STOCK MARKET WATCH, Wednesday November 25

[ozymandius]

Source: du

STOCK MARKET WATCH, Wednesday November 25, 2009

Bush Administration Officials Convicted = 1
Name(s): David Safavian

Bush Administration Officials Charged = 1
Name(s): Richard Lopez Razo

Financial Sector Officials Convicted since 1/20/09 = 11

AT THE CLOSING BELL ON November 24, 2009

Dow... 10,433.71 -17.24 (-0.16%)
Nasdaq... 2,169.18 -6.83 (-0.31%)
S&P 500... 1,105.65 -0.59 (-0.05%)
Gold future... 1,167 +1.90 (+0.16%)
10-Yr Bond... 3.30 -0.05 (-1.37%)
30-Year Bond 4.25 -0.03 (-0.63%)

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

Market Conditions During Trading Hours

GOLD, EURO, YEN, Loonie, Silver and US$

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This thread contains opinions and observations. Individuals may post their experiences, inferences and opinions on this thread. However, it should not be construed as advice. It is unethical (and probably illegal) for financial recommendations to be given here.

Read more: du

[ozymandius]

1. Market Observation

Stimulus Junkies?
Part 2
BY RICHARD A. ECKERT

The Greenspan/Bernanke Fed

Once again, a long segue into the central theme of this article. Although I continue to be bemused by equity valuations—actually, by the rally in the markets for all risk assets—in the wake of what I perceive to be nothing but bad news (good for interest rates in the near term, I suppose, but bad for GDP, corporate earnings and risk assets in the long term), the topic I wanted to discuss in this piece is the seemingly ongoing presence of stimulus and America’s inability to wean itself from that stimulus. Indeed, as alluded to above, I believe the U.S. economy has become addicted to stimulus and consistently healthy increases in GDP are difficult to report in the absence of such stimulus.

Interest rates, led by the Fed Funds rate, have marched inexorably downward since 1982—despite the presence of two long expansions, one shorter one and one incipient recovery—when the primary concern of the Fed was keeping a lid on inflation and controlling the growth in the money supply. One could argue this downward trend was a product of diminishing inflationary pressures—and diminishing fears of inflation—but the apparently ongoing nature of the application of stimulus, in the form of ever lower interest rates, even in economic booms when demand surged and credit exploded suggest a certain reticence on the part of the Fed, especially in the Greenspan/Bernanke era. Just exactly what were they afraid of?
.....

We focus on the Greenspan/Bernanke years, because although the core mission of the Fed—to promote sustainable growth in output and, at the same time, price stability—has not changed over time, the means of fulfilling that mission have been the subject of considerable debate. The policy tools and objectives adopted by the various chairmen of the Federal Reserve Board often reflected the political and economic realities of their day. For instance, faced with a decade of inflation and economic stagnation, Alan Greenspan’s predecessor, Paul Volcker, was determined to control the growth in the money supply using the Fed’s Open Market Operations to keep the Fed Funds rate at whatever level was necessary to contain that growth. With inflation largely under control by 1982, the Fed’s primary policy objective gradually shifted back toward one of maintaining the Fed Funds rate at a specified level.
.....

Since then, the Fed has played a very active, interventionist role in both the U.S. economy and global credit markets. Over the following 19 ½ years, there have been three recessions and three expansions (if, indeed, the latest increase in reported GDP represents the beginning of a sustained expansion). All three of the expansions have given rise to huge asset bubbles (given the data in the first section of this report and IPO Nos, we are assuming the meteoric rise in equity and other risk asset valuations since March of this year in the absence of improving economic or financial fundamentals represent the formation of yet another bubble). The deflation—or outright bursting—of the two preceding bubbles have served as catalysts for subsequent recessions. And each of the last two recessions required successively larger increases in the monetary stimulus provided—and both required assistance from fiscal authorities, once again, each program more ambitious than the last.

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

[Tansy_Gold]

4. "America's" inability. .. . . . . or Timmy's inability to quit giving away

our money to his insatiable parasite friends?


"America" is far more the victim than the victimizer, imho





TG

[Demeter]

42. If It Is Only the Result of Stimulus, Then It Isn't Growth

It's more like self-gratification.

[Tansy_Gold]

53. "Self-gratification"

Wankers.



:evilgrin:




TG

[Demeter]

57. It Helps to Have a Large, Obscure Vocabulary

full of euphemisms, when you want to insult educated idiots. You caught my drift.

[Ghost Dog]

63. .

x(

(I woke up in the middle of the night thinking: uh, I guess Baghdad is/was not much more than two or three times the size of Marrakech). http://www.guardian.co.uk/uk/iraq-war-inquiry

:cry:

[ozymandius]

2. There's a mountain of reports today.

08:30 Personal Income Oct
Briefing.com 0.1%
Consensus 0.1%
Prior 0.0%

08:30 Personal Spending Oct
Briefing.com 0.3%
Consensus 0.5%
Prior -0.5%

08:30 PCE Prices Oct
Briefing.com 0.2%
Consensus 0.1%
Prior -0.5%

08:30 PCE Prices - Core Oct
Briefing.com 0.1%
Consensus 0.1%
Prior 0.1%

08:30 Initial Claims 11/21
Briefing.com 510K
Consensus 500K
Prior 505K

08:30 Continuing Claims 11/14
Briefing.com 5630K
Consensus 5565K
Prior 5611K

08:30 Durable Orders Oct
Briefing.com 0.3%
Consensus 0.5%
Prior 1.0%

8:30 Durable Orders ex Transportation Oct
Briefing.com 0.5%
Consensus 0.6%
Prior 0.9%

09:55 Mich Sentiment-Rev Nov
Briefing.com 65.0
Consensus 67.0
Prior 66.0

10:00 New Home Sales Oct
Briefing.com 420K
Consensus 404K
Prior 402K

10:30 Crude Inventories 11/20
Briefing.com NA
Consensus NA
Prior -0.887K

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

[Tansy_Gold]

6. So, tell me. Does the figure above indicate that spending is rising

faster/more than income? Is this not the recipe for. . . . .something bad?



Tansy Gold, who has other recipes on her mind. . . .

[ozymandius]

11. I do not believe that people are going into debt just t spend.

In my mind - it is a comparison of two different ratios: percentage of personal income increase versus percentage of amount spent when compared to the previous measure of these stats. One does not necessarily follow the other.

I recall when at the peak of the housing market there was a sharp increase in related spending. This was mostly durable goods. Even though we are nowhere near the levels of housing turnover as we were in 2006 - some of the personal spending activity is certainly tied to home sales associated with stimulus money.

[DemReadingDU]

9. There's no missing the disclaimer now

Thanks for enlarging the letters.

[ozymandius]

12. I caught the aftermath of the spam troll.

Enlarging the letters probably will not be a deterrent. Spam trolls are, after all, spam trolls. But the font size increase should serve as a warning that any post of that sort will not last long.

[Tansy_Gold]

16. How did you know it was a spam troll?

And just what IS a spam troll?



Tansy Gold, the obviously ignorant. . . .

[ozymandius]

18. The comments that followed were the biggest clue.

I've seen spam trolls here before. They typically post something to drive people to a site. I've never seen one with a post count higher than ten. If they're lucky - ten is as far as they get before they're tombstoned.

[Ghost Dog]

This one posted just the once, so at least had good taste.

<g>

[Tansy_Gold]

23. Not all tombstones are tombstones. Some are red barons. . .

flying off to fight another day. . . . .

If a post gets pulled, it's designated by "message deleted" and if you go to view the author's profile, you get the tombstone, even if the poster hasn't been axed. I guess it's to prevent questions or stalking or whatever, but it's true. It really is. :evilgrin:




Tansy Gold, who had pizza for supper last night

[DemReadingDU]

27. I had a post removed one time

It was months ago, I guess I posted something from an unreliable source.
:shrug:

I'm just glad I wasn't tombstoned

[Ghost Dog]

19. imho, it's any and all commercial advertising, for a start.

But then I'm a radical progressive socialist extremist activist.

:deadstraight:

[hamerfan]

68. Spam Troll!

Next Halloween's costume idea.
Thanks as I've never heard of this term before, either.

[Warpy]

59. It's bizarre that a disclaimer has to be posted at all

since this is a message board clearly labeled "underground" with no ties to any investment site, whatsoever.

It's like a metal sign I saw on a woodstove years ago, "STOVE MAY BE HOT."

[UpInArms]

36. Oct Durable goods fall 0.6% (surprise!) savings rate falls - spending rises

Oct. durable-goods shipments fall 0.2%
8:30 a.m. Today

Oct. durables orders ex-transportation fall 1.3%
8:30 a.m. Today

Oct. durable goods below expectation of 0.5% rise
8:30 a.m. Today

U.S. Oct. durable-goods orders down 0.6%
8:30 a.m. Today

U.S. Oct. savings rate falls to 4.4% vs. 4.6%
8:30 a.m. Today

U.S. Oct. real disposable incomes rise 0.2%
8:30 a.m. Today

U.S. Oct. real consumer spending rises 0.4%
8:30 a.m. Today

U.S. Oct. personal incomes rise 0.2%
8:30 a.m. Today

[ozymandius]

38. That is fairly consistent with the ATA numbers.

Posting again:

http://www.truckline.com/pages/article.aspx?id=614%2F{8E1C7279-ED27-4C03-B189-CEEEE26BBB12}

[UpInArms]

40. g'morning, Ozy! and happy turkey day to you and yours!

from me and mine

:grouphug:

and to every other SMWer and DUer, also!

[Demeter]

43. Second That! Whipped Cream on the Pumpkin Pie!

[UpInArms]

37. Initial Claims @ 466,000

Four-week moving average for claims hits 496,500
8:33 a.m. Today

Claims under 500,000 mark for 1st time in 54 weeks
8:33 a.m. Today

U.S. first-time jobless claims down to 466,000
8:31 a.m. Today

[FBaggins]

49. Whoo Hoo! ??

So we're finally back down to about the worst claims figure from the last recession?

Ok... yes, it's good news... but perspective is important.

[Demeter]

54. That's What They'd Like You To Believe

until the figures are revised next month, and the month after, and the month after that...

[ozymandius]

3. Oil rises above $76 amid weak demand, dollar drop

SINGAPORE – Oil prices rose above $76 a barrel Wednesday in Asia as investors mulled whether signs of a sluggish U.S. economy and weak crude demand justify a further sell-off this week.
.....

The Commerce Department on Tuesday revised down third quarter gross domestic product growth to 2.8 percent from 3.5 percent, a disappointing result since economies emerging from recessions often see larger expansions.
.....

Crude inventories jumped more than expected last week, the American Petroleum Institute said late Tuesday. Crude stocks rose 3.3 million barrels while analysts had expected a rise of 1.4 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
.....

In other Nymex trading, heating oil was up 0.91 cent to $1.96 a gallon. Gasoline for December delivery was steady at $1.94 a gallon.

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

[Ghost Dog]

5. Dollar Bears Find Strength

By TheLFB-Forex.com 11/25/09 - 06:39 AM EST

NEW YORK (TheStreet) -- The dollar index moved lower during the overnight session as traders looked to add risk to their balance sheets.

This has pulled the dollar index below the 75.00 area, the main swing point of the last two weeks of trading. The major pairs' uptrend was led by the pound, which surged on better quarterly data and by the yen, which fell to the lowest value touched since late January.

The U.S. session Wednesday is loaded with important news reports, which are likely to have an important influence on the currency market. Momentum and volatility are expected to pick up during the U.S. open.

/... http://www.thestreet.com/story/10632778/1/dollar-bears-find-strength.html

[Ghost Dog]

7. Euro/dlr hits 15-month high; Swiss franc hits parity

Wed Nov 25, 2009 6:50am EST LONDON, Nov 25 (Reuters) - The dollar extended losses on Wednesday, hitting a 15-month low against the euro, on views U.S. rates would stay low and as Russia said it would diversify currency reserves.

The euro rose to $1.5096 EUR=, its highest since early August 2008, according to Reuters data.

The Swiss franc rose to 0.9994 franc against the dollar CHF=, briefly breaking parity for the first time since April 2008.

Russia's central bank said on Wednesday it was preparing to invest some of its foreign exchange reserves in Canadian dollars CAD=D4 in order to diversify its currency portfolio.

/. http://www.reuters.com/article/marketsNews/idCNGEE5AO1A420091125?rpc=44

---

[ozymandius]

8. Wary consumers, rising unemployment snag recovery

WASHINGTON – The economy is not growing as fast as the government first thought and the recovery still faces significant obstacles, including households nervous about spending and rising unemployment.

Economists expect new reports Wednesday to give a better picture of how things are shaping up for the final three months of the year.
.....

Even with signs of strength, economists worry the recovery could falter if consumer spending, which makes up 70 percent of economic activity, drops in the face of unemployment that is already at the highest point in 26 years and is expected to keep rising.
.....

But like the rebound in consumer spending, the worry is that the strength in October reflects temporary factors that will fade in the months ahead. Sales of existing homes soared 10.1 percent to a seasonally adjusted annual rate of 6.1 million units in October, the National Association of Realtors reported Monday.

http://news.yahoo.com/s/ap/20091125/ap_on_bi_go_ec_fi/us_economy

[Po_d Mainiac]

26. "Wary consumers"

Another euphemism. More like tapped out and getting screwed by the banking industry (read credit card issuers)

Last night's FRONTLINE should have opened a few eyes. Turbo's statement about not capping fees left little doubt as to where his loyalties lie. :grr:

[tclambert]

10. Good 'toon. Don't conservatives tire of getting it wrong?

Besides social security, medicare, and health care reform, the conservatives opposed giving women the vote, ending slavery (the Republicans were the progressives back then), and rebelling against that nice King George III.

[ozymandius]

13. You'd think.

If I were a conservative, I really would get tired of being on the wrong side of history.

Every. Single. Time.

Funny thing about conservatives: They fight so ferociously to keep social equity programs from being enacted. But if given the chance to dissolve them - they just cannot find the will to pull the trigger.

[Ghost Dog]

24. And they have approved (apart from that one rebellious case)

international interventionism, state-terrorism in general, armed criminality and so-called war against the weak, but never against the strong, right?

Not to mention environmental destruction.

[ozymandius]

14. BEFORE THE BELL:US Stock Futures Up; Fed Minutes Fuel Optimism

U.S. stock futures pointed to a higher opening on Wall Street Wednesday, as investors continued to draw optimism from the Federal Reserve's more upbeat outlook on the U.S. economy.

S&P 500 futures gained 5.40 points to 1108.50, and Nasdaq 100 futures added 8.75 points to 1795.20. Futures on the Dow Jones Industrial Average rose 42 points to 10447.

U.S. equities finished modestly lower Tuesday, but pared what had been steep declines. The Dow Jones Industrial Average fell 17 points, or 0.2%, to 10433.
"Today's sentiment will definitely be driven by the FOMC minutes from yesterday, especially by the better-than-expected forecast regarding growth and the fact that interest rates will remain low in 2010," said Christian Tegllund Blaabjerg, chief equity strategist at Saxo Bank.

In the minutes from its latest meeting, the Federal Reserve revised up its growth projections for the U.S. economy for this year and 2010.

Central bankers also expect the unemployment rate, which hit a hit a 26-year high of 10.2% in November, to stay in the range of 9.3% to 9.7% next year. That's a slightly more positive projection that the Fed's June forecast.

Blaabjerg, however, expressed skepticism about the Fed's projections regarding unemployment and growth.

"The Fed must be assuming that the consumer is starting to spend again," he said. "To be quite frank, we are skeptical whether the U.S. consumer will step up as much as the Fed expects. The debt overhang is quite significant."

http://online.wsj.com/article/BT-CO-20091125-704881.html?mod=rss_Hot_Stocks

[Po_d Mainiac]

22. Conservatives and the Fed have a lot in common..

They keep getting it wrong. Again and again. G

good morning :donut:

[ozymandius]

30. Federal Reserve Endorses Communism for the Wealthy

From Ritholtz:

Here’s a candidate for the understatement of the year: The Federal Reserve is concerned that their free-wheeling, money-printing, dollar-destroying, quantitative-easing, zero-percent interest rate policy might be “fueling undue financial-market speculation.”

Do ya think?

The Fed is a serial bubble blower worse yet, they have refused to hold the most aggressive and damaging speculators accountable for their own losses. Instead, they have participated in a massive socialization of risk, where profits remain private but losses are the taxpayers’ burden.
.....

My pet theory is that all of the anger about Health Care Reform is misdirected rage at the corrupt Bailouts. I don’t want to get too Continental on you, but the conversation in Europe I encountered repeatedly was the sheer perplexity at why people are protesting health care coverage for all. One fund manager said to me in Berlin, “You give trillions to rogue bankers, yet you have 40 million uninsured American. Why is that?”

http://www.ritholtz.com/blog/2009/11/federal-reserve-endorses-communism-for-the-wealthy/

[Ghost Dog]

28. "The Fed must be assuming that the consumer is starting to spend"...

Surely, due to the crashing dollar, core consumer price inflation (food, medicines, education, other essentials...) will cause the (degraded, uninterpreted) numbers to indicate this next year (after Christmas)? Unless...

[ozymandius]

15. GM to keep all German Opel plants open

General Motors (GM) has said that it will not be closing any of Opel's four plants in Germany as part of its restructuring plans.

The US carmaker also said it would be cutting between 9,000 and 9,500 jobs in Europe, slightly fewer than the 10,000 it originally estimated.
.....

GM pulled out of the deal to sell Opel and Vauxhall to Magna after months of negotiation, citing "an improving business environment".

The decision caused anger in Germany and sparked walkouts at German plants.

http://news.bbc.co.uk/2/hi/business/8378252.stm

[ozymandius]

17. Washington Post to Shut U.S. Bureaus

The Washington Post will close its last three remaining national bureaus in a cost-cutting move, Kris Coratti, the paper’s director of communications, said Tuesday.

The decision effectively means The Post will cover national stories by traveling from its base in Washington. The reporters from the bureaus — in New York, Chicago and Los Angeles — will be offered the opportunity to relocate to Washington, Ms. Coratti said, though three news assistants in those cities will lose their jobs.
.....

The Post has closed several sections and has had several rounds of buyouts to reduce the staff. Six years ago the paper had a newsroom staff exceeding 900 people. This year it had reduced the number to under 700.

http://www.nytimes.com/2009/11/25/business/media/25post.html

[Demeter]

55. And the Beltway Bubble Collapses In on Itself

and DC is hermetically sealed away from reality....

[ozymandius]

20. Gold Rises to Record on Dollar Drop, Report India May Buy More

Nov. 25 (Bloomberg) -- Gold climbed to a record in London and New York on a further drop by the dollar and on a report that India may buy more bullion for its central-bank reserves.

Gold has rallied 11 percent since India said on Nov. 3 it bought 200 metric tons of gold from the International Monetary Fund. The country, the world’s largest gold consumer, is open to additional purchases from the IMF, the Financial Chronicle newspaper reported. The U.S. Dollar Index fell for a third day.
.....

Bullion futures for February delivery on the New York Mercantile Exchange’s Comex division climbed 1 percent to $1,179.40 an ounce, after earlier reaching $1,181.60. Up for a ninth day, futures are set for the longest stretch of gains since August 1982.

Reserve Bank of India Governor Duvvuri Subbarao declined to comment on the report. A further purchase would make the country’s stockpile the world’s eighth-largest, overtaking the Netherlands and Russia, according to figures from the producer- funded World Gold Council.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aylyjG85AUYU&pos=7

[Maeve]

21. This one is worth a rec just for the cartoon! Snagging it for my collection

And :hi: y'all--I've been deep in family and business matters--#2 Son is marrying his Air National Guard Sweetie Saturday and life has been hectic.

Keep up the good work and know it is appreciated even when folks don't tell you so!

[ozymandius]

29. Maeve!

Congratulations for your son and nearly daughter-in-law! Thank you very much for dropping by.

:hug:

[Demeter]

44. Mazel Tov!

[Ghost Dog]

50. Umm. "mazel tov definition"

mazel tov (mä′zəl tōv′, -tō̂f′)

interjection
used to express congratulations
also mazeltov maz′el·tov′

interjection

Etymology: Heb (often via Yiddish) < māzal, luck + tōv, good

/... http://www.yourdictionary.com/mazel-tov

Question: I always thought Mazel Tov meant "congratulations." I recently heard that it actually means "good luck." But I thought Jews don't believe in luck...?

Answer: Your confusion is understandable. The Talmud--the ancient encyclopedia of Jewish wisdom--seems to contradict itself on the issue. In one place it states, "On your birthday, your mazel is strong." Elsewhere the Talmud reports, "The Jewish people are not subject to mazel"!

The word mazel literally means "a drip from above." Mazel can have different connotations depending on its context, but they are all connected to this basic definition--something trickling down from above.

...

There is another meaning of the word mazel that is more relevant to the phrase Mazel Tov. Mazel is the term used in Jewish mysticism to describe the root of the soul. The mystics say that only a ray of our soul actually inhabits our body. The main part of the soul, our mazel, remains above, shining down on us from a distance.

/... http://www.chabad.org/library/article_cdo/aid/160965/jewish/What-Does-Mazel-Tov-Mean.htm

Go n-éirí an t-ádh leat!

[ozymandius]

25. UBS, Ernst & Young Face Luxembourg Test Cases Over Madoff Funds

Nov. 25 (Bloomberg) -- UBS AG and Ernst & Young LLP may face hundreds of damages claims if investors who lost millions of dollars in mutual funds linked to Bernard Madoff’s Ponzi scheme win a group of Luxembourg test cases.

Private and institutional investors who lost money through Access International Advisors LLC’s LuxAlpha Sicav-American Selection are suing UBS and Ernst & Young for “seriously neglecting” their supervisory duties of the fund. A Luxembourg court will decide in hearings starting today whether investors have the right to bring direct claims against the fund’s custodian and auditor.
.....

They are the first cases to resolve whether investors who used an intermediary bank to place their money with the now defunct fund can be considered shareholders.
.....

“The problem we’re facing is that people almost never directly buy into these funds, they do it through their bank,” said Francois Brouxel, a lawyer representing mainly French investors in the cases. “The liquidators only recognize one entity as shareholder and that’s the one listed on the official register, in this case the bank, not the investor.”

http://www.bloomberg.com/apps/news?pid=20601109&sid=alQLQ.qLf9LM&pos=10

---

I am getting a sense that banks may soon rue the day when the banking industry decided to become "exciting".

[ozymandius]

31. What Atrios Says

What's The Second Time Called Again?

All that money's gotta go somewhere...

Nov. 24 (Bloomberg) -- Federal Reserve officials said record-low interest rates might fuel “excessive” speculation in financial markets and possibly dislodge expectations for low inflation, according to minutes of their meeting released today.

The way it's supposed to work is that banks borrow money cheap from the Fed and then lend it to people who are going to build factories or other productive things. Instead the big banks are borrowing cheap and using it to gamble on financial assets. Heckuva job.

http://www.eschatonblog.com/2009/11/whats-second-time-called-again.html

[ozymandius]

32. “A significant portion of policymakers are simply clueless” (more Fed idiocy)

Yves Smith picked up on this one. What planet do these starch-collared paragons of idiocy come from?

---

Tim Duy, my favorite Fedwatcher, has a very good post up which combines a general reading on the state of the consumer and then segues to the Fed’s take on matters. The section I found particularly telling:

As has already been widely noted, the minutes of the most recent FOMC meeting reiterated the Fed’s eagerness to reverse, not extend, policy:

…Overall, many participants viewed the risks to their inflation outlooks over the next few quarters as being roughly balanced. Some saw the risks as tilted to the downside in the near term, reflecting the quite elevated level of economic slack and the possibility that inflation expectations could begin to decline in response to the low level of actual inflation. But others felt that risks were tilted to the upside over a longer horizon, because of the possibility that inflation expectations could rise as a result of the public’s concerns about extraordinary monetary policy stimulus and large federal budget deficits. Moreover, these participants noted that banks might seek to reduce appreciably their excess reserves as the economy improves by purchasing securities or by easing credit standards and expanding their lending substantially. Such a development, if not offset by Federal Reserve actions, could give additional impetus to spending and, potentially, to actual and expected inflation. To keep inflation expectations anchored, all participants agreed that it was important for policy to be responsive to changes in the economic outlook and for the Federal Reserve to continue to clearly communicate its ability and intent to begin withdrawing monetary policy accommodation at the appropriate time and pace.

Read that carefully and realize this: An apparently not insignificant portion of the FOMC believes that there is a terrible risk that banks loosen their credit standards and increase lending at a time when, even if the economy posts expected gain, unemployment remains at unacceptably high levels. Silly me, I thought increased lending was the whole point of the exercise to lower interest and expand the balance sheet. That whole credit channel thing. If not to expand lending during a credit crunch, then what else are they expecting?
.....

Yves here. If at all possible, it’s even worse than Duy’s horrified take suggests. Inflation? In an economy with slack capacity, high unemployment, consumers duly cautious about spending, and labor utterly lacking in bargaining power even when times were better? What planet is this inflation talk from? Bond market yields rising over supply fears are not the same as inflation worries. Are there any signs of consumer hoarding in anticipation of price increases, of spending their paychecks ASAP because they fear their money will be worse in a few month’s time? No. Consumers are trying to cut debt and build up their cash buffers, the polar opposite of the behavior you’d expect if any were worried about inflation.

[Roland99]

34. Uh, yeah! That's what we've been saying since the first bailout!

The loosening of credit ain't happening. Never was and never will, at least until the banks are fat, dumb and happy enough for themselves.

[Demeter]

45. Not Even Then

They still have all that toxic waste to palm off on us.

[Roland99]

47. They're wishing, waiting, hoping for the housing market to perk up

and that will "save" them from so many mark-to-market catastrophes.

[Ghost Dog]

52. They will never "mark to market".

They will not pay. They will cut and run (they think, if they think).

That's why there will be war. And we know who is on the wrong side.

Edit: We are witnessing, at last, the "Anglo-Saxon" nemesis. Of course, remedial measures are being taken, at the very least. And therefore a "dominant culture"-shift.

[Demeter]

56. Anglo-Saxon Nemesis?

You mean the revolt of the WASP men? (And a pretty revolting bunch they are, with some exceptions)....

[Ghost Dog]

64. Revolt against, I mean,

such, uh, revoltingness.

http://www.youtube.com/watch?v=UmUqw8GSOzQ
http://www.youtube.com/watch?v=KtX-V4OE50
http://www.youtube.com/watch?v=nwspfejIXEw
http://www.youtube.com/watch?v=qWr-mGWj0vk
http://www.youtube.com/watch?v=iqIP5CeEK_c

[ozymandius]

33. ATA Truck Tonnage Index Declines in October (we're not buying so much after all)

Story here:

The American Trucking Associations’ advance seasonally adjusted (SA) For-Hire Truck Tonnage Index decreased 0.2 percent in October, following a 0.3 percent contraction in September. The latest decline lowered the SA index to 103.6 (2000=100) from the revised 103.8 in September. ...

Compared with October 2008, SA tonnage fell 5.2 percent, which was the best year-over-year showing since November 2008. In September, the index was down 7.3 percent from a year earlier.

ATA Chief Economist Bob Costello said that the latest reading reflects an economic recovery that is still trying to gain balance, although it is on more solid ground than a year ago. “Repeating what I said last month, the trucking industry should not be alarmed by the small decreases in September and October,” Costello noted. “The economy is behaving as expected, with starts and stops. This is being reflected in truck tonnage, as well as most economic indicators.” He reiterated that the industry should remain prepared for ups and downs in the months ahead, but the general trend should be modest improvement. “Since consumer spending and manufacturing are not surging, trucking shouldn’t expect robust growth either. However, both retail sales and manufacturing output are exhibiting mild upward trend lines, which is the path I expect truck freight to take.”
...
Trucking serves as a barometer of the U.S. economy, representing nearly 69 percent of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods.

Calculated Risk says:

The economy fell off a cliff in September October 2008, so the year-over-year comparisons are getting easier. And just like with other indicators, trucking appears to have recovered slightly from the bottom - and is now moving mostly sideways - and will likely remain stalled until there is pickup in domestic end demand.

[AnneD]

67. Ozy....

was that an intentional funny....pick up in domestic end sale demand. We have gone from 18 wheelers and box cars to pick up trucks. :spray: Happy Thanksgiving Day.

[DemReadingDU]

35. FBI investigates Tim Durham Indianapolis millionaire

short video from WISH-tv
11/24/09 FBI raids businesses of prominent Indy exec
Around two o'clock Tuesday afternoon, the FBI raided the offices of two companies owned by well-known Indiana executive Tim Durham.
http://www.youtube.com/watch?v=HbiyGTkxJUs

11/24/09 FBI searches Durham-owned company offices
The FBI on Tuesday afternoon executed search warrants at Akron-based Fair and at Obsidian Enterprises Inc., Durham’s Indianapolis-based leveraged-buyout firm. FBI trucks late this afternoon were positioned on Monument Circle in Indianapolis as agents waited for boxes to be carried down from Obsidian’s headquarters atop Chase Tower.

The FBI action occurred the same day a 16-month-old securities registration that permitted Fair to sell investment certificates expired. An IBJ story last month raised questions about whether Fair, a consumer finance company, had the financial wherewithal to repay investors, who are owed about $200 million.

The investments paid substantially more than certificates of deposit, but unlike CDs they are not guaranteed by the government. The securities were sold only to Ohio residents, many of whom have only modest incomes.

more...
http://www.ibj.com/update-fbi-searches-durhamowned-company-offices-/PARAMS/article/11422


10/24/09 Related-party loans pile up at Durham-owned finance firm
Indianapolis businessman Tim Durham has treated Ohio-based Fair Finance Co. almost like a personal bank since buying it seven years ago, and now Durham, partners and related firms owe it more than $168 million, records show.

Fair, a consumer-loan company, listed no insider loans under prior ownership. The extensive borrowing—which represents 70 percent of Fair’s assets—worries some investment-industry observers at a time parts of Durham’s financial empire are strained.

They note that if the borrowers fail to pay off the loans, Ohioans who have provided capital to Fair for decades by buying short-term investment certificates may not get their money back.

more...
http://www.ibj.com/article?articleId=10719

[UpInArms]

39. dollar watch

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

Last trade 74.449 Change -0.619 (-0.80%)

Daily Sound Bites

http://www.dailyfx.com/forex/fundamental/article/daily_sound_bites/2009-11-25-1321-Daily_Sound_Bites.html



...more...

USD Graphic Rewind

http://www.dailyfx.com/forex/market_alert/2009-11-25-0643-USD_Graphic_Rewind.html



...more...

pictures seem more appropriate today

[Festivito]

41. Debt: 11/23/2009 12,011,838,881,463.68 (UP 1,277,139,248.47) (Mon)

(Debt down some more. Up large one day, then down some for several days. Good day all.)

= Held by the Public + Intragovernmental(FICA)
= 7,611,033,532,327.81 + 4,400,805,349,135.87
DOWN 49,087,609.27 + UP 1,326,226,857.74

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 308-Million person America.
If every American, man, woman and child puts in $3.25 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.74, ABOUT TEN BUCKS for a 1B$ 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 10 seconds we net gain another American, so at the end of the workday of the report, there should be 308,020,638 people in America.
http://www.census.gov/population/www/popclockus.html ON 11/07/2009 08:19 -> 307,879,272
Currently, each of these Americans owe $38,996.86.
A family of three owes $116,990.59. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 21 reports in the last 30 to 31 days.
The average for the last 21 reports is 5,521,422,080.36.
The average for the last 30 days would be 3,864,995,456.25.
The average for the last 31 days would be 3,740,318,183.47.
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$/day.
There were 174 reports in 253 days of Obama's part of FY2009 averaging 7.33B$ per report, 5.07B$/day so far.
There were 249 reports in 365 days of FY2009 averaging 7.57B$ per report, 5.16B$/day.
There were 37 reports in 54 days of FY2010 averaging 2.76B$ per report, 1.89B$/day.
Above line should be okay

PROJECTION:
There are 1,154 days remaining in this Obama 1st term.
By that time the debt could be between 13.6 and 18.0T$.
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)
11/23/2009 12,011,838,881,463.68 BHO (UP 1,384,961,832,550.60 so far since Obama took office.)

FISCAL YEAR DEBT CHANGE, Sep 30 prior year to Sep 30 named year:
(One "* " for each 40B$ reached)
FY1994 +0,281,261,026,873.94 ------------* * * * * * * WJC
FY1995 +0,281,232,990,696.07 ------------* * * * * * * WJC
FY1996 +0,250,828,038,426.34 ------------* * * * * * WJC
FY1997 +0,188,335,072,261.61 ------------* * * * WJC
FY1998 +0,113,046,997,500.28 ------------* * WJC
FY1999 +0,130,077,892,735.81 ------------* * * WJC
FY2000 +0,017,907,308,253.43 ------------WJC
FY2001 +0,133,285,202,313.20 ------------* * * C&B
01-WJC +0,053,598,528,417.78 ------------* WJC 31% of FY, 40% of FY-Debt
01-GWB +0,079,686,673,895.42 ------------* GWB 69% of FY, 60% of FY-Debt
FY2002 +0,420,772,553,397.10 ------------* * * * * * * * * * GWB
FY2003 +0,554,995,097,146.46 ------------* * * * * * * * * * * * * GWB
FY2004 +0,595,821,633,586.70 ------------* * * * * * * * * * * * * * GWB
FY2005 +0,553,656,965,393.18 ------------* * * * * * * * * * * * * GWB
FY2006 +0,574,264,237,491.73 ------------* * * * * * * * * * * * * * GWB
FY2007 +0,500,679,473,047.25 ------------* * * * * * * * * * * * GWB
FY2008 +1,017,071,524,649.92 ------------* * * * * * * * * * * * * * * * * * * * * * * * * GWB
FY2009 +1,885,104,106,599.30 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * B&O
09GWB +0,602,152,152,000.60 ------------* * * * * * * * * * * * * * * GWB 31% of FY, 32% of FY-Debt
09-BHO +1,282,951,954,598.70 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * BHO 69% of FY, 68% of FY-Debt
FY2010 +0,102,009,877,951.90 ------------* * BHO
Endof10 +0,689,511,212,082.29 ------------* * * * * * * * * * * * * * * * * Linear Projection

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
11/02/2009 +091,997,621,963.98 ------------********** Mon
11/03/2009 +000,189,596,548.58 ------------********
11/04/2009 -000,084,777,046.07 ----
11/05/2009 +008,148,647,528.82 ------------*********
11/06/2009 -000,072,128,565.19 ----
11/09/2009 +000,009,587,108.80 ------------****** Mon
11/10/2009 +000,298,454,946.90 ------------********
11/12/2009 +005,635,979,422.58 ------------*********
11/13/2009 -000,263,776,071.91 ---
11/16/2009 +038,287,630,031.50 ------------********** Mon
11/17/2009 +000,263,245,360.02 ------------********
11/18/2009 -000,023,369,864.09 ----
11/19/2009 -021,100,228,230.36 -
11/20/2009 -000,090,793,748.95 ----
11/23/2009 -000,049,087,609.27 ---- Mon

123,146,601,775.34 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008 while Bush was in power JUST BEFORE fiscal year end.
Bush admin borrowed $962,245,245,654.01 in those last 124 days in office crossing two fiscal years.
$360,093,093,653.42 in last 12 days of FY2008, and $602,152,152,000.59 in subsequent 112 days before leaving office.

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

(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=4158618&mesg_id=4158695

[Festivito]

65. Debt: 11/24/2009 12,016,320,934,466.71 (UP 4,482,053,003.03) (Tue)

(Debt up a small amount after being down some for several days after on large jump one day now several days back when it went up. Great Thanksgiving day to everybody.)

= Held by the Public + Intragovernmental(FICA)
= 7,611,355,868,467.05 + 4,404,965,065,999.66
UP 322,336,139.24 + UP 4,159,716,863.79

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 308-Million person America.
If every American, man, woman and child puts in $3.25 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.74, ABOUT TEN BUCKS for a 1B$ 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 10 seconds we net gain another American, so at the end of the workday of the report, there should be 308,029,278 people in America.
http://www.census.gov/population/www/popclockus.html ON 11/07/2009 08:19 -> 307,879,272
Currently, each of these Americans owe $39,010.32.
A family of three owes $117,030.96. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 22 reports in the last 30 to 32 days.
The average for the last 22 reports is 5,474,178,031.39.
The average for the last 30 days would be 4,014,397,223.02.
The average for the last 32 days would be 3,763,497,396.58.
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$/day.
There were 174 reports in 253 days of Obama's part of FY2009 averaging 7.33B$ per report, 5.07B$/day so far.
There were 249 reports in 365 days of FY2009 averaging 7.57B$ per report, 5.16B$/day.
There were 38 reports in 55 days of FY2010 averaging 2.80B$ per report, 1.94B$/day.
Above line should be okay

PROJECTION:
There are 1,153 days remaining in this Obama 1st term.
By that time the debt could be between 13.6 and 18.0T$.
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)
11/24/2009 12,016,320,934,466.71 BHO (UP 1,389,443,885,553.63 so far since Obama took office.)

FISCAL YEAR DEBT CHANGE, Sep 30 prior year to Sep 30 named year:
(One "* " for each 40B$ reached)
FY1994 +0,281,261,026,873.94 ------------* * * * * * * WJC
FY1995 +0,281,232,990,696.07 ------------* * * * * * * WJC
FY1996 +0,250,828,038,426.34 ------------* * * * * * WJC
FY1997 +0,188,335,072,261.61 ------------* * * * WJC
FY1998 +0,113,046,997,500.28 ------------* * WJC
FY1999 +0,130,077,892,735.81 ------------* * * WJC
FY2000 +0,017,907,308,253.43 ------------WJC
FY2001 +0,133,285,202,313.20 ------------* * * C&B
01-WJC +0,053,598,528,417.78 ------------* WJC 31% of FY, 40% of FY-Debt
01-GWB +0,079,686,673,895.42 ------------* GWB 69% of FY, 60% of FY-Debt
FY2002 +0,420,772,553,397.10 ------------* * * * * * * * * * GWB
FY2003 +0,554,995,097,146.46 ------------* * * * * * * * * * * * * GWB
FY2004 +0,595,821,633,586.70 ------------* * * * * * * * * * * * * * GWB
FY2005 +0,553,656,965,393.18 ------------* * * * * * * * * * * * * GWB
FY2006 +0,574,264,237,491.73 ------------* * * * * * * * * * * * * * GWB
FY2007 +0,500,679,473,047.25 ------------* * * * * * * * * * * * GWB
FY2008 +1,017,071,524,649.92 ------------* * * * * * * * * * * * * * * * * * * * * * * * * GWB
FY2009 +1,885,104,106,599.30 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * B&O
09GWB +0,602,152,152,000.60 ------------* * * * * * * * * * * * * * * GWB 31% of FY, 32% of FY-Debt
09-BHO +1,282,951,954,598.70 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * BHO 69% of FY, 68% of FY-Debt
FY2010 +0,106,491,930,955.00 ------------* * BHO
Endof10 +0,706,719,178,155.91 ------------* * * * * * * * * * * * * * * * * Linear Projection

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
11/03/2009 +000,189,596,548.58 ------------********
11/04/2009 -000,084,777,046.07 ----
11/05/2009 +008,148,647,528.82 ------------*********
11/06/2009 -000,072,128,565.19 ----
11/09/2009 +000,009,587,108.80 ------------****** Mon
11/10/2009 +000,298,454,946.90 ------------********
11/12/2009 +005,635,979,422.58 ------------*********
11/13/2009 -000,263,776,071.91 ---
11/16/2009 +038,287,630,031.50 ------------********** Mon
11/17/2009 +000,263,245,360.02 ------------********
11/18/2009 -000,023,369,864.09 ----
11/19/2009 -021,100,228,230.36 -
11/20/2009 -000,090,793,748.95 ----
11/23/2009 -000,049,087,609.27 ---- Mon
11/24/2009 +000,322,336,139.24 ------------********

31,471,315,950.60 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008 while Bush was in power JUST BEFORE fiscal year end.
Bush admin borrowed $962,245,245,654.01 in those last 124 days in office crossing two fiscal years.
$360,093,093,653.42 in last 12 days of FY2008, and $602,152,152,000.59 in subsequent 112 days before leaving office.

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

(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=4160255&mesg_id=4160368

[Demeter]

46. Audit the Fed (and then RICO It!)

Panel votes to audit the Fed; cap its spending at $4 trillion

http://www.marketwatch.com/story/panel-votes-to-audit-feds-balance-sheet-2009-11-19

Rep. Ron Paul, who has sought to audit the Federal Reserve for 26 years, has inched ever so much closer to his goal.

A key congressional panel on Thursday last approved legislation introduced by the Texas congressman that - for the first time in the central bank's 95-year-history -- would require government audits of Federal Reserve monetary policy, as well as how much the central bank has lent and will lend to specific banks.

Fed Chief Ben Bernanke and other key members of the Obama administration, including Treasury Secretary Tim Geithner, had vigorously opposed the move.

The measure was approved by the House Financial Services Committee as it considered broad bank regulatory reform legislation, and included a package of other measures weakening the Fed's power and capping how much it can lend or guarantee.

The committee is now poised to pass the entire bill and has scheduled its final vote on the legislation for December 1.

Lawmakers also agreed to provisions that would require the Fed to work with other regulators before acting as a lender-of-last-resort.

"If you care about transparency of the Fed, you would allow a look at monetary policy," Paul said. "We're dealing with trillions of dollars that doesn't get audited. There is no reason why the world can't know, eventually, what the Fed is doing."

Paul's measure, which was approved by a vote of 43 to 26, would require the Government Accountability Office to audit the central bank's interest rate policy, agreements with foreign governments, foreign central banks and the International Monetary Fund. It also would permit audits of a roughly $800 billion Fed mortgage-backed securities purchase program, which could grow to $1.25 trillion, Paul said.

The GAO would be instructed to complete a Fed audit within 12 months of passage of the bill.

Paul's provision has the bipartisan support of 309 lawmakers in the House. Lawmakers in the House and Senate are considering a wide variety of provisions to reform bank regulation in the wake of the financial crisis. Read story about bank reform

The Fed has argued that it would weaken the bank's independence and hamper its ability to protect the financial system. The central bank worries that GAO audits of its monetary policy goals would influence how it makes its decisions on interest rates.

Paul's provision would seek to alleviate concerns that the audits would be politicized by setting a six-month time lag on the publication of previously unreleased audit data about the Fed's monetary policy decision-making. No additional scrutiny would be placed on transcripts and minutes of the Federal Open Market Committee meetings.

Paul's provision was opposed by Rep. Barney Frank, D-Mass., the committee's chairman. He would have preferred that the committee only approve a less intrusive measure introduced by Rep. Melvin Watt, D-N.C., which was overridden by the Paul amendment.

"If we open all of the discussions and deliberations what we will do is scare off capital because other governments will not deal with our Fed, and ultimately we will increase interest rates and it will be negative for the economy," said Watt.

The measure also would require financial audit of the central bank's financial statements and its internal controls to ensure that there are no material misstatements.

It would require the GAO to conduct an audit and release the names of financial institutions that borrow from the Fed's discount window, with a delay. The discount window is a government lending facility through which commercial banks and, in response to the crisis, investment banks borrow reserves.

The Fed opposes that provision, in part, because it argues that institutions would be afraid to borrow from the discount window when they need to because they would be stigmatized as troubled firms, and the result would be a more troubled economic situation.
A $4-trillion cap

The Federal Reserve's lender of last resort authority would be limited to $4 trillion, according to a provision approved by the committee.

"It's good to tell the American people that while the lenders of last resort's authority is enormous it is limited," said Rep. Brad Sherman, D-Calif., the measure's sponsor.

Lawmakers also approved a Sherman provision that would require that the Fed assures that there is a 99% likelihood that all funds it lends will be repaid to the central bank. The agency is required to lend to solvent institutions but doesn't provide further details.

Sherman expressed concern that the Fed had been lending funds to institutions he believed weren't fully solvent.

A Frank provision that was approved would prohibit the Fed from deciding to be a lender of last resort on its own. The central bank would need to gain approval from the council of regulators before it could provide financial assistance to the banking industry.

Ronald D. Orol is a MarketWatch reporter, based in Washington.

ADDITIONAL ANALYSIS:

http://www.informationclearinghouse.info/article24018.htm

[Demeter]

48. Priceless: How The Federal Reserve Bought The Economics Profession

http://www.huffingtonpost.com/2009/09/07/priceless-how-the-federal_n_278805.html

The Federal Reserve, through its extensive network of consultants, visiting scholars, alumni and staff economists, so thoroughly dominates the field of economics that real criticism of the central bank has become a career liability for members of the profession, an investigation by the Huffington Post has found.

This dominance helps explain how, even after the Fed failed to foresee the greatest economic collapse since the Great Depression, the central bank has largely escaped criticism from academic economists. In the Fed's thrall, the economists missed it, too.

"The Fed has a lock on the economics world," says Joshua Rosner, a Wall Street analyst who correctly called the meltdown. "There is no room for other views, which I guess is why economists got it so wrong."

One critical way the Fed exerts control on academic economists is through its relationships with the field's gatekeepers. For instance, at the Journal of Monetary Economics, a must-publish venue for rising economists, more than half of the editorial board members are currently on the Fed payroll -- and the rest have been in the past.

The Fed failed to see the housing bubble as it happened, insisting that the rise in housing prices was normal. In 2004, after "flipping" had become a term cops and janitors were using to describe the way to get rich in real estate, then-Federal Reserve Chairman Alan Greenspan said that "a national severe price distortion most unlikely." A year later, current Chairman Ben Bernanke said that the boom "largely reflect strong economic fundamentals."

The Fed also failed to sufficiently regulate major financial institutions, with Greenspan -- and the dominant economists -- believing that the banks would regulate themselves in their own self-interest.

Despite all this, Bernanke has been nominated for a second term by President Obama.

In the field of economics, the chairman remains a much-heralded figure, lauded for reaction to a crisis generated, in the first place, by the Fed itself. Congress is even considering legislation to greatly expand the powers of the Fed to systemically regulate the financial industry.
Story continues below

Paul Krugman, in Sunday's New York Times magazine, did his own autopsy of economics, asking "How Did Economists Get It So Wrong?" Krugman concludes that "conomics, as a field, got in trouble because economists were seduced by the vision of a perfect, frictionless market system."

So who seduced them?

The Fed did it.

Three Decades of Domination

The Fed has been dominating the profession for about three decades. "For the economics profession that came out of the war, the Federal Reserve was not a very important place as far as they were concerned, and their views on monetary policy were not framed by a working relationship with the Federal Reserve. So I would date it to maybe the mid-1970s," says University of Texas economics professor -- and Fed critic -- James Galbraith. "The generation that I grew up under, which included both Milton Friedman on the right and Jim Tobin on the left, were independent of the Fed. They sent students to the Fed and they influenced the Fed, but there wasn't a culture of consulting, and it wasn't the same vast network of professional economists working there."

But by 1993, when former Fed Chairman Greenspan provided the House banking committee with a breakdown of the number of economists on contract or employed by the Fed, he reported that 189 worked for the board itself and another 171 for the various regional banks. Adding in statisticians, support staff and "officers" -- who are generally also economists -- the total number came to 730. And then there were the contracts. Over a three-year period ending in October 1994, the Fed awarded 305 contracts to 209 professors worth a total of $3 million.

Just how dominant is the Fed today?

The Federal Reserve's Board of Governors employs 220 PhD economists and a host of researchers and support staff, according to a Fed spokeswoman. The 12 regional banks employ scores more. (HuffPost placed calls to them but was unable to get exact numbers.) The Fed also doles out millions of dollars in contracts to economists for consulting assignments, papers, presentations, workshops, and that plum gig known as a "visiting scholarship." A Fed spokeswoman says that exact figures for the number of economists contracted with weren't available. But, she says, the Federal Reserve spent $389.2 million in 2008 on "monetary and economic policy," money spent on analysis, research, data gathering, and studies on market structure; $433 million is budgeted for 2009.

That's a lot of money for a relatively small number of economists. According to the American Economic Association, a total of only 487 economists list "monetary policy, central banking, and the supply of money and credit," as either their primary or secondary specialty; 310 list "money and interest rates"; and 244 list "macroeconomic policy formation aspects of public finance and general policy." The National Association of Business Economists tells HuffPost that 611 of its roughly 2,400 members are part of their "Financial Roundtable," the closest way they can approximate a focus on monetary policy and central banking.

Robert Auerbach, a former investigator with the House banking committee, spent years looking into the workings of the Fed and published much of what he found in the 2008 book, "Deception and Abuse at the Fed". A chapter in that book, excerpted here, provided the impetus for this investigation.

Auerbach found that in 1992, roughly 968 members of the AEA designated "domestic monetary and financial theory and institutions" as their primary field, and 717 designated it as their secondary field. Combining his numbers with the current ones from the AEA and NABE, it's fair to conclude that there are something like 1,000 to 1,500 monetary economists working across the country. Add up the 220 economist jobs at the Board of Governors along with regional bank hires and contracted economists, and the Fed employs or contracts with easily 500 economists at any given time. Add in those who have previously worked for the Fed -- or who hope to one day soon -- and you've accounted for a very significant majority of the field.

Auerbach concludes that the "problems associated with the Fed's employing or contracting with large numbers of economists" arise "when these economists testify as witnesses at legislative hearings or as experts at judicial proceedings, and when they publish their research and views on Fed policies, including in Fed publications."

Gatekeepers On The Payroll

The Fed keeps many of the influential editors of prominent academic journals on its payroll. It is common for a journal editor to review submissions dealing with Fed policy while also taking the bank's money. A HuffPost review of seven top journals found that 84 of the 190 editorial board members were affiliated with the Federal Reserve in one way or another.

"Try to publish an article critical of the Fed with an editor who works for the Fed," says Galbraith. And the journals, in turn, determine which economists get tenure and what ideas are considered respectable.

The pharmaceutical industry has similarly worked to control key medical journals, but that involves several companies. In the field of economics, it's just the Fed.

Being on the Fed payroll isn't just about the money, either. A relationship with the Fed carries prestige; invitations to Fed conferences and offers of visiting scholarships with the bank signal a rising star or an economist who has arrived.

Affiliations with the Fed have become the oxygen of academic life for monetary economists. "It's very important, if you are tenure track and don't have tenure, to show that you are valued by the Federal Reserve," says Jane D'Arista, a Fed critic and an economist with the Political Economy Research Institute at the University of Massachusetts, Amherst.

Robert King, editor in chief of the Journal of Monetary Economics and a visiting scholar at the Richmond Federal Reserve Bank, dismisses the notion that his journal was influenced by its Fed connections. "I think that the suggestion is a silly one, based on my own experience at least," he wrote in an e-mail. (His full response is at the bottom.)

Galbraith, a Fed critic, has seen the Fed's influence on academia first hand. He and co-authors Olivier Giovannoni and Ann Russo found that in the year before a presidential election, there is a significantly tighter monetary policy coming from the Fed if a Democrat is in office and a significantly looser policy if a Republican is in office. The effects are both statistically significant, allowing for controls, and economically important.

They submitted a paper with their findings to the Review of Economics and Statistics in 2008, but the paper was rejected. "The editor assigned to it turned out to be a fellow at the Fed and that was after I requested that it not be assigned to someone affiliated with the Fed," Galbraith says.

Publishing in top journals is, like in any discipline, the key to getting tenure. Indeed, pursuing tenure ironically requires a kind of fealty to the dominant economic ideology that is the precise opposite of the purpose of tenure, which is to protect academics who present oppositional perspectives.

And while most academic disciplines and top-tier journals are controlled by some defining paradigm, in an academic field like poetry, that situation can do no harm other than to, perhaps, a forest of trees. Economics, unfortunately, collides with reality -- as it did with the Fed's incorrect reading of the housing bubble and failure to regulate financial institutions. Neither was a matter of incompetence, but both resulted from the Fed's unchallenged assumptions about the way the market worked.

Even the late Milton Friedman, whose monetary economic theories heavily influenced Greenspan, was concerned about the stifled nature of the debate. Friedman, in a 1993 letter to Auerbach that the author quotes in his book, argued that the Fed practice was harming objectivity: "I cannot disagree with you that having something like 500 economists is extremely unhealthy. As you say, it is not conducive to independent, objective research. You and I know there has been censorship of the material published. Equally important, the location of the economists in the Federal Reserve has had a significant influence on the kind of research they do, biasing that research toward noncontroversial technical papers on method as opposed to substantive papers on policy and results," Friedman wrote.

Greenspan told Congress in October 2008 that he was in a state of "shocked disbelief" and that the "whole intellectual edifice" had "collapsed." House Committee on Oversight and Government Reform Chairman Henry Waxman (D-Calif.) followed up: "In other words, you found that your view of the world, your ideology, was not right, it was not working."

"Absolutely, precisely," Greenspan replied. "You know, that's precisely the reason I was shocked, because I have been going for 40 years or more with very considerable evidence that it was working exceptionally well."

But, if the intellectual edifice has collapsed, the intellectual infrastructure remains in place. The same economists who provided Greenspan his "very considerable evidence" are still running the journals and still analyzing the world using the same models that were incapable of seeing the credit boom and the coming collapse.

Rosner, the Wall Street analyst who foresaw the crash, says that the Fed's ideological dominance of the journals hampered his attempt to warn his colleagues about what was to come. Rosner wrote a strikingly prescient paper in 2001 arguing that relaxed lending standards and other factors would lead to a boom in housing prices over the next several years, but that the growth would be highly susceptible to an economic disruption because it was fundamentally unsound.

He expanded on those ideas over the next few years, connecting the dots and concluding that the coming housing collapse would wreak havoc on the collateralized debt obligation (CDO) and mortgage backed securities (MBS) markets, which would have a ripple effect on the rest of the economy. That, of course, is exactly what happened and it took the Fed and the economics field completely by surprise.

"What you're doing is, actually, in order to get published, having to whittle down or narrow what might otherwise be oppositional or expansionary views," says Rosner. "The only way you can actually get in a journal is by subscribing to the views of one of the journals."

When Rosner was casting his paper on CDOs and MBSs about, he knew he needed an academic economist to co-author the paper for a journal to consider it. Seven economists turned him down.

"You don't believe that markets are efficient?" he says they asked, telling him the paper was "outside the bounds" of what could be published. "I would say 'Markets are efficient when there's equal access to information, but that doesn't exist,'" he recalls.

The CDO and MBS markets froze because, as the housing market crashed, buyers didn't trust that they had reliable information about them -- precisely the case Rosner had been making.

He eventually found a co-author, Joseph Mason, an associate Professor of Finance at Drexel University LeBow College of Business, a senior fellow at the Wharton School, and a visiting scholar at the Federal Deposit Insurance Corporation. But the pair could only land their papers with the conservative Hudson Institute. In February 2007, they published a paper called "How Resilient Are Mortgage Backed Securities to Collateralized Debt Obligation Market Disruptions?" and in May posted another, "How Misapplied Bond Ratings Cause Mortgage Backed Securities and Collateralized Debt Obligation Market Disruptions."

Together, the two papers offer a better analysis of what led to the crash than the economic journals have managed to put together - and they were published by a non-PhD before the crisis.

Not As Simple As A Pay-Off

Economist Rob Johnson serves on the UN Commission of Experts on Finance and International Monetary Reform and was a top economist on the Senate banking committee under both a Democratic and Republican chairman. He says that the consulting gigs shouldn't be looked at "like it's a payoff, like money. I think it's more being one of, part of, a club -- being respected, invited to the conferences, have a hearing with the chairman, having all the prestige dimensions, as much as a paycheck."

The Fed's hiring of so many economists can be looked at in several ways, Johnson says, because the institution does, of course, need talented analysts. "You can look at it from a telescope, either direction. One, you can say well they're reaching out, they've got a big budget and what they're doing, I'd say, is canvassing as broad a range of talent," he says. "You might call that the 'healthy hypothesis.'"

The other hypothesis, he says, "is that they're essentially using taxpayer money to wrap their arms around everybody that's a critic and therefore muffle or silence the debate. And I would say that probably both dimensions are operative, in reality."

To get a mainstream take, HuffPost called monetary economists at random from the list as members of the AEA. "I think there is a pretty good number of professors of economics who want a very limited use of monetary policy and I don't think that that necessarily has a negative impact on their careers," said Ahmed Ehsan, reached at the economics department at James Madison University. "It's quite possible that if they have some new ideas, that might be attractive to the Federal Reserve."

Ehsan, reflecting on his own career and those of his students, allowed that there is, in fact, something to what the Fed critics are saying. "I don't think , but then my area is monetary economics and I know my own professors, who were really well known when I was at Michigan State, my adviser, he ended up at the St. Louis Fed," he recalls. "He did lots of work. He was a product of the time...so there is some evidence, but it's not an overwhelming thing."

There's definitely prestige in spending a few years at the Fed that can give a boost to an academic career, he added. "It's one of the better career moves for lots of undergraduate students. It's very competitive."

Press officers for the Federal Reserve's board of governors provided some background information for this article, but declined to make anyone available to comment on its substance.

The Fed's Intolerance For Dissent

When dissent has arisen, the Fed has dealt with it like any other institution that cherishes homogeneity.

Take the case of Alan Blinder. Though he's squarely within the mainstream and considered one of the great economic minds of his generation, he lasted a mere year and a half as vice chairman of the Fed, leaving in January 1996.

Rob Johnson, who watched the Blinder ordeal, says Blinder made the mistake of behaving as if the Fed was a place where competing ideas and assumptions were debated. "Sociologically, what was happening was the Fed staff was really afraid of Blinder. At some level, as an applied empirical economist, Alan Blinder is really brilliant," says Johnson.

In closed-door meetings, Blinder did what so few do: challenged assumptions. "The Fed staff would come out and their ritual is: Greenspan has kind of told them what to conclude and they produce studies in which they conclude this. And Blinder treated it more like an open academic debate when he first got there and he'd come out and say, 'Well, that's not true. If you change this assumption and change this assumption and use this kind of assumption you get a completely different result.' And it just created a stir inside--it was sort of like the whole pipeline of Greenspan-arriving-at-decisions was
disrupted."

It didn't sit well with Greenspan or his staff. "A lot of senior staff...were pissed off about Blinder -- how should we say? -- not playing by the customs that they were accustomed to," Johnson says.

And celebrity is no shield against Fed excommunication. Paul Krugman, in fact, has gotten rough treatment. "I've been blackballed from the Fed summer conference at Jackson Hole, which I used to be a regular at, ever since I criticized him," Krugman said of Greenspan in a 2007 interview with Pacifica Radio's Democracy Now! "Nobody really wants to cross him."

An invitation to the annual conference, or some other blessing from the Fed, is a signal to the economic profession that you're a certified member of the club. Even Krugman seems a bit burned by the slight. "And two years ago," he said in 2007, "the conference was devoted to a field, new economic geography, that I invented, and I wasn't invited."

Three years after the conference, Krugman won a Nobel Prize in 2008 for his work in economic geography.

One Journal, In Detail

The Huffington Post reviewed the mastheads of the American Journal of Economics, the Journal of Economic Perspectives, Journal of Economic Literature, the American Economic Journal: Applied Economics, American Economic Journal: Economic Policy, the Journal of Political Economy and the Journal of Monetary Economics.

HuffPost interns Googled around looking for resumes and otherwise searched for Fed connections for the 190 people on those mastheads. Of the 84 that were affiliated with the Federal Reserve at one point in their careers, 21 were on the Fed payroll even as they served as gatekeepers at prominent journals.

At the Journal of Monetary Economics, every single member of the editorial board is or has been affiliated with the Fed and 14 of the 26 board members are presently on the Fed payroll.

After the top editor, King, comes senior associate editor Marianne Baxter, who has written papers for the Chicago and Minneapolis banks and was a visiting scholar at the Minneapolis bank in '84, '85, at the Richmond bank in '97, and at the board itself in '87. She was an advisor to the president of the New York bank from '02-'05. Tim Geithner, now the Treasury Secretary, became president of the New York bank in '03.

The senior associate editors: Janice C Eberly was a Fed visiting-scholar at Philadelphia ('94), Minneapolis ('97) and the board ('97). Martin Eichenbaum has written several papers for the Fed and is a consultant to the Chicago and Atlanta banks. Sergio Rebelo has written for and was previously a consultant to the board. Stephen Williamson has written for the Cleveland, Minneapolis and Richmond banks, he worked in the Minneapolis bank's research department from '85-'87, he's on the editorial board of the Federal Reserve Bank of St. Louis Review, is the co-organizer of the '09 St. Louis Federal Reserve Bank annual economic policy conference and the co-organizer of the same bank's '08 conference on Money, Credit, and Policy, and has been a visiting scholar at the Richmond bank ever since '98.

And then there are the associate editors. Klaus Adam is a visiting scholar at the San Francisco bank. Yongsung Chang is a research associate at the Cleveland bank and has been working with the Fed in one position or another since '01. Mario Crucini was a visiting scholar at the Federal Reserve Bank of New York in '08 and has been a senior fellow at the Dallas bank since that year. Huberto Ennis is a senior economist at the Federal Reserve Bank of Richmond, a position he's held since '00. Jonathan Heathcote is a senior economist at the Minneapolis bank and has been a visiting scholar three times dating back to '01.

Ricardo Lagos is a visiting scholar at the New York bank, a former senior economist for the Minneapolis bank and a visiting scholar at that bank and Cleveland's. In fact, he was a visiting scholar at both the Cleveland and New York banks in '07 and '08. Edward Nelson was the assistant vice president of the St Louis bank from '03-'09.

Esteban Rossi-Hansberg was a visiting scholar at the Philadelphia bank from '05-'09 and similarly served at the Richmond, Minneapolis and New York banks.

Pierre-Daniel Sarte is a senior economist at the Richmond bank, a position he's held since '96. Frank Schorfheide has been a visiting scholar at the Philadelphia bank since '03 and at the New York bank since '07. He's done four such stints at the Atlanta bank and scholared for the board in '03. Alexander Wolman has been a senior economist at the Richmond bank since 1989.

Here is the complete response from King, the journal's editor in chief: "I think that the suggestion is a silly one, based on my own experience at least. In a 1988 article for AEI later republished in the Federal Reserve Bank of Richmond Review, Marvin Goodfriend (then at FRB Richmond and now at Carnegie Mellon) and I argued that it was very important for the Fed to separate monetary policy decisions (setting of interest rates) and banking policy decisions (loans to banks, via the discount window and otherwise). We argued further that there was little positive case for the Fed to be involved in the latter: broadbased liquidity could always be provided by the former. We also argued that moral hazard was a cost of banking intervention.

"Ben Bernanke understands this distinction well: he and other members of the FOMC have read my perspective and sometimes use exactly this distinction between monetary and banking policies. In difficult times, Bernanke and his fellow FOMC members have chosen to involve the Fed in major financial market interventions, well beyond the traditional banking area, a position that attracts plenty of criticism and support. JME and other economics major journals would certainly publish exciting articles that fell between these two distinct perspectives: no intervention and extensive intervention. An upcoming Carnegie-Rochester conference, with its proceeding published in JME, will host a debate on 'The Future of Central Banking'.

"You may use only the entire quotation above or no quotation at all."

Auerbach, shown King's e-mail, says it's just this simple: "If you're on the Fed payroll there's a conflict of interest."

UPDATE: Economists have written in weighing in on both sides of the debate. Here are two of them.

Stephen Williamson, the Robert S. Brookings Distinguished Professor in Arts and Sciences at Washington University in St. Louis:

Since you mentioned me in your piece on the Federal Reserve System, I thought I would drop you a note, as you clearly don't understand the relationship between the Fed and some of the economists on its payroll. I have had a long relationship with the Fed, and with other central banks in the world, including the Bank of Canada. Currently I have an academic position at Washington University in St. Louis, but I am also paid as a consultant to the Federal Reserve Banks of Richmond and St. Louis. In the past, I was a full-time economist at the Bank of Canada and at the Federal Reserve Bank of Minneapolis.

As has perhaps become clearer in the last year, economics and the science of monetary policy is a complicated business, and the Fed needs all the help it can get. The Fed is perhaps surprisingly open to new ideas, and ideas that are sometimes in conflict with the views of its top people. One of the strengths of the Federal Reserve System is that the regional Federal Reserve Banks have a good deal of independence from the Board of Governors in Washington, and this creates a healthy competition in economic ideas within the system. Indeed, some very revolutionary ideas in macroeconomics came out of the intellectual environment at the Federal
Reserve Bank of Minneapolis in the 1970s and 1980s. That intellectual environment included economists who worked full-time for the Fed, and others who were paid consultants to the Fed, but with full-time academic positions. Those economists were often sharply critical of accepted Fed policy, and they certainly never seemed to suffer for it; indeed they were
rewarded.

I have never felt constrained in my interactions with Fed economists (including some Presidents of Federal Reserve Banks). They are curious, and willing to think about new ideas. I am quite willing to bite the hand that feeds me, and have often chewed away quite happily. They keep paying me, so they must be happy about the interaction too.

A former Fed economist disagreed. "I was an economist at the Fed for more than ten years and kept getting in trouble for things I'm proud of. I hear you, loud and clear," he said, asking not to be quoted by name for, well, the reasons laid out above.

Elyse Siegel, Julian Hattem, Jeff Muskus and Jenna Staul contributed to this report

Ryan Grim is the author of This Is Your Country On Drugs: The Secret History of Getting High in America

[FarCenter]

51. PC Shipments Up, Revenue Down In 2009

Gartner had predicted a 2% decline in PC shipments, but instead reports a 2.8% increase from 2008.

By Antone Gonsalves
InformationWeek
November 24, 2009 12:01 PM

Global PC shipments are projected to rise this year, driven by sales of mobile computers, a research firm says. But consumers' preference for inexpensive systems in the economic recession pushed industry revenue way down.

PC manufacturers will ship 298.9 million units this year, a 2.8% increase from 2008, Gartner reported. Revenue, however, will fall 10.7% to $217 billion. Gartner in September had predicted a 2% decline in annual PC shipments.

As the global economy recovers, PC sales are expected to rise next year. Gartner predicts shipments will rise 12.6% over this year to 336.6 million units, and revenue to increase 2.6% to $222.9 billion.

"Blame this year's drop in market value on the unprecedented declines in PC average selling prices we've seen this year," Gartner researcher George Shiffler said in a statement Monday. "The rapid decline in PC ASPs reflects a marked shift towards lower price points as customers have looked for good enough PCs at the cheapest price, and vendors have tried to spur market growth by catering to ever-lower price points."

The decline in average PC selling prices is expected to slow next year as the market recovers, but consumer preference for low-priced PCs in the form of laptops and netbooks is not expected to change. Therefore, the value of PC shipments will significantly lag shipment growth next year and beyond, Gartner said.

Microsoft (NSDQ: MSFT)'s Windows 7, which shipped to consumers in late October, will have only a limited impact on holiday PC sales. "We just don't see consumers buying new PCs solely because of Windows 7," Shiffler said.

<SNIP>http://www.informationweek.com/news/hardware/desktop/showArticle.jhtml?articleID=221900980&cid=nl_IW_daily_2009-11-25_html

[CatholicEdHead]

58. Yep, PC sales are up but cheaper models dominate

They are going after the popular netbooks, so you get a decent XP machine for $200-300. The Atom processor in there is also a much lower margin for Intel, so their revenues are not as high as total chip sales would indicate. Even laptop prices are coming down to netbook level, around $300 for cheap Celeron models and Wally World even has an eMachines (rebranded Gateway/Acer) Laptop (not netbook) for Black Friday for $180. Price pressure continues to be downward at a decent pace.

[Warpy]

60. Well, I ruined that curve two weeks ago

My POS laptop that I'd been tending to turn in to charity before I upgraded to something I could actually use was stolen in a burglary. So I bought one with more bells and whistles than I really need, with an eye toward turning it into my main puter eventually.

I went high end.

It's a real delight to use a machine that takes under twenty five minutes to boot up.

Whee.

[CatholicEdHead]

62. 25min is about right for my Vista laptop (upgrading that to 7 soon)

but my netbook with XP on it is useable within 2-4min. And that is low end hardware.

[FarCenter]

61. They'd be even cheaper in foreign currenicies

A revenue increase in 2010 would only apply to revenues expressed in dollars. With the weakness of the yen and euro, revenues in those currencies must be dropping significantly.

The US is only about a third of the PC market.

[tclambert]

66. My son has a "notebook" computer that is big and heavy.

It has more computing power and data storage than the first computer room I worked in, which was the entire third floor of an office building, about 5,000 square feet. The only problem with my son's computer is it keeps trying to run this program called Skynet . . .