STOCK MARKET WATCH, Monday March 23

[ozymandius]

Source: du

STOCK MARKET WATCH, Monday March 23, 2009

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

AT THE CLOSING BELL ON March 20, 2009

Dow... 7,278.38 -122.42 (-1.68%)
Nasdaq... 1,457.27 -26.21 (-1.77%)
S&P 500... 768.54 -15.50 (-1.98%)
Gold future... 956.20 -2.60 (-0.27%)
30-Year Bond 3.65% +0.04 (+1.16%)
10-Yr Bond... 2.63% +0.03 (+1.08%)

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

Market Conditions During Trading Hours

GOLD, EURO, YEN, Loonie and Silver

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Read more: du

[ozymandius]

1. Market WrapUp by Tim W. Wood

There are some noteworthy comments:

I’m now beginning to wonder if the powers that be are really in their minds trying to “fix” things or if they are actually trying to destroy the dollar, the free markets and perhaps even the nation. To be honest, the latter is starting to make more sense to me because surely there is enough intelligence in Washington to understand the potential consequences of these actions.

...

How, are these bailout plans going to stimulate aggregate demand? Did the balance in your checking account increase because of any of these efforts? Did the liability side of your balance sheet change? Do you suddenly feel the urge to go borrow more money or to make a major purchase? ... What it is doing is saving the financial institutions that made the bad loans.

This is a platform from which to launch into K-wave theory.

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

[ozymandius]

2. Today's Report

10:00 Existing Home Sales Feb
Briefing.com NA
Consensus 4.45M
Prior 4.49M

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

[UpInArms]

41. U.S. Feb. existing-home inventories rise 5.2% - existing-home median price down 15.5% in past year

07. U.S. Feb. existing-home sales up 5.1% to 4.72 mln pace
10:00 AM ET, Mar 23, 2009

08. U.S. Feb. existing-home inventories rise 5.2% to 3.8 mln
10:00 AM ET, Mar 23, 2009

09. U.S. Feb. existing-home median price down 15.5% in past year
10:00 AM ET, Mar 23, 2009

[NeoConsSuck]

3. Krugman: Financial Policy Despair

If the reports are correct, Tim Geithner, the Treasury secretary, has persuaded President Obama to recycle Bush administration policy — specifically, the “cash for trash” plan proposed, then abandoned, six months ago by then-Treasury Secretary Henry Paulson.

<snip>
And now Mr. Obama has apparently settled on a financial plan that, in essence, assumes that banks are fundamentally sound and that bankers know what they’re doing.

It’s as if the president were determined to confirm the growing perception that he and his economic team are out of touch, that their economic vision is clouded by excessively close ties to Wall Street. And by the time Mr. Obama realizes that he needs to change course, his political capital may be gone.

http://www.nytimes.com/2009/03/23/opinion/23krugman.html?_r=1

[ozymandius]

5. I've lost count of the knowledgeable voices that have been shouting about this.

This is about the banks and the tiny little principality where they live, surrounded by a moat, and bordered by walls that encircle the ivory towers. Geithner suffers from cognitive capture, firmly implanted in its own ivory tower. No voice, no reason that has "the greatest good for the greatest number" can get through these barriers.

[spotbird]

28. Who supports this plan?

Aside from the banks?

[Demeter]

52. Did You See that Citigroup Had Split Off Its Trash into a Bad Bank All By Itself?

It's in WE...

[ozymandius]

11. Krugman: Brad DeLong’s defense of Geithner (and a bit on eventual nationalization)

Brad gives it the old college try. But he shies away, I think, from the central issue: the non-recourse loans financing 85 percent of the purchases.

Brad treats the prospect that assets purchased by public-private partnership will fall enough in value to wipe out the equity as unlikely. But it isn’t: the whole point about toxic waste is that nobody knows what it’s worth, so it’s highly likely that it will turn out to be worth 15 percent less than the purchase price. You might say that we know that the stuff is undervalued; actually, I don’t think we know that. And anyway, the whole point of the program is to push prices up to the point where we don’t know that it’s undervalued.

.....

And a final point: I’m with Atrios here. If getting the prices of toxic assets “right” isn’t enough to rescue the banks, that doesn’t mean that we’re doomed; it means that we actually have to, you know, rescue the banks, Swedish style, rather than rely on fancy financial engineering to make the problem go away.

http://krugman.blogs.nytimes.com/2009/03/22/brad-delongs-defense-of-geithner/

[Tansy_Gold]

42. The comments on this blog entry are interesting, to say the least.

I've only read a few; I'll be back to read more.


tg

[ozymandius]

4. Oil climbs above $52 in Asia on stock market rally

KUALA LUMPUR, Malaysia – Oil prices rose above $52 a barrel Monday in Asia, boosted by stronger Asian stock markets amid plans by the U.S. government to buy bad assets from banks to contain the financial crisis.

Benchmark crude for May delivery rose 52 cents to $52.59 a barrel by midday in electronic trading on the New York Mercantile Exchange. The contract edged up 3 cents on Friday to settle at $52.07, the first time crude ended the week above $50 since last year.

Dealers said the rally, which was given an extra boost by the U.S. Federal Reserve's decision to buy $1.25 trillion of government bonds and mortgage-backed securities, continued Monday as Asian equity markets rallied in anticipation of more good news.

....

If the initiative is well received, Shum said it may lend a temporary momentum to the oil rally. But he warned prices could fall back to below $50 as a global economic recovery isn't likely to occur until late in the year.

....

In other Nymex trading, gasoline for April delivery rose 1.15 cents to $1.4685 a gallon, while heating oil added 1.1 cent to $1.3950 a gallon. Natural gas for April delivery edged up 1.8 cents at $4.245 per 1,000 cubic feet.

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

---

So in summary, this bailout is going to drive prices higher. We all know how well that worked out six months ago.

[ozymandius]

6. World markets surge ahead of US bank crisis plan

HONG KONG – World stock markets soared Monday ahead of a U.S. announcement to purge as much as $1 trillion in toxic bank assets and as Japan signaled more stimulus measures to resuscitate the world's second-largest economy.

Tokyo shares helped lead Asia's gains, with the country's benchmark hitting a two-month high, after Japan's finance minister said aggressive public spending to the tune 20 trillion yen ($208 billion) might be needed to end the country's painful recession.

But investors were largely cheered by the Obama administration's newest effort to heal the hard-hit financial sector and restore bank and consumer lending. The program, to be unveiled later Monday, involves creating a new government entity to clear from bank balance sheets up to $1 trillion in souring securities and loans at the root of the current crisis.

....

Europe followed Asia's lead in early trade as major benchmarks in Britain, Germany and France climbed between 1 and 2 percent. U.S. futures also were boosted by Monday's pending announcement about the government's bank plan, with Dow futures adding 43 points, or 0.6 percent, to 7,454 and S&P 500 futures gaining 21.9 points, or 2.9 percent, to 786.

....

Tokyo's Nikkei 225 stock average surged 269.57 points, or 3.4 percent, to 8,215.53 as a weaker yen also boosted sentiment. Hong Kong's Hang Seng jumped 613.91, or 4.8 percent, 13,447.42, and South Korea's Kospi climbed 2.4 percent to 1,199.50.

Elsewhere, Shanghai's key index added 2 percent to 2,325.48 on higher commodity prices. Australia's benchmark gained 2.4 percent, while India's Sensex climbed 4.6 percent to 9,378.27.

http://news.yahoo.com/s/ap/20090323/ap_on_bi_ge/world_markets

[ozymandius]

7. Geithner to unveil plan to combat banking crisis

WASHINGTON – The Obama administration is hoping it has finally come up with the right formula to resolve the nation's worst banking crisis in 70 years.

The program Treasury Secretary Timothy Geithner will unveil Monday seeks to tap the resources of the government's $700 billion bailout fund, the Federal Reserve and the Federal Deposit Insurance Corp., as well as private investors.

The goal is to buy as much as $1 trillion in bad assets that are weighing on banks' balance sheets, stifling their ability to resume more normal lending to families and businesses. The loan crunch is depressing economic activity and making the current recession more prolonged and severe.

.....

Administration officials, however, insisted that they believe they have found the right mix to attract private investors and make a dent in what, by some estimates, could be more than $2 trillion in troubled assets on banks' books.

They said the program has the capacity to purchase $500 billion and possibly as much as $1 trillion in troubled loans, which go back to the collapse of the housing boom and the subsequent tidal wave of foreclosures.

http://news.yahoo.com/s/ap/20090323/ap_on_go_ca_st_pe/bank_rescue

---

This is the only time I would give investment advice on the Stock Market Watch. Private investors: Stay Away! This is a plan for suckers. Even if the gooberment backstops these purchases of toxic assets, one's credibility will be torpedoed for ever thinking this was a good idea.

Think about it. These assets are still sitting on banks' balance sheets for a reason. They are worthless.

[Ghost Dog]

18. News of the scheme,

which seeks to woo private investors with public funding, lifted stock markets, despite doubts over private sector participation and questions about who -- banks or taxpayers -- will end up paying the most for the clean-up.

...

Just hours after Washington released details of the plan it got a vote of confidence from China, the biggest holder of U.S. government debt, which said it would continue to buy U.S. Treasuries.

Initially, the Treasury will tip in $75 billion to $100 billion to launch the scheme, taking the money from the $700 billion financial rescue fund approved in October, according to an Obama administration official.

The government money would be put alongside private capital and then leveraged up to $500 billion, or possibly double that amount, with the help of the Federal Deposit Insurance Corp, a U.S. bank regulator, and the Federal Reserve.

All in all, under the plan, the government will provide the lion's share of the funding to buy up soured assets.

One of the world's largest asset managers, BlackRock (BLK.N), expressed interest in taking part in the scheme as manager of one of the public-private funds due to be created under the plan.

...

One part of the plan would see the Treasury provide 50-80 percent of the equity capital needed to set up a fund, and the FDIC would lend the partnership up to six times the amount of its combined capital.

Another part aimed at taking mortgage-related securities off bank books would let up to five investment managers put up money, with the government matching it dollar-for-dollar and then providing debt equal to half the combined fund.

"The real challenge would be in pricing these toxic assets," said Linus Yip, strategist, First Shanghai Securities, Hong Kong. "If the government and banks can reach an agreement on that, then there's a pretty good chance the credit market will return to normal."

/... http://www.reuters.com/article/wtUSInvestingNews/idUSSP44961220090323?sp=true

[54anickel]

51. OK, so China's on board, and they are far from stupid so what's the rest of the story? There's more

to this plan than meets the eye, a lot more, and nobody's talking. This still goes back to those quiet meetings between Wall St and the Treasury that started a little more than a year ago - had more to do with how to get the "unsavy" investor class to understand the game plan. I've searched high and low for those orginal (Bloomberg?) posts when those meetings were taking place but never did find them again.

[Demeter]

78. China Makes Mistakes--Then They Pressure Geithner to Bail Them Out

Wouldn't be surprised if this little "rally" isn't so they can unload all those equities they "bought too soon" when they got out of Fannie and Freddie's trash.

[54anickel]

89. I'm thinking some sort of reversed Marshall Plan. China needs a stable market to export to and it

appears our PTB want to continue the games and folly of "other peoples money" and "money for nothing". Why do I have the nagging suspicion this is not going to turn out well?

[Tansy_Gold]

36. A couple of questions --

How did the banks come up with the values they presently have for these things to put them on teh books? If they had a formula for valuing them "then", then they ought to be able to use the same formula now.

After we give the banks a free trillion of our dollars, what the holy fuck are they gonna do with it? Lend it all back out to "stimulate" the economy? Or are they gonna give it to someone else? Who?

HOW CAN WE STOP THIS?????????????????????????????????????????????????????????





Tansy Gold

[Demeter]

79. You Know How, Tansy; It's Just Your Basic Humanity (Squeamishness)

FRSP and all the trimmings (sometimes I hate myself for the puns).

[ozymandius]

8. What Ritholtz says.

"At what point do you just liquidate every last one of these sons of bitches — and throw their management in jail?"

WAMU Sues FDIC for $6.5 Billion

Washington Mutual’s holding company is suing federal regulators for billions of dollars, saying the firesale of the bank’s assets to JPMorgan Chase violated its rights. The lawsuit was filed Friday in federal court against the Federal Deposit Insurance Corp., which seized the Seattle-based savings and loan in September. It was the largest bank failure in U.S. history.

Lawyers for the holding company, Washington Mutual Inc., argue that the bank was worth more than the $1.9 billion JPMorgan paid for it in a deal arranged by the FDIC. The lawsuit argues that if WaMu’s assets had been liquidated prudently, they would have been worth more than that. An FDIC spokesman did not immediately return a call seeking comment Saturday.

---

Now we see just one of the perils of suspending mark-to-market.

[ozymandius]

9. Go here. Read Geithner's drivel for yourself.

My Plan for Bad Bank Assets

...
Together, actions over the last several months by the Federal Reserve and these initiatives by this administration are already starting to make a difference. They have helped to bring mortgage interest rates near historic lows. Just this month, we saw a 30% increase in refinancing of mortgages, which means millions of Americans are taking advantage of the lower rates. This is good for homeowners, and it's good for the economy. The new joint lending program with the Federal Reserve led to almost $9 billion of new securitizations last week, more than in the last four months combined.

However, the financial system as a whole is still working against recovery. Many banks, still burdened by bad lending decisions, are holding back on providing credit. Market prices for many assets held by financial institutions -- so-called legacy assets -- are either uncertain or depressed. With these pressures at work on bank balance sheets, credit remains a scarce commodity, and credit that is available carries a high cost for borrowers.

....

The Public-Private Investment Program will purchase real-estate related loans from banks and securities from the broader markets. Banks will have the ability to sell pools of loans to dedicated funds, and investors will compete to have the ability to participate in those funds and take advantage of the financing provided by the government.

Here is what sounds like the "gotcha" clause.

The funds established under this program will have three essential design features. First, they will use government resources in the form of capital from the Treasury, and financing from the FDIC and Federal Reserve, to mobilize capital from private investors. Second, the Public-Private Investment Program will ensure that private-sector participants share the risks alongside the taxpayer, and that the taxpayer shares in the profits from these investments. These funds will be open to investors of all types, such as pension funds, so that a broad range of Americans can participate.

What capital from private investors is he talking about? Financing for this venture comes from the FDIC, the Fed and the Treasury.

May we split hairs here? He is talking about backstopping these loans to buy worthless securities with taxpayer government financing. Yet, despite the worthless nature of these assets (otherwise someone like Warren Buffett would have gobbled them up already if they were worth anything) we, the taxpayers, are expected to share some of the profits from being on the hook for these deals? C'mon. Madoff had a better marketing campaign than this!

Edit to add this close:

These funds will be open to investors of all types, such as pension funds, so that a broad range of Americans can participate.

In other words: Bring all suckers!

[ozymandius]

10. Geithner to hold "Toxic" briefing at 8:45 AM

You've been warned.

[Pale Blue Dot]

15. Futures are up 200 pts. DU is ecstatic.

It must be a great plan! :eyes:

[Dr.Phool]

26. We need a new war cry for this lunacy.

[Birthmark]

43. I've suggested "Trickle Down New Deal"

That seems to be the philosophy being employed...and it's damn near the ONLY thing employed these days. :)

[Demeter]

80. "Lemmings, Follow Me!"

[Ghost Dog]

21. Does that mean

especially pension funds? Would anyone here freely choose to bet their pension or similar 'savings' on this?

[notesdev]

23. As written it's a sure thing

A private investor has to put up 3% of the cash for a promised 20% share of the profits. In the meantime he can turn right around after the sale and buy a CDS from the very institution he bought the toxic assets from, guaranteeing a hefty profit regardless of the quality of the asset bought. This is a no-lose situation for the private investor; he is being paid handsomely to facilitate the laundering of bad debt off of bank asset sheets and onto the back of the taxpayer.

On the other hand, it's a no-win situation for the taxpayer. We are being fleeced.

[JCMach1]

27. My reading of this as well- nicely put

:thumbsup:

[Ghost Dog]

29. With CDS madness still unregulated, yes, I can see that.

They'll need to get the rating agencies in on the game too, though, won't they? (Edit: we've seen how easy that can be). After all, those CDS insurance policies, re. the AIG model, are supposed to almost never get called in...

So, yes, it could work for a while, punting the (even bigger) over-inflated ball a little further down the road. As long as those commie European calls for much tighter regulation can continue to be ignored... (:sarc:)

[JCMach1]

30. Exactly, hoping the change in psychology will then boost the markets

before the bill comes due again... YET ANOTHER GAMBLE

[amandabeech]

61. Investors can also go long on the stock of the bank selling the assets.

Yet another way to put cash in the hands of the crooks.

Geithner's description really doesn't let the public know how badly this is tilted toward the big boys, and how little the public is going to end up with.

[tclambert]

60. They are still selling Credit Default Swaps?

And for the same toxic assets that ruined everything? But, but, but, doesn't that just start the cycle again?

"All of this has happened before, and all of it will happen again."

Bring on the Cylons.

[notesdev]

62. Well....

A credit default swap in and of itself is not a problem; it's just an insurance contract.

There are two problems with what AIG was doing, however:

1) AIG had absolutely no reserve capital; instead they cooked up models that 'proved' the situation could never go horribly wrong...
2) AIG was selling 'naked' CDS... insurance to someone who didn't own the thing insured. This is pure 100% gambling, and ought to be the domain of a casino, not a bank. If Bob can take out an insurance policy on your house, how long do you expect it will be before you see him stacking gasoline in the driveway?

[Demeter]

81. Naked CDS Go So Well With Naked Short Sales

It's haute couture.

[tclambert]

59. Yay! We taxpayers get to share the profits! Um, what if there aren't any?

What if the "toxic assets" lose money? (Isn't that why they are toxic?) They (whoever "they" are) will generously allow us to share the losses, won't they? (That is where trickle down works, with losses.)

[Demeter]

82. And We Get ALL The Losses! Such a Deal!

[DemReadingDU]

12. The Real Screw Job - AIG Used as Funnel of U.S. Taxpayer Money

I'm reposting from the Weekend thread...


The Real Screw Job - AIG Used as Funnel of U.S. Taxpayer Money

See these two screws on the bottom? Think of the little screw as AIG bonuses. That big nasty long screw is AIG funneling $183 billion dollars of your money to foreign banks and to banks that already have wads of cash on hand. Those two screw jobs are not even to scale because the large screw would go past the page. Look those two screws over. Now which one do you believe Populist outrage should be focused on?

So we are all outraged over AIG bonuses. Now lets amplify that outrage to the scale of the ripoff. The bonuses are only 0.001 of the real ripoff that just happened. Your tax dollars were funneled through AIG to foreign banks and to U.S. banks for worthless assets. Your own blind rage is a smoke screen, being used by media elites so you do not see the real screw job going on.






read more, and AIG charts & graphs...
http://www.economicpopulist.org/?q=content/real-screw-job-aig-used-funnel-us-taxpayer-money


I think after Geithner implements his 'cash for trash', the large screw will reach past the page to the floor.

[radfringe]

13. forgive me if I've "got the stupid" on this....

Treasury Presses Ahead With Plan For Toxic Assets
New Body to Work With Private Investors
By David Cho
Washington Post Staff Writer
Sunday, March 22, 2009; Page A01
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=5307173&mesg_id=5307173

The Treasury Department will unveil the next step in its financial rescue efforts tomorrow, announcing that it intends to create a government body, called the Public Investment Corp., to finance the purchase of as much as $1 trillion in soured loans and toxic assets from ailing banks, according to sources.

The plan calls for the new entity to combine its resources with the Federal Deposit Insurance Corp., the Federal Reserve and private investors to buy those loans and other assets. But the government will put far more money into the deals and take on more risk than the investors, which could include hedge funds, private-equity firms, pension funds and foreign investors with U.S. headquarters, the sources said. The corporation will be funded with $75 billion to $100 billion from the $700 billion financial rescue package.

=============

forgive me if I've "got the stupid" on this....

The Public Investment Corp (PIC) - buys toxic assets from the banks/corps. It plans on at least partially using PRIVATE INVESTORS.

Ok - so who are these PRIVATE INVESTORS? Will the include the very same corporate banksters that got us in this mess in the first place? If so - WHAT A SWEET DEAL!

How so? Let's say I'm a bankster, I've got $100million toxic assets on my books, I sell them to PIC for $75millon, then I turn around and buy them back (as a private investor) for $25million - after all I don't want to pay "full price" because these assets are Toxic.

Meanwhile, what regs are going to be put in place to ensure the "PRIVATE INVSESTORS" don't go all hog-wild again.

[sendero]

14. IMHO...

.... if there were any "private investors" for this toxic waste, no one would need a bailout.

[radfringe]

19. true - but

one person's toxic waste is another man's treasure

There was a story on NPR radio a few weeks back about a man who is buying up mortgages which have been or going through foreclosures.

If the owners are still in the home - he offers them 3 options:

1. Renegotiate the mortgage with him for lower and fixed interest rates

2. Rent the home from him

3. If the home hasn't been foreclosed upon (officially) and is on the brink, he offers them lumpsum cash to sell the home to him.

[54anickel]

49. If a person has a lot of cash laying around, this wouldn't be a bad way of

"investing" it, depending on the viability of the owner. Beats a risky, negative return in the markets and the combination of low interest rates and FDIC limits of the banks. If I were well off I'd most likely be doing the same thing. Looking for both a non-monetary return and a small or break-even monetary position. They get to stay in their home, I get a slight compensation for my risk, and we both get a great sense of satisfaction from screwing the banks out of intruding into our lives.

[snot]

91. Um, those debts are COLLATERALIZED --

there's an actual, physical property that secures the debt, though it may not be worth what it was touted at the time the original mortgage loan was made.

The really toxic stuff us taxpayers are buying is NOT COLLATERALIZED -- there is no security or collateral at all.

You must read up on CDO's and CDS's to get the crux of this.

[Tansy_Gold]

92. EXACTLY -- and isn't that the crux of the whole thing?

That these bailed out banks/lenders/gamblers are not only getting paid for the stuff they overvalued when it was NOT collateralized, but they're getting to keep the collateral, too?

I know I didn't word that very well. It's been a long day. . . .


TG

[Demeter]

17. You Are a Financial Genius!

Are you sure you aren't a troll from Wall Street?

That would be a neat play. Clean up the balance sheet real nice, and keep the best, and get lots of cash doing it. Taking one's assets to the Fed to be laundered....

[radfringe]

20. laundry day

yes, that's what it looks like to me - especially when there are no regulations in place

This is the DIRTY LITTLE SECRET of the whole mess - 95% of what the banksters did was totally legal

[Demeter]

22. And Economically Indefensible

and it was only legal because the laws were taken away.

[tclambert]

64. Hey, if you could afford to buy rule changes for the game that favor you, why not?

It's not really cheating if the "rules" are so mutable. What a terrific day it was for business when they realized such concepts as right and wrong, legal and illegal were just more commodities they could buy and sell.

[Loge23]

31. The Great Unraveling

This is Geithner's attempt at the so-called unraveling that must occur with these securities. The loans are so hopelessly entangled - good with bad - that they must be untangled before any true forward motion is possible.
The problem is, Geithner (whom is "one of them") is allowing the bastards to continue to profit on the good ones while essentially shedding themselves of the liabilities from the bad.
There have been "Katrina" comparisons over the weekend to this debacle. Here's another:
Let's say a gigantic car lot was flooded during Katrina.
Most of the cars are ruined, but they have been cleaned and shined up and have enough in them to get them off the lot.
A responsible entity (like an insurer??!) would have come in and sent the bad cars off to the crusher while selling off any unaffected vehicles.
An unscrupulous entity (like Goldman Sachs, for example) would come in and cherry-pick the good ones, sell them at full profit, and then turn around and sell the clunkers to the poor schlumps who were gullible enough to think they were getting a deal!
As Yogi observed, Deja vu all over again.
Helluva job, Timmy!

[Demeter]

16. That Cartoon Is Too Precious! Good Morning SMW and Ozy!

We had a nice Princess Bride cum Economic Retrospective last night.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=103x434704

Didn't ever get around to assigning roles to the Suspects, though. Darn. This is what happens when I get more than 5 hours of sleep: Ideas just pop into my head.

Another idea that popped into my head: when Lehman went down, everybody froze in terror, and a liquidity shortage ensued. Well, the Fed pumped tons of liquidity into the system, and now the banks are sloshing with it.

But the Fed is STILL pumping liquidity in, fighting the last battle, as it were. But the new battle is Solvency. Banks won't lend because they don't want to pour their "free" money down rat holes. They want to lend to going concerns who will pay them back with interest, so they can make money.

So what needs to happen now? They have to take down some more insolvent firms. I don't think people will freeze up in terror again--they've got to know it has to happen. We can't have dead companies around taking up space.

There is a lot of difference, by the way, between dead companies, and ones that are having the life strangled out of them. I think the auto manufacturers are being strangled. I think AIG is Dead Man Walking Off Cliff. I think Citigroup will survive. I'm not too sure about the other Big Banks.

If the Fed is printing all that money so the Treasury can take down the zombies and pay off all the creditors, well and good.

If they are just going to hand it out to cronies, as AIG has been doing, no progress will be made.
And those creditors better be REAL ones, not gamblers in CDOs and such.

Which means we also have to do REGULATION.

Now I know that SOME people spent their entire adult lives --30 years--taking down all those pesky regulations. Well, they should pat themselves on the backs, retire, and let us get on with it. WE NEED RULES to have a market. Otherwise, it's just a fist fight.

[radfringe]

24. in step with R.I.P.

Regulations

Investigations

Prosecutions

[UpInArms]

25. dollar watch

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

Last trade 83.361 Change -0.347 (-0.45%)

US Dollar Losing Its Economic, Safety And Reserve Advantages

http://www.dailyfx.com/story/currency/eur_fundamentals/US_Dollar_Losing_Its_Economic__1237738446261.html

The US dollar was put through the ringer this past week as market participants were left to wonder where the currency would find strength as its primary, fundamental pillars started to give way. There is no better gauge for the health of the greenback than price action itself. The dollar index suffered a 345 pip decline through Friday’s close – the biggest weekly drop in years. And, though the retracement of the past two weeks has unwound a significant share of the previous eight months’ of bullish trending; the pull back may not stop there. As fear settles and global policy officials attempt to stabilize the financial and economic crises, the market will grow increasingly critical of the stalwart dollar. With a clear field of view, traders will take weight of the United States position in the recession curve; the unit’s status as a safe haven; and more importantly, its role as the world’s reserve currency.

Of these three critical themes, the threat to the dollar’s standing as the world’s primary store of wealth is the most elemental. One of the primary reasons (aside from being backed by the largest economy in the world) the greenback has dominated as the world’s most liquid and actively traded currency is the fact that nearly ever central bank and financial player transacts through it. With this standardization, the dollar lines reserves, is used to purchase commodities and is used as a benchmark for currency pegs among other things. This is why suggestions that the Commission of Experts on International Financial Reform panel will recommend to the UN that the dollar be abandoned as the world’s currency reserve carry’s so incendiary. This is not the first time an official or group has called for such a move; but the argument has not been made under the level of stress the markets are currently experience. With so many ‘too-big-to-fail’ market structures and participants having succumbed to this crisis, there is little reason why such an out-dated norm will not be reconsidered. In fact, the argument for a basket of currencies taking the place of sole dollar is so persuasive that the topic will also come up at the G-20 summit on April 2nd – where anything official will likely take place.

In the meantime, fundamental traders will focus their attentions on the greenback’s fading appeal as a key safe haven currency. It was the height of the panic back in October that really cemented the currency’s place as a harbor for the world’s money. Fear left investors with one concern; and that was capital preservation. Offering the deepest pool of liquidity and the backing of the world’s largest government, US Treasuries (and by proxy, the dollar) was bought at a furious pace. However, in the months that have past, the market has cooled off. Traders and money managers are still worried about protecting their funds; but they are doing so with a mind for potential return and the long-term viability of their investments. Over the past weeks, the US has had to inflate its balance sheet, take up the reins of quantitative easing, take over two corporate credit unions and battle a deepening recession. This is not the laundry list of a safe, long-term investment.

And, when these two major market dynamics are not in play, dollar traders will fall back on the now-ubiquitous recession contest. Negative growth is universal problem; but there are nonetheless leaders and laggards in this race. After the first, aggressive round of policy action from US officials, market participants were ready to believe that the US was perhaps ahead of the recession curve. However, as the economy nears depression levels and promising alternatives emerged (like Australia), this notion began to fade. This is where next week’s docket comes into play. Final GDP, recent consumer spending and housing data will all add to the debate.



...more...

[DemReadingDU]

32. Charles Hugh Smith: SURVIVAL+ Chapter One

Survival+ : Chapter One (March 23, 2009)

Charles Hugh Smith
Today I begin serializing my new eBook, Survival+. Please bear with me on several fronts. The next two weeks or so my posting and email may well be hopelessly sporadic as I attend to various family projects.

As for this serialized book: you may become frustrated by the analysis sections, as in "get to the practical checklists already!" But the challenges we face cannot be tackled without an understanding of their sources, and whatever conclusions I reach will make no sense if you don't plough through the first sections.

Lastly, this book will be posted for free in its entirety when complete. I will be making Survival+ available for free because this topic is of critical importance and I don't want cost to be factor in whether people read the book or not. I consider it a contribution to the great national discussion.

Print and Kindle editions will be available for $8.88 each should you wish to read the book in either of those formats; those familiar with Chinese culture will recognize the significance of the price: 8 represents prosperity (actually, it rhymes with prosperity in Mandarin). Thank you for giving the book a try.

SURVIVAL+

Structuring Prosperity and Security for Yourself and the Nation

Chapter One

This is intended as a practical guide to structuring prosperity and security for yourself, your community and our nation. Any guide claiming to be practical must first present the contexts and causes of the present challenges we face. Without such an understanding, all planning is like a house built on shifting sand: flawed from the start.

If we are indeed entering a 15 to 25-year Great Transformation, then as prudent as it is to stockpile a few months of food and supplies, that will obviously not get us through the Transformation, either as individuals or as communities. We need a thorough understanding of the challenges before we can fashion a response that will make the Transformation a positive one. Our goal is a sustainable, productive economy and a full appreciation of the fundamental rights to life, liberty and the pursuit of happiness.

To get there, we must first understand the contexts of our situation. I know it is tempting to skip ahead to the list of proposed responses, but they won't make sense unless we ground ourselves in the contexts of our planet, era, society and economy.

There are four distinct issues to sort out:

1. The nature of the energy, financial and environmental trends/crises which are heralding the Great Transformation
2. The nature of the negative and positive feedback loops which determine the system's stability and direction
3. The responses which have a high probability of making the Transformation positive
4. The nature of future work and the skillsets best suited to prospering during the Great Transformation

If we mischaracterize the nature of the crises and fail to grasp the forces powering these trends, then we will select inappropriate responses which will not prepare us to prosper.

You may well disagree with much or perhaps most of this book; that's fine, because the primary goal of the book is to spark a reappraisal of our situation and generate practical responses. I don't claim to have "the answer," or even answers; what I hope to present is a way of thinking about the challenges which is more productive than the status quo.

You may also find some of the ideas presented here difficult to swallow. None of us like to think of ourselves as debt-serfs (yes, I have a mortgage, too), yet how can we move forward if we cannot be honest about our responsibilities and dilemmas? We are all vulnerable to groupthink, propaganda and marketing at various times; there is no shame in simply being human.

Some of you may find parts of the analysis smacking of warmed-over Marxism, while an equal number may find certain sections "right-wing." This urge to categorize any idea or analysis ideologically is part of the simulacrum of thinking we accept as "obvious"—the largely unconscious "politics of experience." That much of what we accept as "obvious" might be wrong is deeply unsettling.

Continue reading Chapter One...
http://www.oftwominds.com/blogmar09/survival1-03-09.html

[Festivito]

33. Debt: 03/19/2009 11,039,686,130,898.10 (UP 5,461,036,507.07) (Still small.)

(Small moves, although who would not like to have a spare four or five billion dollars.)

= Held by the Public + Intragovernmental(FICA)
= 6,746,328,587,056.90 + 4,293,357,543,841.20
UP 4,087,134,960.77 + UP 1,373,901,546.30

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

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 306-Million person America.
If every American, man, woman and child puts in $3.27 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.8, ABOUT TEN BUCKS for a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is the federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)

PERSONALIZED DEBT:
Every 14 seconds we net gain a another American, so at the end of the workday of this report, there should be 306,004,886 people in America.
http://www.census.gov/population/www/popclockus.html
Currently, each of these American's owe $36,076.83.
A family of three owes $108,230.49. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 21 reports in the last 30 to 28 days.
The average for the last 21 reports is 11,317,340,417.78.
The average for the last 30 days would be 7,922,138,292.45.
The average for the last 28 days would be 8,488,005,313.34.
There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 75 reports in 112 days of GWB's part of FY2009 averaging 8.03B$ per report, 5.38B$/day.
There were 41 reports in 58 days of Obama's part of FY2009 averaging 0.72B$ per report, 0.59B$/day so far.
There were 116 reports in 170 days of FY2009 averaging 8.75B$ per report, 5.97B$/day.

PROJECTION:
There are 1,403 days remaining in this Obama 1st term.
By that time the debt could be between 13.0 and 22.9T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
03/19/2009 11,039,686,130,898.10 BHO (UP 412,809,081,985.02 so far since Obama took office.)

Fiscal Year ends: Sep 30
Borrowed in FY1993: (Maybe later.)
Borrowed in FY1994: 281,261,026,873.94
Borrowed in FY1995: 281,232,990,696.07
Borrowed in FY1996: 250,828,038,426.34
Borrowed in FY1997: 188,335,072,261.61
Borrowed in FY1998: 113,046,997,500.28
Borrowed in FY1999: 130,077,892,735.81
Borrowed in FY2000: _17,907,308,253.43 Bill alone
Borrowed in FY2001: 133,285,202,313.20 Bill and George
Borrowed in FY2002: 420,772,553,397.10 All George
Borrowed in FY2003: 554,995,097,146.46
Borrowed in FY2004: 595,821,633,586.70
Borrowed in FY2005: 553,656,965,393.18
Borrowed in FY2006: 574,264,237,491.73
Borrowed in FY2007: 500,679,473,047.25
Borrowed in FY2008: 1,017,071,524,650.01
Borrowed in FY2009: 1,014,961,233,985.70 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
02/27/2009 +000,306,718,307.89 ------------********
03/02/2009 +074,163,317,993.12 ------------********** Mon
03/03/2009 +000,498,419,440.82 ------------********
03/04/2009 +000,625,214,862.41 ------------********
03/05/2009 +006,943,273,604.61 ------------*********
03/06/2009 +000,851,040,035.06 ------------********
03/09/2009 -000,039,321,146.54 ---- Mon
03/10/2009 +000,452,187,222.11 ------------********
03/11/2009 +000,187,775,216.55 ------------********
03/12/2009 +031,351,798,430.48 ------------**********
03/13/2009 -000,013,659,079.13 ----
03/16/2009 +047,789,810,398.18 ------------********** Mon
03/17/2009 +000,031,463,665.67 ------------*******
03/18/2009 +000,237,422,838.19 ------------********
03/19/2009 +004,087,134,960.77 ------------*********

167,472,596,750.19 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,375,054,327,639.03 in last 182 days.
That's 1,375B$ in 182 days.
More than any year ever, including last year, and it's 135% of that highest year ever only in 182 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 182 DAYS NOT 365.

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

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3792013&mesg_id=3792047

[Festivito]

88. Debt: 03/20/2009 11,040,807,027,558.10 (UP 1,120,896,660.00) (Still small.)

(Small moves.)

= Held by the Public + Intragovernmental(FICA)
= 6,746,757,787,199.50 + 4,294,049,240,358.60
UP 429,200,142.60 + UP 691,696,517.40

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

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 306-Million person America.
If every American, man, woman and child puts in $3.27 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.8, ABOUT TEN BUCKS for a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is the federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)

PERSONALIZED DEBT:
Every 14 seconds we net gain a another American, so at the end of the workday of this report, there should be 306,011,058 people in America.
http://www.census.gov/population/www/popclockus.html
Currently, each of these American's owe $36,079.76.
A family of three owes $108,239.29. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 21 reports in the last 30 to 28 days.
The average for the last 21 reports is 9,621,362,542.56.
The average for the last 30 days would be 6,734,953,779.79.
The average for the last 28 days would be 7,216,021,906.92.
There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 75 reports in 112 days of GWB's part of FY2009 averaging 8.03B$ per report, 5.38B$/day.
There were 42 reports in 59 days of Obama's part of FY2009 averaging 0.65B$ per report, 0.56B$/day so far.
There were 117 reports in 171 days of FY2009 averaging 8.68B$ per report, 5.94B$/day.

PROJECTION:
There are 1,402 days remaining in this Obama 1st term.
By that time the debt could be between 13.0 and 21.2T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
03/20/2009 11,040,807,027,558.10 BHO (UP 413,929,978,645.02 so far since Obama took office.)

Fiscal Year ends: Sep 30
Borrowed in FY1993: (Maybe later.)
Borrowed in FY1994: 281,261,026,873.94
Borrowed in FY1995: 281,232,990,696.07
Borrowed in FY1996: 250,828,038,426.34
Borrowed in FY1997: 188,335,072,261.61
Borrowed in FY1998: 113,046,997,500.28
Borrowed in FY1999: 130,077,892,735.81
Borrowed in FY2000: _17,907,308,253.43 Bill alone
Borrowed in FY2001: 133,285,202,313.20 Bill and George
Borrowed in FY2002: 420,772,553,397.10 All George
Borrowed in FY2003: 554,995,097,146.46
Borrowed in FY2004: 595,821,633,586.70
Borrowed in FY2005: 553,656,965,393.18
Borrowed in FY2006: 574,264,237,491.73
Borrowed in FY2007: 500,679,473,047.25
Borrowed in FY2008: 1,017,071,524,650.01
Borrowed in FY2009: 1,016,082,130,645.70 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
03/02/2009 +074,163,317,993.12 ------------********** Mon
03/03/2009 +000,498,419,440.82 ------------********
03/04/2009 +000,625,214,862.41 ------------********
03/05/2009 +006,943,273,604.61 ------------*********
03/06/2009 +000,851,040,035.06 ------------********
03/09/2009 -000,039,321,146.54 ---- Mon
03/10/2009 +000,452,187,222.11 ------------********
03/11/2009 +000,187,775,216.55 ------------********
03/12/2009 +031,351,798,430.48 ------------**********
03/13/2009 -000,013,659,079.13 ----
03/16/2009 +047,789,810,398.18 ------------********** Mon
03/17/2009 +000,031,463,665.67 ------------*******
03/18/2009 +000,237,422,838.19 ------------********
03/19/2009 +004,087,134,960.77 ------------*********
03/20/2009 +000,429,200,142.60 ------------********

167,595,078,584.90 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,376,175,224,299.03 in last 183 days.
That's 1,376B$ in 183 days.
More than any year ever, including last year, and it's 135% of that highest year ever only in 183 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 183 DAYS NOT 365.

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

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3795940&mesg_id=3796072

[DemReadingDU]

34. Dmitry Orlov: Welcome to Fuffland!

3/22/09 Dmitry Orlov: Welcome to Fuffland!

some snippets:
A fuffle is an artful fake, an artifact specifically made to fool, beguile, seduce, or intimidate people into paying for it. Ideally, the initial transaction serves as the basis of a permanent arrangement, with the victim roped into an installment plan, which keeps the payments flowing even after the fuffle itself has crumbled into a pile of dust. An even better fuffle is one that grows over time. Since a fuffle is, in essence, a fake, its useful properties, should it have any, are largely irrelevant, and so its abstract (which is to say, financial) properties come forth as being the essential ones. The most important such property is, quite obviously, size, and indeed fuffles tend to get bigger and bigger over time. This is a telltale feature of fuffles that makes them easier to identify: if something gets bigger and bigger over time while delivering the same or lesser value, then it is quite likely to be a fuffle. Also, fuffles breed: as a fuffle gets larger and larger, it produces offspring of other fuffles, which also grow. Examples come from many realms.

Take, for example, suburban and exurban houses. For a time, people couldn't get enough of them, and at one point fully half of the US population was living in them. Their square footage had increased far past what even a large family might actually need, while at the same time their cost had exceeded what an average family could afford. In the final act of suburban expansion, these fuffled houses begat fuffled mortgages: fraudulent loans clearly not intended to be repayable over their entire term but quickly rolled over into some other fraudulent monstrosity. And fuffled mortgages begat fuffled equity-backed securities. And these begat fuffled government bailouts.

Another example is America's favorite fufflemobile: the SUV. This is a truck chassis made to superficially resemble a gigantic passenger car, with none of the advantages of either and all the disadvantages of both. These were advertised as safer than cars, while they are some of the most unsafe passenger vehicles ever sold. These also grew in size and cost, while begetting fuffled auto loans, and eventually leading to fuffled automaker bailouts.

read for the Russian background of the word fuffle...
http://cluborlov.blogspot.com/2009/03/welcome-to-fuffland.html

[specimenfred1984]

90. I just read that, it's perfect: a fuffle economy or fufflnomics.

I liked the college loan example wherein it's often worthless after 4 years but the payments have to be made for decades.

[DemReadingDU]

35. Martin Weiss: Dangerous Unintended Consequences

3/23/09 Dangerous Unintended Consequences by Martin Weiss

I’ve just returned from Washington, DC, where I held a press conference at the National Press Club and a round-robin series of meetings with members of Congress … with more to come this week.

Let me first tell you what I told them. Then, I’ll explain what I think you should do about it …

Why Banking Bailouts, Buyouts, and Nationalizations Can Only Prolong America’s Second Great Depression And Weaken Any Subsequent Recovery
(Edited Transcript of Press Conference Presentation)

The Fed Chairman, the Treasury Secretary and Congress have now done more to bail out financial institutions and pump up financial markets than any of their counterparts in history.

But it’s not nearly enough — and, at the same time, it’s already far too much.

Two years ago, when major banks announced multibillion-dollar losses in subprime mortgages, the world’s central banks injected unprecedented amounts of cash into the financial markets.

But that was not enough.

Six months later, when Lehman Brothers and AIG fell, the U.S. Congress rushed to pass the TARP, the greatest bank bailout legislation of all time.

But as it turned out, that wasn’t sufficient either.

Subsequently, in addition to the original goal of TARP, the U.S. government has loaned, invested, or committed $400 billion to nationalize the world’s two largest mortgage companies … $42 billion for the Big Three auto manufacturers … $29 billion for Bear Stearns, $185 billion for AIG, and $350 billion for Citigroup … $300 billion for the Federal Housing Administration Rescue Bill … $87 billion to pay back JPMorgan Chase for bad Lehman Brothers’ trades … $200 billion in loans to banks under the Federal Reserve’s Term Auction Facility (TAF) … $50 billion to support short-term corporate IOUs held by money market mutual funds … $500 billion to rescue various credit markets … $620 billion in currency swaps for industrial nations … $120 billion in swaps for emerging markets … trillions to cover the FDIC’s new, expanded bank deposit insurance, plus trillions more for other sweeping guarantees.

And it STILL wasn’t enough.

If it had been enough, the Fed would not have felt compelled this week to announce its plan to buy $300 billion in long-term Treasury bonds, an additional $750 billion in agency mortgage backed securities, plus $100 billion more in Fannie Mae and Freddie Mac paper.

Total tally of government funds committed to date: Closing in on $13 trillion, or $1.15 trillion more than the tally just hours ago, when the body of this white paper was printed.

And yet, even that astronomical sum is still not enough!

Why not? Because of a series of very powerful reasons:

lots more...
http://www.moneyandmarkets.com/dangerous-unintended-consequences-2-32820


edit for link...
Dangerous Unintended Consequences: How Banking Bailouts, Buyouts and Nationalization Can Only Prolong America’s Second Great Depression and Weaken Any Subsequent Recovery
Presented by Martin D. Weiss, Ph.D.
Weiss Research, Inc.
National Press Club
Washington, DC
March 19, 2009

Part I
The FDIC Greatly Understates the Number and Assets of U.S. Banks Currently at Risk of Failure

Part II
U.S. Commercial Banks Have Taken Massive, Often Unquantifiable, Risks in Their Derivatives Holdings

Part III
Silencing the Potential Triggers of Global Collapse Does Not Address Its Causes

Part IV
U.S. Commercial Banks Are Vulnerable to Contagion Despite Expanded Deposit Insurance
see page 27: Why FDIC Insurance Coverage Does Not Protect the Banking System

Part V
Government Rescues Have Both Failed to Resolve the Debt Crisis AND Weakened the Banking System

Part VI
The Most Dangerous Unintended Consequence of All:
A Continuing Expansion of Federal Rescues Can Severely Damage the Government’s Borrowing Power

Part VII
The “Too‐Big‐Too‐Fail” Doctrine Has Failed

Part VIII
Recommendations for a Balanced, Sustainable Recovery


Appendix A
beginning page 53: Commercial and Savings Banks Rated D+ (Weak) or Lower
A list of troubled banks, is your bank listed?

Appendix B
Savings and Loans Rated D+ (Weak) or Lower
A list of troubled S&L, is yours listed?

http://www.moneyandmarkets.com/files/documents/banking-white-paper.pdf


edit for another link...
The Safe Money Banking Survival Guide
by Martin D. Weiss, Ph.D., and Michael Larson

Contents
1. How to Buy Treasury Bills or Equivalent
2. How to Use Your Treasury-Only Money Fund as a Bank
3. How to Set Up a Single, Safe Account for Nearly All Your Savings and Checking
4. What To Do With Your 401k
5. How to Get Rid of Risky Stocks Despite What Your Broker May Say
6. What to Do About Your Not-So-Risky Stocks
7. More, Equally Urgent Information on Bear Markets
8. Want to Stick With Banks? Here Are the Risks
9. How To Find a Strong Bank
10. How Risky or Safe Is Your Insurance?
11. Treasury-Only Money Market Funds
12. Weakest Banks and Thrifts in the U.S.
13. Strongest Banks and Thrifts in the U.S.
14. Weakest Life & Health plus Property & Casualty Insurers in the U.S.
15. Strongest Life & Health plus Property & Casualty Insurers in the U.S.
16. Select U.S. Brokers With Their Capital Multiples44

http://www.martinweiss.com/images/pdf/SMR0250_BankingSurvivalGuide.pdf

[snot]

93. Impt. quote from the article you're quoting:

"Hidden in an obscure corner of the derivatives market is a unique credit default swap that virtually no one is talking about — contracts on the default of United States Treasury bonds. Quietly and without fanfare, a small but growing number of investors are not only thinking the unthinkable, they’re actually spending money on it, bidding up the premiums on Treasury bond credit default swaps to 14 times their 2007 level. This is an early warning of the next big shoe to drop in the debt crisis — serious potential damage to the credit, credibility, and borrowing power of the United States Treasury."

[Tace]

37. Full Commanding Denial (James Kunstler)

For those of you sitting on U.S. Treasury bonds and bills, now would be a good time to get out.

James Kunstler -- World News Trust

March 23, 2009 -- If central casting called for a poised, straight-talking, and capable-seeming president, it would be hard to come up with someone better than the Barack Obama who walked and talked around the White House grounds with Steve Croft on "60-Minutes" Sunday night. He may perfectly represent the majority who elected him, though, because he also appears to be in full commanding denial of the realities overtaking our American experience.

Those realities include the fact that we can't possibly return to the easy credit and no money down "consumer" economy no matter how many nominal dollars get shoveled into the fiery furnaces of banks too-big-to-fail. As Treasury Secretary Geithner's underling, Stephanie Cutter, said last week, "Our singular focus is on increasing lending to support economic recovery. Everything we do to stabilize the financial system is done with that goal in mind."

Lending on the scale that became normal over the last decade is for sure the one thing that we will not recover. We turn around in 2009 to find ourselves a much poorer nation than we thought we were a year ago, especially among that broad range of formerly middle-class wage-earners who lived so luxuriously until yesterday. The public can't process this reality and the president, for all his relaxed charm, is either not ready to articulate it, or can't process it himself.

Everything that we're doing right now is engineered to avoid reality, to sustain the unsustainable, to recover the unrecoverable, when the mandate of reality compels us to face our losses in order to move on to the next chapter of a collective American life. The next chapter would be a society that runs on a much more local and modest scale, centered on essential activities like growing food, requiring harder physical work, and focused attention -- in other words, the opposite of a society lost in abstractions, long-range daisy chains of off-loaded responsibility, and incessant pleasure-seeking.

http://www.worldnewstrust.com/wnt-reports/commentary/full-commanding-denial-james-kunstler.html

[DemReadingDU]

40. Time to get out of Treasury Bills?

and what to do with the cash? bury it in the ground? the mattress? a 500 pound safe?

[tama]

47. Insulate your home

burn it to keep worm, pay of all debts (aka destroy money as debt), wipe out the memory banks in bankster's computers, lots of ideas...

If money really is the Eye of the Sauron at the top of the civilization wide pyramid fraud - as it is - then how do we liberate us from it's hypnotic gaze?

[MattSh]

48. I hope Kunstler is right when he says...

Lending on the scale that became normal over the last decade is for sure the one thing that we will not recover.

My fear is that somehow, someway they do manage to revive this mess, at the cost of a trillion or ten. Inevitably it will fail again, making a bigger mess the next time around.

[tama]

50. There seems to be

a relatively wide consensus - Kunstler included - that there will be a sizable dead cat bounce labelled as "return to normality" before the hard reality (that limits of growth, PO etc., are really allready way behind) really hits the general awareness. What is interesting is Kunstlers prediction of very rapid timetable...

[antigop]

38. Why do I get the feeling that somehow these guys are going to profit from Geithner's plan?

http://www.washingtonpost.com/wp-dyn/content/article/2009/02/15/AR2009021501283.html
Feb, 2009

District-based Carlyle Group, a giant private-equity firm, has raised around $1 billion and hopes to add $2 billion more for investments in financial institutions that come up for sale under President Obama's economic rescue plan, according to people familiar with the company's plans.

The buyout firm will use the money to help with the recapitalization of banks whose balance sheets have been rocked by toxic mortgage assets and are in need of cash, said the sources, who spoke on condition of anonymity because they are not authorized to speak publicly. The financial crisis has crippled institutions big and small.

Seeking to jump-start the economy, Treasury Secretary Timothy F. Geithner last week said he will seek private-sector help for the banks, offering loans at favorable rates and putting up government backing to reduce the risks to investors like Carlyle.

With $40 billion in cash on the sidelines waiting for the right play, Carlyle could find many profitable deals in the financial sector.

Two of the firm's co-founders, William E. Conway Jr. and David M. Rubenstein, have been saying for months that there is a role for private equity in the bank bailout and that there's money to be made.

[BelgianMadCow]

44. ooo to have intimate knowledge of the REAl value of the toxics..

as I bet some do have but don't share, mmm you could make a killing - buy it together with the government, they assume the risk, and since you can cherrypick a bit - hooray!

I straight away had that gut reaction when hearing about the private involvment. There is a LOT of room for gaming the system now.

You putting Carlyle in the picture - things that make you go hmmm.

[tclambert]

65. Three ladies can accurately predict the value of these toxics.

"Double, double toil and trouble;
Fire burn, and cauldron bubble."

"Fillet of a fenny snake,
In the cauldron boil and bake;
Eye of newt and toe of frog,
Wool of bat and tongue of dog,
Adder's fork and blind-worm's sting,
Lizard's leg and owlet's wing,
For a charm of powerful trouble,
Like a hell-broth boil and bubble.

"By the pricking of my thumbs,
Something wicked this way comes."

"Squinting my dead eye I see,
The lowering demon is AIG!"

(The witches flee for their lives.)

[Karenina]

46. Ah, the usual suspects...

[Demeter]

53. They Can Try...But Their Recent Record Is NOT Good

If they are still stuck in the 1990's mode, they'll be hurt badly, for sure.

[Dr.Phool]

39. Madoff judge gets Nigerian letter from US Attorney's office.

http://www.talkingpointsmemo.com/archives/2009/03/wow_i_needed_that.php


This is good. Imagine what they'd send to Cheney's sentencing.

:rofl: :rofl: :rofl: :rofl:

[specimenfred1984]

45. We'll commit fraud, continue committing fraud and you'll pay for it

That's the plan. Maybe Tim Wood can find an answer in some 100 year old kook numbers.

[tclambert]

67. Fraud? There you go with the moral judgments again.

If all you believe in is economics, morality is a nonsense word, something your PR staff uses to befuddle the customers. If you have enough money and don't like the current "morality," you just buy some churches and pay your hired clergy to preach a "new morality." Perhaps one in which "greed is good" and wealthy people are automatically more virtuous than poor people.

[Tansy_Gold]

77. Calvinism -- where wealth is sign of grace

excuse me while I :puke:

[Demeter]

54. Sleight of Hand--Who's NOT in the Daily News?

I am beginning to suspect legerdemain is being employed. One doesn't hear anything about Goldman Sachs as far as how they are doing, does one?

One only hears two things: how many troops they've got over in the Fed and Treasury and Obama Administration, and how much taxpayer cash is getting funneled to them either directly or through AIG. They must need that cash, though. They aren't shelling it out as bonuses, or crowing, or giving it back.

I'm willing to bet 50 cents (ten times my usual) that Goldman Sachs Is REALLY deep in the zombie state, and all the agitation over AIG and poor little Timmy is smokescreen. Why else would they have funded the Obama campaign so handsomely, once the writing was on the wall that the GOP was out of the running?

If you have any observations to counter this suspicion, please post.

[Tansy_Gold]

55. Well, it's either that or. . . . . .

Goldman Sachs is reaping everything that's been sown in the way of redistributed taxpayer wealth.

Personally, I'm inclined toward the latter. I can't imagine Geithner and Summers and Rubin and Bernanke and all the rest of 'em would let their alma mater (figuratively, if not literally) starve to death. I mean, the money has to land SOMEWHERE, so why not at G-S?

It sure didn't end up with



Tansy Gold

[tclambert]

56. C'mon, I go into work early, don't check in, and you guys let the stock market go crazy.

I thought I could trust you guys.

Seriously, just got in. What the FU and CK happened? Up 4.5%?

[specimenfred1984]

57. Any guesses where the BS stops? Mine is still around 850 on the S&P

Although the S&P could go to 1000 and still be in a clear downtrend. Anyone else notice how it traded today: move up with no pullback, floats for 3 hours then moves up again; that's the way a rigged/propped market trades. Our population is so brainwashed it easily swallows Geithner's so-called plan to magically make bank frauds disappear, especially when the markets are manipulated by the same propaganda machine that got Geithner into his position to begin with.

As worn out as the FDR comparisons are, Obama's efforts will all be just a continuation of the deregulation era fraud until, like FDR, he removes all people connected to banks from his administration.

[Dr.Phool]

58. I believe the term is regulatory capture.

Horrendous when repukes do it. A gift from God when we do it.

[Karenina]

69. I seriously doubt he can do that and live

given the ties between the MIC and the Central Banks. They've had a plan for centuries that is "too big to fail." The Fed cannot be overruled by ANY government agency. So says Greenspan:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=385x287788

[Tansy_Gold]

63. from "Stephanomics" -- BBC economics editor Stephanie Flanders

http://www.bbc.co.uk/blogs/thereporters/stephanieflanders/

(lifted from another thread, thanks to whoever posted it there)

The devil's not in the details. It's in the basic idea.

Like nearly every finance minister in the developed world, the US treasury secretary would like US banks to offload their toxic assets at a price that both private investors and voters are happy to accept. It can't be done. Someone is going to end up sad - probably the voters.

We have fallen into the habit of taking the term "toxic" a bit too literally. These assets aren't bits of plutonium sitting in the vaults of the banks, infecting everything that comes close. They are simply assets. What's toxic about them is the fact that they don't have a market-clearing price.

Put it another way, there isn't a price that banks are willing to accept and investors are willing to pay. This is the problem that's bedevilling governments the world over and it's worth repeating. It's not that these assets have no value, as some would suggest, it's that there's no price that the banks are willing to accept.

MORE AT LINK

tg

[Dr.Phool]

66. Good explanation.

The banks are going to have to suffer from their mistakes, er fraud. Give Goldman a good kick in the Sacks, stomp them a couple of times, and maybe they'll learn something. Half a dollar on the dollar is better than nothing on the dollar.

There might not be any bonuses and yachts for a while, but tough shit.

[Tansy_Gold]

70. My reading of all this, including the opposition blogs/columns/etc.

is that no matter what, the banks will get 100% of their current book value for the "toxic" assets. They can do this because the buyers will be 100% (of their 93%) backed by the taxpayers, whether the taxpayers like it or not.

Thus there is no incentive for the banks to lower the price and no incentive for the buyer to haggle.

So what happens when the buyers want to sell and make a profit on that sale? Who's gonna buy the shit next? At what point does a U.S. Marshal come a-knockin' on your door with a gun pointed at your belly and say, "Fork it over, fuck-head. You're buyin' this here toxic ass-it and I don't give a fuck what you do with it 'cause it's yours."



Tansy Gold

[Demeter]

74. They Could Put It In Cereal Boxes As Premiums

[tclambert]

68. Up 6.8%?

Well, OK then. I guess the recession is over. Any unemployed people get jobs out of this?

DJIA up 497.48 (+6.84%)
Nasdaq up 98.5 (+6.76%)
S&P 500 up 54.38 (+7.08%)

[truthisfreedom]

71. My advice? SELL NOW.

This is not going to last.

[Dr.Phool]

73. You're not alone. BoA's Bernstein says sell bank stocks.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3796666

Thread by NeoConSuck


Source: Bloomberg.com

Investors should sell bank stocks after they rallied 12 percent today because the Treasury Department’s plan to buy toxic assets won’t stop profits from dropping, Bank of America Corp.’s Richard Bernstein said.

Removing devalued loans and securities from banks’ balance sheets is a short-term solution that will delay the problem’s ultimate solution, which is bank takeovers, Bernstein said. The government won’t be able to inflate the prices banks receive for selling bad assets indefinitely, he added.

“The history of bubbles shows quite well that financial sector consolidation is inevitable,” Bernstein, Bank of America’s chief investment strategist, wrote in a research note. “Financial stocks will be attractive when the government tries to speed up that inevitable process. However, to the contrary, the government continues to attempt to stymie that inevitable consolidation.”


Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=ay0...


While investors are popping the champagne corks today, BOA chief investment strategist is telling investors to bail out of financial stocks soon.

[Demeter]

83. I Just Found Out One of My Income Streams Evaporates July 1

So I have $800/month to make up in 3 months....I doubt street walking would pay. too many amateurs in much better shape than I.

[Dr.Phool]

86. I saw that on another news site. Sorry to hear it.

I hope you find something fast.

[RUMMYisFROSTED]

72. Ooh! Ahh!

[Demeter]

84. Pretty ! Shiny! Thank You!

[katty]

75. Dow given Viagra and Cialis--upupup - but it won't last

[Demeter]

76. Somebody Must Have Turned On Bobby McFerrin Today

http://www.bobbymcferrin.com/#

Turn on the radio button!

Here's a little song I wrote
You might want to sing it note for note
Don't Worry — Be Happy
In every life we have some trouble
But when you worry you make it Double
Don't Worry — Be Happy
Ain't got no place to lay your head,
somebody came and took your bed
Don't Worry, Be Happy
The landlord say your rent is late,
he may have to litigate
Don't Worry — Be Happy
Ain't got not cash, ain't got no style,
ain't got no gal to make you smile
Don't Worry — Be Happy
Cause when you worry your face will frown
and that will bring everybody down
Don't Worry — Be Happy

[Demeter]

85. Nine of top 10 AIG bonuses returned: NYAG Cuomo

BUT IT LOOKS LIKE SOME PEOPLE WERE WORRIED ENOUGH!!!


http://news.yahoo.com/s/nm/20090323/bs_nm/us_financial_bonuses_cuomo_3



NEW YORK (Reuters) – Nine of the 10 executives who received top bonuses from American International Group have agreed to return them, New York's top legal officer said on Monday.

New York Attorney General Andrew Cuomo told reporters on a conference call that he hopes to recoup $80 million of bonus payments, or about half of the $165 million paid by the giant insurer on March 15.

"A number of them have risen to the occasion and I applaud them," said Cuomo, who is investigating several banks and firms, including AIG, who received bailout money and paid handsome bonuses to employees.

Cuomo's investigation is intended to determine if AIG broke securities laws by not fully disclosing information about the award of bonuses to executives for 2008 even as it was on the brink of failure and relied on U.S. government money to stay afloat.

[Dr.Phool]

87. I'm gonna watch "24" in a couple of minutes.

I can pretend that Jack is chasing down a bunch of AIG, and Goldman-Sachs economic terrorists.