely.)

Indonesia Halts Stock Trading After 10 Percent Plunge

Oct. 8 (Bloomberg) -- Indonesia's stock exchange halted share-market trading for the first time in eight years after the benchmark index plunged 10 percent, the biggest decline since the 1998 Asian financial crisis.

Trading was suspended indefinitely, the exchange said in an e-mailed statement. The Jakarta Composite Index plummeted the most in Asia, where credit market turmoil drove the MSCI Asia Pacific Index to its biggest loss since 1990. Almost a quarter of Indonesian shares fell at least 10 percent as lending costs rose to near a two-year high.

Bonds and the rupiah declined, while the cost to protect government debt from default rose to the highest level since at least 2004. The benchmark stock index is down 21 percent this week, the worst weekly drop since at least April 1983, data compiled by Bloomberg showed.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a1z6jhcZJzCQ&refer=home

---

Oh boy... this is gonna make an even bigger mess everywhere.

[54anickel]

45. Hmmmm, so just how do you restart a market after closing indefinitely? Wouldn't you have to wait

for some pretty damned good news to get any buyers lining up at the door? :shrug:

[Demeter]

54. Or Just the Absence of Bad News

Tough love, baby!

[54anickel]

59. Oh, now THAT would be good news for a change! And in the news today.......n/t

[Dr.Phool]

144. Coupons! Advertising! Holiday Sales!.

All stocks 30% off! Tomorrow only. Free ponies with every $1000 purchase!

Buy one stock, get one free!

[ozymandius]

8. Meltdown advances despite efforts to limit damage

WASHINGTON - With financial markets still tumbling, the Federal Reserve is signaling that it might cut interest rates after a series of bold steps by federal regulators failed to stem the slide. Neither presidential candidate offered a solution.

"The outlook for economic growth has worsened," Fed Chairman Ben Bernanke told a gathering of business economists.

The slumping economy was underscored by a 1,400-point, or 13 percent, drop in the Dow Jones industrials over the past five trading days.

http://news.yahoo.com/s/ap/20081008/ap_on_bi_ge/financial_meltdown

[ozymandius]

9. Bernanke signals readiness to cut rates

WASHINGTON (Reuters) - Federal Reserve Chairman Ben Bernanke on Tuesday signaled a readiness to lower U.S. interest rates in a dramatic shift to support an economy battered by a financial crisis of "historic dimension."

....

The Fed cut interbank lending rates to 2.0 percent in seven steps between mid-September of last year and the end of April in a bid to put a floor under the economy. Since then, the central bank has focused on cash auctions and loans of ultra-safe Treasury securities to unlock credit markets.

....

Many Fed officials had argued that lowering rates further would do little to spur economic activity while credit is jammed, and they have warned that with inflation already at worrisome levels, easier borrowing terms could set the stage for problems when the economy picks up.

http://news.yahoo.com/s/nm/20081007/bs_nm/us_financial_fed_bernanke

[dweller]

52. cut .5%, just announced on morning news

Fed orders emergency rate cut to 1.5 percent
WASHINGTON (AP) -- The Federal Reserve has ordered an emergency interest rate cut of a half a percentage point to cope with the worst financial crisis since the 1929 stock market crash.
http://biz.yahoo.com/ap/081008/fed_interest_rates.html

dp

[54anickel]

61. Yep, just saw that pop up over in LBN as well. Looks like a concerted effort among CBs

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3533193

[54anickel]

62. Now that they've cut, are they saying the chances of the economy picking up are pretty slim to none?

Many Fed officials had argued that lowering rates further would do little to spur economic activity while credit is jammed, and they have warned that with inflation already at worrisome levels, easier borrowing terms could set the stage for problems when the economy picks up.

Just wondering :evilgrin:

[Demeter]

73. Why Does Bernanke Still Think of Growth?

Why doesn't he worry about survival?

[llmart]

95. Better question.....

is why do Bernanke and Paulson still have jobs? Who even listens to them with any credibility any more?

[Tansy_Gold]

107. Who was it said capitalism is the economic ideology of

the cancer cell?


TG

[radfringe]

10. considering the past few days of plunges

anyone else think we could break through the 9,000 floor and bust through into the 8,000 ceiling today

[ozymandius]

12. I believe that.

That $700 billion check Congress wrote to buy garbage has been a huge disappointment. That legislation now looks more like a fleecing rather than a rescue.

There is no confidence anywhere that I see. Consider the amount of government money worldwide that has been catapulted into the cyclonic meltdown. This has not stopped the contagion from spreading. In sum, the psychology of the time says it is safer to retrieve what's left of one's money now and ride this out.

[TheWatcher]

31. Things are looking pretty systemic at this point

We are going to continue to see Dog And Pony Shows, Dancing Girls, Magical Schemes, Critically Timed Rumors, and all kinds of Carnival Barking and Circus Mayhem from TPTB.

I do expect Helo Ben to follow through on his Rate Cut Threats, but even if he does I wonder if it will do much good at this point.

Hang Seng Managed to Rocket about 800 off the lows when news of a surprise full point cut hit their Markets, but they ended up crashing THROUGH the previous lows of the day to close the session.

There is genuine fear out there kids.

Prepare for a very bumpy ride.

We are Witnesses to History.

AGAIN.

[Ghost Dog]

40. Dervishes come to mind.

...

[TalkingDog]

89. At least Dervishes have some spiritual humility

as a basis for the frantic kinetic whirling....

The Feds? More like water down a gaping hole:

[Ghost Dog]

94. Indeed! I meant to refer to the Dervish method of reaching that place of absolute stillness

and all-seeing clarity. :Om: :smoke:

[Dr.Phool]

147. I guess the feelgood didn't last long.

They had some pretty green numbers up for the markets a few minutes ago. Up about a hundred.

I went to the kitchen for a cup of coffee. All red again.

[JDPriestly]

33. Confidence in the financial world is based on trust.

And trust arises from the knowledge that contracts will be entered into in good faith, that their terms will be performable by all sides and that ultimately enforced by the law in the courts.

The Bush administration does not respect the law. They have not only abused human rights but they have refused to maintain or enforce the laws and regulations that are needed to encourage commerce.

We need an administration that obeys the law and can restore trust in every level of our society.

[Ghost Dog]

41. Too right. n/t

[Hugin]

72. Very well said.

This is truly the core of the problem.

When a Government doesn't recognize or enforce even the most fundamental of Rights, how are people supposed
to trust them on even more complicated matters such as the regulation the most complex economic system ever to
emerge.

[Dr.Phool]

149. We also need a congress that will force the rule of law.

Sending a strongly worded letter to a serial killer is not law enforcement.

[ozymandius]

11. U.K. to Inject About $87 Billion in Country's Banks (Update3)

Oct. 8 (Bloomberg) -- Prime Minister Gordon Brown's government will invest about 50 billion pounds ($87 billion) in an unprecedented step to prevent a collapse of the U.K. banking system.

As part of the plan, the government will buy preference shares, and the Bank of England will make at least 200 billion pounds available for banks to borrow under the so-called special liquidity plan, the Treasury said in a statement today. The government will also provide a guarantee of about 250 billion pounds to help refinance debt.

.....

The worsening credit crisis has forced the U.K to join the U.S., Ireland, Iceland, Belgium and Spain in rushing out untested bailout measures to save their largest banks. Edinburgh-based Royal Bank of Scotland Group Plc and HBOS Plc, Britain's biggest mortgage lender, surrendered more than half their market value this week as investors lost confidence in their ability to fund themselves.

The government said it will make 25 billion pounds immediately available in the form of preference shares and stands ready to provide an additional 25 billion pounds. The amount available to each bank will vary and will depend on their dividend payouts, executive pay policies and will require the banks to lend to small businesses and home owners, the government said.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a3cQlOZYuQJ0&refer=home

[antigop]

153. "The government will buy preference shares"--the difference between a bailout and a rescue

http://action.credomobile.com/sirota/2008/10/the_difference_between_a_bailo.html

Britain teaches us what the difference between an economic rescue and a Wall Street bailout is:

The move amounted to a partial nationalization of some of those institutions...Mr. Brown said there would be "strings attached and conditions to be met" by the banks. "We expect to be rewarded for the support we provide...Our stability and restructuring program is comprehensive, specific and breaks new ground...This is not the American plan. Our plan is to buy shares in the banks themselves and therefore we will have a stake in the banks."

"We are not simply giving money," he said.

That last line is the fundamental difference. Britain is moving to recapitalize banks in exchange for ownership stakes. Henry Paulson and the U.S. Congress last week moved to give away $700 billion with no strings attached.

[ozymandius]

13. Ford to Triple Job Cuts at Volvo Cars on Demand Slump (Update1)

Oct. 8 (Bloomberg) -- Ford Motor Co.'s Volvo subsidiary tripled its planned job cuts to 6,000 positions, citing a ``rapidly deteriorating'' global car market.

Volvo Car Corp. will eliminate a further 4,000 positions, bringing total reductions of employees and consultants to 6,000, the Gothenburg, Sweden-based division of Ford said in a statement today.

.....

Volvo, Ford's sole remaining Europe-based brand, announced plans to cut 2,000 of its 24,300 positions on June 25 because of the weak dollar, rising raw material prices and declining sales in the U.S. and Europe. The reductions are part of a plan to lower expenses by 4 billion kronor ($562 million). Including today's announcement, about 4,800 employees will be cut in Sweden and abroad, while 1,200 consultants will be eliminated.

http://www.bloomberg.com/apps/news?pid=20601085&sid=aJL9NVk53LDM&refer=europe

[ozymandius]

14. Alcoa Plunges in Europe After Profit Misses Estimates

Oct. 8 (Bloomberg) -- Alcoa Inc., the largest U.S. aluminum producer, plunged in European trading after third-quarter profit trailed analyst estimates and the company suspended a share- repurchase program because of the worsening credit crisis.

Net income fell by more than half, to $268 million, or 33 cents a share, from $555 million, or 63 cents, a year earlier, New York-based Alcoa said yesterday after the close of trading. The company suspended a stock buyback program after repurchasing 12 percent of the shares and said it's trying to conserve cash.

Chief Executive Officer Klaus Kleinfeld, facing slowing demand and slumping prices as the credit crisis reduces manufacturing, is closing unprofitable units and shuttering production. Alcoa said it is curtailing non-critical projects to try to withstand an expected economic downturn.

http://www.bloomberg.com/apps/news?pid=20601103&sid=ae9EUYVNKcaw&refer=us

[ozymandius]

15. U.S. Stock-Index Futures Tumble; Bank of America, Alcoa Drop

Oct. 8 (Bloomberg) -- U.S. stock-index futures sank, indicating the Standard & Poor's 500 Index will slump for a sixth day, on concern the credit crisis may topple more banks and push the global economy into a recession. The dollar fell against the yen, while Treasuries rose.

.....

The S&P 500's five-day slide has pushed the benchmark for American equities below 1,000 for the first time since 2003, as investors shrugged off the government's $700 billion bailout plan and signs the Federal Reserve will cut interest rates. Japan's Nikkei 225 Index posted its third-biggest retreat on record today, while all but one of the companies in the U.K.'s FTSE 100 Index dropped.

.....

S&P 500 futures expiring in December lost 20.1, or 2 percent, to 985.7 at 9:58 a.m. in London. Dow Jones Industrial Average futures slid 180, or 1.9 percent, to 9,358. Nasdaq-100 futures dropped 30.25, or 2.3 percent, to 1,306.25.

http://www.bloomberg.com/apps/news?pid=20601103&refer=us&sid=a66zUWczL03U

[Roland99]

16. US Futures tanking. European markets down big. Some markets halt trading

DJIA INDEX 9,266.00 -272.00 05:47
S&P 500 973.90 -31.90 1,004.40 05:47
NASDAQ 100 1,294.25 -42.25 05:47


http://www.marketwatch.com/news/story/europe-shares-slump-early-trade/story.aspx?guid=%7B0EC2BAD3%2D826D%2D49A7%2DBC0F%2D5BFB29EDD584%7D

LONDON (MarketWatch) - European shares slumped on Wednesday as global recession fears continued to rock markets and commodity producers in particular, though British banks were mixed after a 50 billion pound government plan to recapitalize the sector.

...

nvestors eyed the U.K. government's announcement on Wednesday that it would make new capital available to banks and building societies, providing short-term liquidity and ensuring banks have the funds necessary to maintain lending in the medium term. See full story.

...

On a national level, the U.K. FTSE 100 index (UK:UKX: news, chart, profile) fell 3.6% to 4,436.82, the German DAX 30 index (DX:1876534: news, chart, profile) dropped 4.4% to 5,091.23 and the French CAC-40 index (FR:1804546: news, chart, profile) declined 4.5% to 3,562.91.

The move by the U.K. government follows several days of market turmoil, including the biggest one-day drop since 1984 for the FTSE 100 on Monday, after a rescue plan announced on Friday in the U.S. wasn't enough to offset worries that a lack of a coordinated global response would send the global economy into recession.

CNBC reporting that Indonesia halted trading at one point.

[ozymandius]

21. Russia has halted trading at the main exchange until Friday.

How many days have the Russian markets been closed over the past month? How many times have the markets halted trading? The majority of those days?

[Demeter]

36. I Tend To Think The Russians Are At Least TRYING

to stay ahead of the curve. Paulson and Bernanke are clueless, and as for the Resident in chief---pffft!

[Ghost Dog]

18. Europe shares at 5-yr low on credit, economy fears

Wed Oct 8, 2008 5:47am EDT LONDON, Oct 8 (Reuters) - European shares sank to five-year lows on Wednesday as investor jitters about financial sector ructions and their impact on the global economy grew despite a bailout package for UK banks.

At 0940 GMT, the FTSEurofirst 300 index of top European shares was down 5.5 percent at 948.42 points after hitting a low of 923.86 -- the lowest level since late 2003. The index has lost 12.9 percent this week and 37 percent this year.

Trading on France's CAC 40 .FCHI was suspended for about 15 minutes in early trade as a number of stocks, representing about 35 percent of the index's total market capitalisation, were halted limit down, Euronext said.

Banks were the hardest hit, with Dexia (DEXI.BR: Quote, Profile, Research, Stock Buzz) falling 14.6 percent, Societe Generale (SOGN.PA: Quote, Profile, Research, Stock Buzz) slipping 7.7 percent and Credit Agricole (CAGR.PA: Quote, Profile, Research, Stock Buzz) shedding 6.2 percent.

...

British bank HBOS (HBOS.L: Quote, Profile, Research, Stock Buzz) surged 43.8 percent and Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz) jumped 11 percent, but Barclays (BARC.L: Quote, Profile, Research, Stock Buzz) fell 8.5 percent and Lloyds (LLOY.L: Quote, Profile, Research, Stock Buzz) fell 6.7 percent.

/... http://www.reuters.com/article/marketsNews/idCAL865373720081008?rpc=44&pageNumber=2&virtualBrandChannel=0&sp=true

[ozymandius]

19. Damaging Capitol Hill Hearings on AIG

The House of Representative’s Committee on Oversight and Government Reform is in the midst of its hearing on the decline of American International Group. The picture emerging is one of a far-too independent Financial Products group (AIGFP), home to the credit default swap business that eventually drew the insurer to the brink of bankruptcy, a board of directors that had been warned by the company’s auditor about problems valuing those contracts, and management that had very little clarity about just how much AIG was on the hook for.

There’s plenty here to fuel taxpayer anger over government aid to Corporate America. Exhibit A: a $443,343.71 bill for a subsidiary’s executive retreat taken just days after the New York Fed came to the company’s rescue with an emergency $85 billion line of credit. Hosted at the St. Regis Resort Monarch Beach in Dana Point, California, the event racked up nearly $7,000 in golf fees and $23,280.00 was spent at the Spa Gaucin, where massages start at $175 and facials can cost as much as $350. Equally damning, the termination agreement with the former head of AIGFP, Joseph T. Cassano, outlining a 9-month consulting contract under which he continues to be paid $1 million a month.

http://www.businessweek.com/careers/managementiq/archives/2008/10/damaging_capito.html

[radfringe]

28. with this still being a bushie misadministration - I hate to put forth this idea...but

it may be time for us to forgo "bail outs" and initiate "take overs" as it's pretty obvious the "bail out" money is being used to party.

however, it is still a bushie misadministration, and the party would most like just be moved to a different location and results would be the same.

[Tandalayo_Scheisskopf]

132. To hear it told by some on DU...

This gathering was normal and natural and should have gone on as planned.

Times are tough, belts everywhere are being tightened, but AIG shouldn't have to worry about that, after an $85Billion tax dollar infusion? I really wonder what planet some people live on, because it ain't this one.

[Dr.Phool]

150. We've had a huge influx of morans during the election season.

Even some long-time, intelligent posters are buying into Bush and Paulsons bullshit. I think fear does that to people.

I agree with Rad. It's time for takeovers.

Want to cut executive compensation? Put them on a civil servants salary.

[54anickel]

155. Sure, it's like the wedding reception that's been bought and paid for. All that food and drink, not

to mention the band. Sure the bride couldn't make it and had to miss out since her father was lost in a plane crash on his way to the wedding the night before. Doesn't really involve grooms family or the rest of the guests. It would be a shame to let all that merriment go to waste.

:party: :party: :party: PARTY!!! :party: :party: :party:

:sarcasm: :puke:

[Ghost Dog]

20. Yen surges broadly as investors unwind risk

Wed Oct 8, 2008 5:55am EDT LONDON, Oct 8 (Reuters) - The low-yielding yen surged across the board on Wednesday as investors rushed to unwind riskier positions, spooked by a deepening global financial crisis.

The yen hit a 6-month high against the dollar <JPY=> and a 3-year high against the euro <EURJPY=>, while higher-yielding currencies such as the Australian dollar fell sharply against the yen.

At 0924 GMT, the dollar was down 2.4 percent at 98.94 yen, after hitting a low of 98.62 yen, according to Reuters data. The euro was down 2.1 percent at 134.75 yen.

"All sales of yen crosses just made liquidity disappear ... absolute carnage," said one trader on yen trading.

/... http://www.reuters.com/article/marketsNews/idINL818689120081008?rpc=44

[54anickel]

42. Gee, those riskier positions being unwound didn't happen to involve the almighty dollar, did they?

[spinbaby]

111. Dang

The last time I was in Japan you could get about 120 yen per dollar. And this was less than two years ago.

[ozymandius]

22. Linens 'n Things to hasten store closings: report

(Reuters) - Bankrupt U.S. home furnishings retailer Linens 'n Things sought to speed up closing its remaining 371 stores and begin its going-out-of-business sales to avoid competition from other retail failures, Bloomberg said.

The company asked Bankruptcy Judge Christopher Sontchi for permission to auction its remaining 371 stores and begin going-out-of-business sales two days later, the news agency reported.

http://www.reuters.com/article/newsOne/idUSTRE4973WI20081008

[RUMMYisFROSTED]

85. Burlap Bags 'n Stuff to open in their place.

[TalkingDog]

102. Ha! Puts me in mind of these light trifles.

for your viewing pleasure:

http://www.homestarrunner.com/oldtimeyween.html


http://www.homestarrunner.com/parsnips.html

[RUMMYisFROSTED]

112. "It's just a couple of weird one-eyed crows."

:D

[Viva_La_Revolution]

118. "to avoid competition from other retail failures"

oh, goody. ;(

[ozymandius]

162. That was a juicy, rotten line wasn't it?

Direct competition from other going-out-of-business sales is in poor taste.

[TheWatcher]

25. Blue Horseshoe Loves A Rate Cut Before Lunchtime

[54anickel]

27. How Bad Is the Federal Reserve's Balance Sheet?

http://seekingalpha.com/article/98991-how-bad-is-the-federal-reserve-s-balance-sheet

I was astonished when I heard that the Fed is contemplating increasing the Term Auction Facility to $900 billion. I wanted to take another look at the ever-changing balance sheet of the Fed to see how logistically Bernanke might be able to perform such a feat.

The one power that the Fed unquestionably possesses is the ability to create money. It traditionally did so by buying Treasury securities from the public, crediting the sellers' banks with newly created Federal Reserve deposits (a "liability" from the Fed's point of view), and adding the securities purchased to the Fed's asset holdings. Those newly created Federal Reserve deposits are essentially electronic credits that the banks could use to receive delivery of green cash from the Federal Reserve.

The first column of the table below provides a condensed version of the Federal Reserve's balance sheet in the halcyon moments before the credit turmoil began in August 2007. By far the most important asset held by the Fed at that time was some $800 billion in Treasury securities, largely balanced on the liabilities side by a similar value for currency in circulation. Repurchase agreements at that time were used by the Fed as a vehicle to add reserves temporarily, while reverse repos entered on the liabilities side as a factor temporarily draining reserves. The residual reserve balances, after adding up all the factors supplying reserves and subtracting all the other factors absorbing reserves, were themselves a tiny number, under $7 billion.


snip past chart>


The Fed's actions since August of 2007 have often been described as providing "liquidity", though they were not doing so in the traditional sense of expanding reserves or the money supply. We see in the second column of the table above that the increase in currency in circulation between August 2007 and September 2008 was in fact quite modest, and reserve balances actually fell over that period.

The Fed did provide enough money creation to bring the fed funds rate, the interest rate at which banks lend those reserves to one another overnight, down from 5.25% in the summer of 2007 to 2.0% today. But a number of other interest rates, such as the rate banks lend to one another for a 3-month period, stayed well above that 2% overnight rate, signaling substantial frictions in the interbank market.

To try to address those frictions, the Fed had been significantly changing the composition of the asset side of its balance sheet through the beginning of September 2008, while keeping the total assets essentially constant. These compositional changes included selling off $90 billion in Treasuries and replacing them with repos. This swap was implemented not because the Fed wanted the operations to be short-term, but because it was one device to make a market for the less liquid securities that the Fed accepted as collateral against the repo loans and a device for providing term loans to banks directly.

more....it gets real interesting, though confusing, in the end.

[ozymandius]

29. NEW STOCK MARKET TERMS

Here's something fun Barry Ritholtz's found in his e-mail:

CEO --Chief Embezzlement Officer.

CFO-- Corporate Fraud Officer.

BULL MARKET -- A random market movement causing an investor to mistake himself for a financial genius.

BEAR MARKET -- A 6 to 18 month period when the kids get no allowance, the wife gets no jewelry, and the husband gets no sex.

VALUE INVESTING -- The art of buying low and selling lower.

P/E RATIO -- The percentage of investors wetting their pants as the market keeps crashing.

BROKER -- What my broker has made me.

STANDARD & POOR -- Your life in a nutshell.

STOCK ANALYST -- Idiot who just downgraded your stock.

STOCK SPLIT -- When your ex-wife and her lawyer split your assets equally between themselves.

FINANCIAL PLANNER -- A guy whose phone has been disconnected.

MARKET CORRECTION -- The day after you buy stocks.

CASH FLOW -- The movement your money makes as it disappears down the toilet.

YAHOO -- What you yell after selling it to some poor sucker for $240 per share.

WINDOWS -- What you jump out of when you're the sucker who bought Yahoo @ $240 per share.

INSTITUTIONAL INVESTOR -- Past year investor who's now locked up in a nuthouse.

PROFIT -- An archaic word no longer in use.

:rofl:

[TheWatcher]

35. You Forgot PRO FORMA EARNINGS- Because Earnings Can Never Be Bad when you simply make it all up.

:)

[ozymandius]

39. Good one! We all need a laugh however we can get one. nt

[radfringe]

46. may I add

DOWn - Direction Of Wall st, Now

[Demeter]

47. Are Bad Times Healthy? By TARA PARKER-POPE / NYTimes

http://www.nytimes.com/2008/10/07/health/07well.html?8dpc


Most people are worried about the health of the economy. But does the economy also affect your health? It does, but not always in ways you might expect. The data on how an economic downturn influences an individual’s health are surprisingly mixed. It’s clear that long-term economic gains lead to improvements in a population’s overall health, in developing and industrialized societies alike. But whether the current economic slump will take a toll on your own health depends, in part, on your health habits when times are good. And economic studies suggest that people tend not to take care of themselves in boom times — drinking too much (especially before driving), dining on fat-laden restaurant meals and skipping exercise and doctors’ appointments because of work-related time commitments.

“The value of time is higher during good economic times,” said Grant Miller, an assistant professor of medicine at Stanford. “So people work more and do less of the things that are good for them, like cooking at home and exercising; and people experience more stress due to the rigors of hard work during booms.”

Similar patterns have been seen in some developing nations. Dr. Miller, who is studying the effects of fluctuating coffee prices on health in Colombia, says that even though falling prices are bad for the economy, they appear to improve health and mortality rates. When prices are low, laborers have more time to care for their children.

“When coffee prices suddenly rise, people work harder on their coffee plots and spend less time doing things around the home, including things that are good for their children,” he said. “Because the things that matter most for infant and child health in rural Colombia aren’t expensive, but require a substantial amount of time — such as breast-feeding, bringing clean water from far away, taking your child to a distant health clinic for free vaccinations — infant and child mortality rates rise.”

In this country, a similar effect appeared in the Dust Bowl during the Great Depression, according to a 2007 paper by Dr. Miller and colleagues in The Proceedings of the National Academy of Sciences.
The data seem to contradict research in the 1970s suggesting that in hard times there are more deaths from heart disease, cirrhosis, suicide and homicide, as well as more admissions to mental hospitals. But those findings have not been replicated, and several economists have pointed out flaws in the research.

In May 2000, the Quarterly Journal of Economics published a surprising paper called “Are Recessions Good for Your Health?” by Christopher J. Ruhm, professor of economics at the University of North Carolina, Greensboro, based on an analysis measuring death rates and health behavior against economic shifts and jobless rates from 1972 to 1991. Dr. Ruhm found that death rates declined sharply in the 1974 and 1982 recessions, and increased in the economic recovery of the 1980s. An increase of one percentage point in state unemployment rates correlated with a 0.5 percentage point decline in the death rate — or about 5 fewer deaths per 100,000 people. Over all, the death rate fell by more than 8 percent in the 20-year period of mostly economic decline, led by drops in heart disease and car crashes.

The economic downturn did appear to take a toll on factors having less to do with prevention and more to do with mental well-being and access to health care. For instance, cancer deaths rose 23 percent, and deaths from flu and pneumonia increased slightly. Suicides rose 2 percent, homicides 12 percent.

The issue that may matter most in an economic crisis is not related to jobs or income, but whether the slump widens the gap between rich and poor, and whether there is an adequate health safety net available to those who have lost their jobs and insurance.

During a decade of economic recession in Japan that began in the 1990s, people who were unemployed were twice as likely to be in poor health than those with secure jobs. During Peru’s severe economic crisis in the 1980s, infant mortality jumped 2.5 percentage points — about 17,000 more children who died as public health spending and social programs collapsed.

In August, researchers from the Free University of Amsterdam looked at health studies of twins in Denmark. They found that individuals born in a recession were at higher risk for heart problems later in life and lived, on average, 15 months less than those born under better conditions.

Gerard J. van den Berg, an economics professor who was a co-author of the study, said babies in poor households suffered the most in a recession, because their families lacked access to good health care. Poor economic conditions can also cause stress that may interfere with parent bonding and childhood development, he said.

He noted that other studies had found that recessions can benefit babies by giving their parents more time at home.

“This scenario may be relevant for well-to-do families where one of the parents loses a job and the other still brings in enough money,” he said. “But in a crisis where the family may have to incur huge housing-cost losses and the household income is insufficient for adequate nutrition and health care, the adverse effects of being born in a recession seem much more relevant.”

In this country, there are already signs of the economy’s effect on health. In May, the market research firm Information Resources reported that 53 percent of consumers said they were cooking from scratch more than they did just six months before — in part, no doubt, because of the rising cost of prepared foods. At the same time, health insurance costs are rising. With premiums and co-payments, the average employee with insurance pays nearly one-third of medical costs — about twice as much as four years ago, according to Paul H. Keckley, executive director of the Deloitte Center for Health Solutions.

In the United States, which unlike other industrialized nations lacks a national health plan, the looming recession may take a greater toll. About 46 million Americans lack health insurance, Dr. Keckley says, and even among the 179 million who have it, an estimated 1 in 7 would be bankrupted by a single health crisis.

The economic downturn “is not good news for the health care industry,” he said. “There may be slivers of positive, but I view this as sobering.”

[Demeter]

48. The Duplicitous Sheila Bair

http://www.portfolio.com/views/blogs/market-movers/2008/10/06/the-duplicitous-sheila-bair?tid=true


After Wachovia agreed to be bought by Wells Fargo on Friday, the FDIC's Sheila Bair put out a press release saying that her agency "stands behind its previously announced agreement with Citigroup".

Except, it wasn't quite as simple as that. During that whole week, according to the affidavit of Wachovia's Bob Steel, Wachovia had been negotiating in good faith with Citigroup; there was no contact with Wells Fargo. Until, that is, quite late on Thursday night:

On October 2, 2008 at approximately 7:15pm, I received an unexpected call from Chairman Bair. She asked if I had heard from Mr Kovacevich. I assured her I had not spoken to him since the initiation of the negotiations with Citi. She advised me that it was her understanding that he would be calling me to propose a merger transaction that would result in Wachovia shareholders receiving $7.00 per share of Wells Fargo common stock and encouraged me to give serious consideration to that offer.

At that point on Thursday, the agreement between Wachovia and Citi was all but nailed down; they'd even scheduled a time to sign it -- 2pm on Friday. Of course, that never happened. And it looks very much, from Steel's affidavit, that Bair had been working behind the scenes with Kovacevich and the crew from Wells Fargo, putting together a rival deal.

Which puts her public statement on Friday morning into a bit of perspective: yes, she might stand behind the agreement with Citi. But left unsaid was her clear support for a new deal with Wells.

This isn't so much ad hoc policymaking as post hoc policymaking. The agreement with Citi was put together over the course of a very hurried Sunday, because Wachovia would have to have declared bankruptcy on Monday morning if it didn't have a deal. As Jamie Dimon would say, buying a house and buying a house on fire are two different things. Citi bought a house on fire, thereby saving it from burning to the ground. And then Mr Kovacevich waltzed in, decided that, on reflection, he rather liked the look of the house after all, and used a provision of the newly-enacted TARP legislation to gazump the hapless Mr Pandit.

It's easy to see why Citi's rather aggrieved about the whole deal; it's harder to see why Bair would so drastically burn her bridges with 399 Park. If she ever wants to work with Citigroup again, when next she needs to rescue a bank in trouble, I suspect she'll get an extremely frosty reception.

[Festivito]

49. 10/06/2008 10,187,754,347,408.87 (UP 1,485,340,209.70) (~*avg)

ON EDIT: Brillig clock works again.
(Fourth day in FY2009. Suddenly less than a Bush average Still way above a Bill Clinton average.)

= Held by the Public + Intragovernmental(FICA)
5,913,434,272,451.45 + 4,274,320,074,957.42
DOWN 403,863,997.23 + UP 1,889,204,206.99
(FICA changes mostly around each end of month. Makes sense, that's when checks go out.)

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

HISTORICAL:
President's term ends/begins: Jan 20
01/20/1993 4,188,092,107,183.60 BC Inaugural
01/22/2001 5,728,195,796,181.57 BC (UP 1,540,103,688,997.97)
10/06/2008 10,187,754,347,408.87 ** (UP 4,459,558,551,227.30 so far since Bush took office)

Fiscal Year ends: Sep 30
(Guess who might want to hide the Reagan Bush years.)
Borrowed in FY1993: (OLDER DATA IS MISSING)
Borrowed in FY1994: 281,261,026,873.94
Borrowed in FY1995: 281,232,990,696.07
Borrowed in FY1996: 250,828,038,426.34
Borrowed in FY1997: 188,335,072,261.61
Borrowed in FY1998: 113,046,997,500.28
Borrowed in FY1999: 130,077,892,735.81
Borrowed in FY2000: _17,907,308,253.43 Bill alone
Borrowed in FY2001: 133,285,202,313.20 Bill and George
Borrowed in FY2002: 420,772,553,397.10 All George
Borrowed in FY2003: 554,995,097,146.46
Borrowed in FY2004: 595,821,633,586.70
Borrowed in FY2005: 553,656,965,393.18
Borrowed in FY2006: 574,264,237,491.73
Borrowed in FY2007: 500,679,473,047.25
Borrowed in FY2008: 1,017,071,524,650.01
Borrowed in FY2009: 163,029,450,496.32 so far, four days.

UpInArms, the brillig clock works this morning!
http://www.brillig.com/debt_clock

(250 seems an average number of borrowing days for the debt to the penny data.)
Average work-day debt increase using 250 work-days for each year instead of 225:
FY1994: 1,125,044,107.50
FY1995: 1,124,931,962.78
FY1996: 1,003,312,153.71
FY1997: _,753,340,289.05
FY1998: _,452,187,990.00
FY1999: _,520,311,570.94
FY2000: _,_71,629,233.01
FY2001: _,533,140,809.25
FY2002: 1,683,090,213.59
FY2003: 2,219,980,388.59
FY2004: 2,383,286,534.35
FY2005: 2,214,627,861.57
FY2006: 2,297,056,949.97
FY2007: 2,002,717,892.19
FY2008: 4,068,286,098.60 That's as good as one should make Bush look, not good at all.
(I don't want to repeat the daily so far for four days. It's high. It's ugly. It changes fast. It went down for today. I want to be happy about that. It's just not worth calculating today.)

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.)
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3530991&mesg_id=3531180

[Festivito]

70. Last 20 days, debt up 550B$, Fed Reserve Banks up 600B$, nears $700?

I'm guessing. Please take this as such.
The Federal Reserve suddenly rises from 900,000M$ to 1,498,693M$ (assuming in millions). Thus it goes from 900B$ to 1.5T$ in total assets of all Fed Reserve Banks and just acquired 598,693M$ in days. In last 20 days reported so far through 10/6 the debt went up 553,663,882,593.25.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x4183364

The amount was borrowed partly in FY2008 and partly in FY2009 just to confuse the ignorant Publicans who will certainly blame the Dem Congress for the heightened debt.

[DemReadingDU]

156. sounds like a good guess

It will be interesting to see how much more is added in the next days

[Festivito]

163. Debt: 10/07/2008 10,224,252,192,942.42 (UP 36,497,845,533.60) (High again)

(Fifth day in FY2009. Up again. UP 590,161,728,126.85 in last 21 days. Note similar rise in Federal Reserve holdings.)
(Curiously, 102,817,748,262.68 was taken from Intragovernmental on 9/30 & 10/1. A large debt increase happens each 6/30 & 9/30 each year sometimes on two successive days. I'm thinking it is a way to lower the interest accrued by a FICA loan by transferring it in lump sums at end of Fiscal years, and end of calendar years rather than evenly during the year.)

= Held by the Public + Intragovernmental(FICA)
5,943,992,236,199.90 + 4,280,259,956,742.52
UP 30,557,963,748.45 + UP 5,939,881,785.10
(FICA changes mostly around each end of month. Makes sense, that's when checks go out.)

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

HISTORICAL:
President's term ends/begins: Jan 20
01/20/1993 4,188,092,107,183.60 BC Inaugural
01/22/2001 5,728,195,796,181.57 BC (UP 1,540,103,688,997.97)
10/07/2008 10,224,252,192,942.42 ** (UP 4,496,056,396,760.83 so far since Bush took office)

Fiscal Year ends: Sep 30
(Guess who might want to hide the Reagan Bush years.)
Borrowed in FY1993: (OLDER DATA IS MISSING)
Borrowed in FY1994: 281,261,026,873.94
Borrowed in FY1995: 281,232,990,696.07
Borrowed in FY1996: 250,828,038,426.34
Borrowed in FY1997: 188,335,072,261.61
Borrowed in FY1998: 113,046,997,500.28
Borrowed in FY1999: 130,077,892,735.81
Borrowed in FY2000: _17,907,308,253.43 Bill alone
Borrowed in FY2001: 133,285,202,313.20 Bill and George
Borrowed in FY2002: 420,772,553,397.10 All George
Borrowed in FY2003: 554,995,097,146.46
Borrowed in FY2004: 595,821,633,586.70
Borrowed in FY2005: 553,656,965,393.18
Borrowed in FY2006: 574,264,237,491.73
Borrowed in FY2007: 500,679,473,047.25
Borrowed in FY2008: 1,017,071,524,650.01
Borrowed in FY2009: 199,527,296,030.00 so far, five days.

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

(For fun here's the 365.25 year amount per year, day, hour, min, sec.)
Fiscal Year, Borrowed that year, PER 365 DAY, __ PER HOUR, _ PER MIN, PER SECOND
FY1994: 281,261,026,873.94 __770,050,723.82 32,085,446.83 534,757.45 ___8,912.62
FY1995: 281,232,990,696.07 __769,973,964.94 32,082,248.54 534,704.14 ___8,911.74
FY1996: 250,828,038,426.34 __686,729,742.44 28,613,739.27 476,895.65 ___7,948.26
FY1997: 188,335,072,261.61 __515,633,325.84 21,484,721.91 358,078.70 ___5,967.98
FY1998: 113,046,997,500.28 __309,505,811.09 12,896,075.46 214,934.59 ___3,582.24
FY1999: 130,077,892,735.81 __356,133,861.02 14,838,910.88 247,315.18 ___4,121.92
FY2000: _17,907,308,253.43 ___49,027,538.00 _2,042,814.08 _34,046.90 _____567.45
FY2001: 133,285,202,313.20 __364,914,996.07 15,204,791.50 253,413.19 ___4,223.55
FY2002: 420,772,553,397.10 1,152,012,466.52 48,000,519.44 800,008.66 __13,333.48
FY2003: 554,995,097,146.46 1,519,493,763.58 63,312,240.15 1,055,204.00 17,586.73
FY2004: 595,821,633,586.70 1,631,270,728.51 67,969,613.69 1,132,826.89 18,880.45
FY2005: 553,656,965,393.18 1,515,830,158.50 63,159,589.94 1,052,659.83 17,544.33
FY2006: 574,264,237,491.73 1,572,249,794.64 65,510,408.11 1,091,840.14 18,197.34
FY2007: 500,679,473,047.25 1,370,785,689.38 57,116,070.39 __951,934.51 15,865.58
FY2008: 1,017,071,524,650.01 2,784,590,074.33 __116,024,586.43 1,933,743.11 32,229.05
FY2009: 199,527,296,030.00 _28,503,899,432.86 1,187,662,476.37 19,794,374.61 329,906.24 For seven calendar days to last reported day.

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.)

[Festivito]

164. AIG calls US for 37.8B$, debt rises 36.5B$ on Tue 10/7.

This money is very real.

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3534389&mesg_id=3534389

[Demeter]

50. "Chavez Proposes an Oil Price Manipulation Bank"

http://www.nakedcapitalism.com/2008/10/chavez-proposes-oil-price-manipulation.html


Venezuela has lots of oil, but it is heavy and sulphurous, which means it is costly to refine and is not terribly viable uniess oil prices remain high for a sustained period (refinery capacity is now skewed towards the sweet, light grades). That's why Venezula, along with Iran, is the most aggressive among OPEC members in advocating production cuts.

The market appeared to be providing the South American oil producer with exactly what it wanted, until oil prices started faling back in July. So Chavez has a remedy. As reader Michael noted:

I’m sure china had only their interests in mind when they were hoarding diesel prior to the Olympics…however, that sent a powerful message to Chavez and Putin…manipulation of futures markets requires a certain ability to control supply (hoarding). So this “oil bank” is no doubt, a last gasp effort by Venezuela, which requires ~$90 oil to sustain their economy, to keep prices high.

From Rigzone:

Venezuela's President Hugo Chavez on Tuesday called for oil producing countries to create an oil bank and warned oil prices could fall further.

"We once proposed the creation of an OPEC Bank...but it wasn't adopted. Lets work with the idea of an oil bank, a couple of oil (producing) countries can do it," Chavez said as he arrived in Brazil for a state visit.

The president gave no details of how this bank would work but insisted it was a needed idea.

Chavez also acknowledged falling oil prices and said he believed they would stabilize soon.

"We expect (the price) to stabilize between $80, $90 and $95 a barrel," he said.

His administration has lately defended the idea of a price for West Texas intermediate crude at $100 a barrel, a price level the Andean country promoted during the September meeting of the Organization of Petroleum Exporting Countries in Vienna.

[Roland99]

51. BREAKING on CNBC: Fed issues Emergency Rate Cut of 0.50% to 1.50%

[muriel_volestrangler]

60. 7 reserve banks - Fed, ECB, Chinese, British, Canadian, Swiss and Swedish

all involved: http://news.bbc.co.uk/1/hi/business/7658958.stm

First time I've notice the Chinese involved in such things

[Ghost Dog]

126. Here it is. Comment from China yesterday:

China to carry out its responsibility in global economic meltdown
Updated: 2008-10-07 20:13 (Xinhua) BEIJING - China will carry out its responsibilities in global efforts to conquer the economic meltdown, Vice Premier Zhang Dejiang said here Tuesday.

In a meeting with Christian Wulff, Prime Minister of Germany's state of Lower Saxony, Zhang said the economic meltdown in the United States not only cast a shadow on Europe, but also influenced China.

"If we two countries enhance cooperation, we can increase our ability to conquer the crisis," Zhang told Wulff. "As a responsible country, China would discharge its responsibilities."

Wulff, who is also vice chairman of the Christian Democratic Union (CDU), said the steady development of China's economy was "vital" to mitigating the economic volatility.

China was an important factor for stability, Wulff said.

Zhang said China set great store in relations with Germany and pledged to enhance bilateral ties, as the two countries "have no geopolitical disputes, and both sides will benefit from cooperation".

/... http://www.chinadaily.com.cn/china/2008-10/07/content_7084989.htm

[radfringe]

64. patching a gaping hole with

bubble gum and duct tape...

heckava job...

[TalkingDog]

148. A gaping wound or a sucking wound?

In grad school, one of my best mates was a former deep sea diver. When someone said something cutting, he would always grab his side and say: Is it a gaping wound or a sucking wound?

He finally explained that a gaping wound can be fixed with pressure. A sucking wound (like wound puncturing a lung or other motile organs)is much worse because it can easily pull fouled water or other disease bearing material into the wound.

I think this has been a sucking wound for a very long time.

[Demeter]

53. Germany takes hot seat as Europe falls into the abyss

We face extreme danger. Unless there is immediate intervention on every front by all the major powers acting in concert, we risk a disintegration of global finance within days. Nobody will be spared, unless they own gold bars.

By Ambrose Evans-Pritchard


http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/3141428/Germany-takes-hot-seat-as-Europe-falls-into-the-abyss.html

Germany is now in the hot seat. The collapse of a rescue deal for Hypo Real Estate on Saturday threatens a €400bn (£311bn) bankruptcy that nearly matches the Lehman Brothers debacle for sheer scale.

Chancellor Angela Merkel has been forced to pull her head out of the sand, guaranteeing all German savings, a day after she rebuked Ireland for doing much the same thing. Reality intrudes.

During the past week, we have tipped over the edge, into the middle of the abyss. Systemic collapse is in full train. The Netherlands has just rushed through a second, more sweeping nationalisation of Fortis. Ireland and Greece have had to rescue all their banks. Iceland is facing an Argentine denouement.

The US commercial paper market is closed. It shrank $95bn last week, and has lost $208bn in three weeks. The interbank lending market has seized up. There are almost no bids. It is a ghost market. Healthy companies cannot roll over debt. Some will have to sack staff today to stave off default...We are fast approaching the point of no return. The only way out of this calamitous descent is “shock and awe” on a global scale, and even that may not be enough.

Drastic rate cuts would be a good start. Central bankers still paralysed by a misplaced fear of inflation – whether in Europe, Britain, or the US – have become a public menace and should be held to severe account by our democracies. The imminent and massive danger is now self-feeding debt deflation.

The lesson of the 1930s is that any country trying to reflate in isolation will be punished. The crisis will ricochet from one economy to another until every one is crippled. We are seeing it play again in this drama as our leaders fail to rise above their narrow, parochial agendas.

The European Central Bank – which raised rates into the teeth of the crisis in July – has played a shockingly destructive role in this enveloping slump. Its growth predictions this year have been, and still are, delusional. Neglecting its global role, it has vastly complicated the fire-fighting efforts of Washington.

It could have offered “cover” to the US Federal Reserve this spring when Ben Bernanke was forced by events to slash rates to 2pc. It could at least have signalled an end to monetary tightening. That is how an ally ought to behave.

Instead, it stuck maniacally to its Gothic script, with equally unhappy consequences for both sides of the Atlantic, as well as for China, Japan, and India. The euro rocketed yet further, which it turn set off an oil shock as crude metamorphosed into an anti-dollar with leverage.

The ECB policy was self-defeating, even on its own terms. It merely drove headline inflation even higher, while deeper forces of underlying debt deflation pulled the real economies of Germany, Italy, France, and Spain into a recessionary vortex.

Far from offering reassurance, the weekend mini-summit of EU leaders served only to highlight that nobody is in charge of this runaway train. There is still no lender of last resort in euroland. The £12bn stimulus package is risible.

Angela Merkel has revealed her deep limitations. It was she who vetoed French efforts to launch a pan-EU rescue package, suspecting that any lifeboat fund would prove to be Trojan Horse – a way of co-opting German taxpayers into colossal transfers of wealth to Latin Europe.

In that she is right, but it is too late now for dysfunctional EU political games. By demanding that those who caused the damage should pay for it, she crossed the line into caricature, or worse.

Her comments echo word for word the “we’re alright Jack” attitudes of Euro-pols during the first US banking crises in 1930-1931, until the storm hit Europe and the entire cast was swept away by furious electorates, or simply shot. Thankfully, this EU stupidity is at last drawing serious criticism.

“We have to make sure Europe takes its responsibilities, like the US: action must be taken quickly and in a concerted manner,” said IMF chief Dominique Strauss-Kahn.

As for the US itself, it has not yet exhausted its policy arsenal. It can escalate further up the nuclear ladder. The Fed can cut interest rates from 2pc to zero. If that fails, it can let rip with the mass purchase of US debt.

“The US government has a technology, called a printing press,” said Fed chief Ben Bernanke in November 2002. (His helicopter speech).

In extremis, the Treasury/Fed can swoop into any market to shore up asset prices. They can buy Florida property. They can even buy SUV guzzlers from the car lots in Detroit, and mangle them in scrap yards. As Bernanke put it, the Fed can “expand the menu of assets that it buys.”

There is a devilish catch to this ploy, of course. It assumes that foreign creditors will tolerate such action.

Japan entered its Lost Decade as the world’s top creditor, with a vast pool of household savings to cushion the slump. America starts its purge with net external liabilities of $3 trillion, and a savings rate near zero. Foreigners own over half the US Treasury debt, and two thirds of all Fannie, Freddie, and other US agency bonds.

But the risk of a dollar collapse is one for the distant future. Right now the world faces the opposite problem. There is a wild scramble for dollars as a $10 trillion pyramid of global lending based on dollar balance sheets “delevers” with a vengeance.

This is a “short squeeze” on those who have used the dollar for a vast global carry trade. International banks are facing margin calls on their dollar leverage. It is why the Fed is having to provide $1.25 trillion in dollar liquidity for the entire global system, according to estimates by Brad Setser from the Center for Geoeconomic Studies.

The crisis engulfing Europe, Asia and emerging markets, makes life easier for Washington. The United States is becoming a safe-haven again.

The Fed can now hope to pursue monetary stimulus “a l’outrance” without being slapped down by the currency, debt, and commodity markets. Take comfort where you can.

[Demeter]

57. The Fed keeps on wasting time while the mother of all bank runs is underway / Roubini

http://www.rgemonitor.com/roubini-monitor/253907/the_fed_keeps_on_wasting_time_while_the_mother_of_all_bank_runs_is_underway

Last Friday I pointed out in my “Financial and Corporate System is in Cardiac Arrest: The Risk of the Mother of All Bank Runs” that we were at the point of a risk of a systemic financial meltdown with the beginning of the mother of all bank runs: stock markets gave a vote of no confidence to the Senate passage of the TARP legislation (equities down 4% on Thursday) and to the House passage of the legislation on Friday (equities down 3% after the passage of the bill in the House). At the same time last week money markets, interbank markets, credit markets were all imploding with all interbank spread at new all time highs, credit spreads going up through the roof and the roll-off of the financing – via commercial paper – of the corporate system. As I put it last week we were facing:


- a silent run on the huge mass of uninsured deposits of the banking system and even a run on some insured deposits are small depositors are scared;

- a run on most of the shadow banking system: over 300 non bank mortgage lenders are now bust; the SIVs and conduits are now all bust; the five major brokers dealers are now bust (Bear and Lehman) or still under severe stress even after they have been converted into banks (Merrill, Morgan, Goldman); a run on money market funds restrained only by a blanket government guarantee; a serious run on hedge funds; a looming refinancing crisis for private equity firms and LBOs);

- a run on the short term liabilities of the corporate sector as the commercial paper market has totally frozen (and experiencing a roll-off) while access to medium terms and long term financings for corporations is frozen at a time when hundreds of billions of dollars of maturing debts need to be rolled over;

- a total seizure of the interbank and money markets.


This is indeed a cardiac arrest for the shadow and non-shadow banking system and for the system of financing of the corporate sector. The shutdown of financing for the corporate system is particularly scary: solvent but illiquid corporations that cannot roll over their maturing debt may now face massive defaults due to this illiquidity. And if the financing of the corporate sectors shuts down and remains shut down the risk of an economic collapse similar to the Great Depression becomes highly likely.


Indeed by last week a mother of all bank and non-bank runs was underway and even a well designed and well implemented TARP (let alone the poorly designed one passed by Congress) could not address the problem of a short term liquidity panic and run.


And with the liquidity and credit and banking crisis hitting European financial institutions this severe crisis was becoming global last week. I then suggested that only radical and urgent action could stop this mother of all runs such as the following ones:

[ozymandius]

58. I'll see you folks later.

It's time for me and my son to get to school. Be safe.

:hi:

[UpInArms]

65. dollar watch

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

Last trade 80.622 Change -0.388 (-0.50%)

US Dollar Forecast to Decline Against Euro Through Short Term

http://www.dailyfx.com/story/bio2/US_Dollar_Forecast_to_Decline_1223394080274.html

We forecast that the US Dollar will see a short-term decline against the Euro, but our longer-term predictions continue to favor US dollar strength. The Dollar could nonetheless strengthen against the resurgent Japanese Yen and downtrodden British Pound.

<snip>



The US Dollar’s sharp declines against the Japanese Yen met with noteworthy Fibonacci support at the 61.8 percent retracement of the 95.71-110.60 advance, and it seems that a further short-term bounce is likely. Subsequent USDJPY resistance is seen at previous congestion levels and Fibonacci retracements at 103.15, while a continued move to the topside would meet further noteworthy price ceilings at the pair’s 200-day Simple Moving Average at 105.84. Our long-term USDJPY Forecast signals a move towards 95 is likely.

...more...

US Dollar Slips As Bernanke Brings Fed Rate Cuts Back Into Focus

http://www.dailyfx.com/story/bio1/US_Dollar_Slips_As_Bernanke_1223418087364.html

The US dollar saw a choppy day of price action but ended the day lower versus most of the majors as US fundamental factors were broadly bearish. Indeed, during a speech to the National Association for Business Economics this afternoon, Federal Reserve Chairman Ben Bernanke opened the door to rate cuts at their next meeting on October 29. In his comments, Mr. Bernanke said that inflation is likely to ease, and that "the outlook for economic growth has worsened and that the downside risks to growth have increased. At the same time, the outlook for inflation has improved somewhat, though it remains uncertain. In light of these developments, the Federal Reserve will need to consider whether the current stance of policy remains appropriate." The release of the FOMC minutes from September reiterated this sentiment, focusing on the downside risks to growth stemming from financial instability. Fed fund futures have been pricing in a 50bp cut for a while, but it is only now that we have reason to believe that such a move could actually happen due to this specific commentary by the Federal Reserve.

Furthermore, consumer credit growth in the US fell for the first time in over 10 years and by the most since record-keeping began in 1943, adding to evidence that consumer spending is bound to pull back sharply through the end of the year as the global credit crunch impacts nearing every part of the economy. According to the Federal Reserve, consumer credit fell by $7.9 billion in August, down 3.7 percent from a year earlier, due primarily to weaker non-revolving credit like auto loans. Indeed, this makes the point that the credit crisis the markets are facing isn't one that just hurts Wall Street, but impacts Main Street as well. If banks will not lend to each other, they won't be lending much to businesses and consumers either. As we’ve discussed recently, US consumers are particularly used to living with a high amount of debt. With the availability and demand for credit falling rapidly, retailers are sure to feel the repercussions. It will be interesting to see if this bearish US sentiment will hold, or if lingering risk aversion will drive demand for US Treasuries and thus, the US dollar. My fundamental bias for the US dollar in the long term: bullish. However, I do think there’s room for the currency to pull back in the near term.

...more...

[UpInArms]

67. Nikkei dives 9.4 percent, biggest 1-day fall since '87

http://news.yahoo.com/s/nm/us_markets_japan_stocks

TOKYO (Reuters) - The Nikkei average plunged 9.4 percent on Wednesday, its biggest drop since the 1987 stock market crash, as growing fears of a global recession led investors to wipe $250 billion off the value of Tokyo shares.

Toyota Motor Corp (7203.T) tumbled more than 11 percent on growing expectations that the crisis would bite deeper into its profits, while the yen hit a six-month high against the dollar, adding to the pressure on exporter shares.

Panic over the fast-spreading financial crisis dragged down markets across Asia, with Japanese steelmakers such as Nippon Steel Corp (5401.T) sliding, as the Nikkei set another five-year closing low. It has lost 19 percent in the past five days.

"The deteriorating outlook for the economy and the deepening financial crisis are pushing fear to its limit," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.

"Investors want to dump shares as their willingness to take risks has shrunk, but no one wants to buy even if stocks are valued cheaply."

The yen climbed to a six-month high against the tumbling U.S. dollar, as investors stampeded away from stocks and risky positions.

The Nikkei posted its biggest one-day fall since a 14.9 percent drop on October 20, 1987, the day after Black Monday, and logged the third-largest one-day drop ever.

...more...

[54anickel]

69. Lookie them futures soar!!!! Must be lovin' that rate cut.

http://money.cnn.com/data/premarket/

add link on edit

[Ghost Dog]

71. World stocks rally after coordinated rate cuts

Wed Oct 8, 2008 7:20am EDT LONDON, Oct 8 (Reuters) - World stock markets cut heavy losses on Wednesday after the world's leading central banks announced coordinated interest rate cuts in a bid to stem the deepening global financial crisis.

The dollar fell further versus major currencies .DXY and U.S. Treasuries rise. German government bond futures wiped out gains, while European bank shares turned positive.

...

The MSCI world equity index .MIWD00000PUS briefly pared losses to come off earlier four-year lows, but the index was still down 2.2 percent on the day.

The MSCI emerging equities index .MSCIEF rose to 614.11 from 611.82, but was still down 6.82 percent from the U.S. close, after earlier hitting three-year lows of 608.51.

The FTSEurofirst 300 index of top European shares pared losses sharply on the coordinated rate cut and was trading down 1.6 percent at 988.61 points, compared to a loss of nearly 4.

/... http://www.reuters.com/article/marketsNews/idINL87648820081008?rpc=44
________

· SNB statement on interest rate cut - http://www.reuters.com/legacyArticle?duid=mtfh55505_2008-10-08_11-39-26_l8153542_newsml&rpc=44&type=marketsNews
· European Commission declines comment on rate cuts - http://www.reuters.com/legacyArticle?duid=mtfh55320_2008-10-08_11-29-38_l8144354_newsml&rpc=44&type=marketsNews
· FULL TEXT-Bank of Canada statement on rate cut - http://www.reuters.com/legacyArticle?duid=mtfh55115_2008-10-08_11-19-35_n08169540_newsml&rpc=44&type=marketsNews
· Swedish c.bank comments in rate announcement - http://www.reuters.com/legacyArticle?duid=mtfh55010_2008-10-08_11-14-50_l8102673_newsml&rpc=44&type=marketsNews
· Fed statement on its 50 bps cut in Fed Funds rate - http://www.reuters.com/legacyArticle?duid=mtfh54877_2008-10-08_11-09-08_l884969_newsml&rpc=44&type=marketsNews

[54anickel]

74. Too bad the Asian markets had to miss out. Hopefully there's some wind left in the sails tomorrow.

[Ghost Dog]

78. Europe shares "lifted from abyss".

Wed Oct 8, 2008 8:19am EDT LONDON, Oct 8 (Reuters) - European shares were down only slightly by midday on Wednesday after a dramatic coordinated rate cut by the world's top central banks lifted stocks from five-year lows hit early in the day.

The U.S. Federal Reserve led a round of cuts and eased by half a point, as did the European Central Bank, Bank of England and Swiss, Canadian and Swedish banks.

At 1207 GMT, the FTSEurofirst 300 index of top European shares was down 0.2 percent at 1,001.74 points, compared with losses of around 4 percent before the central bank move at 1100 GMT and a slump of nearly 8 percent in early trade.

"This is a very exciting move. The biggest move relative to market expectations was the ECB ... the fact of coordinated rate cutting is incrementally reassuring because it means people are working together, which gives extra comfort," said Bernard McAlinden, strategist at NCB Stockbrokers in Dublin.

/... http://www.reuters.com/article/marketsNews/idINL865373720081008?rpc=44&sp=true

Yes, you're right. Hmm. What's most likely to bounce back up away in Asia 11.5 hours time...

[Hugin]

79. A comfort rate cut?

:puke:

[54anickel]

90. Central Bankers raise a glass in celebration of their newfound unity!

http://www.youtube.com/watch?v=6mOEU87SBTU

[54anickel]

84. Looks like we'll be happy to just stay flat. Futures went from +200 to -41. Blather should be

entertaining today.....

[Ghost Dog]

75. O/n dollar Libor hits 1-wk high as cenbanks cut rates

Wed Oct 8, 2008 7:19am EDT LONDON, Oct 8 (Reuters) - The interbank cost of borrowing
overnight dollars jumped 140 basis points on Wednesday,
according to the latest daily fixing from the British Bankers'
Association, just before coordinated interest rate cuts by major
global central banks to tackle the credit crisis.

The BBA fixings were released moments before the world's
leading central banks -- notably the U.S. Federal Reserve, the
European Central Bank and the Bank of England -- acted in
concert to shore up the global economy in the face of an
intensifying financial crisis.

Overnight Libor sterling rates were largely steady after the
British government said earlier it will invest up to 50 billion
pounds of public funds into the country's banks to strengthen
their shattered capital bases, effectively a
part-nationalisation of the banking system.

The spread of three-month London interbank offered rates
over OIS rates for dollars blew out to 319.125 basis points --
the steepest since at least since the credit crisis began a year
ago -- from 294 basis points on Tuesday.

The spread for euros was at 165.625 basis points from 154
basis points and sterling at 200.025 basis from 190 basis
points.

The spread expresses the three-month premium paid over
anticipated central bank rates, or Overnight Index Swap rates
and is seen as a gauge of banks' willingness to lend to each
other -- a wider spread is seen as an indication of decreased
inclination to lend.

/... http://www.reuters.com/article/marketsNews/idINL83719120081008?rpc=44

[Ghost Dog]

135. UPDATE 2-Global rate cuts helps ease o/n interbank rates

Wed Oct 8, 2008 9:33am EDT

... TURNING POINT?

In the wake of the coordinated rate cuts, interbank overnight dollar deposit rates were indicated as low as 1.25 percent <USDOND=>, but were last around 3.5 percent.

The Libor fix for overnight dollar funds, before the central bank rate cuts, was fixed at 5.37500 percent <USDONFSR=>.

Overnight sterling deposit rates were last indicated around 4.5 percent, lower than the 5.83125 percent Libor fix <GBPONFSR=>.

Overnight euro deposits fell to as low as 3.74 percent <EUROND=>, according to Reuters data. The Libor fixing was 4.35000 percent <EURONFSR=>.

Interbank deposit rates are merely indicative prices and not necessarily the rates at which banks actually lend to each other. The once-a-day Libor fix is also an indicative rate, but is a global reference point for trillions of dollars of contracts for financial, corporate and household borrowing.

The three-month dollar Libor/OIS spread blew out to 320 basis points from 294 basis points on Tuesday, euro Libor/OIS spreads widened to 165 basis points from 154 basis points and sterling to 200 basis points from 190 basis points.

All were the highest in several years. But some analysts said Wednesday's coordinated monetary policy response might mark a turning point.

"We expect that financial spreads have peaked and the worst phase of the financial crisis is coming to an end," said Lena Komileva, G7 strategist at Tullet Prebon.

"A recession will stand in the way of a strong risk rally. But a depression looks increasingly unlikely and this month should mark the low point of the risk cycle."

For more on Wednesday's Libor fixing, see .

Earlier, the European Central Bank's auction of $70 billion in one-day dollar funds was oversubscribed almost twofold.

Alongside the UK government's bank action, the Bank of England said it was expanding and extending its Special Liquidity Scheme to offer at least 200 billion pounds liquidity to financial institutions against a broader range of collateral. For more, see .

"There is no doubting that this is big. We are very impressed by the scale of this," said David Keeble, head of rates strategy at Calyon.

/... http://www.reuters.com/article/marketsNews/idINL873590920081008?rpc=44&sp=true

:shrug:

[Hugin]

77. Why not. They're handing out "Free Money"!

Too bad it's a Fiat Currency.

Their hatred of the Middle-Class is pathological. Think of the Trillions in actual and representative assets
that have been squandered in this series of attempts to support a broken ideology and to bolster a few people's
feelings of moral superiority.

Less than a tenth of that amount used at lower levels would have had much more of a beneficial effect.

But, now the stupid Stimulus Package makes more sense... They can point their self-righteous fingers at
that one relatively tiny, designed to fail action and say, "See, it didn't work. Better if we focus on the
rich and it'll trickle down. Trust us."

[54anickel]

87. I think you nailed that stimulus package on the head Prag. n/t

[UpInArms]

76. Plosser says Fed being asked to do too much

http://www.reuters.com/article/bondsNews/idUSNAT00444720081008

NEW YORK, Oct 8 (Reuters) - The U.S. Federal Reserve should not be seen as an omnipotent crisis fixer, and any such expectations risk undermining the central bank's effectiveness, Philadelphia Fed President Charles Plosser said on Wednesday.

Plosser was speaking from prepared remarks less than an hour after major central banks around the world announced a coordinated interest rate cut aimed at stemming a world financial crisis. The U.S. central bank itself cut rates by a half percentage point to 1.5 percent.

But Plosser said monetary policy could go only so far.

"Before we seek to dramatically expand the Fed's responsibilities, I believe it is important to recognize there are limits to what central banking can do," Plosser said in prepared remarks to the Council on Foreign Relations.

...more...

[theDash]

80. I think the markets are sensing desperation here

Although the rate cut is welcome, it does nothing to restore confidence. It only shows that the fed is panicking, and the fear will erode through the markets after the 'excitement' from the rate cut wears off (which i believe is going to be very short lived)

[UpInArms]

97. Plosser-Fed must think about functional regulation

http://www.reuters.com/article/bondsNews/idUSN0851042820081008

NEW YORK, Oct 8 (Reuters) - The recent financial turmoil shows the Federal Reserve needs to think about functional regulation rather than simply regulating institutions, Philadelphia Fed President Charles Plosser said on Wednesday.

Plosser was answering audience questions after delivering a speech, which came shortly after major central banks around the world announced a coordinated interest rate cut aimed at stemming a world financial crisis.

Plosser said the Fed needs to mull which kind of failure in a market would put the payment system at risk and also about new financial products and the roles they play.

[DemReadingDU]

82. Columbus, Oh - National Century Trial, Tuesday's updates

10/7/08 Witnesses detail overfunding from National Century
Tuesday, October 7, 2008 - 6:20 PM EDT
by Kevin Kemper

Over four years, National Century Financial Enterprises Inc. made illegal advances of more than $2 billion to six companies partially owned by Lance Poulsen, jurors in the former CEO’s fraud trial heard Tuesday.

Jeffrey Williams, an FBI agent who investigates white-collar crimes, told jurors an analysis of more than 1 million electronic transactions found Dublin-based National Century advanced $2.19 billion to the companies from 1999 and 2002. All six of the companies were partially owned by Poulsen, National Century’s founder and co-owner.

Poulsen was indicted on charges he ran a nearly decade-long fraud at National Century that resulted in $2.84 billion in investor funds going missing after the financing company collapsed into bankruptcy in 2002. He is standing trial in U.S. District Court in Columbus on charges of wire fraud, securities fraud and conspiracy among others.

Poulsen has pleaded not guilty to the charges.

Williams’ testimony was the capper to testimony from executives whose companies allegedly received the illegal advances.

Bryan Weiss, former CFO of Los Angeles-based MediManagement, testified Tuesday that his company depended on consistent overfunding from National Century to stay in business. Over the years National Century overfunded MediManagement, a hospital management business it owned, to tune of more than $100 million, Weiss said.

When National Century went bankrupt, MediManagement had to divert about $100,000 owed to National Century and its investors into MediManagement accounts to stay in business.

National Century was a financier of last resort for medical companies such as MediManagement, purchasing accounts receivable in exchange for quick cash that a health-care provider could use to pay its bills. National Century would then package the receivables into bonds and sell them to investors.

In the case of MediManagement, however, National Century also gave the company money to maintain operations, even though Weiss said MediManagement didn’t have sufficient receivables to meet its operating needs. But when National Century funded MediManagement beyond the value of its receivables, it violated securities laws because it broke promises to investors to only purchase accounts receivable, the government has alleged.

Defense lawyer John Haller attempted to show the jury that Weiss and MediManagement were at fault, not Poulsen.

“You took money that didn’t belong to you?” Haller asked.

“Yes,” Weiss answered.

“You stole, didn’t you Mr. Weiss?” Haller asked again.

Weiss said diverting the funds was the decision of MediManagement’s CEO.

Haller also asked Weiss if MediManagement was charged by the government with diverting money. Weiss answered that it wasn’t and that investigators never asked about diversions in interviews they conducted with him.

Craig Porter also testified Tuesday that his company was overfunded by National Century. Porter told jurors he was once CEO of Home Care Concepts of America Inc., which like MediManagement was owned in part by Poulsen and convicted accomplices Donald Ayers and Rebecca Parrett, also co-owners of National Century.

By the time Home Care Concepts went out of business in 2000, Porter testified, National Century had sent more than $300 million in overfunding to the company. Porter said he wasn’t aware of money diverted from Home Care Concepts to Poulsen.

Porter almost didn’t testify due to an attorney’s conflict of interest. Haller was forced to recuse himself from the cross-examination of Porter because he once represented Home Care Concepts. U.S. District Judge Algenon Marbley ruled Haller couldn’t use information gained during his representation of Home Care Concepts against Porter in his questioning and then directed Peter Anderson, another of Poulsen’s attorneys, to fill in for Haller.

Poulsen said he felt his rights weren’t being protected.

“I’m sure as heck not going to stand here and have my defense litigated away,” he told Marbley.

Marbley responded that because Poulsen has employed three lawyers, his rights were protected.
http://www.bizjournals.com/columbus/stories/2008/10/06/daily15.html



10/8/08 National Century's bad loans total $1,297,721,675
Wednesday, October 8, 2008 3:04 AM
By Jodi Andes

Federal authorities have long asserted that National Century Financial Enterprises' $1.9 billion in losses could largely be blamed on unsecured loans being doled out, one after another.

Yesterday, prosecutors quantified for jurors just what those loans totaled in the last four years of the company's operation -- down to the penny.

National Century executives gave $1,297,721,675.28 in unsecured loans to six companies they either owned or had a significant financial stake in, FBI Special Agent Jeffrey Williams testified yesterday at former Chief Executive Lance K. Poulsen's fraud trial.

There was no collateral to secure the loans, hence, no likelihood that they would be repaid, Williams said.

Poulsen, 65, one of three founders of National Century, is being tried in U.S. District Court in Columbus on fraud charges stemming from the company's November 2002 collapse.

The company's two other founders, Rebecca S. Parrett and Donald H. Ayers, were convicted of fraud in March. Ayers, 72, is serving a 15-year sentence. Parrett disappeared while free on bond and remains at large.

The FBI agent's testimony yesterday came after Judge Algenon L. Marbley suggested that one of Poulsen's defense attorneys, John E. Haller, recuse himself from questioning a witness.

Haller was an attorney for Purcell & Scott, a law firm that represented National Century until the company filed for bankruptcy. He also helped represent Home Healthcare of America, a client of National Century's, when a medical supplier sued Home Health and National Century in 1999.

When Assistant U.S. Attorney Doug Squires announced that he would call Home Healthcare's former Chief Executive Craig Porter as a witness, Marbley said Haller could not cross-examine him because that would be a conflict of interest.

He gave Poulsen's two other defense attorneys two hours to prepare, a time window that did not please Poulsen.

"This is a matter critical to my defense," Poulsen said. "I see how this protects Mr. Porter's rights. But I don't see how this protects my rights, and I'm on trial here."

Marbley ended the discussion, saying, "One of the things the court advised you at the outset was the conflict of Mr. Haller, but you waived that. Now this is a consequence of your waiver."

Porter testified that his company acquired home health-care companies and was owned by a company whose principal shareholders were Poulsen, Ayers and Parrett.

Despite National Century's loans, Home Healthcare still struggled, Porter testified.

"The company was really hemorrhaging cash and struggling as a company. It had a hard time paying its bills," Porter said.
http://www.columbusdispatch.com/live/content/business/stories/2008/10/08/NatCen08.ART_ART_10-08-08_C8_CKBHUK1.html?sid=101



link backwards to Monday's articles, and older
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3530991&mesg_id=3531439

edit: corrected link

[UpInArms]

83. Russian stocks plunge again, trading suspended

http://www.marketwatch.com/news/story/russian-stocks-plunge-again-trading/story.aspx?guid=%7BB3F4E24F%2D2990%2D4B00%2DB632%2D6312D0967313%7D&dist=hplatest

NEW YORK (MarketWatch) -- Russian equities went into free fall once again Wednesday, sending the benchmark RTS index down 11% and prompting the RTS exchange to suspend trading "until further notice." At Moscow's other exchange, the Micex stock index tumbled 14%. The latest steep losses come after the RTS and Micex indexes both fell 19% on Monday. Daily double-digit declines and frequent trading suspensions have become the norm lately on the Russian stock exchanges, as the global credit crisis, tumbling oil prices and heightened domestic political risks have battered investor confidence.

[Hugin]

86. "U.S. Stock-Index Futures Decline on Disappointing Retail Sales" (Bloomberg)

By Lynn Thomasson

Oct. 8 (Bloomberg) -- U.S. stock-index futures fell after retailers reported September sales that disappointed investors, overshadowing interest-rate cuts by the Federal Reserve and central banks in Europe aimed at unlocking credit markets.

Target Corp., J.C. Penney Co. and Kohl's Corp. declined after reporting decreases in same-store sales last month. Bank of America Corp. tumbled 14 percent after selling stock at a discount to shore up capital.

Standard & Poor's 500 futures expiring in December lost 19.2, or 1.9 percent, to 986.6 at 8:48 a.m. in New York after dropping as much as 4.3 percent. Dow Jones Industrial Average futures retreated 191, or 2 percent, to 9,347. Nasdaq-100 futures decreased 33.75, or 2.5 percent, to 1,302.75.

The S&P 500 was poised to extend a slump that sent it down 15 percent since Sept. 30, its third-steepest five-day losing streak on record, according to Bespoke Investment Group LLC, a Harrison, New York-based research firm. The bigger declines stemming from five straight losses occurred in 1932.

more...

http://www.bloomberg.com/apps/news?pid=20601087&sid=auCqnXPa1SWE&refer=home

[UpInArms]

93. Retailers' September sales forebode a tough holiday

http://www.marketwatch.com/news/story/retailers-september-sales-miss-forebodes/story.aspx?guid=%7BB005A8F4%2DE942%2D4948%2D8882%2DEA284A0CF777%7D

NEW YORK (MarketWatch) - Foreshadowing what may turn out to be a grim holiday selling period, initial results from U.S. retailers showed disappointing September sales as a global financial crisis made money-pinched shoppers even more reluctant to spend.

Wal-Mart Stores Inc. said Wednesday its sales excluding fuel in the five weeks ended Oct. 3 rose 2.4%. On that basis, the company missed the 2.5% average estimate of analysts surveyed by Thomson Reuters. Costco Wholesale Corp. (COST: 57.80, -2.67, -4.4%) sales rose a less than expected 7%.

Still, value-oriented stores remain safer bets heading into retailers' biggest selling season - the holidays -- than department stores and apparel sellers, both of which have been hurt by their heavier exposure to discretionary spending, analysts said. For October, Wal-Mart forecast sales growth of between 1% and 2% and kept its third-quarter profit forecast of 73 cents to 76 cents a share.

Shoppers already faced with an economic downturn and rising costs got their confidence further beaten down by the ongoing financial crisis and dramatic swings in the stock market. Wal-Mart said Wednesday shoppers are buying groceries and said its low prices are luring more and more shoppers to its stores.

...more...

[llmart]

104. Oh, my......

whatever will we do if we can't go out and shop ourselves silly at Christmas? Isn't that the meaning of Christmas anyway? Buying useless crap from China that we can package in wrapping paper and bows from China and then sell it all at a garage sale next year?

It's the American way nowadays. USA! USA! USA!

I liked Obama's reference in last night's debate to how after 9/11 the Dope-in-Chief told us to go out and shop.

[UpInArms]

88. Gold rallies over $20 after Fed cuts rate

http://www.marketwatch.com/news/story/gold-rallies-over-20-after/story.aspx?guid=%7BCB7A0700%2D1036%2D44EB%2DA324%2DA21272FDDDD3%7D&dist=hplatest

NEW YORK (MarketWatch) -- Gold futures rallied more than $20 Wednesday, pushing up by a weakening dollar after the U.S. Federal Reserve cut its key interest rate by half a percentage point. Gold for December delivery rose $22.20, or 2.5%, to $904.20 an ounce in early electronic trading. Gold has gained about $70 in three straight sessions since Monday. The Fed cut its benchmark rate to 1.5% from 2%. The European Central Bank and four other central banks also lowered their rates in an effort to head off the global financial turmoil. A weakening greenback boosts dollar-denominated gold prices as it reduced gold's appeal as an alternative investment.

[xyouth]

92. New York spot price on gold

GOLD

10/08/2008

09:04

916.10 Bid
917.10 Ask

+29.00

+3.27%

903.50 High

921.70 Low

[Ghost Dog]

98. Insurance company credit spreads rally after rate cuts

Wed Oct 8, 2008 8:45am EDT NEW YORK, Oct 8 (Reuters) - Credit spreads for insurance companies rallied on Wednesday in the wake of a series of rate cuts led by the U.S. Federal Reserve and global central banks.

Credit default swaps spreads for companies such as XL Capital, Metlife Inc, Hartford Financial and Prudential Financial Inc all posted large gains, according to CMA DataVision data.

Five-year credit default swaps of XL Capital (XL.N: Quote, Profile, Research, Stock Buzz) fell to 683 basis points, or $683,000 a year to protect $10 million of debt, down from 807 basis points on Tuesday, according to data from CMA DataVision.

/. http://www.reuters.com/article/marketsNews/idUSN0851483820081008

[UpInArms]

99. IMF sees U.S. growth at 0.1% in 2009, euroland at 0.2%

01. Coordinated rate cuts 'clearly step in right direction': IMF
9:10 AM ET, Oct 08, 2008

02. IMF sees U.S. growth at 0.1% in 2009, euroland at 0.2%
9:00 AM ET, Oct 08, 2008

03. IMF sees global growth at 3% in 2009, vs. 3.9% in 2008
9:00 AM ET, Oct 08, 2008

04. IMF sees major global downturn, with risks it will worsen
9:00 AM ET, Oct 08, 2008

[dweller]

130. IMF: World economy to slow sharply, led by US

(as opposed to accelerate dully?)

IMF predicts world economy will stall sharply in 2008, with US slipping into recession

WASHINGTON (AP) -- The world economy will slow sharply this year and next, with the United States likely sliding into recession reflecting mounting damage from the most dangerous financial jolt in more than a half-century.

The International Monetary Fund, in a World Economic Outlook released Wednesday, slashed growth projections for the global economy and predicted the United States -- the epicenter of the financial meltdown -- will continue to lose traction.

"The world economy is now entering a major downturn in the face of the most dangerous shock in mature financial markets since the 1930s," the IMF said in its report.

The IMF now projects that the global economy, which grew by a hardy 5 percent last year, will lose considerable speed, slowing to 3.9 percent this year. It is forecast to weaken even more -- to just 3 percent -- next year, marking the worst showing since 2002. In the past, the IMF has called global growth of 3 percent or less the equivalent to a global recession.

http://biz.yahoo.com/ap/081008/world_economic_outlook.html

dp

[UpInArms]

101. Futures looking grim - no rate cut boogie this morning

S&P 500 -12.30 993.50 10/8 8:56am
Fair Value 999.75 10/7 9:41pm
Difference* -6.25

NASDAQ -16.75 1319.75 10/8 8:56am
Fair Value 1339.51 10/7 9:41pm
Difference* -19.76

Dow Jones -113.00 9425.00 10/8 8:56am

[Ghost Dog]

103. European markets still look pretty bleak to my eye, too:

________

World stocks return to red despite rate cuts
Wednesday October 8, 9:14 am ET LONDON (Reuters) - Stock markets remained mired in steep losses on Wednesday, battered by fears about the world's worst financial crisis in nearly 80 years and gaining only temporary relief from globally coordinated interest rate cuts.

Wall Street looked set to open lower, in line with stock markets in Asia and Europe.

Reaction to the cuts -- which came from the U.S. Federal Reserve, European Central Bank, Bank of England and People's Bank of China, among others -- initially led equity investors to trim deep losses on many bourses.

Immediate euphoria dissipated quickly. MSCI's main benchmark index of world stocks, for example, remained near 4-year lows, down 2.7 percent and around where it was when the cuts were announced.

Its emerging market stock counterpart was off 7.4 percent.

The pan-European FTSEurofirst 300 index was down 3.6 percent versus 2.9 percent before the cuts. Tokyo's Nikkei share average, which closed long before the central bank moves, plummeted 9.4 percent.

Government debt prices jumped on the overall equity selloff and investors grabbed anything resembling stability, such as gold which rose 3 percent and the low-yielding Japanese yen.

/... http://biz.yahoo.com/rb/081008/business_us_markets_global.html?.v=14

[UpInArms]

108. futures getting worse in a hurry

9,000 we barely knew ya

S&P 500	-32.80	973.00	10/8 9:12am	
Fair Value		999.75	10/7 9:41pm
Difference*		-26.75	

NASDAQ	-46.50	1290.00	10/8 9:12am	
Fair Value		1339.51	10/7 9:41pm
Difference*		-49.51	

Dow Jones	-269.00	9269.00	10/8 9:12am

[Lydia Leftcoast]

106. The yen has broken the psychological barrier of 100/dollar

and is trading in the 99 range, something not seen since the early 1990s.

[adamuu]

109. TDAmeritrade headline: SEC emergency short selling ban to expire (at midnight tonight)

The Securities and Exchange Commission has announced its ban on short-selling of financial stocks will expire at 11:59 p.m. ET on Wednesday, October 8. Find out More
http://www.tdameritrade.com/forms/TDA8147.pdf

[MadinMo]

114. What effect will that have on the market?

[adamuu]

116. downward pressure n/t

[Wednesdays]

110. Ted Spread above 4.00

http://www.bloomberg.com/apps/quote?ticker=.TEDSP:IND

09:14 Currency: N.A.

Value 4.03 Change 0.468 % Change 13.159


We're seeing all sorts of danger signals flashing red today, aren't we?

[Hugin]

113. ~09:31 EMT: Markets open with a big...

OUCH!

Dow 9,231.34 -215.77 (-2.28%)
Nasdaq 1,708.28 -46.60 (-2.66%)
S&P 500 974.18 -22.05 (-2.21%)

10y bond 3.44% -0.02 (-0.58%)

[Roland99]

115. Recovering fast, though. DJIA -48.99 ... now +16!

[54anickel]

120. Steroids?

[Hugin]

122. Markets extremely volatile this morning... S&P goes above 1,000 again.

Dow 9,538.23 +91.12 (0.96%)
Nasdaq 1,772.98 +18.10 (1.03%)
S&P 500 1,006.41 +10.18 (1.02%)

10y bond 3.46% +0.01 (0.29%)

[antigop]

117. WSJ: Nearly 1 in 6 owners 'under water' (home owners)

http://online.wsj.com/article/SB122341352084512611.html

The relentless slide in home prices has left nearly one in six U.S. homeowners owing more on a mortgage than the home is worth, raising the possibility of a rise in defaults -- the very misfortune that touched off the credit crisis last year.

The result of homeowners being "under water" is more pressure on an economy that is already in a downturn. No longer having equity in their homes makes people feel less rich and thus less inclined to shop at the mall.

And having more homeowners under water is likely to mean more eventual foreclosures, because it is hard for borrowers in financial trouble to refinance or sell their homes and pay off their mortgage if their debt exceeds the home's value. A foreclosed home, in turn, tends to lower the value of other homes in its neighborhood.

About 75.5 million U.S. households own the homes they live in. After a housing slump that has pushed values down 30% in some areas, roughly 12 million households, or 16%, owe more than their homes are worth, according to Moody's Economy.com.

[antigop]

119. Monty Python fans: Read Krugman

http://krugman.blogs.nytimes.com/2008/10/08/a-morning-thought/

The only thing we have to fear is fear itself. Fear and negative equity … The two things we have to fear are fear itself and negative equity, and the depleted capital of financial institutions … Amongst the things we have to fear are fear itself, negative equity, and the depleted capital of financial institutions.

Full text here...
http://people.csail.mit.edu/paulfitz/spanish/script.html

[antigop]

123. "We're way past the point at which conventional monetary policy has much traction."

http://krugman.blogs.nytimes.com/2008/10/08/the-trouble-with-rate-cuts/

The trouble with rate cuts

The coordinated rate cut was the right thing to do. But I don’t expect much from it — because the relationship between Fed funds rates and the rates most businesses actually pay is very weak right now, thanks to the messed-up state of the financial system.

A quick illustration: in early July 2007, before the crisis, the target Fed funds rate was 5.25% and the rate on 30-day A2/P2 commercial paper — that is, CP issued by less-than-sterling borrowers — was 5.4%. On Monday of this week, the target Fed funds rate was 2%, down 325 basis points from pre-crisis levels, but the CP rate was 5.61% — up from pre-crisis levels.

So will this latest rate cut make any difference to borrowers? Maybe — but only to a few of them. We’re way past the point at which conventional monetary policy has much traction.

[Demeter]

161. I Can Do One Better

Lucy Van Pelt:

"The only thing wrong with Charlie Brown is his lack of confidence....his inferiority and his lack of confidence, his CLUMSINESS, his inferiority and his lack of confidence, his Stupidity, his clumsiness, his inferiority and his lack of confidence..." musical bridge.

"You're a Good Man, Charlie Brown"

[antigop]

165. Oh, yes! I've seen it MANY times. My partner was even in a production of it! n/t

[Demeter]

166. I'm a Natural Born Lucy

being the eldest and all.

[antigop]

167. Naw, you're too nice to be Lucy. n/t

[Demeter]

168. You Must Speak at My Funeral!

[Hugin]

129. ~10:08 EDT: Up across the board...

Dow 9,619.70 +172.59 (1.83%)
Nasdaq 1,793.62 +38.74 (2.21%)
S&P 500 1,018.71 +22.48 (2.26%)

10y bond 3.48% +0.03 (0.87%)


Strength now in:

Basic Materials
Technology
Services

Not in Financials for once.

[Hugin]

137. ~10:20 EDT: Rally cooling... Still up.

Dow 9,484.70 +37.59 (0.40%)
Nasdaq 1,776.07 +21.19 (1.21%)
S&P 500 1,004.91 +8.68 (0.87%)

10y bond 3.50% +0.05 (1.45%)

[UpInArms]

136. TREASURIES-U.S. yield curve steepest in 4-1/2 years

http://www.reuters.com/article/bondsNews/idUSNYG00135120081008

NEW YORK, Oct 8 (Reuters) - The gap of U.S. Treasury longer maturities yields above shorter maturities widened to the steepest since early 2004 on Wednesday, in the wake of the Federal Reserve's cut in official interest rates in coordination with some other global central banks.

The 10-year note yielded about 3.44 percent, while the 2-year note yielded about 1.34 percent, a 210 basis points gap, the widest in 4-1/2 years.

[UpInArms]

152. Treasury: 'Severe dislocations' in market for notes, bonds

05. Treasury: 'Severe dislocations' in market for notes, bonds
10:31 AM ET, Oct 08, 2008

06. Treasury: Reopenings to happen soon, across maturities
10:30 AM ET, Oct 08, 2008

07. Treasury: Demand for some Treasuries outstripping supply
10:30 AM ET, Oct 08, 2008

08. Treasury aide: Step aimed at borrowing needs and liquidity
10:30 AM ET, Oct 08, 2008

09. Treasury to reopen many securities due to market dislocation
10:30 AM ET, Oct 08, 2008

[UpInArms]

138. Citigroup to slash its wholesale mortgage business

http://www.marketwatch.com/news/story/citigroup-slash-its-wholesale-mortgage/story.aspx?guid=%7BCBACFA1C%2D3EE8%2D47A8%2D9E2F%2DA9F41B75DBB3%7D

SAN FRANCISCO (MarketWatch) -- Citigroup Inc. has become the latest large bank to back away from the crumbling mortgage industry, slashing the number of outside mortgage brokers it does business with and cutting 500 related jobs.

Citigroup Inc. (C: 14.71, -0.44, -2.9%) , which is locked into a pitched battle
with Wells Fargo & Co. (WFC: 32.19, +1.59, +5.2%) over Wachovia Corp. (WB: 5.05, -0.20, -3.9%) , is cutting back on its wholesale mortgage business as part of a restructuring plan announced Tuesday.

A Citigroup spokesman stressed that the firm is not abandoning the wholesale mortgage business, but is "redefining" it.

Citigroup will cut the number of outside mortgage brokers it does business with around the U.S. to 1,000 from about 9,500. The plan also involves laying off roughly 500 sales and operations employees.

Citigroup will consolidate its "retail volume" business in St. Louis, Dallas, and Southfield, Mich., the spokesman said.

Citigroup shares rose more than 1% to $15.31 in late trading.

A number of banks have abandoned the wholesale mortgage business, as the industry has collapsed as borrowers defaulted and related financial instruments crumbled, setting off a domino-like effect throughout the financial-services industry.

While signs of the growing problem became evident years ago, the full effect has only recently become evident, as some of the U.S.'s largest financial, insurance and mortgage institutions crumbled.

...more...

[UpInArms]

139. 10:23 EST markets taking a big lurch downward

Dow 9,386.34 60.77 (0.64%)
Nasdaq 1,754.25 0.63 (0.04%)
S&P 500 993.72 2.51 (0.25%)
10-Yr Bond 3.521% 0.015

NYSE Volume 1,766,302,875
Nasdaq Volume 737,231,687.5

[Hugin]

143. I don't know if anyone has commented on this yet.

But, has anyone else noticed that the new circular sector charts they're showing on Bloomberg look
like poker chips?

:D

They are a good chart style for showing sector activity tho...

[Ghost Dog]

140. Kuwait slashes rates; UAE joins global move to cut

Wed Oct 8, 2008 9:52am EDT KUWAIT/ABU DHABI, Oct 8 (Reuters) - Kuwait slashed its key discount interest rate by 125 basis points on Wednesday while the United Arab Emirates cut by a more modest amount, tracking a round of emergency rate cuts by major central banks.

Analysts said the changes, which also included moves to make access to emergency funding easier, made it more likely that other Gulf states would cut rates in coming days as authorities bid to ease liquidity tensions in the region.

The Kuwait cut added to central bank offers of funds to local lenders in recent days. The only Gulf Arab state to delink its currency from the dollar, it cut the benchmark discount rate to 4.5 percent from 5.75 percent and the repo rate to 2.5 percent from 3.5 percent.

...

The UAE lowered its overnight repurchase rate to 1.5 percent from 2.0 percent and cut the borrowing rate on its emergency facility, making it much cheaper for banks to borrow the money.

...

Some analysts said Saudi Arabia might respond with a cut in its repo rate by as much as 100 basis points in coming days.

/... http://www.reuters.com/article/marketsNews/idINL866297120081008?rpc=44&sp=true

[Tandalayo_Scheisskopf]

141. You gotta admire the hard-core speculators.

They sure are plucky. They are battling like madmen to keep RBOB above 2.00

PETROLEUM ($/bbl)
PRICE* CHANGE % CHANGE TIME
Nymex Crude Future 88.95 -1.11 -1.23 09:53
Dated Brent Spot 83.66 .41 .49 10:23
WTI Cushing Spot 88.25 -1.81 -2.01 08:57


PETROLEUM (¢/gal)
PRICE* CHANGE % CHANGE TIME
Nymex Heating Oil Future 248.02 -2.55 -1.02 09:53
Nymex RBOB Gasoline Future 203.35 -2.93 -1.42 09:53


NATURAL GAS ($/MMBtu)
PRICE* CHANGE % CHANGE TIME
Nymex Henry Hub Future 6.68 -.09 -1.32 09:53
Henry Hub Spot 6.75 -.13 -1.89 10/07
New York City Gate Spot 7.08 -.14 -1.94 10/07


ELECTRICITY ($/megawatt hour)
PRICE* CHANGE % CHANGE TIME
Mid-Columbia, firm on-peak, spot 54.49 -1.57 -2.80 10/07
Palo Verde, firm on-peak, spot 51.94 -1.29 -2.42 10/07
Bloomberg, firm on-peak, day ahead spot/West Coast 60.12 -.74 -1.22 10/07

[Warpy]

145. Well, that dead cat didn't bounce very far, did it?

I woke up to the news that rates had been cut and the market has already come off its rally and into negative numbers.

Now the dollar will take another dive.

Good going, GOP.

[Ghost Dog]

146. HIGHLIGHTS-France's Jouyet, EU's Barroso at European Parliament

Wed Oct 8, 2008 10:30am EDT BRUSSELS, Oct 8 (Reuters) - The following are comments by France's junior minister for Europe, Jean-Pierre Jouyet, and European Commission President Jose Manuel Barroso at the European Parliament on Wednesday.

BARROSO:

"Today I am encouraged by the determination of member states to work together ... To be frank, I am not yet satisfied, we can and we must do more."

"I urge member states to make a real effort at coordination."

"We are a union of states, not one single state."

"Member states' actions have in most cases been effective, but member states have to act based on common principles."

"I take this opportunity to welcome the measures announced by the UK."

JOUYET:

"International coordination in the context of the G7 at the end of the week was also necessary to re-establish confidence ... The G7 has to send out a clear, shared message of prime ministers, finance ministers and governors of central banks. What the central banks have just done is a very important and positive signal. Without doubt we should involve the big emerging economies in the stabilisation of markets, taking into account the international nature of this crisis. That is the meaning of the enlarged G8 the president of the European Council hopes will take place between now and the end of the year."

/. http://www.reuters.com/article/marketsNews/idINL812527420081008?rpc=44

[UpInArms]

154. opened Thread #2 - link here

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3533543&mesg_id=3533543