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ozymandius Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 05:32 AM
Original message
STOCK MARKET WATCH, Thursday August 6
Source: du

STOCK MARKET WATCH, Thursday August 6, 2009

Bush Administration Officials Under Indictment = 2
Financial Sector Officials In Prison = 4

AT THE CLOSING BELL ON August 5, 2009

Dow... 9,280.97 -39.22 (-0.42%)
Nasdaq... 1,993.05 -18.26 (-0.91%)
S&P 500... 1,002.72 -2.93 (-0.29%)
Gold future... 966.30 -3.40 (-0.35%)
10-Yr Bond... 3.74 +0.06 (+1.60%)
30-Year Bond 4.54 +0.08 (+1.84%)




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


Market Conditions During Trading Hours



GOLD, EURO, YEN, Loonie and Silver



Handy Links - Market Data and News:
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    Brad DeLong    Bonddad    Atrios    goldmansachs666

Handy Links - Government Issues:
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This thread contains opinions and observations. Individuals may post their experiences, inferences and opinions on this thread. However, it should not be construed as advice. It is unethical (and probably illegal) for financial recommendations to be given here.

Read more: du
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ozymandius Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 05:36 AM
Response to Original message
1. Market Observation
The Sacrificial Lamb?
BY CHRIS PUPLAVA


To date the Obama Administration has thrown an unprecedented amount of stimulus at the economy, with the latest bit of stimulus being the $1 billion Cash for Clunkers program that lawmakers were surprised was depleted so quickly. Really? Who wouldnt want free money thrown their way? John Stewart had House Speaker Nancy Pelosi on his show a few months ago and even he was asking her how he could get his hand on all the money flowing out of Washington, with his question to Nancy Pelosi below:
The Daily Show with John Stewart (04/08/09)

Let me ask you a question. How do I, John Stewart, get in on some of this delicious TARP money? How badly in my own life do I have to screw up before you could give me say, not a billion, 500 million?
Because the program was so successful Congressional leaders on Monday passed a $2 billion extension to the program with a vote pending in the Senate. But the question we have to ask is how much of future sales are we pulling forward and at what cost? Once the program expires what will happen to auto sales with unemployment continuing to rise and wages and salaries continuing to plummet? Will there be an extension to the extension?

There will be a price to pay at some point for the governments recent largesse and that price tag increases with each and every new initiative coming out of Washington...

If the U.S. economy can not stand on its own two feet without the monumental support of the government and current programs to date are merely slowing down the rate of descent in the economy, what tool is left to use? Perhaps the key lies with one of the last tools in FDRs tool box, that being a devaluation of the U.S. dollar. As was seen in the Great Depression, once FDR devalued the U.S. dollar the economy began to turn around as deflation was arrested and exports picked up as U.S. goods became cheaper to the rest of the world. One of the most dreaded words to central bankers is deflation as debt remains a constant while asset values decline in recessions, thereby increasing leverage in the system unless the debt is either defaulted upon or paid back, while inflation makes debt cheaper as it is serviced with cheapened currency.

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

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amandabeech Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 11:28 AM
Response to Reply #1
35. Puplava sees devaluation of the dollar akin to what FDR did in the '30s.
Even this non-economist understands that the Fed and the weak economy can send the dollar into a downward spiral against floating, fully exchangeable securities, but how do does the U.S. devalue against currencies like the renminbi/yuan that are pegged to the dollar?

I can't see the Chinese devaluing because then their U.S. assets would be worth less, and the exports would be more expensive.

Sen. Schumer has regularly proposed a tariff on Chinese imports to price them as though the yuan was market priced, but that of course would anger our major creditor and probably run afoul of trade rules.

I can't see a truly successful devaluation if it is only against market priced securities.

Anyone care to help me out here?
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AnneD Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 08:27 PM
Response to Reply #35
59. The dollar-like water....
will find a way. All currencies do. You just as well try to dam up the Mississippi. What we don't know is when and where but it will happen.
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amandabeech Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Aug-07-09 10:19 AM
Response to Reply #59
62. Thank you, AnneD. n/t
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ozymandius Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 05:38 AM
Response to Original message
2. Today's Report
08:30 Initial Claims 08/01
Briefing.com 575K
Consensus 580K
Prior 584K

http://www.briefing.com/Investor/Public/Calendars/Econo...
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rfranklin Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 07:37 AM
Response to Reply #2
21. Happy days are here again! Only 550,000 thrown out of work...
this month! Man, times are good and getting better!

Give me another toke on that reeefer...
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ozymandius Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 07:43 AM
Response to Reply #21
22. Remember: "Less bad" equals the "new good"
Soon we can all breathe a sigh of relief when those on extended-extended unemployment benefits are no longer on the rolls. :sarcasm: - of course.
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Dr.Phool Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 09:37 AM
Response to Reply #21
29. More bad news. (Unemployment claims) Denninger
hursday, August 6. 2009
Posted by Karl Denninger in Macro Economics at 08:56
(Page 1 of 406, totaling 1218 entries) next page
More BAD News (Unemployment Claims)

I love how the media (CNBC in particular) "spins" the weekly unemployment report.

Let's dissect it - again.

Continuing claims is the key number. It rose 69,000 from the week previous on a seasonally-adjusted basis.

But look down the table in that report. 139,291 people rolled off the continuing claims numbers into "extended benefits."

Those folks are still unemployed, yet they understate the continuing claims number by a whopping 140,000.

This is the distortion that creeps into the numbers, and over time it gets quite ugly. What's worse is that we're now starting to see people drop off the extended programs, and this will accelerate into August and beyond (although Congress is threatening to extend those benefit times once again.)

The market spiked on the release but again, the issue for the economy is consumption going forward. Government money dumps ultimately must be funded and while this has so far "worked", it cannot continue forever.

Only the actual number of people who do not have a job matters, not those who are claimed in some headline release.

In order to support an economic recovery people need purchasing power - that is, jobs!

Beware buying the hype; euphoria feels real good while you're on the right side of it, but the hangover can truly suck when the drugs wear off.


http://market-ticker.denninger.net/authors/2-Karl-Denni...
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tclambert Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 04:43 PM
Response to Reply #2
51. Tomorrow the Bureau of Labor Statistics announces July's numbers.
Any predictions?

I'll go with unemployment (U-3 and U-6) will go up, but not by very much. (Like all truly gifted prognosticators I will not define what "very much" means, thereby guaranteeing the correctness of my prediction.)

Ooh, I was just playing around with BLS' website and found where to get state by state data. At http://www.bls.gov/eag/home.htm they have "economy at a glance tables" and you can select state or region or some metro areas. Let's see, Michigan, wow, 15.2% unemployment. And that's U-3, the official number. What the hell? Ohio's only 11.1%. (Damn that Jim Tressel.) California is at 11.6%. Florida 10.6%. Arizona 8.7%! (Tansy, stop whining. You've got prosperity there compared to us.) South Dakota 5.1%. If Michigan had 5.1% unemployment, we'd be celebrating.
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 04:53 PM
Response to Reply #51
53. When there aren't any people, it's hard to have unemployment
Still, that's insufficient reason to more to South Dakota, IMO.
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ozymandius Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 05:40 AM
Response to Original message
3. Oil falls to near $71 as US inventories rise
SINGAPORE Oil prices fell to near $71 a barrel Thursday in Asia as investors eyed rising U.S. crude inventories and signs of a weak economy.

Benchmark crude for September delivery was down 41 cents to $71.56 a barrel by late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. On Wednesday, the contract gained 55 cents to settle at $71.97.

.....

In other Nymex trading, gasoline for August delivery rose 0.31 cents to $2.054 a gallon and heating oil dropped 2.1 cents to $1.9548. Natural gas for August delivery rose 0.4 cents to $4.046 per 1,000 cubic feet.

http://news.yahoo.com/s/ap/oil_prices
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ozymandius Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 05:50 AM
Response to Reply #3
7. Top investor defends role in oil, gas markets
WASHINGTON Speculators shouldn't be blamed for the huge swings in oil and natural gas prices over the past 18 months, a leading commodity investor told government regulators Wednesday.

John Hyland, chief investment officer for a firm that manages oil and natural gas funds, said his funds have instead helped reduce price volatility by buying oil and gas futures as prices fell and selling as prices rose.

"The funds' activities in the futures market have resulted in little or no price disruption," Hyland said in a hearing before the Commodity Futures Trading Commission.

http://news.yahoo.com/s/ap/20090805/ap_on_bi_ge/us_ener...



I think this is the guy who used to sell the Brooklyn Bridge four or five times per year.
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tclambert Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 04:51 PM
Response to Reply #7
52. I'm sure Caribbean Pirates defended their role in the economy, too.
"Arr, we stimulate the market in rum and wenches. Especially in Tortuga. And parrots and peg legs! Where would demand for them items be without the likes us of, eh, Jim Hawkins? Answer me that!"
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ozymandius Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 05:42 AM
Response to Original message
4. Judge doesn't sign off on BofA, SEC settlement
NEW YORK A judge Wednesday balked at signing off on a $33 million proposed settlement between the Securities and Exchange Commission and Bank of America Corp. over executive bonuses.

Bank of America on Monday agreed to pay the penalty to settle government charges that it misled investors about Merrill Lynch's plans to pay bonuses to its executives.

.....

But the settlement is subject to court approval, and on Wednesday Judge Jed S. Rakoff declined his consent, pending results of a hearing Monday.

In a statement late Wednesday, Rakoff said the proposed settlement "would leave uncertain the truth of the very serious allegations made in the complaint."

The judge also said the agreement "in no way specifies the basis for the $33 million figure or whether any of this money is derived directly or indirectly" from public funds advanced to Bank of America as part of its bail out.

http://news.yahoo.com/s/ap/20090806/ap_on_bi_ge/us_bank...
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Robbien Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 10:44 AM
Response to Reply #4
31. This sounds like the judge believes the scoundrels should be sitting in jail cells

instead of sitting behind some non-disclosure settlement paid out of taxpayer monies.

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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 11:28 AM
Response to Reply #31
34. Refreshing, Isn't It?
What are the odds he won't be overruled?
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Festivito Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 05:43 AM
Response to Original message
5. Debt: 08/04/2009 11,659,644,290,011.89 (UP 11,096,145,442.13) (Down .05B.)
(Debt down .056B while FICA side goes up 11B.)

= Held by the Public + Intragovernmental(FICA)
= 7,330,433,379,272.34 + 4,329,210,910,739.55
DOWN 56,382,262.77 + UP 11,152,527,704.90

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

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 307-Million person America.
If every American, man, woman and child puts in $3.26 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.77, ABOUT TEN BUCKS for a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is the federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)

PERSONALIZED DEBT:
Every 12 seconds we net gain a another American, so at the end of the workday of the report, there should be 307,019,942 people in America.
http://www.census.gov/population/www/popclockus.html ON 05/25/2009 01:14 -> 306,504,012
Currently, each of these Americans owe $37,976.83.
A family of three owes $113,930.49. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 23 reports in the last 30 to 32 days.
The average for the last 23 reports is 7,332,879,135.91.
The average for the last 30 days would be 5,621,874,004.20.
The average for the last 32 days would be 5,270,506,878.94.
There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 75 reports in 112 days of GWB's part of FY2009 averaging 8.03B$ per report, 5.38B$/day.
There were 135 reports in 196 days of Obama's part of FY2009 averaging -0.24B$ per report, -0.07B$/day so far.
There were 210 reports in 308 days of FY2009 averaging 7.79B$ per report, 5.31B$/day.

PROJECTION:
There are 1,265 days remaining in this Obama 1st term.
By that time the debt could be between 13.4 and 18.4T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
08/04/2009 11,659,644,290,011.89 BHO (UP 1,032,767,241,098.81 so far since Obama took office.)

Fiscal Year ends: Sep 30
Borrowed in FY1993: (Maybe later.)
Borrowed in FY1994: 281,261,026,873.94
Borrowed in FY1995: 281,232,990,696.07
Borrowed in FY1996: 250,828,038,426.34
Borrowed in FY1997: 188,335,072,261.61
Borrowed in FY1998: 113,046,997,500.28
Borrowed in FY1999: 130,077,892,735.81
Borrowed in FY2000: _17,907,308,253.43 Bill alone
Borrowed in FY2001: 133,285,202,313.20 Bill and George
Borrowed in FY2002: 420,772,553,397.10 All George
Borrowed in FY2003: 554,995,097,146.46
Borrowed in FY2004: 595,821,633,586.70
Borrowed in FY2005: 553,656,965,393.18
Borrowed in FY2006: 574,264,237,491.73
Borrowed in FY2007: 500,679,473,047.25
Borrowed in FY2008: 1,017,071,524,650.01
Borrowed in FY2009: 1,634,919,393,099.40 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
07/15/2009 +057,721,794,648.52 ------------**********
07/16/2009 +016,136,405,834.08 ------------**********
07/17/2009 +000,062,427,388.38 ------------*******
07/20/2009 +000,171,809,229.69 ------------******** Mon
07/21/2009 -000,321,987,025.18 ---
07/22/2009 +000,261,059,305.61 ------------********
07/23/2009 +010,040,233,982.08 ------------**********
07/24/2009 -000,124,358,216.07 ---
07/27/2009 +000,077,777,899.40 ------------******* Mon
07/28/2009 +000,420,333,618.55 ------------********
07/29/2009 +000,733,026,310.02 ------------********
07/30/2009 -026,031,384,097.19 -
07/31/2009 +095,534,108,940.65 ------------**********
08/03/2009 -005,083,538,887.00 -- Mon
08/04/2009 -000,056,382,262.77 ----

149,541,326,668.77 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,995,012,486,752.82 in last 320 days.
That's 1,995B$ in 320 days.
More than any year ever, including last year, and it's 196% of that highest year ever only in 320 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 320 DAYS NOT 365.

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

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.ph...
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Festivito Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Aug-07-09 04:34 AM
Response to Reply #5
61. Debt: 08/05/2009 11,659,077,874,250.31 (DOWN 566,415,761.58) (Tiny moves.)
(Debt up .017B while FICA side goes down half a billion.)

= Held by the Public + Intragovernmental(FICA)
= 7,330,451,353,350.81 + 4,328,626,520,899.50
UP 17,974,078.47 + DOWN 584,389,840.05

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

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 307-Million person America.
If every American, man, woman and child puts in $3.26 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.77, ABOUT TEN BUCKS for a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is the federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)

PERSONALIZED DEBT:
Every 12 seconds we net gain a another American, so at the end of the workday of the report, there should be 307,027,142 people in America.
http://www.census.gov/population/www/popclockus.html ON 05/25/2009 01:14 -> 306,504,012
Currently, each of these Americans owe $37,974.1.
A family of three owes $113,922.29. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 24 reports in the last 30 to 33 days.
The average for the last 24 reports is 7,003,741,848.52.
The average for the last 30 days would be 5,602,993,478.82.
The average for the last 33 days would be 5,093,630,435.29.
There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 75 reports in 112 days of GWB's part of FY2009 averaging 8.03B$ per report, 5.38B$/day.
There were 136 reports in 197 days of Obama's part of FY2009 averaging -0.28B$ per report, -0.09B$/day so far.
There were 211 reports in 309 days of FY2009 averaging 7.75B$ per report, 5.29B$/day.

PROJECTION:
There are 1,264 days remaining in this Obama 1st term.
By that time the debt could be between 13.4 and 18.3T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
08/05/2009 11,659,077,874,250.31 BHO (UP 1,032,200,825,337.23 so far since Obama took office.)

Fiscal Year ends: Sep 30
Borrowed in FY1993: (Maybe later.)
Borrowed in FY1994: 281,261,026,873.94
Borrowed in FY1995: 281,232,990,696.07
Borrowed in FY1996: 250,828,038,426.34
Borrowed in FY1997: 188,335,072,261.61
Borrowed in FY1998: 113,046,997,500.28
Borrowed in FY1999: 130,077,892,735.81
Borrowed in FY2000: _17,907,308,253.43 Bill alone
Borrowed in FY2001: 133,285,202,313.20 Bill and George
Borrowed in FY2002: 420,772,553,397.10 All George
Borrowed in FY2003: 554,995,097,146.46
Borrowed in FY2004: 595,821,633,586.70
Borrowed in FY2005: 553,656,965,393.18
Borrowed in FY2006: 574,264,237,491.73
Borrowed in FY2007: 500,679,473,047.25
Borrowed in FY2008: 1,017,071,524,650.01
Borrowed in FY2009: 1,634,352,977,337.90 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
07/16/2009 +016,136,405,834.08 ------------**********
07/17/2009 +000,062,427,388.38 ------------*******
07/20/2009 +000,171,809,229.69 ------------******** Mon
07/21/2009 -000,321,987,025.18 ---
07/22/2009 +000,261,059,305.61 ------------********
07/23/2009 +010,040,233,982.08 ------------**********
07/24/2009 -000,124,358,216.07 ---
07/27/2009 +000,077,777,899.40 ------------******* Mon
07/28/2009 +000,420,333,618.55 ------------********
07/29/2009 +000,733,026,310.02 ------------********
07/30/2009 -026,031,384,097.19 -
07/31/2009 +095,534,108,940.65 ------------**********
08/03/2009 -005,083,538,887.00 -- Mon
08/04/2009 -000,056,382,262.77 ----
08/05/2009 +000,017,974,078.47 ------------*******

91,837,506,098.72 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,994,446,070,991.24 in last 321 days.
That's 1,994B$ in 321 days.
More than any year ever, including last year, and it's 196% of that highest year ever only in 321 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 321 DAYS NOT 365.

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

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.ph...
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ozymandius Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 05:45 AM
Response to Original message
6. Goldman facing compensation, derivative inquiries
NEW YORK Goldman Sachs Group Inc., one of the banking industry's top performers, said Wednesday that government agencies have asked about its compensation practices and use of credit derivatives.

Compensation, especially bonuses, and credit derivatives have been among the most hot-button topics in the financial services industry since the credit crisis peaked last fall.

In a filing with the Securities and Exchange Commission, Goldman said it is cooperating with the requests from undisclosed regulators. A spokesman from Goldman declined to provide further details about the inquiries.

Politicians have recently questioned the methods big banks use to determine compensation packages, especially in the wake the government's bailout last fall of the banking sector, known as the Troubled Asset Relief Program.

Last week, New York Attorney General Andrew Cuomo released details on bonuses paid in 2008 to the initial nine banks the government agreed to provide with TARP funds, including Goldman Sachs.

http://news.yahoo.com/s/ap/20090805/ap_on_bi_ge/us_gold...
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Po_d Mainiac Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 05:54 AM
Response to Original message
8. Deutsche Bank doesn't seem to agree that housing is leveling off
:donut:
NEW YORK (Reuters) - The percentage of U.S. homeowners who owe more than their house is worth will nearly double to 48 percent in 2011 from 26 percent at the end of March, portending another blow to the housing market, Deutsche Bank said on Wednesday.

http://www.reuters.com/article/businessNews/idUSTRE5745...

How this will play out in future defaults, probably not gonna be pretty. Can't see how this is going to send the consumer off on a major shopping spree anytime soon
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ozymandius Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 06:05 AM
Response to Reply #8
11. The ugly details of overzealous leverage and bone-headed appraisals are just becoming apparent.
The basic facts do not lie.

Greedy appraisers went nuts, making outrageous estimates on the value of property. Banks underwrote the ballooning RE market. Greedy brokers lost all sense of perspective, too.

Now consider how much of this development has been tied into the CRE market. Mixed use development, anyone? There's the next shoe to drop. For a chuckle while cradling your aching head - check out Jim the Realtor's videos at Calculated Risk.

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Po_d Mainiac Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 06:19 AM
Response to Reply #11
15. Remember the good old days
just a few month's back, when the airwaves were full of ads for mortgages of up to 120% of "your" homes value.

:nuke: But no one could have seen that implosion coming :sarcasm:
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ozymandius Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 06:29 AM
Response to Reply #15
18. It makes my head hurt to consider that someone offered this as a viable business model.
Sure they will offer a loan at 120% of the property value. First question: what is the stated value?

Second question: How much does this add to the service on the original note?

Default on the loan and the house is forfeit. Lender then becomes seller to recoup the loan losses. Third question: who is buying?

IMO, every big question posed leads to a horrible situation for every party on both sides of this trade.
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tclambert Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 05:15 PM
Response to Reply #18
54. You make the big money only if you're willing to take the big risks.
THAT was part of the standard model of business, too. Every business. Those poor businessmen stuck in safe (regulated) businesses always envied their risk-taking fast money brethren. Then they lobbied a compliant government to let them play at the high stakes tables, too. But sometimes gamblers lose.

My son recently talked me into watching an old South Park about SARS and an Indian casino http://www.southparkstudios.com/episodes/103915 . The South Parkians lost the whole town to the casino and could only raise a tiny fraction of what they needed to buy it back. Stan and Kyle talked them into betting it all on one chance at roulette. And they WON! They won enough to buy back their town. Hallelujah! Then the adults said, "Hey, if we let it ride and win again, we can save the town and be super rich!" Stan's father later explained to him, "Stan, you just don't understand the fine points of gambling. You're never supposed to stop when you're on a winning streak."

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Dr.Phool Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 08:31 AM
Response to Reply #11
26. I'm waiting for a shocker.
I applied for a re-fi last week, and they came out to do the appraisal last Thursday. I haven't heard anything yet, but nothing would surprise me.
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FarCenter Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 03:39 PM
Response to Reply #8
49. This appears to be wrong.
It is very unlikely that 48% of homeowners will owe more on mortgages than their house is worth.

About 40% of houses are owned free and clear without mortgages. So this would imply that 48% have mortgages that are underwater and only 12% have mortgages that are not underwater.

That's very unlikely.

More likely is that 48% of the 60% of homeowners who have mortgages would be underwater. Which is about 30% of homeowners.

Note also, that in many states ouside the sunbelt, mortgage balances are a personal obligation of the homeowner. In other words, the mortgage is secured by not only the mortgaged property, but also by all other personal assets and income of the homeowner.

Unlike California, the underwater homeowner cannot just mail the keys to the lender and walk away from the house and mortgage.
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Dr.Phool Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 05:40 PM
Response to Reply #49
55. I find that figure that 40% of homeowners, free and clear, highly unlikely.
Not in my neighborhood. I'd guesstimate 10% tops.
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FarCenter Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 06:05 PM
Response to Reply #55
56. I had read 40% from somewhere -- looked it up actually.
But the Census figures can be had from http://www.census.gov/hhes/www/housing/ahs/ahs07/tab3-1...

Of 75.647 million owner-occupied homes, there were 24.885 million owned free and clear. So it is more like 33%.

There were 45.156 million which had a regular mortgage. So that is about 60% which have a mortgage.

The balance are mostly homes encumbered by either a lump sum home equity loan or a HELOC.
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Dr.Phool Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 09:59 PM
Response to Reply #56
60. Good source.
It says the weighting is consistent with year 2000. I don't know if that means it is data from 2000, or adjusted for the current market.

If it's nine year old data, it could be changed significantly by now.

Thanks for some clarification anyway.
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ozymandius Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 05:58 AM
Response to Original message
9. U.S. Considers Remaking Mortgage Giants -Jeebus! Not this SHIT again!
'Bad Bank' Would Wipe the Slate Clean for Fannie Mae, Freddie Mac by Taking Their Toxic Loans

The Obama administration is considering an overhaul of Fannie Mae and Freddie Mac that would strip the mortgage finance giants of hundreds of billions of dollars in troubled loans and create a new structure to support the home-loan market, government officials said.

The bad debts the firms own would be placed in new government-backed financial institutions -- so-called bad banks -- that would take responsibility for collecting as much of the outstanding balance as possible. What would be left would be two healthy financial companies with a clean slate.

.....

Internal discussions over the future of the companies began earlier this year during the regulatory reform planning process and now are entering a more serious phase. National Economic Council Director Lawrence H. Summers has long wanted to overhaul the companies.

The government's efforts so far "have taken the risk out of those two firms," Treasury Secretary Timothy F. Geithner said in a recent interview. "The only question that remains is what form, what structure they ultimately will take."

http://www.washingtonpost.com/wp-dyn/content/article/20...



It figures that Summers and Geithner would be all over this with their vaporous insistence that these assets are merely misunderstood and will be worth their original underlying value someday.
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girl gone mad Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 06:04 AM
Response to Reply #9
10. Why let a bad plan go to waste?
If at first you don't succeed in socializing private sector losses with a "bad bank" scheme, try, try again!
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amandabeech Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 11:38 AM
Response to Reply #9
36. The article also states that Summers, in 1999, thought that Fannie and Freddie,
were so big that if they failed, they could cause serious damage.

Duh, why didn't he think that about the behemoths created by the repeal of Glass Steagall?

Enquiring minds want to know.

I'd feel better if Bill Seidman were still alive to run the clean-up. He wasn't perfect, but my gosh, he never appeared to be living in some alternate economic universe like Summers and Geithner.
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 06:51 PM
Response to Reply #9
57. There Isn't SUPPOSED to Be Any Risk!
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ozymandius Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 06:09 AM
Response to Original message
12. U.S. stock futures mixed after Cisco report
LONDON (MarketWatch) -- U.S. stock futures were mixed on Thursday as Cisco Systems reported a 46% profit drop and as retailers are expected to report another disappointing month for sales.

.....

More jobs data is due Thursday, on weekly jobless claims, ahead of the key nonfarm payrolls report on Friday.

Retailers will be announcing same-store sales figures for July.

.....

Of stocks in the spotlight, Cisco Systems (CSCO 21.50, -0.67, -3.02%) fell 3.3% in Frankfurt after it said its profit dropped as sales fell to $8.5 billion from $10.4 billion. Current quarter sales are seen dropping 15% to 17%.

http://www.marketwatch.com/story/us-stock-futures-mixed...
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ozymandius Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 06:13 AM
Response to Original message
13. Gold holds near $965, eyes ECB rates decision
LONDON (Reuters) - Gold held below $965 an ounce in Europe on Thursday, supported by overall softness in the dollar, with traders awaiting direction from an interest rates decision from the European Central Bank due later in the session.

While the ECB is widely expected to leave rates unchanged at 1 percent, the markets will be closely following an accompanying statement from the bank's chief Jean-Claude Trichet for clues on future interest rate policy.

Spot gold was bid at $963.45 an ounce at 4:41 a.m. EDT, against $961.95 an ounce late in New York on Wednesday. U.S. gold futures for December delivery on the COMEX division of the New York Mercantile Exchange fell 10 cents to $966.20.

.....

Interest in bullion will also be influenced by moves in equities, in which a slide precipitated selling of gold late on Wednesday. European shares rose in early trade ahead of the policy announcements from the ECB and Bank of England.

http://www.reuters.com/article/hotStocksNews/idUSTRE574...
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ozymandius Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 06:16 AM
Response to Original message
14. BOJ Said to See Deflation Stretching Through 2011 (Update1)
Aug. 6 (Bloomberg) -- The Bank of Japan will probably forecast that declines in consumer prices will extend into 2011 even as the economy recovers, according to two people familiar with the matter.

The estimate would be included in policy makers first economic projections for the financial year ending March 2012, scheduled for release in October, said the people, who declined to be identified ahead of the report. Central bankers have already predicted prices will fall 1.3 percent in the current year and 1 percent in fiscal 2010.

Prospects for a third year of deflation make it likely Bank of Japan Governor Masaaki Shirakawa and his colleagues will keep interest rates near zero through next year, analysts said. It would also erode profits at companies such as Aeon Co., Japans second-largest retailer, which has been forced to offer discounts to attract consumers whose wages are tumbling.

.....

Deflation may escalate as households, whose spending accounts for more than half of the nations gross domestic product, delay purchases on the expectation that goods will get cheaper, restraining a recovery in the worlds second-largest economy.

.....

Subdued consumer prices have helped keep Japans debt yields from climbing even as the government enacted fiscal- stimulus measures. Benchmark 10-year bonds yielded 1.435 percent at 10:16 a.m. in Tokyo, down from the years high of 1.57 percent in June and an average of 1.47 percent the past decade.

http://www.bloomberg.com/apps/news?pid=20601109&sid=a6Q...
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 06:54 PM
Response to Reply #14
58. Whose Economy Is More Scewed Up, US or Japan?
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ozymandius Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 06:22 AM
Response to Original message
16. Flash Trading Reversal at SEC May Hit Direct Edge
Aug. 5 (Bloomberg) -- The U.S. Securities and Exchange Commissions move to ban so-called flash orders may help NYSE Euronext take back market share of U.S. stock trading at the expense of three-year-old rival Direct Edge Holdings LLC.

Senator Charles Schumer said yesterday the SEC will seek to stop the practice in which some brokers get a split-second advantage in viewing requests to buy and sell stock, after discussing the issue with Chairman Mary Schapiro. NYSE Euronext, the only one of the top four U.S. exchanges that doesnt use flash orders, has seen its portion of the nations share trading slip to 30.3 percent in the second quarter from 35.5 percent a year earlier, while Direct Edges doubled since November.

.....

Flash orders grew to 2.4 percent of the shares traded in the U.S. in June, three years after the practice began as a way of increasing the odds an order would be filled, according to data compiled by New York brokerage Rosenblatt Securities Inc. Schumer said the delay in routing transactions to other exchanges makes it easier for brokerages with the fastest computers to get an edge calculating demand for a stock.

.....

Direct Edge, based in Jersey City, New Jersey, used its early lead in flash trading to take business from rivals. The company is the fastest-growing equity market in the U.S., helped by its three-year-old Enhanced Liquidity Provider program, which handles the most flash trades.

Even excluding flash orders, Direct Edge matched 11.2 percent of U.S. stock trades in July, making it the third- largest U.S. equity market by volume, according to data compiled by Bloomberg. That may help fuel growth if regulators start a broader review of off-exchange trading, Chief Executive Officer William OBrien said in an interview yesterday.

http://www.bloomberg.com/apps/news?pid=20601109&sid=a9....
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Dr.Phool Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 06:22 AM
Response to Original message
17. More change we can make believe in.
Another fox to guard the hen house. I caught this little tidbit on Countdown last night.

Former US Attorney for Minneapolis, fundie whack job and best friend of Monica Goodling, Rachel Paulose is now working for the SEC in Miami.

In the short time she served, after her coronation, all of her deputies had given themselves demotions, to keep from dealing with her. And she generated another 96 harassment lawsuits against the office, stemming from her management style.

I'm sure this will strike fear into the hearts of banksters, tax evaders, and hedge fund operators.
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ozymandius Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 06:41 AM
Response to Reply #17
19. She must have slipped photos under the door of someone important.
Rachel Paulose still drawing a U.S. Govt. paycheck
By Eric Black | Published Mon, Aug 3 2009 4:32 pm

Rachel Paulose, whose brief, stormy tenure as U.S. attorney for Minnesota ended in late 2007, is still working for the U.S. government, now with the Miami office of the Securities and Exchange Commission.

.....

But Paulose is the lead trial attorney for the Miami SEC and has been making court appearances and filing papers, Palazzolo reports.

...Paulose was appointed U.S. attorney by the Alberto Gonzales administration that was famously pushing "loyal Bushies" in these jobs as top federal law endorcement officers. Paulose alienated her staff and ended up under investigation for sloppy handling of national security documents and for alleged acts of discrimination. The federal Office of Special Counsel did ultimately conclude that Paulose had engaged in improper acts of retaliation against her top deputy.



What a piece of work! She was noted for "dressing down underlings and quoting Bible verses on the job," according to one complaint.
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Dr.Phool Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 08:35 AM
Response to Reply #19
27. I'm wondering if she is in the female division of "The Family" cult.
She seemed to act like she was one of "the chosen" when she held that coronation ceremony.
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DemReadingDU Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 08:20 AM
Response to Reply #17
25. Another fox to guard the hen house

I really thought Obama was working for us people.
:(
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ozymandius Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 07:12 AM
Response to Original message
20. A concrete problem (CRE falling down)
Banks face another round of property-related bad debts: this time it will be flashy offices, not rundown homes

.....

After two years of pain, American house prices seem to be stabilising. But attention is now switching to the commercial-property market. Here too loans were bundled together to make complex securities, known as commercial mortgage-backed securities (CMBSs), on which defaults are now rising. And here too prices were driven higher by the use of borrowed money. Thanks to cheap finance, investors could use the time-honoured trick of covering the interest payments with the rental yield and hoping for capital growth on top.

Of this, there was plenty. IPD, an information group, calculates an index of global commercial-property returns. Between 1998 and 2007, this index trebled, easily outstripping the performance of the worlds stockmarkets. And last year, while the MSCI World Index of global share prices suffered a negative return of 40.3%, commercial property lost just 10.1%.

.....

The aftermath of bubbles can last for a long time in financial markets. Wall Street has been celebrating the return of the Dow Jones Industrial Average to the terrain above 9,000. But it first passed that mark in April 1998. As with paper, so it can be with property. In Japan land prices are still nearly 60% below the peak they reached in 1991. Earlier this decade American homebuyers took false assurance from the oft-quoted fact that house prices had not fallen, at the national level, since the second world war; well, they have now. At the moment transactions have dried up in the commercial-property market as owners try to avoid selling at a loss. Those owners are implicitly assuming that a rebound is imminent, yet the downturn may be prolonged.

Such a downturn could inflict further damage on the banks. All the bad news may not yet be reflected on their balance-sheets; although they have had to take the hit on traded securities, like CMBSs, banks are usually slow to write down property-related loans. But as those loans come up for refinancing, losses will have to be taken unless owners put up more capital. Richard Parkus, an analyst at Deutsche Bank, reckons that American banks may eventually face $200 billion-$230 billion of losses on property-related loans.

Most of those losses are likely to land on small, regional banks, rather than the Wall Street giants that wobbled last year. That will still leave the American authorities with a dilemma if the losses prove potentially fatal. Will they allow banks to fail on the ground they are too small to rescue, even if their failure would devastate the economies of the regions they serve? On the other hand, if they want to rescue the banks, do regulators have the resources to cope?

http://www.economist.com/opinion/displayStory.cfm?story...



Another point of concern is the typical structure of CRE loans. These loans typically have around five years of low payments. One huge balloon payment is due at the end of the loan term. For CRE - this structure can easily devastate the builder, broker and bank if the property development's occupancy is too low to cover the large finance costs at the end of the term. If you look at any commercial property built three years ago, still sitting mostly empty, then you are looking at the source of panic for those who are on the hook for the note.
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Hugin Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 08:44 AM
Response to Reply #20
28. too small to rescue
I'm thinking most folks fall in that category... Or at least it sure seems that way. :/
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ozymandius Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 07:50 AM
Response to Original message
23. JP Morgan Fleeces Alabama Hicks with "Shit Bonds," National Guard Called In
This bears repeating. - ozy.

Americas collapse into a Third World banana republic is accelerating: Alabamas most populous county, Jefferson County, is so broke its closing down courthouses and laying off so many cops that its now planning to call in the National Guard to maintain order:
BIRMINGHAM, Ala. The sheriff in Alabamas most populous county may call for the National Guard to help maintain order, a spokesman said Tuesday, after a judge cleared the way for cuts in the sheriffs budget and hopes dimmed for a quick end to a budget crisis.

Its all too fitting that the county is going broke because it cant pay the $3.2 billion in sewer bonds that the county borrowed, on bad advice from whats now the biggest bailed-out bank in the land. They sold Americans shit, and now Jefferson County is literally eating that shit.

The reason why the county is broke is because it took the advice of the same Wall Street villains who later bankrupted America. In this case, JPMorgan Chase, which was hired by the county to act as advisor, and wound up not only giving the worst advice imaginable, pawning toxic assets onto the gullible hicks, but also charging them six times the normal bank feesthats right, JPMorgan charged the county six times the going rate for advice that ruined the county, according to Bloomberg:

The county relied on advice from a bank, JPMorgan Chase & Co., to arrange its funding, rather than use competitive bidding.

The county paid banks $120 million in fees six times the prevailing rate for $5.8 billion in interest-rate swaps. That was supposed to protect the county from rising rates for their bonds. Lending rates went the wrong way, putting the county $277 million deeper into debt.

That means local officials now have to pay to banks money that otherwise might have been used to build schools, hospitals or public housing.

Why would a county do something that stupid, buying up toxic assets for 6 times the price? The answer is so obvious that the SEC and FBI even made a show of investigating, but the only thing thats come of the investigation so far is that taxpayers were forced to bail out the Wall Street thieves who tricked them, while leaving citizens to fuck off and die...

http://exiledonline.com/decline-fall-of-america-exhibit...
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Robbien Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 10:53 AM
Response to Reply #23
32. Also, the Bank of New York Mellon is suing Jefferson county for that $3.2bn
The bank, which is the trustee for the owners of Jefferson County's auction-rate and variable-rate debt issued by the sewer system, argues the county failed to pay $331.7 million in principal payments on warrants due for redemption since June 2008.

In a complaint filed this week with the Circuit Court of Jefferson County, BNY Mellon asked to appoint a receiver, or custodian, for the county's sewer system. It also seeks a court order that would require the county to raise sewer fees and levy other charges to pay bondholders.

BNY Mellon also says in the suit that the county has failed "to operate the system in a manner that will generate net revenues sufficient to service the county's warrant obligations," and that the work on the county's sewer system has been "fraught with fraud and abuse."

In effect, the move indicates that the county, which has pondered bankruptcy, hasn't found a way to right its ship and that the trustee is tired of waiting.

Bank of New York Mellon attorneys as well as a spokesman for the bank didn't respond to requests for comment. County Commission head Bettye Fine Collins, named as a defendant in the suit, was also not available for comment.

http://online.wsj.com/article/BT-CO-20090805-718222.htm...
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ozymandius Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 11:14 AM
Response to Reply #32
33. Too bad the County did not get a warrants deal like Goldman and Morgan Stanley.
But then, the victim does not have the same rights as the perpetrator in this case.
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amandabeech Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 12:49 PM
Response to Reply #23
43. Here's a little something from an Alabama resident from the linked story.
The narrative about the gullible hicks is pretty good, but it probably (the trial starts 08/31/09) had more to do w/ bribery, as the amounts that some of the accused and convicted bankers and advisers were being paid was more than the credit swaps were supposed to save.

The letter from the County Sheriff to the Governor is not going to lead to a deployment of Natl Guard, and is best understood as political grandstanding on the part of the Sheriff. Along w/ the picthfork and torch reaction JeffCo residents have had to the 4-hour lines at the DMV, the Sheriffs fear-mongering will probably force an emergency state legislative session (due to our backwards constitution, the entire state legislature has to be convened to handle county-level issues like taxes).

For a great graphic of this shell-game clusterfuck, check out this pdf:

http://blog.al.com/spotnews/2008/03/309Bonddeal2.pdf

See also : http://www.bhamwiki.com/w/Jefferson_County_debt_crisis

and if youve never met Birminghams Mayor, who was County Commission President when this dumb shit went down, check out:

http://www.bhamwiki.com/w/Larry_Langford

(although this entry doesnt mention his most recent stunt of handing out unicorn statues to the city council.)

Thanks for covering our quaint little murder-capital in your hallowed pages!

* * *

I grew up in a small town. Forcing a tax increase by threats of cutting services is not a foreign concept to me. Neither is some inept corruption.

This sheriff is threatening to lay off all his deputies, in which case, he's calling for the national guard to come in and fill in since they don't cost him anything. It isn't about any kind of expected insurrection.

What will probably happen is that less vital positions in the county government will be cut before the deputies and some tax increase will be forthcoming or there will be some sort of emergency funding from the state, even if it is in the form of a loan.

These banks should be ashamed of themselves. It is not clear to me at all that the SEC amnesty will prevent the county from suing its banker on other grounds and recovering some of the money. Any locals involved in bribes will be face both civil and criminal charges, which are likely to stick and be validated by angry jurors.
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UpInArms Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 07:57 AM
Response to Original message
24. dollar watch
Edited on Thu Aug-06-09 07:58 AM by UpInArms


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

Last trade 77.835 Change +0.255 (+0.33%)

British Pound Strength Hinges Upon BOE's Stance on Quantitative Easing

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

The Bank of England (BOE) is anticipated to leave rates unchanged at 0.50 percent on Thursday at 7:00 ET, but this won’t even be the market-moving part of the announcement.

Instead, traders will be looking toward the BOE’s policy statement in order to see if the Monetary Policy Committee (MPC) will end their quantitative easing (QE) program.

Before the BOE’s last policy meeting on July 9, the markets had been anticipating that the MPC would expand their QE program from 125 billion as evidenced by a steady drop in the British pound against the US dollar in the days ahead of the meeting. However, the BOE did not do so and said that it would take another month to complete, after which the British pound rallied and ended the trading day nearly 2 percent higher against the Japanese yen and US dollar.

Now that a month has passed, the markets are betting that the BOE will put QE to an end, even though the UK Treasury approved up to 150 billion in asset purchases. How safe is this bet, and how will the news impact the British pound?

Conflicting Evidence Suggests QE Decision May Not Be Clear-Cut

There is evidence arguing in favor of and against an expansion to the BOE’s QE program. First, clues that the central bank may consider purchasing another 25 billion in assets come from recent lending data published by the BOE, as they said that lending to non-financial corporations fell a record 14.7 billion during Q2 compared to Q1. The BOE also said that the annual rate of M4 money supply growth (excluding intermediate Offshore Financial Centers) fell 0.7 percentage points to 3.1 percent in Q2, all of which suggests that the central bank’s asset purchases haven’t had the desired effects of boosting money supply and increasing lending.

...more...


Outlook for Risk and Growth Flips Yet Dollar Outcome Still the Same

http://www.dailyfx.com/story/strategy_pieces/watch_what...

The capital markets have maintained their trajectory; but the conviction behind the bullish advance is certainly diminishing. This weight is primarily the work of fading risk appetite trends in the absence of consistent, fundamental fuel. Through much of July, the bullish rebound was initiated and maintained by the second quarter earnings season. However, the initial wave of optimism that was fed by ‘better-than-expected’ revenues is now undermined by the market’s idle time.



...more...

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DemReadingDU Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 10:24 AM
Response to Original message
30. FHFAs Lockhart Stepping Down, Treasury Official Says

8/5/09 FHFAs Lockhart Stepping Down, Treasury Official Says

Federal Housing Finance Agency Director James Lockhart, who regulates mortgage-finance companies Fannie Mae and Freddie Mac, will soon resign, according to a Treasury official.

The Obama administration doesnt have an long-term replacement lined up to replace Lockhart, who was appointed by former President George W. Bush, said the official, who asked not to be identified because no announcement has been made.

Lockhart, 63, has been running the agency since April 2006. The regulator, a Republican and long-time friend of Bush, said in an interview last year that he wouldnt stay at the agency even if President Barack Obama asked.

The Obama administration has been using Washington-based Fannie Mae and McLean, Virginia-based Freddie Mac in its efforts to revive the housing market and avert foreclosures. The administration and Congress are also considering restructuring the government-sponsored enterprises, possibly as public utilities, or liquidating their assets.

http://www.bloomberg.com/apps/news?pid=20601087&sid=acy...
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Robbien Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 12:03 PM
Response to Original message
37. Hank Greenberg settles with the SEC for fraud at AIG. Fine is a mere $15m
Edited on Thu Aug-06-09 12:07 PM by Robbien
SEC Charges Hank Greenberg and Howard Smith for Roles in Alleged AIG Accounting Violations

Washington, D.C., Aug. 6, 2009 The Securities and Exchange Commission today charged former American International Group Chairman and CEO Maurice "Hank" Greenberg and former Vice Chairman and CFO Howard Smith for their involvement in numerous improper accounting transactions that inflated AIG's reported financial results between 2000 and 2005. The SEC alleges that Greenberg and Smith are liable as control persons for AIG's violations of the antifraud and other provisions of the securities laws. Smith also is charged with direct violations of the antifraud and other provisions of the securities laws.

The SEC alleges that Greenberg and Smith were responsible for material misstatements that enabled AIG to create the false impression that the company consistently met or exceeded key earnings and growth targets. According to the SEC's complaint, Greenberg publicly described AIG as the leader in the insurance and financial services industry with a history of delivering consistent double-digit growth. However, AIG faced numerous financial challenges under Greenberg's leadership that were disguised through improper accounting.

Greenberg and Smith agreed to settle the SEC's charges and pay disgorgement and penalties totaling $15 million and $1.5 million, respectively. The SEC previously charged AIG in 2006 with securities fraud and improper accounting, and the company settled the charges by paying disgorgement of $700 million and a penalty of $100 million, among other remedies.

"Corporate leaders cannot avoid the truth and consequences of their companies' performance by using improper accounting gimmicks and signing off on distorted financial reports," said Robert Khuzami, Director of the SEC's Division of Enforcement. "Greenberg and Smith oversaw various improper transactions that presented a false financial picture and allowed AIG to claim success in meeting its performance goals."

http://www.sec.gov/news/press/2009/2009-180.htm

A puny $15m! His annual bonuses were probably more than that.

And he gets to walk.

Pfft
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ozymandius Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 12:19 PM
Response to Reply #37
38. At fines this cheap, you really cannot afford not to commit a crime.
He should be able to afford the fine since he just won control of a $4.3 billion pot in a court battle with AIG.
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Dr.Phool Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 12:23 PM
Response to Reply #37
39. What ever happened to the RICO statutes?
Seize all of their assets and charge them with operating a "continuing criminal enterprise". Life with no parole. No statute of limitations.

These slime balls get off with the equivalent of a parking fine.
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amandabeech Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 12:54 PM
Response to Reply #39
44. I'm no expert on RICO, but I think that it is still alive.
I'd expect a RICO charge to come from the U.S. attorney in Manhattan rather than the Justice Department. The SEC doesn't get involved in RICO, at least not in a lead role.

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Hawkowl Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 12:29 PM
Response to Reply #37
40. That's a KICKBACK not a fine
Fines like these will only accelerate the fraud.
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FarCenter Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 03:27 PM
Response to Reply #37
48. His lawyers probably made more than $15 million from the case
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Karenina Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 12:31 PM
Response to Original message
41. Any Max Keiser fans here?
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Hawkowl Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 12:35 PM
Response to Reply #41
42. Ha!HA!!
I've never seen this guy before! It was almost like listening to the voices in my head....er I mean...
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TheWatcher Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 01:56 PM
Response to Reply #41
46. I'm a huge one myself.
Edited on Thu Aug-06-09 01:58 PM by TheWatcher
I fail to see what is funny about that Video though.

Is the Truth that most Americans will not let themselves see somehow humorous?

But then again, if you don't laugh, you'd spend your days being enraged or crying.

Max does have a way with words. :)

I wish there were more like him that were as EXTREME. :)
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Karenina Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 03:26 PM
Response to Reply #46
47. To me he's a one-of-a-kind.
He lets one rip, I choke on whatever I'm foolish enough to be drinking while watching him...

Other guest: "Well I wouldn't be so extreme"

Max: "WHY NOT?"

Me: :spray:
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Robbien Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 01:47 PM
Response to Original message
45. Feds Close Major Lender-Taylor, Bean-for concerns of fraud
PHOENIX -- The suspension of one of the country's largest mortgage lenders will likely have a ripple effect on the Valley, local experts said.

The federal government cited irresponsible lending in their decision to shut down Florida-based Taylor Bean & Whitaker.

"TBW failed to submit a required annual financial report and misrepresented that there were no unresolved issues with its independent auditor even though the auditor ceased its financial examination after discovering certain irregular transactions that raised concerns of fraud," the Federal Housing Administration said in a statement.

FHA's suspension is also based on TBW's failure to disclose, and its false certifications concealing, that it was the target of two examinations into its business practices in the past year, the statement said.

http://www.kpho.com/houseandhome/20299011/detail.html

from another article:

The FHA said in a written statement Tuesday that Taylor Bean failed to submit its required annual financial report and failed to inform the FHA that TBW's independent auditors ended their examination of the company when they found "certain irregular transactions that raised concerns of fraud."

In addition to the loan suspension, the FHA is also recommending that two top company officials be temporarily banned from doing mortgage business with the federal government.

The FHA alleges that TBW President Ray Bowman and TBW Chief Executive Officer Paul Allen submitted false or misleading documents to the U.S. Department of Housing and Urban Development.

http://www.ocala.com/article/20090806/ARTICLES/90806101...


Taylor Bean is a warehouse lender which bought roughly $1 billion of mortgages a month from brokers. It also was one of the largest mortgage servicers.

Word is, Bank of America gets to take over the mortgage servicer business.

Colonial Bank (which is having huge problems of its own with the Feds & with liquidity) was the main source of Taylor Bean funding. I expect this bank will be on WEEs friday's failed bank listing in the next couple of months.


Any bets these guys see any jail time?


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tclambert Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-06-09 04:13 PM
Response to Original message
50. What's the deal with Fannie and Freddie?
Fannie Mae was up 17 cents yesterday and another 5 cents today. Doesn't sound like much until you figure the percentages. It was 57 cents/share and is now 79 c/s. That is a 38+% increase in TWO DAYS. The talk about putting Freddie and Fannie's bad assets in a "bad bank" is so far just talk. The announcement that James Lockhart is leaving his post doesn't seem like the kind of news that would cause a 38% jump in share price.

Mind you, I'm not complaining. I'm still not back to breakeven on my tiny investment in Fannie Mae, though for ten minutes or so today, my investment made it into positive territory. (Fannie peaked at 93 cents/sh and my breakeven is about 85 c/s, for those who are keeping score at home.)

Still, I'd kinda like to know why.

My guess is some big investor (corporate, fund, brokerage) decided to bet on Fannie's future and THAT investment moved the market. (My micro investment moved the market about .0000001 cent.)

But WHO?
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