Credit-Card Use Is Surging, Risking Another Debt CrisisTuesday June 3, 1:56 pm ET CNBC
Cash-strapped Americans are ringing up more and more purchases on their credit and debit cards, but there could be a steep price to pay ahead.
Though the trend is a boon for the companies that issue the cards, analysts worry that there could be long-term problems not only for consumers but for the anemic economy and the already-troubled banks that will be underwriting all that risky debt.
"Right now what we're seeing is the US consumer losing their disposable income as they have to spend more and more on necessities because of higher prices for gas and food," says Ron Ianieri, a market strategist and co-founder of the Options University investor education center.
"Normally when you have a certain budget and you can't keep up with the budget one of the easy steps is to extend that budget using credit."
One of the main problems with that is US consumers--and their counterparts in Europe as well--already are delinquent on their credit card payments in numbers not seen in six years. The Federal Reserve last week said credit card delinquencies hit 4.86 percent in the first quarter in 2008, while revolving debt--or the type used in credit purchases--hit $957.2 billion in March, a 7.9 percent increase.
As all that risky, high-interest debt keeps accumulating, consumers will find themselves deeper in a hole that threatens to keep the economy in its sluggish state. Economists worry that the problems are being exacerbated by consumers using credit not only to buy big-screen TVs and patio furniture, but also to pay their mortgages and shop for groceries.
"There's a significant risk to people who are using credit cards to help them try to bridge the gaps that they're facing," says Sean Snaith, director of the University of Central Florida's Institute for Economic Competitiveness. "The reality is the economic picture isn't going to clear up instantaneously."
Meanwhile, the banks that underwrite the credit card debt stand to lose as the delinquencies continue to rise. Standard & Poor's on Monday issued a dour forecast for banks in 2008, in part because of their exposure to bad debt.
Ianieri ranks his "starting five" in terms of exposure to risky debt: Lehman Brothers (NYSE:LEH - News), Citigroup (NYSE:C - News), Bank of America (NYSE:BAC - News), UBS (NYSE:UBS - News) and Merrill Lynch (NYSE:MER - News).
"It's a disaster, it's a time bomb," Ianieri says. "The credit crisis is a lot more severe than it's being made out to be. I think the government is doing everything it can to keep the severity of this situation under wraps from the general population. I think they're just trying to bide time for these banks."
For the credit card companies, though, it's a different story.
Little to Lose
Visa and Mastercard back comparatively little of the credit actually issued through their cards, meaning they have a low level of risk for defaults and other payment issues. They get paid a fee each time someone uses their cards, and the banks that issue the cards assume responsibility for the debt.
As such, investors and analysts are fawning over the two companies in the face of consumer cash issues and the growth of emerging markets, where credit cards are only beginning to find
popularity.
"The reality is probably some of it is hype, but some is based on fact," Snaith says. "'Check or cash' has been replaced by 'debit or credit' and that's going to be a continuing trend not just in the US but spreading worldwide."
In a note issued last Thursday, Lehman Brothers raised its outlook on Mastercard, escalating its price target to $335 from $300. Other analysts have joined in the enthusiasm, with Stifel Nicolaus on Tuesday jacking up its price target from $312 to $367.
Visa has gained from the enthusiasm for Mastercard. As of noontime trade Tuesday, both Visa (NYSE:V - News) and Mastercard (NYSE:MA - News) were up more than 12 percent since May 23.
"They have no risk. It's per transaction," says Nadav Baum, managing director of investments at BPU Investment Management. "That's why Visa and Mastercard are bucking the trend when it comes to the other financial companies. Even though they group them as a financial company, they're really not."
Lehman analyst Bruce Harting, in his research note on Mastercard, pointed out that the company believes it can duplicate its US business model in countries including Brazil, Hungary, Poland, Russia, India and China, nations where it projects 39 percent revenue growth.
Similarly, Americans shopping abroad might be more inclined to use their plastic as the dollar begins to gain ground against other currencies. A purchase in euros now could cost fewer dollars
by the time the next monthly bill rolls around if the US currency continues to appreciate.
"That's another reason why Mastercard and Visa will continue to do well," Baum says. "It's all hand-in-hand."
Finally, there are the responsible consumers who pay their bills in full every month and are joining the legions of people who no longer want to carry cash. They enjoy taking advantage of the rapid growth of retailers and restaurants offering debit options, plus using points they can
accumulate by utilizing their cards.
"The danger is in painting with a broad brush and casting all consumers as reluctant or unable to spend," says Greg McBride, senior analyst at Bankrate.com. "There are a lot of consumers that are not in the state of distress and can continue to spend in a manner that's not very different than a year or two ago when the economy was stronger. The card-holders that pay their balance in full every month, the incentive is for them to use the cards as much as possible."
*Fact is, many using credit cards to PAY BILLS, etc is of LAST RESORT and at 20% PLUS rates.....
D
Tuesday, June 03, 2008
THIS GUY DOESN'T CARE FOR BENANKE
http://globaleconomicanalysis.blogspot.com/
I am looking for a little more rally here, then good chance STEEP retrace is due.
D
I am looking for a little more rally here, then good chance STEEP retrace is due.
D
Wednesday, May 28, 2008
REAL WORLD INFLATION
Dow Chemical blames Washington for price hikesWednesday May 28, 10:52 am ET
Dow Chemical to raise prices up to 20 percent, blasts Washington for 'true energy crisis'
MIDLAND, Mich. (AP) -- Dow Chemical Co. will raise product prices by up to 20 percent almost immediately to offset the soaring cost of energy and raw materials, and the CEO of the chemical giant lashed out Washington on Wednesday for failing to develop a sound energy policy.
Dow Chemical to raise prices up to 20 percent, blasts Washington for 'true energy crisis'
MIDLAND, Mich. (AP) -- Dow Chemical Co. will raise product prices by up to 20 percent almost immediately to offset the soaring cost of energy and raw materials, and the CEO of the chemical giant lashed out Washington on Wednesday for failing to develop a sound energy policy.
BANKS MISS EASY FIX
Banks miss an easy housing fix
Lenders say they want to help troubled homeowners, but they are delaying deals that could save everyone - including the lenders themselves - a lot of time and money.
By Les Christie, CNNMoney.com staff writer
Last Updated: May 28, 2008: 7:32 AM EDT
NEW YORK (CNNMoney.com) -- Banks say they want to help troubled homeowners, but they are delaying deals that could save everyone - including the lenders themselves - a lot of time and money.
Lenders are taking much longer than necessary to approve short sales, according to Duane LeGate, of House Buyers Network, a short sale specialist.
In a short sale, a homeowner who cannot keep up with their loan asks the lender to take a dollar amount less than what is owed on a home's mortgage, and forgive the remainder of the unpaid debt.
So if a borrower has a mortgage balance of $100,000 and finds a buyer who will pay $95,000 for the house, the lender agrees to accept that $95,000 and close out the loan.
"There was a much greater chance of success with these in the past," said LeGate
Ideally in a short sale, everyone wins. Borrowers avoid the ugly foreclosure process that destroys their credit, while lenders recoup more of their costs than they would by spending the time and money it takes to kick an owner out and resell the property.
Lenders typically lose about 19% of a mortgage's value in a short sale, according to Clayton Holdings, a Conn.-based, provider of loan analytics, while they lose an average of 40% on loans that go into foreclosure.
Coldwell Banker CEO Jim Gillespie agrees that short sales are taking too long to complete. And he speaks from firsthand experience; a short-sale offer he made on a house in Marin County, Calif. in late fall didn't win approval until April.
But most buyers can't, or won't, wait that long."That's been our biggest challenge - keeping the buyers interested long enough as we wait and wait for an answer," said Jeff Morrell, a Colorado Springs real estate agent who specializes in short sales.
Running out the clock
John Fitzmorris, a short-sale expediter in East Stroudsburg, Pa., was working with Robson and Laura Pereira, who were behind on their mortgage, to market their home before a foreclosure would take it away.
"She worked, but he had a construction business that went defunct," said Fitzmorris. "That put them in trouble."
Falling home prices in the area made a normal sale impossible; the couple was upside-down in their mortgage, owing more on the property than it was worth on the current market.
After they fell behind on their payments, Laura Pereira said, "the bank sent me a letter asking me to call for help. I called them four or five times and they never got back to me. We had three [short sale] offers on the house at the time."
Fitzmorris, who has been doing short sales for more than 20 years, contacted the bank about a short sale well before the foreclosure date.
"We sent an authorization letter listing us as the contact for a short sale, a sales agreement, a completed seller's information document as well as listing and marketing information to First American Loss Mitigation, which was handling the Pereira's foreclosure process, on January 24," he said. The buyer was very interested - enough to pay for a title search.
A month later, Fitzmorris sent another complete package, including a sales contract, to the bank and started to call daily for feedback on the short-sale offer.
Greystone didn't respond until March 10, when it said that it had the file and would process it.
But by March 27 the bank still hadn't approved the short sale, and the Pereira's property went to sheriff's sale.(The bank did not respond to several requests for comment.)
"The offer we sent to the bank was $129,500," said Fitzmorris. "But another investor, TM Builders, bought the property at the sheriff's sale for $100,265."
By the time the Pereira's lost their house, they owed a total of $160,000, including principal of $144,500 in addition to late fees, legal fees, and so forth. So in the end, the bank lost $60,000 on the loan, when it could have lost $30,000 by doing a short sale.
Ironically, TM Builders flipped the home to Fitzmorris's buyer for the $129,500 short-sale price, money the bank would have gotten had it acted more quickly.
"The sellers did what they could to mitigate the problem but the bank didn't respond, which hurt both the sellers - with an unnecessary foreclosure permanently impacting their credit - and the bank," said Fitzmorris.
Usual suspect
The difficulty in getting short sales approved stems from the same hurdles facing all the other foreclosure prevention efforts. The fact that the majority of mortgages are pooled and securitized makes it hard to get approval to change the terms of the mortgages.
"It has to do with who owns the loan," said LeGate. "If a mortgage is stuck in a pool somewhere, when something goes wrong, no one knows who the actual owner of the note is."
Additionally, the volume of troubled borrowers makes it hard for lenders to keep up. The housing crisis has put an enormous burden on mortgage servicers, the companies that manage loans for securities investors.
At many servicers, said LeGate, "There's no one really skilled at loss mitigation, and these guys have more work than they were prepared to do."
And with foreclosure filings breaking new records each month, there's no sign that this problem will ease any time soon.
Says Laura Pereira, "I feel the bank really let us down."
Lenders say they want to help troubled homeowners, but they are delaying deals that could save everyone - including the lenders themselves - a lot of time and money.
By Les Christie, CNNMoney.com staff writer
Last Updated: May 28, 2008: 7:32 AM EDT
NEW YORK (CNNMoney.com) -- Banks say they want to help troubled homeowners, but they are delaying deals that could save everyone - including the lenders themselves - a lot of time and money.
Lenders are taking much longer than necessary to approve short sales, according to Duane LeGate, of House Buyers Network, a short sale specialist.
In a short sale, a homeowner who cannot keep up with their loan asks the lender to take a dollar amount less than what is owed on a home's mortgage, and forgive the remainder of the unpaid debt.
So if a borrower has a mortgage balance of $100,000 and finds a buyer who will pay $95,000 for the house, the lender agrees to accept that $95,000 and close out the loan.
"There was a much greater chance of success with these in the past," said LeGate
Ideally in a short sale, everyone wins. Borrowers avoid the ugly foreclosure process that destroys their credit, while lenders recoup more of their costs than they would by spending the time and money it takes to kick an owner out and resell the property.
Lenders typically lose about 19% of a mortgage's value in a short sale, according to Clayton Holdings, a Conn.-based, provider of loan analytics, while they lose an average of 40% on loans that go into foreclosure.
Coldwell Banker CEO Jim Gillespie agrees that short sales are taking too long to complete. And he speaks from firsthand experience; a short-sale offer he made on a house in Marin County, Calif. in late fall didn't win approval until April.
But most buyers can't, or won't, wait that long."That's been our biggest challenge - keeping the buyers interested long enough as we wait and wait for an answer," said Jeff Morrell, a Colorado Springs real estate agent who specializes in short sales.
Running out the clock
John Fitzmorris, a short-sale expediter in East Stroudsburg, Pa., was working with Robson and Laura Pereira, who were behind on their mortgage, to market their home before a foreclosure would take it away.
"She worked, but he had a construction business that went defunct," said Fitzmorris. "That put them in trouble."
Falling home prices in the area made a normal sale impossible; the couple was upside-down in their mortgage, owing more on the property than it was worth on the current market.
After they fell behind on their payments, Laura Pereira said, "the bank sent me a letter asking me to call for help. I called them four or five times and they never got back to me. We had three [short sale] offers on the house at the time."
Fitzmorris, who has been doing short sales for more than 20 years, contacted the bank about a short sale well before the foreclosure date.
"We sent an authorization letter listing us as the contact for a short sale, a sales agreement, a completed seller's information document as well as listing and marketing information to First American Loss Mitigation, which was handling the Pereira's foreclosure process, on January 24," he said. The buyer was very interested - enough to pay for a title search.
A month later, Fitzmorris sent another complete package, including a sales contract, to the bank and started to call daily for feedback on the short-sale offer.
Greystone didn't respond until March 10, when it said that it had the file and would process it.
But by March 27 the bank still hadn't approved the short sale, and the Pereira's property went to sheriff's sale.(The bank did not respond to several requests for comment.)
"The offer we sent to the bank was $129,500," said Fitzmorris. "But another investor, TM Builders, bought the property at the sheriff's sale for $100,265."
By the time the Pereira's lost their house, they owed a total of $160,000, including principal of $144,500 in addition to late fees, legal fees, and so forth. So in the end, the bank lost $60,000 on the loan, when it could have lost $30,000 by doing a short sale.
Ironically, TM Builders flipped the home to Fitzmorris's buyer for the $129,500 short-sale price, money the bank would have gotten had it acted more quickly.
"The sellers did what they could to mitigate the problem but the bank didn't respond, which hurt both the sellers - with an unnecessary foreclosure permanently impacting their credit - and the bank," said Fitzmorris.
Usual suspect
The difficulty in getting short sales approved stems from the same hurdles facing all the other foreclosure prevention efforts. The fact that the majority of mortgages are pooled and securitized makes it hard to get approval to change the terms of the mortgages.
"It has to do with who owns the loan," said LeGate. "If a mortgage is stuck in a pool somewhere, when something goes wrong, no one knows who the actual owner of the note is."
Additionally, the volume of troubled borrowers makes it hard for lenders to keep up. The housing crisis has put an enormous burden on mortgage servicers, the companies that manage loans for securities investors.
At many servicers, said LeGate, "There's no one really skilled at loss mitigation, and these guys have more work than they were prepared to do."
And with foreclosure filings breaking new records each month, there's no sign that this problem will ease any time soon.
Says Laura Pereira, "I feel the bank really let us down."
Monday, May 26, 2008
Friday, May 23, 2008
BEAR ALIVE AND KICKING?
Donwtrend line was tested broken but more importantly IMHO it didnt HOLD (not enough BUYING UMMPGHHHH) and now it is back where it belongs..........but rising MA'S as shown (up red arrow) MIGHT help......we should now work our way down to the lows IMHOMONEY as TOILET PAPER only works for so long,
FED is shown now as worthless POS, f'd up the whole system...created money out or THIN AIR to BAIL OUT BSC.....and the money center whores.......insiders get paid.....lemmings dont get laid...what a mouth I have today.....
BANKS would implode if all the freebie money sent out as helping stimulus were presented at same time.
FED created this mess......FED should be closed down.
D
Thursday, May 22, 2008
Thursday, May 15, 2008
NO INFLATION?
Martin desk rep came in..on $7K order (from San Diego) freight was 17%....$1,190 NOW fuel surcharge added 40% of the $1,190 adds addtl $476 making my freight now 25% of the $7K
This our reo was told was as “cheap as its gonna get….” This 40% will apply to almost EVERYTHING SHIPPED TO SELL IN THIS COUNTRY!!
Duratek
Monday, May 12, 2008
INTERESTING STATS
P/Es & Yields on Major Indexes
Dow Indexes
Find Historical Data WHAT'S THIS?
Friday, May 09, 2008
http://online.wsj.com/mdc/public/page/2_3021-peyield.html?mod=topnav_2_3000
Dow Indexes
Find Historical Data WHAT'S THIS?
Friday, May 09, 2008
http://online.wsj.com/mdc/public/page/2_3021-peyield.html?mod=topnav_2_3000
Sunday, May 11, 2008
CATCH 22
Transport rally stemmed from Buffets interest and higher oil? (alternative to trucking?)
Investment in alt energy funds or stocks key ahead of Dem's victory?
How wounded gold bull? With $$ rally oil's rise suspect along with WANING DEMAND FROM YES R?? NO!!!!!
Price back below my recent downtrend line, ominous PEEK above preceded.
Strength is VERY SELECTIVE....APPL etc.
INFLATION WHERE IT HURTS.....food energy etc.....( I have FUEL SURCHARGES NOW FROM MOST SOURCES) price increases coming mid year now and now incl's CHinese manuf
DEFLATION WHERE IT KILLS....ASSETS...stocks....HOUSING one of MAIN drivers of economy.
HOUSING PRICES NOT STABLE OR BOTTOMED......leads to addt'l Banking write downs.....
CREDIT CRUNCH NOT CREDIT EXPANSION.....banks tighten standards.....STRANGLING ECONOMY
SOME SPENDING YES.....BIZ out there, but for those who shake a fist of paper....
Happy Mothers Day!
Duratek
Investment in alt energy funds or stocks key ahead of Dem's victory?
How wounded gold bull? With $$ rally oil's rise suspect along with WANING DEMAND FROM YES R?? NO!!!!!
Price back below my recent downtrend line, ominous PEEK above preceded.
Strength is VERY SELECTIVE....APPL etc.
INFLATION WHERE IT HURTS.....food energy etc.....( I have FUEL SURCHARGES NOW FROM MOST SOURCES) price increases coming mid year now and now incl's CHinese manuf
DEFLATION WHERE IT KILLS....ASSETS...stocks....HOUSING one of MAIN drivers of economy.
HOUSING PRICES NOT STABLE OR BOTTOMED......leads to addt'l Banking write downs.....
CREDIT CRUNCH NOT CREDIT EXPANSION.....banks tighten standards.....STRANGLING ECONOMY
SOME SPENDING YES.....BIZ out there, but for those who shake a fist of paper....
Happy Mothers Day!
Duratek
Friday, May 09, 2008
CLOUDY< GLOOMY MONRING IN B'MORE
I AM SHORT AGAINST 1400 SPX (actually slightly above stop loss 1405.....this is MY position from yesterday, I never suggest YOU take any action....for amusement only!@) just putting my cards on table
Using RENKO charts...more later.
http://money.cnn.com/2008/05/09/news/economy/creditcards/index.htm?postversion=2008050905 Americans barely getting by using Credit cards....STORY NEVER TOLD.
Rally had become INCREASINGLY SELECTIVE....less stock going up.
WE have INLFATION and DEFLATION (housing)
http://money.cnn.com/2008/05/08/news/inflation_crunch.fortune/index.htm
I personally think stock prices will follow.....Friday has makings of BIG DOWNER....watch GOLD and Interest rates too for clues...
Duratek
Using RENKO charts...more later.
http://money.cnn.com/2008/05/09/news/economy/creditcards/index.htm?postversion=2008050905 Americans barely getting by using Credit cards....STORY NEVER TOLD.
Rally had become INCREASINGLY SELECTIVE....less stock going up.
WE have INLFATION and DEFLATION (housing)
http://money.cnn.com/2008/05/08/news/inflation_crunch.fortune/index.htm
I personally think stock prices will follow.....Friday has makings of BIG DOWNER....watch GOLD and Interest rates too for clues...
Duratek
Wednesday, May 07, 2008
WHAT IS THE BALTIC DRY INDEX
>>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 26 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.<<
http://www.slate.com/id/2090303/
http://www.slate.com/id/2090303/
an assessment of the price of moving the major raw materials by sea. Taking in 26 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.<<
http://www.slate.com/id/2090303/
http://www.slate.com/id/2090303/
WHY ARE THE MARKETS GOING UP???
Is it all about "ROTATION"......are those "FREE" FED Treasuries being converted into stock purchases? WATCH INT RATES CLOSELY IMHO
Read this from an intelligent poster on another board friend sent me:
When is it going to sink in again?
mannfm11
NEW 5/6/2008 11:25:42 PM
That we are in a real mess? I think we are about to see a real crisis, the quasi public banks like the Fed, FHLB and the GSE's going into crisis. If you read the agreements behind this auction stuff, the Fed has the right to require repurchase or to sell the stuff any time they get ready. Since the books only have to balanced overnight, this stuff is actually repoed daily. What happens if the bank that has the stuff can't perform and the Fed is suddenly stuck with some illiquid stuff? Well, I would venture the taxpayer gets the bill until the Fed earns enough money to pay back the government. The government, probably in return for the New Deal owns 100% of the profits of the Fed, save the preferred stock dividend. The Federal Home Loan banks are somewhat different and I don't know how they work. It seems though that they might be somewhat like FNMA and FHLMC, except I don't exactly know how. I do know I read recently the one in Chicago and the one in Dallas were discussing a merger, which tells me they aren't exactly public entities any more. I am wondering what happens to the bank that has propped up CFC? I don't think CFC is going away as a problem and it will be bigger than Bear. There are significant problems that have nothing but a band-aid on them. The auction loans are one of them, as they are nothing more than a method of keeping insolvents solvent until hope and time bail them out. They are clearly hoping that bad paper can in fact rise from the grave and walk on water, across the Pacific to some sucker fund in China. Surely the world isn't so stupid as to make more deals for Wall Street junk? One thing that I keep bringing up that they keep bringing someone to the table on CNBC is that credit problems like these cause economic problems and I am not talking about cyclical recessions. FNM needs another $6 billion. How much is Merrill going to need the next go around? When is Goldman going to come clean with the losses out of their $60 billion in level 3 assets? When is Wells Fargo going to come clean with its mortgage losses, as it is next to impossible for me to believe that everyone in that business made across the board bad loans except them? We are just seeing the tip of the iceberg on the prime mortgage front of losses from mortgages. Truth is the good stuff was junk and the junk was basically akin to making loans to heroin junkies. There is a supply problem in housing. Nothing is going to make this go away except a hell of a lot of well to do population. Wetbacks from Mexico aren't going to float the housing market at todays prices or even prices 50% of todays prices. It is clear the consumer credit game isn't going to be the same and corporate profits are fueled with consumer bucks. Consumer spending isn't 70% of the economy, it is all the economy either directly or indirectly. Same for the rest of the world. 5% of the US economy is somewhere around $600 billion depending on whose figures you believe. This is about what is going to be missing out of home equity extraction due to refinance or sale the next few years. It is the entire trade deficit, something that has fed the rest of the world with money to create a boom. But, that money is now owed, not free to circulate and there has to be some new real credit. Credit that was being created by virtue of a myriad of derivatives that no longer can be marketed. These CDO losses I can assure you will be more than subprime mortgages by the time they are done.The boom was perpetuated by subprime financing. The other side of this game is the long term investment projects are in full swing, but at some point it is going to be clear that the money was loaned at too low a rate, according to Mises, and the game is going to fall apart. The game is being played in China, but it is being financed by American consumer credit. It won't be long before they suddenly realize they don't have money to finish what they started and the minerals game comes back to earth. They aren't breaking their necks to keep the American financials afloat because they like losing money, but because they need the fresh money created in the US. There are some statistics that tell us the game is coming back. I don't think the consumer balance sheet and some of the more speculative ventures are going to work. I don't think gasoline is the drag it is said to be, but more the idea that the consumer is out of credit and it is going to be that much more difficult to balance the trade balance. Ditto China and Asia, which could be sending more money to the US in trade, but having to send it to OPEC instead. One thing I read a long time ago was that 80% of GDP was the real valuation line for the entire stock market capitalization and we are still way above that, probably in the 140% range. 3% was the dividend rate that capped markets for the past century, but not now. It is clear that only financial bubbles prop markets at these rates. The bulls like to spout a lot of statistics, but few of them are true. The SPX reached it old top solely because stock buybacks reduce the divisor, while dividends don't. Had they back adjusted for the roughly $200 billion to $300 billion shortfall in dividends for the past 10 years, it would have clearly shrunk. Stock buybacks do little for the holder of stock other than increase his proportion of ownership only so far as the stock remains out of the market. It is what used to be called for tax purposes, a partial liquidation. The Dow is up only by virtue of some by chance almost perfect portfolio management. If we reversed the Dow splits and then allowed for the portfolio changes, we would have a hard time having a real new high in the Dow from 2000. There was 60 points of losses saved in the split of GE alone, not to mention another 100 roughly out of the split of INTC. Prior to the last inclusion of new companies, I think BAC and Chevron (CVT?) were put in place of MO and HON, just to make the index match the split adjusted points of 1/14/00, it took 12,610 to reach a real new high. Had they left these lost points in the index, the Dow would be even another 1000 points lower. Quite interesting, MO put about 500 points on the Dow, then they threw it out before it could be bashed apart. The Nasdaq also shows the bear never really ended, only making 50% of its prior high while the big cap NDX, never got close to 50% of its old high.I think this is a speculators market, which means that not one thing I have written means a damn thing, not even the news going forward. What it does mean is that buy and hold to make money in stocks is dead. There is no doubt until the true valuations are back in stocks in the market in general, holding for long term real gains is not going to work for a good while and faces a highly risky near future. No one with a brain would hold any portfolio of stocks, unless they knew how to rotate around losses.
Read this from an intelligent poster on another board friend sent me:
When is it going to sink in again?
mannfm11
NEW 5/6/2008 11:25:42 PM
That we are in a real mess? I think we are about to see a real crisis, the quasi public banks like the Fed, FHLB and the GSE's going into crisis. If you read the agreements behind this auction stuff, the Fed has the right to require repurchase or to sell the stuff any time they get ready. Since the books only have to balanced overnight, this stuff is actually repoed daily. What happens if the bank that has the stuff can't perform and the Fed is suddenly stuck with some illiquid stuff? Well, I would venture the taxpayer gets the bill until the Fed earns enough money to pay back the government. The government, probably in return for the New Deal owns 100% of the profits of the Fed, save the preferred stock dividend. The Federal Home Loan banks are somewhat different and I don't know how they work. It seems though that they might be somewhat like FNMA and FHLMC, except I don't exactly know how. I do know I read recently the one in Chicago and the one in Dallas were discussing a merger, which tells me they aren't exactly public entities any more. I am wondering what happens to the bank that has propped up CFC? I don't think CFC is going away as a problem and it will be bigger than Bear. There are significant problems that have nothing but a band-aid on them. The auction loans are one of them, as they are nothing more than a method of keeping insolvents solvent until hope and time bail them out. They are clearly hoping that bad paper can in fact rise from the grave and walk on water, across the Pacific to some sucker fund in China. Surely the world isn't so stupid as to make more deals for Wall Street junk? One thing that I keep bringing up that they keep bringing someone to the table on CNBC is that credit problems like these cause economic problems and I am not talking about cyclical recessions. FNM needs another $6 billion. How much is Merrill going to need the next go around? When is Goldman going to come clean with the losses out of their $60 billion in level 3 assets? When is Wells Fargo going to come clean with its mortgage losses, as it is next to impossible for me to believe that everyone in that business made across the board bad loans except them? We are just seeing the tip of the iceberg on the prime mortgage front of losses from mortgages. Truth is the good stuff was junk and the junk was basically akin to making loans to heroin junkies. There is a supply problem in housing. Nothing is going to make this go away except a hell of a lot of well to do population. Wetbacks from Mexico aren't going to float the housing market at todays prices or even prices 50% of todays prices. It is clear the consumer credit game isn't going to be the same and corporate profits are fueled with consumer bucks. Consumer spending isn't 70% of the economy, it is all the economy either directly or indirectly. Same for the rest of the world. 5% of the US economy is somewhere around $600 billion depending on whose figures you believe. This is about what is going to be missing out of home equity extraction due to refinance or sale the next few years. It is the entire trade deficit, something that has fed the rest of the world with money to create a boom. But, that money is now owed, not free to circulate and there has to be some new real credit. Credit that was being created by virtue of a myriad of derivatives that no longer can be marketed. These CDO losses I can assure you will be more than subprime mortgages by the time they are done.The boom was perpetuated by subprime financing. The other side of this game is the long term investment projects are in full swing, but at some point it is going to be clear that the money was loaned at too low a rate, according to Mises, and the game is going to fall apart. The game is being played in China, but it is being financed by American consumer credit. It won't be long before they suddenly realize they don't have money to finish what they started and the minerals game comes back to earth. They aren't breaking their necks to keep the American financials afloat because they like losing money, but because they need the fresh money created in the US. There are some statistics that tell us the game is coming back. I don't think the consumer balance sheet and some of the more speculative ventures are going to work. I don't think gasoline is the drag it is said to be, but more the idea that the consumer is out of credit and it is going to be that much more difficult to balance the trade balance. Ditto China and Asia, which could be sending more money to the US in trade, but having to send it to OPEC instead. One thing I read a long time ago was that 80% of GDP was the real valuation line for the entire stock market capitalization and we are still way above that, probably in the 140% range. 3% was the dividend rate that capped markets for the past century, but not now. It is clear that only financial bubbles prop markets at these rates. The bulls like to spout a lot of statistics, but few of them are true. The SPX reached it old top solely because stock buybacks reduce the divisor, while dividends don't. Had they back adjusted for the roughly $200 billion to $300 billion shortfall in dividends for the past 10 years, it would have clearly shrunk. Stock buybacks do little for the holder of stock other than increase his proportion of ownership only so far as the stock remains out of the market. It is what used to be called for tax purposes, a partial liquidation. The Dow is up only by virtue of some by chance almost perfect portfolio management. If we reversed the Dow splits and then allowed for the portfolio changes, we would have a hard time having a real new high in the Dow from 2000. There was 60 points of losses saved in the split of GE alone, not to mention another 100 roughly out of the split of INTC. Prior to the last inclusion of new companies, I think BAC and Chevron (CVT?) were put in place of MO and HON, just to make the index match the split adjusted points of 1/14/00, it took 12,610 to reach a real new high. Had they left these lost points in the index, the Dow would be even another 1000 points lower. Quite interesting, MO put about 500 points on the Dow, then they threw it out before it could be bashed apart. The Nasdaq also shows the bear never really ended, only making 50% of its prior high while the big cap NDX, never got close to 50% of its old high.I think this is a speculators market, which means that not one thing I have written means a damn thing, not even the news going forward. What it does mean is that buy and hold to make money in stocks is dead. There is no doubt until the true valuations are back in stocks in the market in general, holding for long term real gains is not going to work for a good while and faces a highly risky near future. No one with a brain would hold any portfolio of stocks, unless they knew how to rotate around losses.
Tuesday, May 06, 2008
THE GAME PLAN
Meatpuddle *(poster from another board)
Chateau Mouton Rothschild Online
This is THE story. Forget about the stock market, that is meaningless and easy to control (for now). Large FCB (foreign central bank) purchases of agencies and treasuries have kept rates artificially low for a LONG TIME and have led to added "slosh", some of which undoubtedly winds up in the stock market. Here's the downside: As the US economy slows and the dollar falls, the perpetual dollar-recyclers (Arabs and Asians) are having a hard time pegging their currencies with the reduced net inflows so they must print to make up the difference. This printing (not in USD but in foreign currencies) is leading to a crack-up-boom in the commodity complex and is leading to food riots, hoarding, civil unrest, etc. in those countries and a small amount of this even in the US.Now some may be asking, "why would the recyclers continue this when they are stoking hyperinflation in their own currencies?" and this is a good question that I can sum up with a simple phrase: Godfather Protection Racket. So our fleet is stationed in the gulf to provide "protection" to those oil-producing nations that still want to maintain USD pegs and give support to fictitious capital and US bond bubbles. For those that choose not to support the GSE’s and bond bubble, well they might not get our protection and then who can say what bad things might happen to them? So basically they have no choice but to make large blank-check purchases. In order to facilitate this recycling, oil especially must be very high in price. This (somewhat) offsets the reduced demand and gives the Arabs some cash to recycle back into treasuries and GSE debt, but not enough without printing.The above helps explain a lot of the continuing "strength" in the oil markets. The Arabs NEED oil to be very high, and so do the US pigmen. These interest are aligned, albeit at the end of a gun barrel for the Arabs. The end-game is afoot related to all of this and that is basically a gutting of the GSE's by the pigmen. They will drive all of the FCB's into GSE debt (and the FCB have been on an absolute ****ing buying binge recently) and then collapse the GSE's with a feigned liquidity "crises" where they give the FCB's 10 cents on the dollar for the assets in a huge looting operation. This will be similar to the BSC looting operation where certain IB's (with a Fed backstop) will devour the carcass of the GSE's and then the IB's will hold the mountain foreclosures and BINGO the banking insolvency problem is resolved.Gen has said repeatedly that constant trashing of treasury and Fed balance sheets could lead to a TLT collapse, and this is correct. I just wanted to point out that a lot of this trashing is being done on purpose to orchestrate the final looting end-game scenario. Shuffle all of the crap onto the GSE balance sheets and then gut them by engineering a crises and then cherry picking the best stuff. Think BSC or CFC, etc. except on a very large scale.Have you ever asked yourself why the conforming ratios and capital reserve requirements and everything else at the GSE's have been falling into the bilge category? Well now you know the answer. The GSE's are being set up on purpose to implode.
----------"Choose! Choose the form of the Destructor!' The choice is made!" - Gozer"the idea that you're "entitled" to a 5 or 6 percent 30 year mortgage is horse****, and so is the housing prices that it has created." - Genesis
Chateau Mouton Rothschild Online
This is THE story. Forget about the stock market, that is meaningless and easy to control (for now). Large FCB (foreign central bank) purchases of agencies and treasuries have kept rates artificially low for a LONG TIME and have led to added "slosh", some of which undoubtedly winds up in the stock market. Here's the downside: As the US economy slows and the dollar falls, the perpetual dollar-recyclers (Arabs and Asians) are having a hard time pegging their currencies with the reduced net inflows so they must print to make up the difference. This printing (not in USD but in foreign currencies) is leading to a crack-up-boom in the commodity complex and is leading to food riots, hoarding, civil unrest, etc. in those countries and a small amount of this even in the US.Now some may be asking, "why would the recyclers continue this when they are stoking hyperinflation in their own currencies?" and this is a good question that I can sum up with a simple phrase: Godfather Protection Racket. So our fleet is stationed in the gulf to provide "protection" to those oil-producing nations that still want to maintain USD pegs and give support to fictitious capital and US bond bubbles. For those that choose not to support the GSE’s and bond bubble, well they might not get our protection and then who can say what bad things might happen to them? So basically they have no choice but to make large blank-check purchases. In order to facilitate this recycling, oil especially must be very high in price. This (somewhat) offsets the reduced demand and gives the Arabs some cash to recycle back into treasuries and GSE debt, but not enough without printing.The above helps explain a lot of the continuing "strength" in the oil markets. The Arabs NEED oil to be very high, and so do the US pigmen. These interest are aligned, albeit at the end of a gun barrel for the Arabs. The end-game is afoot related to all of this and that is basically a gutting of the GSE's by the pigmen. They will drive all of the FCB's into GSE debt (and the FCB have been on an absolute ****ing buying binge recently) and then collapse the GSE's with a feigned liquidity "crises" where they give the FCB's 10 cents on the dollar for the assets in a huge looting operation. This will be similar to the BSC looting operation where certain IB's (with a Fed backstop) will devour the carcass of the GSE's and then the IB's will hold the mountain foreclosures and BINGO the banking insolvency problem is resolved.Gen has said repeatedly that constant trashing of treasury and Fed balance sheets could lead to a TLT collapse, and this is correct. I just wanted to point out that a lot of this trashing is being done on purpose to orchestrate the final looting end-game scenario. Shuffle all of the crap onto the GSE balance sheets and then gut them by engineering a crises and then cherry picking the best stuff. Think BSC or CFC, etc. except on a very large scale.Have you ever asked yourself why the conforming ratios and capital reserve requirements and everything else at the GSE's have been falling into the bilge category? Well now you know the answer. The GSE's are being set up on purpose to implode.
----------"Choose! Choose the form of the Destructor!' The choice is made!" - Gozer"the idea that you're "entitled" to a 5 or 6 percent 30 year mortgage is horse****, and so is the housing prices that it has created." - Genesis
FNM WOOOOOF (Issuing new shares+ screwing existing shareholders)
Fannie Mae (FNM 28.29) announced this morning plans to increase its capital position by issuing new shares and cutting its dividend. Though the announcement has a dilutive effect on existing shareholders, the plan should help provide a boon for the housing market in the long-term.
The mortgage lender's revenues climbed 28% year-over-year to $3.78 billion. But Fannie Mae still reported a loss of $2.19 billion, or $2.57 per share, for the first quarter. One year ago Fannie Mae earned $961 million, or $0.85 per share.
The negative results were driven by losses from derivatives and trading securities, which totaled $4.4 billion, as well as credit expenses related to higher charge-offs from defaults and loan losses, which totaled $3.2 billion, according to this morning's edition of The Wall Street Journal.
The mortgage credit book of business grew by 3%, and estimated market share increased to approximately 50% of new single-family mortgage-related securities issued.
Core capital totaled $42.7 billion at the end of the quarter, $5.1 billion above the company's current regulatory requirements.
Fannie Mae announced plans to raise $6 billion in new capital through common stock public offerings, noncumulative mandatory convertible preferred stock, noncumulative, nonconvertible preferred stock. The new capital is intended to enhance the company's balance sheet and provide stability to the secondary mortgage market. By increasing its capital base, Fannie Mae can lend additional funds and also increase its protection against future hiccups in its loan portfolio.
According to the company, the Office of Federal Housing Enterprise Oversight (OFHEO), Fannie Mae's watchdog, would reduce the required 20% capital level to 15% upon completing the capital-raising plan. Fannie Mae also said OFHEO indicated the required capital surplus would be trimmed by an additional five percentage points to a 10% surplus requirement in September 2008, based upon the company's continued maintenance of excess capital above its required level. This, of course, assumes no material adverse changes to the company's ongoing regulatory compliance.
As part of Fannie Mae's capital raise, the company will reduce its quarterly dividend. Beginning in the third quarter, the company will cut its dividend to $0.25 per share from $0.35 per share, which will free an additional $390 million of capital per year.
Separately, Fannie Mae is planning a series of initiatives to provide liquidity, stability, and affordability to the housing and mortgage markets for the long term. The plan intends to keep struggling borrowers in their homes, assist prospective homebuyers, and stabilize communities affected by the mortgage market downturn. Such moves will ultimately help restore the housing market by providing further support to the industry. Such support is essential to helping boost economic health.
--Jeffrey Ham, Briefing.com
The mortgage lender's revenues climbed 28% year-over-year to $3.78 billion. But Fannie Mae still reported a loss of $2.19 billion, or $2.57 per share, for the first quarter. One year ago Fannie Mae earned $961 million, or $0.85 per share.
The negative results were driven by losses from derivatives and trading securities, which totaled $4.4 billion, as well as credit expenses related to higher charge-offs from defaults and loan losses, which totaled $3.2 billion, according to this morning's edition of The Wall Street Journal.
The mortgage credit book of business grew by 3%, and estimated market share increased to approximately 50% of new single-family mortgage-related securities issued.
Core capital totaled $42.7 billion at the end of the quarter, $5.1 billion above the company's current regulatory requirements.
Fannie Mae announced plans to raise $6 billion in new capital through common stock public offerings, noncumulative mandatory convertible preferred stock, noncumulative, nonconvertible preferred stock. The new capital is intended to enhance the company's balance sheet and provide stability to the secondary mortgage market. By increasing its capital base, Fannie Mae can lend additional funds and also increase its protection against future hiccups in its loan portfolio.
According to the company, the Office of Federal Housing Enterprise Oversight (OFHEO), Fannie Mae's watchdog, would reduce the required 20% capital level to 15% upon completing the capital-raising plan. Fannie Mae also said OFHEO indicated the required capital surplus would be trimmed by an additional five percentage points to a 10% surplus requirement in September 2008, based upon the company's continued maintenance of excess capital above its required level. This, of course, assumes no material adverse changes to the company's ongoing regulatory compliance.
As part of Fannie Mae's capital raise, the company will reduce its quarterly dividend. Beginning in the third quarter, the company will cut its dividend to $0.25 per share from $0.35 per share, which will free an additional $390 million of capital per year.
Separately, Fannie Mae is planning a series of initiatives to provide liquidity, stability, and affordability to the housing and mortgage markets for the long term. The plan intends to keep struggling borrowers in their homes, assist prospective homebuyers, and stabilize communities affected by the mortgage market downturn. Such moves will ultimately help restore the housing market by providing further support to the industry. Such support is essential to helping boost economic health.
--Jeffrey Ham, Briefing.com
Saturday, May 03, 2008
REVISITING FINANCIAL ARBITRAGE CAPITALISM
http://www.prudentbear.com/index.php/CreditBubbleBulletinHome Doug Noland, always intelligently written!
Indeed, Washington’s validation of the current dysfunctional Credit system structure could very well lay the groundwork for extreme global price distortions, volatility, and social/political unrest. On the current course of things, it’s difficult for me to not think in terms of NASDAQ 1999 or subprime 2006. Throw additional liquidity on overheated Credit, inflationary, and speculative “biases” and be prepared for the spectacular.
When Financial Arbitrage Capitalism’s excesses were spurring acute U.S. securities market inflation, the system enjoyed a period of perceived rising wealth to go with a boom in Wall Street securities issuance (to help offset inflated demand). When this Structure’s excesses were directed at the Mortgage Finance Bubble, the upshots were inflating home prices along with attendant construction and consumption booms. Now, however, with acute inflationary effects prevailing throughout global markets for food, energy, and commodities, one should be prepared for the likes of problematic supply bottlenecks and shocks, hoarding, trade frictions and interruptions, and generally heightened geopolitical instability.
I argued back in 2002 that the overriding systemic issue was not “deflation” but rather myriad risks associated with an unfolding U.S. Credit Bubble. Now, some years later, these risks have expanded alarmingly, as runaway Credit Bubbles have ballooned both at home and abroad.
Indeed, Washington’s validation of the current dysfunctional Credit system structure could very well lay the groundwork for extreme global price distortions, volatility, and social/political unrest. On the current course of things, it’s difficult for me to not think in terms of NASDAQ 1999 or subprime 2006. Throw additional liquidity on overheated Credit, inflationary, and speculative “biases” and be prepared for the spectacular.
When Financial Arbitrage Capitalism’s excesses were spurring acute U.S. securities market inflation, the system enjoyed a period of perceived rising wealth to go with a boom in Wall Street securities issuance (to help offset inflated demand). When this Structure’s excesses were directed at the Mortgage Finance Bubble, the upshots were inflating home prices along with attendant construction and consumption booms. Now, however, with acute inflationary effects prevailing throughout global markets for food, energy, and commodities, one should be prepared for the likes of problematic supply bottlenecks and shocks, hoarding, trade frictions and interruptions, and generally heightened geopolitical instability.
I argued back in 2002 that the overriding systemic issue was not “deflation” but rather myriad risks associated with an unfolding U.S. Credit Bubble. Now, some years later, these risks have expanded alarmingly, as runaway Credit Bubbles have ballooned both at home and abroad.
Friday, May 02, 2008
BEAR MARKET KILLED?
briefing.com has daily economic data......job "losses" better than expected.....90,000 SERVICE jobs added, huge manufacturing job losses....CNBC heralding the results FUTURES JUMP GREEN!!
The breach above of 80.00 in the US $ index broke a Head and Shoulders formation, US $$ could fall to 40.00 (distance from neckline 80.0 to head 120.0 than subtract from 80) BUT not uncommon to TEST break....this could cause falling commodities, unwinding of that speculation and BACK into equities.
Lasr Fri I put 50% of my 401K cash in to equities....will avg in each week, holding back other 50% for confirmation Bear is dead...or to buy at new lows.
FED has gone ALL OUT to rescue the markets, it may have succeeded....for now.
Recent chart showing price above 20 month moving avg is important......see if BROAD BUYING COMES IN looking for 90% upside volume today for more confirmation some kind of low is IN.
Duratek
Thursday, May 01, 2008
ELLIOT WAVE GUY TONY
http://caldaroew.spaces.live.com/blog/cns!D2CB8C5EBA2ADE86!8139.entry
Like how this guy presents market data.
D
Like how this guy presents market data.
D
BEAR BREAKING POINT
**Click chart above to enlarge. Using this method, if MUCH progress is made and the close stays above the MA shown, the bear may be knocked out, crazy as it sounds....so far it still looks a lot like 2001.....we should know soon.
**click to enlarge.Falling VIX (volatility index) is uaually bullish. If this keeps up Bear is going into hibernation IMHO.
Wednesday, April 30, 2008
ART MEETS FUNCTION
This is the business I am in, what a COOL chair around $899, very well made in Germany...all the dealers are asking each other "where has the business gone?"
Tuesday, April 29, 2008
REAL WORLD PROOF 'ALOHA AIR BANKRUPT"
BY RICK DAYSOG
Advertiser Staff Writer
Hawai'i's economy, reeling from the loss of thousands of jobs with the demise of Aloha Airlines' passenger service, the closure of Molokai Ranch and NCL America's decision to pull out two of its ships, now faces the loss of a vital transportation link with the shutdown of Aloha's cargo operations.
Aloha abruptly closed its profitable air freight business yesterday after its lender, GMAC Commercial Finance LLC, cut off financing.
The shutdown means the loss of 300 jobs and the end of a business that handled more than 100 million pounds of cargo each year — about 85 percent of all goods flown between O'ahu and the Neighbor Islands.
The impact will be felt by retailers and wholesalers of time-sensitive consumer items such as baked goods, produce, meat, medical supplies, newspapers, auto parts and construction materials. The move also will affect movement of interisland mail and the flow of cash between local banks and their Neighbor Island branches.
"This is a critical link in the state economy," said Leroy Laney, professor of economics and finance at Hawai'i Pacific University.
"The shutdown will definitely impact the local economy, and with medical supplies, it could lead to life or death situations."
Gov. Linda Lingle said in a news release that she has had discussions with other cargo operators to find shipping alternatives since Aloha filed for bankruptcy.
Maui Mayor Charmaine Tavares said the impact will be especially hard on local entrepreneurs and farmers who rely on Aloha's daily service.
"I am concerned for both the employees of Aloha Airlines cargo as well as for the many small businesses that will be impacted," Tavares said.
Founded in 1946, Aloha was the state's second-largest airline until it shut down its passenger service on March 31 and terminated 1,900 employees. The closing came 11 days after Aloha filed for Chapter 11 bankruptcy reorganization. Aloha said it lost $120 million in two years because of soaring fuel prices and a costly interisland fare war.
Yesterday, Aloha flew its final two afternoon cargo flights. The company canceled six nighttime cargo flights.
Aloha said last night that it was in the process of informing cargo employees about the layoffs.
sale may be affected
The shutdown could also jeopardize the sale of Aloha's 1,100-employee contract services division to Los Angeles-based Pacific Air Cargo.
Pacific Air last week agreed to pay $2.05 million for the unit, which handles ticketing, baggage services, ramp duties and other ground services for carriers that serve Hawai'i.
The deal, which was approved last week by a federal bankruptcy judge, will now have to be reviewed again by a court-appointed bankruptcy trustee.
As of last night, the company's contract services division remained opened.
The layoffs are more bad news for an economy shaken by the shutdown of Molokai Ranch, which resulted in the loss of 120 jobs, and the grounding of Aloha's passenger service, which represented the state's largest-ever mass layoffs.
State lawmakers are now bracing for the impact of the pullout of Norwegian Cruise Lines' two ships, which could rival the 2,200 total jobs lost at Aloha.
"This is one more indicator that our economy is suffering," said state House Speaker Calvin Say.
"It is also a wake-up call for all of us on the importance of our transportation infrastructure."
closure a surprise
The Aloha cargo closure took employees, customers and creditors by surprise, especially because Aloha had at least two bids for its profitable cargo unit.
On March 27, the Seattle-based owner of Young Brothers/Hawaiian Tug & Barge, Saltchuk Resources Inc., signed a letter of intent to purchase the cargo division for $13 million.
And last week, locally based Jupiter Holdings Group bid $13.65 million for the division.
James Wagner, Jupiter's attorney, said the company was prepared to go through with its purchase as recently as yesterday afternoon. But GMAC unexpectedly upped the price to $15 million and required a higher deposit, he said.
Saltchuk, meanwhile, pulled its bid last week after Aloha and GMAC changed the terms of the bidding.
"This all has to do with other parties changing the deal without any warning," Wagner said. "I've been in practice over 30 years and I've never seen a case end like this."
GMAC took the lead in the sale talks because it is owed $44 million by Aloha and has provided money to keep the cargo operations flying after it filed for bankruptcy protection on March 20.
The lender previously threatened to pull the financing for the cargo operations after a dispute with Aloha's pilots.
Aloha pilots laid off with the closure of the passenger service wanted the option to work for the cargo division. Last week, the pilots' union threatened to strike over the issue.
Attorneys for the pilots union and Aloha's unsecured creditors said in bankruptcy court that Aloha will get less than $13 million by shutting down the cargo operations and selling its equipment.
"For GMAC to walk away from legitimate offers makes absolutely no sense at all," added pilot John Riddel. "It's a travesty. This should have never happened. Hundreds of dedicated employees are being victimized today."
Paul Brewbaker, chief economist at the Bank of Hawaii, said it may be some time before competing carriers and cargo operators fill the void left by Aloha.
"This is huge," said Brewbaker. "I don't doubt that somebody will come in and fill the void but in the short-term, anyone who wants to go to market is hung up."
Aloha used six Boeing 737-200 planes solely for interisland cargo. Hawaiian and other carriers take cargo in their passenger planes and don't have aircraft dedicated to cargo.
Brewbaker said it will be more difficult to attract a new competitor to the interisland cargo market than several years ago given turmoil in the nation's credit markets and high fuel prices.
Advertiser Staff Writer
Hawai'i's economy, reeling from the loss of thousands of jobs with the demise of Aloha Airlines' passenger service, the closure of Molokai Ranch and NCL America's decision to pull out two of its ships, now faces the loss of a vital transportation link with the shutdown of Aloha's cargo operations.
Aloha abruptly closed its profitable air freight business yesterday after its lender, GMAC Commercial Finance LLC, cut off financing.
The shutdown means the loss of 300 jobs and the end of a business that handled more than 100 million pounds of cargo each year — about 85 percent of all goods flown between O'ahu and the Neighbor Islands.
The impact will be felt by retailers and wholesalers of time-sensitive consumer items such as baked goods, produce, meat, medical supplies, newspapers, auto parts and construction materials. The move also will affect movement of interisland mail and the flow of cash between local banks and their Neighbor Island branches.
"This is a critical link in the state economy," said Leroy Laney, professor of economics and finance at Hawai'i Pacific University.
"The shutdown will definitely impact the local economy, and with medical supplies, it could lead to life or death situations."
Gov. Linda Lingle said in a news release that she has had discussions with other cargo operators to find shipping alternatives since Aloha filed for bankruptcy.
Maui Mayor Charmaine Tavares said the impact will be especially hard on local entrepreneurs and farmers who rely on Aloha's daily service.
"I am concerned for both the employees of Aloha Airlines cargo as well as for the many small businesses that will be impacted," Tavares said.
Founded in 1946, Aloha was the state's second-largest airline until it shut down its passenger service on March 31 and terminated 1,900 employees. The closing came 11 days after Aloha filed for Chapter 11 bankruptcy reorganization. Aloha said it lost $120 million in two years because of soaring fuel prices and a costly interisland fare war.
Yesterday, Aloha flew its final two afternoon cargo flights. The company canceled six nighttime cargo flights.
Aloha said last night that it was in the process of informing cargo employees about the layoffs.
sale may be affected
The shutdown could also jeopardize the sale of Aloha's 1,100-employee contract services division to Los Angeles-based Pacific Air Cargo.
Pacific Air last week agreed to pay $2.05 million for the unit, which handles ticketing, baggage services, ramp duties and other ground services for carriers that serve Hawai'i.
The deal, which was approved last week by a federal bankruptcy judge, will now have to be reviewed again by a court-appointed bankruptcy trustee.
As of last night, the company's contract services division remained opened.
The layoffs are more bad news for an economy shaken by the shutdown of Molokai Ranch, which resulted in the loss of 120 jobs, and the grounding of Aloha's passenger service, which represented the state's largest-ever mass layoffs.
State lawmakers are now bracing for the impact of the pullout of Norwegian Cruise Lines' two ships, which could rival the 2,200 total jobs lost at Aloha.
"This is one more indicator that our economy is suffering," said state House Speaker Calvin Say.
"It is also a wake-up call for all of us on the importance of our transportation infrastructure."
closure a surprise
The Aloha cargo closure took employees, customers and creditors by surprise, especially because Aloha had at least two bids for its profitable cargo unit.
On March 27, the Seattle-based owner of Young Brothers/Hawaiian Tug & Barge, Saltchuk Resources Inc., signed a letter of intent to purchase the cargo division for $13 million.
And last week, locally based Jupiter Holdings Group bid $13.65 million for the division.
James Wagner, Jupiter's attorney, said the company was prepared to go through with its purchase as recently as yesterday afternoon. But GMAC unexpectedly upped the price to $15 million and required a higher deposit, he said.
Saltchuk, meanwhile, pulled its bid last week after Aloha and GMAC changed the terms of the bidding.
"This all has to do with other parties changing the deal without any warning," Wagner said. "I've been in practice over 30 years and I've never seen a case end like this."
GMAC took the lead in the sale talks because it is owed $44 million by Aloha and has provided money to keep the cargo operations flying after it filed for bankruptcy protection on March 20.
The lender previously threatened to pull the financing for the cargo operations after a dispute with Aloha's pilots.
Aloha pilots laid off with the closure of the passenger service wanted the option to work for the cargo division. Last week, the pilots' union threatened to strike over the issue.
Attorneys for the pilots union and Aloha's unsecured creditors said in bankruptcy court that Aloha will get less than $13 million by shutting down the cargo operations and selling its equipment.
"For GMAC to walk away from legitimate offers makes absolutely no sense at all," added pilot John Riddel. "It's a travesty. This should have never happened. Hundreds of dedicated employees are being victimized today."
Paul Brewbaker, chief economist at the Bank of Hawaii, said it may be some time before competing carriers and cargo operators fill the void left by Aloha.
"This is huge," said Brewbaker. "I don't doubt that somebody will come in and fill the void but in the short-term, anyone who wants to go to market is hung up."
Aloha used six Boeing 737-200 planes solely for interisland cargo. Hawaiian and other carriers take cargo in their passenger planes and don't have aircraft dedicated to cargo.
Brewbaker said it will be more difficult to attract a new competitor to the interisland cargo market than several years ago given turmoil in the nation's credit markets and high fuel prices.
FED LOOKS TO GAIN MORE CONTROL??
March 31, 2008Fed looks at asset-price bubbles in a new light
http://www.dailyreportonline.com/Editorial/News/singleEdit.asp?individual_SQL=3/31/2008@22308&rssFeed=sub
Minneapolis Fed president says long-held hands-off approach can be revisited with 'policies designed to address excesses'BloombergFederal Reserve officials may be rethinking their aversion to acting against asset-price bubbles, an article of faith during former Chairman Alan Greenspan's 18 years at the helm.
After this month's near-collapse of Bear Stearns Cos., Minneapolis Fed Bank President Gary Stern—the longest-serving policy maker—said in a speech last week that it's possible “to build support” for practices “designed to prevent excesses.” New York Fed President Timothy Geithner, whose district bank took on almost $30 billion of Bear Stearns assets to rescue the firm, argued two years ago for a larger role for asset prices in decision-making, and there's no indication his views have changed.
For Fed policy makers, “the consequences of their permissiveness have become so disastrous that they simply can't keep singing the same old tune in public,” said Tom Schlesinger, executive director at the Financial Markets Center in Howardsville, Va.
While the soul-searching is unlikely to result in immediate changes to monetary policy, Stern's comments show how the credit freeze has forced officials to scrutinize long-held philosophies about the Fed's role in markets, and even ask how their current policies can undercut those views.
“As a risk manager, the Fed needs to take account of both directions, not just dealing with the aftermath,” said Bruce Kasman, chief economist at JPMorgan Chase & Co. in New York. “We have had two asset-prices bubbles in the last 10 years that have had big implications for the Fed's desire for a more stable macroeconomy.”
Stern's reflection
Stern, 63, has been president of the Minneapolis Fed since 1985 and is currently a voting member of the rate-setting Federal Open Market Committee. In his speech to the European Economics and Financial Centre in London on Thursday, he said that “while I have not yet changed my opinion that asset-price levels should not be an objective of monetary policy, I am reviewing this conclusion in the wake of the fallout from the decline in house prices and from the earlier collapse of prices of technology stocks.”
He added that “it is well within the realm of possibility for policy makers to build support for, and at least obtain tolerance of, policies designed to address excesses.”
Fed officials have spent years wrestling with how to prevent bubbles without damaging the economy through high interest rates, and few have come up with an answer. That's partly because the debate focused on use of the main policy rate instead of regulatory tools.
Greenspan philosophy
For two decades, the ruling philosophy has been Greenspan's. “It is far from obvious that bubbles, even if identified early, can be pre-empted at a lower cost than a substantial economic contraction and possible financial destabilization,” Greenspan told the American Economic Association in 2004.
“I have always said if we could defuse a nascent asset bubble, I would be all for it,” Greenspan, 82, said in an e- mailed response to a question. “The reason I am against is that in my experience it cannot be done. I know of no occasion when such actions have been successful.”
But his successor, Ben S. Bernanke, and his team now find themselves reconsidering their approach to everything from regulation to the fate of the world's largest securities dealers. The collapse of the U.S. subprime-mortgage market has led to $208 billion in writedowns and credit losses since the start of 2007, pushing Bear to the brink of bankruptcy before its purchase by JPMorgan.
In his public remarks, Bernanke, 54, has opposed using interest rates to rein in asset prices, favoring keeping the benchmark rate focused on managing growth and inflation.
Role for regulation
At the same time, he does see a role for regulations to reduce the likelihood of bubbles and protect institutions when they pop. He is also open to using other tools, as his response to the seven-month credit crisis has shown. And if the Fed gets more supervisory responsibility for securities firms, officials are likely to take more interest in policies that can discipline markets and balance incentives, economists said.
“If it is the case that asset prices matter for the intermediation of credit, then they have to worry about it,” said Vincent Reinhart, former director of the Fed's Monetary Affairs Division, and now a scholar at the American Enterprise Institute in Washington.
The Fed has cut the benchmark rate 2 percentage points this year, the fastest pace in two decades. Bernanke has also changed the composition of the Fed balance sheet, absorbing more mortgage bonds, and swapping Treasuries for even private-label and commercial mortgage-backed securities, in effect influencing prices of securities tied to housing.
Bailout 'hazards'
Stern has spoken publicly only seven times in the last year. The Minneapolis president co-authored a 2004 book called “Too Big to Fail: the Hazards of Bank Bailouts,” which concluded that while governments shouldn't avoid public support for creditors of failing banks, they should minimize that backing because of the distortions it produces.
“If someone like that, steeped in the Fed's traditions, opens the door to a new or different approach to policy, we have to take it seriously,” said Robert McTeer, a former president of the Dallas Fed.
http://www.dailyreportonline.com/Editorial/News/singleEdit.asp?individual_SQL=3/31/2008@22308&rssFeed=sub
Minneapolis Fed president says long-held hands-off approach can be revisited with 'policies designed to address excesses'BloombergFederal Reserve officials may be rethinking their aversion to acting against asset-price bubbles, an article of faith during former Chairman Alan Greenspan's 18 years at the helm.
After this month's near-collapse of Bear Stearns Cos., Minneapolis Fed Bank President Gary Stern—the longest-serving policy maker—said in a speech last week that it's possible “to build support” for practices “designed to prevent excesses.” New York Fed President Timothy Geithner, whose district bank took on almost $30 billion of Bear Stearns assets to rescue the firm, argued two years ago for a larger role for asset prices in decision-making, and there's no indication his views have changed.
For Fed policy makers, “the consequences of their permissiveness have become so disastrous that they simply can't keep singing the same old tune in public,” said Tom Schlesinger, executive director at the Financial Markets Center in Howardsville, Va.
While the soul-searching is unlikely to result in immediate changes to monetary policy, Stern's comments show how the credit freeze has forced officials to scrutinize long-held philosophies about the Fed's role in markets, and even ask how their current policies can undercut those views.
“As a risk manager, the Fed needs to take account of both directions, not just dealing with the aftermath,” said Bruce Kasman, chief economist at JPMorgan Chase & Co. in New York. “We have had two asset-prices bubbles in the last 10 years that have had big implications for the Fed's desire for a more stable macroeconomy.”
Stern's reflection
Stern, 63, has been president of the Minneapolis Fed since 1985 and is currently a voting member of the rate-setting Federal Open Market Committee. In his speech to the European Economics and Financial Centre in London on Thursday, he said that “while I have not yet changed my opinion that asset-price levels should not be an objective of monetary policy, I am reviewing this conclusion in the wake of the fallout from the decline in house prices and from the earlier collapse of prices of technology stocks.”
He added that “it is well within the realm of possibility for policy makers to build support for, and at least obtain tolerance of, policies designed to address excesses.”
Fed officials have spent years wrestling with how to prevent bubbles without damaging the economy through high interest rates, and few have come up with an answer. That's partly because the debate focused on use of the main policy rate instead of regulatory tools.
Greenspan philosophy
For two decades, the ruling philosophy has been Greenspan's. “It is far from obvious that bubbles, even if identified early, can be pre-empted at a lower cost than a substantial economic contraction and possible financial destabilization,” Greenspan told the American Economic Association in 2004.
“I have always said if we could defuse a nascent asset bubble, I would be all for it,” Greenspan, 82, said in an e- mailed response to a question. “The reason I am against is that in my experience it cannot be done. I know of no occasion when such actions have been successful.”
But his successor, Ben S. Bernanke, and his team now find themselves reconsidering their approach to everything from regulation to the fate of the world's largest securities dealers. The collapse of the U.S. subprime-mortgage market has led to $208 billion in writedowns and credit losses since the start of 2007, pushing Bear to the brink of bankruptcy before its purchase by JPMorgan.
In his public remarks, Bernanke, 54, has opposed using interest rates to rein in asset prices, favoring keeping the benchmark rate focused on managing growth and inflation.
Role for regulation
At the same time, he does see a role for regulations to reduce the likelihood of bubbles and protect institutions when they pop. He is also open to using other tools, as his response to the seven-month credit crisis has shown. And if the Fed gets more supervisory responsibility for securities firms, officials are likely to take more interest in policies that can discipline markets and balance incentives, economists said.
“If it is the case that asset prices matter for the intermediation of credit, then they have to worry about it,” said Vincent Reinhart, former director of the Fed's Monetary Affairs Division, and now a scholar at the American Enterprise Institute in Washington.
The Fed has cut the benchmark rate 2 percentage points this year, the fastest pace in two decades. Bernanke has also changed the composition of the Fed balance sheet, absorbing more mortgage bonds, and swapping Treasuries for even private-label and commercial mortgage-backed securities, in effect influencing prices of securities tied to housing.
Bailout 'hazards'
Stern has spoken publicly only seven times in the last year. The Minneapolis president co-authored a 2004 book called “Too Big to Fail: the Hazards of Bank Bailouts,” which concluded that while governments shouldn't avoid public support for creditors of failing banks, they should minimize that backing because of the distortions it produces.
“If someone like that, steeped in the Fed's traditions, opens the door to a new or different approach to policy, we have to take it seriously,” said Robert McTeer, a former president of the Dallas Fed.
HOUSING DRIVES THE ECONOMY
U.S. Home Foreclosure Rate Soars 112 Percent- AP
The number of U.S. homes heading toward foreclosure more than doubled in the first quarter from a year earlier, as weakening property values and tighter lending left many homeowners powerless to prevent homes from being auctioned to the highest bidder, a research firm said Monday.
Home Prices Plunge at Record Rate of 12.7 Percent- AP
Consumer Confidence Drops to Lowest Point in Five Years-
The number of U.S. homes heading toward foreclosure more than doubled in the first quarter from a year earlier, as weakening property values and tighter lending left many homeowners powerless to prevent homes from being auctioned to the highest bidder, a research firm said Monday.
Home Prices Plunge at Record Rate of 12.7 Percent- AP
Consumer Confidence Drops to Lowest Point in Five Years-
Monday, April 28, 2008
MERGE
**CLICK TO ENLARGEYou can see these weekly MA'S merging, declining, especially the important "murphy" 80 week.....these is bocoup resistance near these levels, let's see what happens.
http://www.ft.com/indepth/recession Financial news from afar
D
Saturday, April 26, 2008
WHERE'D THE CONSUMER GO?
OIl's Top
Hard to call a top when in a bull, and oil and nat gas certainly are, is $120 THE blow off top? oil holding well with recent surge in $$ too....unwinding of hedge here maybe not so yet.
Declining economies use LESS OIL, in past RECESSIONS (we are?? haaa)Oil use and price has declined...so if the current oil highs are supported by demand then what holds it up? bubble...
When trading you "go with flow" right? I agree a top price is near...refiners not sharing in glee....pick a botton there?
I AM in retail, there IS a marked slowdown, only the guy in foreclosures is jiggy.....TIMES "The New Austerity" http://www.time.com/time/specials/2007/article/0,28804,1720049_1720050_1721656,00.html
Let's recap where we are?
STIGLITZhttp://jessescrossroadscafe.blogspot.com/2008/04/stiglitz-us-facing-long-recession-that.html
We have lost MASSIVE VELOCITY of MONEY and investment....and consumption..=liquidity and credit expansion
WHAT'S DRIED UP?
HELOC'SCDO'SM&A'SIPO'SVENTURE CAPITALLending standards tightened, banks stingyGrowth of adj monetary base stagnantsavings at zeroDeclining home valuesDeclining asset valuesRising inflationStagnant wage growthJob lossesBanks being (investors) sold out to Sovereign FundsConsumer confidence lowers in decades
SO during the long bull mkt we had? CREDIT EXPANSION, and now? WE HAVE CREDIT CONTRACTION
You say.."but stock market not doing so bad considering" many might agree, but we DO get some VERY NICE rallies during BEAR MKTS even some lasting months....
WE DO seem to rally into FED MEETINGS
1400 area is designated TOUGH RESISTANCE, and my friends a SOLID close ON STRONG DEMAND above 1400 are would be convincing...that it got legs.
Recent rally has been decieving, IMHO more lows than highs on falling volume and breadth......we need to see ANY UPCOMING RALLIES COME WITH STRONG DEMAND (upside volume) because w/o it, it cannot last, withdraw of selling alone aint gonna cut it.
Duratek
Hard to call a top when in a bull, and oil and nat gas certainly are, is $120 THE blow off top? oil holding well with recent surge in $$ too....unwinding of hedge here maybe not so yet.
Declining economies use LESS OIL, in past RECESSIONS (we are?? haaa)Oil use and price has declined...so if the current oil highs are supported by demand then what holds it up? bubble...
When trading you "go with flow" right? I agree a top price is near...refiners not sharing in glee....pick a botton there?
I AM in retail, there IS a marked slowdown, only the guy in foreclosures is jiggy.....TIMES "The New Austerity" http://www.time.com/time/specials/2007/article/0,28804,1720049_1720050_1721656,00.html
Let's recap where we are?
STIGLITZhttp://jessescrossroadscafe.blogspot.com/2008/04/stiglitz-us-facing-long-recession-that.html
We have lost MASSIVE VELOCITY of MONEY and investment....and consumption..=liquidity and credit expansion
WHAT'S DRIED UP?
HELOC'SCDO'SM&A'SIPO'SVENTURE CAPITALLending standards tightened, banks stingyGrowth of adj monetary base stagnantsavings at zeroDeclining home valuesDeclining asset valuesRising inflationStagnant wage growthJob lossesBanks being (investors) sold out to Sovereign FundsConsumer confidence lowers in decades
SO during the long bull mkt we had? CREDIT EXPANSION, and now? WE HAVE CREDIT CONTRACTION
You say.."but stock market not doing so bad considering" many might agree, but we DO get some VERY NICE rallies during BEAR MKTS even some lasting months....
WE DO seem to rally into FED MEETINGS
1400 area is designated TOUGH RESISTANCE, and my friends a SOLID close ON STRONG DEMAND above 1400 are would be convincing...that it got legs.
Recent rally has been decieving, IMHO more lows than highs on falling volume and breadth......we need to see ANY UPCOMING RALLIES COME WITH STRONG DEMAND (upside volume) because w/o it, it cannot last, withdraw of selling alone aint gonna cut it.
Duratek
US RECESSION MAY ECHO THE 1930's
25 April 2008
Stiglitz: US Recession May Echo the 1930s
Nobel Winner Stiglitz: U.S. Facing Long RecessionBy CNBC.com25 Apr 2008 02:17 PM ETThe U.S. economy is already in recession -- and may echo the 1930s, Nobel Laureate Joseph Stiglitz said Friday."The big question is: how will the government respond?" said Stiglitz, in an interview with CNBC. Stiglitz, a Columbia University professor and 2001 winner of the Nobel prize, detailed his bleak outlook for the American economy.
"This is going to be one of the worst economic downturns since the Great Depression," said Stiglitz.He explained that main cause of the current situation is historically unique—and thus is befuddling those charged with creating solutions.Other downturns were primarily caused by excesses in inventories or inflation; but this slowdown is due to the condition of "badly impaired" banks and financial entities, which are unwilling and/or unable to lend capital -- stymieing the very borrowers who usually drive the country back to vitality, Stiglitz said. And the Federal Reserve may have used up its ammunition -- and the faith investors and planners have put in it.
"[The Fed] will be between a rock and hard place. And we're not over-worrying about credit. But [simultaneously], we need to start worrying about the real sector," he said.
And if inflation wasn't the prime recession cause, it's still a menace. The professor points to the two-pronged danger of high oil prices joined by climbing food prices, harming businesses and scaring consumers."Oil is particularly bad," as it means that more U.S. dollars "will be going abroad," he said.
The housing downturn is an even worse economic factor than casual observers realized, Stiglitz said. He explained that during the real estate boom, Americans were able to withdraw billions of dollars from their home equity."[But] with housing prices coming down, it's going to be difficult to do that anymore," he said -- drying up a spending source. And within that problem, still another complication: people typically spent the money they drew off their home equity on consumption, rather than investment -- garnering no return on the spending.
"The savings rate as we go into the recession is zero. Which means [savings] will go up, " he said—decreasing consumer spending and weakening retail further.
What about the government stimulus package?"The Bush Administration's response is too little, too late -- and very badly designed," he declared. The amount ostensibly being infused into the economy by tax rebate checks will be a "drop in the bucket" compared to the money being held back and siphoned out by the factors he mentioned."If you really wanted to stimulate the economy, increase unemployment insurance," he suggested. (That would require giving money to the less fortunate which is anathema to 'silver spoon specimens' like Bush. - Jesse)"The president is telling people to go out and get jobs—and there are no jobs for them," he said.
___________________________________________________
"If the American people ever allow private banks [like the Fed] to control the issue of their currency...the banks and the corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their [fore] fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
Thomas Jefferson, letter to Secretary of the Treasury, Albert Gallatin (1802)
"The market is female. Neither you nor I are ever going to figure it out ---- but we just might get lucky from time to time."
Stiglitz: US Recession May Echo the 1930s
Nobel Winner Stiglitz: U.S. Facing Long RecessionBy CNBC.com25 Apr 2008 02:17 PM ETThe U.S. economy is already in recession -- and may echo the 1930s, Nobel Laureate Joseph Stiglitz said Friday."The big question is: how will the government respond?" said Stiglitz, in an interview with CNBC. Stiglitz, a Columbia University professor and 2001 winner of the Nobel prize, detailed his bleak outlook for the American economy.
"This is going to be one of the worst economic downturns since the Great Depression," said Stiglitz.He explained that main cause of the current situation is historically unique—and thus is befuddling those charged with creating solutions.Other downturns were primarily caused by excesses in inventories or inflation; but this slowdown is due to the condition of "badly impaired" banks and financial entities, which are unwilling and/or unable to lend capital -- stymieing the very borrowers who usually drive the country back to vitality, Stiglitz said. And the Federal Reserve may have used up its ammunition -- and the faith investors and planners have put in it.
"[The Fed] will be between a rock and hard place. And we're not over-worrying about credit. But [simultaneously], we need to start worrying about the real sector," he said.
And if inflation wasn't the prime recession cause, it's still a menace. The professor points to the two-pronged danger of high oil prices joined by climbing food prices, harming businesses and scaring consumers."Oil is particularly bad," as it means that more U.S. dollars "will be going abroad," he said.
The housing downturn is an even worse economic factor than casual observers realized, Stiglitz said. He explained that during the real estate boom, Americans were able to withdraw billions of dollars from their home equity."[But] with housing prices coming down, it's going to be difficult to do that anymore," he said -- drying up a spending source. And within that problem, still another complication: people typically spent the money they drew off their home equity on consumption, rather than investment -- garnering no return on the spending.
"The savings rate as we go into the recession is zero. Which means [savings] will go up, " he said—decreasing consumer spending and weakening retail further.
What about the government stimulus package?"The Bush Administration's response is too little, too late -- and very badly designed," he declared. The amount ostensibly being infused into the economy by tax rebate checks will be a "drop in the bucket" compared to the money being held back and siphoned out by the factors he mentioned."If you really wanted to stimulate the economy, increase unemployment insurance," he suggested. (That would require giving money to the less fortunate which is anathema to 'silver spoon specimens' like Bush. - Jesse)"The president is telling people to go out and get jobs—and there are no jobs for them," he said.
___________________________________________________
"If the American people ever allow private banks [like the Fed] to control the issue of their currency...the banks and the corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their [fore] fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
Thomas Jefferson, letter to Secretary of the Treasury, Albert Gallatin (1802)
"The market is female. Neither you nor I are ever going to figure it out ---- but we just might get lucky from time to time."
Wednesday, April 23, 2008
FEDERAL RESERVE SYSTEM REVEALED
http://www.modernhistoryproject.org/mhp/ArticleDisplay.php?Article=FinalWarn02-3
These interests control the Federal Reserve through about 300 stockholders:
Rothschild Banks of London and Berlin
Lazard Brothers Bank of Paris
Israel Moses Seif Bank of Italy
Warburg Bank of Hamburg and Amsterdam
Lehman Brothers Bank of New York
Kuhn, Loeb and Co. of New York
Chase Manhattan Bank of New York
Goldman, Sachs of New York
SECRETS OF THE FEDERAL RESERVE
http://www.apfn.org/apfn/reserve.htm
Thus the proposed Federal Reserve Bank was to be "controlled by Congress" and answerable to the government, but the majority of the directors were to be chosen, "directly or indirectly" by the banks of the association. In the final refinement of Warburg’s plan, the Federal Reserve Board of Governors would be appointed by the President of the United States, but the real work of the Board would be controlled by a Federal Advisory Council, meeting with the Governors. The Council would be chosen by the directors of the twelve Federal Reserve Banks, and would remain unknown to the public.
WHAT REALLY HAPPENED
http://www.whatreallyhappened.com/legalcounterfeit.php
It’s the stuff conspiracy theories are made of, but the fact is, twelve people overwhelmingly control the United States economy and they are not elected or appointed by the government. They are known as the Federal Reserve System and may be to blame for the downfall of the American economy.
**THESE ARE ALL MUST READS IMHO.....to be informed is to live, AND NOT BE FOOLED.....to be a fool is to live a lie......you canmake a difference.
Duratek
These interests control the Federal Reserve through about 300 stockholders:
Rothschild Banks of London and Berlin
Lazard Brothers Bank of Paris
Israel Moses Seif Bank of Italy
Warburg Bank of Hamburg and Amsterdam
Lehman Brothers Bank of New York
Kuhn, Loeb and Co. of New York
Chase Manhattan Bank of New York
Goldman, Sachs of New York
SECRETS OF THE FEDERAL RESERVE
http://www.apfn.org/apfn/reserve.htm
Thus the proposed Federal Reserve Bank was to be "controlled by Congress" and answerable to the government, but the majority of the directors were to be chosen, "directly or indirectly" by the banks of the association. In the final refinement of Warburg’s plan, the Federal Reserve Board of Governors would be appointed by the President of the United States, but the real work of the Board would be controlled by a Federal Advisory Council, meeting with the Governors. The Council would be chosen by the directors of the twelve Federal Reserve Banks, and would remain unknown to the public.
WHAT REALLY HAPPENED
http://www.whatreallyhappened.com/legalcounterfeit.php
It’s the stuff conspiracy theories are made of, but the fact is, twelve people overwhelmingly control the United States economy and they are not elected or appointed by the government. They are known as the Federal Reserve System and may be to blame for the downfall of the American economy.
**THESE ARE ALL MUST READS IMHO.....to be informed is to live, AND NOT BE FOOLED.....to be a fool is to live a lie......you canmake a difference.
Duratek
Tuesday, April 22, 2008
BUSINESS IS GREAT!!!
Guy comes in….I say “how’s biz?” he says “biz is GREAT!!!!!!” What biz you in?”
He works with the banks to unload FORECLOSURES!! Been doing this since 1995
“We are selling for 50 cents on dollar” he sets up eviction, fixes up if necessary…..try to sell them fast.
For himself he bought “18 acres in Jarretsville, 3,800 sq foot home built in 1992…..for $520K was listed ? over $800K bank ate rest.
He normally carries about 60 homes in inventory….he now has 200-300….”its taking longer to sell.”
He sees his numbers swelling to near 400…..”It is picking up not slowing down” someone will make a killing here and it wont be the banks
He sees it getting worse as “we haven’t even gotten to the Alternate A homes yet due in next 3 months,,,,” and more subprime…..will take another year and half to clear them out.
GLAD SOMEONE IS BUSY!!
He works with the banks to unload FORECLOSURES!! Been doing this since 1995
“We are selling for 50 cents on dollar” he sets up eviction, fixes up if necessary…..try to sell them fast.
For himself he bought “18 acres in Jarretsville, 3,800 sq foot home built in 1992…..for $520K was listed ? over $800K bank ate rest.
He normally carries about 60 homes in inventory….he now has 200-300….”its taking longer to sell.”
He sees his numbers swelling to near 400…..”It is picking up not slowing down” someone will make a killing here and it wont be the banks
He sees it getting worse as “we haven’t even gotten to the Alternate A homes yet due in next 3 months,,,,” and more subprime…..will take another year and half to clear them out.
GLAD SOMEONE IS BUSY!!
Monday, April 21, 2008
BOTTOM IN PLACE?
http://www.screencast.com/users/LeavittBrothers/folders/Default/media/36549708-5ce0-44f9-9dc9-5cac8924ef6b
Short video by Leavitt brothers, informative.
D
Short video by Leavitt brothers, informative.
D
Sunday, April 20, 2008
CREDIT BUBBLE REPORT
http://prudentbear.com/index.php/CreditBubbleBulletinHome DOUG NOLAND
Setting the Backdrop for Stage Two:
Martin Feldstein, Harvard professor and former chairman of the President’s Council of Economic Advisors, wrote an op-ed piece in Wednesday’s Wall Street Journal – “Enough with Interest Rate Cuts” – worthy of comment.
“It’s time for the Federal Reserve to stop reducing the federal funds rate, because the likely benefit is small compared to the potential damage. Lower interest rates could raise the already high prices of energy and food, which are already triggering riots in developing countries. In order to offset the inflationary impact of higher imported commodity prices, central banks in those countries may raise interest rates. Such contractionary policies would reduce real incomes and exacerbate political instability.
The impact of low interest rates on commodity-price inflation is different from the traditional inflationary effect of easy money. The usual concern is that lowering interest rates stimulates economic activity to a point at which labor and product markets cause wages and prices to rise. That is unlikely to happen in the U.S. in the coming year. The general weakness of the economy will keep most wages and prices from rising more rapidly. But high unemployment and low capacity utilization would not prevent lower interest rates from driving up commodity prices.
Many factors have contributed to the recent rise in the prices of oil and food, especially the increased demand from China, India and other rapidly growing countries. Lower interest rates also add to the upward pressure on these commodity prices – by making it less costly for commodity investors and commodity speculators to hold larger inventories of oil and food grains. Lower interest rates induce investors to add commodities to their portfolios. When rates are low, portfolio investors will bid up the prices of oil and other commodities to levels at which the expected future returns are in line with the lower rates. An interest rate-induced rise in the price of oil also contributes indirectly to higher prices of food grains. It does so by making it profitable for farmers to devote more farm land to growing corn for ethanol.”
While I concur with the basic premise of the article (stop the cuts!), the substance of Mr. Feldstein’s analysis leaves much to be desired. First of all, I find it strange than he would address the issues of overly accommodative Federal Reserve policy, commodity price risk, and inflationary pressures without so much as a cursory mention of our weak currency. The word “dollar” is nowhere to be found – not a mention of our Current Account Deficits. The focus is only on interest rates - and such one-dimensional analysis just doesn’t pass muster in our complex world.
Most remain comfortably oblivious to today’s inflation dynamics. Mr. Feldstein mentions increased demand from China and India. He seems to imply, however, that portfolio buying (financed by low interest rates) by “commodity investors and speculators” is providing the major impetus to rising inflationary pressures generally. Perhaps price gains could have something to do with the $2.5 TN increase in global official reserve positions over the past two years (85% growth). I would also counter that destabilizing speculative activity is an inevitable consequence – rather than a cause - of an alarmingly inflationary global backdrop.
I’ll remind readers that we live in a unique world of unregulated Credit. Excess has evolved to the point of being endemic to an apparatus that operates without any mechanism for adjustment or self-correction. There is, of course, no gold reserve system to restrain domestic monetary expansions. Some years back the dollar-based Bretton Woods global monetary regime lost its relevance. And, importantly, the market-based disciplining mechanism (“king dollar”) that emerged at times to ruthlessly punish financial profligacy around the globe throughout the nineties has morphed into a dysfunctional dynamic that these days nurtures self-reinforcing excesses. The “recycling” of our “Bubble dollars” (in the process inflating local Credit systems, asset markets, commodities and economies across the globe) directly back into our securities markets rests at the epicenter of Global Monetary Dysfunction.
A historic inflation in dollar financial claims was the undoing of anything resembling a global monetary system, and now this anchorless “system” of wildcat finance is the bane of financial and economic stability. To be sure, massive and unrelenting U.S. Current Account Deficits and resulting dollar impairment have unleashed domestic Credit systems around the globe to expand uncontrollably. Today, virtually any major Credit system can and does inflate domestic Credit to create the purchasing power to procure inflating global food, energy, and commodities prices.
The long-overdue U.S. Credit contraction and economic adjustment could change this dynamic. But for now there are reasons to expect this uninhibited Global Credit Bubble to instead run to precarious extremes - and for resulting Monetary Disorder to become increasingly problematic. Destabilizing price movements and myriad inflationary effects are poised to worsen. The specter of yet another year of near-$800bn Current Account Deficits coupled with huge speculative flows out of dollars is just too much for an acutely overheated and unstable global currency and economic “system” to cope with.
I hear pundits still referring to a “deflationary Credit collapse.” Well, the U.S. Credit system implosion was largely stopped in its tracks last month. The Fed bailed out Bear Stearns; opened wide its discount window to Wall Street; and implemented unprecedented liquidity facilities for the benefit of the marketplace overall. Central banks around the globe executed unparalleled concerted market liquidity operations. Here at home, the GSEs’ regulator spoke publicly about Fannie and Freddie having the capacity to add $200 billion of mortgages to their balances sheets, with the possibility of increasing their guarantee business as much as $2 TN this year (certainly including “jumbo” mortgages). The Federal Home Loan Bank system was given the ok to continue aggressive liquidity injections and balloon its balance sheet in the process. And now (see “GSE Watch” above) we see that the Federal Housing Administration (with its new mandate and $729,550 loan limit) is likely to increase federal government mortgage insurance by as much as $200bn this year, while Washington’s Ginnie Mae is in the midst of a securitization boom.
Together, the Fed and Washington have effectively nationalized a large portion of both mortgage and market liquidity risk. It is, as well, worth noting that JPMorgan Chase expanded assets by $80.7bn during the first quarter (20.7% annualized) to $1.642 TN, with six-month growth of $163.3bn (22.1% annualized). Goldman Sachs expanded its balance sheets by $69.2bn during Q1 (24.7% annualized) to $1.189 TN, with half-year growth of $143.2bn (27.4%). Even Wells Fargo grew assets at an almost 14% pace this past quarter. And we know that Bank Credit overall has expanded at a 12.6% rate over the past 38 weeks. Meanwhile, GSE MBS issuance has been ramped up to a record pace. And let’s not forget the Credit intermediation function now being carried out by the money fund complex – with assets having increased an unprecedented $371bn y-t-d (41.3% annualized) and $900bn over the past 38 weeks (47.7% annualized). It is also worth noting the $184bn y-t-d increase (29% annualized) in foreign “custody” holdings held at the Fed. Sure, the Credit system remains under significant stress, with additional mortgage and corporate Credit deterioration in the offing. But, at least for now, policymakers have successfully stemmed systemic deleveraging. The Credit system is simply not in deflationary collapse mode.
I could not be more pessimistic with regard to our economy’s prognosis. And certainly much more severe Credit problems lay ahead. I could argue further that recent Credit system developments are indeed consistent with the unfolding “worst-case scenario”. Yet I tend this evening to see benefits from analyzing the current backdrop in terms of the conclusion of the first Stage of the Crisis. The key aspect of this “first Stage” was a breakdown in Wall Street’s highly leveraged risk intermediation and securities speculation markets. The speed and force of the unwind was extraordinary and in notable contrast to traditional banking crises that track real economy developments. “Resolution” came only through the Federal Reserve and federal government assuming unprecedented risk – and at a cost of a policymaking mix of interest-rate cuts, marketplace interventions, and government guarantees. It is worth pondering some of the near-term ramifications.
First of all – and as the market recognized this week – yields have been driven to excessively low levels. Fed funds are today ridiculously priced in comparison both to the inflationary backdrop and to global rates. Mr. Feldstein is calling for a halt to rate cuts when it would be more appropriate for the Fed to move immediately to return rates to a more reasonable level. They, of course, would not contemplate as much. So I will presume that today’s non-imploding Credit system – replete with government-backed mortgage securitizations, government-guaranteed bank Credit, presumed government-backstopped money funds and a recovering debt issuance apparatus – will suffice in the near-term in generating Credit sufficient to perpetuate our enormous Current Account Deficits. This is no minor point.
I have in past Bulletins made the case that U.S. Credit and Economic Bubbles had become untenable – the scope of Credit and risk intermediation necessary to support the maladjusted economy had become too large. Extraordinary measures to effectively “nationalize” mortgage and market liquidity risk change somewhat the direction of the analysis. I would today argue that the risk of a precipitous economic downturn has been reduced in the near-term. As a consequence, U.S. Credit growth could surprise on the upside with risks to global Price Instability increasing markedly.
I would argue firmly that – in the face of a rapidly weakening economic backdrop - global inflation dynamics coupled with our highly maladjusted economy ensure intractable trade deficits. I would further argue that the current inflationary backdrop will prove an impetus to Credit creation – that then begets only more heightened inflationary pressures. There are certainly indications that the over-liquefied global “system” is not well situated today to handle more dollar liquidity (akin to throwing gas on a fire). Inflation and its consequences have quickly become major issues around the world.
With crude hitting a record $117 today, there is every reason to expect that newly created global liquidity will further inflate energy, food, and commodity prices generally. The Goldman Sachs Commodities index has gained 21% already this year. But when it comes to Monetary Instability, our financial markets might just prove the unappreciated wildcard. When the Fed and Washington radically altered the rules of U.S. finance last month, they placed in jeopardy huge positions that had been put in place to hedge against and profit from systemic crisis. With the end of “Stage one” arises a major short squeeze in the Credit, equities, and derivatives markets. And when it comes to contemplating the scope and ramifications of today’s “hedging” activities, we’re clearly in Uncharted Waters. It is not beyond reason that a disorderly unwind of “bearish” Credit market positions could incite a mini bout of liquidity, speculation, and Credit excess that exacerbates Global Monetary Instability - while Setting the Backdrop for Stage Two of the Crisis.
Setting the Backdrop for Stage Two:
Martin Feldstein, Harvard professor and former chairman of the President’s Council of Economic Advisors, wrote an op-ed piece in Wednesday’s Wall Street Journal – “Enough with Interest Rate Cuts” – worthy of comment.
“It’s time for the Federal Reserve to stop reducing the federal funds rate, because the likely benefit is small compared to the potential damage. Lower interest rates could raise the already high prices of energy and food, which are already triggering riots in developing countries. In order to offset the inflationary impact of higher imported commodity prices, central banks in those countries may raise interest rates. Such contractionary policies would reduce real incomes and exacerbate political instability.
The impact of low interest rates on commodity-price inflation is different from the traditional inflationary effect of easy money. The usual concern is that lowering interest rates stimulates economic activity to a point at which labor and product markets cause wages and prices to rise. That is unlikely to happen in the U.S. in the coming year. The general weakness of the economy will keep most wages and prices from rising more rapidly. But high unemployment and low capacity utilization would not prevent lower interest rates from driving up commodity prices.
Many factors have contributed to the recent rise in the prices of oil and food, especially the increased demand from China, India and other rapidly growing countries. Lower interest rates also add to the upward pressure on these commodity prices – by making it less costly for commodity investors and commodity speculators to hold larger inventories of oil and food grains. Lower interest rates induce investors to add commodities to their portfolios. When rates are low, portfolio investors will bid up the prices of oil and other commodities to levels at which the expected future returns are in line with the lower rates. An interest rate-induced rise in the price of oil also contributes indirectly to higher prices of food grains. It does so by making it profitable for farmers to devote more farm land to growing corn for ethanol.”
While I concur with the basic premise of the article (stop the cuts!), the substance of Mr. Feldstein’s analysis leaves much to be desired. First of all, I find it strange than he would address the issues of overly accommodative Federal Reserve policy, commodity price risk, and inflationary pressures without so much as a cursory mention of our weak currency. The word “dollar” is nowhere to be found – not a mention of our Current Account Deficits. The focus is only on interest rates - and such one-dimensional analysis just doesn’t pass muster in our complex world.
Most remain comfortably oblivious to today’s inflation dynamics. Mr. Feldstein mentions increased demand from China and India. He seems to imply, however, that portfolio buying (financed by low interest rates) by “commodity investors and speculators” is providing the major impetus to rising inflationary pressures generally. Perhaps price gains could have something to do with the $2.5 TN increase in global official reserve positions over the past two years (85% growth). I would also counter that destabilizing speculative activity is an inevitable consequence – rather than a cause - of an alarmingly inflationary global backdrop.
I’ll remind readers that we live in a unique world of unregulated Credit. Excess has evolved to the point of being endemic to an apparatus that operates without any mechanism for adjustment or self-correction. There is, of course, no gold reserve system to restrain domestic monetary expansions. Some years back the dollar-based Bretton Woods global monetary regime lost its relevance. And, importantly, the market-based disciplining mechanism (“king dollar”) that emerged at times to ruthlessly punish financial profligacy around the globe throughout the nineties has morphed into a dysfunctional dynamic that these days nurtures self-reinforcing excesses. The “recycling” of our “Bubble dollars” (in the process inflating local Credit systems, asset markets, commodities and economies across the globe) directly back into our securities markets rests at the epicenter of Global Monetary Dysfunction.
A historic inflation in dollar financial claims was the undoing of anything resembling a global monetary system, and now this anchorless “system” of wildcat finance is the bane of financial and economic stability. To be sure, massive and unrelenting U.S. Current Account Deficits and resulting dollar impairment have unleashed domestic Credit systems around the globe to expand uncontrollably. Today, virtually any major Credit system can and does inflate domestic Credit to create the purchasing power to procure inflating global food, energy, and commodities prices.
The long-overdue U.S. Credit contraction and economic adjustment could change this dynamic. But for now there are reasons to expect this uninhibited Global Credit Bubble to instead run to precarious extremes - and for resulting Monetary Disorder to become increasingly problematic. Destabilizing price movements and myriad inflationary effects are poised to worsen. The specter of yet another year of near-$800bn Current Account Deficits coupled with huge speculative flows out of dollars is just too much for an acutely overheated and unstable global currency and economic “system” to cope with.
I hear pundits still referring to a “deflationary Credit collapse.” Well, the U.S. Credit system implosion was largely stopped in its tracks last month. The Fed bailed out Bear Stearns; opened wide its discount window to Wall Street; and implemented unprecedented liquidity facilities for the benefit of the marketplace overall. Central banks around the globe executed unparalleled concerted market liquidity operations. Here at home, the GSEs’ regulator spoke publicly about Fannie and Freddie having the capacity to add $200 billion of mortgages to their balances sheets, with the possibility of increasing their guarantee business as much as $2 TN this year (certainly including “jumbo” mortgages). The Federal Home Loan Bank system was given the ok to continue aggressive liquidity injections and balloon its balance sheet in the process. And now (see “GSE Watch” above) we see that the Federal Housing Administration (with its new mandate and $729,550 loan limit) is likely to increase federal government mortgage insurance by as much as $200bn this year, while Washington’s Ginnie Mae is in the midst of a securitization boom.
Together, the Fed and Washington have effectively nationalized a large portion of both mortgage and market liquidity risk. It is, as well, worth noting that JPMorgan Chase expanded assets by $80.7bn during the first quarter (20.7% annualized) to $1.642 TN, with six-month growth of $163.3bn (22.1% annualized). Goldman Sachs expanded its balance sheets by $69.2bn during Q1 (24.7% annualized) to $1.189 TN, with half-year growth of $143.2bn (27.4%). Even Wells Fargo grew assets at an almost 14% pace this past quarter. And we know that Bank Credit overall has expanded at a 12.6% rate over the past 38 weeks. Meanwhile, GSE MBS issuance has been ramped up to a record pace. And let’s not forget the Credit intermediation function now being carried out by the money fund complex – with assets having increased an unprecedented $371bn y-t-d (41.3% annualized) and $900bn over the past 38 weeks (47.7% annualized). It is also worth noting the $184bn y-t-d increase (29% annualized) in foreign “custody” holdings held at the Fed. Sure, the Credit system remains under significant stress, with additional mortgage and corporate Credit deterioration in the offing. But, at least for now, policymakers have successfully stemmed systemic deleveraging. The Credit system is simply not in deflationary collapse mode.
I could not be more pessimistic with regard to our economy’s prognosis. And certainly much more severe Credit problems lay ahead. I could argue further that recent Credit system developments are indeed consistent with the unfolding “worst-case scenario”. Yet I tend this evening to see benefits from analyzing the current backdrop in terms of the conclusion of the first Stage of the Crisis. The key aspect of this “first Stage” was a breakdown in Wall Street’s highly leveraged risk intermediation and securities speculation markets. The speed and force of the unwind was extraordinary and in notable contrast to traditional banking crises that track real economy developments. “Resolution” came only through the Federal Reserve and federal government assuming unprecedented risk – and at a cost of a policymaking mix of interest-rate cuts, marketplace interventions, and government guarantees. It is worth pondering some of the near-term ramifications.
First of all – and as the market recognized this week – yields have been driven to excessively low levels. Fed funds are today ridiculously priced in comparison both to the inflationary backdrop and to global rates. Mr. Feldstein is calling for a halt to rate cuts when it would be more appropriate for the Fed to move immediately to return rates to a more reasonable level. They, of course, would not contemplate as much. So I will presume that today’s non-imploding Credit system – replete with government-backed mortgage securitizations, government-guaranteed bank Credit, presumed government-backstopped money funds and a recovering debt issuance apparatus – will suffice in the near-term in generating Credit sufficient to perpetuate our enormous Current Account Deficits. This is no minor point.
I have in past Bulletins made the case that U.S. Credit and Economic Bubbles had become untenable – the scope of Credit and risk intermediation necessary to support the maladjusted economy had become too large. Extraordinary measures to effectively “nationalize” mortgage and market liquidity risk change somewhat the direction of the analysis. I would today argue that the risk of a precipitous economic downturn has been reduced in the near-term. As a consequence, U.S. Credit growth could surprise on the upside with risks to global Price Instability increasing markedly.
I would argue firmly that – in the face of a rapidly weakening economic backdrop - global inflation dynamics coupled with our highly maladjusted economy ensure intractable trade deficits. I would further argue that the current inflationary backdrop will prove an impetus to Credit creation – that then begets only more heightened inflationary pressures. There are certainly indications that the over-liquefied global “system” is not well situated today to handle more dollar liquidity (akin to throwing gas on a fire). Inflation and its consequences have quickly become major issues around the world.
With crude hitting a record $117 today, there is every reason to expect that newly created global liquidity will further inflate energy, food, and commodity prices generally. The Goldman Sachs Commodities index has gained 21% already this year. But when it comes to Monetary Instability, our financial markets might just prove the unappreciated wildcard. When the Fed and Washington radically altered the rules of U.S. finance last month, they placed in jeopardy huge positions that had been put in place to hedge against and profit from systemic crisis. With the end of “Stage one” arises a major short squeeze in the Credit, equities, and derivatives markets. And when it comes to contemplating the scope and ramifications of today’s “hedging” activities, we’re clearly in Uncharted Waters. It is not beyond reason that a disorderly unwind of “bearish” Credit market positions could incite a mini bout of liquidity, speculation, and Credit excess that exacerbates Global Monetary Instability - while Setting the Backdrop for Stage Two of the Crisis.
Friday, April 18, 2008
READ 'EM AND WEAP
RISING PRICES< FALLING ECONOMIC ACTIVY!! That's what the FED action has brought us< AND the 10 yr treasury yield is now near 3.8% !!! is this helping home owners?LOOK at 200o on LEI chart....look at today, nuf said! hope is fine....if it's backed up
D
GOOG CHART
**Click chart to enlarge....I have labeled few areas of potential resistance, let's see how GOOG does, it will vault near $80 a share pre openD
GOOG AND AM NEWS
Citigroup stumbles again
6:45am: Financial services giant records $5.1 billion loss, missing forecasts, after taking more than $12 billion in writedowns.
Oil nears $115, gas gets pricier
E*Trade cuts back as recession looms (not here yet?)
http://seekingalpha.com/article/72846-google-inc-q1-2008-earnings-call-transcript?source=yahoo (Goog transcript) 51% of rev's from overseas
Yahoo! appears to be pushing its luck. On April 10, the struggling Internet portal said it was testing a partnership to allow Google to host a small percentage of its search advertisements for two weeks. On Thursday, a week later, it inched further toward a long-term deal with Google because the companies are pleased with the initial results of the experiment, according to The Wall Street Journal.
The problem, as Microsoft (nasdaq: MSFT - news - people ) pointed out in a statement last week, is that any potential deal between Google (nasdaq: GOOG - news - people ) and Yahoo! (nasdaq: YHOO - news - people ) raises antitrust concerns: Google receives 67% of all searches, and Yahoo! hosts 20%, according to March data from Web traffic analysis firm Hitwise. Combined, the two would represent a near monopoly of the search market.
Sharing its ad space with Google would also mean a quick revenue bump for Yahoo!, thanks to Google's higher percentage of clicks on ads. But just how far can a Yahoo! and Google liaison go?
"I hate to admit it, but Microsoft is right," asserts Robert Lande, a member of the American Antitrust Institute. "The closer Google and Yahoo! get to a deal, the closer they get to some very serious antitrust problems."
At the same time,
SOMETHING IS FISHY>????
GOOG 4% QTR OVER QTR???!!
But Google said so-called paid clicks grew 20% in the first quarter over the same year-ago quarter, and 4% over 2007's fourth quarter.
Google is only paid by its search advertisers when users click on such links.
Recent data from comScore Inc. has shown tepid paid-click growth during the first quarter, stirring concerns about the impact of the U.S. economic slowdown on Google and helping send its shares more than 30% lower between the beginning of the year and Thursday's earnings report.
Earlier this week, comScore reported that Google's paid clicks rose only 1.8% in the quarter compared with the period a year earlier, though its data don't include Google's international search markets. Google said Thursday that its paid clicks actually grew 20% in the quarter compared with the period a year earlier.
During a conference call with analysts, Chief Executive Eric Schmidt noted that the paid-click growth was "much higher than has been speculated by third parties."
Still, Google's 20% paid-click growth nonetheless marked a slowdown compared with the 30% growth in Google's previous, fourth fiscal quarter.
That's because the company, according to Collins Stewart analyst Sandeep Aggarwal, seems to be making the most out of the clicks that it's managing to get. "Maybe they are getting higher keyword prices from their advertisers. It was a beat quarter."
Part of that maturation has involved overseas expansion. Google announced that its international revenue reached $2.65 billion, or 51% of its total, compared with 47% of the total in the same period a year earlier.
BULLISH? CNBC
Seems like a lot of short covering, but the theory is...what? Earnings out, brokers unlikely to get worse? Well, sort of. As one trader in financials noted to me, "earnings have to be real bad, not just in line" to keep short positions on.
That's true, but the case for getting bullish is broader than that. Simply put, here's out the bulls are explaining it to me:
1) The write downs mean anything anymore, the story is old, the numbers are meaningless.
2) Probably one or two more rounds of it but the sentiment doesnt really change that much.
3) They are historically cheap, they have survived the meltdown and had no problems raising outside capital.
The downside to this game, as others have noted, is that if the quarter progresses and business is not getting any better, shorts will go right back on again.
6:45am: Financial services giant records $5.1 billion loss, missing forecasts, after taking more than $12 billion in writedowns.
Oil nears $115, gas gets pricier
E*Trade cuts back as recession looms (not here yet?)
http://seekingalpha.com/article/72846-google-inc-q1-2008-earnings-call-transcript?source=yahoo (Goog transcript) 51% of rev's from overseas
Yahoo! appears to be pushing its luck. On April 10, the struggling Internet portal said it was testing a partnership to allow Google to host a small percentage of its search advertisements for two weeks. On Thursday, a week later, it inched further toward a long-term deal with Google because the companies are pleased with the initial results of the experiment, according to The Wall Street Journal.
The problem, as Microsoft (nasdaq: MSFT - news - people ) pointed out in a statement last week, is that any potential deal between Google (nasdaq: GOOG - news - people ) and Yahoo! (nasdaq: YHOO - news - people ) raises antitrust concerns: Google receives 67% of all searches, and Yahoo! hosts 20%, according to March data from Web traffic analysis firm Hitwise. Combined, the two would represent a near monopoly of the search market.
Sharing its ad space with Google would also mean a quick revenue bump for Yahoo!, thanks to Google's higher percentage of clicks on ads. But just how far can a Yahoo! and Google liaison go?
"I hate to admit it, but Microsoft is right," asserts Robert Lande, a member of the American Antitrust Institute. "The closer Google and Yahoo! get to a deal, the closer they get to some very serious antitrust problems."
At the same time,
SOMETHING IS FISHY>????
GOOG 4% QTR OVER QTR???!!
But Google said so-called paid clicks grew 20% in the first quarter over the same year-ago quarter, and 4% over 2007's fourth quarter.
Google is only paid by its search advertisers when users click on such links.
Recent data from comScore Inc. has shown tepid paid-click growth during the first quarter, stirring concerns about the impact of the U.S. economic slowdown on Google and helping send its shares more than 30% lower between the beginning of the year and Thursday's earnings report.
Earlier this week, comScore reported that Google's paid clicks rose only 1.8% in the quarter compared with the period a year earlier, though its data don't include Google's international search markets. Google said Thursday that its paid clicks actually grew 20% in the quarter compared with the period a year earlier.
During a conference call with analysts, Chief Executive Eric Schmidt noted that the paid-click growth was "much higher than has been speculated by third parties."
Still, Google's 20% paid-click growth nonetheless marked a slowdown compared with the 30% growth in Google's previous, fourth fiscal quarter.
That's because the company, according to Collins Stewart analyst Sandeep Aggarwal, seems to be making the most out of the clicks that it's managing to get. "Maybe they are getting higher keyword prices from their advertisers. It was a beat quarter."
Part of that maturation has involved overseas expansion. Google announced that its international revenue reached $2.65 billion, or 51% of its total, compared with 47% of the total in the same period a year earlier.
BULLISH? CNBC
Seems like a lot of short covering, but the theory is...what? Earnings out, brokers unlikely to get worse? Well, sort of. As one trader in financials noted to me, "earnings have to be real bad, not just in line" to keep short positions on.
That's true, but the case for getting bullish is broader than that. Simply put, here's out the bulls are explaining it to me:
1) The write downs mean anything anymore, the story is old, the numbers are meaningless.
2) Probably one or two more rounds of it but the sentiment doesnt really change that much.
3) They are historically cheap, they have survived the meltdown and had no problems raising outside capital.
The downside to this game, as others have noted, is that if the quarter progresses and business is not getting any better, shorts will go right back on again.
Thursday, April 17, 2008
SPX 1400 RESISTANCE
**CLICK CHART TO ENLARGEIt's normal during bear rallies to rise and challenge the declining Moving Avg's, until I SEE differently, I remain defensive against a weekly close above this area, then I wil reasess.
GOOG up huge in AH trading, see is bulls can grab the ball and run with it. technology has been showing relative strength here.
Duratek
BILL BUCKLER OF PRIVATEER
BEST OF BILL BUCKLER
http://www.gloomdoom.com/thebestofbb04-10-08.html
April 10, 2008
After the many dramatic events over the past two weeks - we're all saved! At least that is the message being preached in the US.
The Dow is above 12,000 again. The S&P 500 is above 1300. The US Dollar even had a global rally in the lead-up to Easter. Its nemesis, Gold, fell nearly $US 86 in three trading days and Oil went back to $US 100.
That General Perception Is Entirely False:
In principle, not one economic or financial issue has been solved or even addressed. All the fundamental US problems are still there. They have been literally papered over. The Fed cut interest rates and slammed still more new fresh money into the US financial system to keep it liquid. The Fed is exposing its own balance sheet to an amazing degree, offering up $US 400 Billion in Treasuries as short duration "swaps" in return for unmarketable toxic sludge of US mortgage paper.
The Fed had held about $US 800 Billion in Treasury paper, paper that it acquired by "monetising" the US Treasury's debts. This paper is at the core of the Fed's financial holdings. It is the Fed's major "asset". Now, by having sent $US 400 Billion out the door, the Fed has in fact sold down its capital by half. Please note here that the Fed's liabilities – the US Federal Reserve Notes (US Dollars) - have not fallen in quantity.
If any private financial company had done what the Fed has done, most people in finance would instantly recognise that its liability to asset ratio had doubled. That alone would make holding its liabilities, US Dollars, much more dangerous. What is certain is that the Fed cannot repeat what it has just done. To do so would strip it entirely of capital on its own balance sheet. If the Fed is not now "done" - then it is done for!
A Financial Strategic Overview Of The US:
There are three main economic forces at work inside the US economy. The first is monetary and financial and involves an involuntary de-leveraging of US banks and financial institutions. Everybody is trying to contract credit issued while holding the cash still rolling in. This is contracting the volume of credit quite dramatically and adding to the liquidity crisis inside the US. The second is the situation inside the US economy as it rolls into recession, seen in the fact that nearly nine million US households now have "upside down" mortgages. For the first time ever, aggregate mortgage debt is bigger, by $US 836 Billion, than the total value of homeowner equity. A credit contraction augmented by (real estate) price deflation is a huge monetary and economic force. These two forces are mercilessly squeezing the third force, which is the Fed (aided by the US Treasury). The Fed is caught in a vice from which there is no escape.
The Walls Are Closing In On The Fed:
On March 18, the Fed Funds rate was cut by 0.75 percent to 2.25 percent. The Discount Rate was cut by 0.75 percent - after having been cut by 0.25 percent two days previously – to 2.50 percent. Here too the Fed's back is up against the wall. Having exposed its capital to genuine market risk, the Fed cannot make a similar move again or it would stand stripped of all its core capital.
In terms of the interest rates it offers to US banks and other US financial institutions, a few more emergency cuts would put the Fed in the same position as the Bank of Japan with rates of 0.5 percent. The Fed Funds rate is absurd with US internal consumer prices climbing at 4.3 percent annually.
The Climbing Danger To The US Dollar AND The US Treasury:
The alarm bells should be ringing all over New York and in Washington DC. Foreigners have noticed these recent massive falls in the US Dollar. On their own balance sheets, when accounted back into their own currencies, they are looking at enormous losses. So far, these losses have not been brought to book since that would knock huge holes in the balance sheets of their own commercial banks' and other financial institutions which hold US Dollars and/or US paper assets. That will come later this year. Most private banks normally only have to report in depth once a year. When large losses start appearing on the books of a bank - and they will - the usual reaction is a buyers' strike, followed by sales of the "asset".
International investors are now avoiding US financial assets, making it harder for the Treasury to fund a growing budget deficit. NET sales of US stocks and bonds by private foreign investors totalled $US 38.2 Billion in January, the most since September, the US Treasury Department reported on March 17.
This is the precise point where any further cuts in interest rates by the US Fed become deadly dangerous. The Fed could end up in a situation where its official interest rates are so low that no foreign buyers show up at a scheduled US Treasury auction! Were that to happen, it would be like a global call to all the rest of the world to STOP CREDIT to the USA! We are not there yet, but foreigners are slowly leaving.
To see this, examine what happened to Bear Stearns the week before it nearly crashed. It could not borrow funds from anywhere but it still had its scheduled payments to meet. In mid March, Bear Stearns' cash holdings fell from $US 17 Billion to less than $US 2 Billion. This is the direction in which the US Treasury is now heading. If the US Treasury cannot borrow from foreign sources of money, it cannot fund its fast climbing budget deficit! But the Treasury too still has to pay money out to finance the US government's $US 3 TRILLION plus budget. When the Treasury's till is empty, it will have to send all the sequential truckloads of debt paper over to the Fed, which will have to accept all it gets. Then, the Treasury's debts will be "monetised" to an extent never
seen before!
It is this, a Fed "monetisation" of US Treasury debt paper - where the Fed creates new US Dollars as fast as US Treasury's debts arrive - which is the greatest danger to the international value of the US Dollar.
Travelling Further Along The Road To Weimar:
This process too was a part of the three-year Weimar Republic sequence which destroyed Germany's currency. Back then, even if the German Treasury could report that total tax revenue had climbed by 600 percent, this was totally overpowered by the fact that internal prices in Germany had climbed by 8000 percent over the same time period. In fact, the German Treasury was short of money and government services all across Germany were contracting at ferocious speeds on that account alone.
The need to overcome this involuntary contraction of government services forced the German Treasury to send its debt paper straight over to the central bank which then looked at the face value amounts and printed ever more paper money, simply adding ever more " zeroes" to all of it.
Ó 2008 – The Privateer
http://www.the-privateer.com
http://www.gloomdoom.com/thebestofbb04-10-08.html
April 10, 2008
After the many dramatic events over the past two weeks - we're all saved! At least that is the message being preached in the US.
The Dow is above 12,000 again. The S&P 500 is above 1300. The US Dollar even had a global rally in the lead-up to Easter. Its nemesis, Gold, fell nearly $US 86 in three trading days and Oil went back to $US 100.
That General Perception Is Entirely False:
In principle, not one economic or financial issue has been solved or even addressed. All the fundamental US problems are still there. They have been literally papered over. The Fed cut interest rates and slammed still more new fresh money into the US financial system to keep it liquid. The Fed is exposing its own balance sheet to an amazing degree, offering up $US 400 Billion in Treasuries as short duration "swaps" in return for unmarketable toxic sludge of US mortgage paper.
The Fed had held about $US 800 Billion in Treasury paper, paper that it acquired by "monetising" the US Treasury's debts. This paper is at the core of the Fed's financial holdings. It is the Fed's major "asset". Now, by having sent $US 400 Billion out the door, the Fed has in fact sold down its capital by half. Please note here that the Fed's liabilities – the US Federal Reserve Notes (US Dollars) - have not fallen in quantity.
If any private financial company had done what the Fed has done, most people in finance would instantly recognise that its liability to asset ratio had doubled. That alone would make holding its liabilities, US Dollars, much more dangerous. What is certain is that the Fed cannot repeat what it has just done. To do so would strip it entirely of capital on its own balance sheet. If the Fed is not now "done" - then it is done for!
A Financial Strategic Overview Of The US:
There are three main economic forces at work inside the US economy. The first is monetary and financial and involves an involuntary de-leveraging of US banks and financial institutions. Everybody is trying to contract credit issued while holding the cash still rolling in. This is contracting the volume of credit quite dramatically and adding to the liquidity crisis inside the US. The second is the situation inside the US economy as it rolls into recession, seen in the fact that nearly nine million US households now have "upside down" mortgages. For the first time ever, aggregate mortgage debt is bigger, by $US 836 Billion, than the total value of homeowner equity. A credit contraction augmented by (real estate) price deflation is a huge monetary and economic force. These two forces are mercilessly squeezing the third force, which is the Fed (aided by the US Treasury). The Fed is caught in a vice from which there is no escape.
The Walls Are Closing In On The Fed:
On March 18, the Fed Funds rate was cut by 0.75 percent to 2.25 percent. The Discount Rate was cut by 0.75 percent - after having been cut by 0.25 percent two days previously – to 2.50 percent. Here too the Fed's back is up against the wall. Having exposed its capital to genuine market risk, the Fed cannot make a similar move again or it would stand stripped of all its core capital.
In terms of the interest rates it offers to US banks and other US financial institutions, a few more emergency cuts would put the Fed in the same position as the Bank of Japan with rates of 0.5 percent. The Fed Funds rate is absurd with US internal consumer prices climbing at 4.3 percent annually.
The Climbing Danger To The US Dollar AND The US Treasury:
The alarm bells should be ringing all over New York and in Washington DC. Foreigners have noticed these recent massive falls in the US Dollar. On their own balance sheets, when accounted back into their own currencies, they are looking at enormous losses. So far, these losses have not been brought to book since that would knock huge holes in the balance sheets of their own commercial banks' and other financial institutions which hold US Dollars and/or US paper assets. That will come later this year. Most private banks normally only have to report in depth once a year. When large losses start appearing on the books of a bank - and they will - the usual reaction is a buyers' strike, followed by sales of the "asset".
International investors are now avoiding US financial assets, making it harder for the Treasury to fund a growing budget deficit. NET sales of US stocks and bonds by private foreign investors totalled $US 38.2 Billion in January, the most since September, the US Treasury Department reported on March 17.
This is the precise point where any further cuts in interest rates by the US Fed become deadly dangerous. The Fed could end up in a situation where its official interest rates are so low that no foreign buyers show up at a scheduled US Treasury auction! Were that to happen, it would be like a global call to all the rest of the world to STOP CREDIT to the USA! We are not there yet, but foreigners are slowly leaving.
To see this, examine what happened to Bear Stearns the week before it nearly crashed. It could not borrow funds from anywhere but it still had its scheduled payments to meet. In mid March, Bear Stearns' cash holdings fell from $US 17 Billion to less than $US 2 Billion. This is the direction in which the US Treasury is now heading. If the US Treasury cannot borrow from foreign sources of money, it cannot fund its fast climbing budget deficit! But the Treasury too still has to pay money out to finance the US government's $US 3 TRILLION plus budget. When the Treasury's till is empty, it will have to send all the sequential truckloads of debt paper over to the Fed, which will have to accept all it gets. Then, the Treasury's debts will be "monetised" to an extent never
seen before!
It is this, a Fed "monetisation" of US Treasury debt paper - where the Fed creates new US Dollars as fast as US Treasury's debts arrive - which is the greatest danger to the international value of the US Dollar.
Travelling Further Along The Road To Weimar:
This process too was a part of the three-year Weimar Republic sequence which destroyed Germany's currency. Back then, even if the German Treasury could report that total tax revenue had climbed by 600 percent, this was totally overpowered by the fact that internal prices in Germany had climbed by 8000 percent over the same time period. In fact, the German Treasury was short of money and government services all across Germany were contracting at ferocious speeds on that account alone.
The need to overcome this involuntary contraction of government services forced the German Treasury to send its debt paper straight over to the central bank which then looked at the face value amounts and printed ever more paper money, simply adding ever more " zeroes" to all of it.
Ó 2008 – The Privateer
http://www.the-privateer.com
MER BEATING EXPECTATIONS....IN WRONG WAY
Merrill Lynch posts first-quarter loss amid more write-downs on credit investments
NEW YORK (AP) -- Merrill Lynch has reported a steep first-quarter loss after more write-downs related to the troubled credit markets.
The world's largest brokerage says it lost $2.14 billion, or $2.19 per share, compared to a profit of $2.11 billion, or $2.26 per share, a year earlier. Revenue has fallen 69 percent to $2.93 billion from $9.6 billion a year earlier.
Thomson Financial says analysts expected a loss of $1.99 per share on $3.7 billion of revenue.
New York-based Merrill says it wrote down $1.5 billion related to troubled debt instruments and took a $3 billion adjustment related to protection on certain kinds of debt.
Watch 1400 on SPX if broken and held could be important....no matter what facts abound....did the FEd do enough and forstall the DAY OF RECKONING?
D
NEW YORK (AP) -- Merrill Lynch has reported a steep first-quarter loss after more write-downs related to the troubled credit markets.
The world's largest brokerage says it lost $2.14 billion, or $2.19 per share, compared to a profit of $2.11 billion, or $2.26 per share, a year earlier. Revenue has fallen 69 percent to $2.93 billion from $9.6 billion a year earlier.
Thomson Financial says analysts expected a loss of $1.99 per share on $3.7 billion of revenue.
New York-based Merrill says it wrote down $1.5 billion related to troubled debt instruments and took a $3 billion adjustment related to protection on certain kinds of debt.
Watch 1400 on SPX if broken and held could be important....no matter what facts abound....did the FEd do enough and forstall the DAY OF RECKONING?
D
Wednesday, April 16, 2008
Tuesday, April 15, 2008
LONG TERM DOW CHART
**CLICK TO ENLARGE CHARTAreas I have drawn I think are support and resistance, if 2008 lows go good chance we go to 10,000, we now connect 2000 top with 2008 lows for that trend line.
If 10,000 goes I think we test 2002 lows...crazy right? 14,000 top is the HEAD....we have beuilt left now right shoulder http://www.chartpatterns.com/headandshoulders.htm
Recent action in trading range still, but weakish
D
FINANCIAL TSUNAMI
http://financialsense.com/series2/perspectives2.html
For those who haven't read, this guy was one of first to sound alarms, so INTELLIGENTLY DONE!
D
For those who haven't read, this guy was one of first to sound alarms, so INTELLIGENTLY DONE!
D
ED WALLACE'S WEB SITE
http://www.insideautomotive.com/
Interesting guy, some great resources and reads, especially on the ETHANOL SCAM.
Nothing will change until we together demand it.....
Welcome to my blog Monique, always great talking to you, hope you find something of interest!
D
Interesting guy, some great resources and reads, especially on the ETHANOL SCAM.
Nothing will change until we together demand it.....
Welcome to my blog Monique, always great talking to you, hope you find something of interest!
D
"BAD MONEY" INTERVIEW ON NPR
http://www.npr.org/templates/story/story.php?storyId=89642189
Kevin Phillips
or
http://www.npr.org/templates/player/mediaPlayer.html?action=1&t=1&islist=false&id=89642189&m=89642143&live=1
"Knowledge is POWER" "the US $$ is the gladiator, and it's bleeding on the field"
Duratek
Kevin Phillips
or
http://www.npr.org/templates/player/mediaPlayer.html?action=1&t=1&islist=false&id=89642189&m=89642143&live=1
"Knowledge is POWER" "the US $$ is the gladiator, and it's bleeding on the field"
Duratek
THE ONE BOOK YOU SHOULD READ NOW!
http://www.post-gazette.com/pg/08097/870372-148.stm?cmpid=entertainment.xml
Prepare for LEAN YEARS DOWN THE ROAD, power is shifting away from the US as we become net debtor ot the world....where foreign sovereign funds have to BAIL US OUT.
D
Prepare for LEAN YEARS DOWN THE ROAD, power is shifting away from the US as we become net debtor ot the world....where foreign sovereign funds have to BAIL US OUT.
D
Friday, April 11, 2008
GE MISSES
GE Posts Lower 1Q Profit, Cuts Outlook- AP
General Electric Co. reported a smaller-than-expected first-quarter profit on Friday and lowered its outlook for the full year, sending its shares down almost 10 percent in premarket trading as a slowing U.S. economy sapped its financial services business.
WHen was last time GE MISSED? GE IS LIKE A CROSSSECTION OF OUR ECONOMY...WEAKNESS WAS WIDESPREAD ACROSS THEIR BUSINESSES
IMPORT prices up 1.1$ EX OIL???? largest jump in 20-30 years??? CAN FED KEEP LOWERING??? US $$ GETTING DUMPED AM. TREND IS OBVIOUS http://briefing.com/Investor/Public/Calendars/EconomicCalendar.htm
....... Russel calling BULL from 1980 never ended....Brinker new highs for 2008......where is that light?
D
General Electric Co. reported a smaller-than-expected first-quarter profit on Friday and lowered its outlook for the full year, sending its shares down almost 10 percent in premarket trading as a slowing U.S. economy sapped its financial services business.
WHen was last time GE MISSED? GE IS LIKE A CROSSSECTION OF OUR ECONOMY...WEAKNESS WAS WIDESPREAD ACROSS THEIR BUSINESSES
IMPORT prices up 1.1$ EX OIL???? largest jump in 20-30 years??? CAN FED KEEP LOWERING??? US $$ GETTING DUMPED AM. TREND IS OBVIOUS http://briefing.com/Investor/Public/Calendars/EconomicCalendar.htm
....... Russel calling BULL from 1980 never ended....Brinker new highs for 2008......where is that light?
D
Wednesday, April 09, 2008
DOUBLE EDGED SWORD CUTTING ACROSS AMERICA SLASHING PROFITS
MUSCATINE, Iowa (AP) -- HNI Corp. missed expectations in the first quarter because a deteriorating economy and waning consumer confidence are eating into sales, the home and office furniture maker said Wednesday.
The company said sales and profit in the office furniture segment declined significantly in the first quarter, falling 6 percent because of weak sales to small office and home office customers.
Swelling costs for materials and plant consolidations are also eating into profit, the company said.
The company said sales and profit in the office furniture segment declined significantly in the first quarter, falling 6 percent because of weak sales to small office and home office customers.
Swelling costs for materials and plant consolidations are also eating into profit, the company said.
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