BEAR CASE OR 6 PACK?

http://stockcharts.com/h-sc/ui?s=$SPX&p=W&yr=8&mn=0&dy=0&id=p53661529646&a=135134819
Many ways to look at TA, this is just my view.

SNDK nice pop off lows, was telling friends last week has been in PAST good buy near $20, some decided to buy the 22.50 calls....RIMM ect good longs off lows....always a trade to be found, just like to know where I am in trend and cycle while doing it.
Gold and OIL I am not sure to be honest, think some beaten down good, and bull not show killed....

http://research.stlouisfed.org/publications/usfd/page3.pdf Largest growth in ADJ M in some time
.... Each of the past 2 easing cycles started from HIGHER RATES (more ammo) and ended at LOWER Rates (LESS AMMO) IN last 20 years I could not find another time of a faster cutting environment, and only found ONE other 75 BP cut (as far as Gov data I could find) That period incl longest runing bull mkt. LOWS were made when CUTTING cycle had ended (was a good time to buy.....) With MY TA telling me Bear is YOUNG (or NO bull signal yet)

I am keeping powder DRY and feel GOOD CHANCE we SEE 1% or LOWER rates ahead......

ALL and I MEAN ALL the biz people I talk to see NO LIGHT YET, ALL said environment is getting "WORSE" BUT WDIK....I hope this changes soon..... you tell me WHAT are the signs of improving LIQUIDITY? YOU tell me if a BUBBLE (CREDIT?DEBT ETC) can be reinflated as it is trying to deflate and UNWIND?

Duratek

BEAR BED

BEAR IN THE WOODS SAVED BY GRANDMA

Treasury Undersecretary Robert Steel echoed Bernanke's comments, noting that the government's focus was "not on this specific institution, but on the more strategic concern of the implications of a bankruptcy. "The failure of a firm that was connected to so many corners of our markets would have caused financial disruptions beyond Wall Street," he said. Jamie Dimon, JPMorgan's chief executive, said his firm would not have agreed to buy Bear without the Fed's financial backing, and insisted that JPMorgan did not "cherry pick" the best Bear assets. Under its deal with the Fed, JPMorgan will have to incur the first $1 billion in any losses should Bear's assets deteriorate further.

**HEY what's $30B to JPM??? this smells.....another bank will go... liquidity is drying up. banks dont want to lend...venture capital co's out of money...funded newbie companies folding....no IPO stream....NO HOME ATM'S...no wage growth, job losses, delcining home values,defaults rising,credit cards next,free money not flowing to Hedgies,deleveraging continues....levering up good..unwinding bad.......OK friends, what makes up for all this lost stream? exactly and I wonder who thinks SPX profits also arent coming back to earth as RIMM goes to 18X book 13X sales ASSININE

Duratek

INVESTORS IGNORE STOCK DILUTION

NEW YORK (AP) -- Shares of Lehman Brothers Holdings Inc. rose sharply Tuesday and helped rally broader markets, as the investment bank raised $4 billion in new capital to shore up its liquidity position.
It was $1 billion more than Lehman had said it planned to raise just Monday night; Lehman said the offering was oversubscribed.
Lehman (LEH, Fortune 500) shares rose $6.70, or 17.8%, to close at $44.34, as investors brushed off the dilution from the new shares, which will reduce their ownership stake in the company.
Lehman's efforts are aimed at reassuring investors that the company has enough cash to handle any market demands, unlike competitor Bear Stearns Cos. In March, Bear Stearns faced liquidity problems that led it to near-bankruptcy and forced its sale to JPMorgan Chase & Co. for about $10 per share.
Analysts were mixed about the size and timing of Lehman's preferred stock offering.
"It seems evident that Lehman is being pushed hard by the markets to prove its balance sheet is safe," Punk, Ziegel & Co. analyst Richard Bove wrote in a research note. "By raising additional capital and liquefying the balance sheet, the company hopes to put these fears to rest."
Bove expects the stock offering to raise enough cash to help reduce fears and push the stock higher.
But unlike Bove, Sandler, O'Neill & Partners LP analyst Jeff Harte said Lehman's raising of capital might be a red flag, as he questioned the timing of the offer.
"Management's willingness to raise a large amount of capital after the recent dramatic share price declines implies a more pressing capital need," Harte wrote in a research note. Shares of Lehman declined 42% during the first three months of the year.
Fitch Ratings affirmed its investment-grade "AA-" issuer default ratings for Lehman in the wake of the stock offering, but placed a negative outlook on the bank. The outlook represents Fitch's view that the bank could face earnings pressure because of continued weakness in the capital and mortgage markets.
Lehman was not the only bank to announce its capital raising intentions Tuesday. Swiss bank UBS said it plans to seek $15.1 billion in new cash as it looks to improve its capital position. UBS said it lost $12.1 billion during the first quarter, including a $19 billion write-down tied to deterioration in the mortgage markets.
Lehman will raise the money through the issuance of convertible preferred stock. The preferred stock will carry a dividend rate of 7.25%. Holders of the preferred stock, which is priced at $1,000 per share, will have the option of converting them at any time to 20.0509 shares of Lehman's common stock.
The conversion represents a price of about $49.87 per share of common stock. The deal will dilute the bank's current stock by about 80 million shares, or 14% of current common stock outstanding, Buckingham Research Group analyst James Mitchell said

PROPOSED NEW FED POWERS

The money manipulators only have two goals:

1. The destroy the wealth of every American as much as possible through inflation. While, at the same time trying to pretend they are fighting inflation. They do this by causing boom and bust cycles.
2. To use the financial meltdown to ratchet up their control over all money and credit systems.

Quote from Woodrow Wilson:

A great industrial nation is controlled by its system of credit.Our system of credit is concentrated. The growth of the nation,therefore, and all our activities are in the hands of a few men.
We have come to be one of the worst ruled, one of the most completelycontrolled and dominated governments in the civilized world.No longer a government by free opinion, no longer a government byconviction and the vote of the majority, but a government bythe opinion and duress of a small group of dominant men."Source

" this new power is essential......" "see the train coming and can ACT before......"

Aren't these the SAME BOZO'S who lowerd rates to 1% and kept them there too long and created the current mess and now are proposed NEW POWERS to pre empt markets?

Worse? preverbial FOX in the HENHOUSE! This SMELLS like similar road to Patriot Act

Duratek

INDIAN GIVER

FGIC Sees No Need to Honor Agreement With IKB, Calyon (Update5)
By Jody Shenn

March 26 (Bloomberg) -- FGIC Corp. said it's walking away from an agreement to provide $1.9 billion in guarantees on mortgage-linked securities because Credit Agricole SA and IKB Deutsche Industriebank didn't live up to their side of the deal.

FGIC ``has no further obligation'' because certain responsibilities weren't met and IKB, the German bank that's had to be bailed out four times since July, misrepresented its condition, the insurer said in a statement today. The three companies are fighting the matter in courts. If FGIC wins, the benefit ``could be material,'' the New York-based company said.

Bond insurers are seeking ways to relieve themselves of guarantees on collateralized debt obligations to temper their losses amid surging mortgage defaults. Security Capital Assurance Ltd.'s XL Capital Assurance Inc. last week was sued by Merrill Lynch & Co. after XL voided obligations on $3.1 billion of CDOs because of what it called a breach in agreements over rights to influence matters such as whether the CDOs should be liquidated.

``These guys should have a new motto: Heads we win, tails we rescind,'' said Julian Mann, the vice president for fixed income at First Pacific Advisors LLC, which manages $3.4 billion of bonds. Mann doesn't oversee positions in bond insurers, he said.
The contracts involved in FGIC's dispute include those that accounted for 75 percent of its loss reserves at the end of 2007, the company said. Fitch Ratings, which today lowered the company's insurance units to BBB from AA, said potential losses account for a ``material percentage'' of what it's projecting for FGIC, and that the tussle may take ``several years'' to settle.

Bank Losses

FGIC, the bond insurer owned by Blackstone Group LP and PMI Group Inc., named Credit Agricole's Calyon Credit Agricole CIB in a related lawsuit filed March 12 in New York Supreme Court. Caylon started court proceedings in the U.K. on March 17 seeking to enforce the contracts, FGIC said.

Joerg Chittka, a spokesman for Dusseldorf-based IKB, Anne Robert, a spokeswoman for Paris-based Credit Agricole, and Seth Faison, a spokesman for FGIC, declined to comment.
CDOs, which repackage mortgage bonds, buyout loans and other assets into new securities with varying risks, have been the biggest source of the more than $208 billion of writedowns and credit losses reported by the world's largest banks and securities firms since the beginning of last year. Credit Agricole's total $6.5 billion, while IKB's are $9 billion.

``Legal technicalities'' may be a big factor as losses are divvied up, JPMorgan Chase & Co. CDO analysts including Chris Flanagan and Kedran Garrison Panageas wrote in a March 24 report.

Risk Management
The disputed FGIC transaction was part of a series of deals in which Caylon agreed to buy CDOs from IKB's off-balance-sheet Rhineland fund if requested, with both FGIC and IKB providing credit guarantees if that happened, according to FGIC's complaint. The deal followed a similar arrangement involving IKB, Ambac Financial Group Inc. and a ``European bank,'' it said.
Bond insurers including FGIC and SCA were stripped of their AAA grades by ratings companies because of expectations for increasing losses on the more than $100 billion of mortgage-tied CDOs on which they provide default protection. Others including New York-based Ambac have been forced to raise capital to maintain top rankings. FGIC earlier this month reported a $1.89 billion fourth-quarter net loss.

IKB, forced into seeking emergency aid after Rhineland couldn't raise money because of its holdings of CDOs tied to U.S. homeowners with poor credit, has received assistance totaling 9 billion euros ($14.1 billion). KfW Group, the state- owned development bank that controls IKB, has provided some.

`Developing Problems'
IKB officials at a January 2007 conference in Las Vegas assured FGIC officials that their bank was the ``top of the class'' in the market for asset-backed commercial-paper conduits such as Rhineland, the insurer's complaint says. Such conduits rely on sales of short-term debt, with a sponsor such as IKB promising to buy out holders of the commercial paper who want to turn in the debt if cash isn't otherwise available.

A closing dinner in Dusseldorf for the transaction involving the Havenrock II vehicle set up by IKB to be the middleman for potential risk-sharing occurred on July 25, ``just three days before IKB announced its financial collapse,'' the complaint said. IKB officials downplayed ``developing problems,'' it said.

Lower Ratings
New York-based Blackstone, manager of the world's largest buyout fund, has written down its FGIC investment to ``a few cents on the dollar,'' President Tony James said March 10. Walnut Creek, California-based PMI, the second-largest U.S. mortgage insurer, reported a $776.1 million expense related to FGIC last quarter. General Electric Co. sold most of FGIC in 2003 for $2.2 billion. Cypress Group and CIVC Partners LP also took stakes.
New York-based Fitch today also downgraded Hamilton, Bermuda-based SCA's insurance units to BB, or six levels below investment grade, from A. The dispute with Merrill also may prove important, it said.

``While Fitch is not in a position to opine on the validity or merits of the termination, Fitch notes that a ruling in SCA's favor could have meaningful positive impact on the company's capital position and credit ratings in the future,'' the firm said in a statement, echoing language in its FGIC release.

Fitch cut the units of SCA and FGIC in January from AAA ratings in January. Moody's Investors Service and Standard & Poor's later did the same for both companies.

THEY'RE HIRING!!

NEW YORK, March 26 (Reuters) -
The Federal Deposit Insurance Corp plans to hire as many as 138 new workers to address the potential for rising bank failures, the Wall Street Journal said in its March 26 edition.

An agency spokesman said the FDIC plans to boost the number of workers in its Division of Resolutions & Receiverships to as many as 380 from the current 223, the newspaper said. The division is authorized to have 242 workers, so hiring may involve 138 new positions, of which half will be temporary, it said. Last month, speaking at the Reuters Regulation Summit in Washington, D.C., FDIC Chairman Sheila Bair said she expected bank failures to rise, but mainly among smaller institutions. The FDIC is also hiring because of the expected retirement of some employees, the newspaper said. At year-end, the agency had put 76 FDIC-insured banks with $22.2 billion of assets on its "problem list," up from 65 institutions with $18.5 billion of assets at the end of the third quarter. Only five U.S. banks have failed since 2004, including two this year. Analysts have predicted the failure rate will grow as losses from soured mortgages and other loans mount, and as regulators crack down on lenders that take too much risk. There are 8,535 banking institutions insured by the FDIC. Of these, 7,266 are commercial banks, 1,258 are thrifts and 11 are U.S. branches of foreign banks. More than 2,000 banks nationwide failed in the decade ending in 1992, encompassing the heart of the savings-and-loan crisis

AND

"A Dead Housing Bounce" - Wall Street applauded a glimmer of hope from a national home sales report on Monday, even though experts cautioned that the beleaguered real estate market is far from reaching its bottom.
The National Association of Realtors said 2.9 percent more homes changed hands in February than in January - the first time since July that sales volume increased month-to-month. That surprising news, combined with a higher sale price for struggling investment bank Bear Stearns, was enough to spark a stock market rally, despite the fact that home prices continued to tumble and year-to-year sales volume plunged. No one else was breaking out the Champagne. "It's a dead housing bounce," said Ken Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at UC Berkeley, referring to the "dead cat bounce," a slight, temporary increase in a stock price that has already plummeted. "It is not a recovery. It is wrong to interpret it that way. Wall Street will grasp at any straw." Indeed, the rest of the national real estate report was grim, while a separate report on California home sales also was largely downbeat. Nationwide, a seasonally adjusted total of 5.03 million existing homes (including single-family, townhouses, condos and co-ops) closed escrow in February, NAR said. That was down 23.8 percent from 6.6 million homes in February 2007, but up 2.9 percent from 4.89 million units in January. Even the perpetually upbeat Realtors group declined to crow about the report. "You don't want to read too much into one month's number," said Paul Bishop, managing director of research for the trade group in Washington, D.C. Still, he said, it's a good sign that monthly national home sales have hovered around the 5 million mark since September. "Short of some other unexpected events that irk the housing market, that may be a sign we're scraping along the bottom before we experience a little stronger growth later in 2008 or early 2009," he said. Rosen said the report's most important finding was that February's national median sales price was $195,900, down 8.2 percent from $213,500 a year ago. "The (continued) house price decline is really bad news," he said. "Mostly the market is still in freefall." In addition, the median is lower because sellers are pricing their homes more realistically, foreclosures on the market are selling for big discounts, and the mix of homes sold is tilting more toward inexpensive houses. The national Realtors group said total housing inventory fell 3 percent in February to 4.03 million existing units for sale, representing 9.6 months worth of inventory, down from a 10.2-month supply in January. That means that at the current rate of sales, it would take 9.6 months to sell every house now on the market.

FINANCIAL EXCESS

http://www.contraryinvestor.com/mo.htm

IT"S DIFFERENT THIS TIME

IT'S DIFFERENT THIS TIME

http://arhaus.com/ Higher end home furn...salesman told me biz off more than 50%....

Area eateries
http://www.baltimoresun.com/business/bal-te.bz.smallbiz23mar23,0,7798947.story

Marco and Petra Pineyro, owners of Kiko's Mexican Restaurant in Perry Hall, tried everything to keep their restaurant running amid the worsening economy - they sought marketing advice, lowered prices and even offered a "dinner for a nickel" special.But squeezed between skyrocketing food, electricity and labor costs, as well as penny-pinching consumers who are eating out less, the Pineyros reached the end of the line. Kiko's - which had received good reviews from food critics and was named "Best Mexican Restaurant" in 2006 by Baltimore Magazine - is closing March 31, exactly three years after it opened.

FED policy working? 30-year mortgage rates move to 6.13% from 6.03%

Trickle down? http://www.baltimoresun.com/business/realestate/bal-bz.supplier20mar20,0,5756073.story


Fewer exhibitors and visitors have registered for this year's Builder Mart in Timonium, a little over 6,000 compared with more than 7,000 last year, amid the downturn for the homebuilding industry. (Sun photo by Kim Hairston / March 19, 2008)

Shelter Systems, a Westminster company that makes roof and floor trusses, had 220 employees in 2005. Now? Ninety.

Here come the lawsuits blame game
Bear Stearns Lawsuit
Explore Recovery Options for Losses From Bear Stearns Collapse.
http://www.stockbrokerfraudblog.com/
Moving BACK HOME
MILWAUKEE - After being laid off from her job as an events planner at an upscale resort, Jo Ann Bauer struggled financially. She worked at several lower-paying jobs, relocated to a new city and even declared bankruptcy.Then in December, she finally accepted her parents' invitation to move into their home -- at age 52. "I'm back living in the bedroom that I grew up in," she said.
BAIL ME OUT
Calls grow for U.S. to bail out homeowners, prevent foreclosures
Los Angeles Times Staff WriterFrom Wall Street to Capitol Hill, calls are growing for the government to get into the mortgage business as the only way out of the housing crisis roiling the economy and the financial markets. Proposals to shore up tottering home loans with taxpayer...
SEC ASLEEP
Securities and Exchange Commission Chairman Christopher Cox was asked on March 11 if he was concerned about the financial condition of Bear Stearns Cos.''We have a good deal of comfort about the capital cushions at these firms at the moment,'' Cox told reporters in Washington.Three days later, the Federal Reserve said it was pumping emergency funds into the 85-year-old securities firm through JPMorgan Chase & Co., the third-biggest U.S. bank by assets
EARLY EASTER DOESNT HELP
NEW YORK - The nation's stores are awash with orange patent leather sandals and coral printed dresses, but gray or black would be a better match to shoppers' moods these days."The climate out there is frightening," said Judith Lederman, a public relations executive who was laid off from Lord & Taylor three weeks ago. The Scarsdale, N.Y. resident says she'll bypass the mall and dig into her closet for her spring wardrobe.

COMMERCIAL SPACE
If anyone needed further proof that the economy is heading into recession, several reports on commercial real estate provide it, including one released Thursday that showed Chicago is not immune to a downturn in demand for office space."The housing recession is now migrating into other parts of the economy, and we are seeing a drop in employment," said Paul Kasriel, chief economist for Northern Trust Co. "That is going to lower the demand for office space."Jones Lang LaSalle's "Skyline Review," released Thursday, said Chicago's office market may get through 2008 without too much damage, but that 2009 will likely be much worse.The company said downtown Chicago's vacancy rate for top-quality offices is now a little below 8 percent."An economic downturn coupled with significant new inventory could push the Class A vacancy rate back up to 11 percent by late 2009," said Rena Christofidis, vice president of Chicago Market Research at Jones Lang.
HISTORIC ACTION
Wall Street firms take emergency Fed loans
Associated Press
Associated Press WASHINGTON—Big Wall Street investment companies are taking advantage of the Federal Reserve's unprecedented offer to secure emergency loans, the central bank reported Thursday. The lending is part of a major effort by the Fed...

BEAT EST GAME *(even though A..its acct fiction and B....they fell 50%)
Morgan Stanley 1Q Profit Tops Estimates
AP Business WriterMorgan Stanley posted better-than-expected quarterly earnings on Wednesday, joining those from two of its rivals and indicating that Wall Street may be getting a better grip on the credit crisis. The nation's second-largest investment bank was able to...

HOW THEY SPIN THE FRAUD EARNINGS and HUGE YR/YR DROP

Morgan Stanley Earnings Raise Wall Street Hopes
Associated PressMorgan Stanley posted better-than-expected quarterly earnings on Wednesday, joining those from two of its rivals and indicating that Wall Street may be getting a better grip on the credit crisis. The nation's second-largest investment bank was able to...

Help is around the corner
NEW YORK - A rise in jobless claims and a drop in a key forecasting gauge provided the latest evidence that the U.S. economy is faltering and may be slipping into recession.
The Conference Board, a business-backed research group, said yesterday that its index of leading economic indicators fell in February for the fifth consecutive month. The index, which is designed to forecast where the nation's economy is headed in the next three to six months, dipped 0.3 percent to 135.0 in February after slumping 0.4 percent the month before.
HOME LOANS HARDER TO GET
WASHINGTON - Just when consumers and the U.S. economy need banks to lend more freely, the mortgage industry is making it harder to borrow - even for those with good credit.
http://www.baltimoresun.com/business/bal-bz.crunch21mar21,0,3806827.story

*The deleveraging has begun, and credit CONTRACTION.....any efforts will only make it worse, IMHO

Duratek

HOW TO TELL IF BULL OR BEAR MARKET

CLICK TO ENLARGE
Everyone will have an opinion, you will read and hear all kinds of things, CNBC being the source for most, you will get a horribly slanted opinion.

You may be confused yourself, reading some fundamental pieces which go against the action you see.

We ONLY know a top or bottom is in AFTER THE FACT, so what other than technical data do we have?

ABove I have used LONG TERM moving averages, and when they CROSS each other as shown going UP or DOWN, I PAY ATTENTION!

There is NO fighting it. IN 2003 when the 20 wk crossed the 50 wk and all lined up together rising....going against that is foolish and vice versa, as they are now declining to gether and crossed down....ALL I can deduce is we are early in this bear market.....and I will not know when it's over, until they look like they did in 2003.

YOU can also see/observe how price is SUPPOTED or TURNED BACK (resistance) when touching these moving avg's. YES they mean something....it negates ANY opinion someone might have.

Last Bear had several nice rallies, each ending in MUCH lower prices.

Is it time NOW for one of those (finally) multi week or month rallies? I am not certain, but I notice the Transport average is outperforming here and 600 points above its lows.....the DOLLAR is rallying as commodities fall, does that mean money now comes back to stocks?

We have now a period of CREDIT CONTRACTION....for MANY MANY years it has been EXPANDING (good for bulls) this is serious stuff..

SOme articles of interest

http://www.kwaves.com/kond_overview.htm K waves
http://www.gold-eagle.com/gold_digest_02/droke051602.html Cliff Droke from 2002
credit flow investor eye opener http://www.creditflowinvestor.com/

Duratek

BUBBLE VISION SAYS "Recession is over" ??

FEDEX

For its fiscal fourth quarter, FedEx sees earnings per share of $1.60 to $1.80, which is tantamount to a warning given that the current consensus estimate is $1.95. FedEx said its guidance assumes no additional increases to current fuel prices and no further weakening in the economy.
"Looking ahead to our fiscal 2009, we are expecting a continuation of fourth quarter trends, which would result in limited earnings growth next year. We are scrutinizing all expenses and investments to realign them with the current environment."

A BUST in commodities isn't necessarily a GOOD THING

http://www.safehaven.com/article-9731.htm

COMMODITY BUBBLE POPPED??

DCR DUG GAPPING!! BUBBLE POPPED? Is the "last" bubble popping burst?? or is it a PAUSE? oil wheat gold falling like BSC....not much warning before the dive...or sharp correction.

I am honest...I called the above 2 plays...but I also called LONG refiners, and was amiss with timing on 3 of the 4.....falling oil will help their margins...but currently GAS inventories are HIGH...and if R...sales will FALL...as margins had fallen....I still think I will continue keeping on radar for bottoming. I get feeling we have flattish day by EOD....with some swings.....

UNWINDING OF REAL ESTATE and THIS MESS WILL TAKE MUCH LONGER THAN PEOPLE THINK AND CONTINUE TO SPIRAL DOWNWARD AND SPEAD IF HOME VALUES DO SAME FED HAS NOT ENOUGH IN QUIVER TO DERAIL WHAT MUST UNWIND.....RISING COSTS IN SOME THINGS WE NEED.....DEFLATING ASSETS ON OTHER HAND...A VILE CONCOCTION....this smells like K winter has arrived.... was up to near 325% of GDP for total credit mkt debt.....wonder where it is now?

Duratek

COMMODITY BUBBLE BURST? HEDGIES IN TROUBLE?

The selling of all commodities....GOLD SILVER WHEAT COTTON OIL ETC smells of panic or forced selling to cover other losses.

Stephen Roach
http://www.morganstanley.com/views/gef/archive/2006/20060515-Mon.html

"The world is now in the midst of another bubble -- this one in commodities. It, too, will burst. The only question is when."

Duratek....share with a friend

PIANFUL REMINDER HOW WE GOT HERE

Memo To The Fed: Stop Those Rate Cuts
Robert P. Murphy and Lee Hoskins 03.17.08, 6:00 AM ET

The markets rallied last Tuesday in response to the Fed's growing assistance to holders of mortgage-backed securities. Yet many onlookers are convinced that an aggressive cut in the federal funds rate at the upcoming March 18 meeting is still necessary to avoid a painful recession. In our view, further loosening at this time would be a mistake, and would also send an alarming signal regarding future monetary policy.
The Fed needs to quit chasing declining GDP growth and instead focus on curbing inflation and anchoring inflation expectations. Recent allusions to the stagflation of the 1970s are appropriate. Gold has been hitting all-time nominal highs, and oil prices have shattered the inflation-adjusted record set in 1980 during the Iranian hostage crisis. The dollar, meanwhile, is trading at all-time lows against the euro.
Consumer price inflation was 4.1% in 2007 (the highest in 17 years) while the producer price index rose 7.4%--the most since 1981. Amid these alarming trends on the inflation side, output has stalled. Real GDP grew at a meager rate of 0.6% in the last quarter of 2007, and the private sector shed 101,000 jobs in February. The beginnings of stagflation are upon us.
In response, the Fed has slashed its target rate 2.25 percentage points since September, and has engaged in all manner of novel auction schemes to bolster liquidity, particularly among those holding the bag on soured mortgages. Yet despite momentary blips upward, the stock market and the overall economy continue to slide. Even as the Fed's actions pushed many short-term interest rates below the inflation rate, fixed mortgage rates have begun rising. As inflation expectations gather steam, the Fed will find itself painted into an ever-shrinking corner.
The explanation for all of this is simple yet sobering.
The Fed has abandoned the one thing it can truly control--the long-run increase in price levels--in a self-defeating attempt to keep the economy growing. A good portion of the housing mess itself is the result of Fed policy: In response to the 2000-2001 recession, chairman Alan Greenspan brought the federal funds rate down to a shocking 1% by June 2003, then held it there for a full year. The rate was then steadily ratcheted back up, reaching 5.25% by June 2006.
These actions first helped inflate the home-price bubble and then helped burst it. Naturally, there are many factors--and perhaps even villains--that helped create the housing bubble, but excessively low interest rates were surely a necessary ingredient.
Regardless of past mistakes, the Fed must now make the best of a bad situation. It must stop chasing the financial markets, and even the broader economy. Creating more dollar bills will not add to the nation's wealth, or make workers more productive.
The alleged trade-off between inflation and unemployment--the Phillips Curve--is no guide for action. Yes, an unexpected injection of new money can temporarily boost real output. But once people come to expect the higher rates of price inflation, the Phillips Curve simply shifts; it takes greater and greater injections to achieve the same stimulus. That is how a country becomes trapped in a stagflation spiral.
The painful and costly recessions of the early 1980s were the result of the inflationary policies of the Fed during the 1970s. In contrast, Fed policies during the 1980s and 1990s focused on curbing inflation and maintaining price stability; this shift in focus produced both low inflation and strong, steady real growth. It would be a terrible mistake to throw out that costly victory in an effort to avoid a recession today--one that's already baked in the cake.
The Fed should commit to long-term price stability, and it needs to back up that commitment with action. Recessions will always be with us, but they will be shallow and short when the Fed keeps inflation low and evenly paced. If the Fed continues cutting rates, we will simply get the worst of both worlds: prolonged recession and excessive inflation.
Robert P. Murphy is a senior fellow in business and economic studies at the Pacific Research Institute. Lee Hoskins is a senior fellow at the Pacific Research Institute and a former Cleveland Federal Reserve president.

DON HAROLD VIDEO OF BSC and CRAMER

http://news.goldseek.com/GoldSeek/1205778357.php

JPMorgan to buy Bear for $2 a share

By JOE BEL BRUNO and MADLEN READ, AP Business Writers 1 minute ago

Just four days after Bear Stearns Chief Executive Alan Schwartz assured Wall Street that his company was not in trouble, he was forced on Sunday to sell the investment bank to competitor JPMorgan Chase for a bargain-basement price of $2 a share, or $236.2 million.

The stunning last-minute buyout was aimed at averting a Bear Stearns bankruptcy and a spreading crisis of confidence in the global financial system sparked by the collapse in the subprime mortgage market. Bear Stearns was the most exposed to risky bets on the loans; it is now the first major bank to be undone by that market's collapse.

The Federal Reserve and the U.S. government swiftly approved the all-stock buyout, showing the urgency of completing the deal before world markets opened. The Fed also essentially made the takeover risk-free by saying it would guarantee up to $30 billion of the troubled mortgage and other assets that got the nation's fifth-largest investment bank into trouble.
"This is going to go down in very historic terms," said Peter Dunay, chief investment strategist for New York-based Meridian Equity Partners. "This is about credit being overextended, and how bad it is for major financial institutions and for individuals. This is why we're probably heading into a recession."
JPMorgan Chase & Co. said it will guarantee all business — such as trading and investment banking — until Bear Stearns' shareholders approve the deal, which is expected to be completed during the second quarter. The acquisition includes Bear Stearns' midtown Manhattan headquarters.
JPMorgan Chief Financial Officer Michael Cavanaugh did not say what would happen to Bear Stearns' 14,000 employees worldwide or whether the 85-year-old Bear Stearns name would live on after surviving the Great Depression, two World Wars and a slew of recessions. He told analysts and investors on a conference call that JPMorgan was most interested in buying Bear Stearns' prime brokerage business, which completes trades for big investors such as hedge funds.
At almost the same time as the deal for control of Bear Stearns was announced, the Federal Reserve said it approved a cut in its lending rate to banks to 3.25 percent from 3.50 percent and created another lending facility for big investment banks. The central bank's official meeting is on Tuesday. Before the emergency move to lower the discount rate, which is the rate at which banks lend each other money, the Fed was widely expected to again cut its headline rate by as much as a full point to 2 percent.
"Having taking Bear Stearns out of the problem category, and the strong action by the Federal Reserve, we would anticipate the market will behave quite differently on Monday than it was Thursday or Friday," Cavanaugh said.
Some analysts expected it to be a brutal day for global stocks, nevertheless. Shortly after the news broke, Japan's benchmark Nikkei stock index plunged more than 3 percent in morning trading.
A bankruptcy protection filing of Bear Stearns could have heightened anxiety in world financial markets amid a deepening credit crunch. So far, global banks have written down some $200 billion worth of securities slammed amid the credit crisis — more write-downs could come. Last week, a bond fund controlled by private equity firm Carlyle Group faltered near collapse because of investments linked to mortgage-backed securities.
JPMorgan's acquisition of Bear Stearns represents roughly 1 percent of what the investment bank was worth just 16 days ago. It marked a 93.3 percent discount to Bear Stearns' market capitalization as of Friday, and roughly a 98.8 percent discount to its book value as of Feb. 29.
"The past week has been an incredibly difficult time for Bear Stearns," Schwartz said in a statement. "This represents the best outcome for all of our constituencies based upon the current circumstances."
Wall Street analysts say the bid to rescue Bear Stearns was more than just saving one of the world's largest investments banks — it was a prop for the U.S. economy and the global financial system. An outright failure would cause huge losses for banks, hedge funds and other investors to which Bear Stearns is connected.
After days of denials that it had liquidity problems, Bear was forced into a JPMorgan-led, government-backed bailout on Friday. The arrangement, the first of its kind since the 1930s, resulted in Bear getting a 28-day loan from JPMorgan with the government's guarantee that JPMorgan would not suffer any losses on the deal.
This is not the first time Bear Stearns has earned a place in Wall Street history. A decade ago, Bear Stearns refused to help bail out a hedge fund that was deemed "too big to fail." On Friday, the tables had turned, with the now-struggling investment bank in need of the same kind of aid.
Bear Stearns was founded in 1923 and in recent years was best known for its aggressive investing in mortgage-backed securities — and what was once a cash cow turned into the investment bank's undoing.
In June, two Bear-managed hedge funds worth billions of dollars collapsed. The funds were heavily invested in securities backed by subprime mortgages. Until that point, subprime mortgage-backed securities were immensely popular with investors because of their profitability.
The funds' demise and subsequent problems in the credit markets called into question Bear Stearns' ability to manage its own risk and the leadership ability of then-Chief Executive James Cayne. Critics of the company said Cayne spent too much time away from the office last year playing golf and bridge as the problems unfolded.
Cayne is the same executive who refused to let Bear Stearns provide support as part of a Federal Reserve-led plan to rescue Long-Term Capital Management in 1998. His reticence was said to deeply anger some of his fellow Wall Street CEOs, and the episode came up every time Bear was reported to be in trouble in recent months.
Cayne took over from the legendary Alan "Ace" Greenberg in 1993. Greenberg joined Bear Stearns as a clerk, working his way up through the ranks to eventually take over as CEO in 1978. Greenberg was known for his irreverent style, and his regular memos to employees were turned into a book called "Memos from the Chairman."
Before Greenberg's ascendancy to CEO, Bear Stearns began to expand from its New York roots throughout the 1950s and 1960s, opening international offices and expanding its U.S. operations.
____
AP Business Writers Jeannine Aversa in Washington and Stephen Bernard contributed to this story.

MY TA FOR BULL/BEAR SIGHTINGS

http://stockcharts.com/h-sc/ui?s=$SPX&p=M&b=5&g=0&id=p86607125724&a=133365291

FALLING RATES GOOD?

http://stockcharts.com/h-sc/ui?s=$TNX&p=M&b=1&g=0&id=p89461379592&a=82707588

OIL ABOVE $120 IN FUTURE?

If FED cuts 75 BP next week, and the dollar is the victim, maybe.

D

DAMN LIES AND CPI

http://www.the-tribulation-network.com/denemcgriff/lies.htm

Haaaa no inflation, CPI shows DROP in energy prices?? GO GO

D

GUSHER OF LIES

**(Market note, they'll hold up market for FED meeting.....still in range)

http://www.nytimes.com/2008/03/07/books/07book.html?_r=2&oref=slogin&pagewanted=print excerpt from ‘GUSHER OF LIES”

Also
Oil For WarThursday, March 13, 2008 - Ron Smith
Earlier this week, I mentioned an article in The American Conservative that absolutely blew me away by revealing the astounding amount of fuel being used to continue our failed occupation of Iraq.

Robert Bryce, the author of the piece, informs us that after invading one of the most petroleum-rich countries on the planet, the mighty U.S. military is running on empty, using more than five thousand tanker trucks to haul JP-8 gas – a blended jet fuel used to run both vehicles and aircraft – into Iraq, mostly from a huge refinery complex in Kuwait, but with some that’s run in from Turkey.

Last year alone, says Bryce, who is the managing editor of “Energy Tribune” magazine, the American forces in Iraq burned through more than 1.1 billion gallons of fuel.

“In November 2006,” says Bryce, “a study produced by the U.S. Military Academy estimated that delivering one gallon of fuel to U.S. soldiers in Iraq cost American taxpayers $42 – and that doesn’t include the costs of the fuel itself.”

Bottom line: In the war that Paul Wolfowitz famously predicted would “pay for itself,” the U.S. is spending $923 million per week on fuel-related logistics.

Why is this important? Bryce says, “While the U.S. military chases its own fuel tail in Iraq, a country that sits atop 115 billion barrels of oil – about 9.5 percent of the world’s total – the global energy industry is racing forward with new alliances and deals, many of which would have been unthinkable before the invasion.”

The global balance of power is shifting dramatically according to his analysis, in ways that indicate the effectiveness of militarism in controlling global energy trends is declining. Far from being the sole superpower of recent legend, the U.S. is flailing about in a world where the balance of power is realigning itself in ways that will leave America’s influence substantially diminished.

So much for those best-laid plans, you know, the ones where we invade Iraq and demonstrate to the entire world the futility of opposing our imperial desires.

Unfortunately, “Oil for War,” the article in question, isn’t yet available Online. But we will be talking this afternoon with Robert Bryce about it and also about his new book, “Gusher of Lies: The Dangerous Delusions of Energy Independence.”
WBAL Radio - Baltimorehttp://wbal.com/

LINK TO MY MONTHLY GOLD CHART FROM FEB

http://stockcharts.com/h-sc/ui?s=$GOLD&p=M&st=1978-02-16&id=p47864760935&a=130821433

FOOLS GOLD

It isn't ALWAYS about what you make, it's about what you DONT lose.

HEAVY SELLING IS COMING< YOU KNOW IT!! I think ususally you get a feeble rebound from 90% down day, we should get EXCELLENT short entry if not in one or add....or not

WHich at some point will lead to a pity rebound of some repute....we can try to find that support level. We already know I think which ETF'S to play.

I think gold is set up for a NASTY retreat, which will lead to one last amazing rise.

In face of dying dollar BELOW ANY KNOWN SUPPORT or known......with only a blind, impotent fool denying inflation....what will FED DO?

As the masses, and most will NEVER wise up to gold......they havent and wont....it will be the playa's betting agaisnt themselves as to how far it can be pushed......then no support and crash......the masses dont see this coming (DOW).....unlike gold, they will eventually DO SOMETHING PANIC and in the FACE of DIRE NEWS.....we wait to buy

Remember, in 70's we did not have China factor, we had "TOO MAN CHASING TOO FEW GOODS" BAMMMMMMMMMMMMMMMMMMMMMMM

Now we have the world's MANUFACTURING KING EXPORTING RISING COSTS INFLATION....from prosperity.....rising wages....SOARING COMMODITY PRICES..............I am on front lines as M2, they can NO Longer eat nor contain the rising costs of raw materials...shipping costs.....as the worst case we have SCANT WAGE GROWTH AND NEGATIVE SAVINGS RATE DEFLATING HOUSING MARKET OIL CRISIS FALLING SPX PROFITS RISING CREDIT DELIQUENCIES RISING TAXES SUB PRIME CONTAGION WORLWIDE FALING WORLD ECONOMIES A US RESERVE CURRENCY FALLING BELOW ANY PREVIOUS KNOWN VALUE


Can you spell S C R E W E D

Duratek

BEAR CROSSING SIGHTED

IMHO I THINK WE ARE IN early stages OF A nasty bear market!! as above chart elaborates, today was NASTY and over 90% down volume, NONE of the rally days could muster that.

I do not post much anymore because most of my loyal readers just lurk, I honestly don't know how many ready my blog. I get busy, I own a company.

But I'll post whenI can.

Is Bernanke FEEBLE or what? You had bubble in 90's, you reinflated with REDICULOUS low rates in the bull run of 2003-2007, that is OVER. But all it created was MORE BUBBLES and INFLATION. It killed manufacturing.

The infection known as "sub prime" was shipped ALL OVER THE WORLD...where the hell was the FED? or anyone? ALLOWED to fester rampant speculation and now look at the mess!

BANKS WONT LEND, M and A dead, CDO'S DEAD......FED trying same old tired tricks (they got nothing else) lowering rates again....but this time it isnt any fun!

Where is the money going? COMMODITIES!!!!!!!!!!! loo at OIL, GOLD WHEAT etc...damnit.

But good ole Ben isnt worried about inflation? IDIOT! US DOLLAR isnt worth wiping your ass with it my friends!

LISTEN to RON PAUL!!

http://www.contraryinvestor.com/mo.htm here's another bubble there another bubble.....no STEADY EDDY GROWTH JUST STUPID BUBBLES

As rates fall (short end) Long rates WERE stubborn but FEAR send the HERD there last few days...safety in Bonds....a big 3.6% 10 year whoopieee.

You got a FED just follows market, all they do and denies inflation, not worried about $100 OIL maybe $120 but not $100 oil. $970 GOLD ( setting all time highs) they cant talk inflation away..but who is really listening anyway?

Mono line rumors each day some bad most promise buyout or something.....look EVEN Warren BUffet won't touch them! only wants the good stuff?

Bank gets nationlized in England...Northern Rock

LONDON (AP) -- U.K. treasury chief Alistair Darling said Sunday that struggling bank Northern Rock PLC will be nationalized after the government rejected two private takeover bids.
Darling told a news conference that the ailing mortgage lender would be placed under temporary public ownership because both bids had failed to meet the government's criteria for protecting taxpayers.
"The new board and the company will operate at arm's length from the government, with complete commercial autonomy for their decisions," Darling said.

and this

NEW YORK (Fortune) -- Not long ago, Goldman Sachs alums Geoff Grant and Ron Beller looked like superstars. A prescient wager on the collapse of the subprime mortgage bond market generated last year a whopping 87 percent return for one of their hedge funds.
The twosome, who run London-based Peloton Partners, aren't looking so shrewd these days. They've been forced to liquidate their once high-flying ABS fund after gambling big on a mortgage bond rebound that didn't materialize. The $1.8 billion fund's collapse comes after a series of recent trades dropped sharply in value, leading to margin calls from creditors that the firm was unable to meet.
The ABS fund's implosion, coming just three years after Peloton Partners was formed, highlights the steep challenges that hedge funds face amid the credit crisis gripping Wall Street. Last week D.B. Zwirn & Co shut down its two biggest hedge funds amid investor defections. Citigroup halted earlier this month withdrawals from one of its hedge funds.

***D

RETIAL SALES SPIKES SPX FUTURES (BUT!!!!)

http://www.reuters.com/article/economicNews/idUSN1241744420080213
WASHINGTON, Feb 13 (Reuters) - Sales at U.S. retailers rose 0.3 percent in January, which was an unexpected pickup that partly reflected stronger sales of new cars and gasoline, according to a Commerce Department report on Wednesday.

January's sales increase followed a 0.4 percent decline in December and was contrary to Wall Street analysts' forecasts for a 0.2 percent decline.

Excluding autos, January sales still rose 0.3 percent, reversing a 0.3 percent decline in December sales. Wall Street analysts were expecting a 0.2 percent gain in sales excluding autos.

Despite the higher headline number for sales, there were declines in many categories that implied consumer spending was being pinched. Furniture sales fell 0.5 percent in January, building material sales were down 1.7 percent and department store sales declined by 1.1 percent.
Many analysts think the slowing U.S. economy is headed into recession if not already there and are closely watching for signs that consumers, who fuel 70 percent of national economic activity, will keep scaling back spending.

Gasoline sales rose 2 percent in January after being flat in December. But higher sales numbers can simply reflect increased sales prices and the report does not specify whether the volume of gasoline sales was up from December.

Excluding gasoline, January retail sales rose 0.1 percent.
(Reporting by Glenn Somerville, editing by Joanne Morrison)

DOMAIN FURNITURE 17 stores going PHTTTTTTTT!!!!!!

Duratek

FINANCIAL MELTDOWN

http://www.rgemonitor.com/blog/roubini MUST READ TO INFORM

The first quarter that the credit crunch should directly hit The CEO of accounting firm PricewaterhouseCoopers expects more non-financial U.S. companies to report write-downs linked to the credit crisis, showing the problem has the potential to infect a wide swath of corporate America.‘It's not just in banks,' CEO Samuel DiPiazza told reporters late on Tuesday. ‘These securities sit in cash equivalent accounts of industrials; they sit in investment portfolios of pensions.'‘We are having to deal with this with thousands of companies, not just a handful of big banks,' he said, and added that a ‘first wave' of write-downs was likely in the current audit cycle this quarter.Last month Bristol-Myers Squibb Co became among the first companies outside the financial sector to disclose its exposure to the world-wide credit crisis. Over the last few months, other non-financial companies such as networking-equipment maker Ciena Corp and software company Lawson Software Inc have also reported write-downs related to the credit crunch and the housing sector meltdown.

**BEING INFORMED MIGHT SAVE YOUR ASS!

my email to friends on Cramer this AM

Yeah, and this AM they trot out that idiot CRAMER......who each time he speaks sounds less credable and more carnival like.....CNBC is w/o any merit except amusement....surely they wont have Roubini on again!!

Yeah, how do they WARN their liseners to mover thier assets into a TREASURY MM as even reg MM's can fail?? so it makes you think what good is ANY TIP they give on flip side when all know at same time? is why they always PUKE afterwards.

WHy arent they asking that carnival barker why all his picks have lost fortunes for his lemmings? where did all the BOOYAH'S GO??

WHY did RR say we have great worldwide global boom coming at peak of mkt?
did you see the execution of NYX NMX and CME last night!!!!

WILL losses overseas cause liquidation of US assets?

ANOTHER inter-meeting cut? SPELLS? PANIC AT FED LOSS OF CRED?

WHY doesnt BB see a bear mkt? WHY DID MOST GURU'S underestimate the credit crisis?

I can hear that ahole downstairs...Ill shut him off, go in basemnt and play some blues! GREATEST story never told? was the liars den of thieves.... CSCSO WARNING SOBERING coming from the biggest tech smiler in bunch.. and it appears the few of us, avg Joe's are amng an elite group of mkt tech's that did not fall asleep at the wheel..

I have ALL my assets in a TREASURY MM for protection...but hey that's just me.

TURN OFF CNBC and start thinking for yourselves!

D

YHOO DIRECTOR WAS SELLLER

http://finance.yahoo.com/q/it?s=YHOO Terry Semel between Aug and Oct 2007 sold nearly $100 M of YHO stock! must be nice to be insider......bag holder lemmings bought it...now look at it!

D

20 YEARS IN THE MAKING

http://prudentbear.com/index.php/CreditBubbleBulletinHome

Doug Noland's astutue credit bubble report, conclusion scroll down to above title at end of report.

Big Ben on the m0und this PM, big deal, I suspect when FED Out of way so will excuses for buying thism kt.

D

BALTIC DRY INDEX SINKING LIKE TITANIC

BDI peaked about same time the stock market did. From Wickpedia

Baltic Dry Index
From Wikipedia, the free encyclopedia
Jump to: navigation, search
The Baltic Dry Index is an index covering dry bulk shipping rates and managed by the Baltic Exchange in London. According to Baltic Exchange, the index provides:
an assessment of the price of moving the major raw materials by sea. Taking in 40 shipping routes measured on a timecharter and voyage basis, the index covers supramax, panamax and capesize dry bulk carriers carrying a range of commodities including coal, iron ore and grain.
The index is made up of an average of the Baltic Supramax, Panamax and Capesize indices. These indices are based on professional assessments made by a panel of international shipbroking companies.
Since the cost of shipping varies with the amount of cargo that is being shipped (supply and demand), and since dry bulk is usually goods that are precursors to production (like cement, coal, and iron ore), the index is also seen as a good economic indicator of future economic growth and production.

It is my own opinion that ALL we are seeing is a bear market bounce, until proven otherwise.

Fed tomorrow, WHO doesnt think they will pander to markets demand, they dictate nothing.

50 basis is what is being DEMANDED, IMHO anything less will be sold.

VLO and other refiners are bouncing, oversold restaurants have bounced like Darden, and Calif Pizza Kitchen, Home Builders and some banks catching bids along with commodities.

We are nearing resistance in the SPX of which the 1370 -1380 are should not be broken this time around.....I would reasess if it is.

Duratek

SYSTEMIC FINANCIAL ARMAGEDON

NOLAND:
I’ll stick with the view that an unfolding breakdown in various trading models and hedging strategies is at risk of precipitating a crisis of confidence for the leveraged speculating community. I suspect hedge fund trading was much more responsible for chaotic global securities markets this week than a rogue French equities trader. There is, unfortunately, little prospect for markets to calm down anytime soon. There is no quick or easy fix to any of the myriad current problems – seized up securitization markets, sinking housing prices, faltering bond insurers, counterparty issues, a crisis in confidence for “Wall Street finance”, or acute economic vulnerability - to name only the most obvious. Again, they’ve been More than 20 Years in the Making.

Financial Economists Roundtable
Statement on Derivative Markets and Financial Risk

September 26, 1994 *****(YES 1994 !!!!!!!!!!!!)

This concern, no doubt, partly stems from the sheer size of derivatives markets in general and to the ballooning OTC derivatives market in particular. The General Accounting Office (GAO) reports that at year-end 1992 the notional value of outstanding futures, forward, options and swap contracts alone totalled more than $17 trillion, up from $7 trillion in 1989. Another reason for concern about derivatives is the seemingly impenetrable complexity of some of these instruments. This complexity has created an aura of mystery about derivatives markets, and has fostered a fear that a miscalculation by someone, or an undetected but vital flaw in the market or regulatory system, could trigger failures cascading into a financial market meltdown.

The GAO Report, the latest of these, contains thmost provocative policy recommendations.
The GAO Report recommends additional regulation of both derivatives dealers and end-users of derivatives. The study concludes that OTC derivatives could pose a systemic risk to financial markets if a major OTC dealer were to default on its counterparty (or contractual) obligations. It also finds that certain "unregulated" dealers, such as those affiliated with securities and insurance firms, have created a potentially dangerous "regulatory gap" that needs closing.

http://www.freemarketnews.com/Analysis/178/3889/2006-02-22.asp?nid=3889&wid=178
First, the triggering event or events cause sharp and sudden declines in one or more classes of asset prices. The decline in asset prices is sufficiently steep to raise questions about the creditworthiness of major counterparties or institutions such that the analytical distinction between market risk and credit risk blurs as market risk and credit risk feed on each other.
Second, the combination of falling asset prices and the erosion of creditworthiness causes market participants to commence risk mitigation efforts such as position liquidations which - while perfectly reasonable at the micro level - add to macro pressures on asset prices wjich in turn trigger the initial evaporation of market liquidity for one or more classes of assets. The evaporation of asset liquidity aggravates both market and credit risk and begins to call into question balance sheet liquidity for some institutions. Investor position liquidations intensify these pressures.
Third, in these circumstances, once seemingly generous amounts of margin or collateral are rapidly called into question, thereby dramatically elevating credit concerns. The escalation of credit concerns further influences the defensive behavior of financial market participants, all of which acts to reinforce the cumulating the adverse market dynamics. Hence a financial crisis with systemic risks is at hand.

http://www.safehaven.com/article-4096.htm
In truth, while no one can say for certain when the day of reckoning will arrive, it seems a good bet that if some of those who are in a position to know are worried about the derivatives market and the associated systemic risks, you should be, too.
One of the difficulties people have with understanding this particular disaster-in-the making is its complexity and seeming irrelevance to their day-to-day lives. Unlike an earthquake or a car bomb, a derivatives-inspired financial meltdown won't to lead to leveled buildings or bloodshed, at least initially. Yet, the toxic fallout will likely be as painful, long-lasting, and difficult to overcome as any of the more widely discussed scenarios.
What makes the coming debacle even more difficult to comprehend is that it stems from a long chain of seemingly benign interactions and financial relationships. Indeed, despite the fact that the modern derivatives market has flourished because of big money, complex technology, and highly-paid talent, the culprit when it all goes wrong is likely to be simple: human emotions -- fear and greed -- run amok.
For most people, the term "derivative" has little meaning. In many cases, the mere mention of the word is enough to cause eyes to glaze over. That is partly because these financial instruments are somewhat ethereal. They are, in other words, largely created out of thin air. Practically speaking, they have no value in and of themselves.

http://knowledge.wharton.upenn.edu/article.cfm?articleid=1303
According to Ramaswamy, it is unlikely that trouble related to a single company like Delphi will spill over to the broad markets, but he said it would be worrisome if a large number of companies ran into serious difficulties. And Rosen noted there is a lot of dry tinder on the forest floor -- a mushrooming issuance of low-rated, high-risk debt. "I will be shocked if we don't see a significant rise in default rates over the next 18 months," he said.
If that happens, it will be easier to determine whether credit derivatives are making the world a safer place -- or a more dangerous one.

OTC and exchange-traded
Broadly speaking there are two distinct groups of derivative contracts, which are distinguished by the way they are traded in market:
Over-the-counter (OTC) derivatives are contracts that are traded (and privately negotiated) directly between two parties, without going through an exchange or other intermediary. Products such as swaps, forward rate agreements, and exotic options are almost always traded in this way. The OTC derivatives market is huge. According to the Bank for International Settlements, the total outstanding notional amount is USD 516 trillion (as of June 2007)[1].
Exchange-traded derivatives (ETD) are those derivatives products that are traded via specialized Derivatives exchanges or other exchanges. A derivatives exchange acts as an intermediary to all related transactions, and takes Initial margin from both sides of the trade to act as a guarantee. The world's largest[2] derivatives exchanges (by number of transactions) are the Korea Exchange (which lists KOSPI Index Futures & Options), Eurex (which lists a wide range of European products such as interest rate & index products), and CME Group (made up of the 2007 merger of the Chicago Mercantile Exchange and the Chicago Board of Trade). According to BIS, the combined turnover in the world's derivatives exchanges totalled USD 344 trillion during Q4 2005. Some types of derivative instruments also may trade on traditional exchanges. For instance, hybrid instruments such as convertible bonds and/or convertible preferred may be listed on stock or bond exchanges. Also, warrants (or "rights") may be listed on equity exchanges. Performance Rights, Cash xPRTs(tm) and various other instruments that essentially consist of a complex set of options bundled into a simple package are routinely listed on equity exchanges. Like other derivatives, these publicly traded derivatives provide investors access to risk/reward and volatility characteristics that, while related to an underlying commodity, nonetheless are distinctive.

THERE IT IS

Duratek

GOODBYE BULL MKT

http://market-ticker.denninger.net/2008/01/goodbye-bull-market.html super video! well done Denninger

DON'T BE DUPED!!!! OPEN YOUR EYES, WE are being FUCKED WITH! And SOLD OUT!

D

CRAMER UNDRESSED AS CARNIVAL BARKER!!!!!

http://www.youtube.com/watch?v=SGkrNJ19DSU MUST SEE! LMAO!!!! Thank you RIck Santelli. WHAT IDIOT LEMMING FOLLOWS THIS JERK? OE CNBC

Duratek

"IT'S THE END OF THE WORLD AS WE KNOW IT"

Foreign markets crashing and burning this MLK day, Tuesday will be awful on the US exchanges, maybe even crash like.

Those who insure against losses (AMBAC) are bankrupt themselves....leaving maybe $1 Trillion up in the air.The financial system is seizing up and there is nothing the FED (reason for problem)or Bush can do, and you dont want to be LONG here or standing in the way.....you just want to survive and protect what you got!!!

http://economicrot.blogspot.com/2007/12/kondratieff-winter.html Great blog for Kondratief background

http://www.itulip.com/forums/archive/index.php?t-85.html talk on derivitives

http://www.cross-currents.net/charts.htm great unwinding

http://www.contraryinvestor.com/mo.htm JAN ISSUE

Duratek

THE COMING BEARISH STORM

@@@CLICK CHART TO ENLARGE

It's different this time folks IMHO, I think its telling this is the worst start to a year in HISTORY of the stock market.

I am in 100% CASH, and I'll wait til the smoke clears. BEN BOMBED

I was warning in DECEMBER and long before that, I only pray someone was listening

> http://www.cnbc.com/id/22706231/site/14081545 Cramers rant

D

LOOK IN THE MIRROR, IS THAT FUR YOU SEE?

click to enlarge*

This thing is snowballing, rally it might, it has tried, We are in BEAR territory my friends

D

TIME TO BUY? TIME TO HIDE?

http://www.cnbc.com/id/15840232?video=623459009&play=1 must see video Peter Thiel CNBC interview

http://www.investmenttools.com/futures/bdi_baltic_dry_index.htm I do not like this index is falling signs of world economy slowing?


Mortgage Crisis to Corporate Debt Crisis:
http://prudentbear.com/index.php/CreditBubbleBulletinHome
The financial system fell under intense stress Wednesday. The epicenter of the crisis was in the “Credit default swap,” or CDS market, and “contagion” fears were building quite a head of steam. The pricing for Countrywide Financial default protection (5-yr CDS) surged a huge 469 basis points to a record 1,610 bps (it would cost $16,100 annually for 5-yrs to insure $100,000 of Countrywide debt against default). For perspective, Countrywide default protection was priced at a mere 30 bps one year ago and didn’t even trade above 600 during the subprime crisis this past summer and autumn. Rescap CDS surged an astounding 1,360 bps Wednesday to 3,746. This was up from the year earlier 95 bps. MBIA CDS increased 85bps to 849 (year ago 87) and Ambac 89 bps to 841 (year ago 70bps). Washington Mutual CDS increased 61 bps to 611 (year ago 54bps). Many indices of corporate debt spreads rose to their widest levels in years.
In the old Greenspan days, Wednesday’s circumstance would have most-likely beckoned a “surprise” inter-meeting Fed rate cut. There were rumors for as much. And while chairman Bernanke did not ease rates, Thursday morning he provided the markets the next best thing: “We stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks.” Bernanke didn’t plan on rambling down the Greenspan path. Actually, I believe he and other members of the FOMC would have preferred to avoid it – resist responding directly to Wall Street pleas for aggressive Federal Reserve accommodation. “Let the chips fall…”, as they say. But the Fed now knows what many on Wall Street have understood since this summer: The U.S. Credit system and economy are extraordinarily fragile and the Fed simply will not risk sitting back and watching an implosion without resorting to extreme measures. If nothing else, inter-meeting “surprise” rates cuts are back on the table. Wall Street must be quite relieved to know this mechanism is available in the event market selling pressure turns unwieldy.
This week brought back memories of the 2002 Debt Crisis. Weighed down by the telecom debt collapse, Enron, and other frauds, intensifying Corporate Debt problems late in the year were at risk of smothering the consumer sector. The nexus at the time was the auto finance subsidiaries and Household International. Consumer finance Corporate Debt spreads were widening significantly, and Household, in particular, was facing a liquidity crisis in early November. The failure of a major financial institution at that juncture would have created a major systemic issue.
Well, on November 14 HSBC agreed to buy (bailout) Household International. A week later, FOMC governor Bernanke gave his now (in)famous “Deflation: Making sure ‘it’ doesn't happen here” speech. With rates at 1.0% (until June 2004!), the Fed was now publicly discussing “electronic printing presses,” “helicopters” and other “unconventional measures.” Wall Street was trumpeting “deflation” risk. Sure enough, the crisis was soon resolved and Wall Street was emboldened to perpetuate history’s greatest Credit inflation and Mortgage fiasco.
The tables have been turned these days, with the Mortgage Crisis now evolving into a full-fledged Corporate Debt Crisis. The key nexus this time around has been Wall Street “structured finance,” especially as it relates to the major Mortgage lenders (certainly including Countrywide, Rescap/GMAC, and Washington Mutual) and the “financial guarantors (in particular, MBIA and Ambac). The unfolding Mortgage implosion has destroyed the value of innumerable “structured products;” has annihilated legions of mortgage companies; has impaired scores of major lenders; has severely battered general market confidence; and this week was in the process of taking down a few huge mortgage companies. Institutions with enormous liabilities to the “money,” “repo,” securitization, and derivative markets – not to mention large borrowings from the FHLB system - were in serious jeopardy. The risk of a domino implosion in the Credit default market and the “financial guarantor” industry had become a very real possibility. System Risk Intermediation was in peril.
The Fed responded with what the market has interpreted as a promise of aggressive rate cuts, while Bank of America has apparently for now resolved the Countrywide debt issue. Citigroup’s stock rallied on rumors of a major new investment from Prince Alwaleed and others. Washington Mutual’s stock price rallied sharply on rumors of merger talks with JPMorgan. Countrywide’s stock surged as CDS prices collapsed, a dynamic sure to have caused considerable grief to those shorting the stock to hedge against default protection written.
Curiously, the general market took little comfort from developments. A case can be made that the rally in CDS and financial stocks was destabilizing for much of the leveraged speculating community (including “market neutral” and “quants”) keen to short financial stocks against (now sinking) technology shares. Overall, the market was hammered, while MBIA and Ambac CDS prices barely budged from record levels. Friday's market was one of those that surely caused havoc for numerous sophisticated trading strategies. And it is worth noting that an index of Junk bond spreads to Treasuries actually widened an additional 4 basis points to 603 bps, rising this week above 600 for the first time since – not coincidently - the 2002 Debt Crisis.
But the general environment is nothing like 2002, and I don’t expect Fed words and actions – in concert with financial bailouts - to have similar effects. For one, 13% household mortgage debt growth in 2002 provided powerful financial and economic stimulus that will not be forthcoming in 2008. With consumer Credit relatively stable, 2002’s Corporate Debt Crisis was not a serious systemic issue. Moreover, “Wall Street finance” was in an aggressive expansionary mode and the global banking community was developing quite a hankering to participate in the U.S. Credit Bubble. The economy was emerging from a shallow recession.
The world is a much different place today. The Mortgage Finance Bubble is a bust, Wall Street finance is imploding, and foreign financial institutions are keen to cut and run from the business of providing U.S. Credit. Countrywide’s mortgage problems will be absorbed – along with so many other risks – by our own highly vulnerable domestic banking system. Worse yet, the economy is quickly succumbing to recessionary forces. With a high degree of confidence we can proclaim that the Mortgage Crisis has now evolved into a Corporate Debt Crisis – and this crisis will not be resolved anytime soon – by rates, by helicopters, or by bailouts.
Unlike 2002, today’s Credit crisis is systemic. Consumer and financial sector fragilities – the heart of our Credit system - are now impaired to the point of imperiling the capacity of the Credit system to finance business spending and intermediate corporate lending risk. To be sure, prospects for a faltering U.S. consumer sector, massive financial sector Credit losses, and an imminent economic downturn have quite negative ramifications for business lending and valuations. In particular, unfolding dislocation in the CDS and Credit “insurance” markets will severely restrict Credit Availability for small, medium and large firms – especially those less than top-tier borrowers.
I’ll go further and suggest that a severe tightening of Financial Conditions has abruptly made many business borrowing plans unviable; many a balance sheet and debt load untenable; and vast numbers of business strategies - crafted in altogether different financial and economic times - much less viable. Some companies will make the necessary adjustments and many will not. The unfolding backdrop definitely makes a lot of stock buyback plans imprudent and growth strategies highly risky. The aggressive risk-taking business manager – having previously capitalized on the protracted boom - will now be at a similar handicap to that which afflicted the zealous home buyer and lender.
For those searching for explanations behind the stock market’s dismal start to the New Year, I suggest contemplating the many serious ramifications of the Mortgage Crisis having now evolved into an Incurable Corporate Debt Crisis. This week, the Bursting Credit Bubble passed another significant inflection point – one perhaps subtle but with major economic consequences.

BROKEBACK MARKET

CLICK CHART TO ENLARGE

Countrywide (CFC 5.57, -2.07) is preparing to file bankruptcy as soon as this week, according to Bloomberg.com.
Meanwhile, bond insurers got hit after reports indicated Morgan Stanley cut its bond insurers profit outlook. MBIA (MBI 13.46, -4.16) and Ambac (ABK 19.59, -3.89) shed 22% and 17% respectively.

I heard last 1/2 hour (was out of office after 1:30) consumer credit report was out...instead of $8B they put on $15B on credit cards.....sinking...

Just read my back posts to any new reader, you will see why I was worth reading.....and when I said what I said.

We are teetering at the precipice, and oversold hasnt brought the snap back rally expected...I think the market is saying more danger ahead, all laundry not aired, and it appears a BEAR MKT IS UPON US.

Duratek

FINANCIAL TSUNAMI

CREDIT BUBBLE by DOUG NOLAND

excerpt from above:

CPI may have remained tame, but massive Credit-induced Current Account Deficits and the depreciating dollar set in motion Credit and asset Bubble dynamics in economies around the globe.
Today, the Fed confronts bursting Credit Bubbles throughout Wall Street finance, with resulting acute asset market vulnerability. Yet the unusual structures that permeate the U.S. Financial Sector at this time foster continuing rampant inflationary Credit creation. First of all, “money-like” financial sector liabilities (i.e. agencies, “repos”, and bank/money fund deposits) are proving thus far sufficient to sustain Bubble economy excesses. Second, the global recycling of ongoing massive Current Account Deficits and speculative outflows ensures over-liquefied markets (and artificially low interest rates!), including key U.S. debt instruments such as Treasuries, agencies and other perceived low-risk securities. Bubble dynamics proliferate in the face of a Wall Street bust.
The extreme divergence in liquidity conditions between bursting Bubbles in Wall Street finance and still rapidly inflating Bubbles in “money-like” Financial Sector Liabilities poses both a major quandary and policy dilemma. Aggressive rate cuts would definitely further stoke the powerful Bubbles inflating in GSE, “repo”, money fund, and bank deposit liabilities. Such ongoing Financial Sector Debt expansion would likely sustain destabilizing liquidity outflows to the world, further fueling myriad global bubbles and worsening an already problematic global inflationary backdrop. A rapidly expanding U.S. Financial Sector (with the accompanying heavy risk intermediation burden associated with transforming highly risky loans into perceived safe liabilities) also significantly increases the risk of an eventual catastrophic breakdown in U.S. and international financial systems. Besides, it is likely that lower rates would have only minimal effect on the investor and speculator revulsion that has taken hold throughout the Wall Street securitization marketplace.
Those arguing for a Greenspan-style rate collapse fail to appreciate the extraordinary circumstances and risks that have accumulated from years of Reckless Credit Bubble Excess. The outcry for an audacious policy response to avert a recession is misguided. Importantly, today’s rampant Financial Sector expansion is unsustainable. There are today acute inflationary risks to go with major financial system stability issues. While the dislocation will be substantial, the sooner the Bubble in Financial Credit is reined in the better. We are today in the midst of dangerous “blow-off” excesses in “money-like” Financial Sector liability issuance. Few seem to appreciate that such a circumstance places the stability of the “bedrock” of the entire U.S. and global financial system at considerable risk. Wall Street is clamoring for a rate collapse and bold inflation in “money” to bailout its faltering securitization markets. At this point, this would equate to throwing massive (relatively) good “money” after bad - ensuring that a dreadful situation festers into a historic calamity. The least bad course for central bank policymaking would be to hold the line on rates, while injecting liquidity as necessary as part of a program to check Credit excess and permit the economy to commence its desperately needed adjustment period.

BDI price paid to ship BULK RAW MATERIALS (end up as finished goods) is correcting and has broken uptrend line.

NOV SHEPHERD INV NEWSLETTER Shows relationship of housing to economy at large.

Finiancials added to record SPX profits on way up, and ALL the trickle down industries and companies associated with mortgages, housing, and construction (commodities) and housing is most important component to our economy, as it unravels, what effect to economy do you think it will have? to SPX profits?

MAJOR US AND FOREIGN BANKS are reporting huge loan writedowns, and there is one of many questions remain.....how much more of this BAD PAPER, and OFF RECORD BOOKS BAD INVESTMENT remains?

DECEMBER usually a BULLISH month is running into trouble as we head for XMAS, my research show usually by late Jan market reaches at least a short term high and experiences a correction.

Buying enthusiasm has waned, volume on the rallies has fallen as it rises on the declines. Less and less SECTORS contribute to these same rallies and more and more have fallen into bearish looking trends.

I would argue my friends that the OLD BULL MKT has topped, even as theh FED tries to reflate, long interest rates instead are rising, dollar firms (for now) and in my best estimation we have enterred another Bear Market, where preservation of capital is more important than growing it.

I choose to take a very defensive posture, with little equity exposure, and mostly Treasury Money Market Funds (not the typical unguaranteed MM).

Talk to your financial advisor and look over what you are invested in and decide if their council is sound, voice your concerns if any. I don't think sitting around doing nothing will work out.

One could argue over time the market in last 100 years always goes up, but it also shows during long Bear Markets getting the right allocation can be critical over that period.

JMHO

Duratek

FED WATCH

CME Group Fed Watch – December 7, 2007
In advance of next week's Federal Open Market Committee meeting on December 11, the CME Group will be reporting daily rate change probabilities in the FOMC's federal funds target rate, as indicated by the 30-Day Federal Funds futures contract. The 30-Day Federal Funds futures contract is a key benchmark interest rate barometer that reflects the forward overnight effective rate for excess reserves that are traded among commercial banks in the U.S. federal funds market.

Based upon the December 7 market close, the 30-Day Federal Funds futures contract for the December 2007 expiration is currently pricing in a 100 percent probability that the FOMC will decrease the target rate by at least 25 basis points from 4-1/2 percent to 4-1/4 percent at the FOMC meeting on December 11.

In addition, the 30-Day Federal Funds futures contract is pricing in a 41 percent probability of a further 25-basis point decreasein the target rate to 4 percent (versus a 59 percent probability of just a 25-basis point rate decrease).

PROFIT RECESSION?

http://www.bloomberg.com/apps/news?pid=20601103&sid=aZi6pAy35zW4&refer=us#

SO stocks worth bidding up as profuts are falling??

D