STOCK MARKET WATCH, Wednesday June 24

[ozymandius]

Source: du

STOCK MARKET WATCH, Wednesday June 24, 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 23, 2009

Dow... 8,322.91 -16.10 (-0.19%)
Nasdaq... 1,764.92 -1.27 (-0.07%)
S&P 500... 895.10 +2.06 (+0.23%)
Gold future... 924.30 +3.30 (+0.36%)
10-Yr Bond... 3.62 -0.06 (-1.60%)
30-Year Bond 4.36 -0.08 (-1.83%)

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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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---

Please click cartoon for larger image.


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

Action-Reaction
by Frank Barbera

Understanding, absorbing, and processing the lessons of “markets past” is often one of the key ingredients in putting together a winning investment program and forging a successful investor. While no two economic climates are ever the same, and no two stock markets are ever the same, successful investors tend to have an established historical knowledge that can be employed to help assess complex situations. While history may not repeat precisely, on many occasions, it rhymes.

In my view, markets behave much more akin to ‘living breathing’ organisms, then some random pattern of up and down movements as the ‘Ivory Tower’ types would have unweary investors believe. ‘Inhaling-Exhaling’, ‘Inhaling-Exhaling’, -- markets act as the grand social mirror, reflecting mass psychology in motion. It’s as if societies collective consciousness wakes up each and every day, and over time transitions from a good mood to a bad mood and back again. As we can seen in the chart below, the NASDAQ Composite was in a very good mood for most of April and May, but has re-awoken over the last few days in a more foul tempered, agitated frame of mind...

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

[tclambert]

29. He's right about markets reflecting "mass psychology."

Sometimes "mass psychosis." Understanding history makes a good first cut for investing. But really, predicting the future is key. A real psychic, or functional Tarot cards could create vast fortunes. Trend analysis and a penchant for science fiction make a more realistic basis.

Yeah, I said science fiction. Not the Star Wars type. Not fantasy. What they call "hard" science fiction. 'Cause that's where the future comes from. But it is hard to tell fantasy from real future fiction. Jetsons-style flying cars are not gonna happen. Think about how badly all those other drivers do on plain two dimensional roads. Now imagine those same idiots dealing with three dimensions, no roads, and every puff of wind knocking them off course. Result: flaming debris falling on our houses. How about hydrogen vs. battery-powered electric cars? Bet on batteries. Hydrogen has awful problems to overcome. The really insoluble one is leakage. Hydrogen molecules are so small they leak through solid steel.

[ozymandius]

2. Today's Reports

08:30 Durable Orders May
Briefing.com -1.1%
Consensus -0.9%
Prior 1.9%

08:30 Durable Orders, Ex-Transportation May
Briefing.com -0.6%
Consensus -0.5%
Prior 0.8%

10:00 New Home Sales May
Briefing.com 365K
Consensus 360K
Prior 352K

10:30 Crude Inventories 06/19
Briefing.com NA
Consensus NA
Prior -3.87M

14:15 FOMC Rate Decision

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

[UpInArms]

40. Confusing 8:30 reports:

8:30a U.S. May durable goods inventories fall 0.8%

8:30a U.S. May durable goods shipments fall 2.1%

8:30a U.S. May core capital equipment orders up 4.8%

8:30a U.S. May durable orders ex-transportation up 1.1%

8:30a U.S. May durable goods orders rise 1.8%

:huh:

[Ghost Dog]

57. I'd like to know where the core capital equipment

investment is going. Could be an early healthy indicator, if not misdirected and not military.

[UpInArms]

53. New home sales fall 0.6% to 342,000 yearly rate

http://www.marketwatch.com/story/new-home-sales-fall-06-to-342000-pace

WASHINGTON (MarketWatch) -- Sales of new homes in the United States were essentially unchanged near record-low levels in May as home builders continued to slash their inventories of unsold homes, the Commerce Department estimated Wednesday.

Sales dropped 0.6% to a seasonally adjusted annual rate of 342,000 in May from a downwardly revised 344,000 in April. Seasonally adjusted sales have been essentially flat since January, when they dropped to a postwar record low of 329,000.

The report was weaker than expected, with economists surveyed by MarketWatch expecting a slight increase to 363,000 annualized. See the Economic Calendar.

Government statisticians have low confidence in the monthly report, which is subject to large revisions and large sampling and other statistical errors. In most months, the government isn't sure whether sales rose or fell. The standard error in May, for instance, was plus or minus 17.8%. Read the full government report.

The government says it can take up to five months to establish a new trend in sales. Over the past five months, sales have been on a 341,000 annual pace, 38% slower than a year earlier.

Sales are down 32.8% in the past year.

Inventories of unsold homes fell 2.3% in May to 292,000, representing a 10.2-month supply at the May sales rate.

Once a home is completed, it is taking a record 11.5 months to sell it.

...more...

[UpInArms]

54. Petroleum Inventories Report:

Crude down 1% after data, extending losses
10:32am Today

Gasoline inventories rise 3.9 million barrels: EIA
10:31am Today

Distillate inventories rise 2.1 million barrels
10:31am Today

... where is the crude barrels inventory? :lookingunderdesk:

[ozymandius]

3. Oil drops below $69 as traders eye US dollar

SINGAPORE – Oil prices fell below $69 a barrel Wednesday in Asia, partially reversing gains sparked by a weakening U.S. dollar.

Benchmark crude for August delivery fell 57 cents to $68.67 a barrel by late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. On Tuesday, it rose $1.74 to settle at $69.24.

Oil came off an eight-month high near $73 a barrel earlier this month, and has bounced around in the upper $60s this week, as investors eye the dollar and buy crude as protection against possible inflation down the road.

....

In other Nymex trading, gasoline for July delivery fell 3.74 cents to $1.86 a gallon and heating oil dropped 2.31 cents to $1.75. Natural gas for July delivery was steady at $3.89 per 1,000 cubic feet.

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

[ozymandius]

4. GM to cut 4,000 more white-collar jobs by year end

DETROIT – About 4,000 more salaried workers at General Motors Corp. will lose their jobs by the end of the year as the automaker continues to downsize.

The company notified its more than 27,000 U.S. white-collar workers by e-mail Tuesday that that it will offer standard severance packages, and employees near retirement age will have the opportunity to retire early, spokesman Tom Wilkinson said.

Some involuntary cuts will be necessary, Wilkinson said, as GM tries to shrink its U.S. salaried work force to around 23,500 by year's end.

....

Involuntary cuts will be made based on performance, skills and length of service, Wilkinson said.

Workers have been told to reply to the latest offers by Aug. 3. The company plans to finalize who will be cut by Oct. 1, he said.

http://news.yahoo.com/s/ap/20090623/ap_on_bi_ge/us_gm_job_cuts

[Demeter]

26. Trustee slams ‘unreasonably rich’ GM fees

http://www.ft.com/cms/s/0/fd564878-6046-11de-a09b-00144feabdc0.html

By Bernard Simon in Toronto and Nicole Bullock in New York

Published: June 23 2009 23:52 | Last updated: June 23 2009 23:52

General Motors’ two key restructuring advisers are seeking to charge the carmaker exorbitant fees, the US trustee, the Justice Department agency that oversees administration of bankruptcy cases, has claimed.

In a court filing on Tuesday, the trustee described the fees proposed by AlixPartners and Evercore Group as “unreasonably rich”. A committee of unsecured creditors has lodged a similar complaint.

The trustee estimates the firms would receive at least $130m if GM’s court-supervised restructuring goes through, as is likely within the next month or so.

The trustee is especially critical of “success fees” that would be paid on completion of the restructuring. Alix would receive $13m as well as a “discretionary bonus”. Evercore’s success fees would total $17.9m.

“Neither Alix nor Evercore had any success at finding either a purchaser or funder for ,” the trustee said. “In light of all these circumstances, the Alix application clearly exceeds the bounds of reasonableness.”

Alix and Evercore declined to comment.

GM named Al Koch, a senior Alix executive, as its chief restructuring officer, when it filed for bankruptcy protection on June 1. It has proposed paying Mr Koch $835 an hour, as well as hiring up to 68 people to assist him at rates of up to $1,000 an hour each.

Evercore, which has received $46.6m from GM over the past year, would be paid a flat fee of $400,000 a month until the completion of the carmaker’s restructuring, probably in July or August. Complaints about legal and advisory fees are not uncommon in bankruptcy cases. However, GM’s case is especially sensitive because its fees are being subsidised by US taxpayers.

According to the creditors’ objection, “the high level of involvement of the US Treasury in the orchestration of the GM bankruptcy and proposed ‘sale’ transaction must also be considered in evaluating an appropriate Evercore fee structure”.

The trustee has not objected so far to the fees charged by the law firm leading GM’s case, Weil Gotshal. The firm charges between $850 and $950 an hour for senior counsel.

The bankruptcy court will consider the objections on Thursday.

[Demeter]

30. Carmakers get $8bn for green revamp

http://www.ft.com/cms/s/0/8f7aa46a-6015-11de-a09b-00144feabdc0.html

By Bernard Simon in Toronto and Jonathan Soble in Tokyo

Published: June 23 2009 18:21 | Last updated: June 23 2009 23:40

The US is to make billions of dollars in cheap loans available to Ford , Nissan and Tesla, the California electric carmaker, so they can re-equip their plants to build a new generation of electric and other fuel-efficient vehicles. Ford will receive $5.9bn, Japan’s Nissan $1.6bn and Tesla $465m from $25bn of government money that was set aside in 2007 for a scheme known as the advanced technology vehicles manufacturing incentive programme.

The US funding is another example of how Ford has benefited by not joining General Motors and Chrysler, its two Detroit-based rivals, in asking for direct government bail-outs...The green car incentives are available only to “financially viable” companies, making GM and Chrysler ineligible for the time being.

The low-interest loans are intended to help carmakers comply with tougher standards on fuel efficiency and make US battery technology more competitive versus Asian suppliers.

...Ford will use the loans to help finance the development of engine technology, as well converting two truck assembly plants to cars. The number two Detroit carmaker aims to put a battery-powered commercial van on the road next year and an electric Focus sedan, with a range of 100 miles, in 2011. It plans to introduce a plug-in hybrid vehicle in 2012.

Nissan plans to launch an all-electric car in the US and Japan next year. It plans to modify an assembly plant in Tennessee to produce 150,000 battery-operated vehicles a year, as well as 200,000 batteries. Nissan is developing its electric car in partnership with Renault, its biggest shareholder.

More than 70 carmakers and parts suppliers have applied for loans under the incentive scheme.

The assistance is available only for manufacturing facilities and engineering integration in the US.

[tclambert]

56. I like this. The government should push car companies in this direction.

The short memories and short-term thinking of American businesspeople make it necessary for government to help set long-term goals for our industries. A more effective approach would be to raise gasoline taxes, like Europe and Japan do, and like John Anderson proposed back in 1980, to create demand for more fuel efficiency with the customers. But, of course, Republicans would object. Using taxes for anything except corporate welfare always makes them fake outrage.

I'm a little surprised Tesla gets so much, $465 million. They've only made a few hundred cars EVER. They still haven't made as many cars as Ford does on any given Tuesday afternoon.

[ozymandius]

5. Fed mulls tweaks to economic revival programs

WASHINGTON – With signs the economy is improving but still fragile, Federal Reserve policymakers are considering whether some programs intended to drive down rates on mortgages and other consumer debt should be slowed down.

Most economists predict Fed Chairman Ben Bernanke and his colleagues won't launch any bold new efforts at the end of a two-day meeting Wednesday.

....

In March, the Fed launched a bold $1.2 trillion effort to drive down interest rates to try to revive lending and get Americans to spend more freely again. It said it would spend up to $300 billion to buy long-term government bonds over six months and boost its purchases of mortgage securities. So far, the Fed has bought about $177.5 billion in Treasury bonds.

http://news.yahoo.com/s/ap/20090624/ap_on_bi_ge/us_fed_interest_rates

[ozymandius]

6. Banking "broken," consumers need help: watchdog

WASHINGTON (Reuters) – The outspoken head of a U.S. Congressional watchdog panel will strongly urge lawmakers on Wednesday to set up a new government agency to protect consumers from "tricks and traps" set by banks.

....

"We can help fix the broken credit market. And I can sum it up in four words: Consumer Financial Protection Agency," said Elizabeth Warren, chairman of the Congressional Oversight Panel of the Troubled Asset Relief Program, in prepared remarks.

Warren, who is a professor at Harvard Law School, will be the marquee witness at a House of Representatives committee hearing on Wednesday looking at a key provision of Obama's broad plan to drag the aging U.S. financial regulatory system into the 21st century.

The provision to establish a financial protection agency for consumers "will be carried out," Senator Jack Reed, chairman of the Senate securities subcommittee, said in an interview with Reuters Television on Tuesday.

http://news.yahoo.com/s/nm/20090624/bs_nm/us_financial_regulation_consumers

---

Warren is tapped to head the new agency. I consider that a huge plus in terms of the overall effectiveness of the agency's goals aimed at consumer protection.

[hamerfan]

17. Hooray for Elizabeth!

Good morning everyone. :hi:
That is great news if Ms. Warren is to head this new agency. It's a crying shame Barack didn't go to her for his economic team right out of the gate!
hamerfan

[DemReadingDU]

7. great toon today!

:)

[ozymandius]

9. That one was for Max Baucus, IMO.

I'm sure he's taking suggestions for healthcare reform written on the backs of campaign contribution checks from his K Street pals.

[ozymandius]

8. Chrysler, GM seek U.S. retooling loans

U.S. Department of Energy Secretary Steven Chu said Tuesday that his department is in discussions with General Motors Corp. and Chrysler about their applications for a $25-billion retooling loan program intended to spur fuel-efficient vehicle production.
Advertisement

Chu made the comments at Ford's Research and Innovation Center in Dearborn, where he announced $5.9 billion in loans for Ford Motor Co., $1.6 billion for Nissan and $465 million for Tesla Motors.

....

To qualify, a company must manufacture vehicles in the United States and be viable -- a condition that, at least initially, made Chrysler and General Motors Corp. ineligible.

http://www.freep.com/article/20090624/BUSINESS06/906240321/Chrysler++GM+seek+U.S.+retooling+loans

---

An accompanying factoid from another story says that "General Motors is preparing for oil prices as high as 130 dollars a barrel once the world economy recovers …"

At least this move shows some foresight that has been conspicuously absent from the American automobile industry for nearly thirty years.

[ozymandius]

10. Home sales rise - while prices fall 17%

NEW YORK (CNNMoney.com) -- Existing home sales rose in May, as increasingly affordable home prices and a first-time tax credit attracted hesitant buyers.

The National Association of Realtors reported that existing home sales ticked up 2.4% last month to a seasonally adjusted annual rate of 4.77 million units compared to the downwardly-revised rate of 4.66 million in April.

The sales missed expert forecasts of 4.82 million annual units, according to a consensus estimate of analysts compiled by Briefing.com, and are off 3.6% from the 4.95 million-unit pace 12 months ago.

The median price of homes sold in May was just $173,000, a 16.8% year-over-year drop.

http://money.cnn.com/2009/06/23/real_estate/existing_home_sales/?postversion=2009062314

[ozymandius]

55. Shadow Housing Inventory: Walked Away, but Lender Hasn't Foreclosed

From Calculated Risk reporting from the WaPo

A growing number of American homeowners are falling into financial limbo: They're badly behind on payments, but their banks have not yet foreclosed.

The backlog of seriously delinquent mortgages, which so far affects about 1 million borrowers, is a shadow over hopes for a rebound in the nation's housing markets. It masks the full extent of the foreclosure crisis ...

"I have even begged them for a foreclosure," delinquent mortgage-holder Charlotte Jensen said. When she realized she couldn't save her Glen Allen home last year, she filed for bankruptcy, packed up her family and moved out. Nearly a year later, Bank of America has yet to take back the home.
...
Some of the backlog reflects the inability of lenders to keep up with the swelling rolls of delinquent properties.

[Demeter]

11. First I Laughed, Then I Cried, When I Clicked on the Cartoon

I broke a tooth yesterday, one that had been bungled in my youth by the first dentist, and refilled over the ages by others trying to shore up the damage. Nearly every tooth that incompetent touched has been crowned. We didn't have fluoridated water in my hometown--the Birchers were so frantic about "poison in the water"...of course, when it turned out that fluoride kept old people from breaking their hips and dying, it was a different story.

The crazies, the hysterically irrational, the religiously deranged, the uberpatriots hiding their racism and white supremacy behind a polite fiction, do cause immeasurable damage to the general population, and anyone who tolerates or assists them is even more culpable. For far too long we have been tolerant and merciful. I am willing to support segregation of the mentally and emotionally unbalanced that join such groups and support them, for our safety, and theirs.

If a mentally dysfunctional person is a threat to himself, then we know to offer support and treatment and shelter. But if he is a threat to others, not only does he get to vote and run for office and buy guns and hold down jobs that affect public safety, but we cannot touch him until he commits a "crime". Well, there are crimes on the books, and then there are crimes that some may commit with impunity. It is time we had a broadening of the definition of crime that precluded predatory craziness of the white collar sort, that went beyond a slap on the wrist and honoraria from public speaking, and seats of the Boards of Directors.

It started with McCarthy, continued through Nixon, Reagan, the Bush bunch, and now, even though the GOP is in its death throes, it still goes on. Another "Potential Presidential candidate" goes off the walls, and three more will spring up to take his place. He will undoubtedly STILL be talked up, as well. When does the madness stop?

When will this madness that has cursed the country all my life end?

[ozymandius]

16. I'm sorry that you have had to endure medical incompetence.

As one who had dental drama earlier in life, that is no damn picnic.

You mention the Birchers. I had almost forgotten about them. Some childhood friends took me to a John Birch Society meeting with their father, a kook, when I was either eleven or twelve years old. They showed a short film about the inevitable rise of a new militant Germany, complimented with video of a tank rotating its turret. Ooooh! How frightening!

Then there was something about the Soviet Union and how the Russkies would be able to take us over so easily because too many Americans were oblivious about the coming red invasion. According to the Birchers, our society was preoccupied with growing our hair long and dancing at the disco.

I left after the refreshment break. Their Coca-Cola was tasty. But even tasty, sugary drink did not give me a reason to come back.

[tclambert]

33. Fluoridation? It's a commie plot!

General Jack D. Ripper: You know when fluoridation first began?
Group Capt. Lionel Mandrake: I... no, no. I don't, Jack.
General Jack D. Ripper: Nineteen hundred and forty-six. Nineteen forty-six, Mandrake. How does that coincide with your post-war Commie conspiracy, huh? It's incredibly obvious, isn't it? A foreign substance is introduced into our precious bodily fluids without the knowledge of the individual. Certainly without any choice. That's the way your hard-core Commie works.

[tclambert]

34. Or maybe it was an American Dental Association plot.

Actually, according to Wikipedia, it was the US Public Health Service. H. Trendley Dean and his colleagues conducted the first controlled experiment in Grand Rapids, Michigan, starting in January of 1945. It became official policy nationwide in 1951. (Gasp! General Ripper got it wrong!)

[ozymandius]

12. BEFORE THE BELL: US Stk Futures Up With FOMC Meeting In Focus

NEW YORK (Dow Jones)--U.S. stock futures pointed to a stronger open on Wednesday, with all eyes focused on an expected policy statement from the U.S. Federal Reserve as it concludes its two-day meeting.

S&P 500 futures rose 3.3 points to 893.50 and Nasdaq 100 futures rose 4 points to 1428. Futures on the Dow Jones Industrial Average rose 29 points.

....

Attention on Wednesday turns to the Fed, which is due to release a policy statement at 2:15 p.m., EDT.

....

If the Fed is going to make any mistake, said LaVorgna in a research note, it'll be keeping rates too low for too long. "This is what happened in Japan and we doubt (Federal Reserve Chairman) Bernanke wants to make the same mistake. However, given excess slack and a breakdown in the monetary transmission mechanism, inflation is far out into the future," he said.

http://online.wsj.com/article/BT-CO-20090624-704436.html

---

Of course, the Fed will keep rates unchanged. That's a no-brainer. Why would the Fed raise rates when it plans to add more national debt to its balance sheet?

[Demeter]

14. The Banks Are in an Untenable Position

Obama and the GS crew want them to freely lend, but they cannot. The only way they could freely lend in the past was by shuffling the risks of the bad loans they were making off onto unsuspecting "investors" through the miracle of "securitization".. But the "lending standards" have been tightened to the point of pain. So that's not going to happen.

While the banks were busy firehosing the world with worthless securities, they cut back their loan origination staff to nothing. They have forgotten how to make good loans.

On the other hand, there's hardly a long line of creditworthy customers out there, waiting to borrow. The people desperate for loans probably don't qualify anyway....

[tclambert]

35. But on the TeeVee, they were just talking about the banks paying back the bailout money and making

big profits again. Then came outrage about bonuses. And then came Jim Cramer. When I regained consciousness, they were talking about Jon and Kate's divorce.

Still, big banks paying back bailout money and making profits sounds better than big banks failing like Lehman Bros.

So, here's the question: Did the TARP bailout in fact save the banking system?

[Demeter]

37. Did It Save the Economy? Ask the Right Question, and You Get a Useful Answer

and the answer is: NO

[Demeter]

38. Why America is a Bank-owned State By Samah El-Shahat

http://english.aljazeera.net/focus/2009/06/20096995715625752.html

June 23, 2009 "Al Jazeera" -- June 12, 2009 - In my last column I introduced the idea that America's handling of the financial crisis, and in particular the way it has refused to deal with the banks, is more in keeping with how an "emerging" economy might behave and act.

So this week, I will say that America has become a bank-owned state, allowing its banking oligarchs to suffocate the economy so they can survive at any price.

As a development economist, what always made developing and poorer countries stand out was the level of inequality between individuals.

That is, the difference between how a small percentage, usually the country's capitalists, oligarchs and those close to people in power, were overdosing on wealth as the rest struggled to make ends meet, or even survive.
Everyone in the country knew it, from the poorest farmer on the street to the richest oligarch. It was in your face, unashamed, unabated and highly discomforting.

Discomforting because it made all of us who witnessed it feel crippled at the power of the status quo, ruing the unfairness of life when merit always comes last, relative to who you know and who you are.

We took some relief from believing that this only happens because these countries were authoritarian, and not so accountable to their electorate.

Yet, if we look closer at the leading capitalist economies such as those of America and the UK, we will find that inequity raises its ugly head equally, and as starkly, when you look at the numbers.

Kept in the dark

Here too, a small percentage have the lion's share of national income in their hands, while the rest of the population experience stagnant incomes, all within a democratic, rather than an authoritarian, political regime.

Yet the real difference here is that, away from the numbers, the wider population and the electorate were mostly kept in the dark about this.

In 2006, the top one per cent of American households' share of all disposable income amounted to almost a quarter of all households' disposable income, according to Robert Hunter Wade, professor of political economy at the London School of Economics.

In crude terms, one per cent of the population have a quarter of all the wealth.

Moreover, Wade found the average income of the bottom 90 per cent of the population remained almost stagnant after 1980, although consumption kept rising thanks to the build-up of private debt.

This means that 90 per cent of the American economy were financing their American dream on debt.

In the UK, Wade found the pay gap between the highest and average earners had widened alarmingly.

Back in 1989, chief executives pocketed 17 times more than average earners.

By 2007, those same "captains of industry" were earning 75 times more than the average worker.

That is one enormous leap and I wouldn't mind that happening to my salary!

What's good for Wall Street ...

Warning signs that the financial crisis would become the great recession were there for all to see for a long time.

But where were the alarms in the system itself to say that these countries and the individuals in them were pursuing an unsustainable way of life?

Where were the signs that things were going to end disastrously and, worse still, that the most vulnerable might end up paying the heftiest and most disproportionate price than anyone else?

I believe the status quo was allowed to go unquestioned because banks were benefiting obscenely from the interest on our debt, and governments were in cahoots with these banks.

Let's not forget that governments conveniently moved away from the provision of affordable healthcare, free university education and affordable housing while the banks entered our lives, aggressively, to fill that void.

In addition, I think that this warped and unjust way of operating was not questioned because the electorate was kept in the dark in the most subtle way possible.

The whole issue was made invisible. It was kept off the radar screens of electoral politics.

The American electorate were made accomplice to this because they were convinced that what was good for Wall Street, was good for America as a whole.

It was a political sleight of hand of the highest order. And this explains the bipartisan agreement to the ill-designed deregulation of the finance sector that we have seen over the years.

America has become a bank-owned state.

Ann Pettifor, a fellow development economist who works for the New Economics Foundation, says the US administration has been hijacked, and democracy has been pushed aside in favour of what is good for the bankers, by what Abraham Lincoln called "the money power".

And how right she is. The way the banks are being bailed out is a clear example of this political edifice.

Sucking the life out of tax-payers

The fact some of these failing banks have been thrown a lifeline is a testament to the hold they have over Barack Obama's administration.

Some of the banks should be allowed to die because they are so insolvent and holding so much in toxic assets that they will forever need to be on taxpayer-funded life support.

The problem is, this life support is sucking the life out of the taxpayer in the process, as it weighs them down with ever-increasing debt.

On top of that, the money could be used to restructure the economy in a way that is less reliant on the financial sector.

Underlying this refusal to kill those banks in poor health is a faulty and, dare I say, convenient assumption, that is not backed up by reality or fact, that the banks are facing a liquidity crisis as opposed to them facing a solvency crisis.

A liquidity crisis means the banks are facing a credit shortage, and once that is sorted, all will be well.
A solvency crisis means that the assets of many banks, firms and households are worth less than their debt.

And this means that these banks have to be completely nationalised.

Which leads us to Timothy Geithner, the US treasury secretary, and his "stress tests".

The tests were meant to give a clear and final assessment of these banks' balance sheets, telling us which were healthy and which would not be able to survive and would need more cash if the recession deepens.

As in any induced test, like the ones we undergo when we have our hearts tested, the "stress tests" were meant to simulate worse-case scenarios. Well, that was the promise at least.

The hope was that some would be declared so bad, they would have to go under once and for all.

Unfortunately, the tests turned out peculiarly lacking in stress.

Nouriel Roubini, professor at the Stern School of Business at New York University, says: "The government used assumptions for the macro variables in 2009 and 2010 that are so optimistic that the actual data for 2009 are already worse than the adverse scenario.

"As for some crucial variables, such as the unemployment rate – key to proper estimates of default and recovery rates for residential mortages ... and other bank loans – the current trend shows that by the end of 2009 the unemployment rate will be higher than the average unemployment rate assumed in the more adverse scenario for 2010, not for 2009."

The unemployment rate used in the worse-case scenario was assumed to average 8.9 per cent in 2009 and 10.3 per cent in 2010. But unemployment has already reached 9.4 per cent this year, and looks likely to overtake 10.3 per cent by next year.

So, there is nothing really challenging about these worse case scenarios at all.

Next week, I'll write about Timothy Geithner's plan to wipe toxic assets off the banks' balance sheets without getting rid of one single bank ... and how long before we say ENOUGH and really do something about it.

Samah El-Shahat also presents Al Jazeera's People & Power programme.

The views expressed in this column are the author's own and do not necessarily reflect Al Jazeera editorial policy.

[tclambert]

46. Does your NO mean the economy has not been saved, or that something else saved it?

Either way, I still want to hear opinions on whether TARP succeeded in saving the banking system.

My own take, is: Yes, it did. HOWEVER, the same end could have been accomplished for about 1/10th the cost by approaching the problem from the other end, bailing out mortgage payers. And that cheaper solution would have stopped or slowed the massive loss of wealth due to foreclosures and falling home prices, possibly stopped the ripple effect of declining car sales, layoffs, state budget problems, etc. TARP was expensive and too narrowly focused. But maybe it did the one thing it was intended to do.

[Demeter]

49. I Mostly Agree With You

If the mortgages had just been outright paid off by our tax dollars, the economy AND the banks would have been saved, maybe even the world, and we would have gotten SOME value for the money...but as it stands, the economy doesn't stand, and the banks--well, I wouldn't advise them to buy green bananas. Their parasitical employees are sucking the blood out at even higher rates than ever, with less income to support it and still no regulations to prevent it.

[DemReadingDU]

13. Charles Hugh Smith: Devolution: 20 Predictions

6/23/09 Devolution: 20 Predictions
Charles Hugh Smith

As cities, counties and states default on their obligations and unemployment insurance runs out, devolution sets in.


While some see a collapse of society in our future, right now I see devolution, not revolution. Devolution is both the process of degeneration and the surrender of governmental powers from central authorities to local authorities.

Devolution will take many forms. The key driver behind devolution is simple: there's not enough money to fund the status quo, so something has to be cut, axed, trimmed or devolved. Examples already abound: the number of school days in the year are reduced to shave expenses, two-times-a-week trash pickup is cut to once a week, etc.

The key constraint on devolution is also simple: the status quo power structure must be left intact. Nobody will willingly surrender their power, so devolution means services and front-end expenses will be cut in order to protect back-end administrative powers.
.
.
But devolution insures that the process is akin to the famous analogy of the boiled frog: if the temperature of the water is increased slowly enough, the frog never notices (or so the story goes) that he is being boiled alive.
.
.
In a similar fashion, local government will attempt to manage the degeneration of their services in such a way that the public does not realize it's being boiled. If the trains and buses all stopped running, people might be angry enough to turn off their TVs and demand some actual, real political change. But if services are slowly degraded over time, the public will sigh and habituate to it.




click to read the 20 predictions...
http://www.oftwominds.com/blogjune09/devolution-predictions06-09.html

[Demeter]

15. Michigan Leads the Way, There

Funny thing is, our governor has been managing it all with great fairness and "squeezing the eagle" on the coinage 'til it screams...and she is term-limited!

The GOP legislature put term limits in to disqualify long-term Democratic officeholders and to solidify a GOP lock on the legislature, and as a result, the state is more Democratic than ever!


So the general welfare aspects and the public infrastructure are on lifesupport, while Obama Administration and the Fed play Robber Baron with our industry. And paved roads are switched back to gravel, for lack of money.

[tclambert]

41. IIRC, Engler did something to the budget just as he left office,

sticking Granholm with an immediate and continuing need to squeeze the state budget. Then state Republicans succeeded in killing the old Single Business Tax. It was not the best tax program, but better than what preceded it. The Republicans, though, resisted all efforts to replace it with a better, more sensible business tax. They wanted to trick the state into losing the business tax entirely. At the last minute, a replacement was rushed in that nobody was happy with. Of course, the continuing struggles of the car companies, and falling property values due to foreclosures have strangled the budget that much further. She has had a tough, tough job, and has done it fairly well since 2003.

[Demeter]

18. Obama’s Make-or-Break Summer by Frank Rich

http://www.nytimes.com/2009/06/21/opinion/21rich.html?_r=1&th&emc=th


THAT First 100 Days hoopla seems like a century ago. The countless report cards it engendered are already obsolete. The real story begins now. With Iran, universal health care, energy reform and the economic recovery all on the line, the still-new, still-popular president’s true tests are about to come.

Here’s one thing Barack Obama does not have to worry about: the opposition. Approval ratings for Republicans hit an all-time low last week in both the New York Times/CBS News and Wall Street Journal/NBC News polls. That’s what happens when a party’s most creative innovations are novel twists on old-fashioned sex scandals. Just when you thought the G.O.P. could never match the high bar set by Larry Craig’s men’s room toe-tapping, along came Senator John Ensign of Nevada, an ostentatiously pious born-again Christian whose ecumenical outreach drove him to engineer political jobs for his mistress, her cuckolded husband and the couple’s son. At least it can no longer be said that the Republicans have no plan for putting Americans back to work.

But as ever, the lack of an adversary with gravitas is a double-edged sword for Obama. It tempts him to be cocky and to coast. That’s a rare flaw in a president whose temperament, smarts and judgment remain impressive. Yet it is not insignificant. Though we don’t know how Obama will fare on all the challenges he faces this summer, last week’s big rollout of his financial reform package was a big punt, an accommodation to the status quo. Given that the economy remains the country’s paramount concern — and that all new polling finds that most Americans still think it’s dire — this timid response was a lost opportunity. It violated the Rahm Emanuel dictum that “you never want a serious crisis to go to waste” and could yet prompt a serious political backlash.

A tip-off to what was coming appeared in a Washington Post op-ed article that the administration’s two financial gurus, Lawrence Summers and Timothy Geithner, wrote to preview their plan. “Some people will say that this is not the time to debate the future of financial regulation, that this debate should wait until the crisis is fully behind us,” they wrote by way of congratulating themselves on taking charge.

Who exactly are these “some people” who want to delay debate on the future of regulation? Not anyone you or I know. Most Americans were desperate for action and wondered why it was taking so long. The only people who Summers and Geithner could possibly be talking about are the bankers in their cohort who helped usher us into this disaster in the first place. Both men are protégés of one of them, Robert Rubin, the former wise man of Citigroup...

I CANNOT IN GOOD CONSCIENCE POST THE WHOLE THING, BUT IT IS WELL WORTH YOUR READING IT, IF YOU HAVEN'T ALREADY.

[Demeter]

19. Goldman Sachs plans nearly $1 billion in bonuses after bailout

http://rawstory.com/08/news/2009/06/22/goldman-sachs-billion-bonuses/

...In the fallout from the global financial crisis — which left Wall Street with just two major free-standing stock brokerages, Goldman had a record first quarter as revenues in the trading arena surged amidst lack of competition. Morgan Stanley is the only remaining large free-standing brokerage in New York.

The firm’s bonus plans leaked to The Guardian, a British newspaper. The paper said £600 million of its first quarter profits would be used to reward staff — or $984 million. Last year, Goldman “is believed to have paid 973 bankers $1m or more last year, while this year’s payouts are on track to be the highest for most of the bank’s 28,000 staff, including about 5,400 in London.”

New York’s premier brokerage received $5 billion in a government bailout last year. The firm repaid the sum last week...

[UpInArms]

23. Union asks Morgan Stanley to reverse exec pay hikes: report

http://www.reuters.com/article/businessNews/idUSTRE55N0S520090624?feedType=RSS&feedName=businessNews

(Reuters) - A major union this week called on Morgan Stanley to reverse recent salary hikes for senior executives and other top earners, the Wall Street Journal said citing a letter from the union.

The raises "weakened the link between top executive pay and performance," wrote Gerald McEntee, international president of the American Federation of State, County, and Municipal Employees (AFSCME) in a letter to Morgan Stanley, provided to the paper.

"We urge you to return base salaries to their previous levels and reward executives for long-term value creation, not just showing up for work."

AFSCME members' pension funds have more than $1 trillion in assets and hold roughly 3 percent of Morgan Stanley's outstanding shares, according to the paper.

Last month, Morgan Stanley raised the base salaries of certain senior officers to $800,000, but said it does not plan to raise total compensation.

...more...

[Demeter]

25. Citigroup revamps pay structure

http://www.ft.com/cms/s/0/59accb78-6075-11de-a09b-00144feabdc0.html

By Francesco Guerrera in New York

Published: June 24 2009 05:23 | Last updated: June 24 2009 05:23

Citigroup is revamping its compensation system – raising salaries and reducing bonuses for top bankers – in an effort to persuade its best performers to stay with the troubled bank.

People close to the situation said Citi began informing staff on Tuesday of the new pay structure, which had been in the works for the past few months, telling some senior bankers their salaries could rise by up to 50 per cent this year.

Citi’s move, which will be coupled with a new share options system aimed at retaining top talent, comes as US banks are striving to strike a balance between their desire to retain dealmakers and politicians’ demands to see a sharp reduction in Wall Street pay.

Morgan Stanley, Bank of America and other US banks have made similar changes to their compensation structure in an attempt to persuade bankers and traders to make decisions that benefit their companies in the long-term.

Citi’s pay structure is particularly sensitive because, as a recipient of billions of dollars in US government aid, its compensation plan has to be approved by Kenneth Feinberg, the Obama administration’s new “pay Tsar” .

Citi on Tuesday said that the changes in the pay structure would not result in higher total compensation for bankers, adding that the overhaul was aimed at adjusting the balance between salaries, which are fixed, and bonuses, which vary from year to year and have long accounted for the bulk of Wall Street pay.

Citi, which has been repeatedly bailed out by the US authorities and is about to sell a 34 per cent stake to the government, declined to comment further but people close to the situation said the company had discussed the changes with the government.

Under the new plan, which will start with Citi’s investment bank and will eventually be rolled out to the rest of its sprawling operations, employees will receive a salary raise in exchange for a reduction in their bonuses.

People close to the situation said the amount of the increase in salaries will depend on the employees’ role and contribution to Citi’s overall profitability.

Under the new plan, Citi will also introduce a new stock option programme giving employees one stock option for every share of restricted stock they have accumulated – giving staff an incentive to stay.

[UpInArms]

24. Citi intends to raise employees' base pay: report

http://www.reuters.com/article/businessNews/idUSTRE55N0KP20090624?feedType=RSS&feedName=businessNews

(Reuters) - Citigroup Inc intends to raise employees' base salaries by as much as 50 percent this year to offset smaller annual bonuses, the New York Times said, citing people with direct knowledge of the plan.

With an eye on retaining employees and neutralizing a drop in the value of their stock holdings, Citi also plans to award millions of new stock options to employees, according to the paper.

Citigroup officials declined to discuss the issue on the record with the New York Times, but told the paper the changes would bring the bank's compensation plan in line with the general Wall Street view that bonuses are a form of deferred salary and not one-time payouts.

In a statement emailed to Reuters, Citigroup said it is continuing to examine ways to ensure its employee compensation practices are competitive.

"Retaining and attracting the best talent is very important to the success of Citi and all its stakeholders," Citigroup said.

...more...

[mbperrin]

62. Didn't give back their loan guarantees or cheap access to federal money,

or the huge amount collected from AIG via the taxpayers, did they?

Didn't think so.

[Demeter]

20. China's overdue credit-card debt increases

http://www.marketwatch.com/story/chinese-increasingly-overdue-on-credit-cards?siteid=yahoomy

CHINA NEVER GOT TO ENJOY THE 50'S OR 60'S PROSPERITY OF THE US...WENT STRAIGHT FROM 1945 CONDITIONS TO 2005 CATASTROPHE, WITH 50 YEARS OF MAO AND SUCCESSORS IN BETWEEN.

[UpInArms]

21. dollar watch

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

Last trade 79.703 Change -0.138 (-0.18%)

US Dollar Down Sharply Ahead of FOMC Decision

http://www.dailyfx.com/story/dailyfx_reports/daily_fundamentals/US_Dollar_Down_Sharply_Ahead_1245791147141.html

The DXY index shows that the greenback broke from a wedge formation, as indicated by the drop below a rising trendline near 80.30 connecting the June lows. The release of US economic data didn’t have much of an impact on the currency, and the moves are more likely due to traders trimming their long USD positions as the Federal Reserve started their monetary policy meeting today. They may also signal speculation about an expansion of the Fed’s quantitative easing (QE) program, but we’ll touch on that below. Looking to today’s news, the National Association of Realtors said that US existing home sales rose by 2.4 percent during the month of May to a 7-month high of 4.77 million. A further breakdown of this report suggests that the increase in sales is indeed a sign of recovery, as inventories fell to 9.6 months from 10.1 months while median prices rose to $173,000 from $166,000. That said, median prices still remain down a whopping 16.8 percent from a year earlier and we need to see far more evidence before we can truly say that the US housing collapse is over.

Wednesday’s 8:30 ET release of US durable goods orders are projected to show a 0.9 percent decline in May following a 1.9 percent jump in April, and excluding transportation the index is forecasted to fall 0.5 percent. The markets should keep an eye on non-defense capital goods orders excluding aircraft, as this number serves as a leading indicator for business investment. This component has remained negative over the past two months, and a continuation of this dynamic would not be supportive of outlooks for a slow recovery in the US economy. At 10:00 ET, the Commerce Department may report that new home sales rose again in May at a rate of 2.3 percent to 360,000.

The bigger piece of event risk for the markets looms at 14:15 ET, though, as the Federal Open Market Committee (FOMC) will release their latest policy statement. The FOMC is widely expected to leave the fed funds target range at 0.0 percent - 0.25 percent, and this should remain the case throughout much of the year. In fact, the FOMC started saying in January that they continue “to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time,” and they went on to say something similar in March and April. Furthermore, the last statement highlighted that the Committee's policy focus is to support the functioning of financial markets via QE and other measures that are likely to keep the size of the Federal Reserve's balance sheet at a high level. As long as we see these sorts of statements continue to be published, the news shouldn’t be too market-moving. However, the statement could send the US dollar spiraling lower if the FOMC announces an expansion of their QE efforts, and ultimately, any news that is positive for the stock markets may be negative for the greenback, which has been trading, at times, as a safe-haven asset.

...more...

Euro Bulls Ignore OECD's Call For ECB Rate Cut, Will FOMC Rate Decision Add To Dollar Weakness?

http://www.dailyfx.com/story/bio1/Euro_Bulls_Ignore_OECDs_Call_1245836685143.html

The Euro has started to trade lower after the OECD’s call for an ECB rate cut but the single currency has resumed its bullish momentum. The international economic organization has forecasted that growth will contract by 4.8% in 2009 and become flat in 2010 for the economic union. Meanwhile, the Euro-Zone current account saw its deficit shrink from -7.0 to -5.9 billion as the tradable goods balance swung to a surplus. Also, crossing the wires was mixed Italian data with consumer confidence rising to an 18 month high of 105.4, while retail sales unexpectedly fell by 0.4%.

The Organization for Economic Cooperation and Development said that the central bank should lower rates toward zero and keep them there until the economy is revived. The OECD cited the expected disinflationary environment over the next two years as cause for the ECB to act now as “The euro area is in a deep recession, with external demand collapsing and domestic demand being weakened by tight financial conditions, rising unemployment and heightened uncertainty.” Yesterday nearly every member of the policy committee came out and stated that current rates are appropriate and with Nowotny saying they will remain unchanged until 2010. However, we have seen the central bank take a strong stance against lowering rates before only to reverse in the face of the obvious downside risks. Look for a break below the 20-Day SMA at 1.4020 for accelerated declines in the ERU/USD.

The Pound rose to as high as 1.6596 as European equity markets followed Asia’s lead with a strong open. The sterling began to trade heavy after the OECD report but has started to regain its footing and is looking to test the intra-day high. The U.K. economy’s growth forecast was downgraded to -4.3% from -3.7% as the country’s housing slump continues to be a weighing factor. The 6/3 high of 1.665 remains as formidable resistance and although we could see a test of the level, a sharp reversal remains a possibility. The 20-Day SMA which stands at 1.6335 continues to provide support as cable bulls refuse to give up the fight. A break below there would be a strong bearish signal with a potential test of 1.5801 the 6/8 low.

U.S. durable goods orders are expected to have fallen by 0.9% in May after a 1.7% improvement the month prior. It would be the second decline in the last two months and a sign that companies remain cautious despite signs of a recovery. The biggest obstacle for a rebound in growth may be the psychological impact on businesses and consumers as they may remain tepid for sometime. Therefore, considering that prospect we could see dovish comments from Fed Chairman Bernanke after today’s policy decision. The FOMC is expected to keep the Feds Fund rate at 0%-0.25% as downside risks remain for the economy. A dour outlook from the central bank could spark risk aversion and dollar support. Conversely, there are enough signs that a recovery is imminent with the rate of job losses slowing to 345K from 504K and improvements in manufacturing and housing. Thus, an upbeat Bernanke could raise optimism and add to dollar weakness.

...more...

[ozymandius]

22. Obama’s Weak Regulatory Reform For Derivatives (Ritholtz has coals to rake)

The Obama administration continues to demonstrate their lack of understanding about a) how derivatives work, and b) their role in the crisis and collapse.

The proposals to regulate derivatives are weak and ineffective. CDOs and CDS may be trading at healthy discounts to their notational value, but at least Wall Street is getting 100 cents on the dollar for its lobbying efforts.

“The multitrillion-dollar derivatives market, which currently isn’t regulated, enables financial firms to speculate on whether stocks, bonds, currencies and natural resources, among other things, will rise or fall in value. A particular type of derivative called a credit-default swap exacerbated the financial crisis and contributed to the collapse of American International Group, which made bets on derivatives it could not afford. Credit-default swaps, which are linked to the value of bonds, would be overseen by the SEC under the proposed agreement . . .

Obama’s proposal calls for derivatives to be traded through “central clearinghouses,” which would collect data about the market and require that buyers and sellers allocate enough money to cover any trades.

Gensler wants to go a step further and require that derivatives be traded on electronic exchanges, just as stocks are traded on the New York Stock Exchange and the Nasdaq. A derivatives exchange would offer the advantages of a clearinghouse but also provide public information about the pricing and volume of trades.

Non-standard derivatives would be exempt from much of this regulation. These are derivatives linked to highly complex investments, such as securities composed of mortgages and other kinds of debt. But Gensler and Schapiro said it would be important to be vigilant about policing this market.”

http://www.ritholtz.com/blog/2009/06/team-obama-does-not-understand-derivatives/

---

I'm with Ritholtz on this one. No! No! No! The Commodity Futures Modernization Act needs to be repealed. Anything short of that is just cosmetic.

[Demeter]

31. Everything Done to Date Has Been ONLY Cosmetic

Without even any painkillers during the surgery.

[UpInArms]

27. Ex-Goldman "Goldfinger" raises $2.5 billion fund: sources

http://www.reuters.com/article/innovationNews/idUSTRE55N0ZD20090624?sp=true

HONG KONG (Reuters) - "Goldfinger" is back in the market and has a new focus -- Asia.

Mount Kellett Capital, a private equity firm run by former Goldman Sachs (GS.N) partner Mark McGoldrick, has completed raising about $2.5 billion for its first fund with a focus on Asia, especially China, two people with knowledge of the details told Reuters.

McGoldrick earned his nickname while at Goldman Sachs where, as co-head of its lucrative global special situations group, media reported he was paid $40-$70 million in 2006.

The Asia-focused firm, which McGoldrick and former Goldman colleagues launched early last year, initially set a target to raise about $5 billion, but pared this back as markets fell sharply late last year, said the sources, who declined to be identified as they were not authorized to speak to the media.

A representative for Mount Kellett could not be immediately reached for comment.

"In fact, it's not that bad at all. $2.5 billion is a very impressive number in such a tough market environment," said one of the sources.

Along with scaling back its original target, Mount Kellett also shifted its global investment scale to focus on Asia, especially China, said the sources.

BIG APPETITE

Mount Kellett, named after a mountain in Hong Kong and also known as MKC, has an office in the former British colony with about 10 investment professionals seeking deals across Asia, especially in China and India, said one person familiar with operations.

...more...

[Demeter]

28. India to ban replica handsets from China

http://www.ft.com/cms/s/0/1c2b90ba-6019-11de-a09b-00144feabdc0.html

By Joe Leahy in Mumbai and Kathrin Hille in Beijing

Published: June 23 2009 20:25 | Last updated: June 23 2009 20:25

India is moving to block millions of cheap copy-cat Chinese mobile phones and accessories from flooding the market that the handset industry describes as “time bombs” for their often dangerously poor quality.

“You have many of these phones behaving like little bombs – just exploding because the battery is bad,” said Pankaj Mohindroo, national president of the Indian Cellular Association, the lobby group representing Nokia and other large handset makers in the country.

I DON'T THINK INDIA IS INTO CATS AND DOGS AS PETS--BUT TECHNOLOGY IS HOT THERE

The ICA estimates that of the 4m-5m handsets imported each month from China up to one third, or 1m-1.5m, are cheap replicas produced by small shops in southern China.

Many of these include poor quality accessories and components, such as fake batteries, that can blow up on users.

The ICA says that many of the phones also do not have an “international mobile equipment identity” number, an in-built code allowing handsets to be traced to prevent their use by terrorists or other illegal groups.

The Indian government last week moved to ban Chinese phones that do not carry the number. Analysts said that besides security concerns, pressure from the big handset brands such as Nokia was also a driver behind the ban.

WELL, THAT'S AN INSIGHT INTO THE TERRORIST BOMBING, TOO

According to analyst estimates, 40 per cent of Chinese replica or “whitebox handset” shipments are exported, and India has become their biggest overseas market.

The issue comes as India’s emergence as one of the biggest and fastest growing mobile markets – with about 10m subscribers being added every month – has fuelled its ambition of becoming a global base for the manufacture of handsets.

Gartner, the research company, estimates India will have more than 771m mobile connections by 2013 from an estimated 452m this year, implying annual compound growth of 14.3 per cent.

The ICA is seeking to increase the country’s handset manufacturing capacity from more than 104.5m in 2008, which was up 25 per cent over a year earlier, to about 250m by 2012, which would make India the world’s second largest manufacturer of the units after China.

Nokia has set up its largest manufacturing facility in the world by employee numbers in Chennai, southern India, with 8,000 people.

Mobile handset sales in India in the fiscal year ending March were worth Rs259bn ($5.3bn), up 7.9 per cent, of which Nokia accounted for about two-thirds of market share.

[Demeter]

43. Costly lessons for Indians in Australia

http://www.ft.com/cms/s/0/688285ec-6008-11de-a09b-00144feabdc0.html

Like most young Indians going overseas, Pooja Thakur was excited about new opportunities when she went to Australia last year for graduate studies.

Although the A$30,000 ($23,700, €17,000, £14,500) fee seemed hefty, Ms Thakur, 22, whose father is a schoolmaster, was assured by education agents in Ahmedabad, her home town, that she could earn enough to cover it and A$900 in monthly living expenses through part-time work. “I wanted to learn more and see the world,” she recalls.

Yet almost 18 months into her sojourn, Ms Thakur is filled with regret. Her first semester was spent in a disappointing accountancy course pushed hard by an agent but filled only with other students from India and China.

She has since switched to a mainstream MBA programme but money remains a constant worry. Unable to find a job for six months, she now spends five hours a day selling electricity plans door-to-door, earning just enough for living expenses.

The Rs1.5m ($30,000, €22,000, £18,900) bank loan her family took out to finance her studies weighs heavily. “I realise I made a huge mistake,” Ms Thakur says. “I should have studied in universities in India.”


Shortage of places

Puneet Singh, a 25-year-old pursuing a master’s degree in accounting, opted for Australia’s Latrobe University, because as an “average student” working part-time at a restaurant, he felt he had “no chance” of attending a top-ranked university at home Competition for India’s elite universities is fierce, with many people spending huge sums on coaching for the arduous entry exams. “There are so many good students, and they work so hard,” Mr Singh said. “It’s not always possible for others to compete with them.”... To Mr Singh, who drives a taxi three nights a week to finance his Australian studies, a second-tier Indian university was simply not an appealing option. “I don’t think companies will take you if you come out from them,” he said.

......

India has an acute shortage of high-quality university places, creating intense competition for admission, and Indian elites have long sent their children for higher studies abroad, mainly to the US and UK...Addressing India’s shortage of higher education opportunities is one of the biggest priorities of India’s new government. Under 10 per cent of college-age students are enrolled in higher education.

Australia has also received a huge influx of Indian students, many from middle-class, small-town families who take large loans to finance their progeny’s overseas venture. From 13,000 in 2003, Australia’s Indian student population has soared to 96,000, close to the number of Indian students in the US.

In their quest for upward mobility, young Indians are encouraged by agents who receive commissions from Australian education institutions for each student they recruit. Commissions range from 10 per cent of the tuition fee for top-ranked public universities to 25 per cent for private universities and up to 45 per cent from the lowest-level vocational schools.

Less than a third of Indian students in Australia are enrolled in traditional degree programmes. The vast majority are in vocational institutions, sometimes just two or three rooms in an office block, obtaining skills such as commercial cookery, hairdressing and automotive repair: agents tout these programmes as advantageous towards obtaining permanent residency....

Gulshan Kumar, the association’s president, says numerous unaffiliated agents are pushing low-quality education institutions and painting unrealistically sunny pictures of Australia, especially its job market. Many such agents also supplement their commissions by taking huge fees from the students, adding to their debt burden.

“They are not purely dealing with education – they are doing it as a business. I would even term it as human smuggling,” Mr Kumar says.

Australian authorities should crack down on the proliferation of “shoddy” education companies, Mr Kumar believes... Gautum Gupta of the Federation of Indian Students in Australia says (there is) deep disgruntlement among the students, many of whom feel they came to Australia under false pretences and are now stuck in uninviting jobs.“They are basically importing cheap labour, for cooking, cleaning and driving cabs, in the guise of education,” says Mr Gupta. “It’s a masterstroke.”

[Demeter]

32. Defence says 12-year term apt for Madoff

http://www.ft.com/cms/s/0/8a2a6f98-6021-11de-a09b-00144feabdc0.html

By Joanna Chung in New York

Published: June 23 2009 20:38 | Last updated: June 23 2009 23:32

Bernard Madoff should get 12 years in prison, his attorney said on Tuesday, arguing that the sentence would be sufficient punishment for the former broker who committed one of history’s biggest frauds.

The request for leniency was made in advance of Mr Madoff’s sentencing, scheduled in the US for Monday. Mr Madoff, 71, faces up to 150 years in prison after pleading guilty to carrying out a $65bn Ponzi scheme that has claimed thousands of victims globally.

Mr Madoff would “speak to the shame he has felt and to the pain he has caused” at sentencing, wrote Ira Sorkin, his attorney, in a letter to Judge Denny Chin this week.

“We seek neither mercy nor sympathy,” Mr Sorkin wrote. But he said it was the duty of the court to “set aside the emotion and hysteria attendant to this case’’ in rendering its judgment.

Dozens of defrauded investors have sent letters to Judge Chin, describing the loss of their life savings and asking him to ensure that Mr Madoff spends the rest of his life in prison. Some have asked to speak at the sentencing hearing.

But while the anger and resentment among the victims were justified, Mr Sorkin wrote in his letter, the court should not give in to “a type of mob vengeance” apparently desired by the victims.

A 12-year prison term for Madoff, which would be just short of an effective life sentence, would be sufficient to address the goal of deterrence, protect the public and promote respect for the law, Mr Sorkin wrote.

He said a 15 to 20-year sentence would also achieve the same goals without “disproportionately punishing” Mr Madoff, compared with sentences for other white-collar criminals.

“Indeed, such a range will appropriately eliminate concerns for disparate treatment among similarly situated non-violent offenders,’’ he wrote in his letter, which accompanied an analysis of sentences given to defendants in fraud-related cases between 1999 and 2008 that showed that the average sentence when leniency was not provided was 15.3 years in prison. Mr Sorkin said Mr Madoff had an approximate life expectancy of 12.6 more years.

Jerry Reisman, an attorney who represents victims, said Mr Madoff should receive the maximum sentence. “ Madoff should never see the light of day . . . He should not only be punished for his crimes but the sentence must be a deterrence to others who may even think of committing a similar crime.”

THROW THE BOOK AT HIM--SENTENCING SHOULD BE HIGHER! SET THE PRECEDENT WITH MADOFF!

[tclambert]

42. I used to ask my son's friends how much money they would want to risk a few years of prison time.

I'd tell them about a guy who robbed a 7-11, crashed his car during the police chase, nearly got shot, twice, during the foot pursuit, and got 3 to 5 in prison, all for a take of $248. Then I would tell them about Michael Milken and Ivan Boesky--hundreds of millions for a couple years minimum security. The moral of the story is a little unclear, except "Don't be an idiot robbing 7-11's."

For Madoff, I get $65B/12 years = $5.4B per year. I could see doing the time for that kind of loot. They won't put him in Sing Sing, will they? More likely Danbury.

[Demeter]

45. Are You An Accountant In Real Life?

That was a consummately cold-blooded, penny-wise assessment. I salute you!

(shudder)

[Hugin]

51. When he gets out...

He can always start a money laundry foundation like Milken did.

Me? There isn't enough money in the world for me to spend a day in prison... NO THANKS! The price I pay is remaining the ineffectual nobody... Or so I lead you to believe. ;)

[tclambert]

52. Nah, not an accountant. Useta be in computers.

Sometimes literally inside them. Numbers and logic galore.

The point I was trying to make to the kids was petty crime doesn't pay. 3 years in prison for $248? $82.67 per year. At the time, you could make $248 in about 2 weeks at a minimum wage job. Guys like Milken, Boesky, and Madoff may have done the accounting and decided high-stakes rip-offs made sense. I've heard of criminal big shots paying a low-level criminal, or his family, something like $50,000 - $100,000 per year to take the rap and do the time for them.

[Demeter]

50. SEC files suit against Madoff broker

http://www.ft.com/cms/s/0/30ee2cd8-5f60-11de-93d1-00144feabdc0.html

By Joanna Chung in New York

Published: June 22 2009 20:17 | Last updated: June 22 2009 20:17

The US Securities and Exchange Commission on Monday launched its first action against the big “feeders’’ that channelled billions of dollars to Bernard Madoff, accusing a New York broker dealer and four individuals of enabling his Ponzi scheme to continue for decades.

In a civil complaint, the SEC alleged that Cohmad Securities Corporation, a registered broker dealer, and three of its top employees, ignored and even participated in suspicious practices indicating fraud as they brought investors to Mr Madoff in exchange for hundreds of millions of dollars in fees.

Cohmad, which was partly owned by Mr Madoff, is situated in Manhattan’s “Lipstick Building”, also the site of the now defunct Bernard L. Madoff Investment Securities. The SEC charged Cohmad, along with its chairman, Maurice Cohn, chief operating officer Marcia Cohn, and registered representative Robert Jaffe.

“Madoff cultivated an air of exclusivity by pretending that he was too successful to trouble himself with marketing to new investors,” said Robert Khuzami, director of SEC’s division of enforcement. “In fact, he needed a constant inflow of funds to sustain his fraud, and used his secret control of Cohmad to obtain them.”

Cohmad and the Cohns filed false regulatory reports that concealed the operation’s primary business of bringing in investors for Mr Madoff, which comprised as much as 90 per cent of Cohmad’s revenue in some years, the SEC claimed. Mr Jaffe allegedly brought in more $1bn of investor funds.

The SEC also filed civil charges against another Madoff “feeder’’, Stanley Chais, a California-based investment adviser. In a separate complaint, the SEC claimed that for the past four decades, Mr Chais held himself out as an investing wizard. But he “did nothing more’’ than turn over investors’ money to Mr Madoff while charging more than $250m for his services, the SEC alleged.

Mr Chais oversaw three funds that invested with Mr Madoff and investors’ accounts were valued at nearly $1bn when the Ponzi scheme collapsed, the SEC claimed. Mr Chais also allegedly opened about 60 accounts at Madoff’s firm on behalf of his family members and related entities, which withdrew more than $500m more than they actually invested with Mr Madoff between 1995 and 2008...

[Demeter]

36. U.S. Tops List of Countries with the Largest External Debt

http://seekingalpha.com/article/144442-u-s-tops-list-of-countries-with-the-largest-external-debt?source=feed

The World Bank maintains the database of Gross External Debt Positions of countries.The top five countries with the largest external debt are as follows:

Country External Debt in Millions(at the end of 2008) Year-Over-Year Change

United States 13,641,807 1.6%
United Kingdom 9,388,012 -19.9%
Germany 5,250,499 1.8%
France 5,001,696 2.4%
Netherlands 2,439,864 -6.1%

The USA is the biggest debtor country with a total of $13.6 Trillion at the end of 2008. On a year-over-year basis, this represents an increase of 1.6%. In order to see the creditors to the US, you can check my earlier post titled Top Ten Creditors to the USA. The country with the second largest debt is the UK. Total external debt of the UK stood at $9.3 T. Though this may seem large at first glance, it is actually good since the UK reduced their debt by 19.9% from 2007. All the top five debtor countries are developed rich countries. This is fascinating since these countries are able to borrow so much money to keep their economy moving forward.

The countries with the lowest amount of debt are:

Country External Debt in Millions(at the end of 2008) Year-Over-Year Change

Armenia 3427 15.1%
Kyrgyz Republic 3467 8.8%
Paraguay 3507 11.7%
Moldova 4125 19.4%
Bolivia 5923 9.1%

All the above countries are small countries in the developing world. Armenia has the lowest debt at $3.4B. However this was an increase of 15.1% from 2007.

Some of the countries have been reducing their external debt. Switzerland and the UK reduced it the most at nearly 20% from 2007. Other countries that have decreased their debt in 2008 include Australia, Canada, Israel, Egypt, etc.

The list below shows the countries that reduced their debt in 2008:

Country Year-over-Year Change

Korea -0.7%
Egypt -2.2%
Uruguay -3.0%
South Africa -4.8%
Israel -5.1%
Italy -6.0%
Netherlands -6.1%
Canada -7.4%
Australia -7.4%
Hong Kong, China -7.7%
Belgium -14.3%
United Kingdom -19.9%
Switzerland -19.9%

The countries that increased their external debt in 2008 compared to 2007 are:

Country Year-over-Year Change

Georgia 26.8%
Japan 24.6%
Ukraine 20.4%
Hungary 20.0%
Moldova 19.4%
Malaysia 17.2%
Bulgaria 16.6%
Belarus 15.7%
Slovak Republi 15.6%
Armenia 15.1%
Chile 14.0%
Paraguay 11.7%
India 10.8%
Croatia 10.1%
Kazakhstan 10.1%
Turkey 10.1%

Georgia was the worst with an increase of over 25%. Hungary almost collapsed due to the heavy debt load before it was rescued earlier this year.

The external of a select few countries and the year-over-year change are shown below:

Country External Debt at the end of 2008 Year-over-Year Change

Brazil 262931 8.5%
Estonia 27401 7.9%
Latvia 42054 7.4%
Lithuania 32469 7.3%
Russian Federation 484726 4.0%
Mexico 200393 3.6%
Spain 2313643 0.7%
Hong Kong, China 659931 -7.7%

Data Source: The World Bank

Latvia had $42B in debt as of 2008.The other Baltic countries of Lithuania and Estonia also have high debt levels. China had nearly $660B debt but that was a reduction of 7.7% from 2007.

[Festivito]

39. Debt: 06/22/2009 11,400,656,567,952.60 (UP 2,944,961,932.60) (Debt up a little, mostly FICA.)

(Debt up .025B$, that's about ten cents per American using the $4 rule below. FICA fluctuations depend on workers paying into it alongside recipients taking payments from it. No day to day rhyme or reason that I've found. Have fun all.)

= Held by the Public + Intragovernmental(FICA)
= 7,127,334,842,792.10 + 4,273,321,725,160.50
UP 24,707,752.58 + UP 2,920,254,180.02

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 306,710,342 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 $37,170.76.
A family of three owes $111,512.28. (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 4,949,032,056.18.
The average for the last 30 days would be 3,299,354,704.12.
The average for the last 31 days would be 3,192,923,907.22.
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$/day.
There were 104 reports in 153 days of Obama's part of FY2009 averaging -0.34B$ per report, -0.19B$/day so far.
There were 179 reports in 265 days of FY2009 averaging 7.69B$ per report, 5.19B$/day.

PROJECTION:
There are 1,308 days remaining in this Obama 1st term.
By that time the debt could be between 13.2 and 18.2T$.
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)
06/22/2009 11,400,656,567,952.60 BHO (UP 773,779,519,039.52 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: 1,375,931,671,040.20 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
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 ------------********
06/17/2009 -000,017,732,893.60 ----
06/18/2009 -005,859,665,194.24 --
06/19/2009 -000,316,361,675.40 ---
06/22/2009 +000,024,707,752.58 ------------******* Mon

29,473,165,120.09 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,736,024,764,693.53 in last 277 days.
That's 1,736B$ in 277 days.
More than any year ever, including last year, and it's 171% of that highest year ever only in 277 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 277 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=3934937&mesg_id=3934968

[Festivito]

65. Debt: 06/23/2009 11,407,973,761,151.02 (UP 7,317,193,198.42) (Debt up a little, mostly FICA.)

(Debt up just over a third of a billion, that's about a buck and a half per American using the $4 rule below. FICA does its own thing.)

= Held by the Public + Intragovernmental(FICA)
= 7,127,688,946,496.39 + 4,280,284,814,654.63
UP 354,103,704.29 + UP 6,963,089,494.13

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 306,717,542 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 $37,193.74.
A family of three owes $111,581.23. (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 5,061,801,634.39.
The average for the last 30 days would be 3,543,261,144.07.
The average for the last 32 days would be 3,321,807,322.57.
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$/day.
There were 105 reports in 154 days of Obama's part of FY2009 averaging -0.35B$ per report, -0.18B$/day so far.
There were 180 reports in 266 days of FY2009 averaging 7.68B$ per report, 5.20B$/day.

PROJECTION:
There are 1,307 days remaining in this Obama 1st term.
By that time the debt could be between 13.2 and 18.2T$.
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)
06/23/2009 11,407,973,761,151.02 BHO (UP 781,096,712,237.94 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: 1,383,248,864,238.60 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
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 ------------********
06/17/2009 -000,017,732,893.60 ----
06/18/2009 -005,859,665,194.24 --
06/19/2009 -000,316,361,675.40 ---
06/22/2009 +000,024,707,752.58 ------------******* Mon
06/23/2009 +000,354,103,704.29 ------------********

29,283,980,537.66 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,743,341,957,891.95 in last 278 days.
That's 1,743B$ in 278 days.
More than any year ever, including last year, and it's 171% of that highest year ever only in 278 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 278 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=3936562&mesg_id=3936678

[Demeter]

44. Banknote fuels Korean inflation fears

http://www.ft.com/cms/s/0/18ec94d4-6010-11de-a09b-00144feabdc0.html

By Song Jung-a and Christian Oliver in Seoul

Published: June 23 2009 17:23 | Last updated: June 23 2009 17:23

For over 35 years, the biggest banknote in South Korea has been the Won10,000, now worth only $7.80 (£4.75, €5.50). South Korea on Tuesday finally issued a Won50,000 note, despite concerns that it could stoke corruption and inflation.

Per-capita income in Asia’s fourth-biggest economy has grown 110 times since the Won10,000 bill appeared in 1973 and consumer prices have risen twelvefold.

The new note breaks ground in featuring a woman, 16th-century aristocrat Shin Saimdang. Although she was a celebrated painter, feminists grumbled that the central bank chose her as “the best example of motherhood in Korean history”.

Women’s groups said there were more feisty role models from Korean history than a paragon of Confucian maternal virtue.

Credit cards are widely used in the world’s most wired nation, but those who want to avoid them have to carry wads of small bills or use cheques of fixed sums.

South Koreans brawled in front of the central bank on Tuesday, desperate to get hold of early serial numbers of the new banknote, hoping those bills will soar in value in the coming years.

Owing to such high demand, most banks had to put a ceiling on the amount each customer could exchange. Even so, the Bank of Korea estimated that about Won1,600bn of new notes were circulated.

Retailers hope the higher-value notes could encourage more spending to revive the sluggish Korean economy, forecast to contract by 2 per cent this year, hit by slowing exports and weak consumption. But economists cautioned that the new bills could increase inflationary pressure.

Consumer prices remain low but there are fears they could rise sharply at the end of this year after the government pumped billions of dollars into the economy through fiscal stimulus measures and lower interest rates.

Another concern is that the higher denomination could make corruption easier in a country already infamous for bribery.

[Demeter]

47. ECB pumps record €442bn into system

http://www.ft.com/cms/s/0/2d9300c0-60a2-11de-aa12-00144feabdc0.html

By Ralph Atkins in Frankfurt

Published: June 24 2009 11:05 | Last updated: June 24 2009 11:05

The European Central Bank has pumped a record €442.2bn into the eurozone banking system in a first-ever offer of unlimited one-year funds as it battles continental Europe’s severe recession.

The results of the operation, part of ECB efforts to revive the eurozone economy by rejuvenating the financial system, highlighted expectations that liquidity will not be available again on such favourable conditions. The previous largest amount injected in a single ECB operation was €348.6bn in December 2007.

Demand for the one year funds – offered at the ECB’s main policy rate of just 1 per cent – appears to have been boosted significantly by financial markets’ growing conviction that ECB interest rates will not fall any further.

The operation is expected to push down significantly market borrowing costs, including 12 month interest rates, which are already lower than in the US. Julian Callow, European economist at Barclays Capital, added: “This gives the banking sector greater confidence still in order to be able to make loans and acquire assets.”

Since the collapse of Lehman Brothers last September, the ECB has slashed its main policy rate by 325 basis points to the lowest ever rate. But ECB policymakers have signalled that further reductions are unlikely – unless the eurozone economy takes a substantial further turn for the worse.

At the same time as cutting official borrowing costs, the ECB also expanded its armoury substantially by agreeing to match in full eurozone banks’ demand for liquidity for periods of up to six months.
............

The pace at which the eurozone economy was contracting decelerated sharply in the second quarter, according to latest survey evidence. But the ECB and other economists have been wary about forecasting any early return to growth.

[Ghost Dog]

61. Germany to take on record debt

BERLIN (AFP) – Germany's finance minister said Wednesday Berlin would break EU budget rules until 2013 or 2014, unveiling a record level of borrowing as the country reels from its worst recession in decades. Peer Steinbrueck said Europe's biggest economy would be forced to take on 310 billion euros (430 billion dollars) more debt over the period 2009-2013 -- the highest amount since the Federal Republic was founded 60 years ago.

...

According to EU rules, member state public deficits should not breach 3.0 percent of gross domestic product (GDP), while a country's public debt is not to exceed 60 percent of GDP.

Steinbrueck said Germany's deficit levels would be "around 4.0 percent" this year, rising to "just below 6.0" percent in 2010 -- in line with the commission's own forecasts. He said he therefore expected Brussels to begin disciplinary procedures against Germany at the end of this year or the beginning of next year. However, he said that most countries in the 27-nation EU are also expected to break the rules as they battle against the global economic crisis. According to European Commission figures, 20 member states will surpass the 3.0-percent upper limit this year. And Steinbrueck pointed to the situation in Ireland, whose public deficit has soared to as much as 14 percent, and Britain, where the figure is between 10 and 12 percent.

The minister justified Germany's growing debt mountain by saying that his export-driven country was suffering more than other top economies in the world. "The recession is hitting Germany harder than we expected," he later told a news conference. "No other country is so directly ... hit by what is happening in the global economy," he said, adding: "Some 45 percent of our GDP is based on external trade, compared to 10 to 12 percent for the United States and 20 to 25 percent in Japan."

/... http://news.yahoo.com/s/afp/20090624/bs_afp/financeeconomygermanyeudeficit

[Demeter]

48. Addax agrees C$8bn offer from Sinopec (china's oil coup)

http://www.ft.com/cms/s/0/290095b6-60a9-11de-aa12-00144feabdc0.html

By John O’Doherty

Published: June 24 2009 12:10 | Last updated: June 24 2009 12:10

Sinopec, the Chinese state-owned oil group is to buy Canada’s Addax Petroleum for C$8.3bn ($7.3bn, €5.3bn, £4.4bn), giving the Chinese group control over new oilfields in Kurdish northern Iraq...Sinopec will pay C$52.80 per ordinary share in Addax, a premium of 47 per cent to the closing price on June 5th, the day before Addax announced it was in discussions with a potential bidder.

In clinching the deal, Sinopec beat out other suitors for Addax, including Korea National Oil Company, the Korean state-owned group, which also has oil assets in Kurdish northern Iraq. Sinopec also beat other rumoured Chinese bidders including CNPC and CNOOC, the company behind a failed bid for US oil group Unocal in 2005.

[DemReadingDU]

58. Fed engaged in "cover-up" of BofA-Merrill deal

6/24/09 Fed engaged in "cover-up" of BofA-Merrill deal

The Federal Reserve sought to hide its extensive involvement and concerns about Bank of America Corp's (BAC.N) acquisition of Merrill Lynch amid the latter's worsening financial condition, a top Republican congressman said on Wednesday.

"The committee has already learned that Ben Bernanke and the Federal Reserve made inappropriate threats to fire Bank of America management unless they went ahead with the 'shotgun wedding' that was the Merrill Lynch acquisition," Rep. Darrell Issa of the House Oversight and Government Reform Committee said in a statement released to Reuters.

"The Federal Reserve also engaged in a cover-up and deliberately hid concerns and pertinent details regarding the merger from other federal regulatory agencies," the statement said.

The committee has obtained a number of emails and documents from the U.S. central bank about its behind-the-scenes role in the merger, according to sources familiar with documents.

http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSWEN096120090624

[mullard12ax7]

59. FED says country is corrupt, full of criminals and getting worse

Wouldn't that be funny if they told the truth for once.

[Demeter]

60. Lift that Barge, Tote that Bale!

Everybody, get out and push again!

[Demeter]

63. Wonder where Tansy Gold Is?

[CatholicEdHead]

64. Supervalu shares drop 12 percent to $13.81

Supervalu Inc., the Eden Prairie based grocery chain, tumbled the most in four months in New York trading Wednesday after saying first-quarter earnings were "substantially below" analysts' estimates as shoppers grew conservative.
...
"Consumers have become more value focused and cautious in their spending, which has pressured sales and margins greater than anticipated," Chief Executive Officer Craig Herkert said in the statement. He joined the country's second largest grocery chain last month from Wal-Mart Stores Inc., where he was in charge of outlets in Canada and Latin America.
...
The new CEO is trying to draw customers as Wal-Mart, based in Bentonville, Ark., and other grocery chains cut prices in the worst U.S. recession in half a century. Supervalu hasn't lowered prices fast enough and is now playing catch-up, according to analyst Charles Grom.

Supervalu's "problems rest squarely on the shoulders of one key factor -- high retail prices," Grom, an analyst at J.P. Morgan Chase & Co. in New York, wrote Wednesday in a note to analysts. He rates Supervalu as "neutral." "Unfortunately, this problem is not cyclical, it's structural, and will take time and patience to correct."
..."

http://www.startribune.com/business/49047481.html?


Another sign people are not spending or are unable to spend even on the basics of food.