STOCK MARKET WATCH, Friday May 14

[ozymandius]

Source: du

STOCK MARKET WATCH, Friday May 14, 2010

AT THE CLOSING BELL ON May 13, 2010

Dow... 10,782.95 -113.96 (-1.05%)
Nasdaq... 2,394.36 -30.66 (-1.26%)
S&P 500... 1,157.44 -14.23 (-1.21%)
Gold future... 1,235 +5.60 (+0.46%)
10-Yr Bond... 3.53 0.00 (0.00%)
30-Year Bond 4.42 -0.06 (-1.27%)

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Market Conditions During Trading Hours

Euro, Yen, Loonie, Silver and Gold

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    William Black: This Economic Disaster    Bill Moyers with Kevin Drum and David Corn

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 Reports

08:30 Retail Sales Apr
Briefing.com 0.3%
Consensus 0.2%
Prior 1.9%

08:30 Retail Sales ex-auto Apr
Briefing.com 0.6%
Consensus 0.5%
Prior 0.9%

09:15 Capacity Utilization Apr
Briefing.com 73.7%
Consensus 73.9%
Prior 73.2%

09:15 Industrial Production Apr
Briefing.com 0.6%
Consensus 0.8%
Prior 0.1%

09:55 Mich Sentiment May
Briefing.com 73.7
Consensus 73.5
Prior 72.2

10:00 Business Inventories Mar
Briefing.com 0.4%
Consensus 0.4%
Prior 0.5%

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

[ozymandius]

2. Oil falls near $73 amid signs demand may slacken

SINGAPORE – Oil prices fell to near $73 a barrel Friday in Asia amid expectations a slower economic recovery in debt-saddled Europe will weigh on crude demand.

Oil traders have also been eyeing equity markets as an overall barometer of investor sentiment, and the Dow Jones industrial average fell 1.1 percent Thursday. Most Asian stock indices also dropped Friday.

Investors are concerned that fiscal austerity measures in countries such as Spain, Portugal and Greece will undermine economic growth and crude consumption.

In other Nymex trading in June contracts, heating oil fell 1.64 cent to $2.1155 a gallon, and gasoline fell 1.7 cent to $2.178 a gallon. Natural gas was down 0.6 cent at $4.333 per 1,000 cubic feet.

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

[ozymandius]

3. US Senate fights over oil spill damages

WASHINGTON (AFP) – US Senate Democrats failed Thursday in a bid to quickly pass legislation that would dramatically increase oil firms' economic liability after massive spills like the one soiling the Gulf of Mexico.

The measure, pushed by lawmakers from New Jersey and Florida, would raise the ceiling on damages an oil company could have to pay for things like lost tourism or fishing revenue from 75 million dollars to 10 billion.

The bill is one of many seeking to show voters ahead of November elections that the US Congress is tough on oil companies like British energy giant BP in the wake of the Deepwater Horizon catastrophe.

Democratic Senators Robert Menendez, Frank Lautenberg, and Bill Nelson sought immediate passage by the "unanimous consent" of all senators, but Republican Senator Lisa Murkowski objected, temporarily stalling the legislation.

http://news.yahoo.com/s/afp/20100513/pl_afp/usblastoilpoliticsliability

[Demeter]

15. That Was Shameless and Shameful

The GOP is now a publicly criminal enterprise. RICO them!

[hamerfan]

28. With a name like Murkowski,

She has to be owned by Oil, Inc.
Like father (Frank), like daughter (Lisa).

[ozymandius]

4. Jobless claims signal unemployment to remain high

WASHINGTON (Reuters) – The number of workers filing for jobless benefits fell only slightly last week, suggesting the unemployment rate will remain elevated even as recovery in the labor market builds steam.

Initial claims for state unemployment aid slipped 4,000 to 444,000 in the week to May 8, the Labor Department said on Thursday, maintaining this year's modest downward trend even as other job market indicators have shown major improvements.

Economists said the puzzling stickiness in claims, which they had expected to dip further to 440,000, underscored the challenges the labor market confronts as it heals from the severe beating it took during the worst recession since the 1930s.

The economy has grown for three straight quarters and while employment has risen for four months in a row, some economists worry that the slow improvement in jobless claims, if sustained, could signal slower job growth ahead.

http://news.yahoo.com/s/nm/20100513/bs_nm/us_usa_economy

[Tansy_Gold]

34. It constantly amazes me how utterly DENSE these people seem

They are so narrowly focused and seem incapable of even looking at the larger picture, much less really seeing or understanding it.

"Oh, the Dow is up, which must mean the recovery is at hand, but we just can't figure out why there are no jobs being created???"


Maroons.



My job awaits. We had yet another meltdown of the software-conversion-from-hell sometime Wednesday night or early Thursday morning, and the ripple effect of the bullshit reached me yesterday afternoon, so I'm behing schedule and need to hustle.


TTYL


Tansy Gold

[tranche]

67. It's our job to make the distinction. The Dow being up means corporate profits are expected to rise.

That of course has nothing to do with actual American jobs. We can't be angry that the business channels and multi-millionaire news anchors that we like to like to watch and rail against see the world through the former prism. To them, the DOW and corporate profits (which butters their bread) is the true indicator of the turnaround, because it's "their" turnaround. As for the "economists" which are always "surprised" at this or that. I think that's just balance from the shitty AP columnists that put this garbage out.

[Tansy_Gold]

73. That's my point. The Dow being up does NOT mean corporate profits

will rise, except for those corporations -- FIRE especially, but all otehr speculators as well -- that profit on a rising DJIA. And since those profits are exactly the same as gambling profits, there must be an equal number of losses (if not necessarily an equal number of losers). The disconnect/s is/are total, meaning the disconnect between DJIA and corporate/business profitability AND the disconnect between DJIA and the economy AND the disconnect between the reports and reality.



Tansy Gold, who is not disconnected

[ozymandius]

5. European Shares Drop as Debt Woes Weigh

LONDON—European stocks dropped Friday, with losses on Wall Street Thursday adding to downside pressure amid continuing concerns about the potential impact on euro-zone economic growth as governments in the region take measures to bring their swelling fiscal deficits under control.

The euro, meanwhile, fell to a fresh 14-month low under $1.2510 before steadying, and the cost of insuring Western European sovereign debt against default rose, as the enthusiasm generated by the announcement of a European Union support package for member states in difficulty, and the European Central Bank's decision to buy government bonds, started to fade.

The Stoxx Europe 600 Index declined 1.5% to 253.24. London's FTSE 100 was down 1.0% at 5373.21, Frankfurt's DAX was 0.9% lower at 6202.89, and Paris's CAC-40 was off 1.8% at 3661.52. The ASE in Athens was down 2.0% at 1682.18, the Lisbon PSI-20 slumped 2.4% to 7137.79 and the IBEX-35 in Madrid fell 3.3% to 9629.32.

Worries that Spain's and Portugal's austerity cuts and those that may be adopted by other European nations will have a negative impact on growth in the region has provoked the selling of stocks, said David Rees, a trader with Shortsandlongs.

Asian stock markets were mostly lower Friday, with Japanese exporters falling on the yen's recent strength, while shares in Thailand fell as clashes late Thursday between troops and anti-government protesters left several injured and one person dead. Japan's Nikkei 225 dropped 1.5%. Hong Kong's Hang Seng index fell 1.4% and the Shanghai Composite was off 0.5%. Thailand's SET index fell 1.2%.

http://online.wsj.com/article/SB10001424052748703460404575243573532763044.html?mod=WSJ_Markets_section_Stocks

[Ghost Dog]

8. Euro struggles, stocks fall on EU debt doubts

... Less than a week after European authorities and the IMF tried to calm markets with a $1 trillion emergency aid plan, the euro has slid back to levels seen before the package was announced and stocks are again in retreat.

The MSCI index for Asian stocks outside Japan dropped 0.6 percent. For the week, it gained around 3.6 percent, riding on a short-lived burst of optimism on Monday over the new euro zone rescue package. But it retraced less than half of last week's 8.4 percent dive, the largest weekly drop since the collapse of Lehman Brothers in September 2008.

Japan's Nikkei average fell 1.5 percent, dragged down by a 6.7 percent tumble in electronics giant Sony Corp after it forecast profits that were not as strong as some had hoped Losses in Japanese stocks were further fuelled by worries that a firm yen would eat into exporters' earnings power. Investors typically buy the yen in uncertain times as a safe-haven.

Asian markets were also pressured by losses on Wall Street, where downbeat comments from tech giant Cisco Systems Inc and retailer Kohl's Corp cast doubt on the strength of the U.S. economic recovery.

The movement of cash between markets further attested to investors' anxiety.

Money market funds, perceived to be among the least risky investments, attracted new money this week for the first time since January as investors moved back into cash, data from EPFR Global showed. At the same time, the amount of money pulled from risky, high-yield bond funds hit a five-year high, while equity funds in emerging markets also suffered.

Stock investors seemed to prefer putting money instead in the United States, where flows into equity funds hit a 19-week high despite a mysterious 'flash crash' on Wall Street on May 6 which authorities have still been unable to explain.

/... http://www.finanznachrichten.de/nachrichten-2010-05/16901105-rpt-global-markets-euro-struggles-stocks-fall-on-eu-debt-doubts-020.htm

[Ghost Dog]

10. Europe banks slide on Greek woes, U.S. probes

LONDON/MADRID, May 14 (Reuters) - European bank shares fell over 3 percent on Friday as renewed concerns about losses from exposures to Greece and a widening of probes by U.S. authorities unsettled investors.

Spanish banks led the drop amid fears Greece's problems could spread, despite a record bailout package, and that austerity plans will hurt economic growth. Dealers also cited talk of a levy possibly being imposed on banks in Portugal or Spain.

'Portugal raised the spectre of a bank levy after it announced more austerity measures yesterday and there is now the concern that Spain could do this as well, with the government being pressured by the unions to take the focus off cutting the public sector wages and hitting the fat companies and the wealthy,' Renta 4 analyst Nuria Alvarez said.

By 0830 GMT Santander shares were down 5.5 percent and BBVA dropped 4.6 percent. French banks sagged as they have the biggest exposures to Greece, and Credit Agricole and Societe Generale were each down over 4 percent. Deutsche Bank CEO Josef Ackermann raised the prospect that lenders will have to take haircuts on their exposures after casting doubt on Greece's ability to repay its debt in an interview late on Thursday.

Meanwhile, U.S. prosecutors are conducting a broad criminal investigation of six banks, including Deutsche Bank and UBS , according to a source, and in a separate probe New York's Attorney General served subpoenas on lenders including UBS, Deutsche, Credit Agricole and Credit Suisse , according to another source. The probes add to concerns the industry is in the firing line as regulators scrutinise past practices, dealers said.

Deutsche, UBS and Credit Suisse shares all fall about 3 percent, in line with a 3.3 percent drop by the European bank sector.

/.. http://www.finanznachrichten.de/nachrichten-2010-05/16902067-glance-europe-banks-slide-on-greek-woes-u-s-probes-020.htm

[Ghost Dog]

12. Spanish media comment on public sector strike

May 14 (Reuters) - Spain's main newspapers unanimously criticised a public servants strike called for June 2 as the protest against austerity measures may jeopardise Spain's long-awaited labour reform.

An overhaul of rigid labour-market laws, scheduled by the end of May, is considered vital to boost stagnant growth.

Some newspapers suggest the government should hike taxes as a balancing measure to soothe upset workers after wage and pension cuts.

EL PAIS, leading left-leaning newspaper:

Unions should act with more responsibility, particularly with regard to a possible general strike and its implications for future growth.

'The unions have to modify their reactions to salvage the labour reform and economic recovery,' one columnist said.

ABC, the most conservative daily:

The government's next move will probably be to hike taxes for the middle classes and the rich.

'The austerity plan is not enough to plug the deficit hole,' a columnist said.

EL MUNDO, widely read, close to opposition:

A tax hike is not the answer, it says. The rich always avoid paying more and that's why those people who already pay high taxes will once again suffer.

'What's the point in hanging out to dry those tax payers who are already paying a lot of taxes. There is no eocnomic logic to this,' the paper's editorial said.

/... http://www.finanznachrichten.de/nachrichten-2010-05/16901966-factbox-spanish-media-comment-on-public-sector-strike-020.htm

[ozymandius]

14. Sobering.

There is no easy way out of this mess. Those who cannot afford to hire financial advisors to hide their money are the easy targets of any tax hike legislation. Meanwhile - those who are most able to pay, and oddly benefitted from the debt bubble, can make themselves appear poorer than the average middle class taxpayer.

Austerity measures will not address the debt-to-gdp issues. Aggressive tax collection on the heels of tax reform must accompany any other plans.

[Ghost Dog]

44. A New White House Economic Strategy?

Over the past week, top White House officials have been floating a trial balloon for their strategy on the economy. At its core is a decision to put deficit reduction ahead of job creation.

The premise is that the bond markets and allied deficit hawks are demanding action to cut the budget, that Obama lacks the votes in the Senate for a serious jobs initiative, and that polls show voters care more about deficit reduction than about jobs.

So the plan, modeled closely on the work of the Peter G. Peterson foundation and the anticipated report of the president's own fiscal commission, is a deal that includes cuts in Social Security plus a new Value Added Tax (VAT), in order to get deep cuts in the deficit. As a sweetener to get Republicans to back the VAT, White House officials would cut the corporate income tax.

/... http://www.prospect.org/cs/articles?article=a_new_white_house_economic_strategy

[Zenlitened]

68. Nauseating:

"polls show voters care more about deficit reduction than about jobs"

:puke:

"the plan, modeled closely on the work of the Peter G. Peterson foundation"

:puke:

"to get Republicans to back the VAT, White House officials would cut the corporate income tax"

:puke:

I can't even bring myself to click on the link. Can this possibly be true or accurate? It's insane. Mind-boggling. It's so far divorced from the reality America now faces...not to mention what one would expect from a Democratic administration and Congress...words fail me.
:wow:

[Dr.Phool]

72. We don't have a Democratic Administration. We have a New Democrat Administration.

Or a DLC Administration.

I'm getting ready to start calling them the Democrat Party, my own damn self.

[Tansy_Gold]

77. Hmmm, and you might not be alone, Doc

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x4381468




TG

[Demeter]

27. Good For Them! Tax the Banksters and Currency Speculators

That will put a quick end to this pressure.

[Ghost Dog]

33. It looks like a sensible strategy. Note:

Vote on hedge funds threatens EU-US rift

European countries led by France and Germany plan to push through controversial hedge fund regulations next week after turning down British pleas to defer a vote in Brussels.

The refusal by Paris and Berlin to delay a decision on the new rules, which are opposed by the UK, has set up a bruising early confrontation with David Cameron’s new government.

The directive has also caused concern in the US. Tim Geithner, Treasury secretary, wrote to EU officials in March warning that, if unchanged, the new regulations could trigger a transatlantic rift by unfairly locking US funds out of European markets.

“The Americans are going absolutely ape,” said a person involved in the negotiations. “There’s this overwhelming belief now in Europe that if we legislate first, then the US will follow what we do.”

/... http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x8333072

[ozymandius]

11. Volcker Says Debt Crisis Threatens Euro `Disintegration'

Former Federal Reserve Chairman Paul Volcker said he’s concerned that the euro area may break up after the Greek fiscal crisis that sparked an unprecedented bailout by the region’s members.

“You have the great problem of a potential disintegration of the euro,” Volcker, 82, said in a speech in London yesterday. “The essential element of discipline in economic policy and in fiscal policy that was hoped for” has “so far not been rewarded in some countries.”

European leaders pledged a rescue package of almost $1 trillion this week to counter a mounting debt crisis and restore confidence in the currency. Former U.S. Treasury Secretary John Snow said this week the euro may need a common fiscal policy to survive, a comment echoed by Norman Lamont, who was U.K. finance minister when Britain opted out from the euro in 1992.

The extra yield that investors demand to hold 10-year Spanish bonds over German bunds, Europe’s benchmark, has narrowed to 99 basis points from 164 basis points on May 7. Spreads on Portuguese debt have fallen by more than half to 163 points. The Greek spread was 442 basis points yesterday after touching 973 points last week.

Volcker expressed hope that the euro will survive. “There is strong opinion to keep it going,” he told journalists after his speech at Mansion House, the residence of the lord mayor of the City, London’s financial district. “That does require, I think, changes in the structure of European economic policy.”

http://preview.bloomberg.com/news/2010-05-13/volcker-says-euro-s-disintegration-is-potential-consequence-of-debt-crisis.html

[Demeter]

40. Euro crisis offers opportunity to strengthen EU, says Merkel

http://www.irishtimes.com/newspaper/frontpage/2010/0514/1224270379465.html

GERMAN CHANCELLOR Angela Merkel has said the euro zone is suffering an “existential” crisis, behind which lies a unique opportunity to strengthen EU political and economic union.

Speaking in Aachen yesterday, Dr Merkel said: “This is the biggest test that Europe has experienced since 1990, if not since the Treaty of Rome was agreed 53 years ago,”

In a keynote address as the Polish prime minister Donald Tusk was presented with the Charlemagne Prize for furthering European unity, Dr Merkel said the future of the EU was at stake.

“If the euro fails it’s not just the currency that fails, but Europe and the idea of European unification.”

Dr Merkel said the source of the EU’s problems lay in how the union had grown geographically without keeping pace on other fronts.

“We have a common currency but no common political and economic union. And this is exactly what we must change. To achieve this, therein lies the opportunity of this crisis. If we fail, the consequences cannot be foreseen. If we succeed, Europe will be stronger than ever before.”

The speech was a clear rallying cry to rank-and-file MPs in her Christian Democratic Union (CDU) ahead of next week’s crucial vote on the €750 billion eurozone stability fund. They were critical last week of the Greek bailout but ultimately backed German loans of €22.4 billion over three years.

The crisis appears to be causing a widening split in the CDU’S already fractious coalition with its Free Democrat (FDP) junior partner.

Mr Tusk described the crisis as a “chance for Europe”.

“I see this, paradoxically, as a chance to strengthen and develop Europe further. Europe’s hour is now, and passing this test will be the best proof, ” said Mr Tusk.

Meanwhile, Taoiseach Brian Cowen yesterday criticised Fine Gael’s claim that the EU Commission proposal for more co-ordination of national budgets threatens Ireland’s low corporation tax rate.

“The proposal coming from the commission is not, never has been, and never will be a threat to our corporation tax rate,” Mr Cowen told journalists.

The Taoiseach said the only change being proposed was that there would be greater consultation in the future to protect the economies in the euro zone. He said it was unfortunate the Opposition had sought to create the impression that Ireland’s corporation tax was up for review and he reassured business leaders that there was no question of that happening.

The Fine Gael deputy leader and finance spokesman Richard Bruton had earlier repeated his claim that the commission proposals would involve a final veto over Irish budgets and could lead to tax harmonisation, which could jeopardise Ireland’s corporation tax rate.

[ozymandius]

6. Credit Ratings, Canada Telcom, Cuomo Subpoenas: Compliance

....

The Senate in a 64-35 vote yesterday approved an amendment to the financial overhaul legislation that would create a ratings board overseen by the Securities and Exchange Commission. The panel would assign a credit-rating company to rank an offering.

Senator Al Franken, a Minnesota Democrat who introduced the amendment, said the credit-rating industry is affected by “a staggering conflict of interest,” and issuers of securities “shop around” for the credit ratings.

Lawmakers and regulators have been debating for three years how to reduce conflicts at the companies. Under Franken’s amendment, the SEC would determine the size of the board. The majority of members would be investors, at least one member would be from a credit-rating company and at least one member would be from an investment bank.

Goldman Sachs Group Inc., Morgan Stanley, UBS AG and five other banks were subpoenaed by New York Attorney General Andrew Cuomo over whether they misled rating companies about mortgage- backed securities, according to a person familiar with the investigation.

Cuomo is probing the relationships between the banks and the major companies, which also were subpoenaed, said the person, who declined to be identified because the investigation is continuing.

State and federal regulators since at least 2008 have been looking into why Moody’s Investors Service, Standard & Poor’s and Fitch Ratings gave top grades to subprime-mortgage backed securities and collateralized debt obligations that later plummeted in value.

http://www.businessweek.com/news/2010-05-14/credit-ratings-canada-telcom-cuomo-subpoenas-compliance.html

[ozymandius]

13. Other Senate news: Retailers poised for victory in debit card fee fight

NEW YORK (CNNMoney.com) -- Retailers are poised for a major victory in the Wall Street reform bill currently pending in Congress. The Senate adopted an amendment late Thursday that will slap sharp restrictions on the fees issuers levy every time a buyer pays with a debit card.

Called "interchange" fees, the charges typically consume 1% to 3% of every transaction run through a debit or credit card. Network operators like Visa (V, Fortune 500) skim off a fraction of the fee, while the rest goes to the financial institution that issued the card.

The new Senate amendment adds two major restrictions to the rules on interchange fees.

First, it requires that the fee be "reasonable and proportional to the actual cost incurred" by the payment network or issuer for processing the transaction.

Second, it allows sellers to offer a discount to customers who pay with cards that carry lower transaction fees.

Durbin's amendment isn't a compete fix. Its most prominent limitation is that it only applies to debit cards. Credit cards, like those issued by American Express and Discover (DFS, Fortune 500), are exempt from the fee caps.

The amendment also excludes cards issued by community banks and credit unions with less than $10 billion in assets -- those can continue to carry the same interchange rates they currently do.

http://money.cnn.com/2010/05/14/smallbusiness/interchange_fees/index.htm

[Demeter]

18. Swipe this card; shopping could be cheaper

http://news.yahoo.com/s/ap/20100513/ap_on_bi_ge/us_financial_overhaul


...The measure still needs to survive negotiations with the House, which has already passed its version of regulations on Wall Street. The House bill does not contain the debit card provision.

The change would represent the most direct and tangible consumer benefit of the regulatory overhaul and would amount to a triumph for Durbin who failed to get a similar proposal attached to an overhaul of credit card regulations last year.

The Senate put off a vote on a contentious amendment to the regulatory bill. The amendment would exclude auto dealers that offer loans to car buyers outside the reach of a proposed consumer financial protection agency. President Barack Obama argued against the exemption Wednesday, but Democrats feared that even by requiring 60 votes to pass it, they would be unable to defeat it.

The debit card issue pitted the politically popular appeals of small business owners against the influence of community banks and the lobbying power of the credit card companies...

[Tansy_Gold]

38. If the banks can extract a fee from each transaction,

How is that different from a "fee" (aka "tax") levied in each of their own transactions on Wall Street?

I'm sure their justification is they need the income to cover the "costs" of doing business. Well, the gubmint does business, too, and needs to recover its costs. Wall Street's excesses have contributed to unemployment, which costs the gubmint; to foreclosures, which cost the gubmint; to investigations and civil/criminal prosecutions, which cost the gubmint. It's time to treat the gander the way the goose has been treated for a long time.


Tax the bastards until they honk.



Tansy Gold

[ozymandius]

7. Gold Gains to Near a Record on European Debt Package Concern

May 14 (Bloomberg) -- Gold climbed, heading for a fourth weekly gain, as investors bought the precious metal as a haven amid turmoil in European debt markets.

Gold rose to within 1 percent of a record reached on May 12 and advanced to all-time highs in European currencies. The euro traded near its weakest level in 14 months against the dollar amid speculation that debt-cutting measures by European nations will undermine economic growth.

Gold for immediate delivery added as much as $7.35, or 0.6 percent, to $1,240.05 an ounce and traded at $1,239.18 at 9:16 a.m. in London. The metal reached $1,248.82 an ounce on May 12 and is up 2.6 percent this week. Bullion for June delivery increased 0.8 percent to $1,239.10 on the Comex in New York.

The euro, which generally has moved in tandem with gold as an alternative to the dollar, has slumped 13 percent this year. Gold and the U.S. Dollar Index, a six-currency gauge of the greenback’s strength, have gained the previous three weeks and both climbed for a second straight quarter in the first three months of 2010.

Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, have advanced 6.7 percent this year to a record 1,209.5 tons. The fund’s holdings, exceeding that of Switzerland’s central bank, were unchanged yesterday, according to its website.

http://www.businessweek.com/news/2010-05-14/gold-gains-to-near-a-record-on-european-debt-package-concern.html

[ozymandius]

9. Morgan Stanley's Doomed CDOs Thwarted `Natural Process'

In June 2006, a year before the subprime mortgage market collapsed, Morgan Stanley created a cluster of investments doomed to fail even if default rates stayed low -- then bet against its concoction.

Known as the Baldwin deals, the $167 million of synthetic collateralized debt obligations had an unusual feature, according to sales documents. Rather than curtailing their bets on mortgage bonds as the underlying home loans paid down, the CDOs kept wagering as if the risk hadn’t changed. That left Baldwin investors facing losses on a modest rise in U.S. housing foreclosures, while Morgan Stanley was positioned to gain.

Baldwin CDOs shared their atypical structure with an earlier series of Morgan Stanley CDOs called ABSpoke and two groups of deals, named after U.S. presidents, later sold by other banks, according to offering documents.

The feature meant investors could lose big even if subprime defaults stayed near historical averages and didn’t jump to record levels, said Adams, who worked in structured-finance divisions at Ambac and FGIC. Since June 2006, the share of subprime loans that are delinquent, in foreclosure or have been turned into seized properties has more than quintupled to almost 45 percent, according to data compiled by Bloomberg.

The Baldwin 2006-III securities, which pay 0.75 percentage point more than the three-month London interbank offered rate, were originally granted Moody’s Investors Service’s fourth- highest credit rating. Last April the ranking was cut to the firm’s lowest, given to debt “typically in default, with little prospect for recovery of principal or interest.”

The investors in Baldwin 2006-III would start losing money if only $235 million of the $2.3 billion portfolio of mortgage bonds it referenced went sour, according to the offering document. They’d get wiped out after $18 million more of losses.

http://preview.bloomberg.com/news/2010-05-14/morgan-stanley-shorted-doomed-baldwin-cdos-lacking-natural-curbs-on-risk.html

---

(operative word: 'doomed')

[Demeter]

16. Humorous Word: Natural

Haven't seen anything natural about this from the start.

[ozymandius]

20. I respectfully disagree.

I see the behavior of the banksters who created this crap and the consequences of said behavior as a natural result of their nature.

Sociopathic greed created these 'doomed to fail' CDOs. The past thirty years of ridiculous attitudes and ideas that grew from the fictional Gordon Gekko and the poisoned mind of the very real Milton Friedman (along with his acolytes) opened the doors for all kinds of criminal personality types to enter the world of banking and speculative finance.

The results of their laissez-faire attitudes and aggressive greed produced these natural ends.

[Demeter]

21. I'll Agree With You There

Their behavior is perfectly natural for a bunch of psychopaths.

It's just that the product (naked CDOS) itself is so unnatural and useless for anything except theft.

[tclambert]

26. which is natural behavior . . . FOR THIEVES

[Demeter]

17. Stocks fell after drop in retail, financial shares

http://news.yahoo.com/s/ap/20100513/ap_on_bi_st_ma_re/us_wall_street

A late-day slide left stocks lower Thursday following a disappointing forecast from department store chain Kohl's and a drop in financial shares.

The Dow Jones industrial average ended down about 114 points after shooting up by nearly 149 on Wednesday. The Dow has fallen six of the past eight days.

Stocks mostly made modest moves for much of Thursday's trading but fell in the final hour as the euro weakened. The drop in stocks signaled that traders remain skittish about the direction of the market after weeks of big swings...

Bank stocks fell on reports that New York's attorney general is examining eight banks to determine whether they misled ratings agencies about mortgage securities...

Two stocks fell for every one that rose on the New York Stock Exchange, where consolidated volume came to 4.9 billion shares, compared with 5.3 billion Wednesday.

Volume has been decreasing this week since stocks jumped on Monday on relief over Europe's nearly $1 trillion plan help debt-strapped governments in the European Union. Some analysts say that the drop in volume is a sign of flagging confidence in the market's moves.

SAY RATHER THAT VOLUME IS FALLING AS HFT GET A BIT NERVOUS ABOUT THE HEAVY HAND OF THE LAW...

[Demeter]

31. U.S. stock futures point to weaker start

http://www.marketwatch.com/story/us-stock-futures-point-to-weaker-start-2010-05-14?siteid=YAHOOB

U.S. stock futures pointed to a weaker start Friday ahead of a wave of economic data, with early concerns focused on European debt burden and the legal troubles of the world's top banks.

S&P 500 futures fell 7.2 points to 1,149.60 and Nasdaq 100 futures dropped 11.25 points to 1,936.00. Futures on the Dow Jones Industrial Average fell 59 points.

U.S. stocks lost ground Thursday on reports of widening legal probes of banks, disappointing traffic from retailers and still-elevated jobless claims. The Dow Jones Industrial Average, down six of the last eight sessions, dropped 113 points, the S&P 500 fell 14 points and the Nasdaq Composite fell 30 points.

The lingering debt woes around Europe also have weighed on markets. Data released Friday showed core inflation in Spain turning negative for the first time, raising questions about the country's ability to grow out of its massive debt burden. An alleged threat delivered last week by French President Nicolas Sarkozy to pull his country out of the euro also impacted...

[Demeter]

19. How to Turn Congress Inc. Back to Just Congress By Katrina vanden Heuvel

http://www.washingtonpost.com/wp-dyn/content/article/2010/05/11/AR2010051102500.html

What is the biggest scandal of 2010 so far?

Allegations of fraudulent misrepresentation from Goldman Sachs? An oil spill that poses a threat to our environment and economy for generations? Mining operators freely ignoring safety violations and treating workers as disposable?

Each of these is bad. But perhaps the biggest political scandal is the one that aids and abets these others -- the pay-to-play system that buys up Congress, pollutes our political system with special-interest cash and deep-sixes the kind of bold reform agenda that we voted for and need.

The health-care industry has contributed more than $200 million to congressional candidates in the 2008 and 2010 election cycles, according to the Center for Responsive Politics. Is it any wonder that there was no public option in the final bill, or that Medicare isn't able to negotiate lower drug prices for seniors the same way the Veterans Administration does for veterans?

Big banks and Wall Street financial firms spent more than $500 million since the beginning of 2009 on lobbying and campaign contributions, the center reports. In just the first quarter of 2010, the finance, insurance and real estate sectors spent more than $123 million on 2,057 lobbyists. Any bets on whether the final financial reform bill will create the kind of robust, independent Consumer Financial Protection Agency that would serve as a watchdog with teeth?

Big oil and gas spent nearly $170 million lobbying in 2009 -- nearly $1 billion in the past 12 years -- and has given more than $140 million to members of Congress in the past 20 years. Is it any surprise that we've seen so many exemptions from environmental studies for oil-exploration plans? Or that the climate bill is stalled and insufficient to confront the global warming crisis?

It is clear that the kind of strong reforms we urgently need won't be achieved simply by electing a new president or new members of Congress. Despite the voters' mandate for change, the underlying problem of Washington -- what author and Washington Post reporter Robert Kaiser calls "so damn much money" -- remains unaltered and is in many ways more powerful than even before. In the wake of the Supreme Court's recent Citizens United decision -- which awarded corporations the rights of citizens when it comes to electioneering, allowing them to use their coffers to manipulate political discourse -- the prospect of a Congress "brought to you by (insert corporate sponsor here)" has only grown.

Americans must fight back with legislation that will help organized people defeat organized money. I'm not speaking of the Disclose Act -- a good response to Citizens United that would make corporate campaign funding more transparent. Democratic leaders must recognize that such efforts are mere triage and fail to get to the heart of the money problem in Washington. Congress should also pass the Fair Elections Now Act.

This legislation would sever ties between big-money campaign contributors and members of Congress, who, in the Senate, must raise an average of $27,000 every week they are in office in order to run competitive races. The bill would bar participating congressional candidates from accepting contributions larger than $100 and allow them to run honest campaigns with a blend of small donations and public matching funds.

Sponsored by Senate Majority Whip Richard Durbin and Rep. John Larson (D-Conn.), the bill has 18 Senate co-sponsors (12 of whom signed on since the Citizens United decision) and 149 bipartisan cosponsors in the House. Activists are hopeful there will be a House vote as soon as this summer, and Durbin reportedly will push for the Senate to take it up after the House does.

Fighting for this bill is good policy and good politics. A recent Greenberg/Mark McKinnon poll found that voters support the Fair Elections Now Act by a 2-1 margin, 62 percent to 31 percent. Independents support it 67 percent to 30 percent. Is there a candidate in the country who wouldn't gain votes by saying, "I want a political system in which someone who doesn't take more than $100 from anybody can run a competitive race for Congress. I want a political process that makes Congress listen to their constituents and allows them to ignore the lobbyists with fat checks in hand"?

It was a Republican president, Teddy Roosevelt, who had it right when he told Congress, "All contributions by corporations to any political committee or for any political purpose should be forbidden by law." He was so worried about the power of the trusts that he called for public financing of elections. More than 100 years later we can take a desperately needed step to protect the public interest and clean up our politics by passing this legislation.

[tclambert]

29. Teddy Roosevelt had it right. Bar corporations from political contributions.

What do other countries do to prevent members of parliament from selling themselves to the highest corporate bidder? GhostDog, any insight on that?

[Roland99]

30. What? And infringe upon the right of free speech??

After all, corporations were SPECIFICALLY mentioned in the Declaration of Independence, the Bill of Rights, and the whole Constitution.



Oh wait....they're not??

[ozymandius]

22. Time to sign off for now.

School beckons. Just a couple of weeks left.

Have a good morning and a wonderful afternoon. :donut: :donut: :donut:

I wonder what the WEE will be about this evening.

:hi:

[Demeter]

24. I Was Wondering that Same Thing!

snicker

[Demeter]

23. Blight devastates Afghan poppy crop; prices soar

http://news.yahoo.com/s/ap/20100513/ap_on_re_as/as_afghan_opium_blight

Afghanistan's opium yield is likely to drop as much as 30 percent this year because blight is destroying fields full of poppies in the south — driving up prices amid a countrywide push to grow legal crops, a U.N. official said Thursday.

Higher prices also could mean more money pouring in to the Taliban, which funds much of its insurgency with profits from the drug. Afghanistan supplies 90 percent of the world's opium, the main ingredient in heroin.

The blight, which turns the poppy plants black as they apparently rot from the inside, has hit about half of the poppy crop growing in the northern part of Helmand province — the center of Afghanistan's poppy production, said Jean-Luc Lemahieu, the top official for the United Nations Office on Drugs and Crime in Afghanistan. It is also significantly affecting crops in southern Helmand and in neighboring Kandahar province, he said.

The lower yield on the surface seems to be a boost to reducing opium poppy cultivation, but it is leading to wild price speculation that instead could encourage farmers to plant more poppy next year.

The price of fresh opium has jumped 57 percent from last year to about $85 a kilogram in April, while dry opium prices are up 37 percent, according to U.N. data...

Mystery Disease, Cryptococcus gatti fungi, Linked to Missing Israeli Scientist

http://countusout.wordpress.com/2010/05/08/mystery-disease-cryptococcus-gatti-fungi-linked-to-missing-israeli-scientist/

Herbicide May Boost Toxic Fungi

http://www.impactlab.com/2003/08/14/herbicide-may-boost-toxic-fungi/

Fungus To Kill Drug Poppies Under Study

http://articles.chicagotribune.com/1998-06-29/news/9806290077_1_poppies-fungus-uzbekistan

LONDON, BRITAIN — Britain and the United States are funding biological research aimed at developing a virulent fungus that destroys opium poppies, the raw material for heroin.

The Sunday Times of London reported that the two nations are sharing the $500,000 cost of the research program.

The research is being conducted at a laboratory in Uzbekistan "to find out whether the project is viable," a British Foreign Office spokeswoman said over the weekend.

According to the paper, scientists at Uzbekistan's state genetics institute have drawn up plans to make enough fungus to infect thousands of acres of opium poppies in central Asia.

It said the fungus also could be used against poppies in Southeast Asia and South America.

Myanmar traditionally has been the biggest supplier of poppies, but cultivation has spread more recently into Afghanistan and Colombia.

[Demeter]

25. Offshore natural gas platform sinks off Venezuela

http://news.yahoo.com/s/ap/20100513/ap_on_bi_ge/lt_venezuela_gas_platform

An offshore natural-gas platform sank off Venezuela on Thursday, and 95 workers were rescued safely, the government said.

All of the workers on the Aban Pearl platform off eastern Sucre state were safely evacuated, and the sinking poses no threat to the environment, Oil Minister Rafael Ramirez told state television.

The navy rescued the workers using a frigate and boats after the gas platform disappeared into the Caribbean Sea at 2:20 a.m. (2:50 a.m. EDT; 0650 GMT), Ramirez said.

President Hugo Chavez announced the sinking on Twitter early Thursday, saying: "To my sorrow, I inform you that the Aban Pearl gas platform sank moments ago. The good news is that 95 workers are safe."

The Singapore-flagged platform, built in 1977, has a capacity of 98 people and is owned by a subsidiary of Indian company Aban Offshore.

"The company is assisting in assessment and in determination of the causes of the incident," Aban said in a statement on its website.

Ramirez said officials are investigating, but there was a problem with the flotation systems of the semi-submergible platform that led to a massive water leak in one area.

He said alarms went off three hours before the sinking, giving the crew time to evacuate. Three workers including the captain stayed behind until it was clear that the platform was at risk of collapsing, and then abandoned the rig, Ramirez said.

Unlike the disastrous oil spill caused by a rig explosion off the coast of Louisiana on April 20, the sinking of the gas rig posed no apparent threat to the environment, officials said.

Ramirez said a tube connecting the rig to the gas field was disconnected and safety valves shut.

"There's no problem of any sort of any leak from the field into the environment," Ramirez said. The rig was operating in waters about 525 feet (160 meters) deep.

Last week, Ramirez stood atop the platform on live television as its gas flare was lit to inaugurate the project. Chavez praised the project at the time as an important step in Venezuela's efforts to tap its huge natural-gas deposits, saying, "We're making history."

IN MORE WAYS THAN ONE, VENEZUELA HAS BEEN MAKING HISTORY AND HOPE AND CHANGE I CAN BELIEVE IN!

[tclambert]

32. Um, natural gas escaping may not hurt the ocean too much, but what about the atmosphere?

Natural gas is primarily methane, an extremely potent greenhouse gas. Burning it actually makes sense from a greenhouse pollution point of view, as the CO2 and water vapor produced won't contribute to global warming as much as the original methane would.

Of course, there is no way to contain it. Ships towing floating booms won't do it. Airplanes towing giant mylar bags just won't work.

[Demeter]

35. It's NOT Escaping

They had an orderly shutdown and rescue. They had a PLAN. And it worked.

[Demeter]

37. UPDATE 4-Venezuela stiffens currency law, threatens brokers

http://www.reuters.com/article/idUSN1318432920100514

Venezuelan legislators voted on Thursday to clamp down on foreign exchange trading, while President Hugo Chavez threatened to close financial brokerages, which he accuses of undermining the bolivar currency.

Under the newly-reformed law, the central bank will control the 'parallel' currency market where the bolivar has crashed 25 percent against the dollar this year -- a move the government says will end speculation but critics say could wreak economic havoc.

The law, passed in a second reading, will not take effect until it is published in the government's Official Gazette and may be tweaked before that happens.

The free-floating market is essential to Venezuela's economy as it provides currency for about half of imports, given restricted access to the dollar at two official rates of 4.3 and 2.6 for essential items.

In an evening speech, Chavez warned the brokerages who operate in the market to step into line with the new rules.

"If we had to eliminate the whole bunch of brokerages and I don't know what, well eliminate them, this country does not need them, we don't need this savage capitalism of these rich money-bags," he said.

Chavez promised stern action last week after the bolivar slid to 8 per dollar, adding to economic woes including a deep recession and soaring inflation that are denting his popularity.

A senior government source told Reuters on Tuesday that there were no plans to ban foreign exchange outright in its present form, via bond trading, but that the government could try to establish a floor and a ceiling for the bolivar, linking it to sovereign debt prices traded overseas.

Amid the confusion over what the new exchange regime will look like, most brokerages have stopped accepting trade this week.

Analysts warn a prolonged paralysis of the trade could simply force the creation of a fourth, illegal dollar market, given high local demand.

"We are of the view that tightening the regulatory grip over the parallel market ... and setting a band will be self-defeating as FX supply will likely go deeper underground and emerge somewhere else, probably with an even more distressed VEF/USD level," Goldman Sachs analyst Alberto Ramos said in a research note on Thursday.

The government is determined to strengthen the bolivar's rate on the free-floating market in a bid to counter one of the highest inflation rates in the world.

Consumer prices jumped a record 5.2 percent in April.

[Tuesday Afternoon]

36. Have you ever considered starting a journal? It would be nice to

track these posts via the Journal option. Thanks.

[Hugin]

52. I nag these people about updating their journals constantly.

Short of a journal the only way I've found to gather it for convenient viewing is to search the LBN for Stock Market Watch in the subject line. This usually delivers an assortment of the latest threads. :)

[Tansy_Gold]

75. And I usually pay attention to your nagging.

:hi:

[Demeter]

39. Central Banks Should Steer Clear of Politics By SIMON NIXON

http://online.wsj.com/article/SB10001424052748704635204575242400983963766.html?mod=dist_smartbrief



The principle of central-bank independence, a mainstay of economic orthodoxy for two decades, has taken a battering over the past week. Investors should be on their guard.

Thirteen years after Gordon Brown gave the Bank of England its independence on his first day as U.K. Chancellor of the Exchequer, his successor, George Osborne, used his first day to seek the public endorsement of BOE Governor Mervyn King for his budget plans. That breaches the principle that central bankers don't comment on fiscal policy. Days earlier, the European Central Bank bowed to political pressure to start buying government bonds to help ease the euro-zone debt crisis, a step toward monetization.

Allowing central banks freedom to set interest rates without political interference is the best way to anchor inflation expectations, reduce borrowing costs and deliver faster growth. Independence is arguably even more important in a crisis, when markets need reassurance that governments won't attempt to inflate away debts. But independence also allows central banks huge powers with limited accountability. That makes it even more vital they don't politicize their roles by straying into policy areas beyond their mandates, such as fiscal policy, and thereby risk forfeiting public support.

On this score, Mr. King's endorsement of Mr. Osborne's budget plans was unwise so soon after an election, when the timing of spending cuts was a key issue. Does he plan to offer a running commentary on fiscal policy? Will other Monetary Policy Committee members now be free to offer their views on fiscal policy? Will Mr. King continue to offer Mr. Osborne public support if the policy proves politically unpopular? Doesn't Mr. Osborne's wish to "coordinate" monetary and fiscal policy implicitly cut both ways?

The ECB's decision to start buying government debt is even more troubling. It says it is responding to "dysfunctional" bond markets. But how does it define dysfunctional? How does it know that high government borrowing costs reflect liquidity problems rather than legitimate solvency fears that will expose the central bank to losses? How does the ECB balance the need to maintain financial stability with the goal of price stability? Might its decision to buy bonds increase moral hazard, removing the incentive for governments to tackle their deficits—and increasing pressure on the ECB to monetize their debts?

In fairness, the financial crisis has muddied the line between monetary and fiscal policy. With government borrowing so high, fiscal policy is having a direct impact on the yield curve, a key concern of monetary policy. Both the BOE and ECB insist they won't be deflected from their price stability objective—and their mandates make it very difficult for them to pursue inflationary policies. But both central banks have crossed the line this week into political territory. They shouldn't stray any further.

[Demeter]

41. A special report on banking in emerging markets They might be giants

http://www.economist.com/specialreports/displayStory.cfm?story_id=16078490&source=hptextfeature

Emerging-market banks have raced ahead despite the financial crisis as their Western colleagues have languished. Patrick Foulis (interviewed here) asks how they will use their new-found strength..

The emerging world has a history of volatility and of bad-debt problems—indeed China is grappling with such a problem at the moment. But developing-country banks now have got things right on a number of fronts. Anti-poverty campaigners can admire their efforts to offer banking services to the illiterate. Technology gurus can see new mobile applications and low-cost IT platforms, and industrialists can count on banks that actually want to lend to their firms. Regulation buffs see an industry that is both armour-plated and wrapped in cotton wool after the crises of the late 1990s and early 2000s. In most emerging economies banks are viewed as engines of development rather than as rent-seeking parasites.

But it is by the hard stuff, money, that banks in the developing world now measure up. Not only are they well capitalised and well funded, they are really big—and are enjoying rapid growth. By profits, Tier-1 capital, dividends and market value they now account for a quarter to half of the global banking industry. China’s lenders head the list of banks by market value, and Brazilian and Russian banks are among the world’s top 25. At current growth rates India’s banks will catch up in a decade. The crisis in Western banking, still reverberating in southern Europe, seems to have accelerated the shift in banking muscle from rich countries to the developing world.

This special report will argue that most of that muscle will be needed at home. To support the fast credit growth their populations and politicians demand, and the bad debts it may cause, emerging-market banks will need more capital than they can generate from retained profits. They are the pre-eminent gatherers of savings in the world, a mirror image of Western banks that became huge borrowers. But they will struggle to use those excess deposits abroad without taking dangerous currency risks, so the job of recycling excess savings abroad will remain with central banks and sovereign-wealth funds. The managers of emerging-market banks have plenty to do as it is. Some of them already run organisations that are far bigger than the biggest Western banks. Most also expect to lose corporate customers to local bond markets and to have to build up their consumer- and investment-banking operations to compensate. Many, too, are finding innovative ways to offer banking services to poor people without losing money.

If the crisis has transformed the status of emerging-market banks, it has also transformed the role of the state in banking. In China, which had been relaxing its grip on the industry for a decade, the government directed the banks to continue lending during 2008 and 2009—the main reason why the economy continued to grow fast. In Brazil, India and Russia the state banks have seen a sharp improvement in their fortunes, gaining market share at the expense of private banks. Some Western banks operating in developing countries have lived up to their reputation as unreliable partners. That is likely to have long-term consequences. The banking system most emerging economies now want is a mix of entrepreneurial private firms and state banks, with a few well-run foreign ones to keep the locals honest...

HAHAHAHAHAHAHAHA!

I CANNOT SEE ANYTHING THE WEST NEEDS LESS THAN MORE PROFITEERING BANKS!

[Demeter]

43. Asian nations emerge from recession as stronger economic powers

http://www.washingtonpost.com/wp-dyn/content/article/2010/05/13/AR2010051305534.html

- The economic recovery that rocketed through Asia starting last year has been felt in the usual ways -- a thickening parade of cargo ships around this trade-driven city-state, rising real estate and stock prices -- but it was demand for personal computers in Indonesia that caught the attention of executives at computer memory maker Showa Denko.

Even with U.S. and European consumers controlling their spending because of fears over the economy, the company boosted production and began building new manufacturing lines on the basis of expected growth in Asia. That dynamic shows the contours of the post-crisis global economy and the challenges President Obama faces in his effort to double U.S. exports.

U.S. sales abroad jumped by more than 3 percent from February to March, the Commerce Department reported this week, although imports jumped even more and the trade deficit grew slightly. Still, the administration is focused on exports as a source of new jobs, and it is hoping to encourage the trend with such initiatives as a trade mission to Indonesia and China this month being led by Commerce Secretary Gary Locke.

A rebound in exports from the lows of the recent recession was to be expected. The key to reaching the plateau set by Obama -- $3 trillion in annual exports by 2015 -- will be expanding the U.S. presence in Asia.

But right now, Asia appears to be doing fine on its own. It is the one region of the world that is relatively stable, largely free of the banking and debt troubles that have filled the streets of Athens with enraged demonstrators and forced Spain to cut wages, provoking the country's largest labor union to announce strike plans Thursday. Portugal responded with plans to raise taxes and cut pay for its government workers.

Asia, with its middle class rising, has led the world out of a recession. Its economies are also integrating faster than expected, with an abundance of projects and new trade agreements promising to accelerate the process. Economists, businessmen and politicians here say the United States risks being a step behind in a region increasingly able to turn raw materials into consumer and capital goods that it sells to itself.

"Who is going to double their imports? It's not clear," said Ravi Menon, permanent secretary at Singapore's Ministry of Trade and Industry. He said the rising demand in Asia for appliances, clothing, consumer electronics and household goods won't be of much help to U.S. businesses.

"We have seen demand rebound, but it is very much supported by emerging countries: China, India, Indonesia," said Masanori Kudo, senior vice president at Showa Denko, a Japanese conglomerate. Its Singapore-made hard-drive components are shipped to computer makers in such places as Taiwan for final assembly, an example of how production has been integrated across the region.

The addition of rising Asian consumer demand, the IMF reported recently, marks a historic turn.

"This is the first time Asia is leading a global recovery," the IMF wrote in a recent report, with growth based not just on exports but also on "resilient domestic demand" and a strong surge in investment.

There is indeed a broad sense here that the collapse of Lehman Brothers and the subsequent crisis marked a shift in the world's economic center of gravity.

The United States remains by far the world's largest economy, a critical market for other nations and central still to Asia's growth prospects. It also is still the world's top exporter of goods and services, although China is closing that gap....

THIS IS AN IMPORTANT ARTICLE--I DON'T KNOW HOW TRUE IT IS, AND HOW MUCH IS BLOWING SMOKE--RECOMMEND READING IT ALL. IT'S VERY DISTURBING, IN SOME THINGS.

[Demeter]

42. S&P Eyes Separate Criteria for State Ratings

http://www.bondbuyer.com/issues/119_341/standard_poors_methodogy_ratings-1012115-1.html

Standard & Poor’s is proposing to separate and update its methodology for rating state credits, a move aimed at providing greater detail to clients and incorporating the idiosyncratic position states occupy within the municipal world.

The agency on Tuesday issued a 20-page report outlining the new criteria, and over the next month is seeking comments from issuers. They hope to implement the proposed methodology this summer.

Ratings are unlikely to change as a result of the proposal. The “same general analytic framework” will be maintained, the report said, but it aspires to offer investors a quantitative and qualitative method of comparing one state to another.

“There would be state-specific benchmarks and ratios, and also a lot more clarity about the government framework, which has always been a big part of state ratings,” said Robin Prunty, who co-authored the report.

One reason for the new criteria is the success of Build America Bonds, the taxable municipal asset class created last year that has drawn demand from buyers unfamiliar with the muni market.

In December, Standard & Poor’s said it was making efforts to “enhance comparability of our ratings and provide taxable investors with a way to assess debt relative to sovereign peers outside of the U.S.”

Those measures, such as ratios of tax-supported debt to gross state product, would be comparable under the proposal.

The analytic framework uses five broad categories: government framework, economy, budgetary performance, debt and liability profile, and financial management. The categories are then subdivided into more specific metrics.

The agency proposes rating each metric on a scale from 1 (the strongest) to 4 (the weakest), and then averaging to develop a score for each of the five broader categories. The five categories are then weighted equally to produce a numerical score which corresponds with the ratings scale.

“What this allows is for the investor to sit there and see a layout of all 50 states, be able to measure them on different little inputs, and see where they rank compared to each other,” said Derek Bonifer, muni research director at BMO Capital Markets. “You’re going to be able to look at the numbers and say, 'Okay, which state has more flexibility and an easier time of raising taxes?’ ”

Greater transparency should give issuers a better understanding of how to improve their ratings.

“My state may not end up with the highest credit rating as a result, but I really respect the fact that they laid out their cards on the table so that I can’t just whine when I don’t get the highest ratings,” said Laura Lockwood-McCall, director of debt management for Oregon. “It’s kind of like the teacher laying out for the students exactly how they are going to grade them. But it’s a tough curve.”

Critics, however, say the new methodology fails to recognize that munis have a much lower default history than similarly rated corporate debt.

“The best that can be said about this proposal is that, if it’s adopted, S&P would discriminate against taxpayers in a more transparent fashion. The inequality would be brought out into the open,” said Tom Dresslar, spokesman for California Treasurer Bill Lockyer.

Richard Larkin, director of credit analytics at Herbert J. Sims & Co., agreed that states should be rated with different criteria, but he said the five broad categories shouldn’t be equally weighted.

“I believe government framework should count for more in the weighting process — that is why states should have higher ­average ratings than local governments,” he said. “S&P is correct in its statement that the typical high credit profile for states should be AA or higher. I personally ­believe that in assessing risk of ­default, most states should carry AAA GO ratings.”

But Prunty said upgrades as a result of the proposed new methodology were unlikely, and she strongly denied that the proposal had any connection with Moody’s Investors Service and Fitch Ratings’ recent recalibrations to a global scale that resulted in thousands of upgrades.

Others see a direct link.

“There’s clearly a tie here to the fact that Moody’s does this massive ratings change,” said Justin Hoogendoorn, managing director of strategic analytics at BMO. “S&P is doing it under the radar, while Moody’s is trying to make this big splash.”

“Essentially they are saying, 'if the environment gets better, we can probably upgrade ratings and ultimately be to where Moody’s just changed things to,’ ” he said. “But if the environment continues to deteriorate and the U.S. has larger and larger problems, I don’t think S&P wants to be in Moody’s predicament that you make this massive upgrade and then all of a sudden you start downgrading.”

[hamerfan]

45. They're off!

And dropping like a box of rocks!
Dow is down 135 at 10:02 this morning. :woohoo:

[Robbien]

46. Sarkozy Threatens To Pull France Out Of Euro

If you were wondering why the market is spooked by rumors that Germany may be returning to the DM, here is actual fact that French President is on the verge of reinstating the franc. And with that, the euro is nothing more than a political toy for Merkel, Sarkozy and whoever the current non-indicted head of the Italian government is, to achieve their political goals. The currency is now dead. Parity coming within a few weeks.

http://www.zerohedge.com/article/sarkozy-threatens-pull-france-out-euro


The Guardian has the full story
http://www.guardian.co.uk/business/2010/may/14/nicolas-sarkozy-threatened-euro-withdrawal

[Dr.Phool]

47. Greece threatens to reinstate the Gyro.

The Euro is starting to look deader than a doornail.

[Demeter]

49. Lunchtime!

I love gyros!

[DoBotherMe]

56. LOL!

You are fun. I love it! Dana ; )

[Demeter]

48. Thar She Blows! Down 137 at 11 AM

[Festivito]

50. Debt: 05/12/2010 12,923,161,977,864.28 (DOWN 7,995,759,429.14) (Wed)

(Up a small amount. Long days for me. Good day.)

(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)
= 8,417,239,340,657.65 + 4,505,922,637,206.63
UP 782,970,242.92 + DOWN 8,778,729,672.06

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 309,254,393 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 $41,788.13.
A family of three owes $125,364.38. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 22 reports in the last 30 days.
The average for the last 22 reports is 4,399,205,526.25.
The average for the last 30 days would be 3,226,084,052.58.

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$/day.
There were 153 reports in 224 days of FY2010 averaging 6.62B$ per report, 4.52B$/day.
Above line should be okay

PROJECTION:
There are 984 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)
05/12/2010 12,923,161,977,864.28 BHO (UP 2,296,284,928,951.20 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 +1,013,332,974,352.50 ------------* * * * * * * * * * * * * * * * * * * * * * * * * BHO
Endof10 +1,651,189,891,244.03 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Linear Projection

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
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 ------------*****
05/11/2010 +000,656,599,651.55 ------------******** Tue
05/12/2010 +000,782,970,242.92 ------------********

46,783,790,069.04 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=4379553&mesg_id=4379554

[Roland99]

51. 11:20am - slippin' away

Dow 10,582 -201 -1.86%
Nasdaq 2,333 -62 -2.57%
S&P 500 1,131 -26 -2.28%
GlobalDow 1,846 -58 -3.06%
Gold 1,221 -8 -0.68%
Oil 72.41 -1.99 -2.68%

I have been suh-lammed this week at work.



Anyone remember when oil was last under $70/bbl?

[Warpy]

53. Dollar up, market down

The dollar is the highest I've seen it in years, thanks to the unfolding PIIGS crisis in Europe. People who invested when the buck was at rock bottom are pulling out now, taking their profits.

How low will it go? Who knows? There are still too many dollars concentrated at the top chasing securities of all types, so this is unlikely The Big One.

It's still a hell of a ride.

[Roland99]

54. wow...$1.2379 against the Euro. Oil down to $71.70.

[Robbien]

55. That oil sure is a slippery one today

Just a few minutes or so ago it still was above $73.

[DemReadingDU]

57. Karl Denninger: Ten Things to Do

First read the Ten Things originally published 6/8/09
http://market-ticker.org/archives/1091-Ten-Things-You-Must-Do.html

5/14/10 Here is an updated Ten Things for 2010
http://market-ticker.org/archives/2319-Ten-Things-For-2010.html

Forewarned is forearmed.

[Robbien]

58. Business Insider's new screaming headline: EUROPE CRASHED

The Big Story: At the day's close, stronger eurozone members France and Germany's losses moved closer to fringe states like Spain, Portugal, and Italy.

Markets at close:

Spain's IBEX, down 6.4%

Portugal's PSI, down 4.36%.

Italy's MIB, down 5.17%

France's CAC 40 is down nearly 4.51%.

Germany's DAX is down over 3.12%.

The UK's FTSE is down over 3.14%.


more

http://www.businessinsider.com/piigs-markets-2010-5

[notesdev]

59. Healthy markets do not do this

Getting closer and closer to the Big One, and I ain't talking earthquakes.

[Robbien]

61. CNBC is unbelievable

They are talking Euro and the male guest was saying "not a panic yet just a lot of fear. But hey, can we talk about your dress? I'm a buyer of that dress."

[ozymandius]

62. Were they wearing clown shoes, rainbow wigs and red rubber noses?

Because I could swear that I heard the same thing on the Barnum & Bailey channel.

Feh! What a mess we have this afternoon.
1:01 PM
Dow 10,623.71 159.24 (1.48%)
Nasdaq 2,340.41 53.95 (2.25%)
S&P 500 1,136.10 21.33 (1.84%)
10-Yr Bond 3.43% 1.35
NYSE Volume 3,764,658,250.00
Nasdaq Volume 1,389,922,000.00

[Robbien]

65. No clowns, but Marge Simpson was seen in Europe

by Ritholtz

However, I came across a different theory that I put much more stock in: The reason for all the problems in Europe has nothing to do with France, and everything to do with a subtle problem that goes beyond the PIIGs. It turns out that Europe, is in fact, Marge Simpson:

[DemReadingDU]

60. Freefall: EURUSD 1.2388 And Plunging, Market Liquidity Disappears Again, Traders Brace

5/14/10 Freefall: EURUSD 1.2388 And Plunging, Market Liquidity Disappears Again, Traders Brace For Another Flash Crash

Full profit taking in everything. Now even gold is plunging, but it is likely an LBMA "intervention." EURUSD just broke through 1.23 and has no further realistic supports for a long time. The money has no option but to go into gold or money markets. For now it is not going into gold, which means it is a relatively good buying opportunity. Liquidity in stocks is now gone as volume picks up. Two of the desk traders we have spoken to are all wearing fireman's hats, bracing for Flash Crash part 2. Look for much more action out of the ECB/FED/IMF/EU/X-Men/Ghostbusters before Asia opens this Sunday. In the meantime, everyone must sure be grateful that the SEC is contemplating instituting new and improved circuitbreakers some time in 2039.

more...
http://www.zerohedge.com/article/freefall-eurusd-12388-and-plunging-market-liquidity-disappears-again-traders-brace-another-f

[Roland99]

64. 2039? But we're all dead in Dec. 2012!

;)

[ozone_man]

66. Circuit breakers

are a silly idea. If the market wasn't artificially pumped to insane levels, there wouldn't be a need for circuit breakers. Let it drop already. Yesterday's cartoon nailed it.

[TalkingDog]

63. Today's economic analogy brought to you by: Playmobil

[Ghost Dog]

69. European shares close down 3.4 pct on debt worries

LONDON, May 14 (Reuters) - European shares closed 3.4 percent lower on Friday, hammered by mounting concerns that tough euro-zone austerity measures would slow growth in the region.

The pan-European FTSEurofirst 300 index of top shares closed down 3.4 percent at 1,014.25 points, having earlier dropped to as low as 1,010.85.

Banks took a beating, with the STOXX Europe 600 banking index down 5.2 percent. Spanish banks Banco Santander and BBVA fell 8.9 and 7.6 percent respectively.

But despite Friday's late sell-off, the index recorded a weekly gain of about 4.8 percent after Monday's sharp rally triggered by the $1 trillion emergency rescue package to stabilise the euro-zone.

'We are seeing a lot of red. There are concerns about how durable the euro zone plans will be,' said Peter Dixon, economist at Commerzbank. 'Ahead of the weekend investors do not want to get caught out.'

French banks Credit Agricole and Societe Generale , which are significantly exposed to Southern Europe, lost 6.4 percent and 8.6 percent respectively.

The euro was also hit hard, dropping to a fresh 18-month low against the U.S. dollar.

According to Thomson Reuters data, around 160 billion euros ($197 billion) was wiped off the UK's FTSE 100, Germany's DAX, France's CAC, Spain's IBEX and Italy's MIB indexes combined on Friday, roughly the size of Czech Republic's GDP in 2009.

/... http://www.finanznachrichten.de/nachrichten-2010-05/16907095-european-shares-close-down-3-4-pct-on-debt-worries-020.htm

[Ghost Dog]

70. Safe-haven frenzy drives US bonds higher

NEW YORK, May 14 (Reuters) - U.S. government bonds rallied on Friday, sending 10-year notes up a point in price as persistent worries over the euro zone's debt crisis led investors to ditch stocks for the safer harbor of Treasuries.

The bond market shrugged off data showing a bigger-than-expected rise in April U.S. retail sales, focusing instead on the slumping euro, which fell to an 18-month low against the dollar under $1.24.

Bond investors have paid more attention to the euro in recent weeks, taking its slide as a sign of diminishing confidence in Europe's 11-year-old experiment with a single currency.

The worries have persisted despite the $1 trillion initiative worked out last weekend aimed at stanching the crisis, which began in Greece and has threatened to spread throughout the euro zone's fiscally troubled members.

'It's a general push for dollars,' said Steven Ricchiuto, chief economist at Mizuho Securities USA Inc. '$1.25 was a big level, and we've broken through it handily. That set off the flight-to-quality trade.'

The benchmark 10-year note rose a point in price before backing off a touch. It was last up 28/32 in price, pushing the yield down to 3.43 percent from Thursday's close of 3.54 percent.

/... http://www.finanznachrichten.de/nachrichten-2010-05/16906969-treasuries-safe-haven-frenzy-drives-bonds-higher-020.htm

[Ghost Dog]

76. Damned if you do, damned if you don't...

...Ok, Ok. How about we lay off on the 'austerity' a little, and put the squeeze more on high-risk bongholders, sorry, bondholders, leveraged naked speculators and the like.

That should see equities take off.

[Demeter]

71. I See a Perfect Storm Rising

and a perfect fool in the White House will try to deal with it by listening to the Boys from Chicago and GS....

[florida08]

74. I thought I was afraid of heights

down 225@2:15