STOCK MARKET WATCH, Wednesday 2 August

[ozymandius]

Wednesday August 2, 2006

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 903 DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2048 DAYS
WHERE'S OSAMA BIN-LADEN? 1748 DAYS
DAYS SINCE ENRON COLLAPSE = 1709
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 6
Enron execs conveniently deceased = 3
Other Arrests of Execs = 54


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




AT THE CLOSING BELL WHEN BUSH TOOK OFFICE on January 22, 2001
Dow - 10,578.24
Nasdaq - 2,757.91
S&P 500 - 1,342.90
Oil - $27.69/bbl
Gold - $266.70/oz.

AT THE CLOSING BELL ON July 31, 2006

Dow... 11,125.73 -59.95 (-0.54%)
Nasdaq... 2,061.99 -29.48 (-1.41%)
S&P 500... 1,270.92 -5.74 (-0.45%)
Gold future... 658.80 +12.00 (+1.82%)
30-Year Bond 5.07% -0.00 (-0.02%)
10-Yr Bond... 4.98% -0.01 (-0.10%)






GOLD, EURO, YEN, Loonie and Silver


PIEHOLE ALERT

Heads Up!
Preliminary info on appearances by Bush & Co. throughout the country. Details & links are added as they become available so check back. And if you know more, are organizing something, or would like to, contact [e-mail]

For information on protests and other actions Citizens For Legitimate Government

[ozymandius]

1. WrapUp by Frank Barbera

Bear Gaining Traction

Stocks closed lower on Tuesday with the S&P 500 losing 5.74 index points or .45% to close at 1270.92, with the DJIA down 59.95 index points at 11,125.73 and the NASDAQ falling 29.28 index points or 1.40% to close at 2062.19. What is striking about the stock market behavior in recent weeks is the inability of badly oversold stocks to find any kind of a trading rally, and in many cases, any type of solid bottom. Even more to the point, is the fact that selling within the broad market has been indiscriminate in that virtually every major stock sector has seen its shares of disasters, or what I call “airpockets” stocks just blowing up in one day.

Last week, on a modest EPS miss, healthcare insurer Aetna Life collapsed 20% in one day, and since then has not managed to find even a single advancing session. Along with Aetna, Omnicare, Varian, Healthnet and Coventry have all experienced frightening declines. Even more telling, all of these supposedly “defensive stocks” sell at very low P/E and PEG multiples, at levels where they should be viewed as bargains. I start this with the obscure discussion of healthcare stocks to make a larger point, namely, that selling pressure appears to be gaining ever increasing control within the market. Just look at Tech leaders --- Qualcomm, Motorola, EBAY, AMZN or YHOO. What do you see on these charts? In one word, carnage. How about EMC, JBL, SANM, TXN, INTC or AMD in the broader tech space? Again, carnage.

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To those of have never lived through a stock market “bear” – the outcome is usually pretty horrible. In the case of today’s stock market, major averages like the S&P 500 have actually held up very well despite widespread damage on the broad tape. Looking at the broad A/D Line, we see that despite the recent relatively decent percentage recovery by the S&P, the A/D Line has hardly bounced and is still just barely inside its declining 200 day lower band. This is not a good sign for the primary trend of the market.

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For now, what “leadership” remains in the stock market is grounded in highly defensive area’s such as Energy, pockets of Healthcare, and Consumer Staples such as Food and Beverages. If the history of bear markets is indeed repeating, the normal pattern would be to see only the Energy and Gold Stocks holding up into the next phase of the bear (the breakdown phase for the S&P) and at some point down the road, possibly only the Gold Stocks holding up, as Gold Stocks have a decent history at doing well in bear markets.

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

[ozymandius]

2. One report today -

10:30 AM Crude Inventories 07/28

[54anickel]

32. Crude backs off highs after supply data

http://www.marketwatch.com/news/story/story.aspx?guid=%7B27632941-CD18-4483-A416-3A0A8B001119%7D

NEW YORK (MarketWatch) -- Crude-oil prices backed off their highs Wednesday after the latest weekly supply data. Crude oil inventories for the week ended July 28 fell 1.8 million barrels compared to the previous week. The estimated range was for a decline of 1 million barrel to a gain of 980,000 barrels. Gasoline supplies inched lower by 100,000 barrels last week, far less than the decline of 1.1 million to 2 million estimated. Distillate inventories, which include winter heating oil, rose by 700,000 barrels. Estimates were for distillates to come in little changed, with some analysts seeing a rise of 600,000 barrels. Crude for September delivery was last up 99 cents at $75.90 after climbing above $76 ahead of the data. Gasoline futures were up 4.88 cents at $2.3250 a gallon. Heating oil was up 4.16 cents at $2.1220 a gallon.

[54anickel]

33. Crude Oil Inventories Decline

http://www.123jump.com/economy-story/Crude-Oil-Inventories-Decline/18559/

U.S. crude oil refinery inputs averaged 15.5 million barrels per day during the week ending July 28, down 301,000 barrels per day from the previous week''s average. Refineries operated at 90.8 percent of their operable capacity last week. Gasoline production decreased slightly last week compared to the previous week, averaging over 9.0 million barrels per day, while distillate fuel production remained relatively unchanged, averaging over 3.8 million barrels per day.

U.S. crude oil imports averaged over 10.4 million barrels per day last week, down 76,000 barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged over 10.3 million barrels per day, an increase of 94,000 barrels per day from the comparable four weeks last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged over 1.3 million barrels per day. Distillate fuel imports averaged 473,000 barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) fell 1.8 million barrels compared to the previous week. However, at 333.7 million barrels, U.S. crude oil inventories remain well above the upper end of the average range for this time of year. Total motor gasoline inventories inched lower by 0.1 million barrels last week, and are near the middle of the average range.

Distillate fuel inventories rose by 0.7 million barrels and are above the upper end of the average range for this time of year. A large increase in ultra-low sulfur diesel fuel was more than offset by a large decrease in regular diesel fuel (15 ppm to 500 ppm sulfur), while high-sulfur distillate fuel (heating oil) inventories rose by 1.7 million barrels. Total commercial petroleum inventories increased by 5.2 million barrels last week, and remain above the upper end of the average range for this time of year.

Total products supplied over the last four-week period has averaged nearly 20.8 million barrels per day, or 0.5 percent less than averaged over the same period last year. Over the last four weeks, motor gasoline demand has averaged 9.6 million barrels per day, or 1.6 percent above the same period last year. Distillate fuel demand has averaged over 4.1 million barrels per day over the last four weeks, or 7.0 percent above the same period last year. Jet fuel demand is down 2.1 percent over the last four weeks compared to the same four-week period last year.

[ozymandius]

3. Oil rises amid hurricanes, falling inventories

SINGAPORE (Reuters) - Oil edged higher on Wednesday as a storm was forecast to head for the cluster of oil production rigs in the Gulf of Mexico this week and gasoline stocks in the United States were expected to fall.

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U.S. light, sweet crude for September delivery rose 35 cents to $75.26 a barrel by 0715 GMT, rising for a third session and extending Tuesday's 51-cent gain. London ICE Brent crude rose 39 cents to $76.28 a barrel.

Analysts said prices would be driven more by fundamentals that could trigger supply disruptions such as the looming hurricane season and falling U.S. inventory levels than political tensions in the next one to two months.

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U.S. gasoline stocks are forecast to have fallen by 1.6 million barrels to 211 million barrels for the week ended July 28, having consistently fallen over the past three weeks, a Reuters survey showed.

more

[ozymandius]

4. Gasoline's fledgling rivals: the race to power your car

The alternative fuels race is on. Again.

After a 20-year hiatus, ethanol, methanol, biodiesel, electricity, and other potential fuels are pushing to challenge king gasoline at the pump.

But the race is a tricky one. The successful fuel not only has to be cheaper than gasoline, it has to be produced in huge quantities and survive future swings in gas prices. There's another potential hurdle: Environmentalists want alternatives with smaller greenhouse-gas emissions than gasoline.

So, it's not clear that any alternative fuel will cross the finish line - let alone beat gasoline - anytime soon. Analysts worry that, in an eerie repeat of the 1980s, alternative fuels will get going just as the price of oil falls to a level where they can't compete.

http://www.csmonitor.com/2006/0801/p01s02-usec.html

[n2doc]

13. Suuuure...just keep believing that oil will go down

While big oil and Bushco rachet it up a few bucks at a time. At this point there are only 2 things I think will cause oil prices to go down significantly (less than 50$/bbl)- Global recession/depression or change of US administration.

[54anickel]

39. Delusional thinking on oil

http://www.iht.com/articles/2006/08/02/opinion/edoil.php

Almost six months to the day after President George W. Bush urged Congress in his State of the Union address to help break America's addiction to imported oil, the Senate approved a bill on Tuesday that would do nothing to cure that addiction and could actually make it worse.

The bill, which would open up 8.3 million acres, or 3.3 million hectares, in the Gulf of Mexico for new energy development, is bad fiscal policy, since one-third of the royalties that would normally accrue to all Americans from drilling in federal waters would flow to just four gulf states. Even as a drilling bill it makes little sense: To placate Florida's senators, it prohibits drilling in offshore areas that are richer in resources than the areas it opens up. And as energy policy it's hopelessly one-sided, encouraging production while ignoring consumption.

After Bush's address in January, the Senate legislative machinery went into overdrive and produced scores of energy-related bills, at least two of which were comprehensive, bipartisan measures aimed at reducing oil consumption by half over the next quarter-century by encouraging energy efficiency and alternative fuels. But Bill Frist, the Senate majority leader, prohibited any changes to this bill, pretty much shutting the door on any grown-up discussion of America's energy future.

more...

[ozymandius]

5. Some Merrill Lynch convictions reversed

DALLAS - A federal appeals court on Tuesday reversed several convictions against four former Merrill Lynch executives found guilty of helping engineer Enron's 1999 sale of mobile power plants to the brokerage to help the energy trader appear to have met earnings targets.

The three-judge panel of the 5th U.S. Circuit Court of Appeals found fault with the government's theory of fraud that led to the wire fraud and conspiracy convictions of James A. Brown, William Fuhs, Daniel Bayly and Robert S. Furst. Bayly is Merrill's former head of investment banking.

The panel also ruled that the evidence was insufficient in Fuhs' case but upheld Brown's perjury and obstruction of justice convictions.

They were among five former executives found guilty of one count of conspiracy and two counts of wire fraud in November 2004 in connection with the sham sale of power barges anchored off the coast of Nigeria.

more

[cosmicdot]

47. 3 judges on the panel: 1 Carter appointee; 1 Reagan; 1 Poppy

http://www.ca5.uscourts.gov:8081/isysquery/irl604f/2/doc

the US Court of Appeals for the 5th Circuit is where up-down confirmed Priscilla Owen sits.


fwiw/fyi

[ozymandius]

6. Toyota, Honda report sales jump in July

DETROIT - Amid steep gas prices, Toyota Motor Corp. rode its reputation for fuel-efficient cars to a double-digit sales increase in July and outsold Ford in the U.S. for the first month ever. Honda Motor Co. also reported robust sales.

U.S. automakers experienced a moribund July as sales plummeted from a year ago, when heavy discounts spurred a near record month for the auto industry.

For General Motors Corp., Ford Motor Co. and DaimlerChrysler AG's Chrysler Group, the steepest declines were in trucks and sport utility vehicles, the high-margin items on which the three companies are heavily dependent. Both Honda and Toyota credited their reputations for fuel efficiency and strength in small cars for boosting them during a period when retail gasoline prices have been near $3 per gallon in most parts of the country.

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Toyota's sales, meanwhile, soared 11.7 percent, with cars jumping 19.8 percent and trucks up 1.3 percent. The company outsold Ford by more than 17,000 vehicles.

more

[ozymandius]

8. Vehicle sales for July stuck in reverse

GM and Chrysler lead 8.5% drop
Total for the year turns negative

A steep drop in showroom business at General Motors and DaimlerChrysler pulled down auto sales across the country last month.

Sales and leases of new cars and light trucks tumbled 8.5 per cent or more than 13,000 units to 141,649 in July from the corresponding 2005 period despite heavy incentives by some manufacturers, industry statistics revealed yesterday.

It marked the second consecutive month of decline and left overall sales for the year down slightly for the first time. Sales for the first seven months have slipped 0.7 per cent from to 957,077 vehicles.

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Industry watchers had expected some drop in July because GM, Ford and DaimlerChrysler had generated huge sales numbers last summer when they gave consumers the same discounts as employees, which were worth thousands of dollars.

more

[54anickel]

20. Big 3 automakers see sharp decline in sales

Truck and sport utility vehicles lead fall; Honda, Toyota post increases

http://www.msnbc.msn.com/id/14136797/

DETROIT - For the first time last month, an American auto buyer was more likely to get behind the wheel of a new Toyota than a new Ford.

It’s hard to read anything into one month’s numbers, and Ford Motor Co.’s year-to-date sales are still ahead of its Japanese competitor’s. But the shift seems to symbolize the recent stumbles of U.S. automakers in the face of rising gas prices and changing views on fuel economy.

Ford, along with General Motors Corp. and DaimlerChrysler AG’s Chrysler Group, is heavily dependent on sales of high-margin sport utility vehicles and other trucks — products that have become less popular lately, as gas prices in most of the country are stuck around $3 a gallon.

All three domestic producers saw double-digit sales declines in July, with the worst decreases in trucks. They blamed the drop on heavy incentives last summer that artificially elevated sales then.:eyes:

more...

[54anickel]

36. Report: Ford Eyes Sale of Ailing Brands

http://www.washingtonpost.com/wp-dyn/content/article/2006/08/02/AR2006080200582.html

DETROIT -- Ford Motor Co., which disappointed Wall Street with a $123 million second-quarter loss, is starting a review of poorly performing units, including Jaguar, with an eye toward possible sale of some operations, according to a published report.

Ford also is considering forming an alliance with other automakers, a move that General Motors Corp. is considering, The Wall Street Journal reported Wednesday. It based the report on unidentified people close to the situation.

"We have nothing to announce at this time," Ford spokesman Tom Hoyt told The Associated Press Wednesday morning.

snip>

According to the report, the Dearborn, Mich.-based automaker is naming former investment banker Kenneth Leet to lead the review of its ailing operations. Leet headed merger and acquisition teams for Goldman Sachs Group Inc. and Bank of America Corp.

The newspaper said the team will consider whether Ford should sell some underperforming brands or seek alliances with other automakers. It said the team also will look at what Ford should do with its financing arm, Ford Credit. The unit's borrowing costs have risen because of Ford's credit downgrades below investment grade.

more...

[ozymandius]

7. Loss sends Burger King shares down

Shares of Burger King Holdings Inc. fell yesterday to their lowest level since the company's initial public offering in May after the world's second-largest hamburger chain posted a fourth-quarter loss in its first earnings report since going public.

The loss for the quarter ended June 30 totalled $9 million (U.S.), or 7 cents per share, compared with a profit of $2 million, or 2 cents per share, during the same period last year.

The Miami-based company said the results were hurt by a $30 million management termination fee related to its May initial public offering. Excluding one-time charges, the company reported it had an adjusted profit of 21 cents a share.

Chief executive John Chidsey remained upbeat in a conference call with analysts, saying "our momentum continues and we're in a great position for fiscal year '07," though investors didn't seem convinced.

more

A Booger King that I pass each morning en route to work has just gone out of business. Not that it really bothers me - considering the absolutely evil damage this company has caused to the Amazon rain forest.

[ozymandius]

9. Kodak: Is This the Darkest Hour?

For investors, the picture at Eastman Kodak (EK)—once one of America's premier blue chips—keeps getting darker. On Aug. 1, the already depressed stock plunged some 14%, to $19.20, after the company reported it lost $282 million in the second quarter, nearly double the $155 million it lost a year earlier. Kodak's stock is now trading at levels last seen in 1980, when the overall stock market was trading at a small fraction of today's levels.

But Chief Executive Antonio Perez argues the market is missing the big picture. The Spanish-born Perez, who loves to tell colorful stories to make his point, compares Kodak's turnaround to taking a reluctant horse out for a ride. "When you ride the horse out of the stable," he says, it moves slowly. "But when it senses you are going back to the stable, it starts to trot and then gallop."

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NO MORE DOWNSIZING. Is he right, or is this just wishful thinking? To his credit, Perez makes a powerful case that by some key measures—including Kodak's heavy debt load and its crushing restructuring charges—things will soon improve for the Rochester (N.Y.)-based giant. But the market is likely to remain unimpressed until Perez delivers on his promises of significant earnings from Kodak's burgeoning digital businesses. So far, it hasn't (see BusinessWeek.com, 1/31/06, "Kodak's Comeback: Still Undeveloped"). In fact, in the second quarter, Kodak made a mere $4 million on its $1.8 billion in digital revenues.

The strongest argument made by Perez is that Kodak is nearing the end of the painful downsizing of its film business. With film sales in freefall, Perez aims to cut Kodak's film assets by 75% to some $1 billion by the end of next year. The huge restructuring charges associated with closing factories and laying off up to 27,000 employees have accounted for most of Kodak's losses. In the second quarter, for instance, restructuring accounted for $214 million of Kodak's net loss of $282 million. And this year, Perez estimates the restructuring tab will total $1.15 billion.

more... complete with more photography-related puns

[ozymandius]

10. Treasury Secretary Says He Backs Strong Dollar

NEW YORK — U.S. Treasury Secretary Henry M. Paulson Jr., making his public debut as the Bush administration's top economic spokesman, said Tuesday that soaring costs of federal entitlement programs were a key economic threat and that he supported a strong U.S. dollar.

Speaking at Columbia University's business school, Paulson said that it appeared U.S. economic growth was slowing to a more sustainable pace and that it was vital to maintain open markets that would help keep the economy growing.

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"I believe that a strong dollar is in our nation's interest and that currency values should be determined in open and competitive markets in response to underlying economic fundamentals," Paulson said at Columbia.

Those markets had other ideas about the dollar Tuesday: They pushed the currency to an eight-week low against the euro in New York. The euro ended at $1.282, up from $1.277 on Monday. The dollar also slipped against the yen, to 114.52 from 114.56.

more

[ozymandius]

11. Have a great day folks!

:donut: :donut: :donut:

Have fun at the Casino.

Ozy :hi:

[Demeter]

12. That Cartoon Is Way Too Subtle

I had to stare at it for minutes until I realized that the peace dove had dropped an egg on Condi.

[54anickel]

14. Dollar Watch

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

Last trade 85.14 Change +0.19 (+0.22%)

Settle Time 15:00 Open 84.96

Previous Close 84.95 High 85.20

Low 84.91 2006-08-02 08:34:33, 30 min delay


The September Dollar was slightly higher due to short covering overnight as it consolidates some of this week’s decline. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near- term. If September extends the decline off July’s high, the reaction low crossing at 84.42 is the next downside target. Overnight action sets the stage for a steady to higher opening in early-day session trading.

The September Euro was lower overnight as it consolidates some of Tuesday’s rally but remains above the 20-day moving average crossing at 127.421. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near-term. If September extends the rally off July’s low, the reaction high crossing at 129.50 is the next upside target. Closes below last Wednesday’s low crossing at 126.03 would signal that a short-term top has been posted. Overnight action sets the stage for a steady to lower opening in early-day session trading.

The September Japanese Yen was slightly lower overnight as it consolidates some of the rally off July’s low. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near- term. If September extends last week’s rally, the early-July high crossing at .8901 is the next upside target. Overnight action sets the stage for a steady to lower opening in early-day session trading.


U.S. Dollar Reversed Tuesday's Losses Against Yen Early Wednesday
http://www.tradingmarkets.com/tm.site/news/FOREX%20NEWS/327834/

RTTNews) - The greenback advanced against the Japanese yen during early New York trading Wednesday. The U.S. currency fell to a 3-week low against the yen of about 114.25 during the overnight period. This came amid the release of Japanese monetary base data and comments by BoJ board member Mizuno indicating that the central bank will adjust rates at a slow pace. However, the dollar gained momentum against its Japanese counterpart, showing steady gains for several hours. As of 7:10 am ET, the greenback was worth 114.63 yen.

This came as personal spending and income data released Tuesday increased speculation that the Fed may lift rates next week. The market now turns toward the release of U.S. MBA mortgage applications and ADP employment change.


GLOBAL MARKETS-Dollar hits month low on rate views, oil firm
http://today.reuters.com/investing/financeArticle.aspx?type=economicNews&storyID=2006-08-02T093652Z_01_L0268564_RTRIDST_0_MARKETS-GLOBAL-WRAPUP-3.XML

LONDON, Aug 2 (Reuters) - The dollar hit a one-month low on Wednesday on expectations the Federal Reserve will soon call a halt to its monetary tightening campaign, while oil and gold prices remained firm amid ongoing violence in the Middle East.

European stocks rallied as another largely positive batch of corporate results helped allay concerns about high raw material costs and an expected cooling in the U.S. economy.

Data on Tuesday showing strong U.S. manufacturing growth and a rise in the Fed's favoured inflation gauge to a four-year high did little to dissuade markets that the U.S. central bank will end a two-year run of rate rises when it meets next week.


In contrast, the Reserve Bank of Australia raised rates to 6 percent on Wednesday and the European Central Bank is widely tipped to follow suit on Thursday, increasing its benchmark rate to 3 percent.

"Outside of the chance of a Fed hike next week, the dollar will probably continue to weaken over the short term, especially with the ECB likely to hike tomorrow," said Geoff Kendrick, currency strategist at Westpac. The Bank of England is also meeting on rates and is favoured to leave borrowing costs unchanged at 4.5 percent on Thursday but markets expect it to tighten by the end of the year.

more...

[54anickel]

16. Forex market doubts strength of Paulson's dollar

http://today.reuters.com/news/newsArticle.aspx?type=reutersEdge&storyID=2006-08-02T081252Z_01_N01443597_RTRUKOC_0_US-MARKETS-FOREX-PAULSON.xml

NEW YORK (Reuters) - Treasury Secretary Hank Paulson's public support for a "strong dollar" on Tuesday failed to fully convince the foreign exchange market, which is now bracing for further weakness in the U.S. currency.

He repeated calls for more "flexibility" in China's currency policy -- a veiled message to allow the yuan to strengthen and the dollar to weaken -- but he also stressed the need for the world's fourth largest economy to make progress on other capital market reforms.

Alan Ruskin, chief international strategist with RBS Greenwich Capital, viewed Paulson's comments on China as slightly softer in tone than predecessor John Snow's, but ultimately leading to the same result: dollar weakness.

"Comments on China included looking for FX flexibility, but giving them time to open their capital markets, is more conciliatory than the tone struck by the Treasury in the past, and to some extent takes immediate pressure off the Chinese to respond," Ruskin said.

"Perversely this may result in a faster Chinese response," he added, implying that China might be more willing to allow the yuan to strengthen if it wasn't under a global spotlight.

more...

[54anickel]

40. Let The Rate Hikes Begin!....Today's Pfenning

http://www.kitcocasey.com/displayArticle.php?id=867

snip>

The RBA's Gov. Ian Macfarlane raised rates 25 BPS (I think it should have been 50 BPS) and left the door open to yet another rate hike before the end of the year with statements like this... "Underlying inflation in the period ahead is likely to exceed previous forecasts. Economic activity remains strong and inflation pressures have increased."

Not bad for a guy that's retiring this month! I've always been a fan of Ian Macfarlane, as he never fell into the trap that the Reserve Bank of New Zealand's Gov. fell into, trying to direct the currency... So... Anyway... The Aussie dollar rallied on not only the rate move but the hawkish words coming from Macfarlane... Oh, and in case you're wondering about his replacement... No worries... It will be his right-hand man for some time now, Glenn Stevens, who I believe will carry on the fight against inflation wisely!

snip>

Yesterday, the euro rose above the 1.28 level on the news that German unemployment had fallen in July... The unemployment rate fell to 10.6% from 10.8%, while it was widely expected to remain flat. In addition, Euro-zone unemployment also fell by more than market expectations in July to 7.8% vs. 7.9% expected. I know these numbers sound very high... But then, the Europeans do not, and I repeat do not, use "Birth/Death ghost model numbers" to inflate the labor picture, like is done here in the U.S.

I talked to a ton of people last week, and while most, if not all, agreed that the dollar is in trouble, there were some concerns about the pace of the depreciation... In other words, people were growing tired of waiting for the next big leg down in the dollar... Well, my mother always told me that good things come to those who wait... Unfortunately, we're going to have to wait a bit longer, as it looks as though the "dog days of summer" have set into the currencies...


snip>

Did you see the quote from the new U.S. Treasury Secretary, Henry Paulson, yesterday? Oh, this is sooooo classic! Out of one side of Paulson's mouth came the "a strong dollar is in the best interest of the U.S." statement... And out of the other side of his mouth came the "The Chinese need to allow the renminbi to become more flexible" statement... CLASSIC!
In case there's any confusion here... By saying he wants the Chinese to allow the renminbi to become more flexible, he's saying that he wants it to get stronger. Mainly vs. the dollar, which would mean a weaker dollar.... Now, we know that Paulson is just another John Snow...

more...

[54anickel]

15. 'Free Market' Ideology Has Killed Thousands in Iraq

http://www.coastalpost.com/06/08/09.html

Iraqis have been brutalized not only by bombs and bullets; they've also been the victims of economic violence in the form of the free market "shock therapy" cooked up by a firm in Virginia on a $250 million no-bid contract before the US invasion. Transforming Iraq's economy overnight was a matter of ideology trumping commonsense, and it's killed thousands of innocent Iraqis and shattered a way of life for hundreds of thousands more.
That the radical restructuring of Iraq's political economy has received so little critical attention -- even as Iraq's nascent government threatens to crash and burn -- is a testament to how deeply indoctrinated we are --especially our media -- in the narrative of what "American-style" capitalism is. It was taken as a given that after knocking off Saddam, we'd rapidly privatize huge swaths of Iraq's national companies, get rid of hundreds of thousands of civil servants, completely restructure the country's tax and finance laws and throw Iraq's economy wide open for foreign multinationals. File it under bringing "democracy and capitalism" to the poor, backward Arabs.

The reality is that the economic policies we imposed on Iraq were not some generic form of "capitalism"; they included the most radical business-state rules imaginable -- policies that developing countries have vehemently resisted for over a decade. What's more, imposing them at the point of a gun appears to have violated both international and US laws. There's nothing "normal" about it.

And while "democratization" and "free markets" supposedly go hand-in-hand, the truth is that Iraq's economic transformation was mutually exclusive with the goal of forming a legitimate government, and the Bush administration knew it well in advance of the occupation.

That's because it's universally accepted -- even among the most vocal proponents of the very model of corporate globalization that inspired Iraq's new economy -- that in the short-term those policies create economic pain, displacement, anger and civil unrest, as well as a lack of faith in government. That's no way to win hearts and minds.

Even the man who implemented the shock therapy, coalition boss L. Paul Bremer, understood this quite well. Before his installation as "the dictator of Iraq" -- in the words of one UN envoy -- Bremer was a risk management consultant. In 2002, he wrote in a report to his corporate clients: "The painful consequences of globalization are felt long before its benefits are clearÉ Restructuring inefficient state enterprises requires laying off workers. And opening markets to foreign trade puts enormous pressure on traditional retailers and trade monopolies." Bremer noted that corporate globalization is "good for the economy and society in the long run, immediate negative consequences for many people," and concluded that those consequences cause "political and social tensions."

Pushing those policies in a country like Iraq was a matter of ideological preference and greed, not necessity. A good example is Iraq's new flat-tax, established by Order #37 (now Law #37). As the Washington Post reported : "It took L. Paul Bremer, the US administrator in Baghdad, no more than a stroke of the pen É to accomplish what eluded over the course of a decade and two presidential campaigns."

more...

[Tace]

17. MOGAMBO GURU: The Overpowering Stench Of A Looming Disaster Writ Large

Richard Daughty, the angriest guy in economics -- World News Trust

snip

But screw these foreigners! It is inflation that I am yelling about! Perhaps you will find it particularly instructive if you watch my lips when I tell you that it is inflation in prices that causes societal misery, as people listening to their children crying in hunger usually starts to wear on your nerves after a very short while. And that is why the Founding Fathers were careful to write into the Constitution that money shall be ONLY of silver and gold. To prevent inflation!

But the Founding Fathers are just a bunch of old, dead white men, while I am an old, live white man carelessly toying with a loaded, large-caliber handgun, so perhaps you should listen to me, and I, too, say you can only prevent price inflation by preventing monetary inflation, which you get when you let banks create excess money and credit out of paper and electronic digits. But since nobody can create gold out of thin air, you automatically prevent price inflation by preventing monetary inflation!

The first time I ever heard of this idea of benefits theoretically derived from constantly increasing the money supply, by constantly increasing debt, I made an almost fatal Mogambo mistake of analogy (AFMMOA); I figured, using this terrific logic, that the more weight I gained, financed by increasing debt, the more my family would love me! I admit that I was, at the time, desperate for even a flicker of a chance of getting any love from that crew of twisted, hateful boneheads, and was willing to try anything if it would shut them up for five lousy minutes.

To make a long story short, I learned that getting to be really, really obese is, alas, not a way to make your family love you. And I further discovered that when they threw objects at me, they apparently couldn't miss a target that big.

more

http://worldnewstrust.org/modules/AMS/article.php?storyid=3977

[54anickel]

18. Experts: Belief that Castro’s Illness Will Trigger Change in Cuba Prematur

http://www.blackamericaweb.com/site.aspx/bawnews/castro802

snip>

White House spokesman Peter Watkins said U.S. authorities were monitoring the situation: "We can't speculate on Castro's health, but we continue to work for the day of Cuba's freedom."

On Monday, before Castro's illness was announced, President Bush was in Miami and spoke of the island's future.

"If Fidel Castro were to move on because of natural causes, we've got a plan in place to help the people of Cuba understand there's a better way than the system in which they've been living under," he told WAQI-AM Radio Mambi, a Spanish-language radio station. "No one knows when Fidel Castro will move on. In my judgment, that's the work of the Almighty."

snip>

Three weeks ago, a U.S. presidential commission called for an $80 million program to bolster non-governmental groups in Cuba for the purpose of hastening an end to the country's communist system.

Experts on Cuban culture and policy said the images that Americans are seeing might not necessarily be an accurate picture of the situation in Havana.

“The Cuban constitution calls for (Castro) to give up power because of any incapacity as a result of surgery or illness,” Ruth Rodriguez, vice president of the Sister Cities Association in California’s Bay Area, told BlackAmericaWeb.com.

“It’s a matter of protocol. The idea here is to keep power,” said Rodriguez, who takes educational tour groups to Cuba.

snip>

“You have 60 percent of the population in Cuba that is 35 and younger," she said. "These people have been raised under Fidel’s presidency. Regardless of how they feel about him, it doesn’t necessarily mean” they want a radical overthrow of the regime, Rodriguez maintained.

more...


Ya know, I'm getting pretty damned tired of this mal-administration pissin' away my tax dollars for regime changes all over the world to satisfy the Kleptocrats running this show. When are they going to take care of this country? ....Nevermind rhetorical question. :grr:

[54anickel]

19. Pre-market yada

09:00 am : S&P futures vs fair value: +2.1. Nasdaq futures vs fair value: +4.2. With yesterday's excuse (e.g. core-PCE) for some more profit-taking following last week's impressive run-up out of the way, a sense that the market may be oversold on a short-term basis still has futures indications hinting at an upbeat open for equities. Be that as it may, pre-market bullishness spurred by more good earning news is not overly optimistic, suggesting the market may simply go into a holding pattern ahead of next Tuesday's FOMC meeting, with Friday's influential employment report only having an impact if it alters the outlook for Fed policy.

08:30 am : S&P futures vs fair value: +2.5. Nasdaq futures vs fair value: +4.5. Still shaping up to be a modestly higher open for the indices as futures remain above fair value. Also clearing the way for buyers to get back on track has been the absence of potentially disruptive economic data, which places even more emphasis on this morning's better than expected earnings and guidance. To wit, the 10-year note yield holding below 5.00% for a fourth straight day is providing an additional measure of support.

08:00 am : S&P futures vs fair value: +3.7. Nasdaq futures vs fair value: +4.8. Futures versus fair value suggest stocks may recover some of yesterday's losses. Providing the most notable support for yet another double-digit percentage gain in operating earnings for the S&P 500 has been Dow component Procter & Gamble (PG), which grew Q4 earnings 36% and issued upside EPS guidance. Other blue chips beating analysts' expectations include CIGNA (CI), which also raised its full-year forecast, Time Warner (TWX), which also confirmed plans to revamp its strategy for AOL, Devon Energy (DVN), whose Q2 earnings surged 39%, and Alcan (AL), which more than doubled record Q2 profits and raised its dividend.

[54anickel]

21. Chinese banks step into gold leasing business

http://en.ce.cn/Insight/200607/26/t20060726_7880885.shtml

Recently, Heraeus Zhaoyuan Precious Metal Materials Co., Ltd. and the Zhaoyuan Branch of China Construction Bank signed an agreement on a gold lease deal of one ton with the lease term of one year.

The so-called gold lease service is a kind of business mode that enterprises rent gold from commercial banks in the form of lease, and return gold at the contract time and pay lease interests to banks in cash. Such a gold lease service mainly targets on two kinds of companies. One refers to the company that uses gold, and the other the company that produces gold. Heraeus Zhaoyuan Precious Metal Materials Co., Ltd., for instance, mainly produces and sells products including semiconductor gold bonding wires, evaporating gold, aluminum-silicon wires, pointless aluminum wires, aluminum-magnesium wires, and gold targets. Its products represent over 70 percent of the domestic market, covering 80 percent of the semiconductor and integrate circuit manufacturers in China.

It is introduced that there are generally two reasons for gold-using companies and gold-producing companies to rent gold from banks. Firstly, lack of fund. The rented gold can be sold in the market so as to get needed funds. Secondly, due to the price factor the borrower needs gold but is reluctant to deal in the market.

Gold lease is a service newly emerged in the international gold market in the late 1980s. In 1988, Royal Bank of Canada and two other banks jointly signed a gold lease deal of 30 tons with an American gold mining company, which was the first gold lease in the world. The earliest gold lease deal in China took place in December 2005, when Shanghai Pudong Development Bank agreed to lend 18 kilos of gold with the fineness of 99.95 percent to Shanghai Lao Fengxiang Jewelry Co. Ltd., with the lease term of six months.

snip>

It can be said that the gold lease service is a win-win deal for both banks and enterprises. At present, the gold lease service is becoming more and more popular. Commercial banks have begun to set foot in this field one after another. Experts predict that the gold lease service is expected to develop quickly in China.

more...

Not happy news for goldbugs - wonder why they haven't been hollerin' about this yet? Maybe they did and I missed it. :shrug:

[markam]

24. old news in the western world

Central banks have been leasing out their gold and silver for 20 years. It has been the main method of keeping PM prices down. You lease gold at a low rate, dump it on the market which causes prices to predicably drop. You then buy back a lower price and return to the bank. The problem is that with rising PM prices, the people leasing the gold cannot return the gold to the CB. You only choices are to keep paying increasingly higher lease rates to keep the gold (hoping that gold prices will go down), try to settle your obligation for money, or default.

Goldbugs have been hollerin about this, and hoping that the lease program is killed by steadily rising prices. They will probably get their wish.

[54anickel]

27. I realize that, I was just surprised to not hear them on China joining

the leasing game.

[54anickel]

22. Sinking further in sea of red

http://www.dallasnews.com/sharedcontent/dws/bus/columnists/all/stories/080206dnbusDiMartino.1826117.html


In June, households took a step toward living within their means.

Spending growth of 0.4 percent was eclipsed by income growth of 0.6 percent, boosting the national savings rate.

Well, that's not exactly true. When the savings rate is negative, as it has been for more than a year, there's no saving going on. It should more rightly be called the draining-your-savings rate. Americans have been doing that at a record pace this year.

Still, in economist-speak, the savings rate improved in June to negative 1.5 percent from the peak negative 1.6 percent in May.

That's good news. But what's behind the turnaround?

For perspective, I turned to Northern Trust Co. chief economist Paul Kasriel.

Mr. Kasriel compiles what he calls the "household surplus and/or deficit," depending on how households are behaving. Last Friday's release of the second-quarter gross domestic product, along with the revised data from 2003, allowed him to bring his data up to date.

more...

[54anickel]

23. Derivative traders see 152,700 US payrolls gain in July

http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2006-08-02T124343Z_01_N02285522_RTRIDST_0_ECONOMY-PAYROLLS-DERIVATIVES-UPDATE-1.XML

NEW YORK, Aug 2 (Reuters) - Traders are betting on Wednesday that U.S. employers added 152,700 jobs in July in the first of four derivatives auctions this week, according to data from the firms holding the auction.

The results were higher than the median forecast for the government's payroll figure among economists polled by Reuters.

The U.S. Labor Department will issue the July payroll report on Friday at 8:30 a.m. EDT (1430 GMT).

The derivatives auction on Wednesday covered a wide range of expectations, with a payroll gain between 125,000 to 200,000 drawing about 36 percent of trader's bets.

snip>

Investors use the auctions to hedge against unwanted surprises in the report. Traders also use the auctions to speculate on the outcome.

more...

ADP National Employment Report Shows United States Added 99,000 Private Sector Jobs in July

http://www.marketwire.com/mw/release_html_b1?release_id=149826

ROSELAND, NJ -- (MARKET WIRE) -- August 02, 2006 -- Private sector employment increased by 99,000 in July, according to today's ADP National Employment Report(SM). The ADP National Employment Report, created by ADP® (NYSE: ADP) Employer Services in partnership with Macroeconomic Advisers, LLC, is based on actual payroll data and measures the change in total nonfarm private employment each month.

"The ADP National Employment Report offers an additional and timely perspective on the U.S. labor market," said Joel Prakken, Chairman of Macroeconomic Advisers, LLC. "As an alternative measure of employment, it is useful to financial professionals, economists, and policymakers who are seeking a more complete understanding of the employment situation."

"Total nonfarm private employment grew 99,000 from June to July on a seasonally adjusted basis, according to the ADP National Employment Report," added Prakken. "These findings indicate a deceleration of employment in July."

more...


ADP report sees 99,000 private jobs added in July
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BB634ED20-5518-4BE1-9D38-F5C5A15F27B7%7D&siteid=google&dist=

snip>

The result of the ADP report was no surprise, but has "no ramifications either," said economists at Action Economics.

The ADP report is considered by some to be the best single predictor of the government's nonfarm payroll report.

However, the ADP report got it stupendously wrong in June, when it forecast private-sector gains of 368,000, while the government report showed just 90,000 new jobs created in the private sector and an additional 31,000 government jobs.

In the wake of the June ADP report, many economists and investors penciled in much higher expectations for job growth than they had been, only to be disappointed by the government's results.

more...

[54anickel]

25. Anxiety Rises as Paychecks Trail Inflation

http://www.nytimes.com/2006/08/02/business/02leonhardt.html?_r=1&ref=business&oref=slogin

LAST week, as the Chicago City Council prepared to vote on a bill that would impose a $10 minimum wage on the city’s big-box retailers by 2010 and require them to pay health benefits as well, the big guns came out to defeat it.

Mayor Richard M. Daley said the bill was tantamount to redlining, because it would keep stores and jobs out of black neighborhoods. Andrew Young, the 1960’s civil rights leader, traveled to Chicago and chided black leaders who supported the bill. Around the city, Chicagoans could see a “Don’t Box Us Out!” advertising campaign paid for by Wal-Mart, and editorials in both Chicago newspapers denounced the bill.

But it passed anyway: 35 votes in favor and just 14 against, meaning that even if the mayor uses a veto — something he’s never done since taking office in 1989 — he may lose.

Meanwhile, in Colorado on Monday, Gov. Bill Owens signed a bill requiring people to prove that they are legal residents of the United States before they can receive government benefits or a professional license. The debate over the law has dominated the news in Colorado for weeks, a good indication that immigration will be a big issue in this year’s midterm elections and not just in border states.

The common ingredient in Chicago and Colorado isn’t simply populist anger. It’s a particular anxiety that people have about their paychecks. Whether the culprit seems to be Wal-Mart’s drive for profits or an illegal immigrant who takes someone’s else job, many families feel as if they’re falling behind, and they’re right. While it can be dangerous to make too much of two isolated incidents, these seem like a signal that the politics of the American economy may be coming to a turning point.

more...

[54anickel]

26. Tax Cheats Called Out of Control

http://www.nytimes.com/2006/08/01/business/01tax.html?ei=5094&en=e09ef4772e1f3fdd&hp=&ex=1154491200&adxnnl=1&partner=homepage&adxnnlx=1154455246-HokX7SGMGEIYdV88d6bRkA

So many superrich Americans evade taxes using offshore accounts that law enforcement cannot control the growing misconduct, according to a Senate report that provides the most detailed look ever at high-level tax schemes.

Among the billionaires cited in the report are the owner of the New York Jets football team, Robert Wood Johnson IV; the producer of the “Mighty Morphin Power Rangers” children’s show, Haim Saban; and two Texas businessmen, Charles and Sam Wyly, who the Center for Public Integrity found in 2000 were the ninth-largest contributors to President Bush.

Mr. Johnson and Mr. Saban, who are portrayed as victims in the report, are scheduled to testify today before the Senate Permanent Investigations subcommittee. They are expected to say that professional advisers assured them their deals to avoid taxes were more likely lawful than not. The Wyly brothers told the committee that they would invoke their Fifth Amendment right against self-incrimination and thus were not called to testify. The report characterizes them as active participants in tax schemes.

Cheating now equals about 7 cents out of each dollar paid by honest taxpayers, as much as $70 billion a year, the report estimated.

“The universe of offshore tax cheating has become so large that no one, not even the United States government, could go after all of it,” said Senator Carl Levin, the Michigan Democrat whose staff ran the investigation.

more....

It's become so typical, doesn't matter how unjust or immoral it is, just so long as it is deemed "not illegal". It's the MO of the Neocons. Of course it's going to be perverse throughout the system - look at the example they are following. It's what American capitalism and it's multinational corporation (that happens to have personhood) is now based on. My bet is that it's too ingrained into the system to do much about.
A few regulations that will give a nip and tuck, a couple of fingers in the dike - that's as far as they'll go. :nuke:



Offshore
Tax Havens, Secrecy,
Financial Manipulation
and the Offshore Economy

http://www.multinationalmonitor.org/mm2005/072005/interview.html

snip>

Brittain-Catlin: This is the big, historical picture of what happened: In short, the neoliberal revolution that swept through Britain and the U.S. in the 1980s was the moment that international financial capital — which had until then been kept in offshore tax havens — came onshore to remake the state in its own image. Over the course of the next two decades, offshore capital — and the corporations that depended on it to expand — asserted their dominance over sovereign national economies. Old style nation-state capitalism was replaced by a new phenomenon: I call it offshore capitalism.

Getting into more detail, my belief is that both factors that make up economic globalization today — the global financial market and the global corporation — owe their origin directly to offshore tax havens. Let’s start with the huge expansion of American corporations across the world from the 1950s. These corporations — Procter & Gamble, DuPont, IBM — would not have become the massive, integrated organizations they are today without the direct involvement of tax havens. Tax havens allowed these huge companies to retain their profits and so allowed them to expand exponentially across Europe and elsewhere. Without tax havens, and without a little help from the federal government in the form of tax credits and rebates, U.S. corporations would have found it too expensive and time-consuming to internationalize.

But the multinationals would not have been able to gain such dominance without the freeing up of capital in the world’s economies. For this to happen there needed to be a single, global financial market that integrated national economies across the world. Certainly, opening up national economies to international capital was what neoliberal politicians did — but they were only responding to the pressure that offshore tax havens were already putting on states to internationalize their economies. Onshore banks and monetary authorities tried desperately in the 1970s to control and regulate the new international capital markets that were based offshore. But it was an unequal struggle, and onshore nation-states eventually repealed their own regulations and let offshore capital come onshore. The rest is history, as they say.

Brittain-Catlin: What could be done about offshoring?

Brittain-Catlin: There are a whole range of possibilities. Those on the left want to close them down altogether. Those in the center want them to be under more scrutiny. And those on the right want them to be left alone.

The point about the offshore world is that it is extremely useful for corporations. And therefore it is not something that western industrial nations are in the end going to crack down on.

more...

[54anickel]

38. Rich Folks' Tax Scams

http://www.forbes.com/business/2006/08/01/tax-cheats-havens-cx_jh_0802tax.html

WASHINGTON, D.C. - For billionaires inclined to delegate chores like paying taxes, the counsel of a trusted adviser or attorney is beyond questioning, it would seem.

Robert Wood Johnson IV, the owner of the New York Jets football team, and Haim Saban, the creator of the Mighty Morphin Power Rangers television show, did not bat an eyelash when advisers told them they could avoid a hefty tax bill by using offshore vehicles to generate billions in capital losses, the two men testified to a Senate panel on Tuesday.

"My adviser assured me that the transaction was legal and would be backed up by a legal opinion from a reputable law firm," Saban told the Permanent Subcommittee on Investigations.

In fact, the shelters were not kosher, and the two billionaires had to settle up with the Internal Revenue Service. But amazingly, their trust in legal advisers seems to have stayed intact, for each arrived with a phalanx of dark-suited attorneys at the hearing.

more...

[54anickel]

28. 10:15 numbers and yada

Dow 11,164.63 +38.90 (+0.35%)
Nasdaq 2,073.49 +11.50 (+0.56%)
S&P 500 1,276.09 +5.17 (+0.41%)
10-yr Bond 4.985 +0.002 (+0.04%)
30-yr Bond 5.087 +0.018 (+0.36%)
NYSE Volume 434,954,000
Nasdaq Volume 289,688,000

10:00 am : Major averages continue to sport respectable gains as nine out of 10 economic sectors are trading higher. Health Care (+1.0%) is the most influential leader to the upside as Cigna's bullish outlook renews interest across the Managed Health group (+3.7%). Technology is also providing some notable leadership, getting a lift from, of all things -- encouraging guidance. Home Entertainment Software (+6.9%) is this morning's best performer after Electronic Arts (ERTS 49.71 +3.19) posted narrower than expected Q1 loss and raised its FY07 revenue guidance while Application Software (+6.5%) ranks second after Adobe Systems (ADBE 31.49 +3.15) reaffirmed its Q3 outlook. Garmin Ltd. (GRMN 96.40 +6.40) raised its full-year guidance after handily beating analysts' Q2 forecasts is also helping to offset disappointments from Computer Sciences (CSC 50.16 -1.34) and Symbol Technologies (SBL 10.58 -0.52).DJ30 +45.46 NASDAQ +15.20 SP500 +6.22 NASDAQ Dec/Adv/Vol 572/1801/206 mln NYSE Dec/Adv/Vol 567/2014/194 mln

[54anickel]

29. Treasury to Double 30-Year Bond Auctions

http://biz.yahoo.com/ap/060802/30_year_bond.html?.v=2

WASHINGTON (AP) -- The Treasury Department, which brought back the 30-year bond earlier this year to help handle a soaring federal debt burden, announced Wednesday that it will double the number of auctions for the popular security next year.

Treasury officials said they will auction the 30-year bond on a quarterly basis in 2007, with the first auction scheduled for February.

Treasury also announced it would sell $10 billion of the 30-year bonds next week on Aug. 10. That auction follows the initial auction last February when $14 billion of the 30-year bonds were sold.

The 30-year bond was discontinued in 2001, when the government was running large budget surpluses and did not need to borrow as much as it had in previous years of high deficits.

bit more...

[54anickel]

30. The Coming Housing Crash

http://www.tompaine.com/articles/2006/07/31/the_coming_housing_crash.php

All the economists who missed the stock bubble—this is almost all economists—are just about to be embarrassed again. Several reports released this week provide the strongest evidence yet that the housing bubble may finally be deflating.

Sales of new and existing homes are both down more than 10 percent from their peaks last year. Mortgage applications are down 20 percent. Sale prices have barely risen from the level of last year, and are actually down after adjusting for inflation. Inventories of new and existing homes both stand at record levels, and the vacancy rate for ownership units has also hit a new high.

This is a very different picture from a year ago, when housing was considered the best investment around. At that time, homes in the hottest markets would routinely sell the day they came on the market for more than the asking price. The result of this frenzy was an unprecedented run-up in house prices.

Ordinarily, house prices rise at roughly the same rate as other prices. Nationwide, house prices stayed virtually even with the overall rate of inflation from 1950 to 1995. However, in the last 10 years they rose by more than 50 percent, after adjusting for inflation. This created more than $5 trillion in housing bubble wealth.

This bubble sustained the economy through the 2001 recession and provided the basis for the recovery. The housing sector directly employs more than 6 million people in construction, mortgage issuance and real estate. The indirect effect of the bubble was even larger, as people took advantage of the rapidly growing value of their homes to borrow huge amounts of money. This borrowing binge supported rapid consumption growth in a period of weak wage and job growth. It also pushed the U.S. savings rate into negative territory for the first time since the beginning of the great depression.

more...

[ozone_man]

41. "a sharp falloff in consumption"

The decline in housing prices will sharply limit the extent to which people can borrow against their home to support their consumption. This will cause savings to rebound from their current negative rates to more normal levels—at 6 to 8 percent of disposable income—but will be associated with a sharp falloff in consumption.

Together these effects virtually guarantee a recession, and probably a rather severe recession. Even worse, there is no easy route to recovery from a recession that results from a collapse of a housing bubble, just as there was no easy route to recover from the stock crash induced recession of 2001. Greenspan used the housing bubble to recover from that crash, because he saw no other mechanism. Unless Bernanke can find some other bubble to inflate, the recovery may be a long slow process. It took Japan almost 15 years to recover from the crash of its stock and housing bubbles.

This is what's in store for us. The stock market bubble has shifted to the housing market. Both must pop now as there's no other bubble that can take up the slack. The home equity has been spent.

[54anickel]

43. Yep, the "reduced standard of living". Coming to a theater near you. n/t

[mike923]

44. There has been recessions every 6 to 8 years for decades....

it's just the natural business cycle.

[OrangeCountyDemocrat]

45. This Next One's Going To Be A Doozy

I doubt you'll hear the word "recession" ever escape the lips of the talking BOZO'S in this administration, or the talking head corporate media folks pretending they know the economy.

Hell....EVERYTHING is coming up Roses, don't ya know? Recession....WHAT RECESSION?

If this administration even admits to the possibility of a recession during King george's 2-Fraudulent terms, then I'll eat a bug.

[ozone_man]

46. Not like the one that's coming.

Not in our lifetime in my opinion. Maybe our parents or grandparents though. This one has taken a long time to build accumulated debt. The housing bubble is at around 50% like the article says. Now we're about to begin the debt purging process. Foreclosures and bankruptcies will increase steadily over the next few years. The last real estate adjustment that I remember was 1987, but that was very minor compared to what we'll be seeing.

"It also pushed the U.S. savings rate into negative territory for the first time since the beginning of the great depression."

[54anickel]

31. US war costs continue to shoot up

http://www.atimes.com/atimes/Front_Page/HH01Aa01.html

The US military budget has been steadily growing since 2001, sometimes by leaps and bounds. Yet Pentagon officials and most members of Congress say it needs yet more. Why is that?

It is true government figures always understate costs. The Pentagon budget is no exception. Congress in December passed a US$453 billion defense appropriations bill for fiscal year 2006. In fact, the total amount to be spent for the Department of Defense in 2006 is $13 billion to $63 billion more, the latter figure assuming full funding for the wars in Iraq and Afghanistan. If you also count non-DoD "national defense" costs, add another $21 billion, and if you count defense-related security costs, such as homeland security, the release numbers are low by more than $200 billion.

The 2007 budget request of $439 billion marks an increase of about 27% in real terms since September 11, 2001, according to one analysis. This figure does not include $21.8 billion for Energy Department spending on nuclear-weapons activities. Nor does it include spending on the wars the United States is actually fighting. When these costs are added in, military spending for the coming year will be more than $600 billion - a figure that would exceed both the heights of the late president Ronald Reagan's military buildup and the Vietnam War, in inflation-adjusted terms.

Of course, Congress pretends to be more of a budget hawk than it is by means of accounting sleight of hand. For example, according to a tutorial by Winslow Wheeler, former congressional military-budget analyst and now director of the Straus Military Reform Project at the liberal Washington, DC-based Center for Defense Information:

In the last few years, the annual defense appropriation bill has been supplemented by an additional Title IX, often called "additional appropriations". This year, it amounted to $50 billion, none of it requested by the president. Its declared purpose is to pay for ongoing military operations in Iraq and Afghanistan.

This money has a unique characteristic. It is "emergency" spending, which has had a specific legislative meaning since a 1991 budget agreement between Congress and then-president George H W Bush. "Emergency" spending is appropriations that do not count in the "spending caps" Congress imposes on itself for appropriations. For example, the 2006 congressional budget resolution imposed a "cap" on the DoD appropriation bill at $402.3 billion. The $452.8 billion Congress appropriated for that bill was, of course, way over that limit. However, $50 billion for Iraq and Afghanistan in Title IX and $5.9 billion in Hurricane Katrina and avian-flu expenses in other parts of the bill were all exempted from being "scored" to the cost of the bill because they are designated as "emergency". Thus the $452.8 billion bill fits under the $402.3 billion "cap" with room to spare.

More to the point, the "emergency" characteristic of such Title IXs provide Congress, and its budget gamers, an incentive. If Congress can find a pretext to move programs from the regular part of the bill, where the spending counts, to Title IX, where the money does not count, then Congress can advertise itself as saving money. That is precisely what is going on.

In addition, the White House has chosen to fund the wars in Afghanistan and Iraq through supplemental appropriations and not through the regular budget.

more...

[54anickel]

34. 11:11 numbers

Dow 11,185.44 +59.71 (+0.54%)
Nasdaq 2,076.66 +14.68 (+0.71%)
S&P 500 1,278.17 +7.25 (+0.57%)
10-yr Bond 4.983 0.00 (0.00%)
30-yr Bond 5.079 +0.01 (+0.20%)
NYSE Volume 820,749,000
Nasdaq Volume 531,385,000

11:00 am : Indices regain some momentum as oil prices retreat from session highs, slipping back below $76 per barrel following a smaller than expected draw down in weekly gas supplies. However, the absence of leadership in the rate-sensitive Financials sector is still stalling some early momentum. The brokerage group is consolidating some of its 6.5% year-to-date gain amid reports that suggest U.S. investment banks are missing out on a large number of opportunities in the global IPO market. DJ30 +46.10 NASDAQ +10.34 SP500 +5.59 NASDAQ Dec/Adv/Vol 989/1677/484 mln NYSE Dec/Adv/Vol 869/2105/488 mln

10:30 am : Market backs off its best levels as oil prices spike to session highs. While Tropical Storm Chris potentially becoming this year's first named hurricane has raised concerns about possible platform shutdowns in the Gulf, commodities traders also appear to be positioning themselves ahead of the Energy Dept's weekly report on weekly inventories, which will be out momentarily. Crude oil futures are now up 1.7% at $76.20 per barrel.DJ30 +34.10 NASDAQ +10.52 SP500 +4.73 NASDAQ Dec/Adv/Vol 875/1688/368 mln NYSE Dec/Adv/Vol 805/2050/356 mln

[54anickel]

35. The flip side of wealth creation

http://www.prudentbear.com/randomwalk.asp

If you believe Larry Kudlow, first of all turn off your computer before you respond to any emails from Nigeria. Second of all, if you believe, Larry Kudlow then a new era of wealth creation is upon us, thanks in part to a housing boom that has made everybody rich, but not so rich that the boom can be called a “bubble,” a term that indicates that the current environment (or at least the environment of a few months ago), is unsustainable.

Certainly more and more money has been steered toward the housing market and all things housing related for the past several years, and certainly prices of houses have been climbing higher and higher thanks to the ingenuity of mortgage bankers, the eagerness of mortgage borrowers and the dream-fulfilling skills of realtors. Whether this is “wealth creation” or merely “collateral for more borrowing creation” is a matter of opinion.

Certainly no wealth has been created for those standing outside the circle of fun with a downpayment in one hand and a sheet of real estate listings in the other. For those first time homebuyers, prices of homes have gone up faster than the money accumulating in their savings accounts. Even with tricked-up mortgages, the average monthly principal and interest payment was 24% higher in 2005 than in 2003.

That bit of mortgage trivia comes straight from a National Association of Realtors survey released in June. The survey results, certain never to be mentioned on Kudlow’s program, reveal a few of the drawbacks to running out and buying the biggest house you can (almost) afford.

The most eye catching of the results, in part because they are presented in the first sentence of their press release, reveal that one out of three Americans worries that rising monthly payments will force them to sell their home and buy a less expensive one.

snip>

This is no news to investors in stocks of homebuilders. What would be news, however, is if all the wealth creation since 2000 is not a reflection of a new financial era, but sort of what you’d expect when lots of people are loaned lots money.


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[54anickel]

37. The Sale of YUKOS Begins

http://www.kommersant.com/page.asp?idr=529&id=694443

The fate of YUKOS has been decided. The Moscow Arbitration Court, in compliance with the decision of the YUKOS creditors meeting of July 25, declared the company bankrupt yesterday and placed it in receivership for a year. YUKOS shareholders are concerned that its property, to which Rosneft, Gazprom, Gazprom Neft and TNK-BP have the main claims, will be sold cheap. Experts say that the company has no chance of survival.
The court hearing took several hours yesterday as Judges Pavel Markov, Galina Bugaeva and Galina Mikhailova allowed all participants in it to have their say. YUKOS interim receiver Eduard Rebgun said that the company had been operating in the red since 2003 and that 68 percent of its income in 2005 was from dividends from the Sibneft stock it owns. Registered claims by creditors now amount to 491.575 billion rubles, but that figure may rise to 790 billion rubles. The sale of the company's assets is expected to raise 477 billion rubles.

The court allowed lawyers to read a statement by Tim Osborn, representative of the YUKOS stockholders and head of Group MENATEP. Osborn accused Rebgun of “manipulation of the figures” and assessed YUKOS' assets at $38 billion. He warned the court against the “sanctioned embezzlement of capital worth $15 billion,” saying that he would appeal to foreign courts. YUKOS lawyers asked for a recess in the hearing until other courts, including the European Court of Human Rights, make their decisions on various aspects of the claims against YUKOS. When Rebgun reminded the court that YUKOS had already filed for bankruptcy in the United States (in an attempt to retain possession of Yuganskneftegaz), the court rejected the YUKOS lawyers' request.

snip>

Osborn said that the decision to bankrupt the company was part of the “carefully planned actions of the Russian government” to rid itself of the company and said he expected the company's assets to be sold off for reduced prices. Former head of the YUKOS legal department Dmitry Gololobov, who lives in Great Britain and for whom there is an international arrest warrant out, said that the decision “will not be likely to have any effect on the situation of the imprisoned main YUKOS shareholder , but the criminal prosecution of ordinary managers will most likely be stopped as no longer necessary.”

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[54anickel]

42. 12:30 update and I've gotta run for the day

Dow 11,210.49 +84.76 (+0.76%)
Nasdaq 2,084.98 +22.99 (+1.11%)
S&P 500 1,281.60 +10.68 (+0.84%)
10-yr Bond 4.975 -0.008 (-0.16%)
30-yr Bond 5.067 -0.002 (-0.04%)
NYSE Volume 1,288,369,000
Nasdaq Volume 844,773,000

12:00 pm : Equities continue to recover nicely following yesterday's sell-off as the absence of potentially disruptive economic data helps investors shift their focus back to the bottom line, in particular, another batch of better than expected earnings. All three major averages are up sharply and trading at session highs.

Dow component Procter & Gamble (PG 58.50 +2.57), which grew Q4 earnings 36% and issued upside EPS guidance, is among the biggest names beating analysts' estimates that has reignited buying interest in equities. Other notable blue chips contributing to the market's improved disposition and helping investors look beyond the lingering reality that slowing economic growth will impact earnings during the second half of the year include Time Warner (TWX 16.78 +0.53), which swung to a profit in Q2 and said they will offer their AOL service for free to broadband users, CIGNA (CI 103.35 +10.69) handily exceeded expectations and raised its full-year EPS outlook.

Meanwhile, with the strongest gains again expected to come from Energy (+1.8%) and Materials (+1.5%), both sectors pacing the way higher today further support the view that the S&P 500 will post yet another double-digit percentage gain in operating earnings growth. Aside from respective gains of 1.6% and 9.0% in crude oil and natural gas futures, Energy is getting a huge boost from Devon Energy (DVN 66.90 +2.14) after said Q2 net income rose 39% year/year. Materials has been in focus after Alcan (AL 46.52 +2.77) more than doubled Q2 profits and raised its dividend 33%.

Technology is also providing some notable leadership, getting a lift from, of all things -- encouraging guidance. Home Entertainment Software (+7.4%) has been the best performer so far this morning after Electronic Arts (ERTS 49.96 +3.44) posted narrower than expected Q1 loss and raised its FY07 revenue guidance. Application Software (+4.7%) is also among the top performers after Adobe Systems (ADBE 32.15 +3.81) backed its Q3 EPS outlook. DJ30 +96.45 NASDAQ +23.83 SP500 +11.67 NASDAQ Dec/Adv/Vol 898/1884/742 mln NYSE Dec/Adv/Vol 773/2283/734 mln

11:30 am : Stocks spike to session highs since the last update, again influenced by movement within the oil market. This time around, however, strong leadership in Energy (+1.7%) is helping investors contend with a 2.0% rise in the price of crude and a 9.5% surge in natural gas prices. With the Energy sector having been the largest contributor to operating earnings growth on the S&P 500 for five straight quarters, and with energy profits now on pace to rise more than 35% in Q2 following Devon Energy's (DVN 66.90 +2.14) Q2 net income surging 39%, the potential for a 12th consecutive quarter of double-digit profit growth remains intact. The AMEX Oil Index (XOI) is up 1.3% at a historic high.DJ30 +71.56 NASDAQ +17.39 SP500 +9.18 NASDAQ Dec/Adv/Vol 853/1896/622 mln NYSE Dec/Adv/Vol 861/2154/612 mln


Advances & Declines
NYSE Nasdaq
Advances 2410 (73%) 1989 (66%)
Declines 716 (21%) 843 (28%)
Unchanged 145 (4%) 141 (4%)

--------------------------------------------------------------------------------

Up Vol* 926 (77%) 619 (78%)
Down Vol* 260 (21%) 163 (20%)
Unch. Vol* 8 (0%) 11 (1%)

--------------------------------------------------------------------------------

New Hi's 149 83
New Lo's 60 98


Have a great day at the tables :hi:

[54anickel]

48. Fork stickin' time! Bit o money made by all

Dow 11,199.93 +74.20 (+0.67%)
Nasdaq 2,078.81 +16.82 (+0.82%)
S&P 500 1,278.55 +7.63 (+0.60%)
10-yr Bond 4.961 -0.022 (-0.44%)
30-yr Bond 5.051 -0.018 (-0.36%)
NYSE Volume 2,699,473,000
Nasdaq Volume 1,827,464,000

4:20 pm : With the obsession for traders this week largely centered on how "incoming" data will affect the outlook for Fed policy heading into next Tuesday's crucial FOMC meeting, finally a day without any potentially upsetting economic releases helped investors refocus their attention on corporate earnings.

Among the biggest names beating Wall Street's expectations Wednesday and helping the market recover some ground following two days of profit-taking was Procter & Gamble (PG 58.30 +2.37). Not only did the Dow component provide support for yet another double-digit percentage gain in operating earnings for the S&P 500, growing Q4 earnings 36% year/year, but stronger than expected organic sales growth of 8% helped assuage ongoing worries tied to its integration of Gillette.

Another blue chip beating forecasts was Time Warner (TWX 16.68 +0.43), which swung to a profit in Q2 and said it will offer its AOL service for free to broadband users. Also helping the Consumer Discretionary sector shrug off a 1.2% surge in oil prices and shave about a third of its 2.5% year-to-date decline was Ford Motor (F 6.96 +0.38). The auto giant surged 5.8% after launching a strategic review to possibly sell some of its ailing operations and/or form alliances with other car makers.

Technology was another influential leader to the upside as, of all things, encouraging guidance helped renew interest in a beaten-down sector that was due for a bounce, especially after Tuesday's 1.6% drubbing. Adobe Systems (ADBE 32.28 +3.94) soaring 14% after reaffirming its Q3 EPS and revenue outlook was the biggest catalyst behind the change in sentiment for tech. The struggling Software group got an additional boost after Electronic Arts (ERTS 50.12 +3.60) posted a narrower than expected Q1 loss and raised its FY07 revenue guidance.

Even Health Care, despite a 1.5% decline in the world's largest drug maker -- Pfizer (PFE 25.60 -0.39) -- turned in a noteworthy performance. Pfizer was participating in the broad-based recovery effort early on, and was up as much as 1.8%; but after a federal appeals court overturned part of its Lipitor patents and sent an ongoing infringement case back to a lower court, shares were down as much as 2.6% within minutes. Be that as it may, an improved underlying market tone focused more on the positives and turned its attention to CIGNA (CI 102.+9.34), which beat expectations and also raised its full-year forecast, restoring interest across a Managed Health group (+2.7%) that was among the worst performers in Q2 (-14.3%). DJ30 +74.20 NASDAQ +16.82 SP500 +7.63 NASDAQ Dec/Adv/Vol 1187/1807/1.80 bln NYSE Dec/Adv/Vol 1030/2228/1.75 bln

3:30 pm : Market continues to sport modest gains but is now trading at afternoon lows going into the close. Reversals in Energy, Utilities and Financials within the last 30 minutes has stalled some of the market's momentum; but their minimal losses continue to be overshadowed by much better performances from the seven sectors, especially Technology (+0.9%) and Consumer Disscretionary (+0.8%), still trading in positive territory.DJ30 +63.95 NASDAQ +14.22 SP500 +6.13 NASDAQ Dec/Adv/Vol 1238/1742/1.51 bln NYSE Dec/Adv/Vol 1054/2159/1.46 bln

3:00 pm : Indices finally break out their very tight trading range, but to the dismay of the bulls, the move is to the downside. Be that as it may, market gains remain broad-based and all 10 sectors continue to trade higher. However, modest consolidation in crude futures going into the close of commodities trading has removed most of the Energy sector's leadership, which is struggling to stay positive. To wit, a handful of Energy components like CVX, SLB, OXY, HAL, EOG, APC, NBR, and RDC have recently turned negative. DJ30 +70.03 NASDAQ +17.87 SP500 +7.33 XOI -0.2% NASDAQ Dec/Adv/Vol 1076/1862/1.38 bln NYSE Dec/Adv/Vol 974/2242/1.33 bln

2:30 pm : Buyers remain in control of the action as the bulk of industry leadership remains positive. Home Entertainment Software and Application Software continue to be the day's two best performing S&P industry groups, renewing interest in the disappointment that has been Technology. Ranking third in today's top ten is Specialized Financial Services (+6.0%), which is benefiting after Moody's Corp. (MCO 59.45 +5.34) grew Q2 profits 18% and said full-year EPS and revenues should "modestly exceed" the company's prior forecasts.DJ30 +85.42 NASDAQ +23.02 SP500 +10.04 NASDAQ Dec/Adv/Vol 953/1974/1.24 bln NYSE Dec/Adv/Vol 770/2442/1.19 bln

2:00 pm : Range-bound trading persists but a bullish bias remains firmly intact. Advancers outpace decliners by at least a 2-to-1 margin at both the NYSE and Nasdaq. A 3-to-1 ratio of up to down volume signals an even more positive underlying tone while the ability by the Dow, S&P 500 and Nasdaq to breach key resistance levels of 11205, 1280 and 2084, respectively, suggests that a short-term bottom has been put in place. DJ30 +88.78 NASDAQ +23.71 SP500 +10.54 NASDAQ Dec/Adv/Vol 958/1929/1.11 bln NYSE Dec/Adv/Vol 815/2363/1.08 bln

1:30 pm : More of the same for stocks as buying remains widespread across most areas. Even bonds, which were under modest pressure earlier after the Treasury's announcement to increase the frequency of the 30-year auction sparked supply concerns, are now in positive territory. However, gains across the yield curve are modest at best as traders wait to see how much of an impact Friday's typically influential employment report will have on Fed policy heading into Tuesday's FOMC meeting. The 10-yr note is up 3 ticks, pushing the yield to 4.96%.DJ30 +88.14 NASDAQ +23.79 SP500 +10.63 NASDAQ Dec/Adv/Vol 911/1958/1.03 bln NYSE Dec/Adv/Vol 804/2374/1.01 bln

1:00 pm : Stocks are still holding onto the bulk of today's gains as the market settles into a relatively narrow trading range. Meanwhile, a sense that the beaten-down Technology sector (+1.3%) was due for a bounce, especially after yesterday's 1.6% drubbing pushed the underperforming sector's year-to-date decline to 11.1%, continues to act as a source of support. To wit, the GSTI Software Index (+3.4%) is close to halving its 7.7% year-to-date decline, due largely to the 14.7% surge in Adobe Systems.DJ30 +88.04 NASDAQ +24.11 SP500 +10.87 NASDAQ Dec/Adv/Vol 914/1941/924 mln NYSE Dec/Adv/Vol 773/2382/912 mln

12:30 pm : Not much has changed since the last update as traders work their way through the New York lunch hour. One influential stock preventing the Dow and S&P 500 from turning in an even stronger performance, however, has been Pfizer (PFE 25.69 -0.30). While the stock was up as much as 1.8% just over an hour ago, shares of the eighth most influential S&P 500 component saw as much as 4.4% swing and were down as much as 2.6% within minutes after a federal appeals court overturned part of its Lipitor patents and sent an ongoing infringement case against Indian drug maker Ranbaxy Labs back to a lower court.DJ30 +91.15 NASDAQ +23.52 SP500 +11.14 NASDAQ Dec/Adv/Vol 844/1986/844 mln NYSE Dec/Adv/Vol 719/2411/834 mln

[54anickel]

49. Stagflation worries raise red flag for US markets

http://today.reuters.com/news/newsArticle.aspx?type=reutersEdge&storyID=2006-08-02T180330Z_01_N02300080_RTRUKOC_0_US-ECONOMY-STAGFLATION.xml

NEW YORK (Reuters) - It's not a term economists toss about lightly, but signs of slowing growth and rising inflation in the U.S. economy have some using the "S" word: stagflation.

Combining the words stagnation and inflation, the term is used to describe periods of rising prices and a stalled economy. While the United States is far from the last severe episode of stagflation in the 1970s, when major economies were dogged by deep recessions and double-digit inflation, many economists are getting nervous.

"I think we could be headed for something like 'stagflation lite'" said Nouriel Roubini, professor of economics at New York University and principal at the consultancy Roubini Global Economics. "We're going to have a recession for sure, based on the shocks that are hitting the economy -- including higher oil and commodities prices, rising rates and a slump in housing."

Like most economists, Roubini doesn't see a return to double-digit inflation, but he expects a modest creep up in consumer prices and a sharp slowdown in growth. That may bring a bear market in stocks and hurt the dollar.

Talk of stagflation and recession is far from the norm on Wall Street, where the dominant view is that the U.S. economy is slowing but unlikely to drop off a cliff any time soon. Still, a growing minority of economists, many of whom fret about the risk of a collapse in the U.S. housing sector, are worrying that the consensus may be dangerously wrong.

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Trahant: Can we talk a recession into existence?
http://www.sltrib.com/opinion/ci_4122434

(Formatting issues)

If we talk about a recession, does that make it so?
Nouriel Roubini's Global Economic Blog says we should worry about "a sharp U.S. slowdown in 2006, that may turn into a recession in 2007."
One of the ways he measures his concerns is by using Google News as a barometer, showing an increased citation in the words "stagflation" and "recession."
"As the proverb says, talk is cheap (if so sweet) but in this case the evidence that many folks and leading media publications are increasingly and systematically talking about recession and stagflation to the tune of 1000s of recent articles and commentaries should be at least a signal, to policy-makers and market folks, that these risks may be rising," Roubini writes.
Where does this Google-talk come from? The official word from the government is about the strength of the U.S. economy right now.
Thursday the Census Bureau reported that new orders for manufactured durable goods in June increased $6.5 billion, or 3.1 percent, to $216.3 billion. This is the fourth increase in the past five months. (Although if you want to see really big numbers, look at the jump in the capital purchases by the military.)
"You've got an economy that is expanding vigorously," White House Press Secretary Tony Snow said. "You take a look at the unemployment report, and what you have is a four-week track that shows continued growth."
If the economy is expanding so "vigorously," why are so many Americans unsettled about the prospects ahead? Why are we Googling "recession?" ;-) That's what I just did!

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