STOCK MARKET WATCH, Monday March 10

[ozymandius]

Source: du

STOCK MARKET WATCH, Monday March 10, 2008

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 317
DAYS SINCE DEMOCRACY DIED (12/12/00) 2605 DAYS
WHERE'S OSAMA BIN-LADEN? 2331 DAYS
DAYS SINCE ENRON COLLAPSE = 2622
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 10
Enron execs conveniently deceased = 3
Other Arrests of Execs = 54

---

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

---

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

AT THE CLOSING BELL ON March 7, 2008

Dow... 11,893.69 -146.70 (-1.22%)
Nasdaq... 2,212.49 -8.01 (-0.36%)
S&P 500... 1,293.37 -10.97 (-0.84%)
Gold future... 974.50 -2.60 (-0.27%)
30-Year Bond 4.54% -0.04 (-0.83%)
10-Yr Bond... 3.54% -0.08 (-2.24%)






GOLD, EURO, YEN, Loonie and Silver

---

PIEHOLE ALERT

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

For information on protests and other actions Citizens For Legitimate Government

---

Read more: du

[ozymandius]

1. Market WrapUp: BY TIM W. WOOD

more hundred year-old silliness

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

[TalkingDog]

25. wow that was dry. *kof* but he did mention trucks

Ain't she purdy?

[AnneD]

28. We're not...

the jet set, we're the old Cheverolet set.....

[Hugin]

100. ...

[AnneD]

105. Morning Prag...

wondering where you were. Got a theme for today...Since GhostDog is talking about how quiet it is...I'm thinking The Lion Sleeps Tonight by Robert John would be great.

We-de-de-de
De-de-de-de-de
De-we-um-um-a-way
We-de-de-de
De-de-de-de-de
We-um-um-a-way

A-wimoweh, a-wimoweh
A-wimoweh, a-wimoweh
A-wimoweh, a-wimoweh
A-wimoweh, a-wimoweh
A-wimoweh, a-wimoweh
A-wimoweh, a wimoweh
A-wimoweh, a-wimoweh
A-wimoweh, a-wimoweh

In the jungle
The mighty jungle
The lion sleeps tonight
In the jungle
The quiet jungle
The lion sleeps tonight

<snip>

Near the village
The peaceful village
The lion sleeps tonight
Near the village
The quiet village
The lion sleeps tonight

<snip>

Hush, my darling
Don't fear my darling
The lion sleeps tonight
Hush, my darling
Don't fear my darling
The lion sleeps tonight

<snip>


Now, that's a blast from the past and todays earworm. It's stuck in my ear.

[Hugin]

108. Hey... Great theme! "The Lion Sleeps Tonight"

Perfect theme.


Sorry I'm late today, but, I've been lurking over at gloomberg.com.

[AnneD]

110. Remember...

Don't stick your hand in the crazy

[Ghost Dog]

114. While we're waiting, here's GD's Barcelona-registered 1999 Peugeot Diesel:

- Photo taken in Catalunya. I'm going to bring it down (slowly, touching much ground on the way) to the Canary Islands this spring. Question is, after slowly crossing Andalucia, do I take the boat from Cadiz to the islands, or do I take the Moroccan/Saharan route (there's a new ferry now between S. Morocco and my island) - thousand miles or so):

(Beautiful photo dated March 7th from this European satellite: http://miravi.eo.esa.int/en / )

[Hugin]

115. I recently learned a breed of dog...

I'm familiar with is native to the Canary Islands.

http://en.wikipedia.org/wiki/Bichon

[Ghost Dog]

117. Indeed. History appears to say that Europeans named the islands thus

because of the native dogs: Latin Canis - Canine - (Catalan "Can") - Canarias.

There are a couple of breeds of ferocious but docile hunting dogs still native to some of the islands...

[Ghost Dog]

2. IMF Nods to Spending Spree by Asian Countries Hit by U.S. Slump

March 10 (Bloomberg) -- Asian governments are abandoning spending restraint and trying to get their consumers to do the same in their battle to overcome slowing growth.

The Philippines may discard plans to balance its budget this year as President Gloria Arroyo's government accelerates investment in public works and social services. Thailand's government is spending 1.5 trillion baht ($47 billion) to expand mass transportation and improve health care. Hong Kong is cutting taxes, and Singapore is handing out cash to its citizens.

Such policies, aimed at generating more demand at home to make up for slowing overseas sales, come with the encouragement of the International Monetary Fund, in a reversal of its long- standing push for fiscal restraint. Developing more self- sustaining domestic sources of growth may help Asia's emerging economies shift away from dependence on exports.

``There's been a long tradition of fiscal frugality in most Asian countries,'' says Hubert Neiss, the IMF's top official for the region during the 1997-98 financial crisis. ``However, at a time when global demand and exports are slowing down, it's important to boost domestic demand, consumption and investment. Asia can afford it.''

In developing Asian nations, the IMF predicts growth will decline to 8.6 percent in 2008 from an estimated 9.6 percent in each of the past two years.

Dragged Down

The region's economies, almost twice as reliant on overseas sales as the rest of the world, are being dragged down by weakness in the U.S., Japan and Europe, the markets for 60 percent of Asian shipments. Purchasing managers' indexes in China, Singapore and India already indicate slowing manufacturing growth.

``We foresee a challenging time for Asia's export environment this year,'' says Tai Hui, Singapore-based head of Southeast Asian economic research at Standard Chartered Plc.

The slowdown has been accompanied by accelerating inflation that limits the ability of Asian central banks to support growth with lower interest rates. In January, IMF Managing Director Dominique Strauss-Kahn urged governments to tackle the problem by easing tax and spending policies. That reversed the lender's traditional guidance in favor of smaller budget deficits.

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

[Ghost Dog]

3. Japan's Nikkei Falls to Two-Year Low on U.S. Jobs, Rising Yen

March 10 (Bloomberg) -- Japan's Nikkei 225 Stock Average fell to the lowest in more than two years after falling jobs in the U.S. and the strengthening yen raised concerns about profit earned in Japan's biggest export market.

Sony Corp., which gets a quarter of its electronics sales from the U.S., sank to the lowest in more than two years, while Nissan Motor Co. declined to a level not seen in five years. Power producers rose as investors sought companies perceived to be relatively unaffected by a weaker economy.

``The expectation that emerging countries will offset a rapid slowdown in the U.S. economy has receded,'' said Takanori Tanabe, head of Tokyo-based fund management company Tanabe Economic Research Institute. ``Investors are buying stocks that are insulated from economic news here and overseas, and they're shy to invest in exporters because of the rising yen.''

The Nikkei 225 Stock Average dropped 250.67, or 2 percent, to close at 12,532.13 in Tokyo, the lowest since Sept. 1, 2005. The broader Topix index lost 23.38, or 1.9 percent, to 1,224.39. About five companies fell for each that gained on the benchmark.

U.S. payrolls fell the most in five years, the Labor Department said on March 7, after economists predicted an increase. The dollar traded as low as 101.98 yen in Tokyo, the lowest since January 2000. A weaker dollar cuts the value of repatriated profit from the U.S. for overseas companies.

Sony, the world's second-biggest maker of consumer electronics, tumbled 5 percent to 4,380 yen, the lowest since December 2005. Nissan, which gets 44 percent of its operating profit from North America, dived 3.6 percent to 863 yen, the weakest since April 2003. Toyota Motor Corp., Japan's biggest carmaker, slid 2.4 percent to 5,200 yen.

One Yen Matters

A 1 yen change against the dollar affects Sony's operating profit by 6 billion yen ($59 million) a year, the company said.

The Nikkei had a correlation of 0.93 with the yen in the past six months, according to data compiled by Bloomberg. A value of one would mean the two always rise and fall in tandem.

Sumitomo Metal Mining Co., Japan's biggest gold producer, plummeted 11 percent to 1,989 yen, leading a decline in the Topix Nonferrous Metals Index. Gold for April delivery retreated to as low as $972.00 an ounce from a record $995.20 on March 5.

/... http://www.bloomberg.com/apps/news?pid=20601080&refer=a...

[Ghost Dog]

10. China Rail Construction Has Worst IPO Gain Since 2006

March 10 (Bloomberg) -- China Railway Construction Corp., builder of more than half the nation's railroads, had the worst mainland trading debut since 2006 on concern the government will increase measures to cool the economy.

The stock rose 28 percent to close at 11.64 yuan in Shanghai, compared with its offer price of 9.08 yuan. Beijing-based China Railway Construction last week raised $5.5 billion in Shanghai and Hong Kong, with shares in Hong Kong due to start trading on March 13.

China's government has raised interest rates and curbed access to credit to rein in inflation, helping drive down the CSI 300 Index by 24 percent from its Oct. 16 record. China Railway's debut compares to an average tripling in the stock of the 20 companies that began trading in Shanghai and Shenzhen this year.

``It's shy of previous spectacular gains,'' said Mona Chung, who helps manage more than $2 billion at Daiwa Asst Management Ltd. in Hong Kong. ``Investors have already factored in that spectacular gains won't be a guarantee anymore.''

Today's is the smallest first-day gain for a mainland China- traded stock since Nov. 30, 2006, when Henan Xinye Textile Co. rose 24 percent in Shenzhen.

Larger rival China Railway Group Ltd.'s Shanghai-traded shares have fallen 30 percent from their Jan. 7 peak after gaining 69 percent in their Dec. 3 debut.

Rail Spending

The two rail companies are raising funds in the mainland and in Hong Kong to buy equipment and boost capacity as China spends $800 billion on upgrading transport infrastructure through 2020. The country will expand its railway system by almost a third during the same period, the government has said.

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

[Ghost Dog]

5. Asia stocks at 7-week low as global fears build

HONG KONG (Reuters) - Asian stocks hit their lowest in almost seven weeks on Monday, while the dollar was near a record low against the euro and an eight-year low against the yen after weak U.S. employment data fuelled recession fears.

...

Inflationary pressures remain a concern around Asia.

Data on Monday showed South Korean producer prices rose 6.8 percent in February from a year before, the biggest gain in over three years, while Chinese producer prices were up 6.6 percent.

Oil prices kept near a record high despite the worsening global economic outlook, held up by cold weather in parts of the United States, while gold moved back above $975 an ounce.

"We're at a pretty terrible place where the economic news continues to be bad," said Adnan Kucukalic, equity strategist at Credit Suisse. "Our belief is that this slowdown is going to be across the globe. If the U.S. slows, of course the entire world slows. Things look pretty grim in the next three months or so."

The MSCI measure of Asian stocks outside Japan (.MIAPJ0000PUS) fell 2.8 percent by 2:50 a.m. EDT after hitting its lowest since January 23.

The prospects of a U.S. recession and worsening global credit conditions have hit Asian stocks hard this year, with the MSCI index down 14 percent as of last week, worse than the 12 percent fall in the Standard & Poor's S&P 500 (.SPX) or the 10 percent drop in the Dow Jones industrial average (.DJI).

As stocks lurched lower, Asian bonds extended their gains, with Japanese government bond futures climbing to a 2-1/2-year high. March futures rose 0.45 point to 139.50.

/... http://news.yahoo.com/s/nm/20080310/bs_nm/markets_globa... ;_ylt=ArTCJzj7nbaeUIJc1.nY9nG573QA

edit. Actual data:

^AORD All Ordinaries 5,275.70 1:11AM ET Down 93.20 (1.74%)
^SSEC Shanghai Composite 4,146.30 3:00AM ET Down 154.22 (3.59%)
^HSI Hang Seng 22,705.05 5:59AM ET Up 203.72 (0.91%)
^BSESN BSE 30 15,923.72 6:59AM ET Down 51.80 (0.32%)
^JKSE Jakarta Composite 2,527.87 6:30AM ET Down 128.59 (4.84%)
^KLSE KLSE Composite 1,173.22 5:02AM ET Down 123.11 (9.50%)
^N225 Nikkei 225 12,532.13 3:00AM ET Down 250.67 (1.96%)
^NZ50 NZSE 50 3,547.75 12:31AM ET Down 10.51 (0.30%)
^STI Straits Times 2,836.59 5:10AM ET Down 29.69 (1.04%)
^KS11 Seoul Composite 1,625.17 5:03AM ET Down 38.80 (2.33%)
^TWII Taiwan Weighted 8,299.37 1:46AM ET Down 232.01 (2.72%)

http://finance.yahoo.com/intlindices?e=asia

[Ghost Dog]

6. Malaysian Stocks Fall Most in Decade on Abdullah's Poll Losses

March 10 (Bloomberg) -- Malaysian stocks fell the most in a decade after the ruling coalition's worst election result in fifty years put Prime Minister Abdullah Ahmad Badawi's position in doubt and raised questions about his spending program.

Trading on the Kuala Lumpur stock exchange was halted for an hour after the Kuala Lumpur Composite Index tumbled by the 10 percent limit as opposition parties took control of almost half the states contested in March 8 elections.

Malaysian Resources Corp. and UEM World Bhd. -- among companies building roads and bridges -- led declines on concern the government's 200 billion-ringgit ($63 billion) spending plan may be held up. State banks including Bumiputra-Commerce Holdings Bhd. sank amid demands for Abdullah to quit.

``An element of leadership uncertainty is scaring investors as Malaysia has been perceived as politically stable for so long,'' said Jason Lee, who helps oversee $1.4 billion at JMF Asset Management in Kuala Lumpur. ``The risk is that projects will be delayed as there'll be more scrutiny from the opposition.''

The ruling National Front coalition, which has been in office since Malaysia gained independence in 1957, lost the power to change the constitution unopposed when it was denied a two-thirds majority for the first time since 1969. The coalition has won 140 of 222 parliamentary seats, while the opposition clinched 82, according to the latest data from the Election Commission. Abdullah said yesterday he won't resign because he has the support of his party's leaders, according to the state-owned Bernama news agency.

/. http://www.bloomberg.com/apps/news?pid=20601080&refer=a...

[Ghost Dog]

4. Europe shares flat as oils, M&A buffer growth worries

Mon Mar 10, 2008 7:14am EDT
LONDON, March 10 (Reuters) - European stocks pare losses on Monday, as strength in oil stocks and talk of M&A activity helped shares cushion worries that the U.S. economy is on the brink of recession.

At 1109 GMT, the FTSEurofirst was little changed at 1,269.95 points having opened lower and after falling to its lowest closing level in more than six weeks in the previous session.

Oil stocks were the top performers as crude prices remained below $105 a barrel but within sight of an all-time high. BP (BP.L: Quote, Profile, Research) was up 2.1 percent, Royal Dutch Shell (RDSa.L: Quote, Profile, Research) put on 1 percent and Total (TOTF.PA: Quote, Profile, Research) rose 0.4 percent.

Meanwhile HSBC (HSBA.L: Quote, Profile, Research) jumped more than 2 percent after reports the global bank will try to raise its slice of China's fifth-largest lender beyond 20 percent when regulations allow it. HSBC declined to comment.

But worries over the global growth outlook, after data on Friday showed the U.S. labour market was struggling, kept miners under pressure. Rio Tinto (RIO.L: Quote, Profile, Research), BHP Billiton (BLT.L: Quote, Profile, Research) and Anglo American (AAL.L: Quote, Profile, Research) were down between 2.1 and 3.9 percent.

/. http://www.reuters.com/article/marketsNews/idCAL1020302...

[Ghost Dog]

13. German exports climbed by 9 percent in January, defying gravitational pull of the strong euro

BERLIN (AP) - German exports were up 9 percent in January, showing healthy growth despite the euro's climb to record levels against dollar, government figures showed Monday.

The euro's persistent strength against the dollar threatens to make European exports less competitive overseas. Still, Monday's figures showed that exports to non-European Union countries were up 11.5 percent in January at 30 billion euros ($46.1 billion).

Germany, which has Europe's biggest economy, exported goods and services worth 84.4 billion euros ($129.6 billion) in January, up from 77.4 billion euros a year earlier, the Federal Statistics Office said.

Imports increased by 10.2 percent, rising to 67.3 billion euros ($106.4 billion) from 61 billion euros.

The country's trade surplus rose to 17.1 billion euros ($26.3 billion), beating the 16 billion euros ($24.6 billion) forecast of economists surveyed by Dow Jones Newswires. The surplus stood at 10.7 billion euros in December and 16.4 billion euros in January last year.

Germany's exports grew faster than its EU partners, where trade grew a collective 7.7 percent to 54.3 billion euros ($83.4 billion).

/. http://www.newspress.com/Top/Article/article.jsp?Sectio...

[Ghost Dog]

14. EU current account deficit 19 bn euro

BRUSSELS, March 10 (KUNA) -- The European Union external current account recorded a deficit of 19 billion euro in the fourth quarter of 2007, as compared with a deficit of 21.5 bn in the fourth quarter of 2006 .
In the fourth quarter of 2007, the EU external balance of trade in services recorded a surplus of 26 bn euro, as compared with a surplus of 17.9 bn in the fourth quarter of 2006, according to figures released Monday by Eurostat, the EUs Statistical Office.

/. http://www.kuna.net.kw/NewsAgenciesPublicSite/ArticleDe...

[Ghost Dog]

15. UBS warns euro will be pushed close to breaking point

Europe's monetary union may be tested to near breaking point as the economic downturn engulfs the bloc's southern tier, and German investors cut off a crucial source of foreign funding, according a hard-hitting report by the Swiss bank UBS.

"The coming two years are likely to prove the most testing time for the coherence of the single currency to date," said Meyrick Chapman, the bank's Europe strategist. "We expect that it will emerge unbroken. There is too much political and economic capital invested to break the project. However, adjustments are likely to be severe," he said.

UBS warned of a "funding freeze" for countries with very high current account deficits, such as Spain, Portugal, and Greece that have come to rely on in massive inflow of foreign money to plug the gap. Spain has built up the biggest cross-border liabilities with foreign debts of $362bn (£180bn), or 26pc of GDP. Italy has accumulated $275bn, Greece $129bn, Ireland $123bn, and Portugal $98bn.

Much of the funding has come from German banks and pension funds. They have shown a voracious appetite for cedula (covered bonds) and other forms of Spanish debt from 2005 to 2007. The yield was higher than stodgy offerings at home. The Germans have since brought down the guillotine.

"Following the market dislocation in July 2007, German buyers were almost entirely absent from the Spanish market," UBS said. The cut-off has left some Spanish borrowers starved of funds. Many have instead turned to the European Central Bank for temporary funding, using unsold mortgage as collateral for loans at the Frankfurt window. This is becoming a political issue. "It may raise awkward questions within the ECB Council," the bank added.

Under EU rules the funding is supposed to be "limited and temporary". Spain's banking association insists that the country's lenders are still in good health, with a solid capital base. The investor flight from the region has already become visible in the surging yield spread between German 10-year Bunds and equivalent Latin bloc bonds. After remaining steady in the mid-20s for several years, the spreads began edge up last summer and finally exploded this week. They reached 70 basis points for bonds from Italy and Greece, two countries with towering public debts over 100pc of GDP. "It is certainly a wake-up call to be cautious about fiscal policy," said ECB's president, Jean-Claude Trichet.

/... http://www.telegraph.co.uk/money/main.jhtml?xml=/money/...

[Ghost Dog]

76. Europe shares hit day's lows as banks, miners weigh

Mon Mar 10, 2008 3:54pm GMT
LONDON, March 10 (Reuters) - European shares extended falls to hit their day's lows in late trade on Monday, as banks slipped on fears of more losses, driven by rumours in the United States, and mining stocks fell on economic concerns.

At 1546 GMT, the FTSEurofirst 300 index of top European shares was down 1.2 percent at 1,254.40, its low for the day.

U.S. stocks also hit their session lows, as traders cited rumours that a Wall Street firm had liquidity concerns.

Banks were weaker as Moody's downgraded Bear Stearns' (BSC.N: Quote, Profile, Research) alt-A deals. UBS (UBSN.VX: Quote, Profile, Research) fell 4 percent, BNP Paribas (BNPP.PA: Quote, Profile, Research) fell 2.6 percent, while insurer Axa (AXAF.PA: Quote, Profile, Research) fell 3 percent.

Among miners, Antofagasta (ANTO.L: Quote, Profile, Research) and Kazakhmys (KAZ.L: Quote, Profile, Research) fell 6.5 percent.

/. http://uk.reuters.com/article/eurMktRpt/idUKL1081195720...

[Ghost Dog]

88. Spain's victorious Socialists turn to economy

MADRID (Reuters) - Fresh from a second consecutive election victory, Spain's Socialists began to prepare a public works programme on Monday to reinvigorate a flagging economy.

Prime Minister Jose Luis Rodriguez Zapatero, who boosted his tally of parliamentary seats but once again fell short of an absolute majority, said he would approach smaller parties to forge alliances.

...

Zapatero on Sunday promised to govern for the poor, women and the young, continuing the progressive note of his first term, during which he legalised gay marriage and made divorce easier in the once deeply Roman Catholic country.

SPENDING FOR GROWTH

But with Spain's long economic boom slowing sharply since the global credit crunch bit late last year, his first priority will be to put the lid on unemployment, which rose by 50,000 in February alone to 2.3 million.

"We have the confidence that comes from a budget surplus," said Labour Minister Jesus Caldera, explaining that the government's strong fiscal position meant it would have little difficulty funding public works programmes.

"They know they have to do something quickly ... The dark clouds have gathered, the question is how hard it will rain," said Martin Van Vliet, chief economist at ING Amsterdam.

The government hopes increased spending will keep economic growth at 3 percent after 3.8 percent expansion last year, but some private economists, worried by high levels of debt in both households and firms, fear it could fall as low as 2 percent.

Analysts also point to the long-term economic problems of a country that for years has relied on a construction boom and ballooning private sector debt for growth.

The private debt load is reflected by a current account deficit running at nearly 10 percent of gross domestic product.

Economists say Spain badly needs to make its exports more attractive and encourage inward investment in sectors other than property, notably by improving productivity as well as infrastructure and education.

/... http://uk.reuters.com/article/topNews/idUKL104420692008...

[Ghost Dog]

98. Europe stocks fall to lowest close since June '06

LONDON, March 10 (Reuters) - European shares ended sharply lower on Monday as worries intensified that a credit crisis would lead to more losses at banks and spread wider, slowing economies and hurting demand for metals.

The FTSEurofirst 300 index of top European shares ended unofficially 1.15 percent lower at 1,254.76 points, its lowest close since June 2006.

Banks and mining stocks were the heaviest weights on the pan-European index, with UBS (UBSN.VX: Quote, Profile, Research) falling 4 percent, BNP Paribas (BNPP.PA: Quote, Profile, Research) 2.7 percent and Credit Suisse (CSGN.VX: Quote, Profile, Research) 3.2 percent.

The top three drags on the index were mining stocks Rio Tinto (RIO.L: Quote, Profile, Research), BHP Billiton (BLT.L: Quote, Profile, Research) and Anglo American (AAL.L: Quote, Profile, Research), which fell between 4 and 6 percent, driven by a fall in copper prices.

"People are concerned at signs that the financial system is not repairing itself, and that earnings outside the financial sector are now going to get hurt," said John Haynes, strategist at Rensburg Sheppard Investment Management.

"Logically hedge funds should be the next victim and people who deal with hedge funds, the prime brokers, those who supply capital."

"Interest rate cuts are not enough -- this is beginning to go beyond the Fed," he said.

/... http://www.reuters.com/article/marketsNews/idCAL1082121...

^ATX ATX 3,671.08 12:35PM ET Down 18.05 (0.49%)
^BFX BEL-20 3,595.62 1:07PM ET Down 39.44 (1.08%)
^FCHI CAC 40 4,566.99 1:11PM ET Down 51.97 (1.13%)
^GDAXI DAX 6,448.08 12:45PM ET Down 65.91 (1.01%)
^AEX AEX General 427.96 1:07PM ET Down 7.13 (1.64%)
^OSEAX OSE All Share 467.54 11:29AM ET Down 11.38 (2.38%)
^MIBTEL MIBTel 24,363.00 12:40PM ET Down 310.00 (1.26%)
^IXX ISE National-100 85.46 1:29PM ET Down 0.80 (0.93%)
^SMSI Madrid General 1,371.73 12:40PM ET Down 5.46 (0.40%)
^OMXSPI Stockholm General 302.76 12:44PM ET Down 3.82 (1.25%)
^SSMI Swiss Market 7,055.01 12:31PM ET Down 119.14 (1.66%)
^FTSE FTSE 100 5,629.10 12:35PM ET Down 70.80 (1.24%)

[CGrantt57]

7. IPO Question

I read this column everyday, just to keep an eye on things. I'm not invested in the market, but, I've been thinking about getting in.

Especially since Visa is going IPO around March 17th.

Sounds like a winner. How do I get in on it? Better yet, should I get in on it?

Any advice is appreciated.

Regards,

[Robbien]

24. My thoughts

Almost all investors are sitting on the sidelines. Speculators are running the market these days.

Other bubbles are getting ready to burst. High on that list is credit card debt.

No IPOs have been initiated since last fall (due to few investors/many speculators).

You want to get in, you are going to be playing with a very tough crowd.

[AnneD]

34. I think it was Ozy once.....

that warned once about catching falling knives (in relation to buying a house in the bubble phase). I think that advice holds with Visa at the moment. IPO are generally overpriced and go down after their initial offering. I'm a bargain shopper and I tend to wait out some of these things.

But this brings up the chance to speak on my pet subject-socially responsible investing. There are many ways to make a buck-but do you REALLY want to invest in a credit card company? They make their profits by cheating, lying, and out right swindling fellow human beings. With all the crap they have been pulling lately, I am sure they will be hit with fines and regulations by Congress. I think their IPO is their attempt to sucker others in to help pay for what awaits them.

I am not being a Pollyanna here, but I think those companies that work for our betterment is less likely to intentionally do wrong. MOHO, but I always try to invest my principals. I might have made more money, but I wouldn't have been a good steward.

Just my $0.02

[wordpix]

37. I'm with you, AnneD---and my social investing hasn't done bad over the years

and now I'm investing in alternative energy. Not for the faint-hearted, but there's certainly a chance for growth once we get the war profiteer crowd out of office.

[AnneD]

58. My socially responsible funds .....

have, in the long run, always out preformed WS. I invested in them when they first started up and have been well pleased with my return on investment.

[fasttense]

35. Good advice from Robbien

I've heard that stocks are very risky lately. I heard about VISA's IPO and thought it sounded good too, but I'm afraid stocks will tank. Some of the more intelligent economist have been saying to invest in gold coins, instead. They say you want to get something that is very liquid and safe.

What do I know. I took a killing in the dotcom bubble.

[ozymandius]

43. Right on!

Damn good advice.

[aquart]

81. Why is anyone talking about IPOs?

Have the rules changed? They're apportioned to favored clients with a heavy trading history as favors. Has that changed? The only way normal investors get in is in the aftersale, when it's already too late unless you have really enormous faith in the future of the stock.

I know there were many complaints about that so did they change the rules?

[ozymandius]

41. My two cents, CGrantt57.

Here at the Stock Market Watch, we like to avoid giving investment advice. But with respect to those who have responded to this query, they do so in good faith to this tenet. People have asked the question: how can I invest in a way that fits my political/social ideals? AnneD leads you to this prospect.

Now, for my two cents worth. I believe that Citi is looking to socialize its losses. More writedowns are coming. And I have reason to believe that Citi is going to get hit hard. The sovereign wealth funds are tapped out. There is only a limited amount that the Fed can do to help Citi without becoming a controlling partner in its operations (anathema to the role of the Fed). So the most available source of income comes from the public sector.

The thing about going public: Citi will have to open its books to public scrutiny. To me, that could be like opening Pandora's Box for the initial investor.

Caveat emptor, as always.

[CGrantt57]

51. I appreciate all the advice.

Especially the info about Citi looking to socialize its losses. They can do so without my money, thank you very much.

I'm working very hard to eliminate my credit card debt, build up my savings, and invest in my retirement through a money-market fund they offer where I work. It's a tough slog, but, in 12 months, I should be debt free with $5000 in the bank.

We are not upside-down in our house (Owe 150K, valued at 350K)and after the lone kid goes to college, we plan to downsize and find a nice townhouse closer to where we work to save on fuel costs.

Fortunately, I work in a recession-proof industry (teaching) and I have tenure.

I hope others do as well surviving in the coming calamity.

Regards,

[AnneD]

66. Thanks, Ozy....

Your words are gold.

I have found the advice and information on the thread priceless. It has been a wonderful resource.

I listen to Wall Street Journal Week, and assorted other shows. This thread is a great counter balance and the folks here have always been ahead of the curve. My only wish is that I had known (or we had this place) before the dot com bust. I could have saved a pretty penny. You have already save me a bundle this time around.

Thanks Ozy.

[MilesColtrane]

82. Diversify.

I really like Scott Burns' approach of avoiding managed funds, spreading your investments across different sectors then basically forgetting about them. (Of course he does recommend rebalancing at each year's end to gradually reduce your exposure to equities as your retirement date approaches.)

http://assetbuilder.com/blogs/scott_burns/archive/2008/...

This works for me, but may not work for you as different folks have different needs, time frames, and tolerance for risk.

[ozymandius]

8. Today's Report

10:00 AM Wholesale Inventories Jan
Briefing Forecast 0.6%
Market Expects 0.5%
Prior 1.1%

http://biz.yahoo.com/c/e.html

[Pale Blue Dot]

42. Wholesale inventories 0.8% nt

[ozymandius]

80. U.S. wholesale inventories, sales up in January

WASHINGTON (Reuters) - U.S. wholesale inventories rose 0.8 percent in January, while sales leapt 2.7 percent, the largest increase in nearly four years, the Commerce Department said on Monday.

Strong durable goods and farm product sales helped spur the biggest jump in wholesale sales since a 3.3 percent rise in March 2004. The overall sales increase in January came after a 0.5 percent drop in December, revised from a previously reported 0.7 percent decline.

Analysts polled by Reuters had expected wholesale inventories to increase only 0.4 percent, after a 1.1 percent unrevised gain in December. Their value in January was $414.8 billion and sales stood at $387.7 billion.
.....

The inventory to sales ratio, or how long it would take to sell stocks at the current pace, fell to 1.07 months' worth in January, matching the record low set in November. It was 1.09 months' in December.


http://news.yahoo.com/s/nm/20080310/bs_nm/usa_economy_i...

[Roland99]

9. MBIA asks Fitch to cease and desist on its IFS Ratings

MBIA: Fitch's IFS Ratings Can Cause Serious Volatility For Company
http://www.marketwatch.com/news/story/mbia-fitchs-ifs-r...

MBIA Inc. expects $200 million in mark-to-market losses from its credit derivative business, and said that Fitch Ratings' insurer financial strength ratings can cause serious volatility in how the company is viewed in the equity markets. In a letter from Chairman and Chief Executive Jay Brown, the company said it was an appropriate time to request that Fitch no longer provide its IFS ratings. On Friday, MBIA asked Fitch Ratings to withdraw insurer financial strength ratings on six of its units. MBIA said it is working to improve its capital margins and strengthen its Triple-A ratings, but added that it was a good decision to exit the credit derivative business. The company said it has "very little idea why Fitch's capital model produces the charges it does, and why it can change so rapidly at any point in time when there is no obvious change in our circumstance or in the credit market at large.

uhhhh...

[Robbien]

31. Heh

The fact that MBIA even sent this letter says a lot about how much a ruse the whole credit rating system is.

[ozymandius]

48. Jeebus - what a ruse indeed.

The banks pay the rating agencies for their review.

[Roland99]

96. Latest headline blurbs from Fitch (this is getting good)

1:40 Fitch asks if MBIA seeking equal S&P, Moody's concessions
1:37 Fitch: MBIA requested destruction of key portfolio info
1:35 Fitch willing to waive rating fee for MBIA
1:29 Fitch sees conflict in MBIA partial rating withdraw request
1:28 Fitch 'considering' MBIA request to withdraw IFS ratings

[UpInArms]

11. dollar watch

ttp://

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

Last trade 72.946 Change -0.073 (-0.10%)

Federal Reserve Is On High Alert

http://www.dailyfx.com/story/bio1/Federal_Reserve_Is_On...

Non-farm payrolls dropped for the second month in a row but interestingly enough, that was not the biggest story of the day. Instead, the Federal Reserve is on high alert, having announced plans to pump 200 billion dollars into the banking system to "address liquidity pressures in the funding markets.” Although they denied that this was related to the weak jobs report, the timing is certainly suspect. The announcement may have been aimed at preventing a non-farm payrolls induced collapse in the stock market, which worked for about an hour before stocks completely reversed all of its gains. Whether this is true or not, the one thing that is certain is the fact that the Federal Reserve is very worried about the current state of the US economy and the financial markets. Today’s payroll numbers tell us that the US economy is already in a recession and it will just be a matter of time before retail sales turn negative as well. The only reason why the unemployment rate dropped was because prospective employees were so discouraged about the outlook of the labor market that they simply gave up. This seals the fate for the Fed rate decision in less than 2 weeks - they will have no choice but to cut interest rates by 75bp. In the coming months, we expect the labor market to worsen which will force the Fed to bring interest rates down to as low as 1.50 percent. Two back to back months of job losses is still nothing compared to the 15 consecutive months of negative job losses between 2001 and 2002. In our non-farm payrolls preview, we said that as much as 100k jobs could have been cut from US payrolls last month. If your strip out the contribution of government jobs to the February report, the private sector actually reported a net job loss of -101k. Retail sales are the big event risk for the US dollar next week. 4k jobs were cut from the retail sector and according to Wall Street Journal, sales at most retailers other than discounters have been weak. With gas prices skyrocketing, foreclosures hitting a record high, the labor market weakening and confidence at a record low, discretionary spending may be the last things on the consumer’s mind. In addition to retail sales, we are also expecting the trade balance and consumer price report. Both numbers should be dollar positive because the weakness of the greenback should help to improve the trade deficit while record high commodity prices will boost inflation.

...more...

Dollar - Close To Pessimistic Extreme?

http://www.dailyfx.com/story/topheadline/Dollar___Close...

The one way price action in the EURUSD continued unabated this week, as the pair sliced through the 1.5200, 1.5300 and 1.5400 figures. However, even Friday’s worse than expected NFP numbers could not bump it over the 1.5500 hurdle. Non-Farm payrolls were as ugly as many analysts thought they would be with the private sector losing more than 100K jobs. The unemployment rate declined to 4.8% from 5.0% expected, but it was Pyrrhic victory as the number reflected the fact that many workers gave up looking for a job rather than any tightening of labor conditions.
With NFP registering its second consecutive month of job losses, the US economy edged closer to a recession with the news nearly guaranteeing at least a 50bp point cut by the Fed. In fact the markets are now factoring more than 80% chance of 75bp cut from the Fed. Yet despite the incessant torrent of bad news the EURUSD actually sold off in the classic ‘buy the rumor, sell the news” dynamic. After climbing in a near uninterrupted fashion from 1.4700, the pair was due for a pause as euro longs booked massive profits.

The retrace in the EURUSD however is likely to be relatively shallow as the 1.500o level which acted as such serious resistance for several months, will now most likely act as support. On the economic front there is little to help the dollar. The two key events next week Trade Balance and Retail Sales are unlikely to provide much hope for dollar bulls. The Trade Balance deficit is expected to expand once as the cost of higher oil imports will offset any gains in exports. Retail Sales, too can disappoint given this week’s bleak employment picture. In short, while the dollar remains grossly oversold, there appears to nothing on the horizon to turn trader sentiment just yet.



...more...

[Ghost Dog]

23. Euro= USD 1.536, GBP 0.761, CHF 1.573 and JPY 157.5 at this time

[ozymandius]

52. Krugman: What’s Ben doing? (Very wonkish)

http://krugman.blogs.nytimes.com/2008/03/08/whats-ben-d... /

The financial crisis seems to have entered its third wave. Panic in August, then partial recovery thanks to lots of money thrown at the system by the Fed. Renewed panic late fall, then partial recovery thanks to even more money thrown in, especially the Temporary Auction Facility. And panic has set in yet again:

-see chart-


So the Fed is throwing another wave of money in, via the TAF and also additional loans to banks. All this lending is backed by collateral: the banks are setting aside various stuff, but probably mainly mortgage-backed securities.

How do we think about all this? I was trying to straighten out my own thoughts, and realized — after reading Steve Waldman — that the old framework I learned back in grad school for thinking about sterilized intervention in the foreign exchange market applies pretty well.

The basic idea (which goes back to James Tobin) involves thinking of equilibrium in the markets for assets, while putting the question of how all this interacts with the markets for goods and labor temporarily off to one side. So, in this case, imagine that there are three assets: money (really monetary base), Treasury bills, and private securities (think mortgage-backed). There are three separate market-clearing conditions, which can be represented by the lines SS, TT, and MM below; the interest rates on T-bills and private securities have to adjust so as to clear all three. But if any two markets clear, the third one does too — Walras’s Law, for the nerds.
.....

But now the Fed faces a new problem: the private sector is fleeing from private securities that are seen as risky/illiquid, and seeking safe haven in T-bills. Hence rising interest rates on securities even as T-bill rates fall: -graph-

And the Fed is afraid that this will lead to a vicious spiral of financial collapse. So it’s responding by doing something different from normal monetary policy: by lending to banks with securities as collateral, it is arguably in effect buying securities other than T-bills. Meanwhile, it’s sterilizing the effects on the monetary base. As Jim Hamilton says, the Fed is conducting monetary policy on the asset side of its balance sheet — shifting from T-bills to less liquid, and arguably riskier assets. The effect, looks like this: -scary graph-

.....

OK, this is just like the way you analyze sterilized intervention in currencies. And the usual problem with such intervention applies: the financial markets are so huge that even big interventions tend to look like a drop in the bucket. If foreign exchange intervention works, it’s usually because of the “slap in the face” effect: the markets are getting hysterical, and intervention gives them a chance to come to their senses.

[Ghost Dog]

54. Dollar steadies vs euro on Trichet, falls vs yen

Mon Mar 10, 2008 1:22pm GMT
NEW YORK, March 10 (Reuters) - The dollar fell against the yen on Monday as fear of a U.S. recession hit equity prices but it firmed against the euro after Europe's top monetary official said he was worried about excessive exchange rate moves.

...

Though a package of Federal Reserve liquidity-boosting measures helped the greenback rebound into the weekend, risk aversion returned on Monday as investors sent Japan's benchmark Nikkei stock index .N225 to its lowest in 2-1/2 years.

That sent the dollar down 0.4 percent to 102.25 yen <JPY=> after hitting an eight-year low of 101.41 yen last week and down 0.2 percent to 1.0230 Swiss francs <CHF=>.

After chalking up more than a week of sharp gains that lifted it to a lifetime high of $1.5459, the euro stabilized on Monday and moved lower after European Central Bank President Jean-Claude Trichet said the ECB was concerned about "excessive exchange rate moves."

He told reporters in Switzerland that "excessive volatility and disorderly movement in exchange rates are undesirable for economic growth," prompting traders to sell the euro.

/... http://uk.reuters.com/article/usDollarRpt/idUKN10457726...

[Ghost Dog]

56. Euro= USD 1.535, GBP 0.761, CHF 1.570 and JPY 157.5 at this time

[Ghost Dog]

122. Euro= USD 1.534, GBP 0.763, CHF 1.565 and JPY 156.7 at this time

Yen, sure. But the rapidly increasing strength of low-yielding Swiss Francs (CHF) is very significant, IMHO.

[Ghost Dog]

147. Euro= USD 1.537, GBP 0.764, CHF 1.566 and JPY 156.3 at this time

Japan stocks fall on U.S. recession worries
Mon Mar 10, 2008 8:09pm EDT
(Updates with opening)

TOKYO, March 11 (Reuters) - Japanese stocks fell on Tuesday, with exporters like Honda Motor Co Ltd (7267.T: Quote, Profile, Research) sold on deepening worries about a U.S. recession and the yen's gains against the dollar.

Financial shares like Sumitomo Mitsui Financial Group (8316.T: Quote, Profile, Research) were bid down amid mounting credit concerns.

As of 0002 GMT, the benchmark Nikkei .N225 was down 1.1 percent at 12,395.53. The broader TOPIX index also shed 1.1 percent to 1,211.45.

/. http://www.reuters.com/article/marketsNews/idCATKB00297...

The stenographers will have to think up a new headline meme pretty soon...

[DemReadingDU]

12. JPM margin call warning. "The Game is Over". Here's why.

If you missed this posting Sunday by GliderGuider , it is an eye-opener. It explains the importance behind the JPMorgan margin call of $325 billion.

http://www.democraticunderground.com/discuss/duboard.ph...

[ozymandius]

45. Everyone needs to read this.

Shocking. This coming from someone who is difficult to shock.

[antigop]

64. Reminds me of the Marathon Man: "Is it safe?" n/t

[DemReadingDU]

16. Whitney: Sorting Through The Rubble in Post-Bubble America

3/7/08 Sorting Through The Rubble in Post-Bubble America By Mike Whitney

some snippets

The hurricane that began with subprime mortgages, has swept through the credit markets wreaking havoc on municipal bonds, hedge funds, complex structured investments, and agency debt (Fannie Mae). Now the first gusts from the Force-5 gale are touching down in the real economy where the damage is expected to be widespread. The Labor Department reported on Friday that US employers cut 63,000 jobs in February, the biggest monthly decline in five years. The cut in payrolls added to the 22,000 jobs that were lost in January. 52,000 jobs were cut in manufacturing, while 331,000 have been lost in construction since September 2006.

So, what does it all mean? Unemployment is up, productivity is down, inflation is increasing, the dollar is underwater, commercial real estate is in the tank and the country is sliding inexorably into recession.

THE DEEPEST AND MOST RAPID DOWNSWING SINCE THE GREAT DEPRESSION

Not only will the impending recession be six times more severe; it will also be the death-knell for America's consumer-based society. Attitudes towards spending have already changed dramatically since prices on food and fuel have increased. That trend will only grow as hard times set in.

A more effective strategy would be to try to tilt the economy away from consumption and toward exports and long-needed investments in infrastructure...Fiscal initiatives should be directed at laying the groundwork for future growth, especially by upgrading the nation’s antiquated highways, bridges and ports.” (“Double, Bubble Trouble” Stephen Roach, New York Times)

more...
http://www.informationclearinghouse.info/article19484.h...


3/5/08 Double Bubble Trouble by Stephen Roach
http://www.nytimes.com/2008/03/05/opinion/05roach.html ?

[donkeyotay]

93. That would be a happy day. Imagine our government working for us.

The Federal Reserve and Washington policymakers are still stuck in the past trying to revive consumer spending by creating another equity bubble with low interest rates and their $600 per person “stimulus” giveaways. This is the wrong approach and its bound to fail. The Greenspan era is over. Let's put it to rest once and for all. No more bubbles. No more phony debt-generated prosperity. No more over-leveraged, complex Ponzi-scams that end in tragedy. Roach points the way forward; invest in infrastructure and environmentally-friendly technologies, rebuild the economy from the ground up, reestablish fiscal sanity and minimize deficit spending, put America back to work making things that people use and that improve society, and (as Roach says) “help the innocent victims of the bubble’s aftermath — especially lower- and middle-income families”. And, most importantly, abolish the Federal Reserve and give the control of our money back to our elected representatives in Congress. That is the only way to put America's economic future back in the hands of the people.

http://www.informationclearinghouse.info/article19484.h ...

The only thing I would add is we also have to put control of Congress back into the hands of the people.

[AnneD]

17. Bank crackdown sends hedge funds scrambling

The hedge-fund industry is reeling from its worst crisis in a decade as banks are now demanding more money pledged to support outstanding loans even when the investment is backed by the full faith and credit of the United States.

Since Feb. 15, at least six hedge funds, totaling more than $5.4 billion, have been forced to liquidate or sell holdings because their lenders -- staggered by almost $190 billion of asset writedowns and credit losses caused by the collapse of the subprime-mortgage market -- raised borrowing rates by as much as 10-fold with new claims for extra collateral.

While lenders are most unsettled by credit consisting of real estate and consumer debt, bankers are now attempting to raise the rates they charge on Treasuries, considered the world's safest securities, because of the price fluctuations in the bond market.

"If you have leverage, you're stuffed," said Alex Allen, chief investment officer of London-based Eddington Capital Management Ltd., which has $195 million invested in hedge funds for clients. He likens the crisis to a bank panic turned upside down with bankers, not depositors, concerned they won't get their money back.

<Big snip>

http://www.chron.com/disp/story.mpl/business/5606059.ht...

It's worth it to read about the collateral haircuts....Some folks are getting scalped it seems.

[MilesColtrane]

89. Maybe if Hillary wins, she can get Chelsea a gig in the event that Avenue Capitol bites it.

[AnneD]

18. Survey: Gasoline prices rise 9 cents in past 2 weeks

CAMARILLO, Calif. — A survey says the national average price for gasoline rose 9 cents over the last two weeks.

The average price of self-serve regular gasoline on Friday was $3.19 a gallon, mid-grade was $3.31 and premium was $3.42, according to the Lundberg Survey of 7,000 stations nationwide released Sunday.

Of the cities surveyed, the cheapest price was in Cheyenne, Wyo., where a gallon of regular cost $2.95, on average. The highest was in San Francisco at $3.58.

Compared to a year ago, national gas prices are up 64 cents.

http://www.chron.com/disp/story.mpl/business/5605710.ht...

Sad thing is, one day soon, we'll look back on this as the good ol days.

[Lasher]

30. National average gas price on January 22, 2001: $1.46 per gallon.

US regular conventional retail gasoline average price was $1.456 on January 22 2001 according to The Energy Information Administration

Gas Buddy reports today's national average at $3.22.

[Wednesdays]

62. And I remember it was relatively "high" at the time, too

The average price a year earlier than that was around $1.00 if I remember correctly.

[Lasher]

77. Yes, and during 2000 Junior was highly critical of Clinton over gas prices.

Junior said he would 'jawbone' with the Saudis to 'open their spigots' (increase production) so that prices would come down.

[AnneD]

19. Workers wanted, with right skills

CLEVELAND — Managers of some manufacturing plants have been making a claim that seems to defy logic. Yet there's every reason to think they're telling the truth.

They say they're having trouble finding skilled workers. The problem is hindering their businesses.

But hold on. Haven't industrial jobs been swirling down an open drain for years as plants close or move? Wouldn't it seem there should be experienced out-of-work machinists, welders and assembly personnel eager to snap up available jobs?

The answers: yes and yes. But changes in manufacturing have reshaped factory protocols and job descriptions worldwide. The process has shaken up plants from China to Ohio.

http://www.chron.com/disp/story.mpl/business/5602575.ht...

Sure to stimulate debate here....

[DemReadingDU]

22. Americans have skills, if not, they can be trained

The problem is with companies paying Americans more than the minimum wage. The companies want cheap workers. If the companies can hire people from other countries on H1B visas, cheap, then they'll do that rather than paying Americans.

[AnneD]

36. ITA

Companies have lost the concept of growing employees from within.

MD Anderson helped me get my ADN and I worked there for 4 years afterward and when I leave School Nursing, I will give them the first shot. I have always spoken well of the hospital and have referred many people there both as employees and patients. You can't advertise or buy that much good will and loyalty.

Companies need to take the chance with their own employees and invest in them.

[MilesColtrane]

90. I have a warm spot in my heart for the folks at MD A.

They helped keep my dad alive significantly longer than the statistics after he was diagnosed.

[AnneD]

94. Most people that have ever had dealings with MDA...

have a soft spot. It is a unique place.

I became a Real Nurse working there and it is the gold standard by which I measure other hospitals. Few measure up.

[TalkingDog]

20. Morning Marketeers! It's Monday! It's gravity sucks day!

There are rumours on the Internets that, well, "They call it Stormy Monday, but Tuesday's just as bad". Blues for a blue, blue Monday. Thank you vurry much, I'll be here all week.

Since my real world experience doesn't include the working definition of a Margin Call, I just have to relate it to something I do know. I think today, in high-stakes poker games all round the world, banks are having their bluffs called. And you know, it's late. They've been up in this smokey, dank room that smells like flop sweat for way too long. The food has been too rich, the drinks too plentiful and now they are feeling a hard knot of nausea in the pit of their collective stomachs. They've already tapped out the credit cards, thrown in the title to the car and lost their wedding ring.

It's 7 card stud and they've got an Ace up but are only holding a measly pair of 2's. Whatever will our boys do?
Whatever it is, it ain't gonna be pretty.

Well, Marketeers, I'll poke my head in later to see what's up. I hope your powder is dry and your eggs are in multiple, padded containers.

"So, Come along and sing a song And join the jamboree. M-A-R-K-E-T F-L-O-P-S.

M...A...R.... We're not REAL happy.

K...E...T... Why? Because we're TIRED of getting shmooed.

F...L...O...P...S.........."


Bye, bye now.
I hope we see ya' real soon!

[AnneD]

27. Mourning Marketeers....

Donut: and lurkers and voyeurs. And speaking of kiddie shows TD, we were awash in prepubescent hormones on my end of town this weekend. All manner of SUV made the pilgrimage to the Houston Livestock Show and Rodeo, not to see the latest developments in Agriculture-but to see Hannah Montana. The natural aroma of the pasture was overpowered by the smell of Tinkerbell (mmmm where have a heard the name Tinkerbell an stock before).
I can't say how the market on Wall Street is fairing, but our stock exchange has been doing a brisk business. It will be interesting to see what price the Grand Champion Steer fetches. Agriculture has been doing ok. Weather has been holding out and crops are getting a good price, so we shall see. Normally businesses here buy the Grand Champion. That in itself will be revealing also.

And remember...Spritz a little Tinkerbell before heading out into the Stock Exchange today.

Happy hunting and watch out for the bears.

[Ghost Dog]

60. Mmm. Today may turn out to be counter-intuitively calm

in US-EU stock markets, I'd say. :eyesstormcloudsonhorizonwhilelashingselftotiller:

[AnneD]

21. China trade surplus drops, exports fall

— China's trade surplus shrank in February as sales of goods to the United States fell, the government said Monday, but analysts said exports should bounce back now that winter storms that disrupted the economy have passed.

The 63 percent drop in the trade gap from a year earlier was due partly to a longterm slowdown in export demand, but February was an unusually weak month, analysts said.

"We expect the export figures to rebound in March, but continue to anticipate a more moderate slowdown in export growth over the course of the year," Jing Ulrich, JP Morgan's chairwoman of China equities, said in a report to clients.

February's trade surplus was $8.6 billion, down from $23.7 billion in the year-earlier period, according to China's customs bureau.

The data reflected slowing growth in exports to the United States and Europe while China's still-robust economy is driving demand for imported energy, consumer goods and industrial equipment.

<more>

http://www.chron.com/disp/story.mpl/ap/business/5606159...

This will pose a most interesting problem for the Chinese-economically and politically.

[Robbien]

29. A sixty three percent plunge and headline downplays it with a mediocre "drop" label

And the game plays on.

[Ghost Dog]

67. Yeah. But there was the long lunar new year holiday and genuinely freakish weather

to take into account.

My take is that at least China in the EastAsia region is open-eyed and quite prepared to increasingly depend on domestic internal economic activity for the forseeable future, where (still) overheating and inflation are seen as the biggest threats.

edit: BTW This year is the Year of the Rat, I understand...

[radfringe]

26. Shock and OIL

this fall we stacked 10 cords of wood for heating the house this winter. we've about 3/4's of a cord left, and should take us through the remainder of march.. hopefully April will warm things up

around october-november we had about 1/2 tank of heating oil (our tank is a big one, 500gal)

without burning wood as a heating source, we would normally go through 100 gallons a month. This year with using wood pretty much 24/7 - we made the heating oil last. we kept the oil furnace at a minimum temp, just enough to get hot water.

checked the gauge over the weekend, and it's reading below 1/8th of a tank, so we have to get some oil.

my partner called to order a minimum delivery of 150gallons -- $3.50 a gallon - thank-you so very fucking much, mr. bush! that's $437.50

because we are long time customers, they will allow us to just order 125 gallons - (big deal...)

guess where my fucking rebate is going? wood and oil... _|_ stimulate this bush!


pm me to find out where I go

[wordpix]

38. wood has gone up, too, if you have to buy it---around here, it's ca. $170/cord

That is split in quarters and delivered. Would have cost you $1700 this year, which is no bargain if you had to buy.

If you have a woodlot, you're golden.

[radfringe]

47. we'll be out in our woodlot this summer

our woodguy only charges $95/cord split for delivery

meanwhile - we should do this with the oil to the greedy fuckers:

http://en.wikipedia.org/wiki/Pedro_de_Valdivia

The uprising of 1553
After a brief stay in Santiago, Valdivia returned to the south again in December 1552. To keep the connection open between Concepción and the southern settlements, Valdivia had a number of forts built in the coastal mountain range. One of the first signs that a big rebellion was building was in the attack on the fort of Tucapel. Valdivia decided to personally inspect the fort, but the indigenous forces attacked when the party was near the fort and Valdivia was captured. The Battle of Tucapel would be Valdivia's last: the dreaded conquistador was captured by Mapuche and executed by pouring molten golddown his throat to satisfy his thirst for treasures, although this could very well be a myth; he may have died by more "traditional" tortures and execution.

or at least waterboard them in oil

[Ghost Dog]

74. More traditional method:

[Ghost Dog]

128. OK, OK. Very sorry.

(After how many hits was that?)

Here's an even more macabre (but also quite ancient) image:

You don't want to look, but there are some horrible more contemporary images out there, let me tell you.

And, BTW, there's a film called "Redacted" - http://film.guardian.co.uk/features/featurepages/0,,226... - ...

[burf]

83. We burn wood too,

and because of the cold winter, we ran out a couple weeks ago. What we did then is saw an ad in the local paper where we could get a semi load (about 11 or 12 cords) of wood they cut down that was not suitable for going to the saw mill. It is all white oak. It comes in 8 foot lengths and we just cut it into lengths we want and split some. The wood is green but we are feeding an outdoor wood boiler so it makes little difference. Got the load delivered for $650 and it will get us through the rest of this year and well into next. Maybe if you have any logging in your area perhaps you can find a deal like this. Just a suggestion.

[ozymandius]

39. Oil prices down after last week's record

Oil prices pulled back Monday as traders booked profits after last week's record highs and amid easing tension between oil producers Venezuela and Colombia over the weekend.

Cold weather in the United States and the continuing weakness of the U.S. dollar were seen as bullish factors supporting prices.

Light, sweet crude for April delivery on the New York Mercantile Exchange fell 61 cents to $104.54 a barrel in electronic trading by midday in Europe.

The contract set a new trading record of $106.54 a barrel on Friday before retreating to settle at $105.15 a barrel, down 32 cents.
.....

The surge to a new record was driven by a U.S. Labor Department report that said employers cut 63,000 jobs in February — the biggest drop in five years.

Investors can react to such news in one of two ways: by selling on the prospect that the economy — and demand for oil — is cooling, or by buying on a conviction that bad economic data makes it more likely the Fed will cut rates. On Friday investors engaged in a little of both, sending oil prices down more than a dollar at one moment and propelling them to new records the next.

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

[4dsc]

71. oil sets new record..

$107. and change...

[ozymandius]

73. Gas prices near records, following oil

NEW YORK - Gasoline prices were poised Monday to set a new record at the pump, having surged to within half a cent of their record high of $3.227 a gallon. Oil prices, meanwhile, surged to $107, a new inflation-adjusted record and their fifth new high in the last six sessions on an upbeat report on wholesale inventories.

The national average price of a gallon of gas rose 0.7 cent overnight to $3.222 a gallon, 69 cents higher than one year ago, according to AAA and the Oil Price Information Service. Last May, prices peaked at $3.227 as surging demand and a string of refinery outages raised concerns about supplies.

That record will likely be left in the dust soon as gas prices accelerate toward levels that could approach $4 a gallon, though most analysts believe prices will peak below that psychologically significant mark. In its last forecast, released last month, the Energy Department said prices will likely peak around $3.40 a gallon this spring; a new forecast is due Tuesday.

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

-ahem- Regular gas is already $3.40/gal in my neighborhood.

[kineneb]

86. paid off the propane bill last week

$422.00 (no nat-gas in our area)
price- $3.15/gal incl. delivery. The last fill was from 30% to only 80%.

Ouch. Next winter, long johns may be my fashion statement.

[UpInArms]

32. Goldman says can't rule out Fed emergency rate cut (today)

http://www.reuters.com/article/bondsNews/idUSN104434752...

NEW YORK, March 10 (Reuters) - An emergency interest rate cut by the Federal Reserve is possible ahead of its next scheduled monetary policy meeting on March 18, according to a Goldman Sachs research note on Monday.

Goldman said its view on Fed policy changed on Friday.

The government reported on Friday that a second straight month of U.S. job losses and the Fed announced new steps to inject liquidity into the financial system as credit availability remains tight.

"In fact, today's report on last month's job market leaves little doubt that the U.S. economy is in recession," the Wall Street investment bank said in a separate report on Friday.

The employment report, which showed a payroll decline of 63,000 in February, ended a week that featured downbeat data on business activity, construction outlays, auto sales and retail chain store results, according to Goldman.

In its Friday and Monday research notes, Goldman said the Fed would drop the benchmark federal funds target rate to 2 percent by late April from the current 3 percent, most likely in two 50 basis-point steps at the next two meetings.

"We cannot rule out an intermeeting rate cut today," the Monday note said.

...more...

(emphasis mine)

[Robbien]

44. Rate cut profits being held on to by banks. Mortgage rates go up

.................CURRENT 1 MO. PRIOR
15-YEAR. . . . . 5.49 5.04
30-YEAR. . . . . 6.09 5.57
1-YEAR ARM. . 4.69 5.07


Banks need to make up loss of fee income on CDO sales.

[Robbien]

33. WaMu’s executive bonuses ignite backlash

Washington Mutual's annual shareholder meeting April 15 will be no lovefest. Last month, an investor group targeted the company’s risk committee directors with a “no” vote campaign, claiming their failure to manage mortgage-related risk cost shareholders $28 billion in 2007, as shares lost 70% of their value; they currently trade at a 12-year low. Now that group is considering adding to its hit list the board’s human resources committee, which last week chose to protect executives’ 2008 bonuses by rejiggering its pay formula to exclude the impact on profit of any further housing-related loan losses—a maneuver that has only further enraged shareholders, coming on the heels of the bank’s $1.87 billion loss in the fourth quarter.

“It’s like a brazen daylight robbery,” said Richard Clayton, research director at CTW Investment Group, an advisory firm to union-sponsored pension funds that is orchestrating the “no” vote campaign. “The idea that performance bonuses ought to be exempting the consequences of irresponsible lending practices is not only astonishing, it’s unjust. I can’t believe the board thinks this would be acceptable to anyone.”

http://www.financialweek.com/apps/pbcs.dll/article?AID=...

[Roland99]

40. 10:07am - The start of a rough day?

Dow 11,858.28 -35.41
Nasdaq 2,208.86 -3.63
S&P 500 1,289.13 -4.24
Oil $104.90 $-0.25
Gold $965.50 $-8.70
10 YR 3.51% -0.03

[Robbien]

46. Blackstone Profit Falls 89% on Credit Market Meltdown

Profit excluding some compensation costs declined to $88 million, or 8 cents a share, from $808.1 million, or 72 cents, a year earlier, the New York-based company said today in a statement. That fell short of the average estimate of 20 cents a share by seven analysts in a Bloomberg survey.

``Difficult market conditions in the U.S. and Europe continue in 2008 and there is little visibility on when these conditions might improve,'' Chairman Stephen Schwarzman said in the statement. ``Despite the meltdown'' in credit markets, the company sees deal opportunities, especially in Asia, he said.

Blackstone's stock has fallen 53 percent since going public in June as a doubling in credit costs froze the LBO market. The firm hasn't completed a takeover of more than $2 billion in five months and is struggling to close the $6.6 billion buyout of Dallas-based Alliance Data Systems Corp., the Dallas-based credit-card processor, announced in May.

Earnings were hurt by a decline in fees earned by completing acquisitions and the writedown of its investment in Financial Guaranty Insurance Co., a bond insurer. The firm invested $2.33 billion of capital in the quarter, a 31 percent drop from a year earlier.

Net Loss

``Among the risks are that LBO financing conditions continue to worsen and erode Blackstone's ability to earn sufficient private-equity returns,'' Bank of America Corp. analyst Michael Hecht wrote in a March 6 report to investors. Hecht, who is based in New York, cut his fourth-quarter estimate to 11 cents from 25 cents.

Blackstone reported a fourth-quarter net loss of $170 million because of compensation costs tied to the IPO. Revenue rose 17 percent to $3.05 billion. The firm agreed to buy GSO Capital Partners LP for as much as $930 million in January to expand investments in distressed debt and leveraged loans.

Assets under management jumped 47 percent to $102.4 billion, driven by real estate, which doubled to $26.1 billion. Money-management assets rose 65 percent to $44.5 billion. Private-equity assets gained 7 percent to $31.8 billion.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aO2...

[ozymandius]

49. 10:51 and Countrywide is still under FBI investigation

Dow 11,903.62 Up 9.93 (0.08%)
Nasdaq 2,209.82 Down 2.67 (0.12%)
S&P 500 1,292.68 Down 0.69 (0.05%)
10-Yr Bond 3.5110% Down 0.0300
NYSE Volume 894,305,000
Nasdaq Volume 459,554,500

10:30 am : The major indices fall to their worst levels of the session, although losses remain modest. Only three sectors remain in positive territory. The financial sector (-0.5%) was up as much as 0.9% but is now a laggard as traders focus on some negative items this morning.

Countrywide (CFC 4.72, -0.35) is down on a Wall Street Journal report that said the company, and up to 15 other subprime lenders, are under FBI investigation. Washington Mutual (WM 10.63, -0.08) is in the red after Fitch ratings lowered the company's long term issuer default rating (IDR) to BBB from A-. Fitch took negative rating action on seven other banks. Meanwhile, Fannie Mae (FNM 21.09, -7.38) and Freddie Mac (FRE 18.07, -1.58) are under pressure after Barron's mentioned Fannie negatively.

Financials took out a fresh 52-week low last Friday.DJ30 -15.79 NASDAQ -5.88 SP500 -3.61 NASDAQ Dec/Adv/Vol 1586/1077/355 mln NYSE Dec/Adv/Vol 1821/1081/240 mln

10:00 am : The major indices catch a bid that sends them into positive territory on a better than expected economic release. Five of the ten economic sectors are trending lower. The energy (-0.9%) and materials (-2.2%) sectors are posting the largest decline, in part due to the 0.5% slide in crude prices and the 1.0% fall in the Commodity Index.

Just hitting the wires, January wholesale inventories rose 0.8% compared to the expected rise of 0.5%. This follows December's 1.1% rise.DJ30 +4.56 NASDAQ +2.34 SP500 +0.15 NASDAQ Dec/Adv/Vol 1399/1167/196 mln NYSE Dec/Adv/Vol 1549/1240/137 mln

[Robbien]

50. Bankers had a conference in Florida. Guest speakers: Bernanke and Bill O'Reilly

It was a dramatic change of channels last week for community bankers attending an industry conference in Orlando.

. . .

Consider this juxtaposition:

Bernanke: "Policymakers and stakeholders have been working to find effective responses to the increases in delinquencies and foreclosures. . . . Measures that lead to a sustainable outcome are to be preferred to temporary palliatives, which may only put off foreclosure and, perhaps, increase its ultimate costs."

O'Reilly: "The jihadists think McCain is crazy. They're thinking this guy, he was in 'Nam, he was in a prison camp, he wants payback now!! Imagine bin Laden sitting in his cave, watching TV and seeing McCain, Clinton and Obama. If you're bin Laden, who are you going to vote for? I submit you're not going to vote for the little guy who was in a prison camp."

While Bernanke's oratory had the bankers pondering the financial crisis, O'Reilly had them musing election politics with his lively takes on the presidential candidates.

O'Reilly touted his "independence" and promised listeners he would "never tell people how they should vote." Still, by the end of his time slot, he had effectively done just that, generally skewering Democrats Barack Obama and Hillary Clinton, while burnishing the stature of Republican John McCain.

. . .

Overall, however, the bankers gave O'Reilly's barb-filled political commentary a warm reception, which was interspersed with laughter and applause. Perhaps it was because they shared his conservative politics or maybe it was a just a welcome break from housing slumps, subprime meltdowns and global credit woes.

Whatever the case, O'Reilly was a hit with the Independent Community Bankers of America and he might be in line for an encore gig at their next convention.

http://www.orlandosentinel.com/business/orl-banks1108ma...

Any wonder banks are in trouble?

[Ghost Dog]

79. However, there is no bin Laden and there were no caves.

[AnneD]

85. Robbien.....

you beat me to the punch.

[Demeter]

53. Nonsensical arguments against capital controls

http://rodrik.typepad.com/dani_rodriks_weblog/2008/03/n...

Every time somebody mentions the term "capital controls" in polite company, as Arvind Subramanian and I did in the FT recently, you get back a barrage of counter-arguments about how crazy the idea is. Policy makers should stay away from policies that try to stem the flow of capital across national borders, the chorus intones. But you look closer at those arguments, and they are surprisingly weak and mutually contradictory.

Here are the typical counter-arguments.

1. Capital controls result in corruption and rent-seeking. Well, perhaps yes, sometimes they do. But not always, and surely the type of capital controls you are talking about makes a difference. I have yet to hear anyone make the argument that the Chilean tax on capital inflows led to corruption or that long-standing Taiwanese controls have been overwhelmed by rent-seeking. Our job as policy advisors is to design policies that minimize the risk of corruption while their primary objective is being served. Government regulations on environmental externalities, health, or consumer safety are all subject to corruption and "capture" by the private sector as well, but most economists take this as a reason to think of better-designed regulations, not as a reason not to regulate. People who do not understand this should not be in the business of providing advice to governments.

2. The problem is not with capital flows per se, but with the underlying market distortions that induce risky behavior by financial intermediaries and by borrowers. So policy should target these distortions directly, through appropriate prudential regulation, rather than target the flows themselves. Yes in principle, but no in practice. If one could design the perfect prudential regulatory regime, able to handle all future financial innovations, then indeed we would not need direct controls on capital flows. But if we cannot, and we surely cannot, we need to work on as many margins available to us as we can. That is where the gun control analogy is really helpful. If you could perfectly regulate the behavior of future criminals, you would not need controls on the sale of guns directly. It is people who kill people, not guns--remember? But most of us are reasonable enough to realize that we have imperfect control over the behavior of gun owners and so we think direct gun controls make sense.

3. Capital controls won't work because they are easy to evade. Surely, some leakage is inevitable, but it is paradoxical that the same people who make this argument are those who cry bloody murder at the mention of capital controls. If you can evade capital controls at little cost, you should simply be unconcerned. And if you can evade them only at a cost, well then capital controls are working! Or as my co-author Arvind puts it, ask the people who make this argument whether they will deny that lifting capital controls will cause an increase in the volume of capital flows?

4. Capital controls will raise the cost of finance to some firms. Duh? That's the whole point of capital controls...

[Demeter]

55. Thinking the Unthinkable: Regulating the Brave New World of Finance

http://www.nakedcapitalism.com/2007/08/thinking-unthink...


Earlier this week, I sought to frame the prevailing views of what the supervising adults, namely central bankers, should do about the turmoil in the financial markets. They break down into four groups (names of representative spokesmen included):


The keep the party going types (Jim Cramer and his less histrionic brethren) who argue that markets should be stabilized at any cost.

The cold water Yankees (Nouriel Roubini, Marc Faber Andy Xie, Michael Panzner) who think the problems have only started and providing any more cash to the miscreants (or anyone within hailing distance of them, which is basically the entire financial system) is a Bad Idea and Will Only Make Things Worse.

The realists (heavily representation at the Financial Times, including the estimable Martin Wolf and Paul de Grauwe) who agree things are a mess, but also argue that central bankers can't sit on their hands in a crisis. They hew to the idea presented by Walter Bagehot in the 19th century, that central bankers should lend at penalty rates against good collateral (meaning in normal markets). This gets a bit tricky if you are talking about collateral with a lot of embedded leverage. A modern variant comes from Willem Buiter and Anne Sibert, who want central bankers to act as market makers of the last resort.

The reformers (former central banker Ian MacFarlane, Henry Kaufman, Steven Roach) who see the turmoil as evidence that our current regulatory regime is outdated. However, regulation is such a dirty word that they believe the current problems have to become much worse for there to be sufficient political will to take on such a challenge. Kaufman, as befits his 1980s sobriquet, "Dr. Doom," is particularly pessimistic, since he feels that the economic discipline has become too specialized to have an adequate grasp of the issues.

Even though I am largely on the same page as the cold water Yankees in terms of how bad the downside could be, I believe that the reformist camp is correct. While booms and busts are an inevitable part of capitalism, the very reason we have financial regulation is to mitigate those swings.

It's an open question as to whether the history of the 1992-2007 will be seen as one of stability, which is the current view, or rewritten to emphasize serial asset bubbles that eventually became so large as to exact a large cost on the real economy.

In recent weeks, as the carnage in the markets has worsened, the use of the dreaded "R" word by the media has increased. However, the worry is that Congress will return this fall, eager to have some public hangings to satisfy the blood lust of newly impoverished homeowners, schedule some hearings, summon some famous people and call them bad names for ten minutes, enact some hasty legislation that will at best address surface problems, and declare victory.

The only axis on which that approach might work is consumer protection. There has already been discussion of possible remedies and some states have enacted legislation that might serve as models. Any reform of the credit markets, in which a tremendous amount of activity has moved well beyond the Fed's reach and therefore, to some extent, even its understanding, is a very tricky affair. It's important to get it right. This process is not only politically daunting, (expect piercing cries and doom saying from the financial community), but intellectually demanding as well.

Now many may argue that that task is impossible, but recall that the Securities Act of 1933 and the Securities Exchange Act of 1934 were formed almost out of whole cloth, yet have proven remarkably robust and enduring. It is possible, though rare, to take great leaps forward with regulatory frameworks.

To come up with appropriate new rules, it is vital to define the problem or problems need to be addressed. Per Kaufman's concerns, that isn't as easy as it might seem. Framing the problem well, conducting analysis and investigation, and seeing if they point to other hypotheses and avenues for investigation is vital. And for issues of this importance and complexity, they will need to be attacked from various angles. In addition, the problem statement is likely to be reformulated as understanding advances.

In other words, expecting a one-shot investigation, no matter how well staffed, to do the job is unrealistic. Coming to grips with such a hairy, multifaceted problem is likely to be an iterative process. (And note we haven't considered the possible dead body in the room, namely, that any approach will likely require either much greater international cooperation or an international body, raising issues of national sovereignty. We may need a real train wreck to get past that hurdle).

It's encouraging that some good minds are already starting to grapple with problem definition. Unfortunately, the discussion is taking place on the other side of the Atlantic, where regulation is held in higher esteem than here. But ideas are fungible and will hopefully capture the attention of thoughtful people here.

A couple of examples, one from VoxEu, "Subprime crisis: Greenspan’s Legacy," by Tito Boeri and Luigi Guiso .

The article makes an elegant and compelling argument. The subprime crisis had three causes, namely:

The low financial literacy of US households;
The financial innovation that has resulted in the massive securitisation of illiquid assets, and;
The low interest rate policy followed by Alan Greenspan’s Fed from 2001 to 2004.

The authors clearly state that the first two issues were necessary but not sufficient to cause the housing mess, and they make a cogent and critical review of Greenspan's actions.

The comments on Greenspan, while well done, are in line with what is rapidly becoming conventional wisdom. But this section is useful to keep in mind when thinking about reform:

The first ingredient of the crisis is a blend of bad information, financial inexperience and myopia of consumers/investors. They fell for the prospect of getting a mortgage at rates never seen before and then extrapolating these rates out for thirty years. This myopia was encouraged and indeed exploited by banks and other lenders eager to attract and retain clients. This is surprisingly similar to what has been seen in the past when banks and intermediaries have advised their clients to invest in financial assets ill-suited to their ability to bear risk. In both cases, a biased advisor is the reflection of a clear conflict of interest in the financial industry. Financial literacy is low not only in financially backward countries (as one would expect), but also in the US. Only two out of three Americans are familiar with the law of compound interest; less than half know how to measure the effects of inflation on the costs of indebtedness. Financial literacy is particularly low among those who have taken out subprime mortgages. The intermediaries exploited this financial illiteracy.

Another good article, which explicitly looked at the question of regulation, came from Clive Crook of the Financial Times. He goes where US financial writers fear to tread, namely, questioning the benefits of financial innovation:

The harder question is whether new rules are needed for the wider financial system. On the face of it, the answer is Yes. One rationale for excluding non-bank lenders from Fed scrutiny is that they pose no systemic risk. So much for that. Wall Street financed the subprime boom by buying the loans – repackaged as securities, stamped AAA by the credit-rating agencies – and selling them on. This model, of course, made the original lenders even less attentive to loan quality. On the other hand, it spread the risk throughout the system, which was also thought to be a good thing – until the loans started to go bad. Then, it turned out, investors wanted to know where the risk was and nobody could say. Arriving as if from nowhere, that fear led to the freezing up of the credit system.

How are regulators to grapple with this? If the opacity of the system is the problem, then new scrutiny and disclosure requirements for secretive investors such as hedge funds and private-equity firms must be part of the remedy. But it could be that complexity, more than lack of transparency in its own right, is the issue. The accelerated pace of financial innovation and the ever-proliferating complication of modern financial instruments seem to defy the ability even of the products’ designers to fathom what is going on. And the new instruments are often thinly traded, if at all, so values are guessed by simulation or calculation, not in the market. Sophisticated investors are left poorly informed about the risks they are bearing; unsophisticated investors have not got a clue. Desirable as fuller disclosure by hedge funds and private equity firms may be, it is hard to believe that it will be enough.

In other words, financial innovation itself is the problem. This poses a dilemma. The benefits of modern finance are real: as its champions rightly say, it deserves much of the credit for the relative stability of the world economy in the past two decades. Stifling this innovation, or attempting to manage it, looks unpromising.

Part of the answer – and, along with fuller scrutiny, perhaps the best that can be done – is to create a climate where excessive risk-taking is more effectively discouraged, and punished when things go wrong. Here the role of the Fed is crucial, both in the boom phase of speculative cycles and in the bust. Fast-rising house and other asset prices have been buoyed by very low interest rates. It was enough for the Fed that consumer-price inflation was low; asset prices, in their own right, were not its concern. This set the scene for America’s remarkable debt-fuelled house-price surge – whose inevitable end was the proximate cause of the subprime collapse. The Fed’s long-maintained reluctance to weigh asset prices in its monetary policy calculations needs to go.

Then, when financial markets seize up, the Fed must take care, as far as possible, to avoid bailing out the culprits. As the economists, Willem Buiter and Anne Sibert, have argued, the Fed was wrong to cut the discount rate last week, and will compound the error if it soon cuts the more important Fed funds rate as many now expect – unless there is evidence of harm spreading to the real economy. Instead, honouring Walter Bagehot’s maxim, it should provide liquidity at a penalty rate (against conservatively valued collateral) to those so lacking in liquidity that they are willing to pay it. That memorably costly help should be available not just to banks, as now, but to hedge funds and other financial firms willing to accept the Fed’s terms.

It is a cliché, but nonetheless true, that the end of each financial crisis sows the seeds of the next. Better regulation has a place, but the Fed is the key to attacking that cycle.

While this is a good start, Crook's ideas are an extension of well established principles, namely, disclosure and central banks as stewards of stability and lenders of the last resort. We may need thinking along new lines to devise enduring remedies


LOCKING THE BARN AFTER THE HORSE WAS STOLEN, YET AGAIN....

[ozymandius]

57. “Every day is like the 1987 stock market crash'’

One more from Krugman:

http://krugman.blogs.nytimes.com/2008/03/06/meanwhile-o... /

Soothing news of market panic (well, I find it more soothing than politics, anyway):

“Every day is like the 1987 stock market crash,'’ said Thomas Tucci, head of U.S. government bond trading at RBC Capital Markets in New York, the investment-banking arm of Canada’s biggest lender. “There isn’t a day when you’re not at the edge of your seat. The system is at daily risk.'’

.....
The three-month bill’s rate dropped 13 basis points to 1.36 percent after touching 1.31 percent, the lowest level since July 2004. The drop pushed the so-called TED spread, the difference between what banks and the government pay for three-month loans, to 1.64 percentage points, the widest amount since Dec. 27.

.....
The cost of exchanging fixed for floating interest-rate payments for two years climbed to a record high as investors sought to lock in rates. The spread between the rate on a two- year interest-rate swap, used to hedge against and speculate on interest-rate swings, and the Treasury two-year note yield, reached 110.06 basis points, the largest since at least November 1988, when Bloomberg began compiling data.

Just a quick not on how it looks on the front lines, at ground level, or whatever metaphor you want to use for the effect of credit crises on real people who trade bonds for a living.

[Demeter]

65. You Can Say That Again!

And in Michigan, that's been the case since 9/11/2001

Proving that one can live with anything that doesn't actually kill one, given enough exposure to it.

[Demeter]

59. Why Investors Are Down on Fannie Mae

http://www.nakedcapitalism.com/2008/03/why-investors-ar...

Even as recently as, say, last December, worrying about the the safety of Fannie Mae and Freddie Mac's guarantees was seen as a sign of a being overly preoccupied with remote risks (in fairness, Nouriel Roubini did consider this possibility in the summer of 2006 and Michael Panzner did in his book Financial Armageddon, but both seen as such outliers than that it almost proves the point). Now they've moved front and center, witness the Fed's launching of new liquidity measures on Friday that look to be designed, among other things, to shore up agency paper.

So why the panic? You can argue it's overdone; even Ginnie Maes, which unlike Fannie and Freddie paper, are full faith and credit obligations of the US government, are trading at ridiculous spreads (disclosure: I bought some). But the flip side is that all the talk of making Freddie and Fannie the guarantor of mortgage debt of all kind is getting a resounding thumb's down. And it may also have unwittingly precipitated an overdue look at the state of the GSEs' finances.

A very good article in Barrons, "Is Fannie Mae the Next Government Bailout?" by Jonathan R. Laing in Barron's finds Fannie's financials to be less than rock solid:


It's perhaps the cruelest of ironies that in the U.S. housing market's greatest hour of need, the major entity created during the Depression to bring liquidity to housing, Fannie Mae, may itself soon be in need of bailout.

Fannie, of course, occupies a curious middle ground between the public and private sector as a result of its privatization in 1968 as a Government Sponsored Enterprise, or GSE. While owned by its shareholders, Fannie is regulated by a government agency and is able to borrow money cheaply, thanks to an implicit guarantee by Uncle Sam. It uses those funds to buy and securitize home loans -- lots of them. At year end, the company owned in its portfolio or had packaged and guaranteed some $2.8 trillion of mortgages or 23% of all U.S. residential mortgage debt outstanding.

Of late, however, Fannie's prospects have darkened notably. The company (ticker: FNM) lost $2.6 billion last year as a surge of red ink in the final two quarters more than wiped out a nicely profitable first half. And by late last week, credit-market jitters had penetrated the once-unassailable hushed precincts of the market in Fannie debt.

In the wake of margin calls on collateral at the investment concern Carlyle Capital, yields on guaranteed mortgage securities issued by Fannie and its GSE sibling Freddie Mac (FRE) rose to their highest level over U.S. Treasuries in 22 years. Likewise credit default swaps, measuring market concerns over the safety of Fannie corporate debt, have ballooned out to 2% of the insured amount from 0.5% just four months ago.

Company executives attribute such concerns to what Fannie CEO Daniel Mudd last month called "the toughest housing and mortgage market in a generation."...

But, if the truth be known, a considerable portion of Fannie's losses also came from speculative forays into higher-yielding but riskier mortgage products like subprime, Alt-A (a category between subprime and prime in credit quality) and dicey mortgages requiring monthly payments of interest only or less. For example, Fannie's $314 billion of Alt-A -- often called liar loans because borrowers provide little documentation -- accounted for 31.4% of the company's credit losses while making up just 11.9% of its $2.5 trillion single-family-home credit book. Fannie was clearly looking for love -- and market share -- in some of the wrong places.

Likewise, Barron's has found other areas that may bode ill for Fannie's prospects. Its balance sheet is larded with soft assets and understated liabilities that would leave the company ill-equipped to weather a serious financial crisis. And spiraling mortgage defaults and falling home prices could bring a tsunami of credit losses over the next two years that will severely test Fannie's solvency.

Should Fannie or the similarly hobbled Freddie Mac buckle, the government would no doubt bail them out and honor their debt and mortgage guarantee obligations. Fannie common and preferred shareholders would likely suffer grievously in such a scenario.

Fannie, for its part, insists it's more than adequately capitalized to withstand any future stress...

But some financial leaders aren't so sure. At a conference several weeks back, William Poole, president of the St. Louis Federal Reserve Bank, said that the GSEs (clearly a reference to Fannie and Freddie) appeared to be insufficiently capitalized to handle the kind of losses suffered by U.S. major banks in the past six months. "I do not have any information on the GSEs that the market does not have," he said. "Nevertheless, in assessing the risk of further credit disruptions this year, I would put the GSEs at the top of my list of sources of potentially serious trouble."

And, in commenting on the government's "too big to fail doctrine" for financial institutions, he said: "First, firms in trouble ought not to be bailed out, unless the bailout takes a form that imposes heavy costs on managers and shareholders."

Poole has long been skeptical -- correctly it turns out -- of Fannie and Freddie's ability to serve both God (their social mission of promoting liquidity and affordability) and Mammon (the shareholder and lush management compensation). At Fannie, a generation of Democratic Party insiders, such as James Johnson, Jamie Gorelik and Franklin Raines, made substantial fortunes in Fannie's executive suite. As Fannie Mae's top regulator, James Lockhart, pointed out in recent congressional testimony, the absence of debt-market discipline (the government guarantee makes Fannie and Freddie all but impervious to credit downgrades) makes pell-mell growth irresistible to shareholders and managers. Have a hunch, bet a bunch.

A major scandal erupted at Fannie earlier in the millennium when the company was found to be cooking its books to hide a multibillion-dollar loss it had incurred when massive interest-rate bets went awry. Freddie got nailed at the same time for setting hedging profits aside in a cookie jar to boost results in subsequent years. Yet, the recent lending bets made by Fannie are likely to prove far more damaging.

On the surface, Fannie's balance sheet looks fine. At year end, the company reported regulatory net worth of $45.4 billion, some $3.9 billion higher than the expanded minimum capital of $41.5 billion required by federal regulators. But with its extreme leverage -- assets stand at 20 times net worth -- Fannie has little room for error. And there appear to be significant problems with the way Fannie has valued both its assets and liabilities.

For example, some $13 billion of its $45.4 billion in net worth consists of deferred tax assets that have value only if Fannie can earn enough money in the near future (say $36 billion) to employ them. That hardly seems likely. During the housing boom of 2002 to 2006, this tax asset only climbed -- from zero to $8 billion as Fannie reported $23 billion in income from 2003 to 2006.

Last year's $2.6 billion loss compounds the problem, pushing the tax asset to $13 billion. At a minimum, accountants may require the company to sharply write down the value of this asset, thus slashing net worth. Bank regulators, for example, limit the amount of deferred tax assets for regulatory purposes to the lesser of the amount expected to be used within one year or 10% of regulatory capital. So if Fannie were a bank, this entire asset would be wiped out. Fannie maintains the value of the asset will be realized over time.

Another soft asset is Fannie's $8.1 billion of Lower Income Housing Tax Credit partnerships. The partnerships' only value, other than helping fulfill Fannie's housing affordability requirements, are the rich tax credits they generate from their intended operating losses. The problem is that Fannie hasn't made enough money to employ these tax credits. Thus the asset is apt to dwindle away to zero without providing Fannie any benefit. Fannie makes no predictions on the future values.

The story is much the same for the liability side of Fannie's balance sheet. There's an item called guaranty obligation, which represents the company's best estimate on what it will have to pay out to make good on any mortgage defaults in its $2.4 trillion guaranty book. On its regular balance sheet, Fannie carries the item at $15.4 billion, but on its "fair value" balance sheet, which attempts to mark every asset and liability to current market value, the guaranty obligations are pegged at $20.6 billion. The problem was, as Morgan Stanley analyst Kenneth Posner discovered, Freddie went through the exact same drill with its guaranty obligations' fair value and chose to mark them much more aggressively. It valued them at 1.5% of its guaranteed book, double the 0.74% of total book that Fannie saw fit to use, even though Freddie's delinquency rate is lower than its rival's.

Had Fannie taken a similar hit, its fair-value net worth would've shrunk by some $20 billion to a paltry $16 billion, compared with its juiced-up regulatory capital of $45.4 billion. Fannie stands by its estimate and says it doesn't know how Freddie arrived at its own.

Finally, Fannie seemed to have been inordinately easy on itself when, in the fourth quarter, it wrote down its $74 billion holdings of privately packaged, non-agency subprime and Alt-A mortgage securities by a mere 6%, or $4.6 billion. In addition, Fannie declared that only $1.4 billion of the write-down constituted a permanent impairment, something that penalized both Fannie's profits and net worth. The remainder of the write-down was deemed a temporary mark-to-market loss that had no such negative impact.

Had Fannie charged off the remaining $3.2 billion that would have torched most of the $3.9 billion in excess regulatory capital that it held at the end of the fourth quarter. Nearly all the major banks, from Merrill Lynch to UBS, have taken much larger percentage write-downs on their holdings of similar mortgage paper, and ran virtually all the losses through their income statements.

In any event, continued deterioration since year end in indexes like the ABX triple-A index indicate that Fannie, based on the different vintages it owns, should conservatively take another $14 billion charge, according to Barron's estimates. Fannie Mae says that since it's a long-term investor, it should incur no permanent decrease in asset value beyond what it has recognized.

The very survival of Fannie as a going concern hinges on the size and speed of the credit losses it faces in the years ahead. Merrill Lynch's Kenneth Bruce sees Fannie suffering losses on its current book of around $32 billion over the next decade. Yet, he still expects the company to manage recovery earnings per share of between $2.50 to $4 between 2009 and 2011.

His forecast, however, is based on spirited 8% average annual growth in Fannie's credit book over the decade. Although Fannie has just been cleared to deal in mortgages of up to $700,000, from $420,000 now, 8% growth could be hard to come by if the company's capital remains stretched.

In our view, the rapid decline in home prices and soaring level of foreclosures might cause the wave of credit losses to hit far sooner and with greater ferocity than many imagine, potentially submerging the income Fannie is expecting to harvest from volume growth and higher lending fees.

[Demeter]

61. No Exit: Will "A Short Financial Crisis Become a Long One"?

http://www.nakedcapitalism.com/2008/03/no-exit-will-sho...

By happenstance, three articles in the Financial Times provide useful, if disheartening, triangulation on the credit crisis. In sum, the markets are a mess, policymakers don't agree on what to do, and there may be nothing they can do except make matters worse.

Last week was by any standards a bad week, with the Fed's new liquidity measures an apparent reaction to a continuing deterioration in the market for Freddie Mac and Fannie Mae debt issues, which is a sign of how much confidence has fallen. Even though, as Brad Setser pointed out, push comes to shove, the Federal government would have to support the agencies, investors are instead taking a dim view of the GSEs' not very pretty balance sheets.

The FT points out today in "Credit derivatives turmoil strikes," that the less well publicized, but very large credit derivatives market (over $45 trillion in notional value; estimates of its economic value vary widely) is in a state of near meltdown due to hedge fund failures and credit unwindings, Worse, the sharp in swap prices leads to higher borrowing costs. And we warned of counterparty risk months ago; it's now a widespread concern.

From the FT:


Turmoil in the credit derivatives markets is having an increasingly brutal impact on the wider financial system as a vicious cycle of forced selling drives risk premiums on company debt to new highs.

The trend accelerated on both sides of the Atlantic last week as investors rushed to unwind highly leveraged positions in complex structured products. The cost of protecting US investment grade debt against default soared to a high of 188 basis points, from 80bp in January.

In Europe, the cost of insuring the debt of the 125 investment-grade companies in the benchmark iTraxx Europe index surged to a new high of 156bp, before closing at 146bp on Friday. A move above 150bp would spark the unwinding of structured trades, according to BNP Paribas...

Liquidating structured credit instruments requires buying large amounts of protection using credit default swaps. This, in turn, drives the cost of protection higher, potentially triggering a chain reaction.

“There is potential for some wild and possibly inexplicable price movements as the unwinds get bigger,” said Mehernosh Engineer, credit strategist at BNP...

Tim Bond, head of global asset allocation at Barclays Capital, said: “It’s inflicting heavy losses on the banking system, eroding their capital and reducing their ability to lend. The spread widening is so severe, you’re seeing a rise in borrowing rates across the board for everybody except top-quality governments. It’s affecting both the price and availability of credit.”

Some structured credit vehicles have in-built triggers that force them to be liquidated.

Bank of America estimates that if the cost of US investment grade credit insurance rises above 200bp, the unwinding of structures could trigger a jump towards 220bp.

Jim Sarni, portfolio manager at Payden & Rygel, an investment management firm, said: “The market is very concerned about counterparty risk and how stable positions are as they are marked to market as prices keep falling.”

Clive Crook in "In the grip of implacable subprime forces," gives a good summary of current and projected defaults for US homeowners, and also notes the disconnect between Bernanke and Paulson on what to do about it. Crook argues that less intervention is the course of valor:

The line that “falling house prices are good for the economy – they help clear the market” is no doubt correct, but it will be difficult to sustain if anything like that worst-case scenario begins to unfold. Then the challenge will be to confine political action to measures that do relatively little harm, and to avoid palliatives that will only amplify the cycle of recklessness and remorse next time round.

This seemingly obvious point is widely ignored in Washington. The US already has what must be the world’s most generous fiscal dispensation for mortgage borrowers – uncapped tax relief for owner-occupiers, plus colossal “government sponsored entities” to guarantee loans, implicitly subsidise mortgage rates and promote securitisation. This fiscal regime created an environment in which you felt a fool unless you borrowed to the hilt – not just to buy your house but to keep your equity in it to a minimum, so as to liberate cash for other purposes. This is the very root of the problem. Yet favoured responses to the subprime crisis on Capitol Hill include extensions of tax relief to poorer households (at present, it goes only to taxpayers who itemise their deductions), further vast expansions of the remit of, and resources potentially available to, the GSEs, and assorted new outright subsidies.

Adjusting the bankruptcy laws to encourage writedowns and make repossession more difficult may do little to help right now, but it does at least have the virtue of making no new demands on taxpayers. If it makes lenders think twice in future about extending 100 per cent mortgages to borrowers with no income or assets, so much the better – although “jingle mail” may prove even more salutary in that regard. The medium-term goal for policy should be less subsidy of every sort for borrowing, and stricter regulation of lenders. The short-term goal should be to avoid actions that militate against the medium-term goal. That sounds timid, I know, but at times like this being timid is a lot to ask.

Wolgang Munchau, in "Central bankers cannot stop this contagion," is on the same page as Crook, but for largely different reasons. He argues that a central bank's tools for dealing with crises can address only illiquidity, not the sort of solvency crises we are seeing now. Thus, central bank action can give us the worst of all possible worlds: impotent in bringing relief to the markets but inflationary.

From Munchau:

Since the start of the global financial crisis last August, monetary policy has been remarkably ineffective. The US Federal Reserve has cut short-term rates by a cumulative 225 basis points since then. Yet, borrowing costs for US consumers and companies have actually gone up....

For as long as this financial crisis persists, interest rates will be determined by toxic market conditions, not central bankers. Among the various channels through which monetary policy affects the real economy, the credit channel is one of the most important. If real-world interest rates are determined independent of a central bank’s monetary policy, the effect of monetary policy on economic growth is correspondingly reduced.

But that does not mean monetary policy is irrelevant. On the contrary. It remains hugely important in steering inflationary expectations in the long run. I am not at all surprised by last week’s upward revision of the ECB’s own inflation forecast, a de facto acknowledgement that European interest rates have been too low for too long. Nor am I surprised by the falling yields of US Treasury inflation-protected securities, or TIPS. The difference in yields between ordinary US Treasuries and TIPS serve as an indicator – albeit imperfect – of future inflationary expectations, which are rising in the US as well.

We may even be in a situation where low interest rates give us the worst of all worlds: no stimulus in the short run, and a rise in inflationary expectations in the long run. What drives inflationary expectations up is not the current prices of oil or wheat, persistent though they may have been. What spooks investors is the loud and clear signal from central banks that they are not prepared to stabilise inflation in adverse circumstances.

This credit crisis is first and foremost a financial solvency crisis. When you are insolvent, the rate of interest is irrelevant because no one will lend you money in any case. And if someone did, the interest rate would still be irrelevant, since you are not going to pay them back. If you face only a liquidity problem, the rate of interest matters a great deal, since it determines the price you pay to regain liquidity.

This has not been a liquidity crisis, but a hugely contagious solvency crisis, affecting sector after sector, starting off with subprime mortgages, spilling over to the rest of the mortgage market, into municipal debt, corporate debt and many obscure sectors of the financial market.

A good example of how contagion works in practice came last week when Carlyle Capital defaulted on a margin call from its banks. What is happening here is known in financial jargon as “haircut contagion”.

In its September 2007 global stability report, the International Monetary Fund provided a useful hypothetical example of how a small fall in asset prices can easily wipe out an investor. Say, a fund invests $100 in a portfolio of risky securities. The margin requirement from the lender is 15 per cent. So on that basis, the fund borrows $85 from the bank. The rest is the fund’s equity. Assume the portfolio drops 5 per cent in value, and is now worth only $95. At that point, the fund faces a margin call. To meet it, it is forced to sell securities. When the bank decides to raise the margin requirement, or the “haircut”, more forced selling becomes necessary. At some point, the fund’s investors start to panic and get out. And the fund is forced to sell again. In this hypothetical IMF example, forced selling turned a portfolio of $100 into one of $36.

Interest rates do not even enter into the picture. Central banks could cut their short-term rates as much as they liked and they still would not be able to stop this kind of contagion. I cannot offer an effective solution either, and believe that this crisis will slowly spread from segment to segment of the credit market. It will spill over into the rest of the financial market and to the real economy. Perhaps there exist some regulatory devices one could deploy to mitigate the forced-selling problem. I suspect we will ultimately end up with some combination of regulatory relief, fiscal bail-outs, nationalisations and many, many bankruptcies of financial institutions not too big to fail.

But monetary policy itself cannot be an effective part of the solution of this credit crisis. This means that we are no longer living in the New Keynesian textbook world where the short-term interest rate is the variable through which central bankers can simultaneously control the economic cycle and maintain price stability in an optimal way.

A monetary policy overreaction would not solve any existing crises, but would create new ones. Nominal interest rates would rise sharply, bond prices would crash and a short financial crisis would become a long one.

[ozymandius]

75. This is so rich with irony.

And chuckling from irony is the only thing that keeps me from falling into an abyss of depression. Take this snippet:

Wolgang Munchau, in "Central bankers cannot stop this contagion," is on the same page as Crook, but for largely different reasons. He argues that a central bank's tools for dealing with crises can address only illiquidity, not the sort of solvency crises we are seeing now. Thus, central bank action can give us the worst of all possible worlds: impotent in bringing relief to the markets but inflationary.

The central bankers can certainly cause this kind of economic plague. But they can do nothing to stop it. Bear in mind that the Fed attempts to remedy the situation it caused with the same mechanisms it used to create this mess.

[4dsc]

63. Moody's Downgrades Bear Stearns Alt-A Deals

This could be the next shoe to fall according to the talking heads on CNBC.. Not a good sign here..

http://www.foxbusiness.com/markets/industries/finance/a...

[Ghost Dog]

68. Markets certainly reacted to that story, then.

[Ghost Dog]

99. Bear Stearns debt protection costs jump, puts active

NEW YORK (Reuters) - The cost to insure the debt of Bear Stearns Cos (BSC.N) surged on Monday and its share and put options were active on concerns the company may be facing liquidity problems.

Bear Stearns chairman of the executive committee, Alan Greenberg, however, said on Monday the market rumors were "totally ridiculous."

The cost to insure Bear Stearns' debt with credit default swaps jumped as high as 650 basis points, or $650,000 per year for five years to insure $10 million in debt, before retracing to 605 basis points, according to broker Phoenix Partners Group.

The swaps had traded at 465 basis points on Friday.

Shorter-dated protection also surged, indicating concerns that any liquidity problems would be more likely to manifest themselves in the short term.

One-year debt protection costs jumped to 1,050 basis points, while two year protection cost 900 basis points per year for two years, Phoenix Partners data showed.

PUT OPTIONS, BONDS

Bear Stearns' shares and put options also were active on Monday, while its bonds weakened to junk levels.

"Bear Stearns shares and put options are active on unconfirmed liquidity concerns," said Paul Foster, options strategist at Web information site theflyonthewall.com in Chicago.

Investors are aggressively buying puts, which convey the right to sell the stock, Foster said.

Bear Stearns' bonds also weakened and buying interest evaporated amid talk about liquidity problems, a trader said. "There probably isn't even a bid for the bonds right now," the trader said.

/... http://news.yahoo.com/s/nm/20080310/bs_nm/bearstearns_s... ;_ylt=AoH5Q_GsYnfZD1YlBZja6Se573QA

[ozymandius]

69. 11:59ET. Faith and Hope have left the building.

Dow 11,829.46 Down 64.23 (0.54%)
Nasdaq 2,193.73 Down 18.76 (0.85%)
S&P 500 1,283.68 Down 9.69 (0.75%)
10-Yr Bond 3.4770% Down 0.0640
NYSE Volume 1,594,043,750
Nasdaq Volume 799,106,000

11:30 am : The major indices quickly fall to their worst levels of the session. The decline is being led by financials (-1.5%). Only tech (+0.2%) and consumer staples (+0.1%) remain in the green.

All 17 of the financial sector's industry groups are trading lower. Thrifts & mortgages (-6.8%) and consumer finance (-3.0%) are posting the largest decline.

Tech is being supported by gains in Microsoft (MSFT 27.99, +0.12), IBM (IBM 114.95, +1.01) and Intel (INTC 20.23, +0.26).DJ30 -55.36 NASDAQ -15.04 SP500 -8.52 NASDAQ Dec/Adv/Vol 1793/977/645 mln NYSE Dec/Adv/Vol 2140/870/439 mln

11:00 am : The major indices come off their lows as energy stocks make a recovery. The energy sector has rebounded into positive territory as crude oil spikes into the green. Oil is now posting a gain of 1.5% after being down as much as 1%. In its recent advance, crude hit $107.00 per barrel, marking a fresh all-time intraday high.

Shares of Lehman Brothers (LEH 45.02, -1.34) and the financial sector (-0.7%) fall to their worst levels of the session on a CNBC report that Lehman is laying off 5% of its global workforce today. The cuts will be across all lines of its business and it is not clear if this will be the end of layoffs. Roughly 1430 people will be affected by the layoffs, considering Lehman had 28,600 employees as of November 2007.DJ30 -11.56 NASDAQ -3.86 SP500 -2.80 NASDAQ Dec/Adv/Vol 1528/1184/499 mln NYSE Dec/Adv/Vol 1794/1171/339 mln

[ozymandius]

72. Love just left too.

12:04
Dow 11,801.37 Down 92.32 (0.78%)
Nasdaq 2,189.99 Down 22.50 (1.02%)
S&P 500 1,279.99 Down 13.38 (1.03%)
10-Yr Bond 3.472% Down 0.069
NYSE Volume 1,639,437,000
Nasdaq Volume 819,996,062.5

[Demeter]

84. So We're Stuck With Love and Charity?

Love is a two-timer, and Charity is a piker.

[Ghost Dog]

70. Weird stories day on Reuters UK:

Most Popular on Reuters UK

1. Atlantic storm lashes southern England | Video
2. Knights Templar win heresy reprieve after 700 years
3. India police "covered up" Keeling's murder | Video
4. Gasoline prices hit new high, seen jumping more
5. Revealed: The seven great "medical myths"
6. Toxic jatropha not magic biofuel crop, experts warn
7. Australian magazine apologises to Harry
8. Company makes camera that "sees" under clothes
9. It's debt freedom day (but don't get too excited)
10. UK Plc picks dividends over buybacks in tough times

Must be the weather. Looking at that Knights Templar story from last October, "A reproduction of the minutes of trials against the Templars, "'Processus Contra Templarios -- Papal Inquiry into the Trial of the Templars'" is a massive work and much more than a book -- with a 5,900 euros (4,125 pounds) price tag," one wonders whether this may actually be an interesting long-term investment object or 'collector's piece'???

http://uk.reuters.com/investing/markets

[librechik]

91. It's quiet. Too quiet.

Reports of long line of erect feathers spotted just above rockline in distance. Sun hot.
Buzzards cackle overhead. Nothing else moving.

[Ghost Dog]

92. You've got it exactly...

[Demeter]

97. "I've Got a Bad Feeling About This"

next cliche from the films, please

[Hugin]

104. "Let's split up..."

"I'll take the attic and you check the basement."

[AnneD]

106. Look around every one...

remember where we parked.....

[Karenina]

129. What a DUMP!

[Demeter]

135. Oooh! Extra Points for Star Trek!

That was my favorite movie: Save the Whales and Have a Nice Day!

[librechik]

111. Whatever you do

DON'T ANSWER THE PHONE (it's AT& Treason--Bugged!)

[Hugin]

113. "Hold my flip-flops a sec..."

"I'll be right back."

[Ghost Dog]

130. .

Although it stands to reason that a samurai should be mindful of the Way of the Samurai, it would seem that we are all negligent. Consequently, if someone were to ask, "What is the true meaning of the Way of the Samurai?" the person who would be able to answer promptly is rare. This is because it has not been established in one's mind beforehand. From this, one's unmindfulness of the Way can be known.

Negligence is an extreme thing. The Way of the Samurai is found in death. When it comes to either/or, there is only the quick choice of death. It is not particularly difficult. Be determined and advance. To say that dying without reaching one's aim is to die a dog's death is the frivolous way of sophisticates. When pressed with the choice of life or death, it is not necessary to gain one's aim.

We all want to live. And in large part we make our logic according to what we like. But not having attained our aim and continuing to live is cowardice. This is a thin dangerous line. To die without gaining one's aim is a dog's death and fanaticism. But there is no shame in this. This is the substance of the Way of the Samurai. If by setting one's heart right every morning and evening, one is able to live as though his body were already dead, he gains freedom in the Way. His whole life will be without blame, and he will succeed in his calling.

A man is a good retainer to the extent that he earnestly places importance in his master. This is the highest sort of retainer. If one is born into a prominent family that goes back for generations, it is sufficient to deeply consider the matter of obligation to one's ancestors, to lay down one's body and mind, and to earnestly esteem one's master. It is further good fortune if, more than this, one has wisdom and talent and can use them appropriately. But even a person who is good for nothing and exceedingly clumsy will be a reliable retainer if only he has the determination to think earnestly of his master. Having only wisdom and talent is the lowest tier of usefulness.

According to their nature, there are both people who have quick intelligence, and those who must withdraw and take time to think things over. Looking into this thoroughly, if one thinks selflessly and adheres to the four vows of the Nabeshima samurai, surprising wisdom will occur regardless of the high or low points of one's nature.

People think that they can clear up profound matters if they consider them deeply, but they exercise perverse thoughts and come to no good because they do their reflecting with only self-interest at the center.

It is difficult for a fool's habits to change to selflessness. In confronting a matter, however, if at first you leave it alone, fix the four vows in your heart, exclude self-interest, and make an effort, you will not go far from your mark.

Because we do most things relying only on our own sagacity we become self-interested, turn our backs on reason, and things do not turn out well. As seen by other people this is sordid, weak, narrow and inefficient. When one is not capable of true intelligence, it is good to consult with someone of good sense. An advisor will fulfil the Way when he makes a decision by selfless and frank intelligence because he is not personally involved. This way of doing things will certainly be seen by others as being strongly rooted. It is, for example, like a large tree with many roots. One man's intelligence is like a tree that has been simply stuck in the ground.

We learn about the sayings and deeds of the men of old in order to entrust ourselves to their wisdom and prevent selfishness. When we throw off our own bias, follow the sayings of the ancients, and confer with other people, matters should go well and without mishap. Lord Katsushige borrowed from the wisdom of Lord Naoshige. This is mentioned in the Ohanashikikigaki. We should be grateful for his concern.

/... http://pagesperso-orange.fr/chabrieres/texts/hagakure.h...

Edited to correct a couple of typos in the text.

[Demeter]

136. Guess I'm Not a Samurai, Then

Just a Pollack. Survivors, the Poles.

[TrogL]

137. I've completely lost it

I googled "Knights Templar win heresy reprieve after 700 years" and it decided it would suggest

"Knights Templar nin heresy"

which of course got me to "Knights that say nin" which is the second Monty Python reference I've had today (the other one's about government reports (http://ruina.tam.cornell.edu/research/topics/locomotion... ) about the inefficiency of walking with long strides (I wish I was making this up)).

No loonie watch. I'm not feeling well and I'm typing nonsense and hallucinating sutff.

[Ghost Dog]

139. Hallucinating stuff? Try this:

http://www.democraticunderground.com/discuss/duboard.ph...

[ozymandius]

78. Carlyle tries to hold off lenders

LONDON - Carlyle Capital Corp. Ltd is in talks with creditors to prevent the liquidation of some $16 billion in securities, the listed mortgage-bond fund said Monday.

Carlyle Capital shook financial markets last week after missing margin calls from banks on its $21.7 billion portfolio of residential mortgage-backed bonds. It said some $5 billion in securities held as collateral may have already been sold.

The fund, an affiliate of the U.S.-based private equity firm Carlyle Group, warned that if it fails to reach an agreement with remaining lenders, all of its securities may be liquidated.
.....

The trouble at Carlyle Capital has raised fears that their assets will flood the market, further depressing prices on fixed-income securities. The securities have dropped sharply in recent weeks as banks pull back on lending to funds and investment vehicles, leading to forced asset sales.

http://news.yahoo.com/s/ap/20080310/ap_on_bi_ge/britain...

[Demeter]

87. Carlyle Could Borrow From Another Branch

Unless the whole fraud is so highly leveraged that there is no actual money involved....

[Robbien]

101. Carlyle Capital was an idiot

It sat on its Fannie and Freddies and margined the hell out of them thinking that hey *wink* *wink* *nudge* *nudge* these are Government backed securities *wink* *wink* *nudge* *nudge*. While everyone else was backing out of the leveraging, Carlyle strolled merrily along believing their own bluff that with the Carlyle name and with the Freddie and Fannies foundation they were untouchable.

Well, as slow on the uptake as the Bernanke/O'Reilly bankers may be, sooner or later one of the many blows from a clue stick will ultimately take effect.

I read Carlyle Capital is now overseas seeking a handout.

[Ghost Dog]

95. TIPS' Yields Show Fed Has Lost Control of Inflation

March 10 (Bloomberg) -- Bond investors have never been so sure that the Federal Reserve will lose control of inflation. They're so convinced that they're giving up yields just to buy debt securities that protect against rising consumer prices.

The yield on the five-year Treasury Inflation-Protected Security due in 2012 has been negative since Feb. 29, and traded today at minus 0.17 percent. The notes, which were first sold in 1997, have never before traded below zero. Even so, firms from Deutsche Asset Management to Vanguard Group Inc., the second- biggest U.S. mutual fund company, say TIPS are a bargain.

/DU Thread:... http://www.democraticunderground.com/discuss/duboard.ph...

[MilesColtrane]

109. I bought into a TIPS fund last May.

With reinvested dividends it has increased 14% so far.

It's the only spot of green amongst the hemorrhaging stocks in my portfolio.

[Hugin]

102. ~14:15 EDT: Now, you kiddies eat 'till you see the happy bunny at the bottom of the bowl...

Index Last Change % change
• DJIA 11774.83 -118.86 -1.00%
• NASDAQ 2179.09 -33.40 -1.51%
• S&P 500 1276.73 -16.64 -1.29%

[AnneD]

107. And remember...

you might want to sniff those brown jelly beans before you pop them in your mouth.

[Hugin]

112. Sadly enough if things continue the way they're headed...

Many people will be saying this to their kids for real.

It occurred to me yesterday when I saw someone throw a potato away due to a minor blemish.

A WHOLE POTATO! FERCRYINGOUTLOUD!

[Warpy]

116. And check that those raisins aint movin'

"It's only down 115" is good news these days.

[AnneD]

119. So ....

This is the way the world ends
This is the way the world ends
This is the way the world ends
Not with a bang but a whimper.

How many day of straight losses have we had now. What % have we lost. I'll post the "Turn back the Hands of Time' pool tomorrow. At this rate-it may close before the end of the month.

[Warpy]

121. I'll admit it hurts to see the paper worth decreasing

even though I know it's overdue, even though I tell myself it was only paper that had no basis in reality and that unless I wanted to leverage that much debt, it wasn't really a meaningful number. My real income is staying the same.

After all, I'm the one who predicted a Dow of 7000 when Stupid finally leaves office.

I'm not quite ready to don a barrel now and I won't be ready to then.

It would be nice if bubbles lasted forever, but the only thing you can say for certain is that they will pop eventually, no matter how pretty they are.

This isn't the way the world ends. This is, however, something else that will pass. Anybody who's ever been constipated knows everything passes eventually.

[AnneD]

123. Of course the world is not ending....

but everyone thinks of the depression as one big drop, and yet it was actually a death spiral with intermittent gasps of air.

If this continues-I see another real parallel.

[Ghost Dog]

131. Eaten Every One

The sun was shining on the sea,
Shining with all his might:
He did his very best to make
The billows smooth and bright--
And this was odd, because it was
The middle of the night.

The moon was shining sulkily,
Because she thought the sun
Had got no business to be there
After the day was done--
"It's very rude of him," she said,
"To come and spoil the fun!"

The sea was wet as wet could be,
The sands were dry as dry.
You could not see a cloud, because
No cloud was in the sky:
No birds were flying overhead--
There were no birds to fly.

The Walrus and the Carpenter
Were walking close at hand;
They wept like anything to see
Such quantities of sand:
"If this were only cleared away,"
They said, "it would be grand!"

"If seven maids with seven mops
Swept it for half a year.
Do you suppose," the Walrus said,
"That they could get it clear?"
"I doubt it," said the Carpenter,
And shed a bitter tear.

"O Oysters, come and walk with us!"
The Walrus did beseech.
"A pleasant walk, a pleasant talk,
Along the briny beach:
We cannot do with more than four,
To give a hand to each."

The eldest Oyster looked at him,
But never a word he said:
The eldest Oyster winked his eye,
And shook his heavy head--
Meaning to say he did not choose
To leave the oyster-bed.

But four young Oysters hurried up,
All eager for the treat:
Their coats were brushed, their faces washed,
Their shoes were clean and neat--
And this was odd, because, you know,
They hadn't any feet.

Four other Oysters followed them,
And yet another four;
And thick and fast they came at last,
And more, and more, and more--
All hopping through the frothy waves,
And scrambling to the shore.

The Walrus and the Carpenter
Walked on a mile or so,
And then they rested on a rock
Conveniently low:
And all the little Oysters stood
And waited in a row.

"The time has come," the Walrus said,
"To talk of many things:
Of shoes--and ships--and sealing-wax--
Of cabbages--and kings--
And why the sea is boiling hot--
And whether pigs have wings."

"But wait a bit," the Oysters cried,
"Before we have our chat;
For some of us are out of breath,
And all of us are fat!"
"No hurry!" said the Carpenter.
They thanked him much for that.

"A loaf of bread," the Walrus said,
"Is what we chiefly need:
Pepper and vinegar besides
Are very good indeed--
Now if you're ready, Oysters dear,
We can begin to feed."

"But not on us!" the Oysters cried,
Turning a little blue.
"After such kindness, that would be
A dismal thing to do!"
"The night is fine," the Walrus said.
"Do you admire the view?

"It was so kind of you to come!
And you are very nice!"
The Carpenter said nothing but
"Cut us another slice:
I wish you were not quite so deaf--
I've had to ask you twice!"

"It seems a shame," the Walrus said,
"To play them such a trick,
After we've brought them out so far,
And made them trot so quick!"
The Carpenter said nothing but
"The butter's spread too thick!"

"I weep for you," the Walrus said:
"I deeply sympathize."
With sobs and tears he sorted out
Those of the largest size,
Holding his pocket-handkerchief
Before his streaming eyes.

"O Oysters," said the Carpenter,
"You've had a pleasant run!
Shall we be trotting home again?'
But answer came there none--
And this was scarcely odd, because
They'd eaten every one.

[TalkingDog]

134. One of my faves. I used to know it by heart. n/t

[CatholicEdHead]

124. I still have my copy of "Bankruptcy: 1995" nearby

I bought that in 1996 for 99cents. It talked about all the same issues which would lead to a collapse, which SMW shows every day. It had to come eventually.

Another one I read a couple years ago which I think of often during this decline is American Theocracy http://www.americantheocracy.net / . With the third of the book that talks about the fall of past empires due to debt problems and looking at our own problems. It is sad to see that material not have much effect.

My economic frugality comes from my late Grandparents and their stories, but more their way of going about life since they lived through the 1930's and were frugal until they passed on a decade or more ago.

[Demeter]

138. Clinton and Volcker Delayed the Crash a Decade

That's why they were so pissed at Clinton. They were afraid we'd actually escape our punishment.

[Ghost Dog]

103. Sovereign wealth funds seen a boon to UK asset mgt

LONDON, March 10 (Reuters) - Sovereign wealth funds present little threat to the fund management industry, despite fears over their strategic intentions, but rather offer opportunities for asset growth, British fund executives said on Monday.

Sovereign funds, which in total run an estimated $1.9 trillion to $2.9 trillion, such as Temasek and the Government of Singapore Investment Corp (GIC) have made high-profile investments in U.S. financial institutions such as Citigroup and Merrill Lynch , who sought billions of dollars after suffering huge subprime-related losses.

The investments have raised concerns that foreign governments might be investing for political rather than financial gain, and might at some point use those stakes to advance their own national interests.

However, speaking at the Future of Fund Management conference in London, Robin Geffen, managing director of Neptune Investment Management, said he would welcome investment by sovereign wealth funds either in the firm's funds or in the firm itself. "We have absolutely no fear of them at all ... We'd be delighted to have them as clients. They show every sign of wanting to tap into Western expertise, as in the case of Blackstone (in which China Investment Corp made a $3 billion investment)," he said.

"We hope to get calls saying they want to invest, or maybe buy a small stake in us." Last week U.S. officials testifying before a U.S. House of Representatives financial services subcommittee said sovereign wealth funds were a good thing but could be more transparent.

Edward Bonham Carter, chief executive and chief investment officer of Jupiter Asset Management, said London should benefit as foreign governments look to learn from its position as a hub for the funds industry.

/... http://asia.news.yahoo.com/080310/3/3ge6i.html

Expertise, huh. So (apart from moral and other practical issues) how much did, for example, China Investment Corp lose on the Blackstone deal, so far? - viz:

China losing heavily on Blackstone investment
Saturday, July 28, 2007

Billsedue is looking thoroughly at the first endavour of the Chinese central government in the international investment and wonders whether they have been screwed.

China's state foreign exchange investment company invested $3B in Blackstone's BX) IPO at a 4.5% discount, so they paid $29.605 per share. Blackstone's stock closed Friday at $24.30. China has on paper already lost 18% of its investment, or approximately $540m.

China has effectively lost half a billion US dollar in a month time: a painful way to reduce the trade surplus.

/.. http://www.chinaherald.net/2007/07/china-losing-heavily...

CIC Suffers Huge Loss from Holding of Blackstone
Monday, February 18, 2008; Posted: 07:49 AM

BEIJING, Feb 18, 2008 (SinoCast via COMTEX) -- BX | news | PowerRating | PR Charts -- Blackstone Group L.P. (NYSE: BX), the first investment object of China Investment Corporation (CIC), saw its stock price fall to new low to USD 17.59 a share on February 12, driving the Chinese investor to suffer huge loss.

CIC, the sovereign wealth fund in China responsible for managing part of China's foreign exchange reserves, on May 2007 purchased a nearly 10% stake in the New York-listed company with about USD 3 billion in total or USD 29.605 a share.

However, stock price of Blackstone, the second largest private equity firm in the US, had been dropping after its listing, which shrank investment of CIC. The Chinese investor lost up to USD 1.218 billion on February 14, equivalent to about CNY 8.7 billion.

/.. http://www.tradingmarkets.com/.site/news/Stock%20News/1... /

ed. And, is it possible that the said Neptune Investment Management could be already underwater???

[Roland99]

118. 3:06pm - Losses deepen as oil tops $108/bbl

Dow 11,747.89 -145.80
Nasdaq 2,175.30 -37.19
S&P 500 1,274.50 -18.87
10 YR 3.44% -0.10
Oil $107.80 $2.65
Gold $972.00 $-2.20

[radfringe]

120. no little

piece of crumbs from the cake is going to 'stimulate' this economy...

the sooner smirkboy is gone the sooner we can fix all of his messes...

[Hugin]

125. ~15:45 EDT: Choppy ride...

(Pun intended)

Index Last Change % change
• DJIA 11740.48 -153.21 -1.29%
• NASDAQ 2172.46 -40.03 -1.81%
• S&P 500 1273.54 -19.83 -1.53%

[RUMMYisFROSTED]

126. 1004.

Or is it like mentioning a no-hitter while it's in progrsss?

[RUMMYisFROSTED]

141. 1240

[Roland99]

127. Closing numbers: And that's a (bloody) wrap

Dow 11,740.15 -153.54
Nasdaq 2,169.34 -43.15
S&P 500 1,273.38 -19.99
Gold $972.00 $-2.20
10 YR 3.44% -0.10
Oil $107.90 $2.75

[MilesColtrane]

132. Open up the sluice grates on the exchange floor.

There's a lot of meat by-products to get out of there by tomorrow's opening bell.

[UpInArms]

142. it's the media's fault blather

After opening near the unchanged mark on Monday, sentiment quickly soured on increased concerns regarding the financial sector and the economy. The major indices finished the day near their lows, with losses of at least 1%.

There were a handful of factors that caused the financial sector (-3.0%) to fall to its lowest level since May 2003. Citigroup (C 17.71, -1.20) cut its earnings estimates on a number of investment banks (-4.4%). Citi expects $9 billion more mark-to-market write-downs from several major U.S. firms.

Countrywide (CFC 4.36, -0.71) and the thrifts & mortgages group (-9.4%) got clipped on a Wall Street Journal report that stated the company, and 15 other subprime lenders, are under FBI investigation for securities fraud.

Fitch Ratings took negative ratings action on eight banks, including Washington Mutual (WM 10.04, -0.67). WaMu had its long-term issuer default rating cut to BBB from A-.

Fannie Mae (FNM 19.81, -2.96) and Freddie Mac (FRE 17.39, -2.26) got hammered due to a Barron's article that mentioned Fannie negatively, and continued concerns that the companies may face further write-downs.

Reports indicate that Lehman Brothers (LEH 42.98, -3.38) will be laying off 5% of its workforce, or roughly 1430 employees. Lehman employed 28,600 people as of November 2007.

Finally, there were plenty of negative rumors that a major Wall Street firm was facing liquidity issues. Specifically, there was speculation that Bear Stearns (BSC 62.30, -7.78) was having problems with liquidity, which the company eventually came out and denied.

Although the financial sector was the key driver in Monday's bearish bias, weakness was broad-based with all ten economic sectors trading lower. Materials (-3.3%) posted the largest loss due to economic fears. Defensive investments consumer staples (-0.4%) and utilities (-0.7%) outperformed on a relative basis.

One bright spot was McDonald's (MCD 53.80, +1.53). The company reported that global same-store sales were up 11.7%, which topped expectations.

The sole economic report was the January Wholesale Inventories reading. Inventories rose 0.8%, which was slight better than the expected rise of 0.5%. This report typically does not hold much influence on the market, as was the case today.

Economic and credit concerns may have weighed on stocks, but that did not stop crude oil from breaking records. Crude rallied $2.70 to an all-time closing high of $107.85 per barrel. Crude also hit an all-time intraday high of $108.21 per barrel.DJ30 -153.54 NASDAQ -43.15 NQ100 -2.0% R2K -2.5% SP400 -2.1% SP500 -20.00 NASDAQ Dec/Adv/Vol 2301/670/2.12 bln NYSE Dec/Adv/Vol 2670/498/1.61 bln

[ozymandius]

144. and the closing blather - OOPS

Sorry to bump your head UpInArms.

[UpInArms]

145. hiya Ozy!

was a long day and just came back in to see the damages

hoping all is good with you and yours

[MilesColtrane]

133. DJIA down now 17% since Oct. of last year.

Guess that makes it official.

He's all grown up.






Hope Bush's Economy doesn't last long, I've only got 20+ years until retirement.

[Ghost Dog]

148. Found this sound/visual track:

http://www.youtube.com/watch?v=1m0yCM5uhQU&feature=rela...

[ozymandius]

140. Gasoline's price spike has only just begun

NEW YORK (CNNMoney.com) -- Gasoline will hit a new record high price - perhaps as early as Tuesday - and experts say it will likely continue to soar in tandem with the skyrocketing price of crude.

The national average retail price for gas has already risen 26 cents in the last month, according to the motorist organization AAA. At $3.222 a gallon, it is less than a cent away from the all-time record.

And experts say motorists should prepare to pay nearly $4 a gallon - and in some places even more than that - before the price of gas finally comes down in the late spring as high prices crimp demand.

The price of gasoline usually increases this time of year. Several factors contribute to the runup: Low refinery output due to maintenance, a switch from winter to pricier summer blends, and the looming high-demand summer driving season.

http://money.cnn.com/2008/03/10/news/economy/gas_prices...

[4dsc]

143. Gas went up $ .13 here today..

I wonder how much more tomorrow..

[JNelson6563]

146. $3.27 a gallon

in northern Michigan right now.

Julie