STOCK MARKET WATCH, Tuesday May 11

[ozymandius]

Source: du

STOCK MARKET WATCH, Tuesday May 11, 2010

AT THE CLOSING BELL ON May 10, 2010

Dow... 10,785.14 +404.71 (+3.75%)
Nasdaq... 2,374.67 +109.03 (+4.59%)
S&P 500... 1,159.73 +48.85 (+4.21%)
Gold future... 1,210 +9.00 (+0.75%)
10-Yr Bond... 3.53 +0.11 (+3.18%)
30-Year Bond 4.41 +0.13 (+3.06%)

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Market Conditions During Trading Hours

Euro, Yen, Loonie, Silver and Gold

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Bush Administration Officials Convicted = 2
Names: David Safavian, James Fondren

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

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

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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. Today's Report

10:00 Wholesale Inventories Mar
Briefing.com 0.1%
Consensus 0.5%
Prior 0.6%

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

[ozymandius]

2. Oil falls to near $76 a barrel as traders eye euro

SINGAPORE – Oil prices fell to near $76 a barrel Tuesday in Asia after investor euphoria over a $1 trillion European debt bailout evaporated and the euro weakened.

Crude rebounded Monday after the European Union Commission and International Monetary Fund pledged a loan package of euro750 billion ($975 billion) to defend the common currency, but closed off its high of $78.51 as the euro gave back some of its gains.

Some analysts expect the bailout to temporarily stabilize European bond prices but eventually weaken the euro and weigh on oil prices.

In other Nymex trading in June contracts, heating oil rose 0.79 cents to $2.1123 a gallon, and gasoline slid 0.54 cent to $2.1672 a gallon. Natural gas was steady at $4.170 per 1,000 cubic feet.

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

[ozymandius]

3. Excitement over $1 trillion euro plan fades, euro slips

TOKYO (Reuters) – Excitement over the euro zone's mammoth $1 trillion rescue package gave way on Tuesday to doubts whether its weakest economies can meet their end of the bargain and deliver drastic debt cuts, driving the euro and stocks lower.

The emergency plan -- the biggest since G20 leaders threw money at the global economy following the collapse of Lehman Brothers in 2008 -- impressed markets with its sheer size and sparked a spectacular rally in world stocks and the euro.

Yet financial markets turned cautious when they reopened for business in Asia on Tuesday, with investors concerned that the plan was not a long-term solution to problems plaguing the 11-year old single currency area.

Concerns that credit markets could freeze again also appeared to have forced the European Central Bank's hand, which joined the rescue with a pledge to buy government bonds -- a "nuclear option" it had resisted for months.

Euro zone central banks immediately began implementing the ECB's part of the deal, buying government bonds in the open market.

http://news.yahoo.com/s/nm/20100511/bs_nm/us_eurozone

[ozymandius]

4. World stocks fall as EU bailout rally peters out

As elation faded about the European Union's headline-grabbing moves to defend the euro and quarantine the debt woes of financially shaky member states, investors returned to fretting over the strength of the economic recovery.

As trading opened in Europe, Britain's FTSE 100 index fell 53.85 points, or 1 percent, to 5,333.57, Germany's DAX dropped 0.9 percent while the CAC-40 in France was down 1.1 percent. Dow futures pointed to stocks falling at the U.S. open.

Japan's Nikkei 225 stock average fell 1.1 percent to 10,411.10 after jumping 1.6 percent on Monday. South Korea's Kospi dropped 0.4 percent and Australia's S&P/ASX 200 shed 1.1 percent.

Benchmarks in mainland China, Taiwan, India, and Singapore also slid, while Hong Kong's Hang Seng index retreated 1.4 percent to 20,146.51.

Stocks in the Philippines bucked the regional trend, surging 3.9 percent as Sen. Benigno Aquino III, son of Philippine democracy icon Corazon Aquino, opened up a commanding lead in presidential elections after campaigning on an anti-graft platform.

http://news.yahoo.com/s/ap/20100511/ap_on_bi_ge/world_markets

[ozymandius]

10. The ECB’s nuclear option has its limitations

By Edward Harrison:

My understanding is that the ECB is legally prohibited from ‘monetizing’ Eurozone debt by buying it directly at auction. Therefore, in instituting the nuclear option of buying up debt, they can only do so on the secondary market. I had been thinking of the constraints this imposes operationally when I read this from John Hussman.

The bailout package for Greece should keep it from having to tap the open market for capital for about 18 months. Yet it is hard to look at the possible trajectories of Greek output, deficits and debt without concluding that a debt restructuring will ultimately be necessary – meaning that owners of Greek debt are likely to receive only a portion of face value. What European leaders seem to be attempting is to buy Greece more time, essentially to smooth the potential amount of this restructuring and its impact on the banking system, perhaps three or four years from today when, hopefully, Greece has smaller deficits and the ability to operate without new borrowing.

In the event Greece fails to bring its budget significantly into balance, ongoing membership as one of the euro-zone countries implies ongoing subsidies from other countries, many of which are also running substantial deficits. This would eventually be intolerable. If investors are at all forward looking, the window of relief about Greece (and the euro more generally) is likely to be much shorter than 18 months.

So when the 110 billion euros runs out, what then?

http://www.creditwritedowns.com/2010/05/the-ecbs-nuclear-option-has-its-limitations.html

[Tansy_Gold]

21. Reminds me of the Sun Valley Parkway, the "road to nowhere"

built west of Phoenix in the late 1980s.

The approximately 57,000 acre Sun Valley "development" was originally owned by Bob Burns through an outfit called Burns International. They sold parcels, some of them huge and some of them just 1- or 2- acre homesite lots, on deeds that included joint liability for debts. They then built a massive and quite beautiful 40-mile highway through the middle of it. The cost of the highway was to be borne by the landowners; the Sun Valley Parkway was not to be built with taxpayer funds.

But as the actual development lagged, property owners defaulted on their portion of the road construction costs, and what they defaulted on got spread amongst all the others, forcing them into default, too.

Burns got burnt on the deal and was forced into bankruptcy/foreclosure, but never really left the picture, and the property, with the highway to nowhere (it actually links I-10 in the far west valley to Bell Road way way north, for those who are familiar with the area, and google earth has some lovely photos of it) continues to be in the news.

Some of the more colorful background is available at --

http://www.allbusiness.com/legal/trial-procedure-suits-claims/12042781-1.html

http://www.azcentral.com/arizonarepublic/business/articles/1107biz-wolfswinkel1107.html?&wired

http://www.phoenixnewtimes.com/1997-04-10/news/carr-wrecks/7

and the West Valley View (for whom yours truly used to write a bit) gives a good history on the 20-year anniversary of the Parkway. http://westvalleyview.1upsoftware.com/main.asp?SectionID=2&SubSectionID=1&ArticleID=26619&TM=54832.28

To my knowledge, none of the major developements planned for Sun Valley have yet materialized, but I haven't been out in that direction to look around for a couple of years, so who knows? But the fact that Sun Valley continues to be undeveloped and making money only for the lawyers may have a lesson for Greece and the EU and the US, but of course it's a lesson lost on the greedy.



Tansy Gold, who met most of Sun Valley principals at one time or another in her reporting days and disliked all of 'em, slimy bastards

[ozymandius]

12. Dead cat bounce for the euro

Krugman comments with this blog post called "Second Thoughts?" and shows a "catty" chart.

Yes, I know — the point is not to lift the euro. Still, the exchange rate is a quick measure of the impact on eurozone confidence, which bounced with the policy announcement but doesn’t seem to be staying up …

http://krugman.blogs.nytimes.com/2010/05/10/second-thoughts/

[Ghost Dog]

15. Structural reforms and budget austerity remain a key attention point

Notably, the euro failed to join in the party as an early surge back above the $1.30 level faded away. Inter-bank lending rate risk also did not diminish, with the 3-month US Libor spread remaining elevated at 42bp.

“The EU package will have a lasting positive impact on risk appetite, but will do no more than pad the euro downside against a sharp collapse, rather than turn it around,” warned Alan Ruskin, chief currency strategist at RBS.

“This is a monetary union that looks hopelessly compromised by real divergences that will give long-term players, notably foreign central banks and sovereign wealth funds, pause for thought when considering reserve alternatives to the dollar.”

Elwin de Groot, economist at Rabobank, said the measures failed to address the heart of the eurozone’s problems: high government deficits and debt.

“Neither do they solve the underlying long-term problem of insufficient competitiveness in certain member states,” he said.

“This implies that structural reforms and budget austerity will remain a key attention point. Additional austerity measures will only add to uncertainty with respect to the economic outlook.”

/... http://www.ft.com/cms/s/0/844fccd4-5c7a-11df-bb38-00144feab49a,dwp_uuid=79cadde4-5c1b-11df-95f9-00144feab49a.html


Germany backs euro package as markets sober up

By Andreas Rinke and George Matlock

BERLIN/LONDON, May 11 (Reuters) - Germany's cabinet approved the biggest national contribution to a $1 trillion emergency rescue package intended to stabilise the euro as global markets sobered up after Monday's euphoria.

Relief at the European Union's bold move to restore investor confidence gave way on Tuesday to doubts about whether weaker euro zone economies can meet their part of the bargain and deliver drastic debt cuts, driving the euro and stocks lower.

The 16-nation single currency, which surged above $1.30 early on Monday, slipped below $1.27 as traders weighed debt worries and a perceived blow to the European Central Bank's independence in its weekend policy reversal to start buying euro zone government bonds.

The emergency plan -- the biggest since G20 leaders threw money at the global economy following the collapse of Lehman Brothers in 2008 -- wowed markets with its sheer size and sparked a spectacular rally in world stocks and the euro.

Yet stock and bond markets turned cautious when they reopened for business in Asia and Europe on Tuesday, with investors concerned that the plan was not a long-term solution to problems plaguing the 11-year old single currency area.

EU Economic and Monetary Affairs Commissioner Olli Rehn raised pressure on Italy, which has the euro zone's highest debt after Greece as a proportion of national output, and France, which has a heavy structural budget deficit, to do more quickly to improve their public finances.

/.. http://www.finanznachrichten.de/nachrichten-2010-05/16868121-topwrap-2-germany-backs-euro-package-as-markets-sober-up-020.htm

[Tansy_Gold]

16. My understanding of "structural adjustment" is that

such policies generally put the burden of the "austerity programs" on those least able to cut back further while providing most of the benefits to those who have already benefited from whatever policies prompted the "structural adjustment" in the first place.

Kinda like New Jersey, where education budgets are being slashed because kids don't have votes.





Tansy Gold

[Ghost Dog]

20. That is certainly the case and there's the rub.

There is little or no discussion of progressive tax increases anywhere, always of government spending cuts targetting social programs especially. Some Germans are unhappy now because they will be denied tax cuts.

...

It would be nice to feel able to hope that a positive outcome from present tensions is possible, one in which the European internal market grows much closer to the real needs of people. The center has been distributing structural funds for the development of the EU periphery for decades now and a great deal of corruption has fed upon those and other financial flows. Expect action in this area, which may even extend to some of the less transparent 'under/over the counter' financial transactions tolerated until now. Don't forget, the EU has been demanding systemic financial reform for some time now, but the US and UK have turned international cooperation down.

eg:

MEPs Votes Look To Provide Enhanced Powers For European Systemic Risk Board
Source: European Commission
Published Tuesday, 11 May, 2010 - 13:03

The EU's financial supervisory plans were beefed up by Economic and Monetary Affairs Committee MEPs on Monday, with new measures including a much bigger say for the nascent European Systemic Risk Board before and during crises affecting financial stability, direct EU supervision of systemically important financial institutions, the right to impose temporary bans on very risky financial products and the designation of two EU stability-assisting funds.

...

If backed by Parliament as a whole, the committee vote will base all the proposed supervisory bodies in Frankfurt and make them part of a tightly-integrated system, replacing the looser network of supervisors in various European cities originally proposed.

...

The committee text sets up a supervisory quasi-umbrella authority, with a European Banking Authority (EBA), a European Insurance Authority (EIOPA) and a European Securities and Markets authority (ESMA), beneath it, working together through an improved joint coordinating committee.

...

The text as voted aims to ensure that the aim assigned by the Commission to the ESRB - that of monitoring the build-up of risk in the EU economy - is carried out better, more clearly, and can thus be acted upon faster.

/... http://www.egovmonitor.com/node/36324

[Ghost Dog]

27. Eurozone 'economic government' will affect Britain too

The UK will have to take heed of the eurozone's fiery defence of its currency – and its fight against City playboys
...

The euphoria on world stock and financial markets yesterday at the announcement by European Union leaders of a €750bn defence fund against financial speculators seeking to tear the euro apart may prove temporary. So too the palpable sense of relief in Brussels that at least one battle to preserve the single currency from fragmentation has been won. But the outcome of the war over the future of the euro and the wider European integration project is still far from decided.

The breathtaking financial firepower mobilised by the EU to protect the euro, including the radically new measures announced by the European Central Bank, should give the financial sharks pause for reflection. Anyone gambling on Greece and then maybe Portugal and Spain being forced out of the euro area may in the short run risk getting badly burned.

This should buy the European Union breathing space to confront even greater challenges in the months ahead. The next urgent step must be a series of detailed agreements on an EU-wide system of financial regulation with real teeth. In spite of City objections, even the conservative leaders of Germany and France are determined to break with the Anglo-Saxon system of financial self-regulation, which they rightly hold responsible for the financial catastrophe which plunged the world into crisis two years ago .

Whoever emerges as heading the new British government should understand that the rest of the EU wants to put the financial playboys back in their box. Whoever seeks to become chancellor of the exchequer should be drafting a warning to City traders of exotic, but toxic, financial products that the game is up.

For the European Union, the next essential step must be agreement on root-and-branch reform of euro-area governance, which many now openly refer to as the future eurozone "economic government". The president of the European council, Herman van Rompuy, is already preparing major plans to strengthen collective economic decision-making in the euro-area which, if implemented, would mark a major step towards a more integrated EU.

Crucially, eurozone governments will be expected to clear their national economic plans in advance with their partners so that no one undermines anyone else's efforts. There will be stricter discipline over governments who blatantly fiddle the system, including the possible suspension of their voting rights in the EU. In future, countries that run up surpluses with their euro-area partners, such as Germany, should be expected to stimulate their economies – to balance the tough action that deficit countries will be expected to take to cut their deficits.

Lest anyone in London has not got the message, van Rompuy put it like this on Monday: "We can't have a monetary union at the end without some form of economic and political union, and that is our big task for the coming weeks and the coming months."

/... http://www.guardian.co.uk/commentisfree/2010/may/11/eurozone-economic-government-britain

[amandabeech]

33. Does anyone here think that the Eurozone countries will actually

carry out a single economic policy in reality? Or political, for that matter?

[Warpy]

32. That's really why they're rioting

The wealthy in Greece are apparently on the honor system, where they tell the government what their assets are and basically set their own taxes. The government would seem to do its part and never check up.

The riots are happening because the austerity programs are hitting the working class and missing the rich, entirely.

[AnneD]

35. I heard that the pensions are cut....

but politicians et al are at full pay. Honestly-who cuts bus service and expects the country to produce anything? Frankly I am on the side of the rioters. Mom said that makes me a socialist. Well, I have been called worse and I think politician in this country best beware. The anti incumbent party is sounding better and better.

[Ghost Dog]

17. Pound under pressure as UK faces political vacuum

The pound continued a slide that started toward the end of trading on Monday after Gordon Brown's unexpected announcement that he will manage negotiations with the Lib Dems before standing aside as Labour leader.

Within minutes of currency traders arriving at the desks on Tuesday, the pound had given up another half a cent against the dollar to trade at around $1.4780. It remains above its recent low of $1.4476, helped by the overall lift given to markets by the half-trillion euro bail-out package negotiated in Brussels.

However, foreign-exchange analysts say they expect the pound to remain in the cross-hairs now that the Liberal Democrats are officially in talks with the Labour Party, alongside their existing talks with David Cameron's Conservatives.

"All bets are off, it looks like it (forming a government) is going to take longer than thought and that puts back deficit cutting," said Jeremy Stretch, an analyst at Rabobank. "UK politicians have been lucky in that the markets' attention has been on Europe."

...

Back in Britain, investors will want a new Government to lay out credible plans to cut a Budget deficit that reached £167bn last year and is forecast to be similar this year. Mr Stretch of Rabobank says the markets harbour greater doubts over a possible Lib-Lab coalition - or Rainbow coalition - that would require support from a handful of smaller parties to command a majority in Parliament.

"The Rainbow coalition would be least able to withstand the deficit reduction and longevity tests," he said.

/. http://www.telegraph.co.uk/finance/currency/7708975/Pound-under-pressure-as-UK-faces-political-vacuum.html



Market turmoil - live blog - City of London

...

12.09pm: The success of the auction of UK government debt this morning (see 10.40am) has not gone unnoticed in Parliament. In fact, it may even give politicians an excuse to drag out the ongoing coalition talks even more. This just in from John Hemming, Liberal Democrat MP for Birmingham Yardley (via Sky News)

The gilt auction was the big test...The evidence from the markets is that there is no pressure to make a deal now.

But currency traders disagree, sending the pound down to $1.4750 as I type. My colleague Graeme Wearden has spoken to Richard Turner, corporate dealer at UKForex, who said City traders are losing patience with the endless stream of news flashes from Westminster as negotiations continue.

Yesterday people came into work expecting a coalition between the Conservatives and the Liberal Democrats. Today they're seeing headlines about Labour and Liberal MPs meeting today. The longer this does on, the more it will weigh on the pound.

Greece had a policy of ambiguity - it worked for them for a while.....

12.00pm: This sounds ominous. A Lib-Lab pact would "almost guarantee" a downgrade of the UK's top-notch credit rating because both parties oppose early spending cuts to reduce the government deficit, according to analysts at BNP Paribas. They advised investors to sell the pound against the dollar.

"A Labour/Liberal government is the least-liked option by markets and would almost guarantee a downgrade of the UK sovereign," the analysts said. This is because "both parties agree that early expenditure cuts could harm the economy."

/... http://www.guardian.co.uk/business/2010/may/11/market-turmoil-europe-debt-crisis-election-live-blog

[Robbien]

34. Greece calls for EU-IMF first payment of 20 billion Euros

ATHENS - The Greek government on Tuesday will ask the EU and the International Monetary Fund an initial payment of 20 billion euros in aid promised plan for saving the country from bankruptcy, said a finance ministry source.

* The Ministry of Finance should send a letter in the day to the European Commission, the European Central Bank and the IMF requesting activation of the new mechanism set up by the eurozone, said the source.
* The payment of this first installment, which the EU should take over 14.5 billion euros and 5.5 billion by the IMF, "must be immediate, perhaps in the day," the source added.
* Greece must meet May 19 with the expiracy of loan debt of around 9 billion euros. Finance Minister George Papaconstantinou had recognized in late April that "prohibitive" levelsof the market, Greece could not refinance itself on the financial markets.

http://www.ennaharonline.com/en/economy/3862.html


Grab the money quick before Germany changes it mind.

[ozymandius]

5. SEC, exchanges agree to boost market safeguards

WASHINGTON/NEW YORK (Reuters) – Market watchdogs and six major exchanges agreed new safeguards were needed to curb trading in plunging markets, an effort to address last Thursday's mysterious market free fall.

Securities and Exchange Commission Chairman Mary Schapiro met on Monday with the leaders of major stock and option exchanges, as well as the brokerage industry watchdog, the Financial Industry Regulatory Authority (FINRA).

Currently, if the market falls more than 10 percent in a day before 2 p.m. local time, a circuit breaker is triggered and shuts the market down for one hour. If the market falls more than 20 percent after 2.30 pm, the market shuts for the rest of the day.

Both the Dow Jones Industrial Average and Standard & Poor's 500 index never reached the crucial trigger point on May 6. The Dow fell as much as 9.2 percent and the S&P was off as much as 8.6 percent during the latter half of Thursday's trading day.

The SEC and other regulators are scheduled to appear with exchange executives before a House Financial Services subcommittee hearing on Tuesday.

http://news.yahoo.com/s/nm/20100510/bs_nm/us_selloff

[Demeter]

18. The Ultimate Solution Is...

Close the Market for the rest of the day whenever it drops 100 points.

At that rate, it would never open.

Ozy would have to take up knitting. I could do more housework. We could all relax.

And the TBTF would have to change their business plans, and that is what is needed, no?

[ozymandius]

6. U.S. stocks set to open lower after sharp rally

* Futures for the Dow Jones industrial average DJc1, the S&P 500 SPc1 and the Nasdaq 100 NDc1 fell 1.0 to 1.1 percent, pointing to a weaker open on Wall Street on Tuesday.

* U.S. stocks racked up their biggest one-day gain in over a year on Monday as an agreement on a $1 trillion emergency rescue package from the EU quelled fears a new credit crisis would derail European economies.

* ICSC/Goldman Sachs release at 1145 GMT chain store sales for the week ended May 8 versus the prior week. In the previous week, sales fell 0.4 percent.

* At 1255 GMT, Redbook releases its Retail Sales Index of department and chain store sales for May versus April. In the prior period, sales fell 2.2 percent.

* Two key amendments to the U.S. Senate's far-reaching Wall Street reform bill are expected to be voted on on Tuesday, with a measure that would allow limited oversight of the Federal Reserve expected to pass.

* Another amendment that would require the government to relinquish control of housing finance giants Fannie Mae (FNM.N) and Freddie Mac (FRE.N) within two years looked set to fail.

http://www.reuters.com/article/idUSLDE64A0O020100511

[Demeter]

19. Whose Idea Is It to Let Freddie and Fannie Off the Leash?

That's just crazy talk. They can't even open the doors without US assistance!

[ozymandius]

7. Paulson & Co. Said to Close Largest Funds to New Investments

Billionaire John Paulson, whose Paulson & Co. oversees $35 billion in hedge funds, told clients he plans to close his largest funds to new investments.

The Advantage funds, which seek to profit from distressed debt, bankruptcies and mergers, manage about $20 billion. The only inflows the firm will allow in the funds will be to replace withdrawals, according to two clients who participated in an investor conference call today. Details on the closing will be announced in late June. Armel Leslie, a spokesman for the New York-based firm, declined to comment on the call.

Paulson is closing the fund to new investors after a record rally in credit markets. The S&P/LSTA US Leveraged Loan 100 Index gained 1.47 percent in April and this year’s 5.77 percent total return extended a record 52 percent rally in 2009.

Managers usually stop taking new cash when they are concerned that their funds are getting too big to run effectively. They give up the chance to manage more money and earn more fees, usually 2 percent of assets, to protect their ability to produce investment gains, of which they typically take a 20 percent cut.

http://preview.bloomberg.com/news/2010-05-10/paulson-co-said-to-close-largest-funds-to-new-investments.html

[ozymandius]

8. Small Business: Still No Soup for You!

Last Friday’s tease for the release of the National Federation of Business Small Business Economic Trends report (due out at 7:30 Tuesday):

“The steep recession will unlikely be followed by a steep recovery, the numbers just aren’t moving in that direction. Average employment per firm first turned negative in April of 2007. It has been negative for 10 of the last 12 quarterly readings ending with a negative 0.18 in April 2010 (seasonally adjusted). Since July 2008, employment per firm fell steadily each quarter, logging the largest reductions in the survey’s 35-year history.

“There is little enthusiasm among owners to hire more workers, primarily due to continued weak sales trends.”

http://www.ritholtz.com/blog/2010/05/small-business-still-no-soup-for-you/

[fasttense]

9. No jobs, no salaries for the average joe, no demand for buying crap.

No demand for buying crap, no jobs, no salaries........

[hamerfan]

13. An excellent and succinct way

of expressing the current economic miasma! Thanks.
And a hearty Good Morning to all! :donut:

[Festivito]

11. Debt: 05/07/2010 12,928,941,224,629.55 (DOWN 3,972,100,571.11) (Fri)

(Up a tiny tiny amount. Good morn.)

(Debt under Obama seems to jump up big then drop slowly maybe up a little and down a little for days--repeat.)
= Held by the Public + Intragovernmental(FICA)
= 8,415,799,770,763.18 + 4,513,141,453,866.37
UP 195,077.74 + DOWN 3,972,295,648.85

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 309-Million person America.
If every American, man, woman and child puts in $3.23 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.7, ABOUT TEN BUCKS for a 1B$ 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 13 seconds we net gain another American, so at the end of the workday of the report, there should be 309,221,162 people in America.
http://www.census.gov/population/www/popclockus.html ON 04/09/2010 15:49 -> 309,034,742
Currently, each of these Americans owe $41,811.31.
A family of three owes $125,433.92. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 23 reports in the last 30 days.
The average for the last 23 reports is 5,959,420,703.28.
The average for the last 30 days would be 4,568,889,205.85.

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$/day.
There were 151 reports in 219 days of FY2010 averaging 6.75B$ per report, 4.65B$/day.
Above line should be okay

PROJECTION:
There are 989 days remaining in this Obama 1st term.
By that time the debt could be between 14.3 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)
05/07/2010 12,928,941,224,629.55 BHO (UP 2,302,064,175,716.47 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 +1,019,112,221,117.80 ------------* * * * * * * * * * * * * * * * * * * * * * * * * BHO
Endof10 +1,698,520,368,529.67 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Linear Projection

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
04/19/2010 -017,215,897,730.16 - Mon
04/20/2010 +000,349,194,756.21 ------------********
04/21/2010 +000,180,306,016.37 ------------********
04/22/2010 -015,686,359,446.12 -
04/23/2010 -000,156,047,055.50 ---
04/26/2010 +000,019,005,411.26 ------------******* Mon
04/27/2010 +000,734,843,937.10 ------------********
04/28/2010 -000,020,446,125.69 ----
04/29/2010 -019,519,315,418.04 -
04/30/2010 +098,427,087,705.17 ------------**********
05/03/2010 -004,329,381,263.93 -- Mon
05/04/2010 +000,043,170,775.25 ------------*******
05/05/2010 +000,598,834,211.91 ------------********
05/06/2010 -014,947,673,650.95 -
05/07/2010 +000,000,195,077.74 ------------*****

28,477,517,200.62 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/
DUer primer on National debt

(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=4375016&mesg_id=4375048

[AllentownJake]

14. Bernake is going to have a busy day

Plunge Protection Team to the rescue today I think

[Demeter]

22. Shadow Inventory A "Lost Decade" Ahead For Housing By Mike Whitney

http://www.informationclearinghouse.info/article25402.htm

In its effort to rescue the housing market, the Obama administration has created a Frankensystem which neither allows the market to clear nor solves the intractable social problems of lost equity and foreclosure. Obama needs to step-back and take a look at the mess he's made by following the advice of financial industry reps and bank lobbyists. Housing is in a shambles. The market is presently stitched together with buyer-assistance programs, loan modifications programs, new homebuyer subsidies, foreclosure abatement programs, principal reduction programs, historic low interest rates, "easy-term" financing, and government-backed loans. It's a veritable dog's breakfast of inducements, giveaways and bandaids all designed with one purpose in mind; to keep the banks from taking a bigger hit on their garbage mortgages. To get an idea of how desperate the situation really is; take a look at this eye-popping article in the Wall Street Journal:

"The U.S. government's massive share of the nation's mortgage market grew even larger during the first quarter. Government-related entities backed 96.5% of all home loans during the first quarter, up from 90% in 2009, according to Inside Mortgage Finance. The increase was driven by a jump in the share of loans backed by Fannie Mae and Freddie Mac, the government-owned housing-finance giants....

The collapse of the mortgage market in 2007 steered more business to the Federal Housing Administration, which insures loans, and Fannie and Freddie, which were taken over by the government in 2008 as rising losses wiped out thin capital reserves. Congress also increased the limits on the size of loans that Fannie, Freddie and the FHA can guarantee, raising the ceiling to as high as $729,750 in high-cost housing markets such as New York and California. ("U.S. Role in Mortgage Market Grows Even Larger" Nick Timiraos, Wall Street Journal)

There is no housing market in the U.S. apart from the government. The Potemkin banking system is still on the rocks, so Fannie and Freddie have been forced to pick up the slack. But if the government is going to put up all the financing, then it should have a bigger say-so on the way things are run. The emphasis should be on helping people, not on more handouts for the banks.

The first order of business should be the launching of a National Bank that would help support the privately-owned banking system. This would ensure the availability of credit for prospective homeowners and small businesses without putting more pressure on Fannie and Freddie. The National Bank would operate as a public utility run by government employees. That would help to control salaries, eliminate the problem executive compensation and incentives, and reduce the incidents of fraud.

Naturally, the banks will oppose the move tooth and nail, so its up to Obama to guide the legislation through the Congress. This is matter of national security. The banks now pose a threat to the material well-being of everyone in the country. They're a menace. While a National Bank won't undo the massive damage that's already been done; it will put the economy on the road to recovery by creating a reliable source of credit for any future expansion without inflating another humongous asset bubble.

As the WSJ's report reveals, the banks don't have the capital to function as banks. So, what good are they? They're merely wards of the state. Obama should bypass this sclerotic system of corruption-plagued institutions altogether and do what needs to be done while the economy is still weak. That way, the new National Bank will be up-and-running by the time economic activity begins to pick up again.

SHADOW INVENTORY; There's a 9-year backlog of distressed homes

Here's another stunner from the Wall Street Journal. The article is titled "Number of the Week: 103 Months to Clear Housing Inventory" by Mark Whitehouse. Here's an excerpt:

"How much should we worry about a new leg down in the housing market? If the number of foreclosed homes piling up at banks is any indication, there’s ample reason for concern. As of March, banks had an inventory of about 1.1 million foreclosed homes, up 20% from a year earlier....

Another 4.8 million mortgage holders were at least 60 days behind on their payments or in the foreclosure process, meaning their homes were well on their way to the inventory pile. That “shadow inventory” was up 30% from a year earlier. Based on the rate at which banks have been selling those foreclosed homes over the past few months, all that inventory, real and shadow, would take 103 months to unload. That’s nearly nine years. Of course, banks could pick up the pace of sales, but the added supply of distressed homes would weigh heavily on prices — and thus boost their losses." ("Number of the Week: 103 Months to Clear Housing Inventory" Mark Whitehouse, Wall Street Journal)

Got that? There's a 9-year backlog of distressed homes. The banks are deliberately fudging the numbers to hide how bad things really are. The number of homes in late-stage foreclosure is not 1.1 million, but nearly 6 million--- 5X more than the banks are admitting. Housing will be in the doldrums for a decade or more. It's shameful that people can't get basic information like this to help them make their investment decisions. The banks couldn't pull off this type of information warfare without the help of government officials pulling strings from inside. Bernanke and Geithner must be involved.

So, what's the objective?

The banks are trying to keep prices artificially high to avoid writing-down millions of mortgages that would force them into bankruptcy. It's called "extend and pretend" and its poisonous for the broader economy because it distorts prices and keeps a broken banking system in place that can't perform its social purpose.

WSJ housing editor James R. Hagerty verifies Whitehouse's claims and fills in some of the blanks. Here's a clip from his article:

"To get a sense of how many more households will lose their homes to foreclosures or related actions, Barclays tallies what it calls a shadow inventory, consisting of homeowners 90 days or more overdue on mortgage payments or already in the foreclosure process. At the end of February, 4.6 million households were in that category.

Barclays expects 1.6 million "distressed sales" of homes—mainly foreclosures or sales of homes for less than the mortgage balance due—both this year and in 2011, then a slight decline to 1.5 million in 2012. Last year, Barclays estimates, such sales totaled 1.5 million. About 30% of all home sales this year and next will be foreclosure-related, forecasts Robert Tayon, a mortgage analyst at Barclays, who says that would be only about 6% in a normal housing market." ("Foreclosure Estimate Falls", James R. Hagerty, Wall Street Journal)

Why would Barclays think that only 1.6 million "distressed" homes would be sold in 2010, when they openly admit that there's 4.6 million homes already in the foreclosure pipeline? What does Barclays know that the public is not supposed to know?

Clearly, the banks have worked out a deal with Geithner and Bernanke to sell distressed inventory in dribs and drabs rather than all at once. That keeps prices high and makes their losses more manageable. But isn't that collusion or, at the very least, price fixing? The government definitely HAS a role to play in helping people keep their homes or providing assistance when they lose them, but they have no right to scam the public by stealthily manipulating the market to save underwater financial institutions.

The problem is not housing. The problem is the banks. The banks do not have sufficient capital to fund the mortgage market, nor do they provide the bulk of the financing for auto loans, student loans, small business loans or credit card debt which is gathered into pools and chopped up into tranches for securities that are sold to investors. (Securitization generates wholesale funding for the credit markets) Not only are the banks unable to fulfill their primary social purpose--which is extending credit--they're also increasingly dependent on revenue from high-risk speculation. A recent article in the Financial Times exposed the fraud behind the 12-month surge in equities pointing out that retail investors have largely stayed on the sidelines. Here's an excerpt:

"...surveys show that the usual investors in major rallies – pension funds, hedge funds and retail investors – have not been net buyers of equities. And he says the most likely explanation for this anomaly in the biggest stock market rally since the 1930s is that major investment banks are the anxious buyers.

“Their buying would appear to be for one of two reasons. Firstly because they think the authorities will prevail in their (so far unsuccessful) efforts to inflate their way out of debt liquidation; or secondly because they are too big to fail and so can afford to take a huge gamble that enough buying will convince others to rush in and buy their inventory of risk assets at even higher prices." ("Equity Rally Not Driven by the Usual Investors", Financial Times)

Many people already suspected that the soaring stock market had more to do with "easy money" and bubblenomics, than they did with "green shoots". Still, the FT article does help to underline the fact that the banks' business model is broken and badly in need of repair. But, what is to be done? The banks already own just about everyone on Capital Hill, and their lobbyists are now writing large sections of the reform legislation. So how can they be stopped?

The root of the problem is political, and that's the best place to start. The banks' lethal grip on government has to be broken. The rest will be easy.

[Tansy_Gold]

28. How dare he! Blasphemy! Burn the heretic!

"Obama needs to step-back and take a look at the mess he's made..."




Oh, wait, the emperor really is buck nekkid, ain't he.



never mind.






Tansy Gold

[Demeter]

23. Buffett defends Goldman, joins greed Conspiracy By Paul B. Farrell, MarketWatch

http://www.marketwatch.com/story/buffett-defends-goldman-joins-greed-conspiracy-2010-05-11

Warning: Bears taking over. Time to short Buffett's new "Baby Berkshires," short Goldman, short Moody's and other favorites of Uncle Warren.

Why? Behind the façade, the lovable, good ol' Uncle Warren strumming his cute little ukulele, ostensibly supporting reform, there's a dark force that's part of the toxic Goldman Conspiracy fighting to keep alive everything that's wrong with Wall Street, everything that got us into this mess, everything that will trigger another meltdown that even Uncle Warren says: "I can guarantee it."

Buffett belongs to the past while the news screams of a new world order ... Riots in Greece, more coming when the other PIIGS demand EU bailouts ... conservatives regain Britain ... unregulated BP's greed is spilling millions of gallons of oil destroying Gulf states, confirming Foreign Policy magazine warning of the "End of the Age of Oil" ... the Dow's techno-fear-driven irrational 1,000-point plunge as technicians turn bearish, ending the year-long bull rally ... even Hank Paulson's changing his tune, warning the Financial Crisis Commission that we need stronger reforms than Dobb's Senate bill.

Meanwhile, out there, seemingly oblivious of the gathering storm is an aging Woodstock hippy, good Ol' Uncle Warren strumming away on his ukulele, an over-the-hill rock star basking in the adulation of 40,000 adoring shareholders at their annual meeting in Omaha's Qwest Center ... a scene reminding us of Nero fiddling as Rome burns ... of the string quartet playing on the deck of the sinking Titanic ... of a Shakespearean tragedy with a raging, blind King Lear trapped, in denial of his role in America's collapsing empire.

Yes, folks, Uncle Warren has a bad case of denial. Remember, not too long ago Buffett was calling derivatives "weapons of financial mass destruction." And yet, there he was on stage at his love fest last week defending Wall Street's most toxic companies, trapped in denial, defending the greedy culture that got America into its current mess: MORE AT LINK-- VITRIOL IN THE MORNING!

AND MASSIVELY UGLY, ALARMING NUMBERS

[DemReadingDU]

24. Karl Denninger: The Gun is Loaded

5/11/10 Karl Denninger: The Gun is Loaded

No, no, not the ECB's.

The "currency speculators" - cough - BANKS that were shorting the hell out of the Euro.

Let's see if I can figure out what's happened here.

1. Banks shorted the Euro, (correctly) surmising that Greece, Portugal, Spain and others can't possibly cover their debts.

2. The ECB freaks out as the Euro heads toward PAR and calls "emergency meetings" (forgetting, I might add, that the Euro traded under PAR not that long ago.)

3. The ECB and Eurozone decides to "defend" the Euro with €1t in "defensive measures", including buying bonds of bankrupt sovereigns (gee, that's nice - monetization by another name.) Since the ECB and EuroZone cognescenti is of course connected to the large banks in Europe (including France, where Sarkozy is located) these banks know to back off on Friday (notice the nice little uptick?) to lock in their bonuses from these insanely-profitable trades against their own currency.

4. The very same banks, including the ones in Sarkozy's back yard, see the very nice spike and short the Euro even harder, (correctly) surmising that they have successfully stuck the gun up the nose of the ECB!

Rinse and repeat until you have all the money.

Naw, it wouldn't be that simple, would it? Why of course it would.

See, lending someone money when they're bankrupt can't possibly make them not-bankrupt. It can only make them more-bankrupt. As a consequence the ECB's action is self-destructive and doomed to fail, and as a consequence there is no reason for these banks to back off at all! Indeed, quite to the contrary - they have (correctly) deduced that they can make billion in bonuses by shorting their own currency to destruction, forcing ever-larger "interventions" by the ECB!

If you've ever seen a meth addict goose himself with his drug of choice to the point where his teeth literally fall out, you know how this story ends.

The only winning play is to refuse to play at all, and force the bankrupt to recognize their insolvency and reorganize their debts. That's it. Attempting to paper over insolvency never works, and the market has now deduced this, as I expected - although I didn't think it would happen quite this quickly.

"All in" by the ECB drew not a "ok, ok your pot!" response, but rather one loud voice in response: CALL!

Bonne chance Nicolas.

click link for EUR/USD market chart
http://market-ticker.org/archives/2303-See,-The-Gun-Is-Loaded!.html


Who is going to pull the trigger?

[DemReadingDU]

26. ZeroHedge: European Banks Now Feverishly Betting Against Euro, As Bailout Fails, Gold Surges

5/11/10 European Banks Now Feverishly Betting Against Euro, As Bailout Fails, Gold Surges

Thought experiment: You are the head FX trader at French megabank Croc Monsieur & Cie. (HFT: CMC) For the past 5 years, your bonus has been getting paid primarily in company stock. In the last two weeks you have seen the stock of your firm plunge as the markets have finally realized that those idiots in the Fixed Income desk have loaded up to the gills with PIIGS debt which is now worth 60 cents on the dollar at best. And to top things off, the euro has plunged to multi year lows killing any chance of buying that New York Pied A Terre which seemed so cheap when the EURUSD was 1.50 a few months ago. So what do you do? Well, you short the living daylights out of the EUR, knowing full well that the EU, the IMF and the ECB will not let Europe crash. You sell, you sell on margin and then you sell some more, trying to get EURUSD all they way down to 1.20, to 1.10, even to parity if possible, to make it all that more believable that the end of Europe is coming. And, lo and behold, on May 9 your plan succeeds: Europe agrees to bail your bonus out, by flushing $1 trillion under the pretext the money will be used to stabilize the periphery and the euro. Immediately the stock of CMC, and thus the value of your accrued bonus (several million worth), surges by a record 20% in one day. So you think: "How can I get an even greater bonus appreciation? Why - I will short the euro again. At this point I know that between myself and the other FX desks at all the other French and German banks we can easily take the euro down to 1.20 if not much lower. After all we are only trading against the very central banks that are keeping us alive. And when that happens Europe will have to print another trillion, then ten trillion, then one hundred trillion, all the while the stock portion of my accrued bonus surges. Brilliant." Brilliant indeed - Zero Hedge has received confirmation that several of the largest French banks are now actively shorting the euro to take advantage of globalized moral hazard, which with every ensuing bailout does nothing but make the bonuses of French FX traders surge. In other words, the very banks that Europe is bailing out are betting more and more aggressively with each passing day against Europe's own survival! Even George Soros has shed a tear of pride in how beautifully his initial plan to take on the BOE has mutated for the Bailout Generation.

And overnight, the traders from the imaginary CMC, and other all too real French banks (and now US hedge funds), are succeeding, as the last traces of this weekend's $1 trillion bailout are long forgotten: futures are plunging, Asia is collapsing, the EURUSD is probing a 1.26 handle and we see it easily going back down to 1.25, even as gold surges.

We anticipate another record bailout to be announced by Europe within the month as Europe now has no other choice. And each subsequent bailout will only lead European banks to bet even more aggressively against the survival of Europe, which destroys more and more European taxpayer capital. Welcome to Global Moral Hazard.

http://www.zerohedge.com/article/european-banks-now-feverishly-betting-against-euro-bailout-fails-gold-surges

[DemReadingDU]

29. Jim Rickards: "Goldman Can Create Shorts Faster Than Europe Can Print Money"

5/10/10
Jim Rickards: "Goldman Can Create Shorts Faster Than Europe Can Print Money"

Jim Rickards, who recently has gotten massive media exposure on everything from the JPM Silver manipulation scandal, to the Greek default, was back on CNBC earlier with one of the most fascinating insights we have yet heard from anyone, which demonstrates beyond a doubt why any attempt by Europe to print its way out of its current default is doomed: "Look at what Soros did to the Bank of England in 1992 - he went after them, they had a finite amount of dollars, he was selling sterling and taking the dollars, and they were buying the sterling and selling the dollars to defend the peg. All he had to do was sell more than they had and he wins. But he needed real money to do that. Today you can break a country, you don't need money you just need synthetic euroshorts or CDS. A trillion dollar bailout: Goldman can create 10 trillion of euroshorts. So it just dominates whatever governments can do. So basically Goldman can create shorts faster than Europe can create money." Just wait until Europe finally realizes that the CDS "speculators" had all the cards in the poker game all along. And we hope Europe listens to the man: being LTCM's GC he knows all about failed bail outs.

click link for CNBC video
http://www.zerohedge.com/article/jim-rickards-goldman-can-create-shorts-faster-europe-can-print-money

[Demeter]

38. Definition of Insanity Applies Here

[Tansy_Gold]

30. "Until you have all the money." n/t

[Demeter]

37. Ireland, I Think

Iceland has already done what they can, and they aren't in the common market and are glad for it.

[MARALE]

25. I love that Toon!

It is so appropriate. Self-Regulating does not work well at all.

[DemReadingDU]

31. Good toon today!

[Dr.Phool]

36. Locking........

Damn. I've been gone all day, and don't see a single post with a afternoon time stamp.

Somebody must have locked it.

edit:On further review, I found a couple.
:silly: :spank: :silly: :banghead: :banghead: :spank: :silly: