STOCK MARKET WATCH, Wednesday June 17

[ozymandius]

Source: du

STOCK MARKET WATCH, Wednesday June 17, 2009

Bush Administration Officials Under Indictment = 2
Financial Sector Officials Under Indictment = 0
Financial Sector Officials In Prison = 2

AT THE CLOSING BELL ON June 16, 2009

Dow... 8,504.67 -107.46 (-1.25%)
Nasdaq... 1,796.18 -20.20 (-1.11%)
S&P 500... 911.97 -11.75 (-1.27%)
Gold future... 932.20 +4.70 (+0.51%)
10-Yr Bond... 3.65 -0.06 (-1.64%)
30-Year Bond 4.47 -0.09 (-1.91%)

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

Market Conditions During Trading Hours

GOLD, EURO, YEN, Loonie and Silver

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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

[ozymandius]

1. Market Observation

Problematic Outcomes
by Frank Barbera

Over the last 10 weeks there can be no question that the capital market ‘herd’ has come storming back into the arena for speculation, on the prowl for signs of global recovery and reflation. The idea underpinning the advance has been to surf the coattails of the market gods, -- the global central banks -- which have been creating liquidity as never before. Yet, the event in itself has been a total exercise in wishful thinking as any analysis that penetrates even a little bit below the surface reveals that virtually all of the ‘economic bounce’ seen to date is tied to government spending. Ex-government spending, the green shoots do no exist, and the data is still flat lining. What’s more, on a structural basis, there is no primary economic driver that is large enough or buoyant enough to fuel a global recovery. Yes, we know that China and India are high growth economies, but in both cases they are still hugely export dependent and thus will still be dependent on US and European final demand, demand which is not likely to come back for some time. With so many corners of the capitalist world crippled with high levels of debt and industries shedding jobs, it seems that any true recovery is still months down the line. In my view the event just witnessed is a page from early 1950’s market technician, Ed Quinn’s ‘Action-Reaction’ charts. One extreme begets another with the current rally’s false optimism belied by huge cracks in the foundation. It is the polar opposite of last year’s nightmare ‘Armageddon trade,’ which left virtually all investment managers out on the ledge.

....

In addition to major league overbought values on the weekly chart, Crude is now in a position where bearish divergences are showing up on both the daily and hourly chart. As can be seen using the chart of USO, an OIL ETF (and admittedly only a fair proxy for Oil), we see that prices are in the process of retesting the recent highs at Point B (6/11/09 $40.00) with a well defined trendline coming in as support at $38. Notice also that hourly MACD is very likely to ‘fail’ and record a much lower peak in the hours directly ahead. This would amount to a major bearish divergence and is likely indicating a market that is getting ready to launch a major downside correction. In my view if USO breaks below $38, it is very likely to correct further to the downside, perhaps into the low $30s over the weeks ahead.

....

Getting back to the near term market outlook I also want to throw a spotlight on the Bank Index, which over the last few weeks was unable to make new highs in tandem with the major stock market averages. This is a bearish divergence and harkens back to the kind of action we saw in the financials before some of the major problems began in 2007 and 2008. Relative strength weakness is often a very big ‘tell,’ and right now the BKX, the Philly Bank Index resides just above very important support at $35.70. With the 50 day average also in this same neighborhood ($35.94), any close below $35.70 in the days ahead would be bearish not only for the Bank Index, but would be a bearish development for the market as a whole. For the Bank Index a pull back to the low $30 area would be fairly routine and could be a sign of money getting defensive ahead of the release of Bank earnings reports due out in early July.

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

[ozymandius]

2. Today's Reports

08:30 Core CPI May
Briefing.com 0.1%
Consensus 0.1%
Prior 0.3%

08:30 CPI May
Briefing.com 0.3%
Consensus 0.3%
Prior 0.0%

08:30 Current Account Balance Q1
Briefing.com NA
Consensus -$85.0B
Prior -$132.8B

10:30 Crude Inventories 06/12
Briefing.com NA
Consensus NA
Prior -4.38M

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

[UpInArms]

7. U.S. mortgage applications plunge to near seven-month low

http://www.reuters.com/article/bondsNews/idUSNYS00515720090617?sp=true

NEW YORK (Reuters) - U.S. mortgage applications fell for a fourth consecutive week, with overall demand plunging to its lowest level in nearly seven months, data from an industry group showed on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended June 12 decreased 15.8 percent to 514.4, the lowest since the week ended November 21, 2008.

A rise in mortgage rates in recent weeks had sapped demand, particularly for home loan refinancing, but the direction of rates reversed course last week.

Cameron Findlay, chief economist at LendingTree.com based in Charlotte, North Carolina, said borrowers who are considering refinancing their current mortgage are now reevaluating their decision, given the swift and sharp rise in mortgage rates over the past few weeks.

"When rates move in volatile swings like this, it is critical (that) borrowers look for competitive rates -- competition in this environment keeps mortgage companies honest," he said.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 5.50 percent, down 0.07 percentage point from the previous week, but significantly higher than the all-time low of 4.61 percent set in the week ended March 27. The survey has been conducted weekly since 1990.

...more...

I know this isn't on the "report" list, but it is a leading indicator

[Hugin]

31. Yet, yesterday the Corporate Media was all a-gush about a 17% increase in home starts.

It's indeed a :crazy: world.

[ozymandius]

36. Yesterday's numbers gave me a headache and indigestion.

I have yet to read analysis that could make sense of it all.

[dixiegrrrrl]

50. As was the Mobile Register. But the graph in the story was 180 degrees from the headline.

Huge headline that real estate sales are up "80% this first quarter."
Well, yeah, since previous quarter there were 50 total sales.

Sidebar graph, showing 56% drop in sales over past 2 years.
2005 sales something like 4,700.
2008 sales 187.

Republican owned paper.

[Hawkowl]

49. "...Recovery is nonsensical"

Second-Half Recovery Is "Nonsensical": Economy Still Descending, Ritholtz Says

Posted Jun 16, 2009 01:34pm EDT by Aaron Task in Investing, Recession

Wednesday's report of a 17% monthly rise in housing starts made for some dramatic headlines, but don't confuse that with an actual recovery, says Barry Ritholtz, CEO of Fusion IQ and author of Bailout Nation.

"Housing Starts did not ‘soar' as Bloomberg claimed; you soar high in the sky, and a move from ankle to knee level does not qualify," Ritholtz writes on his popular blog, The Big Picture. "This was not, as The WSJ asserted, a ‘Surge in Home Construction.' Rather, it was a bounce off of record lows."


http://finance.yahoo.com/tech-ticker/article/264809/Second-Half-Recovery-Is-%22Nonsensical%22%3A-Economy-Still-Descending%2C-Ritholtz-Says

[UpInArms]

38. Look Maw! No Hands! - See there's NO NO NO NO Inflation!

U.S. May consumer price index rises 0.1%
8:30am Today

U.S. May core CPI rises 0.1%
8:30am Today

U.S CPI down 1.3% over past year
8:30am Today

U.S. core CPI up 1.8% over past year
8:30am Today

U.S. May food prices down 0.2%, 4th drop in a row
8:30am Today

U.S. May energy prices up 0.2%
8:30am Today

U.S. May real weekly earnings fall 0.3%
8:30am Today

[ozymandius]

47. Wha! That's just dumb.

I suppose imagination is to blame for my weekly grocery bill increase on staple items.

[UpInArms]

39. Petroleum Inventories Report:

Crude supplies down 3.9 mln barrels last week: EIA
10:31am Today

Gasoline stocks up 3.4 mln barrels last week: EIA
10:31am Today

Distillate supplies up 0.3 mln barrels last week
10:31am Today

[UpInArms]

40. Ruh-Roh! The Account Balance Report really really really sucks!

Jun 17 8:30 AM Current Account Balance Q1

report		-$101.5B
consensus	 -$85.0B
last quarter	-$154.9B
rev'd from	-$132.8B

[Demeter]

43. When Does It Not?

And what can we believe anymore, anyway?

I believe I'll have some dark chocolate.....

[ozymandius]

3. Oil hovers above $70 on mixed US economic signs

SINGAPORE – Oil prices hovered above $70 a barrel Wednesday in Asia as investors weighed mixed signals from the U.S. economy amid tumbling equity markets.

Benchmark crude for July delivery rose 8 cents to $70.55 a barrel by late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. On Tuesday, it fell 15 cents to settle at $70.47.

....

In other Nymex trading, gasoline for July delivery fell 0.56 cent to $2.07 a gallon and heating oil rose 0.67 cent to $1.83. Natural gas for July delivery was steady at $4.13 per 1,000 cubic feet.

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

[ozymandius]

4. Obama to unveil plans for financial rules overhaul

WASHINGTON (Reuters) – President Barack Obama will unveil on Wednesday his plans for reshaping U.S. financial regulation, with proposals to close one bank regulator and create new overseers for big-picture economic risk and consumer financial product safety.

....

A senior administration official said on Tuesday that the Obama plan will call for closing the Office of Thrift Supervision, a Treasury Department unit, and eliminating the federal charter under which savings and loans operate, with the objective of streamlining bank supervision.

In addition, the Federal Reserve would be assigned new duties to monitor risks that could threaten the entire financial system, working in conjunction with a council of other regulators to be chaired by Treasury.

The goal is to make sure a failure of one large company -- like bailed-out mega-insurer American International Group, for instance -- does not destabilize the broader economy.

http://news.yahoo.com/s/nm/20090617/bs_nm/us_financial_regulation

[Demeter]

44. Why Pick on the Thrifts?

they've been well regulated since .... 1987 or so.

[Festivito]

5. Debt: 06/15/2009 11,400,723,732,452.21 (UP 25,771,002,883.89) (up 22B$.)

(Debt goes up about a week's worth after about a week of doing little or nothing. Not earth shattering. Off to my work.)

= Held by the Public + Intragovernmental(FICA)
= 7,133,203,590,883.64 + 4,267,520,141,568.57
UP 22,279,783,785.91 + UP 3,491,219,097.98

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

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: $9.78, ABOUT TEN BUCKS for a 1B$ 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 306,659,942 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 $37,177.09.
A family of three owes $111,531.26. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 20 reports in the last 30 to 31 days.
The average for the last 20 reports is 5,830,666,251.38.
The average for the last 30 days would be 3,887,110,834.26.
The average for the last 31 days would be 3,761,720,162.18.
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$/day.
There were 99 reports in 146 days of Obama's part of FY2009 averaging -0.12B$ per report, -0.05B$/day so far.
There were 174 reports in 258 days of FY2009 averaging 7.91B$ per report, 5.33B$/day.

PROJECTION:
There are 1,315 days remaining in this Obama 1st term.
By that time the debt could be between 13.2 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)
06/15/2009 11,400,723,732,452.21 BHO (UP 773,846,683,539.13 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: 1,375,998,835,539.80 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
05/22/2009 +000,007,301,981.46 ------------******
05/26/2009 +000,178,213,075.69 ------------******** Tue
05/27/2009 +000,332,821,919.42 ------------********
05/29/2009 +019,434,324,960.50 ------------**********
06/01/2009 +078,540,152,146.76 ------------********** Mon
06/02/2009 +000,543,288,286.72 ------------********
06/03/2009 -000,003,266,733.82 -----
06/04/2009 +011,755,789,483.75 ------------**********
06/05/2009 -000,226,149,345.97 ---
06/08/2009 +000,015,040,049.19 ------------******* Mon
06/09/2009 +000,025,670,087.48 ------------*******
06/10/2009 +000,124,232,779.18 ------------********
06/11/2009 +000,484,710,305.16 ------------********
06/12/2009 +000,342,814,514.03 ------------********
06/15/2009 +022,279,783,785.91 ------------********** Mon

133,834,727,295.46 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,736,091,929,193.14 in last 270 days.
That's 1,736B$ in 270 days.
More than any year ever, including last year, and it's 171% of that highest year ever only in 270 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 270 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.php?az=show_mesg&forum=102&topic_id=3924791&mesg_id=3924820

[Festivito]

59. Debt: 06/16/2009 11,406,012,959,882.55 (UP 5,289,227,430.34) (Small debt move, mostly FICA.)

(Debt moves up .3 billion dollars, a tiny amount. Day before raised debt enough for most of a week. What occurs today will be reported tomorrow, Friday, and has been bigger increases, but not all the time. The borrowing has not been outrageous under Obama as Republican poutrage would suggest.)

= Held by the Public + Intragovernmental(FICA)
= 7,133,503,894,802.76 + 4,272,509,065,079.79
UP 300,303,919.12 + UP 4,988,923,511.22

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

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: $9.78, ABOUT TEN BUCKS for a 1B$ 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 306,667,142 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 $37,193.46.
A family of three owes $111,580.39. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 21 reports in the last 30 to 32 days.
The average for the last 21 reports is 5,804,883,450.38.
The average for the last 30 days would be 4,063,418,415.27.
The average for the last 32 days would be 3,809,454,764.31.
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$/day.
There were 100 reports in 147 days of Obama's part of FY2009 averaging -0.14B$ per report, -0.05B$/day so far.
There were 175 reports in 259 days of FY2009 averaging 7.89B$ per report, 5.33B$/day.

PROJECTION:
There are 1,314 days remaining in this Obama 1st term.
By that time the debt could be between 13.2 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)
06/16/2009 11,406,012,959,882.55 BHO (UP 779,135,910,969.47 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: 1,381,288,062,970.10 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
05/26/2009 +000,178,213,075.69 ------------******** Tue
05/27/2009 +000,332,821,919.42 ------------********
05/29/2009 +019,434,324,960.50 ------------**********
06/01/2009 +078,540,152,146.76 ------------********** Mon
06/02/2009 +000,543,288,286.72 ------------********
06/03/2009 -000,003,266,733.82 -----
06/04/2009 +011,755,789,483.75 ------------**********
06/05/2009 -000,226,149,345.97 ---
06/08/2009 +000,015,040,049.19 ------------******* Mon
06/09/2009 +000,025,670,087.48 ------------*******
06/10/2009 +000,124,232,779.18 ------------********
06/11/2009 +000,484,710,305.16 ------------********
06/12/2009 +000,342,814,514.03 ------------********
06/15/2009 +022,279,783,785.91 ------------********** Mon
06/16/2009 +000,300,303,919.12 ------------********

134,127,729,233.12 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,741,381,156,623.48 in last 271 days.
That's 1,741B$ in 271 days.
More than any year ever, including last year, and it's 171% of that highest year ever only in 271 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 271 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.php?az=show_mesg&forum=102&topic_id=3926836&mesg_id=3926852

[UpInArms]

6. dollar watch

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

Last trade 80.857 Change +0.113 (+0.15%)

Pound, Euro Reverse Gains On Global Recovery Concerns Despite Improving Fundamental Data

http://www.dailyfx.com/story/bio1/Pound__Euro_Reverse_Gains_On_1245232661532.html

The Pound has started to trade heavy after reaching as high as 1.6483 despite a slower pace of job losses and an improving outlook from the BoE. Indeed. the U.K. economy lost 39,300 jobs in May which was far less than the 60,000 that was expected. The minutes from the last policy meeting of the BoE showed that they are becoming optimistic that a recovery is imminent. The central bank points to signs that the housing market is stabilizing and a slowing of the decline in consumer consumption. However, they still see the credit supply poutlook as remaining constrained.

The slower pace of job losses will also help lead to a recovery in domestic growth and without the threat of falling home prices we could see the U.K. economy take steps toward a recovery. However, there remain concerns over the amount of debt that the government has issued to help finance the stimulus package and bailout of financial institutions. The expectations of higher taxation going forward will limit the upside for the economy and may cap the pound’s potential appreciation. At 20:00 GMT BoE governor King and Chancellor Alistair Darling will make their Mansion House speeches and if we hear talk of an exit strategy from their quantitative easing efforts, we could see a return of sterling bullish sentiment. Look for support at 1.6185 the 20-Day SMA, with a break there leaving 1.5798 the 38.2% Fibo of 1.4397-1.6664 as the next barrier.

The Euro saw a similar reversal as sterling after reaching as high as 1.3926 as it was also a victim of global growth concerns. A rise in construction activity for a second month by 0.6% in April added to the signs that the economy is stabilizing. Meanwhile, the trade balance for April saw its surplus increase to 2.7B from 1.8B, despite expectations for a deficit of 1.5B. The decline in imports outpaced a slowdown in exports as local demand remains weak. The region may start to see a pickup in demand for its products as global demand improves but domestic growth may be slow to recover which could limit the scope of a possible recovery.

We have seen the dollar start to regain some support overnight as concerns over the type of recovery for the global economy has reignited a move toward safety. U.S. consumer prices are forecasted to decline by 0.9% from a year ago as oil prices are lower by 50% despite their recent rise. An inline print will ease some of the recent concerns that the upside risks of inflation are increasing as the central bank continues to print money. Fears are growing that the Fed may need to start tightening monetary policy sooner than their projection of mid 2010 which could limit the scope of a recovery. Either the prospect of rising interest rates or a slower recovery could generate bullish dollar sentiment. However, an inline print will confirm that current policy is appropriate and will lower interest rate expectations which could send the dollar lower.

...more...

US Dollar May See Biggest US CPI Drop Since 1950 on Wednesday

http://www.dailyfx.com/story/dailyfx_reports/daily_fundamentals/US_Dollar_May_See_Biggest_1245187383952.html

The US dollar ended on a mixed note on Tuesday, losing out against the euro, Swiss franc, British pound, and Japanese yen while gaining versus the commodity dollars. While the currency did stage a solid rally during the US trading session, it ultimately wasn’t enough to make up for the greenback’s heavy losses experienced during the European trading session. US economic news was broadly mixed, as the Labor Department said that US producer prices rose by 0.2 percent in May, but this monthly gain did not prevent the annual rate from falling further to a nearly 60-year low of -5.0 percent. The drop in the annual rate suggests that Wednesday's US CPI release could be similarly weak on an annual basis. Adding to the mix, the Commerce Department reported that housing starts jumped for the first time in three months by 17.2 percent in May to an annual rate of 532K from a record low of 454K. Likewise, building permits rose by 4.0 percent during the month to an annual rate of 518K from a record low of 498K. Manufacturing sector data was not as optimistic, though, as the Federal Reserve's industrial production index fell more than expected at a rate of -1.1 percent, marking the seventh straight month of contraction. Indeed, as we've noted in the past, the persistent slowdown in both domestic and foreign demand has taken a hefty toll on the manufacturing sector, which has shown no signs of recovering.

The latest inflation figures for the US are forecasted to show slight increases on a monthly basis, but clear weakness on an annual basis. Indeed, headline CPI is projected to have risen 0.3 percent during May, while the core measure, which excludes food and energy, is anticipated to rise 0.1 percent. Meanwhile, headline CPI is expected to have fallen 0.9 percent in May from a year ago, the steepest drop since February 1950, compared to a decline of 0.7 percent in April. On the other hand, core CPI may have only eased to a 1.8 percent annual pace of growth from 1.9 percent, suggesting that volatile commodity prices are the sole reason for the contractions in headline inflation. Weaker than expected results have the potential to stoke deflation fears, but overall, the FX markets haven’t shown a strong reaction to past CPI reports, and this time around we may see more of the same.

...more...

as long as you don't eat, heat or cool or power an abode, drive anywhere - well, hey! there's no inflation!!!

[UpInArms]

8. Confessions of a Trader - Chapter 2 -- Animal House

http://www.marketwatch.com/story/story/print?guid=AA6BA7B4-B689-4D89-A628-269BB4E5FC44

When I accepted the internship at Morgan Stanley, I had no idea it was the only paying position. That's good news for a young kid living abroad and staring at tens of thousands of dollars in college loans. I packed my bags and headed to London for the summer of 1990 between my junior and senior year.

I was placed in Operations Control and was the kid who told the producers on the trading desk there were errors in their account. As an intern, I was low man on the totem pole. Given I worked in Ops Control, I was low man on the lowest totem.

I lifted weights in college and had the muscles to prove it. That was helpful in the bar but provided little utility in business. I felt very small when I stepped on to the trading floor each day and wove my way through the verbal barrage. It was scary yet exciting, unlike anything I had ever experienced.

By the time August arrived, I was physically drained, emotionally spent, intellectually challenged -- and completely sold.

(edited because I made my post "disappear")

Yes, it's safe to say that by the time I returned to the states, accounting was no longer an option. I didn't want to crunch the numbers. I wanted to create them.

not as alluring as last week's entry :shrug:

[KoKo]

41. agree...

Maybe he needed an editor... :eyes:

I was a solid student and took my academic career seriously, despite an active commitment to collegiate hedonism. I was competitive, perhaps because I felt I had something to prove. When I began to view my course load as a contest, I excelled in kind. I was obsessed with success and the empowerment that arrived with it.

The dean's list felt good, so I kept making the grade. After waiting tables my freshman year, I took a bartending class over the summer and worked at several bars before landing a job as a bouncer at Harry's, one of the more popular hangouts. I had no interest in standing in the Syracuse chill, but it was an opportunity to get my foot in the door and I grabbed it. That, too, would be repeated throughout my career.

One night, when the regular bartender called in sick, I was asked to fill in. Under the watchful eye of the owner, I was "high ring," putting more money in the till than the older, more experienced pourers. I joined the rotation, and with each successful night, I was given more latitude. In a few short months, I had my choice of shifts.

There I was, bartending at my favorite pub as I excelled in school, enjoying fraternity life and doing the sorts of things college kids should be doing. I had it all yet I wanted more, the fatal flaw of a classic overachiever.

The ace of spades

During my junior year, I aced my finance midterm and blew the curve. Pride would have been the appropriate reaction, but I studied my few wrong answers and loathed the lack of perfection.

That was my style -- set the bar too high so that if I missed, I was still ahead of the crowd. It wasn't the healthiest approach. While it pushed me to bigger and better things, it never allowed me to feel a complete sense of accomplishment.

After that midterm, the professor called me to his office. I allowed myself a rare moment of satisfaction as I rushed across campus to accept some praise. When I arrived, he grilled me with questions. After a few minutes, I realized what was happening.

"You think I cheated?" I asked, humbly at first but then with increased agitation. "I busted hump for this class and you're going to accuse me of cheating?"

Following an intense discussion, the conversation eased into a healthy dialogue. He ran the Department of International Programs Abroad and there were several internship opportunities overseas that summer -- most of which were geared to MBA's -- and he began to gauge my interest.

I asked him what was available and he listed them in kind: Manufacturer's Hanover, Saatchi & Saatchi, Morgan Stanley. "Morgan Stanley?" I asked, recognizing the name of the biggest cash register on the street. "If you can get me the job at Morgan, I'll gladly hop the pond for the summer."

[tclambert]

9. OMG, he killed a fly! How will the market respond?

[Old Hob]

15. it will undoubtedly interpret the death of the fly as a sure sign of our imminent recovery.

[Demeter]

22. Welcome to SMW!

That didn't take long! Hope you find kindred spirits anduseful information here.

[Old Hob]

42. thanks. I love economic data.

[Dr.Phool]

29. Or, as Kieth Olbermann said last night,

"I hope that wasn't Jeff Goldblum".

[tclambert]

53. Obama missed the opportunity

to say, "Does that fly have a human head?"

[Hugin]

32. I killed one yesterday... and nobody noticed.

Is that a sign? Some sort of philosophical paradox or something? :shrug:

[Demeter]

45. If You Kill a Fly, And Nobody's Watching, Is It Really Dead?

Or is it your life that lacks a certain liveliness?

[tclambert]

54. "It just so happens that your friend here is only MOSTLY dead."

- Miracle Max.

[AnneD]

52. Since no one else noticed.....

does that mean the fly and perhaps you, do not exist.

[Demeter]

58. Cogito ergo sum--Descartes

[ozymandius]

10. Treasuries Drop, Snap 4-Day Gain, as Obama Says Yields to Rise

June 17 (Bloomberg) -- Treasuries fell, snapping a four-day gain, as President Barack Obama said a recovery in the U.S. economy may drive yields higher as appetite for risk returns.

Benchmark notes ended the longest rally since January before the Treasury resumes debt sales next week with auctions of two-, five- and seven-year securities. As recession concerns ease, “there’s going to be money flowing out of Treasuries and people are going to start putting money in other investments that provide higher yields,” Obama said in an interview with Bloomberg News.

.....

The yield on the benchmark 10-year note rose three basis points, or 0.03 percentage point, to 3.69 percent as of 7:34 a.m. in London, according to BGCantor Market Data. The 3.125 percent security maturing May 2019 fell 7/32, or $2.19 per $1,000 face amount, to 95 3/8. The yield declined to as low as 3.65 percent yesterday, the least since June 4.

.....

Ten-year yields will probably drop to as low as 1.5 percent over the next two years, Mizuho Asset’s Takei said. Should his predictions prove accurate, investors who buy the debt today would make a return of 26 percent, Bloomberg calculations show.

http://www.bloomberg.com/apps/news?pid=20601087&sid=atdXJsoSfK1c

[Demeter]

23. Higher Yields? Like Where?

All the bubbles are burst, or bursting, and only the Abyss behind them remains.

[ozymandius]

35. Merely speculative, I think.

But still - higher yields would evidence lower demand for that product.

[Robbien]

51. Higher yields are happening in the munis

State and local governments are getting slaughtered.

For all the talk of improving credit conditions, one group close to taxpayers’ hearts isn’t faring equally well: municipalities.

Although corporations have been able to borrow at steadily improving rates this year, major lenders still demand steep premiums for states and municipalities — especially those without the highest ratings.

Municipal borrowing costs have actually become more expensive over the past few weeks, in spite of improving economic news. Of course, when municipalities have to pony up more, that translates to higher taxes and fees for residents.

Investment-grade spreads, or the premium investors demand to own corporate debt rather than risk-free Treasurys, have slid by about 1.3 percentage points May 1 (a whopping 37% percent drop), and companies have responded with hundreds of millions of dollars of new issuance, according to Dealogic.

Meanwhile, many municipalities are actually paying higher yields to sell tax-free bonds, according to a Municipal Market Advisors report. Compared to two weeks ago, rates are now about 0.15 percentage points higher.

The state of Washington’s $391.3 million offering last week was only 1/3 sold, MMA said. Even among borrowers with the same ratings, the tax-free or municipal issuer tends to be charged a higher rate than would an equivalent company.

http://blogs.wsj.com/marketbeat/2009/06/17/credit-crunch-still-on-for-municipalities/


Meanwhile California is cutting education programs and work grant programs. Over a million people in poverty are going to be dropping down to the homeless class.

Illinois is close to that edge. But Daley and Obama are still pushing for the Olympics. Insanity.

[DemReadingDU]

11. Arianna Huffington: Whistling Past the Economic Graveyard

6/15/09 Whistling Past the Economic Graveyard: The Audacity of Misplaced Hope by Arianna Huffington

Is it possible to have too much hope? To be too optimistic? Yes, if that hope keeps you from facing -- and dealing with -- unpleasant realities.

That seems to be what's happening regarding the financial institutions responsible for the economic meltdown.

Let's start with the banks' toxic assets. When Tim Geithner unveiled the Public Private Investment Program, he said that dealing with these assets was a "core" part of solving the financial crisis.

But the banks would much rather keep pretending that their toxic assets are not that toxic, and worth much more than they really are -- a risky charade the relaxed mark-to-market rules allow them to continue to pull off.

So, last week, the PPIP program was apparently scrapped. Does this mean that the toxic assets are no longer a "core" part of the problem? Or that hoping they're no longer part of the problem will somehow make them no longer part of the problem?

"Hope sustains life, but misplaced hope prolongs recessions." So says Jim Grant, publisher of the Grant's Interest Rate Observer newsletter, whom I interviewed last week on Squawk Box. Because of misplaced hope, Grant says, business people, homeowners -- and administrations -- often refuse to admit the truth and take the painful steps necessary to turn things around.

On Wednesday, President Obama will lay out the details of his administration's plan to remake the financial regulatory system. Geithner and Larry Summers offered a sneak peak at the plan in an op-ed in today's Washington Post, proclaiming, "we must begin today to build the foundation for a stronger and safer system."

Among the proposals: "raising capital and liquidity requirements for all institutions"; "consolidated supervision by the Federal Reserve"; "robust reporting requirements on the issuers of asset-backed securities" including "strong oversight of 'over the counter' derivatives"; and providing "a stronger framework for consumer and investor protection across the board."

The devil, of course, will be in the details. And on how much muscle Obama puts behind pushing these measures through and ensuring they become law without being watered down. Especially at a time when the latest stock market bubble has undermined the urgent push for reform, which seems to have given way to a push to move on to other things and leave that little financial kerfuffle behind us.

And investors seem anxious to do the same. Witness the "fierce rally" in the collateralized loan obligation market. CLOs are made up of sliced and diced assets (including high-risk and junk loans) -- and are kissing cousins to the collateralized-debt obligations (i.e. crap) at the heart of the financial meltdown. But according to analysts at Morgan Stanley there has recently been a "remarkable change" in investor sentiment towards these securities, including an "exuberance" for the lowest grade junk being sold.

In other words, we are right back to risky business as usual. No harm, no foul. Let's get back to the fun we were having before this whole worldwide economic collapse thing started happening.

It puts a whole other spin on the audacity of hope.

Too many in Washington -- and in the media continue to take the well-being of Wall Street as the proper gauge for the well-being of the rest of America. Yes, the Dow is up 33 percent since March. But another 345,000 jobs were lost in May, raising the number of the unemployed to 14.5 million, and the unemployment rate to 9.4 percent. Since the start of the recession in December 2007, unemployment has almost doubled.

What's more, as this chart shows, over the past two decades, the top one percent of Americans has done very well in terms of wage growth. Things have not been nearly as good for everybody else.

Are the reforms going to be sufficiently fundamental to avoid a repeat of the boom and bust cycles, in which only a select few enjoy the boom and everybody else pays for the bust?

http://www.huffingtonpost.com/arianna-huffington/whistling-past-the-econom_b_215672.html

[Demeter]

25. Ooops! You beat Me To It!

It's still a great article, though. HuffPost is on fire!

[Soylent Brice]

12. that toon deserves it's own post.

[Doctor_J]

24. Amen

best I have seen in awhile

[Soylent Brice]

27. i've forwarded that on to some friends, and it's spreading like wildfire now.

[Loge23]

28. Best cartoon of the year!

And therein lies the truth about what became of the once-great United States of America.
So why is Obama pussy-footing around a minority opposition??

Those other guys stole elections, lied about taking us to an unnecessary war, gave the country to the elitists, and overthrew hundreds of years of due process, human rights, and civil liberties. And the people did nothing.

What have we become?

[Hissyspit]

37. It got posted yesterday.

Check the Greatest Page.

[Demeter]

13. Why is the Treasury Excluding the Gulf Coast from Stimulus Benefits?

http://prospect.org/cs/articles?article=why_is_the_treasury_excluding_the_gulf_coast_from_stimulus_benefits

Low-income housing construction is stalled due to the economic collapse -- and a recent ruling by Tim Geithner is preventing federal funds from reaching the victims of Katrina.


Brentin Mock | June 10, 2009 | web only



Why is the Treasury Excluding the Gulf Coast from Stimulus Benefits?


A recent Treasury Department ruling has disqualified the Gulf Coast region from a significant portion of stimulus funding specifically set aside to help low-income housing developments languishing due to the recession.

In question is whether low-income-housing tax credits granted by Congress in the wake of Hurricanes Katrina and Rita qualify for the American Recovery and Reinvestment Act's tax-credit exchange program, which allows state agencies to cash in the credits for grants to finish affordable housing projects that have stalled due to the finance industry's collapse.

Why Geithner would exclude from the nation's stimulus bill the region of America that most needs stimulating has baffled members of Congress, state legislators, lawyers, and advocates alike. At stake, according to the Louisiana Finance Housing Agency, are about 10,000 housing units, the bulk of which would be in New Orleans, and roughly $73 million in lost tax credits. "Not to mention the collateral damage," Jeff DeGrass, LHFA's director of public information tells me, "the loss of jobs, construction, and all the families displaced who were counting on these units."

The Treasury's ruling comes as Gulf Coast states are grappling with how to accommodate thousands of families who are now facing eviction from temporary housing units -- the infamous Federal Emergency Management Agency trailers. Those mobile units weren't built for long-term housing, and FEMA has already granted two deadline extensions for the estimated 143,000 families who have occupied them after the storm. On June 1, the agency issued a final eviction notice to the remaining 3,450 families still occupying the trailers. Advocates appealed to President Barack Obama to intervene so that families wouldn't end up in the streets, and on June 3, he answered.

The administration announced it would enable FEMA, the Department of Homeland Security, and the Department of Housing and Urban Development (HUD) to help the evicted families with $50 million in housing vouchers, options to purchase the FEMA trailers for $1 or $5, and broadened access to expanded case-management services -- including assistance with applying for income-based housing.

But this aid is predicated on the idea that there is ample housing in place for these families to transition into and ignores the fact that the FEMA trailers were never intended to serve as permanent housing. As Annie Clark of the Louisiana Finance Housing Agency told the Prospect, "Vouchers need housing units in order to be used. If there is no housing for people to go to, those vouchers don't mean anything."

According to the Greater New Orleans Community Data Center's most recent report, permits for the construction of new residential buildings dropped 28 percent in the second half of 2008 when compared with the first half, while home construction in general fell 25 percent. There were 86,845 blighted or uninhabitable units in the St. Bernard and Orleans parishes as of January, while the number of unoccupied residencies in the Jefferson, St. Tammany, and Plaquemines parishes increased from the year before. Rent in New Orleans is currently 52 percent higher than before Katrina hit. The snail pace of housing construction and rehab, and the cost inflation of the limited available stock, has left low-income families with few options.

MUCH MORE AT LINK....

"If the best and brightest lawyers in the tax-credit industry think Treasury’s ruling is wrong, why hasn’t Treasury revisited the issue and revised their ruling in keeping with the president’s pledge to help Katrina and Rita Hurricane victims?" he asks. "Why should we have to wait months for a legislative fix when it is in Secretary Geithner’s power to fix it today?"

[Demeter]

14. Five Questions We Should Ask About Financial Oversight

http://prospect.org/cs/articles?article=five_questions_we_should_ask_about_financial_oversight

Strengthening regulation is only the beginning.


Robert Kuttner | June 10, 2009 | web only


On June 17, the Obama administration will make public its long-awaited white paper on financial reform, quite possibly with a speech by the president himself. Leaks from various players within the administration over the past few weeks have focused on whether there should be a major consolidation of the different agencies that supervise banks, investment companies, and financial exchanges.

But where regulatory oversight is located, which got headline treatment in recent leaks to the Wall Street Journal, is really a minor detail. The more important issue is how tough regulation will be. When I spoke with senior administration economic officials late last week, it was clear that they are still working in the particulars.

Among the most contentious issues will be these:

How should the shadow banking system, namely hedge funds and private equity firms, be regulated?
President Barack Obama has long argued that any financial firm with the capacity to create credit and risk should be subject to regulation; hedge funds and private-equity companies currently are not. But should this include detailed disclosures of trading positions and capital reserve requirements, of the kind required of other financial companies? And who should regulate them? The advocates of tough reform want to have the Securities and Exchange Commission to do the job; allies of the industry want to give general authority to the Federal Reserve, in a new capacity as “systemic risk regulator” but without explicit standards.

Should the Fed get more power -- or less?
Treasury Secretary Timothy Geithner is passionate about the idea that the system needs a super-regulator to oversee systemic risk and that this body should be the Federal Reserve. The premise is that since the responsibility of intervening in a crisis falls to the Fed, the Fed should be charged with heading off financial meltdowns before they occur. However, many in the administration and in Congress think this would give the Fed too much power and that the Fed is the wrong agency for the job. Federal Deposit Insurance Corporation Chair Sheila Bair wants a new panel made up of chairs of agencies, with its own professional staff, to be the watchdog for systemic risk; both Rep. Barney Frank and Sen. Christopher Dodd have indicated that they prefer this approach, which has the support of some consumer and industry groups. (See my recent Prospect piece on the Fed and its critics.)

Should there be a Financial Product Safety Commission?
Elizabeth Warren, the Harvard law professor who also chairs the congressional oversight panel on the banking bailout program, has long advocated for a commission that would review and restrict potentially hazardous financial products such as sub-prime mortgages, deceptively priced payday loans, and other consumer rip-offs. The argument is that the banking agencies have paid too little attention to consumer welfare and that consumers need an agency that is their champion. The counterargument is that a new Financial Product Safety Commission would scramble lines of authority and that it's better to strengthen bank regulators' ability to safeguard consumer interests just as they assure bank soundness. Support for an FPSC is gaining strength in Congress. My sources say that President Obama was very pleased with the positive reception when he signed the credit-card bill last month and that he is inclined to support more high-profile, pro-consumer measures such as the FPSC but that his senior economic advisers are lukewarm on such steps.

What kind of Resolution Authority for Failed Banks?
Since the financial crisis began, the Treasury and the Fed have helped zombie banks like Citigroup with low interest rates, credit advances, and direct infusions of government capital. The idea of a temporary government takeover has been disparaged as "nationalization." Now, in the new administration proposal, Geithner wants government to have the authority to take over failed banks. The FDIC already has that authority for small and medium-sized banks but not for large bank-holding companies. There are two key issues here. Would the new authority go to an expanded FDIC, whose independent-minded chair, Sheila Bair, is sometimes depicted as disloyal to the administration? And would the administration actually use the new authority -- or just keep doling out money to keep sinking banks afloat?

How to Regulate Derivatives?
Along with sub-prime mortgages, complex and highly speculative derivative securities, such as credit-default swaps, were at the heart of the financial collapse. Several key Democratic senators were appalled when President Obama named Gary Gensler to chair the Commodity Futures Trading Commission (CFTC), since Gensler, as a Treasury official under President Bill Clinton, was one of the key players in the effort to prohibit CFTC from regulating customized derivatives, such as the ones abused by Enron and American International Group.

Sen. Maria Cantwell of Washington state, one of the Senate's experts on derivatives, put a hold on the Gensler nomination until she got a written commitment from the administration to require much greater disclosure to the CFTC of derivative trading positions as well as capital reserve requirements, but there are potential loopholes. The administration does not yet support the reformers' goal of requiring that all derivatives, including customized ones, be traded on regulated exchanges.

The president's release of a plan next week is only the opening gun. The key House and Senate committees will hold hearings this month, and floor action will not begin until after Labor Day. Senate Majority Leader Harry Reid has said that given all of the other legislative business, he can't imagine the Senate actually passing legislation until early 2010. That's probably a good thing, since it will give consumer groups pushing for tough financial regulation more time to organize, while the continuing weakness of the banking sector provides the exclamation point. Until now, the main players in this insiders' debate have been the government and the financial industry. A new consumer-labor reform coalition made up of several dozen groups is set to be unveiled on June 16, just before the release of the administration's plan.

[Demeter]

16. Has Anyone Noticed the Housing Bubble?

http://www.prospect.org/csnc/blogs/beat_the_press



The Obama administration's regulatory reform proposal includes many positive features, but it ultimately will not make the financial system safer for the simple reason that it conceals responsibility rather than holding regulators accountable for their failures. The basic story of this crisis was not that the regulatory authorities lacked the ability to rein in this disaster before it was too late. Rather, the basic story is that the regulatory authorities -- most importantly the Fed -- opted not to use their power to rein in the housing bubble.

The discussion of financial issues has largely worked to hide the centrality of the housing bubble to the crisis. If there had been no credit default swaps, collaterized debt obligations, subprime or Alt-A mortgages, but the housing bubble had still grown to $8 trillion, we would be pretty much in the same economic situation that we are today. Residential construction would have collapsed due to a huge glut in the market and consumption would have plunged as a result of the loss of $8 trillion in household wealth. The financial problems created by failed regulation do complicate the picture, but the fundamental picture is a very simple one of a collapsed bubble sending demand plummeting.

Politicians and regulators have a direct interest in portraying the crisis as being the result of an inadequate regulatory apparatus rather than failed regulators, because failed regulators should get fired. However, by not holding failed regulators accountable, this reform proposal is setting the grounds for the next crisis.

Even a perfect regulatory structure will not work, if the regulators do not do their job. They will not have an incentive to do their job, if there are no consequences for not doing their job.

In this case, we have seen the most disastrous possible regulatory failure -- this is like the drunken school bus driver who gets all his passengers killed driving into oncoming traffic -- and no one is held accountable. The message to future regulators is therefore to simply go along with the powers that be (i.e. the financial industry) and you will never suffer any negative consequences.

It is remarkable that this perspective is completely absent from the coverage of President Obama's regulatory reform proposal. The media failed dismally in its coverage of the housing bubble. They appear to have learned nothing from this failure.

--Dean Baker

[tclambert]

55. This have anything to do with that movie

Up?

[Demeter]

17. Health Care Reform Arithmetic for the Numerically Challenged

http://www.prospect.org/csnc/blogs/beat_the_press_archive?month=06&year=2009&base_name=health_care_reform_arithmetic

The Congressional Budget Office (CBO) came out with preliminary projections of the impact of Senator Kennedy's health reform bill. CBO had a projected cost of $1 trillion, with an addition 16 million people getting insured over this period.

Republicans were quick to put the cost at $62,500 for each additional insured person. This is a good joke, but has no place in serious policy discussions. The relevant question is the cost per year ($6,250). If the projections were done over 20 years, then the cost would be $125,000 per insured person using the Republican methodology.

It is also important to remember that the number of people who are uninsured at least part of the year is over 80 million. The generally used number of 45 million uninsured refers to the number of people who go the entire year without insurance. Presumably there will be a reduction in the number of people who are uninsured for part of the year as a result of the Kennedy plan.Serious analysis would take this into account also.

[Demeter]

18. NPR, the IMF, and the Global Savings Glut

http://www.prospect.org/csnc/blogs/beat_the_press_archive?month=06&year=2009&base_name=npr_the_imf_and_the_global_sav



The Obama administration is having a tough time getting its request for $108 billion for the IMF through Congress. Bank bailouts are rapidly losing popularity. And bailouts of foreign banks are probably even less popular than bailouts of U.S. banks.

But, NPR is rushing to the rescue. It had a piece this morning telling listeners that it was important to get the IMF more money to help the poor countries of the world. The piece never mentions the fact that the bulk of the IMF lending at present is going to East European countries, not the developing world.

The basic problem is simple. The West European bankers proved to be every bit as stupid as the Robert Rubin-Citigroup crew in dishing out loans. The main outlet for their bad loans was Eastern Europe, where they made enormous loans denominated in euros.

It is very difficult for the countries of Eastern Europe to maintain their exchange rates against the euro without large amounts of assistance. However, if they let their currencies fall against the euro, then the default rates on the loans from Western European banks will explode.

Of course West Europe is rich enough to bail out its own banks, but the governments in countries like France and Germany know that their people will not stand for this sort of handout. In steps the IMF, with a big assist from NPR, which managed to not even mention East Europe in the piece.

NPR made one major misrepresentation that is worth noting. It referred to a "global savings glut" which it attributes to developing countries' fears that the IMF won't have enough resources to bail them out in a crisis, and therefore their need to self-insure. WRONG!!!!!!

Developing countries only began to accumulate massive amounts of foreign exchange (i.e. savings) after the East Asian financial crisis in 1997. There was no talk at the time about the IMF not having enough money. Rather, the explicit motive of most of these countries was to accumulate enough reserves that they would never need to turn to the IMF for a bailout.

The conditions that the IMF imposed on the East Asian countries, who had previously been the superstars of the developing world, were seen as being so onerous that other countries wanted to make sure that they never were forced to turn to the IMF for help. Therefore they deliberately kept their exchange rates under-valued so that they would run huge trade surpluses, which let them rapidly build reserves.

In short, the IMF's conduct was a major cause of the global imbalances that led to the current economic crisis. NPR turns history on its head in telling listeners that more support for the IMF is the solution.

--Dean Baker

[Demeter]

19. Four Reasons Why Giving Consumers the Choice of a Public Health Insurance Plan Is Great Politics for

Democrats!

http://www.huffingtonpost.com/robert-creamer/four-reasons-why-giving-c_b_216070.html


The private health insurance industry and its voices in Congress have begun to spin the narrative that offering consumers a choice of a public health insurance plan is:

a) Never going to pass Congress;
b) A fringe proposal by the Democratic Party's "left wing;"
c) Is generally bad politics for Democrats.

This narrative is flat wrong. In fact, offering consumers the choice of a public health insurance plan as part of health care reform is great politics for Democrats of all stripes, and is absolutely capable of passing Congress. Here are four reasons why:

1) It is very popular. In a poll taken earlier this year by Lake Research, 73% of respondents favored a health plan that gives them the choice between a private plan or a public health insurance plan. Only 15% preferred to have only the choice of a private plan. And the preference for a choice between public and private health insurance plans extends across all demographic and partisan groups, including Democrats (77%), Independents (79%) and Republicans (63%).

In fact, this is one of the most popular parts of President Obama's health care reform proposal -- which a Diageo/Hot Line poll found last week had overall support of 62% of the voters.

What's more, private health insurance companies are very unpopular. Only 7% of Americans say they trust private health insurance companies.

Democrats have the high political ground on the issue of health care reform in general, and the choice of a public health care plan in particular -- with support from the Democratic base, crucial independent voters -- and even Republicans voters. In the coming debate, we need to act like it.

2) Democrats Need the Choice of a Public Plan to mobilize the base to fight for reform. The prospect of escaping from the tyranny of private health insurance firms is enormously motivational to core Democratic voters.

In order for Democrats to maintain a motivated, united front in defense of health care reform, the health care proposal must include the choice of a public health insurance plan. If it does not, elements of the base will oppose the plan and much of the balance will be tepid in their support.

We desperately need that united base of progressive organizations and voters to do battle with the massive number of special interests that will do everything in their power to oppose, disrupt and cripple a serious health reform proposal, as they did in 1993.

The fact is that any health care reform that actually controls cost will gore the oxen of many of the health industry's special interests; they will be very motivated. In order for us to be successful in the face of that motivation, we must mobilize a unified, equally-motivated group of voters to demand change.

We not only need the broad base of support -- which we have -- we will also need intensity to carry the day.

The presence of a public health insurance option in the plan is critical to maintain that unity and motivation.

3) A proposal containing a provision that gives consumers the choice of a public health insurance plan can pass Congress. The rules contained in the budget resolution that passed Congress protect health care reform from a filibuster in the Senate. That means it can pass with just 50 votes. We will have 50 votes in the Senate to pass a provision giving us a choice of a public health insurance plan.

The talking heads keep intoning: "But we won't have any Republican votes." We don't need Republican votes to pass the Senate. In fact we could loose all Republicans and 10 Democrats and still pass a bill. It would be great to pass a bill with bi-partisan Congressional support, but the choice of a public option already has massive bi-partisan support among the voters. Once it's passed, the special interests won't have any more luck taking it away than they had privatizing Social Security or eliminating Medicare.

In fact, there is a real question whether a bill that does not contain the choice of a public plan can pass Congress. Eighty House Democrats have signed a letter saying they won't vote for a bill without a public option.

There is simply no appetite among most Democrats in Congress to pass a new version of the disastrous "Medicare Part D" that provided some pharmaceutical coverage to those on Medicare. It has huge gaps in coverage (a "donut hole"), it gives private health insurers a monopoly on providing coverage, and it prohibits the government from negotiating with pharmaceutical companies to get cheaper prices. It would have been simple and elegant for Congress to extend traditional Medicare coverage to include drugs, but the Republicans that then controlled Congress and the White House -- and the health care and pharmaceutical firms -- would have none of it. Their goal was not to provide a critical, needed service to consumers. It was to make lots of money. The result is a much more expensive approach than coverage through Medicare.

Yesterday in his speech to the AMA, President Obama was dead on when he said, "But what I refuse to do is simply create a system where insurance companies suddenly have a whole bunch more customers on Uncle Sam's dime but still fail to meet their responsibilities." That brings us to point four.

4) The choice of a public option is critical to assure that health care reform actually delivers universal coverage and controls costs.

..................................
We can't afford to screw this one up. Democrats need to pass a health care reform bill this year, and we need to be sure that it will really work. Giving people the choice of a public health insurance plan will do more to assure that the system works as advertised than anything else we can do.

Robert Creamer is a long-time political organizer and strategist, and author of the recent book: "Stand Up Straight: How Progressives Can Win," available on amazon.com.

[Demeter]

20. The TV Business Is Toast

http://www.huffingtonpost.com/henry-blodget/the-tv-business-is-toast_b_216243.html


The traditional TV industry -- cable companies, networks, and broadcasters -- is where the newspaper industry was about five years ago:

In denial.

There are murmurings on the edges about how longstanding business models will come under pressure as Internet distribution takes over. But, so far, the revenue and profits are hanging in there, so the big TV companies don't really care.

Specifically, the TV industry's attitude is the same as the newspaper industry's attitude was circa 2002-2003: Stop calling us dinosaurs: We get digital; We're growing our digital businesses; We're investing in digital platforms; People still recall ads even when they fast-forward through them on DVRs; There's no substitute for TV ads. Traditional TV isn't going away: Just look at our revenue and profits!

After saying all this same stuff for years, the newspaper industry figured out the hard way that you can't stuff the genie back in the bottle. And over the next 5-10 years, the TV industry will figure this out, too.

Here's the problem in a nutshell:

As with print-based media, Internet-based distribution generates only a tiny fraction of the revenue and profit that today's incumbent cable, broadcast, and satellite distribution models do. As Internet-based distribution gains steam, therefore, most TV industry incumbents will no longer be able to support their existing cost structures.

Specifically, TV business models for the past half-century, from broadcast to cable to satellite, have been built on the following foundation:

* Not much else to do at home that's as simple and fun as TV
* No way to get video content other than via TV
* No options other than TV for advertisers who want to tell video stories
* No options other than cable -- and, more recently, satellite -- to get TV
* Tight choke-points in each market through which all video content has to flow (cable company, airwaves), which creates enormous value for the owners of those gates.


And now, slowly but surely, look what's happening:

* Other simple options emerging at home: Internet, video games, Facebook, IM, DVDs
* New ways to get TV other than satellite/cable: Hulu, YouTube, iTunes, Netflix
* Video-ad options beginning to emerge
* More options for getting video content: telcos, cable cos, wireless cos (soon)
* Fewer choke points in each market: With an Internet connection anywhere in the world, you will soon be able to get to almost anything. And not just to your computer -- to your television.


Thus far, the TV industry has reacted to these changes the way most people would: By trying to port its existing model to the new world and maintain its hold on power and money. This is why we're getting so many ridiculous, consumer-unfriendly TV solutions, such as:

* Market-based control over what you can and can't watch (thanks to contracts with local cable companies)
* No live-streaming of lots of popular video content despite the fact that this would grow the audience (same reason)
* Time-shifting of popular shows (don't want to cannibalize more profitable TV audience)
* Hoarding of video libraries that could be easily available, watched, and monetized online
* Single episode downloads that expire after 24 hours
* $150/month "triple-play" solutions that come larded up with absurd taxes, fees, and service-charges, most of which go to pay for crap we don't want.


All these Band-Aid solutions will eventually fail. Why? Because eventually the cable-satellite-airwave monopoly over TV content in local markets will be circumvented by simple, global Internet distribution.

You won't have 5 channels, or 50 channels, or 500 channels. You'll have millions of channels. You'll be able to watch anything you want, live or taped. You'll be able to watch it wherever you want -- TV, computer, mobile device. You won't have to sorry about "slinging" video content around or programming your DVR. You'll just plug a pipe (Internet) into a box (device) and watch.

This is where the future is going. That's obvious. The only question is how long it takes us to get there -- and who gets killed along the way.

A lot of this content, by the way, won't -- and shouldn't -- be free. But you won't have to pay your cable company for the dozens of channels you won't ever watch just get the ones you do. You may have to maintain subscriptions with several different content-aggregation companies (a pain) but this will be a lot better than paying for things you don't want. And whatever content you do pay for will -- and should -- cost a lot less than it does now.

And what will happen to the companies?

The best content creators will do just fine. Video storytelling won't go away. Compared to the people who produced Battlestar Galactica, the Sopranos, and West Wing, etc., the folks who post to YouTube generally suck at it. So great content creators won't have to worry about them.

The lousy content creators will disappear. No big loss. And no big change.

The cable companies will become dumb pipes, and they'll get disintermediated. We won't need Brian Roberts to negotiate a deal with the Tennis Channel for us (or, rather, to prevent us from getting the Tennis Channel because of some contract dispute). We'll just go direct.

The phone companies will remain dumb pipes.

The wireless companies will become dumber pipes.

The competition between the multiple dumb pipes will eventually, I pray, result in lower prices for consumers for the only thing we will really need: Ubiquitous high-speed Internet access.

Box and device companies will remain box and device companies. Unless Apple somehow creates a new global chokepoint via the iPhone.

Networks that produce live news, sports, and entertainment will offer the content direct to consumers. But they'll no longer get paid big carriage fees from cable companies.

A few clever online aggregators -- YouTube? Hulu? Cable companies? Netflix?--will create nice video portals and build powerful new businesses. At these portals, you'll be able to sign up to watch anything in the world on any device you want. You'll be able choose among multiple subscription models (monthly, a la carte). You'll also have a basic "what's on" option in case you just want to watch TV.

When will this happen? Over the next 5-10 years. And it will leave today's TV industry looking like today's newspaper industry.

And from this frustrated TV consumer's perspective, it can't happen soon enough.

[tclambert]

56. I concur. We hardly ever bother recording any shows any more.

We can get them online. And just last week, we (our son) figured out how to connect a computer to the big screen. MyFreeFilm.Net advertises "Watch Satellite TV from your PC" and "No recurring monthly bills."

Now when are we gonna get HDMI jacks for cranial implantation? I want to inject bad HD movies directly into my brain.

[Demeter]

21. The Powers of the Big Banks

http://www.huffingtonpost.com/mike-lux/the-powers-of-the-big-ban_b_216068.html


Issues related to high finance and the banking industry were never something I had spent a lot of time focusing on, but last September's financial collapse was a moment not unlike 9/11 and national security: suddenly it became really obvious to all people who care about their country that it was essential to understand and start being involved in the issue.

I approached it from my perspective as a political strategist, and it was extremely clear that while some complicated economic issues were involved, the financial crisis was, at heart, a crisis of politics. Wall Street had gotten way too powerful and politicians were letting them have their way with us. Any private business that is "too big to fail" economically also holds an enormous amount of weight politically, and that political weight is at the heart of the problem.

What's important to remember is that the power of these huge financial institutions takes of many forms. Progressives are keenly aware of all the political contributions the financial industry makes and the well-connected lobbyists they employ. That kind of power is certainly important, especially on Capitol Hill where members have to spend practically every day dialing for dollars to pay for absurdly expensive campaigns. But we need to be careful not to focus on only that kind of power when trying to decide how to win back out democracy from the financial industry.

When you have the kind of size that the institutions behemoths do, your power stretches far beyond campaign contributions.

-- Bond traders have a huge amount to say about whether interest rates are lowered and raised.

-- Stock speculators and investment banks can literally destroy companies overnight by combining to drive their stocks downward.

-- Many in the media make snap judgments over how successful a presidential initiative on the economy is based on whether the stock rises or falls immediately following a new policy announcement.

-- Perhaps most importantly, there's this free market, what's good for Wall Street is good for America mentality that has been bought into by many Democrats and pretty much all Republicans.

And then, of course, there's the whole "too big to fail" dynamic in and of itself. As we have just seen in the last eight months, if one of these giant companies is struggling -- even when it is due to their own bad decisions -- they can run to the government and say "give us all kinds of bailouts and tax breaks and special privileges, or else we will fail and destroy the entire economy"

There is nothing more important to the long term political and economic health of our country than lessening the power and the size of the massive financial conglomerates on Wall Street. They have already destroyed our economy, and will again if we don't solve this problem. They are also the biggest single danger to our democracy.

[Hugin]

33. Hmm, this has me wondering if I should replace TPTB with TPBB.

In my typical set of commonly used acronyms.

[Hawkowl]

48. Thomas Jefferson

From the founder of the Democratic party, Thomas Jefferson:

"If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that grow up around them, will deprive the people of their property until their children wake up homeless on the continent their fathers conquered."

and my personal favorite:

"I believe that banking institutions are more dangerous to our liberties than standing armies".

[Demeter]

26. I Found This After Our 3 Stooges Weekend

http://www.youtube.com/watch?v=FJfHnLHUhdA

[DemReadingDU]

30. ‘Buy China’ policy set to raise tensions

6/16/09 ‘Buy China’ policy set to raise tensions

China has introduced an explicit “Buy Chinese” policy as part of its economic stimulus programme in a move that will amplify tensions with trade partners and increase the likelihood of protectionism around the world.

In an edict released jointly by nine government departments, Beijing said government procurement must use only Chinese products or services unless they were not available within the country or could not be bought on reasonable commercial or legal terms.

The government also said it was launching an investigation in response to complaints from domestic industry associations which accuse local governments of favouring foreign suppliers in procurement related to the country’s Rmb4,000bn ($585bn, €421bn, £356bn) economic stimulus package.

“From a domestic political perspective this makes some sense because local governments do tend to favour foreign products in some categories,” Dong Tao, chief China economist for Credit Suisse, said. “But given how important free trade is for China’s economy this is not the right message for them to be sending to the rest of the world right now.”

Just a few months ago Beijing was raging against a proposed “Buy American” clause included in the US economic rescue package.

“Some countries raised clauses to prioritise the purchase of products of their own countries in their economic stimulus packages,” Yao Jian, a Chinese commerce ministry spokesman, told reporters in February. “We express deep concern about these ... under the current financial crisis, measures issued by all countries should not cause negative impacts, and especially they should not send out wrong messages.”

Most economists agree China’s economy is starting to recover as a result of its aggressive stimulus package but the country is still struggling with unemployment and fears widespread layoffs could lead to serious social unrest.

“The whole world is dying to see China spread its orders around and save their economies,” said Mr Tao. “But what this policy reflects is heightened anxiety about these job pressures and the potential for social unrest.”

more...
http://www.ft.com/cms/s/0/66454774-5a7c-11de-8c14-00144feabdc0.html

[ozymandius]

34. redness

9:50
Dow 8,491.89 Down 12.78 (0.15%)
Nasdaq 1,792.39 Down 3.79 (0.21%)
S&P 500 908.58 Down 3.39 (0.37%)
10-Yr Bond 3.64% Down 0.034
NYSE Volume 650,506,250
Nasdaq Volume 256,353,859.375

09:45 am : Stocks are working to find their direction in the opening minutes of trade. However, health care stocks are stand outs for the second straight session; the sector is currently up 1.5% and outperforming every other major sector in the S&P 500.

A broad range of industry players is helping propel the health care sector. Health care distributors are up 2.2%, health care suppliers are up 2.1%, biotech is up 1.9%, health care equipment is up 1.6%, and pharmaceuticals are up 1.4%.

Materials stocks are trading as laggards in the early going. The sector is currently down 1.9% as commodity prices come under pressure to push the CRB Commodity Index down to a 0.3% loss. DJ30 -0.99 NASDAQ -1.30 SP500 -2.06 NASDAQ Adv/Vol/Dec 1001/223 mln/1136 NYSE Adv/Vol/Dec 941/117 mln/1651

[Demeter]

46. Well, It Looks LIke Everyone Got Out and Pushed

Now in the black.

[Dr.Phool]

57. Looks like it rolled back a bit.