STOCK MARKET WATCH -- Friday, 26 October 2012

[Tansy_Gold]

[font size=3]STOCK MARKET WATCH, Friday, 26 October 2012[font color=black][/font]

SMW for 25 October 2012

AT THE CLOSING BELL ON 25 October 2012
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Dow Jones 13,103.68 +26.34 (0.20%)
S&P 500 1,412.97 +4.22 (0.30%)
Nasdaq 2,986.12 +4.42 (0.15%)


[font color=green]10 Year 1.82% -0.01 (-0.55%)
30 Year 2.97% -0.02 (-0.67%) [font color=black]


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[font size=2]Market Conditions During Trading Hours[/font]
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[font size=2]Euro, Yen, Loonie, Silver and Gold[center]

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[font color=black][font size=2]Handy Links - Market Data and News:[/font][/font]
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Economic Calendar
Marketwatch Data
Bloomberg Economic News
Yahoo Finance
Google Finance
Bank Tracker
Credit Union Tracker
Daily Job Cuts
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[font color=black][font size=2]Handy Links - Economic Blogs:[/font][/font]
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The Big Picture
Financial Sense
Calculated Risk
Naked Capitalism
Credit Writedowns
Brad DeLong
Bonddad
Atrios
goldmansachs666
The Stand-Up Economist
The Automatic Earth
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[font color=black][font size=2]Handy Links - Government Issues:[/font][/font]
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LegitGov
Open Government
Earmark Database
USA spending.gov
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[font color=black][font size=2]Handy Links - Videos:[/font][/font]
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Charlie Rose talks with Roubini
Charlie Rose talks with Krugman
William Black: This Economic Disaster
Bill Moyers with Kevin Drum and David Corn
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[font color=red]Partial List of Financial Sector Officials Convicted since 1/20/09 [/font][font color=red]
2/2/12 David Higgs and Salmaan Siddiqui, Credit Suisse, plead guilty to conspiracy involving valuation of MBS
3/6/12 Allen Stanford, former Caribbean billionaire and general schmuck, convicted on 13 of 14 counts in $2.2B Ponzi scheme, faces 20+ years in prison
6/4/12 Matthew Kluger, lawyer, sentenced to 12 years in prison, along with co-conspirator stock trader Garrett Bauer (9 years) and co-conspirator Kenneth Robinson (not yet sentenced) for 17 year insider trading scheme.
6/14/12 Allen Stanford sentenced to 110 years without parole.
6/15/12 Rajat Gupta, former Goldman Sachs director, found guilty of insider trading. Could face a decade in prison when sentenced later this year.
6/22/12 Timothy S. Durham, 49, former CEO of Fair Financial Company, convicted of one count conspiracy to commit wire and securities fraud, 10 counts of wire fraud, and one count of securities fraud.
6/22/12 James F. Cochran, 56, former chairman of the board of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and six counts of wire fraud.
6/22/12 Rick D. Snow, 48, former CFO of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and three counts of wire fraud.
7/13/12 Russell Wassendorf Sr., CEO of collapsed brokerage firm Peregrine Financial Group Inc. arrested and charged with lying to regulators after admitting to authorities he embezzled "millions of dollars" and forged bank statements for "nearly twenty years."
8/22/12 Doug Whitman, Whitman Capital LLC hedge fund founder, convicted of insider trading following a trial in which he spent more than two days on the stand telling jurors he was innocent




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[font size=3][font color=red]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.[/font][/font][/font color=red][font color=black]

[Demeter]

1. 10 lessons from the market crash of 1987

http://www.marketwatch.com/story/10-lessons-from-the-1987-stock-market-crash-2012-10-19

The more things change, the more they stay the same — except computers are faster...

1. Stay objective when others get emotional

2. Be like Buffett: Buy on the fear, sell on the greed

3. Make a crash shopping list

4. What goes up fast comes down faster

5. There’s no such thing as ‘it can't happen’

6. Tune out the daily noise

Corrections of 10% are common and typically happen about three times a year, said Bob Pavlik, chief market strategist at Banyan Partners.

Pavlik, who started as an assistant portfolio manager with Laidlaw, Adams and Peck in 1987, said he does not think shareholders have learned many lessons in the past 25 years. Investors still panic during corrections and forget that they are part of the market’s ongoing contraction and expansion cycle. Read more: Jack Bogle: Forget trading; start investing.

“If you focus on the details, you can lose out on the big picture,” Pavlik said. Then, he added, “you lose out on those cycles that will help you,”.

7. Don’t bail

8. Don’t use the calendar to rebalance your portfolio

9. Bet with your head, not over it

Margin calls fueled the fire in October 1987, according to managers who lived through the crash. And even though margin requirements have been tightened since, individual investors should avoid it, said AAII’s Rotblut. The only margin call the individual investor should care about is an opportunistic one — such as when hedge funds have to sell on the cheap to cover their bets, putting downward pressure on prices and creating bargains, Barrack’s Leclerc said.

10. Investors face greater risk now

In 1987, portfolio insurance and program trading threatened the orderly functioning of the financial markets. Today, high-frequency trading algorithms move massive volume in microseconds and amp up volatility. That sort of risk, as evidenced in market gyrations since 2000, has damaged retail investors’ appetite for stocks, according to Jeff Applegate, chief investment officer of Morgan Stanley Wealth Management. Also, the rise of technology and widespread online trading has made individual investors more vulnerable to knee-jerk trades, without the benefit of a broker or pension plan manager talking them off the ledge, Rotblut said. But as technology makes it easier for investors to go it alone without traditional guidance, volatility can create anxiety and make investors vulnerable to fads and higher fees.

“Investors are more exposed to risk now,” said AJO’s Aronson. “There are more opportunities to lever investment ideas, to amplify investment ideas, and more ‘advances’ that have given investors more opportunities to pick their own pockets.”

DETAILS AT LINK

[Demeter]

2. A Pre-Nup to Discourage Private Equity Companies From Asset Stripping

THAT'S ASSUMING THE SELLER GIVES A DAMN ABOUT THE COMPANY, THE WORKERS, THE COMMUNITY...

IMO, IF THEY GAVE A DAMN, THEY WOULDN'T BE SELLING TO A VULTURE

SO THIS MIGHT HAVE TO BE IMPOSED ON THE DEAL BY THE WORKERS AND THE COMMUNITY

http://truth-out.org/opinion/item/12279-a-pre-nup-to-discourage-private-equity-companies-from-asset-stripping

Why should workers, communities and creditors pay the price when the equivalent of a good marriage lawyer could ensure they're protected against such exploitative practices?

In one of the largest settlements by creditors against private equity (or PE) companies, Cerberus Capital, Sun Capital Partners and Lubert-Adler/Klaff have agreed to pay $166 million to vendors of bankrupt department store chain Mervyn's. The proposed settlement will prove even costlier to the PE firms when settlement terms force them to withdraw their own financial claims against the Mervyn's bankruptcy estate.

When the leveraged buyout that carved Mervyn's out of retailer Target was consummated in 2004, Mervyn's brought 30,000 employees and 257 stores to the altar. The PE consortium brought $400 million in equity and borrowed another $800 million using Mervyn's real estate as collateral, all of which went to Mervyn's parent company, Target. The private equity group formed Mervyn's Holdings to operate the department store business, and transferred Mervyn's valuable real estate assets to MDS Realty. Mervyn's received no compensation for these assets and no residual interest in the property. Mervyn's Holdings had to lease back the real estate, paying high rents that enabled its PE owners to both service the debt and extract value for themselves. After holding the properties long enough to obtain capital gains tax treatment, MDS Realty sold most of the stores. The PE owners took a total of more than $400 million out of Mervyn's in the original transaction that split off the chain's real estate holdings, and subsequently, in management fees and dividends, they paid themselves out of the rents MDS collected from Mervyn's and out of the retail chain's cash flow. The PE owners were thus able to guarantee that they would do well no matter how things ended for the retail chain.

Like a bride led down the garden path, all the risk in this union fell on Mervyn's and its employees and creditors. Essentially making promises to workers and communities that it did not keep, the PE consortium used the marriage to put all of Mervyn's assets in a separate company, beyond the reach of creditors should anything go wrong with the retail business. Struggling to pay its high rents as the recession took a toll on sales, Mervyn's sought bankruptcy protection in 2008. Unable to emerge from bankruptcy, Mervyn's closed its remaining stores, dismissed its last 18,000 workers, and was liquidated. Mervyn's owed the Levi Strauss & Company more than $12 million out of over $102 million in total to its vendors. The private equity owners, however, were little affected by the bankruptcy. Profits realized through real estate deals and dividends far exceeded losses on the retail side....At the request of its vendors, Mervyn's sued Target, the PE firms and others involved in the transaction later that year. The complaint accused Target and the PE owners of engaging in a fraudulent transaction by knowingly causing Mervyn's real estate to be transferred without consideration of the effects of this action. The complaint also alleged that Mervyn's PE owners breached their fiduciary duties to Mervyn's and its creditors by paying themselves a dividend at a time when Mervyn's was essentially insolvent...

FASCINATING WHO DUNNIT OR MAYBE WHO DUNWHAT.

[Demeter]

3. Romney & Company Shipped Every Single Delphi UAW Job to China By Greg Palast

http://truth-out.org/progressivepicks/item/12273-romney-company-shipped-every-single-delphi-uaw-job-to-china

He's kidding, right? Did I just hear Mitt Romney say, "I would do nothing to hurt the US auto industry." Really? Really? Here's the facts, ma'am:

As I reported in this week's The Nation magazine cover story "Mitt Romney's Bail-out Bonanza," the Romneys are in a special partnership with the vulture fund that bought Delphi, the former GM auto parts division. The Romney vulture fund investment syndicate shipped every single UAW production job - every job - to China.

Just after The Nation broke the story, Washington newsletter The Hill received the Romneys' admission of profiteering: "Romney's campaign did not deny that he profited from the auto bailout in an email to The Hill, but it said the report showed the Detroit intervention was 'misguided.'"

The truth? On June 1, 2009, the Obama administration announced that Detroit Piston's owner Tom Gores, GM and the US Treasury would buy back Delphi.The plan called for saving 15 of 29 Delphi factories in the US. Then the vulture funds pounced. The Nation discovered that, in the two weeks immediately following the announcement of the Delphi jobs-saving plan, Paul Singer, Romney's partner, secretly bought up over a billion dollars of old Delphi bonds for pennies on the dollar. Singer and partners now controlled the company - and killed the return of Delphi to GM. These facts were revealed in a sworn deposition of Delphi's Chief Financial Officer John Sheehan, confidential, but now released on the Web.

Sheehan said, under oath, that these speculators threatened to withhold key parts (steering columns), from GM. This would have brought the auto maker to its knees, immediately forcing GM's permanent closure. The extortion worked. The government money that was supposed to go to save jobs went to Singer's hedge fund, Elliott Management Corporation and its partners, including the Romneys...

[Demeter]

4. Matt Taibbi and Chrystia Freeland on the One Percent's Power and Privileges

http://truth-out.org/news/item/12268-matt-taibbi-and-chrystia-freeland-on-the-one-percents-power-and-privileges

VIDEO AND TRANSCRIPT AT LINK

[mother earth]

39. This is must reading. Taibbi & Freeland are telling it like it is. Fucking Trump should be held up

for the idiotic bastard he is, in front of the world, with as much fanfare as his assinine & daily meritless charges. The l%ers outdo themselves in shameless arrogance and self-appointed entitlement. They are sucking the life out of entire generations of people.

When will enough be enough for these greedy parasites? Never. They will never be happy enough with what they have until they've sucked everyone else dry. This is DISEASE, insanity by the l%. They need an intervention.

[Demeter]

5. Pointing Toward Prosperity? By PAUL KRUGMAN (DISSECTS ROMNEY & OBAMA)

www.nytimes.com/2012/10/26/opinion/krugman-pointing-toward-prosperity.html

Mitt Romney has been barnstorming the country, telling voters that he has a five-point plan to restore prosperity. And some voters, alas, seem to believe what he’s saying. So President Obama has now responded with his own plan, a little blue booklet containing 27 policy proposals. How do these two plans stack up? Well, as I’ve said before, Mr. Romney’s “plan” is a sham. It’s a list of things he claims will happen, with no description of the policies he would follow to make those things happen. “We will cut the deficit and put America on track to a balanced budget,” he declares, but he refuses to specify which tax loopholes he would close to offset his $5 trillion in tax cuts. Actually, if describing what you want to see happen without providing any specific policies to get us there constitutes a “plan,” I can easily come up with a one-point plan that trumps Mr. Romney any day. Here it is: Every American will have a good job with good wages. Also, a blissfully happy marriage. And a pony.

So Mr. Romney is faking it. His real plan seems to be to foster economic recovery through magic, inspiring business confidence through his personal awesomeness. But what about the man he wants to kick out of the White House? Well, Mr. Obama’s booklet comes a lot closer to being an actual plan. Where Mr. Romney says he’ll achieve energy independence, never mind how, Mr. Obama calls for concrete steps like raising fuel efficiency standards. Mr. Romney says, “We will give our fellow citizens the skills they need,” but says nothing about how he’ll make that happen, pivoting instead to a veiled endorsement of school vouchers; Mr. Obama calls for specific things like a program to recruit math and science teachers and partnerships between businesses and community colleges. So, is Mr. Obama offering an inspiring vision for economic recovery? No, he isn’t. His economic agenda is relatively small-bore — a bunch of modest if sensible proposals rather than a big push. More important, it’s aimed at the medium term, the economy of 2020, rather than at the clear and pressing problems of the present.

Put it this way: If you didn’t know what was actually going on in the U.S. economy, you’d think from reading the Obama plan that America was a place where workers with the right skills were in high demand, so that our big problem was that not enough people have those skills. And five or 10 years from now, America might actually look like that. Right now, however, we’re still living in a depressed economy offering poor prospects for almost everyone, including the highly educated. Indeed, these have been really bad years for recent college graduates, who all too often can’t find anyone willing to make use of their hard-won skills that were expensive to attain. Unemployment and underemployment among recent graduates surged between 2007 and 2010, while far too many highly trained young people found themselves working in low-skill jobs. The job market for skilled workers, like that for Americans in general, is now gradually improving. But it’s still far from normal.

The point is that America is still suffering from an overall lack of demand, the result of the severe debt and financial crisis that broke out before Mr. Obama took office. In a better world, the president would be proposing bold short-term moves to move us rapidly back to full employment. But he isn’t.

MORE HALF-FULL GLASS AT LINK

[mother earth]

38. Yes indeed, our expectations have been so minimized by the incredibly bar lowering Romney.

Thanks to citizens with GOP amnesia, the questions being asked & their solutions have been kept lower than low key.

We need Obama to be more like FDR, but with Romney as the opponent he doesn't need to be. All he needs to do is present facts & remind us who brought us this mess. How about upping that bar? How about expecting the highest office to represent the people and think outside of this stranglehold?

"In a better world, the president would be proposing bold short-term moves to move us rapidly back to full employment. But he isn't."

Have we had enough of the status quo? Have we had enough of centrist limitation? Who profits from this oligarchy? It sure the hell isn't the people.

[Demeter]

6. Apple misses Wall Street 4Q expectations

I THINK MAYBE IT WILL BE A DOWN DAY....

http://www.latimes.com/business/la-fiw-apple-misses-wall-street-4q-expectations-20121025,0,5363551.story

[DemReadingDU]

8. DOW futures down -98

[DemReadingDU]

7. Citi Chairman Is Said to Have Planned Chief’s Exit Over Months

10/26/12
Citi Chairman Is Said to Have Planned Chief’s Exit Over Months
By JESSICA SILVER-GREENBERG and SUSANNE CRAIG

Vikram Pandit’s last day at Citigroup swung from celebratory to devastating in a matter of minutes. Having fielded congratulatory e-mails about the earnings report in the morning that suggested the bank was finally on more solid ground, Mr. Pandit strode into the office of the chairman at day’s end on Oct. 15 for what he considered just another of their frequent meetings on his calendar.

Instead, Mr. Pandit, the chief executive of Citigroup, was told three news releases were ready. One stated that Mr. Pandit had resigned, effective immediately. Another that he would resign, effective at the end of the year. The third release stated Mr. Pandit had been fired without cause. The choice was his.

The abrupt encounter, described by three people briefed on the conversation, included a terse comment by the chairman, Michael E. O’Neill: “The board has lost confidence in you.”

A stunned Mr. Pandit chose to resign immediately. Even though Mr. Pandit and the board have publicly characterized his exit as his decision, interviews with people close to the board describe how the chairman maneuvered behind the scenes for months ahead of that day to force Mr. Pandit out and replace him with Michael L. Corbat, the board’s chosen successor.

Once he became chairman this year, Mr. O’Neill, 66, meticulously built a case for the chief executive’s ouster, they say, first meeting privately with less-satisfied board members and then drawing in others until Mr. Pandit had virtually no allies left.

As Mr. Pandit was reeling from his encounter, three board members confronted John Havens, the bank’s chief operating officer and a longtime lieutenant.

“Vikram has offered his resignation, and we would like to give you the opportunity to offer yours,” a board member said, following a script prepared by the board’s lawyers, according to several people with knowledge of the meeting.

Startled, Mr. Havens briefly challenged the directors, pointing to the solid performance of the institutional clients group, and then relented, saying his resignation would be on Mr. Pandit’s desk within five minutes.

more...
http://www.nytimes.com/2012/10/26/business/citi-chairman-is-said-to-have-planned-pandits-exit-for-months.html?

[Demeter]

29. And that's the way the big boys play it, folks

I'm not saying it wasn't good or necessary.

I'm saying it was done methodically and by conspiracy.

[Demeter]

9. Amid Cutbacks, Greek Doctors Offer Message to Poor: You Are Not Alone

GREECE HAS SWITCHED FROM EUROPEAN HEALTH CARE TO US STYLE...

ON ORDER OF THE GERMANS AND TROIKA

http://www.nytimes.com/2012/10/25/world/europe/greek-unemployed-cut-off-from-medical-treatment.html?hp

...“When we saw her we were speechless,” said Dr. Syrigos, the chief of oncology at Sotiria General Hospital in central Athens. “Everyone was crying. Things like that are described in textbooks, but you never see them because until now, anybody who got sick in this country could always get help.”

Life in Greece has been turned on its head since the debt crisis took hold. But in few areas has the change been more striking than in health care. Until recently, Greece had a typical European health system, with employers and individuals contributing to a fund that with government assistance financed universal care. People who lost their jobs received health care and unemployment benefits for a year, but were still treated by hospitals if they could not afford to pay even after the benefits expired. Things changed in July 2011, when Greece signed a supplemental loan agreement with international lenders to ward off financial collapse. Now, as stipulated in the deal, Greeks must pay all costs out of pocket after their benefits expire.

About half of Greece’s 1.2 million long-term unemployed lack health insurance, a number that is expected to rise sharply in a country with an unemployment rate of 25 percent and a moribund economy, said Savas Robolis, director of the Labor Institute of the General Confederation of Greek Workers. A new $17.5 billion austerity package of budget cuts and tax increases, agreed upon Wednesday with Greece’s international lenders, will make matters only worse, most economists say.

The changes are forcing increasing numbers of people to seek help outside the traditional health care system. Elena, for example, was referred to Dr. Syrigos by doctors in an underground movement that has sprung up here to care for the uninsured. “In Greece right now, to be unemployed means death,” said Dr. Syrigos, an imposing man with a stern demeanor that grew soft when discussing the plight of cancer patients.MThe development is new for Greeks — and perhaps for Europe, too. “We are moving to the same situation that the United States has been in, where when you lose your job and you are uninsured, you aren’t covered,” Dr. Syrigos said...

[Demeter]

10. How Profligate Was the Greek Government? Michael Stephens

I THINK THE REAL ISSUE WAS CORRUPTION...

http://www.multiplier-effect.org/?p=6036

Breezily blaming the eurozone crisis on government profligacy is a widely-used journalistic shortcut, but by now it should be clear that it’s a shortcut that doesn’t help us understand what went wrong with the euro project. It has been repeated often, though evidently not often enough, that Spain, one of the hardest hit countries, had a public debt-to-GDP ratio that was a mere 27 percent before the crisis hit. And there is reason to believe that even in the case of Greece, the bogeyman of government profligacy, the popular narrative should be treated with a little more skepticism.

In a new report, Dimitri Papadimitriou, Gennaro Zezza, and Vincent Duwicquet use the “financial balances” approach pioneered by Wynne Godley to look at the recent history and future prospects of growth for the Greek economy. Their analysis of the government accounts includes this graph:



As the authors observe, Greece’s government expenditures were basically stable through the ’90s and most of the 2000s, increasing rapidly only as a result of the 2008 recession (until the austerity programs began to take effect in 2010). Moreover, Greece was not a massive outlier in terms of government spending levels. Prior to the crisis, Greek public spending as a percentage of GDP was on the lower end compared to France, Italy, and Germany:



Papadimitriou, Zezza, and Duwicquet also look at changes in government revenue collection, before and after the adoption of the euro, and they examine the role played by rising interest payments in Greece’s post-crisis increase in government expenditures. But as with most of the other troubled eurozone economies, the major problem for Greece, the authors conclude, can be found in the private sector financial balances:

Growth in Greece during the 2000s—similar to the United States—was fueled by consumption financed by running down households’ financial assets, and/or by net borrowing. It was this unsustainable process, rather than an excessive government deficit, that put Greece on an unsustainable path.

And after mapping out the decrease in net financial assets in Greece (NFA turned negative in 2004), they note that the country is in an even trickier position than some other crisis-wracked nations:

While other countries like Italy still have a net creditor position in the stock of financial assets of the private sector, so that, if necessary, a reduction in government net liabilities can be obtained through appropriation of private financial assets, this possibility is ruled out for Greece, where both the private and the public sector have a net debt against foreigners. As a result, any attempt to quickly reduce the stock of debt must imply a transfer of real, rather than financial, assets from Greece to foreigners.

[Demeter]

22. Desperate to keep the police on side, is the Greek government overlooking violent abuses?

LETTING THE NAZIS RUN AMUCK

http://www.newstatesman.com/politics/2012/10/desperate-keep-police-side-greek-government-overlooking-violent-abuses

Golden Dawn is having a field day while MPs from other parties are assaulted...“50, maybe 60% of the police are with us now” Illias Panagiotaros (an MP with the Golden Dawn who participated in the attacks outside Corpus Cristi last week) admitted to Newsnight’s Paul Mason last Wednesday. Dendias (the Greek Minister of Public Order), desperately trying to outflank the neo-nazi party from the right and win over the police at the same time, is failing miserably. His empty anti-immigrant rhetoric and his sucking up to the police, leads nowhere but to the complete loss of his ministry’s status...

[Demeter]

25. Malaria returns to crisis-torn Greece

http://www.telegraph.co.uk/news/worldnews/europe/greece/9626423/Malaria-returns-to-crisis-torn-Greece.html

Medecins Sans Frontiers is offering the sort of treatments it usually provides in sub-saharan Africa to southern Greece...Global health bodies have issued warnings to travellers to the worst hit region in the south of the country, with fears that Athens could soon be affected.

Austerity budgets have resulted in drastic cutbacks in municipal spraying schemes to combat mosquito borne diseases.

In what is believed to be a first for Western Europe, Greece has experienced the first domestic cases of malaria since 1974.

Other mosquito-borne diseases that have slipped back into Greece include West Nile virus....

[xchrom]

11. i'm looking at you...yes, you

[xchrom]

12. Spain Joblessness Breaches 25%, Adding to Rescue Pressure

http://www.bloomberg.com/news/2012-10-26/spain-joblessness-breaches-25-adding-to-rescue-pressure.html

Spanish unemployment climbed to a record in the third quarter as a deepening recession left one in four workers jobless, adding pressure on Prime Minister Mariano Rajoy to seek a second European bailout.

Unemployment, the second highest in the European Union after Greece, rose to 25.02 percent from 24.6 percent in the previous quarter, the National Statistics Institute said in Madrid today. That is the highest since at least 1976, the year after dictator Francisco Franco’s death led Spain to democracy.

“The situation is serious,” Ricardo Santos, an economist at BNP Paribas SA in London, said by telephone. “There is still room for a deterioration in unemployment. Activity is weak and the government will reduce jobs as there are strict targets to adjust the number of public-sector temporary workers, especially in health and education.”

Nearly three months after the European Central Bank offered bond buys to lower its borrowing costs, Spain is still playing for time. Economy Minister Luis de Guindos said on Oct. 23 that the recent improvement in funding conditions shows they depend on investors’ perception of the euro’s future rather than domestic issues.

[xchrom]

13. Worst Storm in 100 Years Seen for Northeast U.S.

http://www.bloomberg.com/news/2012-10-25/u-s-east-from-washington-to-nyc-at-risk-from-hurricane-sandy.html


A driver maneuvers his classic American car along a wet road as a wave crashes against the Malecon in Havana, Cuba, on Oct. 25, 2012. Hurricane Sandy blasted across eastern Cuba on Thursday as a potent Category 2 storm and headed for the Bahamas after causing at least two deaths in the Caribbean.

Hurricane Sandy will probably grow into a “Frankenstorm” that may become the worst to hit the U.S. Northeast in 100 years if current forecasts are correct.

Sandy may combine with a second storm coming out of the Midwest to create a system that would rival the New England hurricane of 1938 in intensity, said Paul Kocin, a National Weather Service meteorologist in College Park, Maryland. The hurricane currently passing the Bahamas has killed 21 people across the Caribbean, the Associated Press reported, citing local officials.

“What we’re seeing in some of our models is a storm at an intensity that we have not seen in this part of the country in the past century,” Kocin said in a telephone interview yesterday. “We’re not trying to hype it, this is what we’re seeing in some of our models. It may come in weaker.”

The hybrid storm may strike anywhere from the Delaware- Maryland-Virginia peninsula to southern New England. The current National Hurricane Center track calls for the system to go ashore in New Jersey on Oct. 30, although landfall predictions often change as storms get closer to shore.

[Po_d Mainiac]

48. Just in time for the annual

Leaf drop, and storm drain blockage.

[xchrom]

14. Firings Highest Since 2010 as Ford to Dow Face Slump

http://www.bloomberg.com/news/2012-10-24/firings-reach-highest-since-2010-as-ford-to-dow-face-sales-slump.html

Ford Motor Co. (F) and Dow Chemical Co. (DOW) joined a growing number of companies firing thousands of workers as sluggish U.S. growth and Europe’s deepening recession lead to a persisting slump in sales.

North American companies have announced plans to eliminate more than 62,600 positions at home and abroad since Sept. 1, the biggest two-month drop since the start of 2010, according to data compiled by Bloomberg. Firings total 158,100 so far this year, more than the 129,000 job cuts in the same period in 2011.

Ford is closing its first European car-assembly factories in 10 years and Colgate-Palmolive Co. (CL) said today it will cut 2,300 jobs, adding to more than 5,500 cuts announced by Dow Chemical, DuPont Co. and Advanced Micro Devices Inc. (AMD) in the past week. The reductions coincide with a majority of U.S. companies missing analysts’ third-quarter revenue estimates and a focus on jobs in the final weeks of the U.S. presidential campaign.

“Companies are saying, ‘Let’s not build up inventories, let’s be lean and mean until we know until we have a better idea of what 2013 is going to look like,’” said Janna Sampson, who helps manage more than $3 billion for Oakbrook Investments in Lisle, Illinois. “There is a fear now as companies see that the economic recovery is not picking up.”

[DemReadingDU]

18. If firings are increasing, why is unemployment rate decreasing?

I doubt that all these fired people, immediately got another job.

[xchrom]

26. i know ford is closing 2 plants in belgium

so i think some of these firings are global rather than limited to the US.

[Demeter]

15. Deposit Insurance – Who is it for really?

http://www.golemxiv.co.uk/2012/10/deposit-insurance-who-is-it-for-really/

Government backed Deposit Insurance is like the rip cord on a parachute. It is the thing you know will save you if it all goes horribly wrong. As long as it is there you can pull it and the parachute will open saving you from otherwise certain death. The government guarantees your money if your bank goes bust. In the UK the limit is £85K per account. Double that for a joint account. It’s just nice to know it is there. Nice to think that whatever other injustices are heaped upon us, in extremis there is still one ultimate guarantee our government has in place for us. It may be only there as a last resort but at least it is our last resort. It proves that there is at least one way left in which our governments are still trying to look out for and protect the best interests of us, the people. In this one way at least the purpose of government for the benefit of the people has not been corrupted or removed.

Or at least that is what I used to think.

A friend of mine did a little digging for me in Greece recently. What he found is that at least one major UK bank is deeply involved in capital flight from Greece and quite possibly from other European nations as well. This bank which I won’t name if you don’t mind has been advertising to Greeks-with-savings that they should switch their savings from their Greek bank to this UK bank. So far so ordinary. Unsavoury, predatory perhaps, but not illegal.

What piqued my friend’s interest was that the bank was telling prospective clients that this was not the Greek registered part of the bank family but a branch of that bank’s UK operation. For the sake of clarity let’s call the bank RBHS. No such bank exists, I’m sure you’ll agree. RBHS was telling clients it was a branch not of RBHS Greece but RBHS UK. The money would be available to the client in Greece but on deposit in either the UK or they also offered Cyprus. Why, you might wonder? Why go to the bother of opening a branch of (or at least something connected directly to) RBHS UK when you already had a Greek operation? My friend asked. The answer he was given was that the money would then be guaranteed under the UK deposit guarantee scheme run by the FSA/FSCS (Financial Services Compensation Scheme).

So what was being sold to prospective Greek clients was that they should move their money from their Greek bank to UK registered and run RBHS because if the Greek bank went down as part of a Greek exit from the EU and euro then the Greek state might not fully cover the deposit. It might, but then again, it might not. Would the client really want to take such a risk when by simply switching banks to RBHS UK their money would be guaranteed by the British government and British tax payer?

MUCH BLATHER...CONCLUSION: The short version of all these words is that the banks deposit guarentee is only incidentally for you. It is mainly for the banks. It is part of the huge but largely hidden subsidy which every nation pays to the global private banking sector.

[Demeter]

16. Banks Mark Up Costs For Bounced Checks By As Much As 470,000 Percent

http://www.businessinsider.com/real-cost-of-a-bounced-check-2012-10

Hardly anyone pays with a check these days, but that hasn't stopped big banks from gouging people who bounce them.

Banks may mark up processing charges by as much as 470,000 percent, according to author David Cay Johnson, who discusses various forms of price gouging in his new book, The Fine Print: How Big Companies Use "Plain English" To Rob You Blind:

"Back in the late 1970s, when checks were still processed by a person and a machine rather than digitally, Crocker Bank (now part of Wells Fargo) was forced to reveal in a California court case that its cost was thirty cents. At that time, the bank was charging customers $6 for bounced checks, a markup of 2,000 percent. The California Supreme Court held that charging twenty times the cost was not necessarily unconscionable. Adjusted for inflation, that $6 fee would now be $21, less than half was BofA charges.

"What are today's costs for processing a bounced check? BofA won't tell customers, but research papers on costs in the digital era suggest it could be less than a penny, making the markup by BofA in the neighborhood of 470,000 percent."

Read more: http://www.businessinsider.com/real-cost-of-a-bounced-check-2012-10#ixzz2AP0F0Tkd

[Demeter]

17. Social Security a Far Better Deal for Workers Than Modern Retirement Plans

http://news.firedoglake.com/2012/10/24/social-security-a-far-better-deal-for-workers-than-modern-retirement-plans/

This brief set of calculations from the Wall Street Journal’s Ellen Schultz shows simply how much of a raw deal American workers have been getting from defined-contribution retirement plans. It is impossible for them to generate the rate of return of a defined benefit plan, just completely impossible. Schultz shows this in the context of Social Security:

Despite widespread gloom over the health of the system, it will be still be able to pay at least 70% of benefits in coming decades, even if no action is taken.

That means you need to take the benefits into account when estimating your retirement income, how much you’ll need to save and how to allocate your investments to achieve your goals.

A 50-year-old man, for example, might have accrued a Social Security benefit worth $1,750 a month at full retirement age. Assuming annual cost-of-living adjustments of 2% a year and a life expectancy of 90, the present value of his Social Security benefits would be $588,551 if he starts taking them at age 62, and $802,039 if he begins at 70, says William Meyer, founder of Social Security Solutions, a Leawood, Kan., financial-planning firm.

To generate the same amount of income they would be receiving from Social Security taken at age 70, the individual would have to pay $436,517 today into an immediate annuity, says Mr. Meyer.

This says more about the futility of 401(k)-style plans than the adequacy of Social Security as a social insurance program. Social Security doesn’t provide the best benefit in the world. But the universality of the program, the lifetime of payments and the simple reality of defined benefit retirement programs make it a far better deal for workers than providing a sum of money to play with in the stock market. And this is the program you get when the payroll tax is capped at the first $110,000 or so of income; raising the tax cap and plugging that money into not only the long-term funding situation but increasing benefits would make this even more stark.

Most people have next to no retirement savings on their own. They rely on Social Security, and you can argue how they would manage retirement without the safety net program. But you cannot argue that they could get a better, safer return on investment. And it’s affordable to the government simply by changing the dynamic that Bill Gates does not pay into the system at the same rate as a guy earning $110,000 a year. Increasing inequality is more responsible for the long-run funding gap in Social Security than virtually any other event, including the baby boomers retiring. 93% of all compensation gains in the recovery from the Great Recession has accrued to the very top. Practically none of that money flows into the Social Security trust fund. Fix that, and you fix the problem....MORE

[Demeter]

19. The Central Fact that Folks Don’t Get about Fannie and Freddie’s Role in the Crisis

By William K. Black

http://neweconomicperspectives.org/2012/10/the-central-fact-that-folks-dont-get-about-fannie-and-freddies-role-in-the-crisis.html

Here’s the central thesis of the far right about Fannie Mae and Freddie Mac. It is taken from the web site: The Neville Awards (as in Neville Chamberlain), which gives “awards” to Democrats for their cowardice and other mortal and venal sins. This particular article claims that the damnably clever Democrats, while the Republicans controlled the Presidency, House, Senate, Supreme Court, and all the regulatory agencies, pulled off a deliberate plan to destroy the economy in order to elect Obama. “Obama, Fannie Mae & Freddie Mac – How the Democrats Brought Down the Economy in Time to Elect Obama.”

The author summarized his thesis in two sentences. “Fan and Fred and the Problem of Narrative-The GSEs don’t fit the left’s story about how greedy bankers caused the financial crisis. That’s why they haven’t been reformed.” Actually, Fannie and Freddie are perfect fits for the accurate narrative of what caused this financial crisis (and the Enron-era crisis and the S&L debacle) – epidemics of “accounting control fraud.” The right has simply forgotten that Fannie and Freddie were controlled by “greedy bankers.” Fannie and Freddie were privately owned and privately managed. George Akerlof and Paul Romer explained their fraud scheme in their famous 1993 article (“Looting, the Economic Underworld of Bankruptcy for Profit”). Crucially, they explained that accounting control fraud is a “sure thing.” It will make the controlling officers wealthy and it will do so promptly.
The Bush administration’s regulators at the SEC and OFHEO (which regulated Fannie and Freddie in that era) explicitly charged that Fannie’s senior officers caused it to engage in accounting and securities fraud for the express purpose of maximizing those officer’s bonuses. The relevant paragraphs of the 2006 SEC complaint against Fannie stated:

22. Management’s decisions to book an amount significantly less than the total calculated catch-up amount and to institute the two accounting adjustments in the fourth quarter of 1998 resulted in the Company not only exceeding Wall Street expectations, but also hitting the earnings per share (“EPS’) target necessary to trigger maximum bonuses.

23. Under the Company’s Annual Incentive Pool (“AIP”) for 1998, an EPS figure of $3.13 would trigger minimum bonuses, an EPS figure of $3.18 would trigger the target bonus, and an EPS figure of $3.23 would trigger maximum bonuses.

24. Without these improper accounting adjustments, Fannie Mae’s management could have received substantially smaller bonuses (based on either a pool of only $17.3 million or only $8.6 million) or no bonuses at all. For example, prior to the 1lth-hour reversal of suspense items, EPS for the year was $3.2285. While this figure exceeded Wall Street estimates of $3.22, it fell short of the $3.23 EPS figure required to trigger maximum bonus payouts. After the $3.9 million reversal of suspense items, EPS for the year was $3.2309, which triggered a maximum AIP bonus pool for management totaling $27.1 million. If Fannie Mae had recorded the full catch-up amount as initially calculated, its EPS would have been $3.10 for year-end 1998, a figure below the minimum threshold for bonuses under the AIP.

25. By fraudulently failing to book the full amount of catch-up adjustment in the fourth quarter of 1998, Fannie Mae issued financial statements that were materially false and misleading. On January 14, 1999, Fannie Mae publicly issued its financial statements for the period ending December 3 1, 1998, which overstated pre-tax earnings by 4.3% and net interest income by 4.9%. Moreover, the Company failed to disclose that these figures had been intentionally manipulated to trigger management bonuses.

Similarly, the SEC has charged that Fannie and Freddie’s controlling officers caused the firms to make deceitful statements in violation of the securities laws during the ongoing crisis. Fannie and Freddie’s managers bought enormous amounts of endemically fraudulent liar’s loans for the same reasons that the investment banks did – it maximized their bonuses. For a fraudulent purchaser of loans, the “recipe” for optimizing looting has four ingredients:

Grow like crazy by
Purchasing crappy loans at a premium yield
While employing extreme leverage, and
Providing only grossly inadequate allowances for loan and lease losses (ALLL)

There are two things that were obviously special about Fannie and Freddie. First, Fannie and Freddie initially (Freddie: 1998 – 2003; Fannie: 1998 – 2004) followed a different accounting fraud strategy (and used opposite tactics in implementing that strategy) that was designed to “skim” profits rather than to loot. The strategy was to take serious interest risk by rapidly growing their portfolio of loans. Fannie and Freddie normally buy mortgages, repackage them as mortgage backed securities (MBS), and sell the MBS to others. Fannie and Freddie began to keep huge amounts of loans rather than selling them through MBS (or even “purchasing” their own MBS from themselves). The idea was to gamble on interest rate risk. If they won the bet the managers would get rich through bonuses. If they lost the bet they would commit accounting fraud to hide the losses and get rich through bonuses. Fannie bet that interest rates would increase. Freddie bet they would fall. Rates fell. Fannie used accounting fraud to hide the real losses in order to maximize their bonuses. Freddie committed accounting fraud to hide its (real) profits in the form of “cookie jar reserves” that it could draw on (illegally) in future time periods in order to claim profits (fictionally earned in that quarter) in order to report sufficient profit to maximize their bonuses...Second, when the SEC and OFHEO discovered their initial accounting fraud schemes in 2003 (Freddie) and 2004 (Fannie) it led to OFHEO, in 2005 and 2006, severely restricting how much they could grow their portfolio. Fannie and Freddie could no longer use their initial fraud strategy, so their managers shifted to a variant of the looting recipe. They could no longer grow “like crazy,” but they could ensure that a dramatically increased share of the mortgages they caused Fannie and Freddie to purchase would have premium, nominal yields. (The real yield, of course, was sharply negative, but if one ignores the inevitable losses and provides only a trivial ALLL the nominal yield was certain to surge quickly under this looting strategy. It is no coincidence that Fannie and Freddie begin their massive purchases of nonprime loans after their original fraud strategy was blocked...MUCH MORE DETAIL...CONCLUSIONS:

The central point that Republicans and Democrats miss is that Fannie and Freddie were private. They had no express federal guarantee. They failed because, like the failed investment banks, they were looted by greedy bankers – their own officers. It was their controlling officers who structured the perverse compensation incentives that made accounting control fraud a “sure thing.” The identification of some of their employees with the public interest reduced, not increased, their losses compared to investment bankers who deride the entire concept of the public interest. Many of Fannie and Freddie’s employees and even some their important officers identified sufficiently with the public interest that they resisted the total destruction of underwriting. That reduced the Fannie and Freddie bailout by hundreds of billions of dollars. Fannie and Freddie were bailed out not because they were the “government” but because they were considered systemically dangerous institutions (SDIs). A financial institution is bailed out not because it is the “government” but because it is an SDI. Citicorp’s general creditors have been bailed out by governmental interventions three times not because it is the government but because it is an SDI. It is true that we do not call Citicorp a Government Sponsored Enterprise (GSE) – but we should, because that is the truth. All the SDIs are in fact GSEs. Perhaps if we follow Camus’ advice and begin to call a pestilence by its correct name we can get past some of the silly partisan debates and stop the plague. Any “too big to fail” financial institution poses a systemic risk to the global economy, makes “free” markets impossible, and poses a grave threat to democracy. Let’s (1) begin to call them SDIs – and GSEs, (2) forbid them to grow, (3) order them to shrink within five years to the point that they no longer pose a systemic risk (which will also make them far more efficient), and (4) regulate them ultra-intensively until they shrink.

[Demeter]

20. Gupta Gets Two Years for Leaking Inside Tips

http://online.wsj.com/article/SB10001424052970203897404578077050403577468.html

Former Goldman Sachs Group Inc. director Rajat Gupta was sentenced to two years in federal prison for leaking corporate secrets about the bank to a hedge fund at the height of the financial crisis.

The prison term imposed by U.S. District Judge Jed Rakoff in Manhattan marks a nadir for Mr. Gupta, who became the most prominent figure caught in the push against insider trading by criminal authorities. He was implicated in 2010 in the investigation of former Galleon Group chief Raj Rajaratnam, his friend and business associate.

His tip about Berkshire Hathaway Inc.'s BRKB +0.24% impending investment to shore up Goldman during the crisis was "disgusting in its implications" and "a terrible breach of trust," said Judge Rakoff before he handed down the sentence. He added: "Others similarly situated to the defendant must…be made to understand that when you get caught, you will go to jail."

The judge also ordered Mr. Gupta, the former head of McKinsey & Co., the global consulting firm, to pay a $5 million fine and said he would face one year of supervised release after finishing his prison term. Prosecutors had asked for a term of up to 10 years. He is appealing his conviction. There is no parole, but defendants usually serve only 85% of their sentences, so Mr. Gupta could be out in less than 21 months.

MORE

[Demeter]

21. Occupy Goldman Sachs

https://www.facebook.com/OccupyGoldmanSachs

An occupation has sprung up outside of Lloyd Blankfein's house in NYC- the CEO of Goldman Sachs...THEY CALL BLANKFEIN "LORD BLANKCHECK"

WELL, IT'S BETTER THAN GOD'S MINI-ME...

TOO BAD IT'S NOT BLANKFINE

[Demeter]

28. Greg Smith And Goldman Sachs

http://jessescrossroadscafe.blogspot.com/2012/10/greg-smith-and-goldman-sachs.html

"Ad hominem (also called personal abuse or personal attacks) usually involves insulting or belittling one's opponents in order to attack their claims or invalidate their arguments, but can also involve pointing out true character flaws or actions that are irrelevant to the opponent's argument. This is logically fallacious because it relates to the opponent's personal character, which has nothing to do with the logical merit of the opponent's argument."

...the absolute trashing and personal attacks on Greg Smith in the past week that were orchestrated by Goldman and supported, heavily, by the US financial networks got my attention. Generally ad hominem attacks are used by those who consider the facts of the case to be dangerous ground, and wish to do anything that they can to avoid discussing them. So instead they seek to discuss the person bringing them to light.

The 'news channels' do have not spent much time discussing what Greg Smith is saying, but instead turn their focus to discrediting Greg Smith personally as a loser, a fool, a person who was naive to be surprised by the ruthless predatory culture on Wall Street. He was disgruntled because he did not get a raise, and so has an ax to grind.

The media are working from the talking points memos released by Goldman, and a growing cultural disposition against whistleblowers as being inherently disloyal malcontents.

The rationales in favor of Goldman quickly take on the character of the schoolyard. Everyone does it on Wall Street, and singling out Goldman isn't fair. And what was Greg Smith expecting? Everyone knows Wall Street is predatory and will do whatever it takes, even abuse their customers and make millions out of it. And if the customers are dumb enough to fall for it, they deserve it. Don't be a fool like him, be a sophisticate and move along....

[Tansy_Gold]

52. I will update the Wall of Shame for Monday!

Of course, I'm sure there will be no lasting significant damage to Mr. Gupta's personal finances. . . . . that might actually give some of these slime buckets a reason to reconsider before they do this shit.

[xchrom]

23. Gordhan Scrambles to Reassure Investors on S. Africa Budget

http://www.bloomberg.com/news/2012-10-25/gordhan-scrambles-to-reassure-investors-on-south-african-budget.html

South African Finance Minister Pravin Gordhan will have to do more than just keep a lid on spending to reassure investors spooked by the worst mining strikes since the end of apartheid, said economists from Johannesburg to London.

While Gordhan, 63, pledged to freeze spending targets for the first time since 1998, he failed to say in his mid-term budget yesterday how he will address the fiscal burden of an unemployment rate that’s headed for 25 percent. He may also struggle to contain debt levels as slower economic growth curbs tax revenue. Fitch Ratings said today rising debt will push interest payments above the median for its BBB credit rating.

“It is a conservative and entirely predictable budget but it doesn’t offer any bold steps,” George Glynos, an analyst at ETM Analytics in Johannesburg, said in a phone interview yesterday. “He talks about fiscal discipline but I don’t really see that.”

The government is under increased scrutiny as labor unrest adds to pressure on the budget and the ruling African National Congress pledges “radical” shifts at its December leadership conference. Slowing growth and rising social tensions have already sparked the first downgrades since the end of apartheid in 1994, with Moody’s Investors Service and Standard & Poor’s cutting the nation’s ratings in the past month. Fitch will give its review of the country early next year, the company said in a statement.

[xchrom]

24. Ballooning Debt Costs Crowding Out Police: South Africa Credit

http://www.bloomberg.com/news/2012-10-26/ballooning-debt-costs-crowding-out-police-south-africa-credit.html

South Africa’s debt-service costs, the fastest growing area of government expenditure, are threatening to undermine spending on police, housing and schools as falling tax receipts add to deepening strains on the budget.

Interest payments on government debt will be 88.9 billion rand ($10.2 billion) in the year through March 2013, second only to welfare payments, according to the National Treasury. Costs will climb 8.9 percent annually over the next three years, compared with 8.2 percent in total spending. Debt will climb to 41.3 percent of gross domestic product this fiscal year from 39.4 percent last year, versus 8.3 percent for similarly-rated Russia, 35.4 percent for Mexico and 54.2 percent for Brazil.

Finance Minister Pravin Gordhan is being forced to finance a rising debt burden, which may lead to spending curbs on social and infrastructure programs, as he seeks to shrink the deficit, forecast to be 4.8 percent of GDP this year. Moody’s Investors Service and Standard & Poor’s cut the nation’s credit rating in the past month amid concern about government finances. Bonds fell after his budget yesterday, sending yields on benchmark nine-year securities to the highest in more than a week.

“This budget reinforces our underweight stance on local bonds,” Esther Law, the London-based director of emerging- market strategy at Societe Generale SA (GLE), said by phone yesterday. “I don’t think the risk of a downgrade is any lower than before. If anything, the budget is underlining the rating agencies’ worries.”

[Demeter]

27. Oldest Auschwitz survivor dies aged 108

JUST IN TIME FOR A NEW ROUND (UP)

http://www.abc.net.au/news/2012-10-23/oldest-auschwitz-survivor-dies-aged-108/4328042

The oldest known survivor of the Nazi German death camp of Auschwitz-Birkenau, Antoni Dobrowolski, has died at the age of 108. Official Auschwitz historian Adam Cyra, who works at the Auschwitz-Birkenau memorial and museum, said Mr Dobrowolski died in the town of Debno, in north-west Poland.

Mr Dobrowolski, a primary school teacher, ran secret classes during Germany's brutal World War II occupation of Poland, when the local population was barred from receiving an education. Arrested in 1942 by the Nazis' Gestapo secret police, he was first sent to Auschwitz, in annexed Polish territory, and later transferred to Gross Rosen and Sachsenhausen, both in Germany. He survived until the latter camp was liberated by Soviet and Polish forces in 1945.

Returning to Poland after the war, he first ran a primary school in Debno and then a secondary school...

A SALUTE TO SURVIVORS EVERYWHERE

[Demeter]

30. See you all on the Weekend Thread

I had a topic in mind, but now I'm having doubts.

Any suggestions of something timely, as opposed to timeless?

Our Indian summer lasted 3 days. Back to the drizzle and gloom and chill.

Gas was still $3.20 last night...

[xchrom]

31. hurricane sandy/frankenstorm? -- that's all i got.

[Demeter]

35. Well, it's not going to hit during the weekend, is it?

Great storms might be good--nice and ominous and metaphoric and all that...

Maybe it will hit--it seems to be off the SE coast now.

Okay.

[xchrom]

36. I feel bad for the kids if it screws up Halloween. Nt

[Fuddnik]

45. Halloween is arriving, storm or not.

Millions of homes will be invaded over the next week with the "Devils Treat". Candy Corn. Torture from Hell itself.

My wife is still punishing me. She left a bowl of that evil shit, right smack-dab in the middle of the dining room table, knowing that I'll grab a few "kernels" every time I walk by it.

Pure evil.

[xchrom]

32. STUDY: FLOOD OF MONEY LEAVING CHINA

http://hosted.ap.org/dynamic/stories/A/AS_CHINA_MONEY_OUTFLOW?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2012-10-26-06-48-49

BEIJING (AP) -- Chinese investors evaded government controls to move more than $600 billion out of the country last year and the outflow is increasing, fueling economic and political risks as communist leaders prepare for a handover of power, a Washington-based monitoring group says.

The study by Global Financial Integrity gives backing to anecdotal signs of huge, unreported movements of Chinese money out of the country. Experts say the outflows are driven by public frustration with a banking system that subsidizes state companies at the expense of savers and by businesses profiting from loopholes in the government's pervasive economic controls.

Chinese companies are widely believed to move money abroad both to invest and to "round trip" back into the country disguised as foreign investment to win tax breaks and other incentives. Chinese families move money abroad to gain a better return than they can from state banks that pay low deposit rates.

Last year's outflow was part of a $3.8 trillion flood of capital that left China over 11 years, Global Financial Integrity said. It said the amount rose from $172.6 billion in 2000 to $602.9 billion in 2011.

[xchrom]

42. Study: Flood of money being smuggled out of China, raising possible economic risks

http://www.washingtonpost.com/business/study-flood-of-money-being-smuggled-out-of-china-raising-possible-economic-risks/2012/10/26/b22fd1f4-1f2c-11e2-8817-41b9a7aaabc7_story.html

BEIJING — Chinese investors evaded government controls to move more than $600 billion out of the country last year and the outflow is increasing, fueling economic and political risks as communist leaders prepare for a handover of power, a Washington-based monitoring group says.

The study by Global Financial Integrity gives backing to anecdotal signs of huge, unreported movements of Chinese money out of the country. Experts say the outflows are driven by public frustration with a banking system that subsidizes state companies at the expense of savers and by businesses profiting from loopholes in the government’s pervasive economic controls.

Chinese companies are widely believed to move money abroad both to invest and to “round trip” back into the country disguised as foreign investment to win tax breaks and other incentives. Chinese families move money abroad to gain a better return than they can from state banks that pay low deposit rates.

Last year’s outflow was part of a $3.8 trillion flood of capital that left China over 11 years, Global Financial Integrity said. It said the amount rose from $172.6 billion in 2000 to $602.9 billion in 2011.

[xchrom]

33. US ECONOMIC GROWTH IMPROVES TO 2 PCT. RATE IN Q3

http://hosted.ap.org/dynamic/stories/U/US_ECONOMY_GDP?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2012-10-26-08-31-57

WASHINGTON (AP) -- The U.S. economy expanded at a slightly faster 2 percent annual rate from July through September, buoyed by an uptick in consumer spending and a burst of government spending.

The Commerce Department says growth improved from the 1.3 percent rate in the April-June quarter.

The pickup in growth may help President Barack Obama's message that the economy is improving. Still, growth remains too weak to rapidly boost hiring. And the 1.74 percent rate for 2012 trails last year's 1.8 percent growth, a point GOP nominee Mitt Romney will emphasize.

The report is the last snapshot of economic growth before Americans choose a president in 11 days.

[DemReadingDU]

34. Video: Australia Vic financial group collapses owing $660m

10/26/12 Vic financial group collapses owing $660m video

Investors have been caught up in the collapse of the Victorian-based Banksia Securities financial group, which owes $660 million. Nervous investors, including farmers and workers in regional Victoria, will have to wait to find out what will happen to the hundreds of millions of dollars that are tied up in the company's collapse. The firm McGrathNicol has been appointed as receivers.

They have frozen the money and interest payments while there is an urgent review of Banksia's books.

more...
http://www.abc.net.au/news/2012-10-26/victorian-financial-group-collapses-owing-24660m/4334796?section=sa

[Po_d Mainiac]

40. MFG Redux n/t

[xchrom]

37. GDP BEATS EXPECTATIONS, RISES 2.0%

http://www.businessinsider.com/q3-gdp-2012-10

Q3 GDP is out.
The number beat expectations, rising 2.0 percent versus 1.8 percent.
Personal consumption rose 2.0 percent, missing expectations of 2.1 percent.
Core PCE increased 1.3 percent, right in line with expectations.
Here are the key paragraphs:
The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), federal government spending, and residential fixed investment that were partly offset by negative contributions from exports, nonresidential fixed investment, and private inventory investment. Imports, which are a subtraction in the calculation of GDP, decreased.
The acceleration in real GDP in the third quarter primarily reflected an upturn in federal government spending, a downturn in imports, an acceleration in PCE, a smaller decrease in private inventory investment, an acceleration in residential fixed investment, and a smaller decrease in state and local government spending that were partly offset by downturns in exports and in nonresidential fixed investment.


Read more: http://www.businessinsider.com/q3-gdp-2012-10#ixzz2APPeO9tT

[xchrom]

41. Stunning NYT Report Explains How Vikram Pandit Was Really Fired From Citi

http://www.businessinsider.com/how-vikram-pandit-was-ousted-from-citi-2012-10



Jessica Silver-Greenberg and Susanne Craig at The New York Times have a fantastic account of how Vikram Pandit was forced out as Citi CEO by new chairman Michael O'Neill.

The report explains how Pandit was completely blindsided on October 15, when he walked into O'Neill's office, on the same day he reported strong earnings.

...Mr. Pandit, the chief executive of Citigroup, was told three news releases were ready. One stated that Mr. Pandit had resigned, effective immediately. Another that he would resign, effective at the end of the year. The third release stated Mr. Pandit had been fired without cause. The choice was his.
The abrupt encounter, described by three people briefed on the conversation, included a terse comment by the chairman, Michael E. O’Neill: “The board has lost confidence in you.”

Obviously, Pandit chose to resign right away.
Though Pandit and the company described the choice as "his" in the immediate aftermath of his departure, it was clear from the fact that Pandit said he didn't want to be a "lame duck" that his time was soon up.


Read more: http://www.businessinsider.com/how-vikram-pandit-was-ousted-from-citi-2012-10#ixzz2APYIL0ua

[xchrom]

43. Senators call for an end to Volcker rule delay

http://www.washingtonpost.com/business/economy/senators-call-for-an-end-to-volcker-rule-delay/2012/10/25/97279e08-1ebb-11e2-9746-908f727990d8_story.html


Peter Foley/BLOOMBERG - Mary Schapiro, chairman of the U.S. Securities and Exchange Commission, speaks at the Securities Industry and Financial Markets Association (SIFMA) annual meeting in New York on Tuesday.

Democratic lawmakers on Thursday criticized regulators for taking too long to finalize the Volcker Rule, a controversial provision passed in 2010 aimed at restricting banks from making risky investments with their own money.

People familiar with the matter say a rift has developed between bank regulators and the nation’s top markets regulator over how the rule should be shaped. That could delay a final draft beyond the end of the year, an informal deadline set by the Obama administration, those people said.


Banking regulators have crafted an outline of the proposal, showing the most progress they have made on the complex rule, the people said, speaking on condition of anonymity because the draft was not final.

But these officials face opposition from the Securities and Exchange Commission. Now the banking regulators must decide whether to move ahead on their own and risk damaging their relationship with the SEC or accept further delays.

[TOC]

44. QE3

when should this QE3 start to kick in? shall it only benefit the banks again...

[Fuddnik]

46. Oh goody! A new cruise ship!

[Demeter]

49. It's already over

They tried to pump up the market for a new high....and it petered out. Everything is collapsing now, like a shaken souffle.

I don't think we are going to see anything anywhere from QE3.

[DemReadingDU]

51. QE wasn't designed for the 99%

QE designed to benefit the 1%

[Demeter]

50. Whoa, Nelly! Somebody must have gotten stuck with the check after lunch

Look at that free fall DOW!