STOCK MARKET WATCH, Tuesday April 22

[ozymandius]

Source: du

STOCK MARKET WATCH, Tuesday April 22, 2008

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 274
DAYS SINCE DEMOCRACY DIED (12/12/00) 2648 DAYS
WHERE'S OSAMA BIN-LADEN? 2373 DAYS
DAYS SINCE ENRON COLLAPSE = 2664
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 April 21, 2008

Dow... 12,825.02 -24.34 (-0.19%)
Nasdaq... 2,408.04 +5.07 (+0.21%)
S&P 500... 1,388.17 -2.16 (-0.16%)
Gold future... 917.60 +2.40 (+0.26%)
30-Year Bond 4.48% -0.04 (-0.91%)
10-Yr Bond... 3.71% -0.03 (-0.83%)






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 [email protected]

For information on protests and other actions Citizens For Legitimate Government

---

Read more: du

[ozymandius]

1. Market WrapUp: Getting Real

BY ROB KIRBY

Last week saw China renew a contract with Potash Corp. of Toronto which calls for shipment of 1 million metric tons of potash at $576 per metric ton, which appears to be a $400 per metric ton increase over the 2007 price:

Chinese agree to pay extra $400 U.S. per tonne for fertilizer

Apr 17, 2008 04:30 AM

Dana Flavelle
Business Reporter

In another sign that global demand for food is going through the roof, the Chinese have agreed to pay three times as much for fertilizer this year to boost crops.

Shares in the world's largest fertilizer supplier, Potash Corp. of Saskatchewan, jumped 5.5 per cent to $198.50 a share on the news, helping take the Toronto Stock Exchange higher yesterday.

Potash Corp. is now the second largest publicly traded company in Canada, after Research In Motion and ahead of the Royal Bank of Canada and Manulife Financial, with a market value of $62 billion. Its stock has gained nearly 1,000 per cent in value over five years.

Perhaps China’s willingness to pay has something to do with the dollar growth in their international reserve account:

.....

What’s Reality?

Mr. Matthew Simmons, a renowned “peak-oiler” and frequent quest of Jim’s steadfastly maintains that discovery of ‘replacement’ crude oil reserves has severely lagged consumption.

Based on most published accounts, from officialdom, of “announced” discovered reserves - I would concur.

However, I have articulated in the past, my disbelief in the ‘apparent’ geographical dispersion of the world’s crude oil reserves – strictly from a fundamental or “common sense” point of view.

As a result of my own research, I do believe that the western world has encountered “peak production from existing infrastructure and known reserves” but I question whether or not we have actually achieved “peak reserves”.

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

[ozymandius]

2. Today's Report

10:00 Existing Home Sales Mar
Briefing.com 4.90M
Consensus 4.92M
Prior 5.03M

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

[UpInArms]

79. March Existing Homes Sales @ 4.93 mil - down 2% from Feb

http://www.reuters.com/article/bondsNews/idUSN2228970420080422

WASHINGTON, April 22 (Reuters) - The pace of existing home sales in the United States fell in March to a 4.93 million-unit annual rate, the National Association of Realtors said on Tuesday in a report that showed the U.S. housing market continues to struggle.

Economists polled by Reuters were expecting home resales to fall to a 4.92 million-unit pace, off from the February rate of 5.03 million that was left unchanged.

The inventory of homes for sale swelled by 40,000 to 4.06 million homes or a 9.9 months' supply at the current sales pace. Meanwhile, the median national home price declined 7.7 percent from a year ago to $200,700.

[ozymandius]

3. Oil steadies near overnight record

SINGAPORE - Oil prices steadied Tuesday in Asia near the previous session's record close above $117 a barrel, supported by concerns about instability in crude supplies from some producers.

A Royal Dutch Shell PLC joint venture in Nigeria said Monday it may have to cut crude deliveries some 169,000 barrels a day in April and May because militants sabotaged a pipeline last week in the country's south.

The company, Shell Petroleum Development Co., declared force majeure on its April and May oil delivery contracts from its 400,000-barrel-a-day Bonny fields, effective April 22, a move that protects it from litigation if it fails to deliver on contractual obligations to buyers.

Militancy and lawlessness has grown in recent years in Nigeria's south, and attacks on oil infrastructure have become common.

.....

Other supply developments also factored into the market. In Mexico, oil production slipped 7.8 percent in the first quarter to 2.91 million barrels a day as output at the country's traditional oil fields wanes, state oil company Petroleos Mexicanos said. In Scotland, workers at Ineos PLC's 196,000-barrel-a-day Grangemouth refinery and petrochemical plant have threatened to strike for 48 hours from April 27 over changes to an employee pension plan.

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

[ozymandius]

4. Oil prices surge to new record of $118 a barrel on weak dollar

http://news.yahoo.com/s/afp/20080422/ts_afp/commoditiesenergyoilpricerecord_080422093134

quite brief

[Demeter]

50. Oil rallies $2 to near $120 on supply worries

http://news.yahoo.com/s/nm/20080422/bs_nm/markets_oil_dc_16


Oil jumped $2 to record highs near $120 a barrel on Tuesday on supply concerns from Nigeria and the North Sea. U.S. crude rose $1.90 to $119.38 a barrel by 12:18 p.m. EDT (1618 GMT) after hitting an all-time peak of $119.74 earlier. London Brent crude gained $1.80 to trade at $116.23 a barrel, after rising to a record peak of $116.75. Oil's fresh highs have extended a rally that has seen prices climb more than five-fold since 2002, driven by booming demand from emerging markets such as China that has coincided with long-term supply constraints. The slumping U.S. greenback, which tumbled to fresh lows against the euro on Tuesday, has also helped boost dollar-denominated commodities like oil and attracted speculative inflows from hedge funds. "The trend is up and the market didn't break down when it moved lower in the morning, and you have the weak dollar and the supply disruptions are in the mix," said Eric Wittenauer, analyst at Wachovia Securities.

Pipeline attacks in OPEC member Nigeria last week shut 169,000 barrels per day (bpd) of Bonny Light production, forcing Royal Dutch Shell Plc (RDSa.L) to declare force majeure on crude oil exports.
Nigerian rebels also attacked two Shell oil pipelines in the Niger Delta on Monday.

Management and union officials are in talks to avoid a planned two-day strike at Scotland's Grangemouth refinery, which could force the shut-in of some oil and natural gas production from the North Sea. Despite the supply worries, officials from oil cartel OPEC insist markets have enough crude.

Ali al-Naimi, oil minister to OPEC kingpin Saudi Arabia, on Tuesday said a lack of investment in crude and refining capacity -- not a lack of reserves -- was driving prices higher. "Recently, I have observed an unprecedented level of uncertainty, doubt and even fear in discussions about the future of energy and its impact on global economic prospects," Naimi said at the International Energy Forum in Rome. "I can assure you unequivocally that the world is not running out of oil."

Rising energy costs and the wider U.S. economic crisis have forced analysts to revise downward oil demand growth forecasts for the world's largest consumer. However, demand from emerging economies continues to rise. China's oil demand leapt 8 percent in March from a year ago, the fastest rate in 19 months as refiners boosted imports ahead of the Olympics.

[Demeter]

72. Local Pump Price up 15 Cents TODAY to $3.65

You'd never know Michigan was in a Depression.

[ozymandius]

5. With gas hitting record highs, drivers feeling squeezed

NEW YORK - Cabbies here complain their take-home pay is thinner than it used to be. Trucking companies across the country are making drivers slow down to conserve fuel. Filling station owners plead that really, really, the skyrocketing prices aren't their fault.

And the rest of us? With gas prices now averaging $3.50 a gallon nationwide, according to AAA and the Oil Price Information Service, more and more Americans who have to drive are weighing the need for each and every trip.

......

Gasoline prices typically rise in the spring as stations switch over to pricier summer-grade fuel and demand picks up as more travelers take to the road.

But this year prices are rising even faster than normal, experts say, because of the massive jump in benchmark crude prices, which spiked to a record $117.76 a barrel Monday before settling a record settlement price of $117.48 on the New York Mercantile Exchange, up 79 cents from the previous close. It was the sixth day in a row prices set new records.

http://news.yahoo.com/s/ap/20080422/ap_on_bi_ge/gas_prices_consumers

[ozymandius]

6. Asian markets hunker down, fear more bank pain

HONG KONG (Reuters) - Asian shares fell on Tuesday as investors flinched at more bad news from the banking sector while fears of fresh dollar weakness hurt exporters and kept oil within sight of its latest record of nearly $118 a barrel.

Major European markets also fell in early trading. London's FTSE 100 (.FTSE) dropped 0.2 percent, the German DAX (.GDAXI) slipped 0.4 percent and the French CAC 40 (.FCHI) was off 0.3 percent.

.....

Investors hoping that an end to the credit crisis might be in sight were brought back to earth on Monday when Bank of America Corp (BAC.N), the top U.S. retail bank, showed a 77 percent drop in quarterly profit and regional bank National City Corp (NCC.N) said it was raising $7 billion in capital.

More bad news from banks could be on the way after Britain's Royal Bank of Scotland (RBS.L) announced a 12 billion pound ($24 billion) rights issue to cover a potential 5.9 billion pound writedown. Other British banks could follow suit.

http://news.yahoo.com/s/nm/20080422/bs_nm/markets_global_dc

[ozymandius]

7. RBS exposure: another $11.7B in losses tied to mortgages

LONDON - Royal Bank of Scotland said Tuesday it had suffered $11.7 billion in additional losses and was forced to raise $23.9 billion in new capital to cover exposure to toxic U.S. loans.

The bank said it would raise even more capital by asking shareholders to approve a rights issue that will offer them 11 new shares for every 18 existing shares at 200 pence ($3.98) each.

RBS said it expects further write-downs on mortgage-backed securities, collateralized debt obligations and other assets of 4.3 billion pounds ($8.6 billion).

.....

RBS said it also intends to rid itself of its insurance business and other smaller assets.

Royal Bank of Scotland Group PLC, Britain's second-largest bank by market capitalization, stretched its reserves last year in leading a consortium including Belgian-Dutch group Fortis and Spain's Banco Santander in the takeover of Dutch giant ABN Amro Holding NV. Then it was hit by the freeze-up of the market in securities based on mortgages.

http://news.yahoo.com/s/ap/20080422/ap_on_bi_ge/britain_rbs

[AnneD]

30. Fed has loaned $360 billion to banks since December

WASHINGTON — Battling to relieve stressed credit markets, the Federal Reserve has provided a total of $360 billion in short-term loans to squeezed banks since December to help them overcome credit problems.

The central bank today announced the results of its most recent auction — the 10th since the program started in December, where commercial banks bid to get a slice of another $50 billion in the short-term loans.

It's part of an ongoing effort by the Fed to help ease the credit crunch, which erupted last August, intensified in December and January and took another turn for the worst in March with the sudden crash of Bear Stearns, the nation's fifth-largest investment house.

The mighty blows of the housing, credit and financial crises threaten to push the country into a deep recession.

more.....

http://www.chron.com/disp/story.mpl/business/5720156.html

Another Malox moment.:puke:

[Tansy_Gold]

86. "Then it was hit by the freeze-up of the market in securities based on mortgages."

Meaning, it was the one who got stuck with the "Old Maid" card and couldn't get rid of it.

I'm really sorry they paid buckets of cash for "toxic" mortgages. With this $11.7B write down and $8.6B more pending just from RBS, you really have to wonder just how much is being "written down" for these "toxic" mortgages. I mean, what's the actual total in terms of the subprime mortgages that are expected to default, and then what's the actual total of write downs so far and anticipated? Can we come up with some numbers here?

Tansy Gold, who has an accounting background but doesn't need it to add two and two, or 11.7 and 8.6 .. . . . . .

[ozymandius]

8. Stocks set to pull back

LONDON (CNNMoney.com) -- Stock futures fell early Tuesday as investors reacted to a bleak outlook from Texas Instruments and awaited earnings from a trio of Dow components.

At 4:34 a.m. ET, Nasdaq and S&P futures were lower and indicating losses at the market open.

Texas Instruments (TXN, Fortune 500) reported a jump in quarterly profit late Monday. But the chipmaker's outlook disappointed investors. Shares fell 2% in after-hours trading.

The cascade of earnings continues with AT&T (T, Fortune 500), DuPont (DD, Fortune 500) and McDonald's (MCD, Fortune 500) all due to report earnings before the opening bell. All three are components of the blue-chip Dow Jones industrial average.

http://money.cnn.com/2008/04/22/markets/stockswatch/index.htm?postversion=2008042205

[ozymandius]

9. futures at 6:14

S&P futures vs fair value: -0.9. Nasdaq futures vs fair value: -11.0.

[Demeter]

51. Stocks fall on oil surge and profit worries

http://news.yahoo.com/s/nm/20080422/bs_nm/markets_stocks_dc_21



Stocks fell on Tuesday as surging oil prices escalated concerns about how higher energy costs will affect the economy, profits and consumer spending, while disappointing earnings outlooks also darkened the mood.

All three major U.S. stock indexes dropped more than 1 percent, while an index of airline stocks (.XAL) plunged 11.6 percent and an index of retailers' shares (.RLX) slid 2.6 percent as crude oil futures rose $2 to a record above $119 per barrel..."The price of oil is the over-arching issue," said Matt Kaufler, portfolio manager and equity analyst at Clover Capital Management in Rochester, New York. "Everyone keep saying that it's overdone but the price keeps going up. The more it stays elevated, the more inflation fears becomes cemented in."

[ozymandius]

10. ATT braces for more hangups

The pinch on consumer spending continues to cause big hangups at phone companies where their core businesses — landline telephone service — is eroding faster than ever.

The latest round in the alarming decline in phone lines will come Tuesday morning, when AT&T (T) presents its first-quarter earnings. Analysts are expecting AT&T — No.10 on the Fortune 500 list — to report that the rate of line losses in Q1 exceeded the 8% hit it took last year. No. 2 telco Verizon (VZ) has an even higher cancellation rate, losing 8.1% of its lines last year compared with a 7.6% decline in 2006.

.....

AT&T’s so-called landline business accounts for about 59% of total revenue and about 55% of its profits. With the number of lines falling, AT&T has had to trim costs to keep in pace. Last week AT&T said it was cutting about 4,650 employees, or 1.5% of its staff in a “streamlining” effort.

http://techland.blogs.fortune.cnn.com/2008/04/21/att-shrinkage-report-on-deck/

[UpInArms]

11. dollar watch

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

Last trade 71.533 Change -0.133 (-0.19%)

Majors Point to Easing Risk Aversion

http://www.dailyfx.com/story/topheadline/Majors_Point_to_Easing_Risk_1208836827750.html

The majors have positioned to signal gains for the Australian and New Zealand dollars, as well as the US dollar’s pairing against the Japanese Yen. USDJPY price action has tracked closely to the Dow stock index, while the AUD and the NZD bore the brunt of carry trade liquidation fueled by recent bouts of risk aversion. Interestingly, the same cannot be said of Franc, with the USDCHF trading sideways in a range. The Euro remains a momentum trade, seeming to need to hit 1.60 regardless of developing weakness in the Euro Zone. The Pound is left looking for direction following the announcement of a last-minute liquidity injection from the BOE, while the Canadian Dollar retains its independence and continues to move along established technical trends.



...more...

Euro: Taking Another Stab at 1.60

http://www.dailyfx.com/story/bio1/Euro__Taking_Another_Stab_at_1208812708842.html

The fourth time may be the charm for the Euro which is once again trying to rise above 1.60. There was no major Eurozone economic data released this morning, but rising inflationary pressures has sparked speculation that the next move by the European Central Bank may be a rate hike instead of a rate cut. Even though economic data has been slowly deteriorating, the fact that price growth is well above the ECB’s target level is making the central bank increasingly uncomfortable. ECB member Liikanen reminded the markets this morning that Eurozone inflation risks are real but despite comments such as these, a rate hike from the ECB is very unlikely. We are already beginning to see consumer spending slow and there are rumors that the big moves in LIBOR rates suggest that European banks are underreporting their losses. Therefore the ECB may not want to risk tipping over their own economy by raising interest rates. Wednesday’s PMI numbers will shed more light on how well the Eurozone economy has been holding up. The tightening ranges of the EUR/USD reflect indecision and the market’s uncertainty about whether the next big surprise will come from the Eurozone or the US economy. Meanwhile the Swiss franc is up sharply today following stronger than expected inflation numbers. Producer prices grew 0.6 percent last month, which was double the market’ expectations, driving the Swiss franc to a 17 year high against the Japanese Yen. The market’s interpretation of Swiss economic is better seen CHF/JPY these days than EUR/CHF because EUR/CHF has become a carry trade currency.

<snip>

US Dollar: Giving Back Gains

With no US economic data released today, the greenback has given back a portion of Friday’s gains. Bank of America, the nation’s second largest bank became the latest victim of subprime related losses. They reported a 77 percent drop in net income as provisions for credit losses hit $6 billion. In order to raise capital, the Bank has been forced to sell part of their highly lucrative stake in China’s Construction Bank. In 2005, they invested $3 billion into the bank and now that investment is worth $16 billion. The plethora of bad news from the US financial sector has weighed on US stocks as well as the US dollar. Activity should pick up tomorrow with existing home sales due for release. Mortgage applications have been rebounding, which suggests that home sales could improve as well, but house prices may continue to be the Achilles heel for real estate. Watch out for more job cuts by Bank of America, which will exacerbate what should be a quickly deteriorating labor market.

...more...

[UpInArms]

77. Dollar sinks into uncharted territory vs. euro - Euro hits 1.60

http://www.marketwatch.com/news/story/currencies-dollar-hits-record-low/story.aspx?guid=%7B0AE286C5%2D4559%2D4444%2DBD46%2D64004243B5F5%7D&dist=hplatest

SAN FRANCISCO (MarketWatch) -- The dollar sank to a new record low against the euro Tuesday, pressured by surging oil prices and hawkish talk from European Central Bank officials.

The 15-nation currency broke through the key $1.60 level to a high of $1.6018 according to FactSet Research, its strongest level since it began trading in January 1999. The euro was last at $1.5994, up from $1.5913 in late North American trading Monday. See real-time currency prices.

"The latest bout of euro strength or dollar weakness can be partially attributed to the sharp rise in oil prices," wrote Kathy Lien, chief strategist at Forex Capital Markets.

Crude-oil futures surged Tuesday to a new high of $119.90 a barrel, within one thin dime of the $120 level, before closing up 1.6%.

"This continual rise in inflationary pressures raises the risk of a rate hike from the European Central Bank," said Lien.

The euro's rise took the wind out of the greenback's earlier strength against its Canadian counterpart Tuesday. The U.S. dollar firmed after the central Bank of Canada cut its target for the overnight rate by 50 basis points to 3%, with the bank projecting a "deeper and more protracted slowdown in the U.S. economy." See full story.

...more...

[UpInArms]

12. Florida luxury home market shows signs of wear

:nopity:

http://www.reuters.com/article/newsOne/idUSN0128282020080421

MIAMI (Reuters) - The surprisingly healthy market for oceanfront mansions and palatial condos in Florida, one of the most toxic states in America's housing meltdown, may finally be showing some cracks.

While many luxury properties are selling briskly thanks to Europeans and Canadians pouring their strong currencies into Florida, billionaire Donald Trump recently dropped the price on a Palm Beach mansion by 20 percent, and some market watchers say the U.S. housing woes have finally touched the wealthy.

At a recent luxury property auction in Fort Lauderdale, the auctioneer took home after home off the block within moments after opening the bidding when nobody made an offer.

On one high-rise condo in the Miami enclave of Williams Island, a 3,100 square foot penthouse previously listed at $5.6 million, he opened bidding at $5 million, lowered his price to $3.5 million, $3 million, $2.5 million, and then closed the auction, all within a minute.

<snip>

An oceanfront estate owned by philanthropist Sidney Kimmel sold this month for $81.5 million, the full asking price, broker Dana Koch of Corcoran Group said. He would not reveal the buyer, but a local newspaper identified him as John Thornton, former president of Goldman Sachs.

...more...

[54anickel]

16. Just a little hide-away for Johnnie Thorton to gather with the alma mater gang for

for tea and cookies is all.


From left, Goldman Sachs alumni: Treasury Secretary Henry M. Paulson Jr.; Robert E. Rubin of Citigroup; Gov. Jon Corzine of New Jersey; and Joshua B. Bolten, White House chief of staff.


Goldman’s Shadow Extends Far Past Wall St.

[Hugin]

28. Desperation is rearing it's ugly head all over...

Personal story: Okay, I owe a teeny-tiny (unbelievably small) mortgage on some property I bought years ago. I've
kept it that way mainly for tax reasons and because the "Three Big Sisters/Brothers Credit Rating Brown Shirts" really
like to see you owe somebody something. :eyes:

Well, thanks to protections granted mortgage borrowers via THE NEW DEAL! I was notified that my itty-bitty mortgage was
being sold/transfered/stolen/whatever to a large huge mega Bank heavily in trouble due to the Mortgage Crisis...
Which will remain unmentioned *coff* Citi *coff* to protect it from public ridicule. Now, this notice was cleverly
disguised as 'junk mail' maybe in the hopes I'd not notice and let the transaction through unfettered... Sorry CHARLES. I
paid that sucker off this morning. No way I'm going to let the collapse of their stupid Ponzi Scheme steal my property.
My family already had that happen once... and it's like Bush tried to say, "Fool us once, shame on you. Fool us twice,
shame on us."

Anyway, if they're fooling with mortgages of the value of this one... All I can say is, They ARE IN TROUBLE!

I'm just happy there was the 15 day pre-notice (required by LAW and REGULATION) notifying me of this farce.

:rant:

[TalkingDog]

13. For those SMWers who are proponents of commodities.

Especially the Stock Your Larder First type:

http://nysun.com/news/food-rationing-confronts-breadbasket-world

snip:
Major retailers in New York, in areas of New England, and on the West Coast are limiting purchases of flour, rice, and cooking oil as demand outstrips supply. There are also anecdotal reports that some consumers are hoarding grain stocks.


snip:

An employee at the Costco store in Queens said there were no restrictions on rice buying, but limits were being imposed on purchases of oil and flour. Internet postings attributed some of the shortage at the retail level to bakery owners who flocked to warehouse stores when the price of flour from commercial suppliers doubled.

The curbs and shortages are being tracked with concern by survivalists who view the phenomenon as a harbinger of more serious trouble to come.




And then there is Theresa, who probably doesn't get it just yet....

snip:
For now, rice is available at Asian markets in California, though consumers have fewer choices when buying the largest bags. “At our neighborhood store, it’s very expensive, more than $30” for a 25-pound bag, a housewife from Mountain View, Theresa Esquerra, said. “I’m not going to pay $30. Maybe we’ll just eat bread.”

[Dr.Phool]

14. And if we run out of bread, we'll eat cake.

[Karenina]

15. Have a dirt cookie.

Helps quiet the stomach growls, I hear...

[AnneD]

60. Jam Sandwich...

2 pieces of bread and jam them into your mouth. (see hand sandwich)
Hot dog wrap. Wrap a tortilla around your finger-pretending it is a hot dog. Eat tortilla on bite at a time-sliding your finger downwars so as not to get bitten,

You know you are broke when you step on a penny and without taking your foot up, tell if it is heads or tails.:evilgrin:

[DemReadingDU]

17. Must share dog story

I have a beagle, beagles have a nose for anything and everything. I was cleaning up the yard of her 'presents', and noticed one had some unusual white things. I was thinking maybe worms, but wasn't sure. Later, I brought her in the house and heard her rustling in her crate. She had dragged in her crate a new package of rice!

Rice! My dog ate dry rice, possible only a spoonful, but there are worldwide shortages of rice. jeeez!


:rofl:

[Demeter]

46. You're Lucky There Weren't Any Consequences

Evidently, they stopped throwing rice at weddings because birds would eat it, and then explode as rice swells when exposed to water.

[AnneD]

22. Morning Marketeers....

:donut: and lurkers. I think this food shortage is the sleeper story in this country. The last time we really had a food shortage and rationing was in the Depression and WWII. Even then it was regional from what I gather. More folks were farmers and lived in rural areas.

Mom was telling me that their farm was fairly self sufficient (fruits, dates, nuts, veggies, chickens, and hogs) but that they learned to make honey into 'maple' syrup, use it in it's crystallized form in baking, etc. They also learned to eat everything. Grandma sewed and made just about any kind garment and cooked everything. Grandpa was a jack of all trades and among other things would resole their shoes with the rubber from old tires he had and when their feet grew to big for their fall shoe-toes and heels were cut out and they were made into sandals. They would trade their ration coupons with folks in town and barter for things.

We can't go back totally to those days, but I think we will have spot shortages in the future more frequently and the government will act quickly to hush up any stories or riots that happen. Nothing gets a government booted quicker than food riots. Wonder how they will handle this with the Guard spread thin. Homeland Security may take the place of troops of the NG. I don't think we are prepared to handle something like this and it will be a shock when it happens. Keep your pantries stocked folks-it's better than money in the bank.

Happy hunting and watch out for the bears.

[Dr.Phool]

24. My mother took a trip back to her birthplace a couple of years ago.

Back in the mountains and hollers of West Virginia. As they were driving up the old dirt road (now lightly paved) She remarked how everything looked so different, and then it hit her. "Nobody is growing their food any more".

They used to all have big gardens, and can everything to last them through the winter. Not anymore.

Now, I'm headed down to Costco to get stocked up for hurricane season. But, this year it might be a different kind of storm.

[Warpy]

32. 99% of the shortage right now is hoarding

People seeing prices going up and they overbuy, creating false shortages for everybody else.

Meanwhile, six months from now, all that stuff they're hoarding will be full of bugs to the point of being inedible.

There will be shortages because too many people are basically fools.

Since I dislike feeding the bugs, I'll just keep buying what I need and work around any spot shortages as they arise.

I've been a whole foods nut for 30+ years. I'm used to seeing "out of stock" every time I shop. This will be nothing new for me.

[AnneD]

35. The trick is ....

rotating your food and buying what you use ie I am not a big bread eater but eat pasta. I don't store much wheat (and do use the nitro packed product to extend the shelf life) but have more pasta and sauces on hand. I eat meat but hubby is a vegetarian so I don't store as much. I'm too frugal to feed the bugs.

But hey, you've got a temperate climate and have your garden growing any way.

[Warpy]

37. What I don't have is WATER

and soil that doesn't have a brick hard layer of caliche six inches down.

[AnneD]

49. Don't know much about hydrology in that area but there is this.......

http://www.watertanks.com/


Besides, at the rate we're melting the ice caps-you'll be able to sell your desert plot as beach front property:evilgrin:

[Warpy]

52. It already is beach front property

The problem is that the ocean is a mile down.

[DemReadingDU]

55. I keep my flour in the freezer

It never gets bugs, and I can use it directly form the bag as it doesn't actually get frozen.

[AnneD]

70. I do that too

keeps it from going stale.

[Tansy_Gold]

23. Confessions of a hoarder

No, I'm not Mormon, but I do try to keep a stock of essentials on hand. There have been times in my life when my future was not terribly secure -- right now being one of those times -- and I've felt it prudent to stock up on non-perishables: rice, pasta, spices and seasonings, cooking oil, sugar (and/or honey), flour, baking soda, baking powder, cereal, tea, even pop corn. Not huge quantities, but enough to last . . . . for a while.

Just a week or so ago a friend and I were talking about the wisdom of starting a sourdough starter, just to maintain some active yeast. Hmmmm, on second thought, it might not be such a bad idea. . . .


Tansy Gold, who doesn't have and doesn't need a bread machine

[AnneD]

27. Secure food supplies....

No, no Mormons in our family tree either, but Mom grew up in AZ. Our family on both sides always believed in maintaining a year's supply of food. The Mormons do have guidlines on the best time to add to your pantry when it is seasonably appropriate. If you do it year round it is not too expensive. I love canning but don't do it often anymore-it is almost a dying art. There are places that have bulk food that can be rehydrated to. I keep some of that around due to power outages due to hurricanes.

A place to start
http://aiki.pbwiki.com/Canned+Food+Storage+Tips
http://articles.moneycentral.msn.com/SavingandDebt/SaveMoney/TheEmergencyFundYouCanEat.aspx
http://www.flylady.net/pages/FLYsense4.asp

Shelf life info a place to start
http://outlands.tripod.com/farm/example1.htm

General guidlines and forms
http://www.organizedhome.com/organized-pantry-beginner-guide-pantry-pride

General News for Mormons:
great info on world food situations and tips
http://newsformormons.com/category/food-storage/

I don't go too crazy but I don't get caught unprepared either.

[MadinMo]

33. Thanks for the links AnneD

I have been a moderate "stocker upper" for a while now, and frequent many sites with information on this subject. These are new to me.

The general dread gets to me some days --- the not knowing how much to prepare and/or what I'm forgetting to store. Right now my goal is to be able to sit out any "event" at my home for an extended period of time, probably a few months. We'd be okay except for dairy and meat.

We are planting a big garden this year, or will if the ground will dry out and we can get the tiller in to do the job, and the plan is to can/freeze/store as much extra as possible.

[AnneD]

57. Reguarding milk and meat....

TVP (textured vegtable protien) has come a long way in taste and I use it alot and I keep powdered milk (that too is in nitro packed cans). I love to get powdered eggs (I live in the city)and use them for cooking daily.

Here is a vendor I have used for bulk staples
http://waltonfeed.com/

A clearing house of different suppliers.
I like them because you can get the add water meals
http://survivalacres.com/

And my fav place to get off the grid supplies (Amish store)
I swear if I am ever in OHIO I want to see this place
http://www.lehmans.com/

Shop around and price items. Shipping is expensive but I still come out eating cheaper and better from my pantry.

[bain_sidhe]

54. bookmarking!

some great stuff there, thank you for the links!

[wordpix]

68. food security: we won't have it if we keep selling our best farmland to developers

[AnneD]

69. Or...

Agrabusiness and use GM seeds from Monsanto, ADM or Cargill.

[Demeter]

47. You Can Buy Yeast in Quantity and Store in the Freezer

My stock is several years old--only make bread for Easter and Christmas (in good years).

[Hugin]

26. Or maybe we could just eat cake...

Hmm... Now where have I heard that before? :think:




Sorry I'm late fellow peoples... But, the Al/Pat and Nancy/Newt climate change ads on the H-Channel caused a flare up of my GERD.

[AnneD]

31. Regulators: Commodity trading restrictions not answer

WASHINGTON — Federal regulators today said placing tougher restrictions on agricultural commodity trading will not alleviate high and volatile prices in those markets, and could make matters worse.

Farmers, ranchers and grain processors met with regulators in Washington to discuss the causes behind turbulent markets and historically high prices for wheat, corn and other foodstuffs. Food producers have complained in recent months that increased speculation by Wall Street investors has thrown off-balance the exchanges where they buy and sell crop futures.

But commissioners from the Commodity Futures Trading Commission said current conditions can be explained by a host of factors that have driven demand for U.S. crops: a weak dollar, small inventories due to poor weather and higher transportation costs.

In their opening comments to participants, the agency's four commissioners showed little enthusiasm for setting new restrictions on speculation to attempt to calm commodities trading.

more...

http://www.chron.com/disp/story.mpl/business/5720155.html

Gee we know how well deregulation worked for housing. Hold on to your butts folks.

[54anickel]

18. A strong case for market optimism (bad news is getting all the press)

Believe it or not - you have several good reasons to believe the sky isn't falling. In fact, it may be clearing up.

http://money.cnn.com/2008/04/21/pf/mad_market.moneymag/index.htm?postversion=2008042204

big snip>

That sounds awful. Why on earth should I be optimistic?
First, remember that predictors of doom make headlines precisely because their positions are so extreme. Most forecasters are more positive. The UCLA Anderson Forecast still anticipates that the slowdown won't even be severe enough to rank as an official recession. (To qualify, the economy has to actually shrink for at least six months, not just stagnate.)

Edward Yardeni of Yardeni Research is one of many economists who expect a short, shallow recession during the first half of the year with a recovery starting by fall, and he projects that S&P 500 operating earnings will rise 7% for the year. Yardeni also notes that the price/earnings ratios of big value stocks are quite low and that growth stocks are the cheapest they've been in more than a decade.

Even Warren Buffett, who has said we're now in a recession, is bullish longer term. His Berkshire Hathaway has sold a variety of options basically betting that the stock market is close to a bottom.

I'm inclined to agree that the outlook for the economy is more encouraging than most investors seem to think. For one thing, it appears likely that most of the damage has been done and that stock prices today reflect what are now widely recognized problems. Moreover, while you can find similarities between the three big shocks of the past 80 years and today's situation, none really matches present circumstances. Let's look at them in more detail.

snip>

In any event, the Fed can't afford to worry about the dollar as long as it has the credit crunch to deal with. Low interest rates are necessary to limit damage to the economy, which has to be top priority. When growth resumes and the Fed is raising rates once again, the dollar should recover much of its lost value.

snip>

That said, my optimistic outlook for stocks does rest on two reasonable, though by no means surefire, assumptions. The first is that the Fed will pursue the right interest-rate policy - specifically, that it will continue to cut short-term rates this year and that it will also start nudging them back up in a year or two so that the economy and inflation don't over-heat.

snip>

The second assumption is that the scale of loan losses will remain within manageable bounds. The doomsayers notwithstanding, the total equity in the U.S. financial system is many times larger than the total losses most economists expect.

more from the future surprised economist....

[DemReadingDU]

19. When a HELOC freezes over

What to do if the bank tries to put your credit line on ice. By Carolyn Bigda, Money Magazine writer-reporter
Last Updated: April 21, 2008: 4:11 AM EDT

When Diane Carr, 55, received word in February that her home-equity line of credit would be canceled, she was dumbfounded. The HELOC had been open since 2003, when she bought her Woodside, Calif. home. And Carr had never even tapped it.

"It was just a security thing," she says. No matter. In recent months, tens of thousands of homeowners like Carr have been shut off from their equity as lenders try to stem losses from subprime mortgages and other high-risk loans.

As of September, delinquencies on HELOCs were up 47% year over year, according to Economy.com; the numbers are expected to be worse in 2008. In response, Countrywide has already suspended an estimated 122,000 lines, many in high-foreclosure-rate states, and USAA has frozen or reduced some 15,000 accounts.Bank of America (BAC, Fortune 500), Chase (JPM, Fortune 500) and Citibank (C, Fortune 500), among others, are following suit.

Not all HELOCs will be frozen or downgraded, but you can be sure lenders will scrutinize every account - including yours.

more...
http://money.cnn.com/2008/04/18/real_estate/heloc_freeze.moneymag/index.htm?postversion=2008042104

[UpInArms]

20. Commentary: Economic sound bites sound alarm on coming financial Armageddon

http://www.marketwatch.com/news/story/economic-sound-bites-sound-alarm/story.aspx?guid=%7B31FDFF14%2DCBCC%2D4251%2DB2AC%2D770A72CF4651%7D&dist=MostReadHome

ARROYO GRANDE, Calif. (MarketWatch) -- Red hot and ripped from the New York Post's "Page Six," America's No. 1 gossip column: "Our civilization has become extremely dumbed down, with shorter attention spans," says Joan Collins, that lovable "super-bitchy" Alexis Carrington Colby from the 1980s hit soap opera Dynasty.

"All they want are sound bites," says Collins, blaming celeb-mags. But it's more. She's spotlighting a disastrous cultural trend turning us into a "world of idiots." Not just in gossip columns and celeb-mags. Everywhere -- worst in the endlessly annoying election coverage where anchors, pundits and pollsters are degrading news to Britney-style tabloid voyeurism with their self-indulgent bickering over sound bites like "bitter" and "sniperfire."

So with thanks to Collins and "Page Six," here's my new collection of hot economic sound bites Washington and Wall Street probably hopes you missed. In a world where nobody's really "connecting the dots," here's your chance to do it. Play with some of these gossipy "bites" from the far corners of the financial world and connect the isolated "dots" into a whole prediction of the future:

1. Warning: It's not a 'Black Swan' if it wasn't 'improbable!'

Seems everyone's talking about Nassim Nicholas Taleb's "The Black Swan: The Impact of the Highly Improbable." But is he really telling us the "true story" behind the housing, subprime-credit meltdown that's sinking us ever deeper into a recession? Or were recent events not only probable and predictable but obvious, even intentional and well-known for years in Washington and Wall Street?
Keep these questions in mind as you struggle to "connect the dots" and predict the future. Why? Because you're "probably" being mislead again about the "probability" of a new, bigger meltdown dead ahead, with a high "probability" of a long-term "no-growth" economy.

2. 'Bad Money' is now America's 'real economy'

Onetime Nixon strategist, Kevin Phillips just published a brilliant analysis of today's problems: "Bad Money: Reckless Finance, Failed Politics and the Global Crisis of American Capitalism." He tells me we're all "failing to connect the dots," failing to see our "nation's deepening tragedy" in historical context.
"Bad Money" (mainly Wall Street and its buddies in real estate and insurance) has been building for over two decades. In one brief generation our total debt quintupled to $50 trillion. Manufacturing was cut in half, from 25% to 12%, while "Bad Money" doubled, from 10% to 20%, in our GDP. Now "Bad Money" is the world's "real, real economy," setting up a new and bigger disaster.

...more...

[UpInArms]

21. Refiners slow fuel production as profits drop

http://www.marketwatch.com/news/story/gasoline-refiners-slow-output-rate/story.aspx?guid=%7B6634214A%2DA8E7%2D423F%2D9A0A%2DC5119FC8661C%7D

SAN FRANCISCO (MarketWatch) -- A production slowdown at the nation's refineries, now operating at levels last seen in the aftermath of Hurricane Katrina in 2005, couldn't come at a more troublesome time for consumers watching pump prices flirt with $4 a gallon.

Such low production rates could create a new set of problems for refiners, already operating at the brink of loss. Utilization rates at 30-month lows threaten to spark probes by lawmakers, who have been holding a series of hearings on the rampant rise in gasoline and diesel prices.

"If this operating level persists, the industry will likely see another round of intense legislative scrutiny," said John Kilduff, an analyst at futures brokerage MF Global.

U.S. refineries operated at 81.4% of their operable capacity in the week ending April 11, the Energy Department's statistical arm said last week. The last time the utilization rate fell below 80% was in October 2005 after hurricanes Rita and Katrina devastated refineries along the U.S. Gulf Coast.

The culprit is a record run in oil prices, which are rising much faster than gasoline prices. Near-term crude futures, which hit a new record above $117 a barrel Monday, have accelerated 80% in the last 12 months. Gasoline futures and retail prices also keep hitting new records. But the yearly gain of 41% in gas futures has not been nearly as dramatic. See more on oil and gas futures.

The gap between the price of crude and the price of gasoline and other refined products has pressured profit margins at refiners Valero Corp. (VLO 53.50, +0.95, +1.8%) , Tesoro Corp. (TSO 28.35, +0.35, +1.3%) and Sunoco Inc. (SUN 54.68, -0.97, -1.7%) , among others.

...more...

[formercia]

25. THE PROFIT OF ONE MAN IS THE LOSS OF ANOTHER.

http://oll.libertyfund.org/?option=com_staticxt&staticfile=show.php%3Ftitle=107&chapter=20796&layout=html&Itemid=27

THE PROFIT OF ONE MAN IS THE LOSS OF ANOTHER.

DEMADES the Athenian condemned one of his city, whose trade it was to sell the necessaries for funeral ceremonies, upon pretense that he demanded unreasonable profit, and that that profit could not accrue to him, but by the death of a great number of people. A judgment that appears to be ill grounded, inasmuch as no profit whatever can possibly be made but at the expense of another, and that by the same rule he should condemn all gain of what kind soever. The merchant only thrives by the debauchery of youth, the husbandman by the dearness of grain, the architect by the ruin of buildings, lawyers and officers of justice by the suits and contentions of men: nay, even the honor and office of divines are derived from our death and vices. A physician takes no pleasure in the health even of his friends, says the ancient Greek comic writer, nor a soldier in the peace of his country, and so of the rest. And, which is yet worse, let every one but dive into his own bosom, and he will find his private wishes spring and his secret hopes grow up at another’s expense. Upon which consideration it comes into my head, that nature does not in this swerve from her general polity; for physicians hold, that the birth, nourishment and increase of every thing is the dissolution and corruption of another:—

“For, whatever from its own confines passes changed, this is at once the death of that which before it was.”

[Tansy_Gold]

29. I think there's a bit of a difference between

trading like for like or fair for fair on one hand, and the obscene "profits" extracted from the economy by those who neither sow nor spin.

There is also a difference between "unreasonable profit" and any profit at all.

I suspect that there are indeed physicians who take pleasure in the health of their friends, that there are architects who design new buildings at the same time that they strive to preserve the old, that there are soldiers who long for peace as earnestly -- and perhaps more so -- than those who have never gone to war.

It is only those who take "unreasonable profit," who put their own obscene luxury ahead of the common comfort of all, who see the world in such black and white terms.

Indeed, it is possible for the profit of one to be the profit of another at the same time. If my neighbor has a fine garden with a beautiful grape arbor and fruit-heavy tomato plants but has suffered a stroke and can no longer tend her plants, would it not benefit both of us if I help her weed and prune and harvest and preseve and then we share in the bounty? Is her "profit" the less because she does not reap everything? Or is her "profit" the more, because she could have harvested nothing at all by herself?

I dislike parables that are nothing but pathetic attempts to justify greed.


And I am


Tansy Gold

[Robbien]

34. Bankers being told to cut back on expense account spending

http://www.thisismoney.co.uk/news/article.html?in_article_id=440664&in_page_id=2

The article has a long list of new rules such as eating in the cafeteria instead of restaurants, taking subways instead of taxis, shaving in airports instead of getting early hotel check-ins, etc.

Interesting is a rule included in the list of new restrictions: No expenses will be paid for adult entertainment of any kind.

Which leads one to believe these expenses were reimbursed before the belt tightening.

Some excesses listed in article:

Six bankers ran up a £44,000 wine bill at Pétrus in 2002. They drank a 1982 Montrachet at £14,000 and followed with a 1945 Pétrus at £11,600, a 1946 Pétrus at £9,400, a 1947 Pétrus at £12,300, a 1900 Chateau d'Yquem at £9,200. The food was thrown in for free. Five of them were subsequently sacked.

An investment banker spent £20,000 on Cristal and Dom Perignon champagne but instead of drinking it, sprayed it around Movida club in the West End in 2005 The banker, aged 33, had to pay a £15,000 cleaning bill.

A middle-aged man, thought to be a banker, spent £32,000 on a bottle of whisky - a Dalmore 62-year-old malt - and drank it with friends in one night at a Surrey hotel in 2006.

[Hugin]

36. The only word I can think of to describe this behavior is...

Obscene.

Really.

[Robbien]

43. When considering that on the other side of this

are the people working two or three jobs to pay for the banking profits, or losing their homes and living in tent cities

Obscene is too nice a word

[Tansy_Gold]

59. Beyond obscene. Add the numbers. . . .

"Six bankers ran up a £44,000 wine bill at Pétrus in 2002. They drank a 1982 Montrachet at £14,000 and followed with a 1945 Pétrus at £11,600, a 1946 Pétrus at £9,400, a 1947 Pétrus at £12,300, a 1900 Chateau d'Yquem at £9,200. The food was thrown in for free. Five of them were subsequently sacked."

£14,000
£11,600
£9,400
£12,300
£9,200
____________
£56,500


(edited to add:

I have to wonder: if five of the six were sacked, what happened to the sixth? Promoted? Given a seven-figure bonus? Shot? As staunchly opposed to the death penalty as I am, I am beginning to think that we need a new category of "capital crime" and "capital punishment" for greed like this.)

[Demeter]

38. Looks Like Bernanke Ran Out of Geese!

Too bad.

I've been on extended working hours, hardly get a chance to breathe, AND my kitty has an abscessed tooth, so any free time goes to finding, chasing and medicating her. One sign that the meds are working: it's getting much harder (and more dangerous) to dose the cat!

So, let's see what this lovely spring day will bring!


In honor of kitty, can we dedicate today to that raucous hit, "What's New Pussycat?" by Burt Bacharach


http://www.rhapsody.com/goto?rcid=tra.3490892&variant=play



What's new, pussycat?
Whoa-oh
What's new, pussycat?
Whoa-oh oh

Pussycat pussycat ,
I've got flowers and lots of hours
to spend with you.
So go and power your cute little pussycat nose

Pussycat, pussycat I love you
Yes I do
You and your pussycat nose.

What's new, pussycat?
Whoa-oh
What's new, pussycat?
Whoa-oh oh
Pussycat, pussycat,
You're so thrilling and I'm so willing
to care for you.
So go and make up you big little pussy cat eyes

Pussycat, pussycat, I love you
Yes I do
You and your pussycat eyes.

What's new, pussycat?
Whoa-oh
What's new, pussycat?
Whoa-oh oh

Pussycat, pussycat,
You're delicious and if my wishes
Can all come true,
I'll soon be kissing your sweet little pussycat lips.

Pussycat, pussycat, I love you
Yes I do
You and your pussycat lips.
Whoa-oh
You and your pussycat eyes.
Whoa-oh
You and your pussycat nose.

[Hugin]

44. Great song, Demeter!

Although, I prefer the Tom Jones version. :)

[AnneD]

61. ITA

Also like "You Can Leave Your Hat On" The CD should come in a flame retardant wrapper.

[Roland99]

39. 1:03pm - Grab the tourniquet (and soak it in oil)

Dow 12,663.81 -161.21
Nasdaq 2,363.41 -44.63
S&P 500 1,370.73 -17.44
10 YR 3.68% -0.03
Oil $119.69 $2.21
Gold $926.10 $8.50

[formercia]

40. Why Gold Was 'Hacked' Today - and How

http://www.kitco.com/ind/Wallenwein/apr212008.html

Why Gold Was 'Hacked' Today - and How


By Alex Wallenwein
Apr 21 2008 10:46AM


www.small-business-goldmine.com/

The market delivered a huge"drubbing" to gold and silver today – or at least that's what thefinancial powers want you to think.

To try and find out what happened, I looked at the Kitco 24-hour chart and saw that, for the very first time, the "New York Globex" system was listed at the bottom.

--snip--

[Roland99]

41. Home resales fall 2% to 4.93 million in March; Inventory up 1%; median sales prices fall 7.7% in yr

http://www.marketwatch.com/news/story/home-resales-fall-2-493/story.aspx?guid=%7B9A7024E9%2DFF06%2D4876%2DBB61%2D6B9EAC11BA92%7D

WASHINGTON (MarketWatch) -- The U.S. housing market weakened slightly in March, as resales of U.S. homes fell, inventories climbed, and prices continued to decline, the National Association of Realtors reported Tuesday.

Resales have sunk 19.3% in the past year and are down 33% from the peak in 2005.

Existing home sales are "stable yet soft," said Lawrence Yun, chief economist for the real estate agents' trade group. Sales have stabilized in a narrow range between 4.90 million and 5.10 million in the seven months since the credit crunch hit, he said.

Inventories of homes for sale rose 1% to 4.06 million, representing a 9.9-month supply at the March sales pace. Inventories are not seasonally adjusted.

[specimenfred1984]

42. "Looks like a bull market", LOL

Except for all the corruption, propaganda and insurmountable losses. But "I've got a feeling"...must be that same feeling people had when the Nazi Pope drove by them all inspirational-like.

[jdog]

45. anybody seen this chart on non-borrowed reserves...

from another site:

http://chartmechanic.com/chart.jsp?c=3512


Wow!

[Roland99]

58. Dang, that is scary.

[jdog]

62. That's what I thought! n/t

[AnneD]

63. Dang...

Need an extra roll of Charmin in the Fed Reserve Conference room.

[fedsron2us]

78. Is n't this the result of the Fed use of the TAF to provide liquidity

These get classed as borrowed reserves.

[jdog]

83. I think you may be right but

what does that mean when there is a need for reserves? I guess fire up the printing presses but....omg....it's just crazy!

[Robbien]

48. Why Wall St. Needed Credit Default Swaps

A good article by Thomas Tan, SeekingAlpha. The whole article is worth a read, the following is just the part discussing how all profits from CDSs are booked upfront:

Take a CDO with a 50 basis point spread over US Treasures. Banks will buy credit default swaps costing them 20 basis points, but by doing so, even they seem to make less profit (50 vs. now only 30 bp spread), banks can actually book the difference in spread for the whole life of this CDO instantly, something called negative-basis trade.

If this CDO life is 10 years, banks can book the whole 10 years of phantom profits this year, even if this CDO defaults sometime in next 10 years. And I don't need to mention its implications for the bonuses of the structured product groups at Wall St firms, or hedge funds with 2/20 fee structure.

In other words, who cares whether this CDO defaults next year, let us just realize the next 10 years of bonuses today! There is a common secret at Wall St. - it doesn't matter whether a product is good or bad, the only thing matters is how you structure it.

<snip?

But at the same time, this raises a lot of questions about how real are the past earnings reported by both Wall St firms and hedge funds with large CDO profits. For example, if a hedge fund manager can trade minor reduction of profit (from 50 to 30 bps) with an immediate bonus of 10 times (1 vs. 10 years) paid today, what would he choose?

He would be nuts for not using credit default swaps to "structure" his CDO holdings. If the CDO defaults next year and take his fund under the watermark, it's no a big deal. He already collected 20% money from the "profit" the year before. He can just close the fund and open another new one, raising money probably from the same sucker pool of investors. If you want to see a pyramid scheme, there is nothing more live and vivid than this.

How about those unbelievable earnings reported by Wall St. investment banks over the last several years? Frankly and openly, early this decade, investment banks had repeatedly expressed their dissatisfaction about relying mainly on the traditional banking fees from M&A and IPOs.

There is very little room for manipulation since they only get paid when a banking deal of M&A or IPO is completed. By discovering CDO and credit default swaps, they suddenly found their Holy Grail, with profit becoming more and more skewed toward the asset "structuring" (or manipulation?) and trading side, representing the majority of their "earnings" these days.

This kind of account abuse is not unusual. It happens in option ARM (adjustable-rate mortgages) market too. Homeowners (borrowers) for the first year or two pay a teaser rate of 2%, however in their financial statement, banks (lenders) report the full amount of interest, say 6%, as "profit", while they actually only collect 2%. The net 4% shortfall is added to the borrower's balance. Banks have nothing to lose, but homeowners see their balance increasing with home price dropping.

WaMu reported $1.4B profit from this kind of ARM last year, while Countrywide Financial earned about $600M from them in 2007. How much of those earnings were real? How much real cash have they actually collected or will collect?

much more . . .
http://seekingalpha.com/article/73060-why-wall-st-needed-credit-default-swaps

[jdog]

53. Really good article. Thanks. n/t

[Tansy_Gold]

56. "How much real cash have they actually collected or will collect?"

EXCUSE ME????????????????????????????????

What does this really amount to?

"Okay, let's see. I collected $50K from my investors. I'm going to use that $50K to buy $500K worth of CDOs or whateverthefuck these things are today. They should earn, if they don't default, $5M over the next 20 years, but I'm going to book that $5M today, and keep 20% -- $1M -- for myself. SUCH A DEAL!

"A year or so later, when these CDOs prove to be worthless, I'll write that $5M down to $3M and everyone will feel sorry for me and I'll get a free bailout from the Fed. My investors, who are now out $50K, will just have to suck it up. The guy I bought the $500K shit from, hell, he's happy, too, because he knew it was garbage when he sold it to me, so we're all happy as clams and the rest of you poor schmucks can, well, you CAN GO FUCKING EAT CAKE."

Am I wrong? How far off from reality is this scenario? And if it isn't off very far, why aren't assholes like Charlie Glibson and Kutie, er, Katie Couric and Brainless, er, Brian Williams spreading the news? Yes, SMWers, that was a rhetorical question, the kind neither I nor Helen will ever get to ask.


Tansy Gold, furious and poor

[Robbien]

64. Close, only there are swaps in there which is the structure by which

they get to claim all earnings up front and it still be considered legal.

So in your example:

I collected $50K from my investors.
I'm going to use that $50K to buy $500K worth of CDOs
I buy swaps to cover the CDOs
They should earn, if they don't default, $5M over the next 10 years, but I'm going to book that $5M today, and keep 20% -- $1M -- for myself.


A year or so later, when these CDOs prove to be worthless, the swaps will cover the CDOs and I close the fund.

My investors, who may or may not get their $50K back, received a hefty return (30-70% and up) for a year or so.

The people who really are out are the huge investors such as pension funds who are sitting on the losing end of those swaps.

And to answer your rhetorical question, one reason no one is really talking about it because it is so confusing to figure out where the ball stops. As much as one tries to pay attention, it is hard to keep track of who is left standing holding the stick at the end of the game. Only thing one can be sure of is that the loser is definitely not going to be one of the big players. Which of course is the real reason the talking heads are keeping mum.

[Tansy_Gold]

67. "considered legal"

The "swaps" are the "structures" allow the reporting of unearned income to be "considered legal." Even though the income hasn't been "earned" yet, and in fact may never be earned if the instruments default. Have I got it correct this far?

The "investors" who get the "hefty return" for a year or so, are getting paid in whose money? The hedge fund hasn't actually received any income, or at least not all that it has "reported" as having been earned. (Edited to add: And if the investors receive 30% for a couple years, then lose their investment, they've suffered a NET LOSS of 40% of their investment. This is a good thing how?)

But I have to qualify my original figures as being small so I could wrap my head around them. I understand that ALL investors in hedge funds are playing with large amounts of money, not pocket change like $50K. So none of them are going to lose a small amount; they're all going to lose big.

Except for the hedge fund manager, who is taking his cut off the top and up front, then goes "belly up" and opens a new one?

With Bear Stearns, of course, we know that the bailout came ultimately from the Fed, meaning from us. But if the whole $45T CDS pyramid collapses (or worse, the $516T derivatives pyramid), who walks away with the $1-2T in real money and who gets stuck for the losses? Because let's face it, folks, there ain't enough wealth on the whole friggin' planet to pay off on a bet like that?

Or is it that the winners don't give a fat rat's butt, because once they get their $1-2T out of it, the rest of us can go scratch?



TG, rethinking her 2004 non-run for the presidency

[Robbien]

71. Ha! That is the hard question

As the article asks, where is the real money?

As far as I can figure, the money being earned by investors and withdrawn by hedge fund managers are from paid from original investment, fees on buying selling CDOs, buying and selling layers of swaps, and first year real income arbitrage on money borrowed from the Feds.

Once the fund closes, the original investors may not be out their original investment because if all the swaps are honored (ha, good luck keeping track of those), the full original investment is returned.

But heck, I am as poor as you. I am just one of the poor slobs trying to figure out where the stick is at any point in the game.

The two Bear Stearns Hedge Funds which failed and closed last July were not bailed out by the Feds, but were paid back by swap fund holders. Those holders are now taking Bear to court for misrepresentation.

[DemReadingDU]

73. wow, you really are good at thinking these thru

I just call it another Ponzi scheme!


Tansy_Gold, for a 2008 non-run for the presidency



:)

[Tansy_Gold]

84. Well, it IS a Ponzi scheme, just carefully disguised -- long rant

One of the worst aspects, in my humble opinion, is the way so much of the blame is being laid at the feet of the sub-prime mortgage holders. Even here on DU there are/were constant voices whining that all those people who bought homes they couldn't afford were liars and cheats and frauds, and it was all their fault that CountryWide was going bankrupt and Angelo Mozilo was going to have to give up part of his hundred-million-dollar "severance" package.

EXCUSE ME???? EXCUSE ME???

I knew better

For almost all of 2001 and early 2002, I worked for property management firm in Phoenix. One of the tenants in the building we managed was a mortgage brokerage. I'll call the manager of the brokerage "Daniel." Daniel bragged on a daily basis about how much money they were turning, how many loans they were processing, how much profit they were making. He bragged about how he could get anyone into a mortgage, no $$ down, no closing costs, fake the income, lie, lie, lie. People want houses! he cried, and I can get them houses!

He had moved to Phoenix from the SF Bay area, where a 700 sq ft "fixer upper" went for $1.7M. He thought ANYONE could afford a $175k tract house in Surprise or El Mirage or Tolleson or Buckeye. After all, he was making seven figures. He bought his girl friend a new Jaguar. He bought a home in Anthem, then another. Then another.

After I left the property mgt firm, I went to work for the Community Services dept of one of those aforementioned communities in the summer and fall of 2002. Many of the calls we took were from local residents who were being pressured to buy new homes in the new developments springing up like mushrooms on what used to be farmland. "I don't think I can afford the payments, but the salesman says I can," many of the callers asked. But our department wasn't authorized to give advice, and we were told by the city council that we should NEVER discourage people from trying to buy their own homes and get out of substandard rentals. Besides, the new homes were bringing in new tax money, and the city certainly didn't want to lose that. . ..

But my boss and I were worried. We knew what was going to happen to these people who put their life savings into a new house and then couldn't make the payments. They didn't understand that in addition to the mortgage payment they'd have to make insurance premiums and taxes. Many of them sold tiny homes on tiny lots that had been in their families for generations and put everything they had -- husband's earnings, wife's earnings, divorced daughter moving back home's child support, grandmother's social security -- into the new house.

Who was talking about derivatives back then? Who was looking at what had happened to Enron? By spring of 2003 we had Iraq to worry about, and Enron was mostly forgotten. The rolling blackouts in California, the nasty recorded conversations about Grandma Millie, the scams, the frauds, the pain inflicted on people who had no choice and couldn't fight back -- who was telling their stories?

I didn't know shit about "derivatives" back then. All I knew was what I'd seen on tv in the Enron investigation -- or what passed for an investigation. But there was something that just plain didn't seem kosher about "investing" in "the weather." You can bet on the weather. You can gamble on the weather (ask any farmer!). You can speculate on the weather.

BUT YOU CAN'T FUCKING INVEST IN THE WEATHER, and yet that's what the media were saying derivatives were: complex investments that allowed investors to invest in the weather.

By 2004, we were hoping the booooosh regime was coming to end, but we found out it wasn't, and just as I was recovering from that catastrophe, I had my own personal one to deal with as my husband was dying of cancer. We had little safety net and no time to prepare one. And as I struggled to get my financial house in order as best I could, I kept seeing the headlines of the multi-billion dollar pay-outs to these hedge fund managers.

"It's not real money!" I kept saying. "It's not real money!"

Then, in fall of 2007, it got personal. My son and daughter-in-law had moved to Seattle. They'd been lucky, oh so very lucky, and sold their house in Phoenix for the asking price, giving them a tidy sum with which to buy some land and then build a house. They drew up their plans, found a contractor, then went after the construction loan to built their house. Four times -- FOUR TIMES -- they had an appointment to "come in and sign the papers in the morning" only to get a call late in the afternoon beforehand with the message, "That mortgage company just went bankrupt."

And of course the blame was being heaped on the sub-prime borrowers, but NOT on the mortgage brokers who helped them lie, not on the hedge funds and investment bankers who were swapping toxic mortgages for real money.

We used to play games based on this sort of thing. Remember "Old Maid," where you didn't want to be the one stuck with the "Old Maid" card? Remember "Musical Chairs," where you raced around so you weren't the last one left standing? (They still do car commercials based on that one!) Or "Hot Potato?"

What happened in the housing market is EXACTLY what happened in the derivatives market. In order to keep making money off the home buyers, the mortgage brokers, the lenders, the investment banks, the hedge funds, all had to keep jacking the price of the houses up. Make more money available, establish a feeding frenzy, then sell off the poisoned paper to unsuspecting "investors" and take the money and run. Sell it to the next one, take the money and run. Sell it to the next one, take the money and run. Create a derivative instrument, book ten years' profit before you've made a time, take the money and run. And whoever is left holding the Old Maid at the end, well, SUCKER!!!! You lose.

Guess who's left holding the Old Maid? Us. The taxpayers. The workers. The homeowners. The retirees. The children who need schools. The drivers on the roads. The meat inspectors. The national parks. The soldiers on that obscene misadventure in Iraq, those who come home damaged (and which of them doesn't) and the families of those who don't come home at all.

It makes me furious. I spent all day today filling out online applications for jobs that pay $12/hour. Tomorrow I'll go to a job fair and put on my best face while pleading for a job that pays a living wage, that I don't have to drive 30 miles to on $3.50/gal. gas in a car that needs tires. And in the meantime this Paulsen person makes more in ten minutes than my husband made in his entire lifetime. Someone sells a mansion in Florida for $80M. A sheik in Dubai builds a skyscraper for his harem.

Bitter? Oh, goddess yes, I'm bitter. I'm furious. I'm not turning to guns or god or anger at people of another color skin or who speak una otra lengua. I'm turning to words.

DERIVATIVES ARE A PONZI SCHEME. And all of us have been involuntarily suckered into it.

A few years after my husband and I were married, we arranged a visit from his best navy buddy, who had been best man at our wedding. The visit was cancelled at the last minute because the buddy had to go to court: he'd been charged with running a pyramid scheme. Somehow or other, he got off, and came to visit us a few weeks later. We kept in touch for a few more years, then lost contact.

Not long after my husband died, I tried to get in touch with this friend to let him know. His name was relatively unusual, and I thought I could maybe find some of his relatives in his home town and ultimately locate him. My first phone call got results, but not the results I was expecting.

"Oh, no, he's not a relative," the young woman on the other end told me, with some laughter. "He's a distant cousin a couple times removed from my father-in-law, but we get calls for him every once in a while. He's on the run from the law for some scam he tried to run a few years ago; he was always in and out of trouble and I guess it finally caught up to him."

I can only hope it catches up to this latest batch of scam artists before they pull their whole pyramid down on top of the rest of us.


Tansy Gold

[DemReadingDU]

85. I hope it catches up to the scam artists too

and let them all rot in hell


Thanks for your rant, Tansy Gold. Best of luck in your job search. I'd be furiously bitter too, trying to find a good job at our age after my spouse passed awhile. Something is terribly wrong in our country, but I always want to hope that it has to get better.

[Tansy_Gold]

87. Regarding "paying attention" and "keeping track"

Sometimes these things come to me later, on a subsequent reading --

You write -- "As much as one tries to pay attention, it is hard to keep track of who is left standing holding the stick at the end of the game."

Is this, perhaps, part of the whole OTC, non-regulated strategy with these things? I mean, I'm not suggesting these hedge fund managers or the investment bankers or anyone like that would do anything, well, underhanded, like try to conceal the truth from investors or the public, heaven forbid, but I get just a tad suspicious about people who get very defensive when you want to know just what it is they're doing.

For instance, when a mortgage gets "securitized," what does that really mean for the homeowner who has to pay that mortgage back? Does the note actually get transferred to someone else, or does it go into a "pool" with a bunch of other mortgages and divvied up in some amalgamated investment instrument, like a mutual fund in reverse? (Or maybe it's not in reverse. . . .. Seriously, I don't always understand this stuff clearly. )

I wish to hell I had more time to read up on this shit. Somehow or other, though, I have to find a way of making a living. . .. .

[Robbien]

88. My understanding

(Please keep in mind I'm not an financial instrument expert)

But my understanding is,

Once a mortgage contract is signed and on the books of a bank, it is quickly moved off, combined with hundreds of other securities, all of which are chopped and diced and then recombined into various CDOs. The CDO's are sold to other banks and hedges who combine them with other securities, chop and dice and then recombine into other various CDOs and sold to other banks and hedges. Repeat and repeat and repeat.

There is no real money to be had in holding on to a CDO, the big money is in the fees charged in buying and selling CDOs.

Then throw into the mix that reinsurance and swaps are created for every one of these transactions (which of course have massive fees of their own) and even these are combined with the pieces of mortgages, all of which are chopped and diced and combined as new CDOs and then enter the buying and selling game.

All of this is unregulated. There is no one exchange which keeps track of the instruments (Europe is talking about setting one up but the US is very much against it).

No one really knows who holds the original mortgage, which is a huge problem in the foreclosure process. People who have the cash can fight a foreclosure in the courts just by insisting that the bank provide proof of being the primary mortgage holder.

A homeowner pays his mortgage not to the bank but to a mortgage processor, that mortgage processor doesn't necessarily have anything to do with actually being the holder of the mortgage. A mortgage processor is just an outside contractor hired by the banking system to process the homeowners repayment of the mortgage.

[Karenina]

65. I LOVE YOU, TANSY!!!

:loveya:

[Tansy_Gold]

80. Thanks!

:blush:


I guess what bugs the bejeebers out of me is that none of this has/had to happen.

Conversation at coffee this morning was about some email one of the gals was passing around -- to everyone but me. It had apparently been written by some 82-year-old man, and many of the less-well-informed at coffee were agreeing with him. Some of it had to do with "all those people in China and Japan and over there taking all our money and our jobs." When I dared to suggest, "Uh, folks, our companies GAVE them that money and those jobs, in pursuit of profit," I was quickly shushed and the topic was changed.

BF dismisses 90% of Americans as stupid and/or uneducated and/or unconcerned about anything. Sometimes I think maybe he's right, but on the other hand, the PTB have made it so difficult for the average American to BE educated. Oh, not just formal education, the kind that requires an expensive college degree that too many can't afford; I'm talking about the information/education process that ought to be available to all.

I'm talking about the education we ought to be getting from the media, instead of the pro-corporate propaganda that spews from every network, every cable outlet, every newspaper. "It's the economy, stupid," someone once said, but too many are still "stupid."

CDOs, SIVs, CDSes, and all the other bits in the alphabet soup of the derivatives market are, as far as I can tell, nothing but illusion. They aren't real pasta swimming in a rich broth with nutritious vegetables and hearty bits of beef. It's paper money in colored water, it's a scam, it's a fraud, it's a carefully calculated scheme to bring down the American -- and maybe even the global -- economy to put ALL the wealth into a very tiny few pockets.

I'm just doing what I can to figure out a way to stop it. Whether it's the Nigerian women taking over the Delta oil operations or the people in Haiti rioting over food prices or desperate young men braving the devil's highway to cross the Arizona desert from Mexico to some perceived safe haven in Denver or Chicago or New York or Des Moines, too many human beings' lives are at stake.

And just as there are multi-billionaires who don't give a flying fuck about the people starving in Darfur or Indonesia or Zimbabwe or Biloxi or Wichita, I don't give a flying fuck about the multi-billionaires.

But that's just because I'm


Tansy Gold

[AnneD]

66. You go girl...

(as she snaps her fingers smartly). Keep asking those questions.

[Demeter]

74. So, Why Did All the Charts Stop Before 2 PM?

And Tansy, running for President is still a good option. For one thing, there's nowhere to go but up from W.

[Hugin]

75. ...

Click the 'refresh' on your browser. ;)

Index Last Change % change
• DJIA 12720.23 -104.79 -0.82%
• NASDAQ 2376.94 -31.10 -1.29%
• S&P 500 1375.94 -12.23 -0.88%


My... My... There was a 40 pt goose on the Dow, tho.

[Demeter]

81. I Did, Several Times

[Hugin]

82. Hmm...

:shrug:

I'm outta guesses, as, that usually fixes it.

Complete instructions: 1) Leave your browser opened to the SMW.
2) Click the "Refresh" at the top of the browser or "Right Mouse Click" on the page and
select "Refresh" from the dialog which appears.
k) Look for images at top of SMW page to reload.
IV) Check the times at the top of the images compared to your local time.

But, I didn't notice any delays.

[UpInArms]

76. closing numbers and blather

Dow ...12,720.23...-104.79
Nasdaq.....2,376.94...-31.10
S&P 500....1,375.94...-12.23
10 YR........3.72%..... 0.01
Oil.........$119.50.... $1.89
Gold........$925.20.... $7.60

4:15 pm : The major indices finished with sharp losses on Tuesday. A bearish bias prevailed throughout the session after traders were disappointed by earnings reports at several notable companies. Meanwhile, crude oil and the Commodity Index spiked to lifetime highs, which did not help matters.

Texas Instruments (TXN 28.82, -1.77) reported earnings grew by a strong 19%, which met analysts expectations. However, its stock got clipped after the company provided a disappointing outlook. Because of uncertainty regarding the near-term economic outlook, the company expects to earn between $0.42 and $0.48 per share in the second quarter. This falls well short of the expected earnings of $0.48 per share.

TI's dour outlook was taken as bearish signal regarding large-cap tech stocks, with the Nasdaq 100 shedding -1.6%. Semiconductors took the brunt of the selling pressure, as the SOX fell 3.3%.

Tech was not the only area under pressure. Healthcare stocks posted a decline of 1.3%. Shares of health insurer UnitedHealth Group (UNH 34.15, -3.66) declined nearly 10% to a fresh 52-week low, bringing its four-month slide to a total of 42%. The company reported earnings that fell short of estimates, and lowered its full year 2008 guidance.

CME Group (CME 483.50, -40.00), operator of the Chicago Mercantile Exchange, faced notable selling interest, with shares falling roughly 8%. The company reported revenue rose 25% and earnings of $4.67 per share. However, that was not enough to meet the consensus estimate that pegged revenue growth at 26% and earnings of $4.80 per share.

The Amex Airline Index (-12.3%) got hammered and hit a fresh 52-week low after UAL Corp (UAUA 13.55, -7.88) reported disappointing earnings. The operator of United Airlines reported a quarterly loss of $4.45 per share, compared to the expected loss of $3.41. Also not helping things, crude hit a fresh all-time high of $119.90 per barrel on supply concerns in Nigeria and reports of a worker strike in the United Kingdom. The gains in crude helped send the CRB Commodity Index (+1.6%) to its all-time high.

Not every company reported worse than expected earnings -- although buying interest was held in check on some cautious outlooks. Dow components McDonald's (MCD 58.35, -0.32) and DuPont (DD 50.16, -2.09) topped their earnings estimates, while AT&T (T 37.81, +0.22) met expectations. In addition, Coach (COH 31.70, -0.80), Wyeth (WYE 43.99, -0.22) and Kimberly Clark (KMB 64.37, +0.34) came out ahead of their respective consensus estimates.

Economic data were light this session, with only one notable release. The market saw a modest boost following the March existing home sales report, but quickly retreated to predata levels as the data were largely in-line with expectations. March existing home sales fell 2.0% to an annualized rate of 4.93 million from the prior reading of 5.03 million. This was slightly better than the expected reading of 4.92 million. Compared to last year, sales are down 19.3%. Prices have fallen 7.7% versus last year. Housing remains in a deep slump, but the rate of decline has slowed in recent months.

In the end, eight of the ten sectors posted a loss. Consumer discretionary (-1.7%) and materials (-1.4%) posted the largest losses. Energy (+0.2%) and telecom (+0.2%) outperformed on a relative basis.DJ30 -104.79 NASDAQ -31.10 NQ100 -1.6% R2K -2.0% SP400 -1.4% SP500 -12.23 NASDAQ Dec/Adv/Vol 2185/705/1.93 bln NYSE Dec/Adv/Vol 2250/882/1.33 bln

3:30 pm : The major indices are off their worst levels, but continue to trade with losses in excess of 1%. The VIX (+4.0%) has taken a turn higher, indicating increased volatility during the next 30 days of trade.

Looking ahead, the market will have a plethora of earnings reports to sift through on Wednesday. A total of 116 companies are confirmed to report tonight and tomorrow morning, including Ambac (ABK 6.02, +0.08) Boeing (BA 78.02, -1.07), Yahoo! (YHOO 28.59, +0.04), UPS (UPS 71.73, -0.79), to name a few.DJ30 -123.52 NASDAQ -33.88 SP500 -14.77 NASDAQ Dec/Adv/Vol 2211/661/1.60 bln NYSE Dec/Adv/Vol 2319/808/1.04 bln

2:55 pm : The major indices are falling back toward their session lows, as all ten of the major economic sectors are now in negative territory.

The more than 1.5% advance in crude, and a 2.5% advance in grains has sent the CRB Commodity Index (+1.6%) to a lifetime high. Of note, commodities are still well below their inflation adjusted highs that were reached in the 1970s. The CRB Index is up 18% year-to-date and up 35% compared to last year.DJ30 -159.84 NASDAQ -42.63 SP500 -17.69 NASDAQ Dec/Adv/Vol 2220/628/1.44 bln NYSE Dec/Adv/Vol 2368/741/931 mln

2:30 pm : The major indices continue to post steep losses, but are trying to climb higher. There is an overall lack of leadership, as the only sectors in the green -- energy (+0.2%) and telecom (+0.1%) -- are basically clutching the unchanged mark.

Not everything is negative today. Intrepid Potash (IPI 50.29, +18.29) has soared 57% since its IPO this morning. The company is the second largest producer of potash -- a crop nutrient -- in the world. The gains today are even more impressive when considering its IPO was priced at $32 per share, which was well above the expected pricing of $27-to-$29 (which had been increased from $24-to-$26).DJ30 -120.34 NASDAQ -35.28 SP500 -13.63 NASDAQ Dec/Adv/Vol 2208/642/1.33 bln NYSE Dec/Adv/Vol 2318/776/864 mln