STOCK MARKET WATCH, Thursday April 15

Source: du

STOCK MARKET WATCH, Thursday April 15, 2010

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Euro, Yen, Loonie, Silver and Gold

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Handy Links - Market Data and News:Economic Calendar    Marketwatch Data    Bloomberg Economic News    Yahoo! Finance    Google Finance    Bank Tracker    
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    William Black: This Economic Disaster    Bill Moyers with Kevin Drum and David Corn

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

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

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

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

Read more: du

08:30 Continuing Claims 04/03
Briefing.com 4600K
Consensus 4583K
Prior 4550K

08:30 Initial Claims 04/10
Briefing.com 425K
Consensus 440K
Prior 460K

08:30 Empire Manufacturing Index Apr
Briefing.com 24.00
Consensus 24.00
Prior 22.86

09:00 Net Long-Term TIC Flows Jan
Briefing.com $40.0B
Consensus $38.9B
Prior $19.1B

09:15 Capacity Utilization Mar
Briefing.com 73.1%
Consensus 73.3%
Prior 72.7%

09:15 Industrial Production Mar
Briefing.com 0.5%
Consensus 0.7%
Prior 0.1%

10:00 Philadelphia Fed Apr
Briefing.com 19.5
Consensus 20.0
Prior 18.9

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

:sarcasm:

Add the jobs numbers with the up climb in foreclosures and there is little doubt that S&P 1250 is doable by the weekend!

Unless Grease (er pardon, Greece) weights down the market.
:woohoo:

Oh, and Oil is up...

SINGAPORE – Oil prices hovered below $85 a barrel Thursday in Asia amid signs global crude demand is growing. ...

Crude investors were encouraged by signs of strong economic growth in Asia. China said Thursday its gross domestic product grew 11.9 percent in the first quarter from a year earlier while Singapore's economy expanded 13 percent from a year ago. ...

Oil traders were also cheered by news U.S. weekly crude inventories had their first declined since January, suggesting demand is recovering.

The Energy Information Administration said crude supplies dropped by 2.2 million barrels for the week ended April 9. Analysts expected them to increase by 1.6 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

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

LOS ANGELES – A record number of U.S. homes were lost to foreclosure in the first three months of this year, a sign banks are starting to wade through the backlog of troubled home loans at a faster pace, according to a new report.

RealtyTrac Inc. said Thursday that the number of U.S. homes taken over by banks jumped 35 percent in the first quarter from a year ago. In addition, households facing foreclosure grew 16 percent in the same period and 7 percent from the last three months of 2009.

More homes were taken over by banks and scheduled for a foreclosure sale than in any quarter going back to at least January 2005, when RealtyTrac began reporting the data, the firm said. ....

In all, more than 900,000 households, or one in every 138 homes, received a foreclosure-related notice, RealtyTrac said. The firm based in Irvine, Calif., tracks notices for defaults, scheduled home auctions and home repossessions.

Homeowners continue to fall behind on payments because they've lost their job or seen their mortgage payment rise due to an interest-rate reset. Many are unable to refinance because they now owe more on their loan than their home is worth.

http://news.yahoo.com/s/ap/20100415/ap_on_bi_ge/us_foreclosure_rates

The government's foreclosure prevention efforts are struggling to make an impact on millions of borrowers who are in trouble on their mortgages, according to a report issued Wednesday by a congressional watchdog panel.

The program, known as Making Home Affordable, is on course to prevent only about 1 million foreclosures, aiding a small fraction of the homeowners who are in trouble with their mortgages nationwide, according to the report by the Congressional Oversight Panel, which monitors spending on financial bailout efforts.

About 230,000 U.S. homeowners had secured permanent loan modification under the program through last month, according to Treasury Department data also released Wednesday. That includes about 14,000 borrowers in the Washington region.

But many borrowers who have signed up for the program are in limbo, waiting to prove they qualify for permanent mortgage relief. And more than 150,000 have been dropped from the program because they didn't keep up with their payments or their lender determined they did not qualify after all, according to the Treasury data.

"Treasury's response is lagging behind the pace of the crisis," said Elizabeth Warren, head of the watchdog panel. "It also seems clear that Treasury's programs will not reach the overwhelming majority of homeowners in trouble."

http://www.washingtonpost.com/wp-dyn/content/article/2010/04/14/AR2010041404336.html?hpid=topnews

The following report is from housing economist Tom Lawler:

In a House Financial Services Committee meeting today on “Second Liens and Other Barriers to Principal Reduction as an Effective Foreclosure Mitigation Program, spokespersons from BoA, Citi, JPMorgan Chase, and Wells Fargo explained the potential dangers of broad principal reductions, as well as tried to dismiss the silly claim that many second mortgages have “virtually no value” because so many borrowers with seconds have total mortgage balances at or exceeding the value of the home collateralizing those mortgages. Below are some observations on BoA’s and Chase’s testimony.

BoA provided a few interesting stats: of the 10.4 million first lien mortgages that it services, 15% of second mortgages owned by BoA, while 16% have second mortgages with other lenders. (Thus, 31% have second liens!).

BoA also said that about 90% of BoA’s owned second-lien mortgage portfolio is made up of “standalone originations used to finance a specific customer need, such as education expenses or home improvements, with “(t)he remainder consists of piggy back (combo) loans originated with the home purchase.” BoA made this point to highlight that the vast bulk of its second mortgage lending was collateralized consumer credit lending, where the borrower’s ability to pay was a major factor behind extending the credit. .....

And here is Chase on why many second loan portfolios are performing better than firsts, as well as the risks involved in broad-based principal reduction plans:

a broad-based second-lien principal reduction plan would be forgiving past consumption by borrowers rather than housing investment. According to both internal Chase and Federal Reserve data, over 50% of borrowers used home equity loan proceeds for repayment of debt or personal consumption. No more than 15-20% used home equity proceeds to purchase a home. A broad-based program of principal reduction would be very expensive. To bring underwater borrowers “even” to a loan to value ratio of 100%, we estimate:

• It would have an industry-wide cost of $700 billion to $900 billion.
• The cost to Fannie Mae, Freddie Mac and FHA alone would be in the neighborhood of $150 billion.
• The Federal Reserve and Department of Treasury would have additional exposure through their ownership interests and risk guarantees of AIG, GMAC, and other institutions.
• Mortgage lenders would incur a significant reduction in capital now, potentially impairing their ability to extend future credit – mortgage or otherwise.
• And if house prices decline further, the costs would be even higher, representing the implicit “put” at 100% CLTV. “

More at Calculated Risk

http://www.calculatedriskblog.com/2010/04/lawler-boa-and-chase-on-second.html

NAH! Hey look, the Dow jumped 103 points yesterday!

SINGAPORE – Asian stock markets mostly gained Thursday after China reported strong first quarter economic growth and earnings from JPMorgan Chase & Co exceeded expectations.

Japan's benchmark Nikkei 225 stock average led gainers, rising 68.89 points, or 0.6 percent, to 11,273.79. Indonesia's benchmark index also advanced 0.6 percent, South Korea and Hong Kong gained 0.5 percent while Singapore added 0.3 percent.

Australia rose 0.1 percent while China, India and Malaysia were little changed.

Equity investors took heart from signs of strong economic growth in Asia. China said its gross domestic product grew 11.9 percent in the first quarter from a year earlier while Singapore's economy jumped 13 percent from a year ago.

China reported consumer prices rose 2.2 percent over a year earlier, leading some analysts to herald the high-growth, low-inflation economy — the so-called Goldilocks scenario — as ideal for company profits and equity investing.

http://news.yahoo.com/s/ap/20100415/ap_on_bi_ge/world_markets

WASHINGTON/NEW YORK (Reuters) – U.S. securities regulators proposed requiring high-frequency traders to reveal their identities and disclose their trades -- the latest attempt to get a grip on the lightening-fast trades that are shaking up equity markets.

The Securities and Exchange Commission voted unanimously on Wednesday for a plan to tag high-frequency traders with ID numbers and give the SEC access to information on their trades.

This would allow regulators to analyze the fast traders' activities and judge whether their trades skew the markets, or disadvantage retail investors, as some critics have charged.

The SEC also voted in favor of a plan to shine more light on the options market, proposing to cap fees for investors who want to access the market's best price.

Both proposals are open for a 60-day comment period. The SEC must vote again to make the rules final.

http://news.yahoo.com/s/nm/20100414/bs_nm/us_sec_trading

April 15 (Bloomberg) -- Lehman Brothers Holdings Inc. may have grounds to sue Goldman Sachs Group Inc. and Barclays Plc after they demanded $1.2 billion in additional margin to assume trading positions auctioned by a Chicago exchange, bankruptcy examiner Anton Valukas said.

Goldman Sachs was the high bidder for Lehman’s equity derivatives at options and futures exchange CME Group Inc., and took $445 million of those assets at a private auction in September 2008, according to previously censored details of Valukas’s March 11 report. Barclays was the high bidder for Lehman’s energy derivatives and took $707 million in assets from CME.

DRW Trading was the highest bidder for Lehman’s foreign exchange, agricultural and interest-rate derivatives, Valukas said. The transfer of $2 billion in Lehman deposits for its proprietary trades at the CME cost the defunct investment bank $1.2 billion, Valukas said, adding that CME also may be sued.

“The examiner concludes that an argument can be made that the transfers at issue were fraudulent transfers,” Valukas said in the report, released in its unredacted form yesterday. Under bankruptcy law, Lehman may be able to undo the auction, he said.

Part of Valukas’s job was to explore Lehman’s grounds for suing companies that contributed to, or benefitted unfairly from, the demise of the investment bank and its affiliates including the brokerage Lehman Brothers Inc., and to say which kinds of lawsuits are most likely to succeed and what the possible defenses are.

http://www.businessweek.com/news/2010-04-15/lehman-may-have-grounds-to-sue-goldman-barclays-cme-group.html

Sounds like a case for remedial table manners lessons....paging Judith Martin!

Do unto others (Read: "screw them side ways") before they apply the KY to your posterior.

or

It's easier to get in a hoof shot to the chin, when they are already on their knees.

http://www.nytimes.com/2010/04/13/business/13lehman.html?hp




It was like a hidden passage on Wall Street, a secret channel that enabled billions of dollars to flow through Lehman Brothers.

In the years before its collapse, Lehman used a small company — its “alter ego,” in the words of a former Lehman trader — to shift investments off its books.

The firm, called Hudson Castle, played a crucial, behind-the-scenes role at Lehman, according to an internal Lehman document and interviews with former employees. The relationship raises new questions about the extent to which Lehman obscured its financial condition before it plunged into bankruptcy.

While Hudson Castle appeared to be an independent business, it was deeply entwined with Lehman. For years, its board was controlled by Lehman, which owned a quarter of the firm. It was also stocked with former Lehman employees.

None of this was disclosed by Lehman, however.

Entities like Hudson Castle are part of a vast financial system that operates in the shadows of Wall Street, largely beyond the reach of banking regulators. These entities enable banks to exchange investments for cash to finance their operations and, at times, make their finances look stronger than they are.

Critics say that such deals helped Lehman and other banks temporarily transfer their exposure to the risky investments tied to subprime mortgages and commercial real estate. Even now, a year and a half after Lehman’s collapse, major banks still undertake such transactions with businesses whose names, like Hudson Castle’s, are rarely mentioned outside of footnotes in financial statements, if at all.

The Securities and Exchange Commission is examining various creative borrowing tactics used by some 20 financial companies. A Congressional panel investigating the financial crisis also plans to examine such deals at a hearing in May to focus on Lehman and Bear Stearns, according to two people knowledgeable about the panel’s plans.

Most of these deals are legal. But certain Lehman transactions crossed the line, according to the account of the bank’s demise prepared by an examiner of the bank. Hudson Castle was not mentioned in that report, released last month, which concluded that some of Lehman’s bookkeeping was “materially misleading.” The report did not say that Hudson was involved in the misleading accounting.

At several points, Lehman did transactions greater than $1 billion with Hudson vehicles, but it is unclear how much money was involved since 2001.

Still, accounting experts say the shadow financial system needs some sunlight.

“How can anyone — regulators, investors or anyone — understand what’s in these financial statements if they have to dig 15 layers deep to find these kinds of interlocking relationships and these kinds of transactions?” said Francine McKenna, an accounting consultant who has examined the financial crisis on her blog, re: The Auditors. “Everybody’s talking about preventing the next crisis, but they can’t prevent the next crisis if they don’t understand all these incestuous relationships.”

The story of Lehman and Hudson Castle begins in 2001, when the housing bubble was just starting to inflate. That year, Lehman spent $7 million to buy into a small financial company, IBEX Capital Markets, which later became Hudson Castle.

From the start, Hudson Castle lived in Lehman’s shadow. According to a 2001 memorandum given to The New York Times, as well as interviews with seven former employees at Lehman and Hudson Castle, Lehman exerted an unusual level of control over the firm. Lehman, the memorandum said, would serve “as the internal and external ‘gatekeeper’ for all business activities conducted by the firm.”

The deal was proposed by Kyle Miller, who worked at Lehman. In the memorandum, Mr. Miller wrote that Lehman’s investment in Hudson Castle would give the bank and its clients access to financing while preventing “headline risk” if any of its deals went south. It would also reduce Lehman’s “moral obligation” to support its off-balance sheet vehicles, he wrote. The arrangement would maximize Lehman’s control over Hudson Castle “without jeopardizing the off-balance sheet accounting treatment.”

Mr. Miller became president of Hudson Castle and brought several Lehman employees with him. Through a Hudson Castle spokesman, Mr. Miller declined a request for an interview.

The spokesman did not dispute the 2001 memorandum but said the relationship with Lehman had evolved. After 2004, “all funding decisions at Hudson Castle were solely made by the management team and neither the board of directors nor Lehman Brothers participated in or influenced those decisions in any way,” he said, adding that Lehman was only a tenth of Hudson’s revenue.

Still, Lehman never told its shareholders about the arrangement. Nor did Moody’s choose to mention it in its credit ratings reports on Hudson Castle’s vehicles. Former Lehman workers, who spoke on the condition that they not be named because of confidentiality agreements with the bank, offered conflicting accounts of the bank’s relationship with Hudson Castle.

One said Lehman bought into Hudson Castle to compete with the big commercial banks like Citigroup, which had a greater ability to lend to corporate clients. “There were no bad intentions around any of this stuff,” this person said.

But another former employee said he was leery of the arrangement from the start. “Lehman wanted to have a company it controlled, but to the outside world be able to act like it was arm’s length,” this person said.

Typically, companies are required to disclose only material investments or purchases of public companies. Hudson Castle was neither.

Nonetheless, Hudson Castle was central to some Lehman deals up until the bank collapsed.

“This should have been disclosed, given how critical this relationship was,” said Elizabeth Nowicki, a professor at Boston University and a former lawyer at the S.E.C. “Part of the problems with all these bank failures is there were a lot of secondary actors — there were lawyers, accountants, and here you have a secondary company that was helping conceal the true state of Lehman.”

Until 2004, Hudson had an agreement with Lehman that blocked it from working with the investment bank’s competitors, but in 2004, that deal ended, and Lehman reduced its number of board seats to one, from five, according to two people with direct knowledge of the situation and an internal Hudson Castle document. Lehman remained Hudson’s largest shareholder, and its management remained close to important Lehman officials.

Hudson Castle created at least four separate legal entities to borrow money in the markets by issuing short-term i.o.u.’s to investors. It then used that money to make loans to Lehman and other financial companies, often via repurchase agreements, or repos. In repos, banks typically sell assets and promise to buy them back at a set price in the future.

One of the vehicles that Hudson Castle created was called Fenway, which was often used to lend to Lehman, including in the summer of 2008, as the investment bank foundered. Because of that relationship, Hudson Castle is now the second-largest creditor in the Lehman Estate, after JPMorgan Chase. Hudson Castle, which is still in business, doing similar work for other banks, bought out Lehman’s stake last year. The firm’s spokesman said Hudson operated independently in the Fenway deal in the summer of 2008.

Hudson Castle might have walked away earlier if not for Fenway’s ties to Lehman. Lehman itself bought $3 billion of Fenway notes just before its bankruptcy that, in turn, were used to back a loan from Fenway to a Lehman subsidiary. The loan was secured by part of Lehman's investments with a California property developer, SunCal, and those investments also collapsed. At the time, other lenders were already growing uneasy about dealing with Lehman.

Further complicating the arrangement, Lehman later pledged those Fenway notes to JPMorgan as collateral for still other loans as Lehman began to founder. When JPMorgan realized the circular relationship, “JPMorgan concluded that Fenway was worth practically nothing,” according the report prepared by the court examiner of Lehman.

This article has been revised to reflect the following correction:

Correction: April 14, 2010

An article on Tuesday about Lehman Brothers’ relationship with a smaller company, Hudson Castle, referred incorrectly to the status of a California property developer, SunCal, which had joint investments with Lehman. SunCal’s and Lehman’s investments collapsed; SunCal itself did not.

April 15 (Bloomberg) -- JPMorgan Chase & Co., Wells Fargo & Co. and Fifth Third Bancorp executives told U.S. regulators last week that plans to bolster banks’ liquidity are based on the wrong assumptions and risk unintended consequences.

The three spoke at a private meeting in Washington called by the U.S. Federal Reserve to discuss the impact of rules on bank capital and liquidity being drafted by the Committee on Banking Supervision in Basel, Switzerland. None of the representatives from the Fed and four other regulatory agencies present defended the Basel plans, according to two participants who spoke on condition of anonymity.

The complaints voiced by the U.S. lenders are part of a campaign targeting the Basel committee, which the Group of 20 leaders asked last April to produce rules on how much cash and capital banks must keep on hand following the worst financial crisis in 70 years. Lobbyists for Deutsche Bank AG, HSBC Holdings Plc and more than 150 other European financial services companies are also pushing their countries’ regulators and politicians to soften the rules and give them extra time for implementation. The rules may cost 13 of the largest banks $20 billion in annual earnings, according to JPMorgan analysts. ....

Banks, lobbyists and others have until tomorrow to submit comments to the committee, part of the Basel-based Bank for International Settlements. They have until the end of this month to tell their regulators how much the proposals will cost. The panel, made up of bank supervisors and central bankers from 27 countries and territories, will draft rules by the end of the year for lawmakers to implement by late 2012. The committee first published regulations in 1988 and revised them in 2004.

http://www.bloomberg.com/apps/news?pid=20601087&sid=as1VjRaoiQ10&pos=4

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Here is another instance when banks argue for a free hand to be reckless and without any tether to the slightest limit of regulation.

WASHINGTON — Drawing the lines for a fierce election-year battle over regulating the nation’s financial system, Senate Republicans on Tuesday insisted that legislation proposed by Democrats and the White House would only encourage future taxpayer bailouts of big banks.

The Senate Republican leader, Mitch McConnell of Kentucky, criticized the Democrats’ plans to regulate Wall Street as arrogant and partisan, echoing the recent health care fight in which he accused Democrats of carrying out a government takeover.

“We cannot allow endless taxpayer-funded bailouts,” Mr. McConnell said in a floor speech. “That’s why we must not pass the financial reform bill that’s about to hit the floor. The fact is this bill wouldn’t solve the problems that led to the financial crisis. It would make them worse.”

Both the White House and Congressional Democrats quickly fired back, accusing Republicans of trying to prevent tougher policing of Wall Street.

“There’s a clear choice in this debate: to stand with American families or stand on the side of the big Wall Street banks and their lobbyists,” Jen Psaki, the deputy White House communications director, wrote in a blog post rebutting the criticism. “The Senate bill explicitly mandates that a large financial firm that faces failure be allowed to fail.”

Mr. McConnell’s comments offered a first glimpse at a Republican strategy carefully calibrated for a highly competitive midterm election year. In many ways it is a political high-wire act, as the Republicans seek to oppose the Democrats’ bill while not appearing to side with the banks at a time when popular anger at Wall Street is high.

http://www.nytimes.com/2010/04/14/business/14regulate.html

Greenspan and many other bankers, regulators and industry insiders say that “no one could have known” that we were in a housing bubble.

For example, Greenspan:

Stood by his conviction that little could be done to identify a bubble before it burst, much less to pop it.

And he claimed that:

We didn’t and couldn’t have known about the problem until Fannie and Freddie figures were released in December 2009.

But leading housing price analyst Robert Shiller has charted real (i.e. inflation-adjusted) housing prices back to 1890. Here’s how it looked as of August 2006:

See the charts that any idiot would have no trouble reading.

.....

Joe Sixpack didn’t have access to real housing price data. But by 2004 or 2005, the Fed, Fannie, Freddie, the big banks and everyone else who had an economist on hand should have known that we were in an unprecedented bubble.

In addition, the Bank for International Settlements warned the Fed about the housing bubble many years ago, but the Fed ignored the warnings.

Moreover, Donald L. Kohn, member of the Board of Governors of the Federal Reserve System, gave a speech in February of 2003 asking whether there was a housing bubble. In 2004, Kohn said:

Warnings about a possible “bubble” in house prices have been sounded for a number of years now. About a year ago, I examined this issue in some detail and concluded that, while one could never be very confident about such a judgment, house prices were not obviously too high and the housing stock was not clearly too large. Since then, however, prices have climbed further, and by more than the rise in rents–a proxy for the return on houses. Consequently, the odds have risen that these prices could be out of line with fundamentals.

More at Naked Capitalism

So I wish you a good morning :donut: :donut: :donut: and hope you have an easy day. I have much to get done before work.

:hi:

Guess I'll post some to fill the gap....

http://www.businessweek.com/news/2010-04-14/china-s-economy-grows-11-9-pressuring-wen-on-yuan-peg-rates.html

China’s economic growth accelerated to the fastest pace in almost three years in the first quarter, adding pressure on Premier Wen Jiabao to sever the yuan’s peg to the dollar and raise interest rates.

Property prices rose by a record in March and foreign-exchange reserves climbed the most in four months, the government said this week. Singapore allowed a one-time revaluation of its currency yesterday and Australia and India have already raised interest rates as the region winds back stimulus policies to limit asset-bubble and inflation risks.

“More needs to be done to curb increasingly harmful bubbles” in China, Stephen Green, head of China research at Standard Chartered Bank Plc in Shanghai, said before today’s data. “Inflationary pressures are building.”

Green forecasts two interest-rate increases of 27 basis points each this quarter and the scrapping of the yuan’s peg to the dollar to cut import costs.

Consumer prices rose a less-than-estimated 2.4 percent in March from a year earlier, today’s data showed, after a 2.7 percent gain in February. Economists forecast a 2.6 percent gain....

.... U.S. Pressure

U.S. Treasury Secretary Timothy F. Geithner’s unscheduled meeting with Chinese Vice Premier Wang Qishan in Beijing on April 8 fueled speculation that the yuan’s 21-month-old peg at about 6.83 per dollar may be scrapped amid calls in Congress to brand China a currency manipulator.

Asian central banks have moved in lockstep on currency policy in the past. Malaysia on July 21, 2005, removed a seven- year peg on the ringgit to the dollar less than an hour after China said it would let the yuan appreciate by 2.1 percent against the dollar and let it fluctuate versus a basket of currencies.

Bubble Concern

Some investors, including hedge fund manager Jim Chanos, already see a property bubble in China that could reverberate around the world if it bursts.

Residential and commercial real-estate prices in 70 cities climbed 11.7 percent in March from a year earlier, the most since data began in 2005. Guangzhou-based Evergrande Real Estate Group Ltd. said sales jumped 175 percent in the first quarter.

The State Council said last night that officials will speed the study of a property tax that could help to cool the market, after already tightening mortgage lending and re-imposing a sales tax.

The central bank has twice asked lenders to set aside more cash as reserves this year. Deputy governor Zhu Min said last month that China will be “very careful” with interest rates because they are a “heavy-duty weapon” and alternative measures are working well.

Today’s report may overstate the overheating risk, DBS Bank Ltd. said yesterday, estimating that quarter-on-quarter growth cooled to 9.4 percent after peaking between April and June in 2009. Some economists also said this week that a slowdown in lending in March could delay any interest-rate increase.

(Down a little. Good day all.)

(Debt under Obama seems to jump up big then drop slowly maybe up a little and down a little for days--repeat.)
= Held by the Public + Intragovernmental(FICA)
= 8,347,257,429,111.42 + 4,483,935,954,579.27
DOWN 86,542,536.22 + UP 4,900,469,940.06

Source: Debt to the penny:
http://www.treasurydirect.gov/NP/BPDLogin?application=np

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 309-Million person America.
If every American, man, woman and child puts in $3.24 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.71, ABOUT TEN BUCKS for a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is the federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)

PERSONALIZED DEBT:
Every 13 seconds we net gain another American, so at the end of the workday of the report, there should be 309,061,654 people in America.
http://www.census.gov/population/www/popclockus.html ON 04/09/2010 15:49 -> 309,034,742
Currently, each of these Americans owe $41,516.61.
A family of three owes $124,549.84. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 23 reports in the last 30 to 32 days.
The average for the last 23 reports is 11,109,326,990.83.
The average for the last 30 days would be 8,517,150,692.97.
The average for the last 32 days would be 7,984,828,774.66.
There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 75 reports in 112 days of GWB's part of FY2009 averaging 8.03B$ per report, 5.38B$/day.
There were 174 reports in 253 days of Obama's part of FY2009 averaging 7.33B$ per report, 5.07B$/day so far.
There were 249 reports in 365 days of FY2009 averaging 7.57B$ per report, 5.16B$/day.
There were 133 reports in 195 days of FY2010 averaging 6.93B$ per report, 4.72B$/day.
Above line should be okay

PROJECTION:
There are 1,013 days remaining in this Obama 1st term.
By that time the debt could be between 14.2 and 20.9T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
04/13/2010 12,831,193,383,690.69 BHO (UP 2,204,316,334,777.61 so far since Obama took office.)

FISCAL YEAR DEBT CHANGE, Sep 30 prior year to Sep 30 named year:
(One "* " for each 40B$ reached)
FY1994 +0,281,261,026,873.94 ------------* * * * * * * WJC
FY1995 +0,281,232,990,696.07 ------------* * * * * * * WJC
FY1996 +0,250,828,038,426.34 ------------* * * * * * WJC
FY1997 +0,188,335,072,261.61 ------------* * * * WJC
FY1998 +0,113,046,997,500.28 ------------* * WJC
FY1999 +0,130,077,892,735.81 ------------* * * WJC
FY2000 +0,017,907,308,253.43 ------------WJC
FY2001 +0,133,285,202,313.20 ------------* * * C&B
01-WJC +0,053,598,528,417.78 ------------* WJC 31% of FY, 40% of FY-Debt
01-GWB +0,079,686,673,895.42 ------------* GWB 69% of FY, 60% of FY-Debt
FY2002 +0,420,772,553,397.10 ------------* * * * * * * * * * GWB
FY2003 +0,554,995,097,146.46 ------------* * * * * * * * * * * * * GWB
FY2004 +0,595,821,633,586.70 ------------* * * * * * * * * * * * * * GWB
FY2005 +0,553,656,965,393.18 ------------* * * * * * * * * * * * * GWB
FY2006 +0,574,264,237,491.73 ------------* * * * * * * * * * * * * * GWB
FY2007 +0,500,679,473,047.25 ------------* * * * * * * * * * * * GWB
FY2008 +1,017,071,524,649.92 ------------* * * * * * * * * * * * * * * * * * * * * * * * * GWB
FY2009 +1,885,104,106,599.30 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * B&O
09GWB +0,602,152,152,000.60 ------------* * * * * * * * * * * * * * * GWB 31% of FY, 32% of FY-Debt
09-BHO +1,282,951,954,598.70 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * BHO 69% of FY, 68% of FY-Debt
FY2010 +0,921,364,380,178.90 ------------* * * * * * * * * * * * * * * * * * * * * * * BHO
Endof10 +1,724,605,121,873.33 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Linear Projection

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
03/24/2010 +000,495,755,553.04 ------------********
03/25/2010 +024,094,622,106.32 ------------**********
03/26/2010 -000,521,947,711.23 ---
03/29/2010 -000,032,502,739.57 ---- Mon
03/30/2010 +000,146,146,107.03 ------------********
03/31/2010 +089,964,337,654.53 ------------**********
04/01/2010 +004,832,827,050.45 ------------*********
04/02/2010 -000,783,098,135.53 ---
04/05/2010 +021,628,544,775.26 ------------********** Mon
04/06/2010 +000,246,106,716.91 ------------********
04/07/2010 +000,926,408,143.83 ------------********
04/08/2010 +030,863,719,709.59 ------------**********
04/09/2010 -000,215,194,285.06 ---
04/12/2010 -000,193,173,374.30 --- Mon
04/13/2010 -000,086,542,536.22 ----

171,366,009,035.05 Total of 15 above reports.

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

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

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=4342932&mesg_id=4342961

(Up a little. Good day all.)

(Debt under Obama seems to jump up big then drop slowly maybe up a little and down a little for days--repeat.)
= Held by the Public + Intragovernmental(FICA)
= 8,348,114,710,150.81 + 4,475,377,726,064.30
UP 857,281,039.39 + DOWN 8,558,228,514.97

Source: Debt to the penny:
http://www.treasurydirect.gov/NP/BPDLogin?application=np

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 309-Million person America.
If every American, man, woman and child puts in $3.24 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.71, ABOUT TEN BUCKS for a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is the federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)

PERSONALIZED DEBT:
Every 13 seconds we net gain another American, so at the end of the workday of the report, there should be 309,068,300 people in America.
http://www.census.gov/population/www/popclockus.html ON 04/09/2010 15:49 -> 309,034,742
Currently, each of these Americans owe $41,490.8.
A family of three owes $124,472.41. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 24 reports in the last 30 to 33 days.
The average for the last 24 reports is 10,325,565,554.73.
The average for the last 30 days would be 8,260,452,443.78.
The average for the last 33 days would be 7,509,502,221.62.
There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 75 reports in 112 days of GWB's part of FY2009 averaging 8.03B$ per report, 5.38B$/day.
There were 174 reports in 253 days of Obama's part of FY2009 averaging 7.33B$ per report, 5.07B$/day so far.
There were 249 reports in 365 days of FY2009 averaging 7.57B$ per report, 5.16B$/day.
There were 134 reports in 196 days of FY2010 averaging 6.82B$ per report, 4.66B$/day.
Above line should be okay

PROJECTION:
There are 1,012 days remaining in this Obama 1st term.
By that time the debt could be between 14.2 and 20.4T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
04/14/2010 12,823,492,436,215.11 BHO (UP 2,196,615,387,302.03 so far since Obama took office.)

FISCAL YEAR DEBT CHANGE, Sep 30 prior year to Sep 30 named year:
(One "* " for each 40B$ reached)
FY1994 +0,281,261,026,873.94 ------------* * * * * * * WJC
FY1995 +0,281,232,990,696.07 ------------* * * * * * * WJC
FY1996 +0,250,828,038,426.34 ------------* * * * * * WJC
FY1997 +0,188,335,072,261.61 ------------* * * * WJC
FY1998 +0,113,046,997,500.28 ------------* * WJC
FY1999 +0,130,077,892,735.81 ------------* * * WJC
FY2000 +0,017,907,308,253.43 ------------WJC
FY2001 +0,133,285,202,313.20 ------------* * * C&B
01-WJC +0,053,598,528,417.78 ------------* WJC 31% of FY, 40% of FY-Debt
01-GWB +0,079,686,673,895.42 ------------* GWB 69% of FY, 60% of FY-Debt
FY2002 +0,420,772,553,397.10 ------------* * * * * * * * * * GWB
FY2003 +0,554,995,097,146.46 ------------* * * * * * * * * * * * * GWB
FY2004 +0,595,821,633,586.70 ------------* * * * * * * * * * * * * * GWB
FY2005 +0,553,656,965,393.18 ------------* * * * * * * * * * * * * GWB
FY2006 +0,574,264,237,491.73 ------------* * * * * * * * * * * * * * GWB
FY2007 +0,500,679,473,047.25 ------------* * * * * * * * * * * * GWB
FY2008 +1,017,071,524,649.92 ------------* * * * * * * * * * * * * * * * * * * * * * * * * GWB
FY2009 +1,885,104,106,599.30 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * B&O
09GWB +0,602,152,152,000.60 ------------* * * * * * * * * * * * * * * GWB 31% of FY, 32% of FY-Debt
09-BHO +1,282,951,954,598.70 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * BHO 69% of FY, 68% of FY-Debt
FY2010 +0,913,663,432,703.40 ------------* * * * * * * * * * * * * * * * * * * * * * BHO
Endof10 +1,701,465,066,003.78 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Linear Projection

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
03/25/2010 +024,094,622,106.32 ------------**********
03/26/2010 -000,521,947,711.23 ---
03/29/2010 -000,032,502,739.57 ---- Mon
03/30/2010 +000,146,146,107.03 ------------********
03/31/2010 +089,964,337,654.53 ------------**********
04/01/2010 +004,832,827,050.45 ------------*********
04/02/2010 -000,783,098,135.53 ---
04/05/2010 +021,628,544,775.26 ------------********** Mon
04/06/2010 +000,246,106,716.91 ------------********
04/07/2010 +000,926,408,143.83 ------------********
04/08/2010 +030,863,719,709.59 ------------**********
04/09/2010 -000,215,194,285.06 ---
04/12/2010 -000,193,173,374.30 --- Mon
04/13/2010 -000,086,542,536.22 ----
04/14/2010 +000,857,281,039.39 ------------********

171,727,534,521.40 Total of 15 above reports.

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

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

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=4344290&mesg_id=4344454

GMAC, the struggling auto and home lender, took a big step toward clearing its books of troubled loans when it agreed to sell its $12bn European mortgage business to Fortress Investment Group
Read more >>
http://link.ft.com/r/FG6LAA/ZB03YD/LSLXF/HDFG0D/KE9GX9/RF/t

GMAC, the bailed-out former financial service arm of General Motors, said Monday that it had sold its residential mortgage operations in Europe to the American hedge fund and private equity group, Fortress Investment.

The assets and business are being sold by GMAC’s subsidiary, Residential Capital, include both performing and nonperforming mortgages, as well as securitizations of such assets, and represent about 10 percent of the unit’s holdings as of December, GMAC said.

Fortress said it was buying about 6,000 residential mortgages, as well as the businesses that ResCap operated in Britain, the Netherlands and Germany.

GMAC said that it expected no material gain or loss to result from the deal, which involved assets it had already written down; it did not specify the amount of the sale. The deal with Fortress, as well as other transactions, mean that the company is entirely exiting the European mortgage market, it said.

“The agreements to sell the European mortgage assets and businesses are key steps toward our objective of reducing the ongoing exposure for GMAC from the legacy mortgage operation,” Michael A. Carpenter, GMAC’s chief executive, said in the statement.

http://dealbook.blogs.nytimes.com/2010/04/13/gmac-sells-european-mortgage-arm-to-fortress/?src=busln

http://www.livemint.com/2010/04/14092719/Carlyle8217s-Asia-buyout-fu.html?h=B

Though there is no fixed allocation, India and China account for a lion’s share of 60% and 80% within Asian funds...

Mumbai: Global private equity (PE) giant Carlyle Group, which has $88.6 billion (Rs3.9 trillion) in management worldwide, on Tuesday said it has closed its third Asia buyout fund, Carlyle Asia Partners III (CAP III), with a corpus of $2.55 billion. Close to one-third of that will be invested in India, a senior Carlyle official said.

“There is no fixed allocation but if you go by the size of the economy and the absorption capacity, I do think that approximately one-third will come into India,” said Rajeev Gupta, managing director, Carlyle India Advisors Pvt. Ltd.

Indeed, India and China account for a lion’s share of Asian funds. According to Arun Natarajan, chief executive of research service firm Venture Intelligence, the two countries have an allocation of between 60% and 80% within Asian funds.

“However, buyout deals account for less than 5% of the total PE investments in India both in terms of value as well as number of deals,” he pointed out, adding that buyout funds are tweaking their strategy to pick up minority stakes instead of controlling ones.

In a media statement, Gupta said the closing of CAP III was an “important milestone for Carlyle in India” as its previous edition had made one of the largest PE investments in the country when it injected $650 million for a 5.6% stake in mortgage lender Housing Development Finance Corp. Ltd (HDFC) in 2007.

“Ultimately, you have to invest a certain amount of dollars, so you can either invest $100 million in six transactions or $600 million in one. If the quality of the deal is good, you are much better off putting money in a leading business,” Gupta said in a telephone interview on Tuesday. “Also, no compromise can be made on returns because we are in the business of providing returns to the investor,” Gupta added.

However, he clarified that while the fund is sector agnostic, it would stay away from some areas. “We don’t do real estate and we do not do sin, so we don’t do liquor,” he said.

Buyout funds, meanwhile, continue to look for big deals.

According to Bimal Tanna, executive director (transaction services) at audit firm PricewaterhouseCoopers, the pace of activity in the buyout space has improved after the recent economic downturn.

“Many promoters who have been badly affected by the downturn have become risk averse and are trying to cash out, so buyout opportunities do exist in the market,” he said. That is also what Carlyle is after. “Our bigger priority is to work with better managements and to have higher percentage of ownership,” said Gupta. “We have an appetite to do large deals. So the idea is going to be to invest in large transactions,” he said.

However, as fund-raising for big global funds has become easier, smaller regional players are feeling the pinch.

“The fund-raising is getting confined to well-known brand names only, while the regional, lesser known funds are finding it very difficult,” said Gupta. “So in a sense there has been a consolidation in this space.”

According to data from Venture Intelligence, fund-raising has declined from 23 funds raising $5,150 million in 2008 to 16 funds raising $3,771 million in 2009. There are about 40 funds in India that are currently looking for capital, according to industry estimates.

NOVEMBER 2009--http://www.just-auto.com/article.aspx?id=102050

CHINA: 2010 vehicle sales forecast to rise 10%

JANUARY 2010--http://online.wsj.com/article/SB10001424052748704876804574628052052209502.html

Car Makers Face Cooldown in China Market


China's car market exploded in 2009, propping up an ailing global industry and relegating the U.S. to the second spot. In 2010, the ride won't be nearly as smooth or fast.

Vehicle sales in China are expected to slam on the brakes this year, and grow by as little as 5% to 6%, according to analysts' projections. That would be healthy growth in many markets, but in China it comes after the roughly 50% surge in 2009, when Chinese shoppers bought about 13 million vehicles, compared with just over 10 million in the U.S.

Analysts say that among global car makers, the slowdown may be particularly severe for Ford Motor Co. and General Motors Co., for which China was perhaps the only bright spot in an otherwise painful 2009.

J.D. Power & Associates expects GM's sales in China to dip slightly in 2010 after a blazing 2009. On Monday, GM said its China sales, including Wuling microvans and microtrucks built by a joint venture, expanded 67% last year to 1.83 million vehicles. For Ford, J.D. Power forecast 6% sales growth in 2010, down from 50% last year.

Challenges in the Detroit duo's China business—such as coping with aging products and maintaining quality while increasing capacity—"would start getting more exposed," says Rudy Schlais, a longtime GM executive who retired in 2001 as its Asia Pacific president and is now an adviser to several Chinese auto brands. "When water goes down in the river, rocks will start to show up."

Both Ford and GM shrugged off concerns and expressed optimism about their China business this year. "We're pretty bullish about 2010...and China's potential in years to come," said Nigel Harris, a senior Ford executive in China. GM's Shanghai-based spokesman, Michael Albano, said GM is optimistic about 2010 and intends to maintain its leadership position in China and introduce "almost 10" new products in 2010, including the redesigned GL8 minivan.

The good news for global car makers is that China will no longer be the only major market growing in 2010, thanks to the recovering U.S. economy. Vehicle sales in the U.S. in 2010 are likely to grow about 12%—faster than in China—according to J.D. Power.

Even so, the Chinese market will remain far larger than America's—by at least two million vehicle sales. Sales in Western Europe are expected to fall in 2010, as government incentive programs there expire, and sales in Japan are likely to edge down, J.D. Power says.....

APRIL 2010--http://autonews.gasgoo.com/auto-news/1014773/GM-and-VW-raise-China-automobile-sales-forecasts.html

GM, VW raise China auto sales forecasts

Volkswagen and General Motors Monday raised their forecasts for automobile sales in China, as the world's biggest vehicle market continues beating expectations in spite of Beijing withdrawing some tax incentives.

Q-1 Chinese car sales rose 76% from the year earlier period to 3.52M, according to figures released by the government-affiliated China Association of Automobile Manufacturers.

Kevin Wale, head of GM in China, said the unexpectedly strong growth, which came in spite of the Chinese government tax incentive for small vehicle purchases being halved, would allow the US carmaker to hit its target of 2M sales in China in Y2010. That is 4 years ahead of schedule. GM, the largest overseas carmaker in China, expects the Chinese market to continue pulling ahead of the US market this year.
Total Chinese auto sales this year are expected to hit 17M, a 25% increase from 13.6M last year, according to the China Passenger Car Association.

VW said Monday that it would also revise its forecast upwards. Along with its 2 joint ventures, Shanghai Volkswagen and FAW-Volkswagen, the German carmaker said it delivered 457,259 cars in Q-1 Y 2010 to customers in the Chinese Mainland and Hong Kong, up 60.9% from the year earlier period.

"The Volkswagen Group's strong performance in Q-1 of Y2010 has exceeded our expectations," said Winfried Vahland, president and chief executive of VW China. "Sales in the first quarter allow us to be more optimistic."—Paul A. Ebeling, Jnr

Message removed by moderator. Click here to review the message board rules.

Transcript: José Luis Rodríguez Zapatero

Published: April 11 2010 21:04

Financial Times interview with José Luis Rodríguez Zapatero, Spanish prime minister, in Madrid on April 8, 2010.

/... here: http://www.ft.com/cms/s/0/a95400f4-4582-11df-9e46-00144feab49a.html

http://online.wsj.com/article/SB10001424052702303828304575180304287489896.html?mod=dist_smartbrief

...Since January 2008, more than 200 banks have failed and just eight of those banks have had more than $10 billion of assets. The rest have all been smaller, and more than 70 have had just one or two branches. FDIC officials project more than 140 banks will fail in 2010, with many still facing heavy losses from speculative commercial real-estate loans.

It is unclear how much money the unlimited deposit insurance program has cost the FDIC. The FDIC has been able to sell almost all of the deposits at failed banks recently to other banks, meaning the FDIC has rarely had to reimburse insured depositors.

In March, FDIC Chairman Sheila Bair said more than 6,900 of the country's roughly 8,000 U.S. banks used the unlimited deposit insurance program.

"It has been highly effective in offering an extra margin of protection to small businesses and other holders of payment-processing accounts at small and mid-sized institutions," Ms. Bair said in a March speech to Florida bankers.

The FDIC's move reflects ongoing concern among many regulators about the condition of hundreds of small banks, many of which could see a flight of deposits if federal deposit insurance was withdrawn.

At the end of 2009, 702 banks were on the FDIC's list of problem loans. It doesn't publish the names of banks on that list, but there are scores of banks that regulators have been publicly disciplined for being in weak condition.

The Conference of State Bank Supervisors is pushing for an extension until 2012, and wrote a letter to FDIC officials April 6 asking them to extend the program.

"While the worst of the crisis appears to be behind us, this program is still needed to provide assurance to consumers and small businesses and ensure a stable source of funds for community and regional banks," said the letter. "Any recovery in the economy is occurring slowly and is not being realized in all areas of the country. In addition, the steady pace of bank failures still has many communities on edge."

http://www.spiegel.de/international/europe/0,1518,688580,00.html

The European Union has hammered out a rescue plan for Greece. If Greece goes belly up, Germany will have to fork over 8 billion euros to the relief effort. The government doesn't want to hear about having "buckled." But there's no doubt that Angela Merkel's days as "Madame Non" are behind her.

Christopher Steegmans, spokesman for Chancellor Angela Merkel, decided that the best defense would be to go on the offensive. In a press conference held in Berlin on Monday, he declared that the state of the European Union's decision on whether to help Greece was "unchanged" -- lest anyone have a chance to claim the opposite beforehand. As he described it, discussions about the proposed €30 billion ($40.8 billion) rescue package for the crisis-plagued county were only about "hammering out technical details" but the time for talking about last resorts had yet to arrive. "The fact that the fire extinguisher is on the wall," he stated, "says absolutely nothing about the likelihood of its being used."

In other words: There's no reason to get excited. There's nothing to see here. Go on about your business, please.

But something about his hasty and unprompted justification elicited the feeling that something just wasn't right. Hadn't something happened? Hadn't Angela Merkel earned the moniker of "Madame Non" just a few weeks ago among EU heads of state and governments for being such a hard-nosed negotiator and blocking all moves to quickly provide the cash-strapped Greeks with some financial shots in the arm? And hasn't the conversation suddenly turned to very concrete sums running into the billions of euros that Berlin can use to give Athens a hand?

'Buckled?'

For the Federation of German Taxpayers at least, the matter is crystal clear. As its president, Karl Heinz Däke, told the business daily Handelsblatt, Germany's federal government has "buckled," and the Germany taxpayer will now "have to provide the majority of the help for Greece."

In reality, Däke is right. If worst comes to worst, Germany actually will have to contribute the lion's share of the EU's rescue package for Greece. KfW, the government-owned development bank, would have to transfer €8.4 billion into Athens' accounts, and those funds would be backed by the federal government. That, at least, is the maximum amount that Germany would have to pay based upon its share in the European Central Bank. But that figure, of course, is based on the presumption that all euro zone member states, the countries that have adopted Europe's common currency, will contribute to the aid package -- a decision that will be made individually by each country.

In fact, the hefty payment doesn't seem to match up with the hard line the chancellor has assumed with her EU colleagues. In surprisingly undiplomatic tones, her message to them has been that Germany is no longer content to play the role of Europe's paymaster. In Berlin, politicians are trying to play down the meaning of the decisions taken over the weekend, claiming that they are merely a provisional and more concrete version of the statement that emerged from the last EU summit, on March 25, when Merkel was still dictating the conditions.

'Nothing Automatic'

A spokesman for German Finance Minister Wolfgang Schäuble, a member of Merkel's Christian Democratic Union (CDU) party, said there is "nothing automatic" about the package, which combines bilateral loans and IMF support, and that the aid has yet to be "activated". For its part, the Greek government in Athens hasn't asked for help yet, either. Nevertheless, the spokesman added, if Athens is unable to raise the needed funds on normal capital markets, it might need to do so. In that case, the European Council, which is comprised of the heads of state and government of EU countries, would still have to give its unanimous approval before aid could be provided.

Still, the hectic pace with which the EU finance ministers agreed to further measures during a videoconference crisis meeting on Sunday suggests that what is happening right now is anything but routine. After the risk premiums for Greek state bonds rose dramatically, the Euro Group appeared to realize the urgent need to act. On Friday, markets imposed a 7.4 interest rate on Greek 10-year bonds, which is well over twice the 3.1 percent that Germany must pay.

The vague pledges of aid given at the EU summit in Brussels appear to have had no effect. Unlike half of her European colleagues, Merkel calculated that markets would quickly quiet down again. But they didn't.

'A Serious Defeat'

Back home, Merkel's political opponents are already criticizing her for her hard-line stance. The leftist Greens have called the move a "serious defeat" for the federal government. Gerhard Schick, the party's budget expert, alleges that the conservatives and their government coalition partner, the business-friendly Free Democratic Party (FDP), unsuccessfully sought to block concrete aid for Greece in the run-up to important state elections in North Rhine-Westphalia to be held in early May.

The center-left Social Democrats (SPD) have also accused the chancellor of acting too late on the issue. "Ms. Merkel, even acting in her own interests, should have shown greater European solidarity long ago," said Angelica Schwall-Düren, the deputy head of the SPD's parliamentary group.

Likewise, there was even criticism from within the FDP-CDU coalition. FDP finance expert Frank Schäffler believes that, over the long term, the plan will weaken the euro's culture of stability, and that the European finance ministers' agreement goes against what was agreed upon at the EU summit held in late March. "After several days, this agreement is no longer worth the paper it is written on," he said.

Schäffler added that he was particularly bothered by the fact that EU leaders had agreed that loans should not contain any elements resembling subsidies. But the deal apparently reached on Sunday has provisions for an interest rate of just over 5 percent, which is considerably below the dizzying 7 percent rates of late. "It clearly has the elements of being a subsidy," Angela Nahles, general secretary of the center-left Social Democratic Party (SPD), told SPIEGEL ONLINE.

Still, Schäuble's spokesman rejects such accusations. As he sees it, the interest rate is "close to the market," "clearly higher" than the financing costs of all the other countries within the euro zone and considerably higher than the interest rate would be on an IMF loan. In recent days, he added, the interest rate had just "climbed too high."

Continued Uncertainty

All that may now change. Indeed, on Monday, the markets actually reacted positively to the news. The euro exchange rate and the stock market both soared, though they would lose some of that ground later on. And risk premiums on Greek bonds fell.

Uncertainty is still running high, and it appears the German government is no longer be ruling out the possibility that it may soon need to pull the fire extinguisher off the wall. The desired effects have occurred, Schäuble's spokesman said, and the markets have calmed down.

Then, he added tellingly, "At least this morning."

CFA | Apr. 15, 2010, 6:40 AM A government official in Athens has said that Greece now hopes to just raise one to four billion dollars from a dollar-denominated bond it plans to sell around the world. This is down substantially from the previous five to ten billion dollar target for the sale.

Why? American investors don't seem all that interested and without major American institutional investors there will be far less demand.

Note this dollar-bond issue is key to helping Greece meet the needs of an upcoming 8.5 billion euro bond payment approaching on May 19th.

WSJ:



It's all PIMCO's fault?



Thus it seems PIMCO could feasibly kill the bond issue, which could cause substantial liquidity challenges for Greece next month.

/. http://www.businessinsider.com/pimco-is-killing-greeces-chance-to-refinance-itself-next-month-2010-4

NO, IT'S NOT FROM THE ONION, WORSE LUCK APRIL 12, 2010

http://www.washingtonpost.com/wp-dyn/content/article/2010/04/12/AR2010041203341.html

America is close to turning the page on this economic crisis. While far too many Americans are still out of work and face deep economic hardship, we have now reported three quarters of positive growth and the beginnings of job creation. As the economy improves, we are winding down the Troubled Assets Relief Program, and Congress is moving toward enacting the strongest financial reforms since those that followed the Great Depression.

In fact, we are repairing our financial system at much lower cost than anyone anticipated and expect to return hundreds of billions of dollars in available but unused TARP resources to the American people. That is a rare achievement in Washington.

Our latest estimate conservatively puts the cost of TARP at $117 billion, and if Congress adopts the Financial Crisis Responsibility Fee that the president proposed in January, the cost to American taxpayers will be zero. More broadly, we estimate the overall cost of this crisis will be a fraction of what was originally feared and much less than what was required to resolve the savings-and-loan crisis of the 1980s.

The true cost of this crisis, however, will always be measured by the millions of lost jobs, the trillions in lost savings and the thousands of failed businesses. No future generation should have to pay such a price.

It is simply unacceptable to walk away from this recession without fixing the system's basic flaws that helped to create it.

Thankfully, signs of bipartisan support for action seem to be emerging in Washington, including for an independent consumer financial protection agency.

That is welcome news. The best way to protect American families who take out a mortgage or a car loan or who save to put their kids through college is through an independent, accountable agency that can set and enforce clear rules of the road across the financial marketplace.

But consumer and investor protection, while critical to reform, are only one part. As the Senate bill moves to the floor, we must all fight loopholes that would weaken it and push to make sure the government has real authority to help end the problem of "too big to fail."

To prevent large financial firms from ever posing a threat to the economy, the Senate bill gives the government authority to impose stronger requirements on capital and liquidity. It limits banks from owning, investing, or sponsoring hedge funds, private equity funds or proprietary trading operations for their own profit unrelated to serving their customers. And it prevents excess concentration of liabilities in our financial system.

All of that means major global financial institutions -- whether they look like Goldman Sachs, Citigroup or AIG -- will be required to operate with less leverage and less risk-taking.

Crucially, if a major firm does mismanage itself into failure, the Senate bill gives the government the authority to wind down the firm with no exposure to the taxpayer. No more bailouts. Instead, we will have a bankruptcy-like regime where equityholders will be wiped out and the assets will be sold.

These are important steps, but they are not enough. Ending "too big to fail" also requires building stronger shock absorbers throughout the system so it can better withstand the next financial storm. To do that, the Senate bill closes loopholes and opportunities for arbitrage, and it brings key markets, such as those for derivatives, out of the shadows.

Transparency will lower costs for users of derivatives, such as industrial or agriculture companies, allowing them to more effectively manage their risk. It will enable regulators to more effectively monitor risks of all significant derivatives players and financial institutions, and prevent fraud, manipulation and abuse. And by bringing standardized derivatives into central clearing houses and trading facilities, the Senate bill would reduce the risk that the derivatives market will again threaten the entire financial system.

A clear lesson of this crisis is that any strategy that relies on market discipline to compensate for weak regulation and then leaves it to the government to clean up the mess is a strategy for disaster.

This is a defining moment for financial reform. We have to get it right. We cannot build a system that depends on the wisdom and judgment of future regulators. Even the smartest individuals armed with the sharpest tools will not be able to find every weakness and preempt every crisis. Instead, the best strategy for stability is to force the financial system to operate with clear rules that set unambiguous limits on leverage and risk.

We need that to happen here and around the world. Importantly, with the Senate bill, the United States would have a strong hand in negotiating a global agreement on new capital requirements by the end of the year. Such an agreement would establish a level playing field with minimum requirements for capital, and compliance would be open to scrutiny by regulators and the markets.

The Senate bill is strong. It would create an independent agency to better protect American families across the financial marketplace. It would protect against "too big to fail." And it would bring the derivatives market out of the dark. As the bill moves to the floor, we will fight any attempt to weaken it. The American people have suffered through too much to enact reform that does too little.

The writer is secretary of the Treasury.

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and other European countries.

Actually, they gave a good explanation on the Today Show of why they grounded the planes. The gritty ash doesn't just cause excess wear. Ash sucked into a jet engine can melt when it reaches the hot parts, then re-solidify when it reaches cooler parts, clogging the engine.

Back to bad banking. If Icelandic leaders are accused of negligence, how about American leaders? Bush, Cheney, Poulson, Bernanke, all the members of the SEC?

They took an active part--it wasn't just negligence. They spiked the regulations, bought off Congress, drained the Treasury, cooked the Fed books, hired every incompetent person they could find to cover up for the outright crooks, and even let Madoff run loose.

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http://www.ft.com/cms/s/0/02a30360-47ba-11df-a4a6-00144feab49a.html

Jamie Dimon, JPMorgan Chase’s chief executive, on Wednesday abandoned his trademark caution and hailed significant improvements in the health of long-suffering US consumers as the harbinger of a strong economic recovery.

Mr Dimon’s bullish tone, which was underpinned by JPMorgan’s strong first-quarter results, is a sign of Wall Street’s improving mood over the US economy’s rebound from the recession caused by the financial crisis.

“There have been clear and broad-based improvements in underlying economic trends,” Mr Dimon told investors. “We believe these improvements will continue and are hopeful they will gain momentum, resulting in a strong recovery.”

Mr Dimon stopped short of calling the end of a cycle that has battered consumers and cost banks billions of dollars, but said that for the first time in two years losses in businesses ranging from credit cards to home equity loans were falling.

“The chance of a double dip is rapidly going away,” he said. “This could be the makings of a good recovery.”

Mr Dimon’s comments and JPMorgan’s profits, which showed continued strength in its investment bank, set the tone for the first-quarter reporting season for US banks.

Commercial lenders such as Bank of America Merrill Lynch and Citigroup will be expected to confirm JPMorgan’s confidence in the consumer recovery, while Goldman Sachs and Morgan Stanley will have to match its strong fixed income trading profits.

Mr Dimon’s newly found optimism was compounded by his belief that large US companies were ready to invest and hire again, fuelling demand for loans and capital markets services for banks such as JPMorgan.

Nevertheless, the JPMorgan chief said the bank would wait for sustained rises in employment and continued good news from consumers before answering investors’ calls to increase its dividend.

In the first three months of 2010, JPMorgan reported net income of $3.3bn, a 57 per cent rise on the same period in 2009. Earnings per share more than doubled to $0.74, beating expectations of $0.64 a share.

The bank’s bottom line number was driven by the strength of its investment banking division, which saw profits rise by 54 per cent to $2.47bn.

The commercial and retail banking businesses performed well, but the bank was held back by consumer credit losses.

The new capital generated by the earnings helped lift JPMorgan’s tier one ratio – a key measure of financial strength – to 11.5 per cent. It reduced its provision for credit losses to $7bn from $10bn in the first quarter of last year.

The bank’s shares were $4.1 per cent higher at $47.73 at close of trade in New York.

http://www.ft.com/cms/s/0/6ed25220-46bb-11df-bb5a-00144feab49a.html

The Hong Kong Monetary Authority the territory’s quasi-central bank, is to manage its burgeoning reserves more aggressively by putting more money into higher-risk, higher-return hedge funds and private equity.

KKR, the private equity firm, has received funds from the authority, while Bain and Blackstone are among others that have received investments or held talks with it, according to people familiar with the matter.

In addition to placing more money with private equity and hedge funds – many of which are focused on Asia – the authority is also considering investing more in mainland China.

The increased focus on “alternative” investments reflects a shift by HKMA, which has traditionally kept its billions in safe liquid assets.

By law it is required to back its own currency with US dollars to maintain the currency peg that has been in place since 1983.

However, the authority now has far more in reserves than it needs to back the Hong Kong dollar, giving it more flexibility to invest in riskier assets.

“You don’t need all of the funds to help keep the Hong Kong dollar stable,” said Joseph Yam, the former head of the monetary authority.

In recent years, mainland Chinese and overseas demand for Hong Kong dollars to buy shares and property in the territory has led to large inflows of US dollars into the authority’s coffers. At the end of 2008, its exchange fund had total assets of HK$1,560bn.

The latest HKMA annual report says the exchange fund is “not primarily an investment fund”. But it adds that the fund’s compound annual return since 1994 is 6.1 per cent, making it more successful than many other sovereign funds.

One person familiar with the thinking at the HKMA said that there was now scope for diversification on a “cautious and incremental basis”.

The Asia co-head of one international private equity fund said that while HKMA had a different mandate to, say, GIC, Singapore’s sovereign wealth fund, it could “carve out some capacity for long-term high-return assets”.

As it seeks higher returns, the HKMA is using its clout to ask for special conditions, such as investing in separate accounts, rather than contributing to large funds.

HKMA declined to comment on the investment operations of the fund, but said it was “under regular review to ensure that prudently managed”. KKR, Bain and Blackstone all declined to comment.

http://www.ft.com/cms/s/0/50da40fa-4618-11df-8769-00144feab49a.html

UK grocers are seeing a big top-level shake-up with three of the leading food retail chains set to be under new leadership after Andy Bond’s unexpected announcement that he is throwing in the towel at Asda.

Mr Bond said on Monday he was quitting as chief executive of the Walmart-owned supermarket chain but would stay on as part-time chairman, a new role, for at least six months.

A successor would be anointed “in a matter of weeks”.

His move means that both Asda and Wm Morrison, the UK’s second and fourth-biggest supermarket chains respectively, will have new chief executives this year.

Dalton Philips, most recently working for Canadian retailer Loblaw, took up the reins at Morrison at the end of March.

Marks and Spencer also has a new chief executive – Marc Bolland, who joins next month.

“This happens from time to time,” Dave McCarthy, analyst at Evolution Securities, said.

“But it usually comes about when there is some struggling going on. What is interesting here is that whoever gets the Asda job will be taking it as the industry comes under pressure because of falling food price inflation and slower sales growth.”

Mr Bond’s move comes at a difficult time for Asda, which has been in the doldrums. It was the weakest Christmas performer of the big four – Tesco, Asda, J Sainsbury, Morrison – and has struggled to rebound.

Mr Bond said there was “no hidden story” in his exit from day-to-day running of Asda. He wanted a change after five years at the helm of one of Walmart’s most profitable units. The US company had “absolutely not” tried to ease him out.

He insisted that another chief executive job was not on the cards. He stressed that his move did not herald a change in Asda’s strategy to move into smaller supermarkets and drive non-food growth. It is due to present a five-year plan this week.

Jack Sinclair, formerly of Safeway and Tesco, who runs grocery merchandise for Walmart in the US, is a possible contender. Others include Andy Clarke, Asda chief operating officer; David Cheesewright, who runs Walmart’s Canadian business; Judith McKenna, Asda finance director; and Darren Blackhurst, its trading director.

http://www.washingtonsblog.com/2010/04/jospeh-cassano-guy-who-brought-down-aig.html

Jospeh Cassano, the guy who brought down AIG - and maybe the world economy - with trillions in risky derivatives deals which AIG couldn't back up, is getting prosecuted ... and the government will claw back all the money he made, right?

Uh, no.

In reality, Cassano is walking away scott-free with $315 million.

As Cent Uygur points out:

Prosecutors will likely not charge him with fraud. They are not going to try for clawbacks to get some of the money back. In the end, he gets away scot-free. But it's better than free, he gets to keep all the money he never really made in the first place ...

I told you about his $35 million thank you note (his exit bonus) for robbing the place clean. But how about the original robbery? How much did he make for himself from 2000 to 2008 by gambling with the company's money? Only $280 million.

In the end, he walked away with over $315 million for destroying the company and maybe the whole economy. So, why wouldn't he do it again? Well, next time it won't be him. We're on to him, so he's going to have spend his retirement on his yacht. It'll be someone else. It'll be another Cassano. And we'll fall for it then as well.

http://www.nytimes.com/2010/04/12/opinion/12krugman.html



As we look for ways to prevent future financial crises, many questions should be asked. Here’s one you may not have heard: What’s the matter with Georgia?

I’m not sure how many people know that Georgia leads the nation in bank failures, accounting for 37 of the 206 banks seized by the Federal Deposit Insurance Corporation since the beginning of 2008. These bank failures are a symptom of deeper problems: arguably, no other state has suffered as badly from banks gone wild.

To appreciate Georgia’s specialness, you need to realize that the housing bubble was a geographically uneven affair. Basically, prices rose sharply only where zoning restrictions and other factors limited the construction of new houses. In the rest of the country — what I once dubbed Flatland — permissive zoning and abundant land make it easy to increase the housing supply, a situation that prevented big price increases and therefore prevented a serious bubble.

Most of the post-bubble hangover is concentrated in states where home prices soared, then fell back to earth, leaving many homeowners with negative equity — houses worth less than their mortgages. It’s no accident that Florida, Nevada and Arizona lead the nation in both negative equity and mortgage delinquencies; prices more than doubled in Miami, Las Vegas and Phoenix, and have subsequently suffered some of the biggest declines.

But not all of Flatland has gotten off lightly. In particular, there’s a sharp contrast between the two biggest Flatland states, Texas — which avoided the worst — and Georgia, which didn’t.

This contrast can’t be explained by the geography of the two states’ major cities. Like Dallas or Houston, Atlanta is a sprawling metropolis facing few limits on expansion. And like other Flatland cities, Atlanta never saw much of a housing price surge.

Yet Texas has managed to avoid severe stress to either its housing market or its banking system, while Georgia is suffering severe post-bubble trauma. The share of mortgages with delinquent payments is higher in Georgia than in California; the percentage of Georgia homeowners with negative equity is well above the national average. And Georgia leads the nation in bank failures.

So what’s the matter with Georgia? As I said, banks went wild, in a scene strongly reminiscent of the savings-and-loan excesses of the 1980s. High-flying bank executives aggressively expanded lending — and paid themselves lavishly — while relying heavily on “hot money” raised from outside investors rather than on their own depositors.

It was fun while it lasted. Then the music stopped.

Why didn’t the same thing happen in Texas? The most likely answer, surprisingly, is that Texas had strong consumer-protection regulation. In particular, Texas law made it difficult for homeowners to treat their homes as piggybanks, extracting cash by increasing the size of their mortgages. Georgia lacked any similar protections (and the Bush administration blocked the state’s efforts to restrict subprime lending directly). And Georgia suffered from the difference.

What’s striking about the contrast between the Texas story and Georgia’s debacle is that it doesn’t seem to have anything to do with the issues that have dominated debates about banking reform. For example, many observers have blamed complex financial derivatives for the crisis. But Georgia banks blew themselves up with old-fashioned loans gone bad.

And for all the concern about banks that are too big to fail, Georgia suffered, if anything, from a proliferation of small banks. Actually, the worst offenders in the lending spree tended to be relatively small start-ups that attracted customers by playing to a specific community. Thus Georgian Bank, founded in 2001, catered to the state’s elite, some of whom were entertained on the C.E.O.’s yacht and private jet. Meanwhile, Integrity Bank, founded in 2000, played up its “faith based” business model — it was featured in a 2005 Time magazine article titled “Praying for Profits.” Both banks have now gone bust.

So what’s the moral of this story? As I see it, it’s a caution against silver-bullet views of reform, the idea that cracking down on just one thing — in particular, breaking up big banks — will solve our problems. The case of Georgia shows that bad behavior by many small banks can do as much damage as misbehavior by a few financial giants.

And the contrast between Texas and Georgia suggests that consumer protection is an essential element of reform. By all means, let’s limit the power of the big banks. But if we don’t also protect consumers from predatory lending, there are plenty of smaller players — both small banks and the nonbank “mortgage originators” responsible for many of the worst subprime abuses — that will step in and fill the gap.

http://rawstory.com/rs/2010/0411/risk-japan-bankrupt-real-analysts/

Greece's debt problems may currently be in the spotlight but Japan is walking its own financial tightrope, analysts say, with a public debt mountain bigger than that of any other industrialised nation.

Public debt is expected to hit 200 percent of GDP in the next year as the government tries to spend its way out of the economic doldrums despite plummeting tax revenues and soaring welfare costs for its ageing population.

Based on fiscal 2010's nominal GDP of 475 trillion yen, Japan's debt is estimated to reach around 950 trillion yen -- or roughly 7.5 million yen per person.

Japan "can't finance" its record trillion-dollar budget passed in March for the coming year as it tries to stimulate its fragile economy, said Hideo Kumano, chief economist at Dai-ichi Life Research Institute.

"Japan's revenue is roughly 37 trillion yen and debt is 44 trillion yen in fiscal 2010, " he said. "Its debt to budget ratio is more than 50 percent."

Without issuing more government bonds, Japan "would go bankrupt by 2011", he added.

Despite crawling out of a severe year-long recession in 2009, Japan's recovery remains fragile with deflation, high public debt and weak domestic demand all concerns for policymakers.

Japan was stuck in a deflationary spiral for years after its asset price bubble burst in the early 1990s, hitting corporate earnings and prompting consumers to put off purchases in the hope of further price drops.

Its huge public debt is a legacy of massive stimulus spending during the economic "lost decade" of the 1990s, as well as a series of pump-priming packages to tackle the recession which began in 2008.

Standard & Poor's in January warned that it might cut its rating on Japanese government bonds, which could raise Japan's borrowing costs amid the faltering efforts of Prime Minister Yukio Hatoyama's government to curb debt.

The system of Japanese government bonds being bought by institutions such as the huge Japan Post Bank has been key in enabling Japan to remain buoyant since its stock market crash of 1990.

"Japan's risk of default is low because it has a huge current account surplus, with the backing of private sector savings," to continue purchasing bonds, said Katsutoshi Inadome, bond strategist at Mitsubishi UFJ Securities.

But while Japan's risk of a Greek-style debt crisis is seen as much less likely, the event of risk becoming reality would be devastating, say analysts who question how long the government can continue its dependence on issuing public debt.

"There is no problem as long as there are flows of money in the bond market," said Kumano.

"It's hard to predict when the bond market might collapse, but it would happen when the market judges that Japan's ability to finance its debt is not sustainable anymore."

"And when that happens, the yen will plummet and a capital flight from Japan's government bonds to foreign bonds will occur," he said.

Yet others argue that there is no precedent for the ratio of debt to GDP nearing 200 percent being dangerous.

Nomura Securities economist Takehide Kiuchi cited Britain's government debt in the post-war period "which reached 260 percent but (the government) didn't face a debt crisis.

"There is no answer to the question of what the critical level of debt is for a government to go bust."

The likes of single-currency Greece and non-eurozone countries are also different in that the latter group have flexible currency exchange rates which are more closely calibrated to their fiscal conditions, he said.

Instead, the most realistic hazard brought by huge Japanese debt is prolonged deflation under a shrinking economy, say analysts.

"Regaining fiscal health needs fiscal austerity, which could weigh on economic growth," said Kiuchi.

"And when the economy is bad, people don't spend money as they are worried about their future, which in turn intensifies the deflational trend," he said.

Continued deflation could further worsen Japan's fiscal health because of less tax revenue and more stimulus spending, stirring fears over big tax hikes, which in turn weigh on demand and again reinforce deflation, analysts said.

The key to breaking the vicious cycle is drafting a feasible economic growth strategy for Japan, they said.

"If the economy grows, tax revenue increases," Kumano of Dai-ichi Life said.

Since 2001 Japan's annual growth rate has peaked at 2.7 percent in 2004.

The economy shrank 1.2 percent in 2008 and 5.2 percent last year.

Prime Minister Yukio Hatoyama's centre-left government has pledged to announce details of its new strategy in June, which aims to lift annual growth to two percent by focusing on the environment, health, tourism and improved ties with the rest of Asia.

By Jeff Harrington, Times Staff Writer
In Print: Thursday, April 15, 2010

http://www.tampabay.com/news/business/personalfinance/article1087486.ece


Tampa bankruptcy trustee Terry Smith grimly jokes that the landmark 2005 overhaul of bankruptcy law was supposed to make it harder to file.

You would never know it, based on the surge in cases from debt-riddled individuals and businesses across the Tampa Bay area in recent months.

Bankruptcy filings in the Tampa/Fort Myers division jumped nearly 21 percent in the first quarter, a pace that would smash last year's record.

Filings in the Middle District of Florida, which includes the Tampa office, are also up about 21 percent. The 16,149 cases filed in the Middle District, which also includes Orlando and Jacksonville, make it the second-busiest bankruptcy court in the country behind California's Central District.

According to preliminary numbers, March was one of the Middle District's busiest months on record, trailing only the two months in 2005 in which filers were racing to beat the bankruptcy law changes.

And, if projections are right, it hasn't peaked yet.

U.S. Bankruptcy Judge Catherine Peek McEwen, who is juggling 6,500 cases in Tampa, said the district's chief judge in Jacksonville told judges to anticipate a record year. "Our case managers are stressed," she said, "but they're able to keep up with the pace of things."

Charles Moore, a bankruptcy lawyer in St. Petersburg with 20 years' experience, is the busiest he has ever been. He has seen lawyers with dwindled demand in divorce, personal injury and even criminal law all "hanging up their bankruptcy shingle" to get a piece of the action as bankruptcies rise.

"I think we may peak in a year to 18 months and then start on the downside," he predicts.

Ed Whitson, a bankruptcy lawyer with Tampa-based Akerman Senterfitt, likewise forecasts a very slow turnaround over the next couple of years. Whitson said he's encouraged that banks are lending again at a "modest" level, but he's waiting for unemployment to fall. "Until you have more job creation, you're going to see that high level of consumer bankruptcies," he said.

Like unemployment, bankruptcy is a lagging indicator of economic recovery. It tends to peak long after a recession officially ends, even after unemployment tops out. It's often a last resort for strapped consumers and businesses who have exhausted emergency funds and the largesse of relatives and friends.

The combination of Florida's 12.2 percent unemployment, depressed housing prices and a huge foreclosure backlog are all taking a toll on debtors.

On the business bankruptcy side, filings have been broad-based: home builders and developers, retailers, professional services and restaurants. McEwen noted that even fast-food outlets haven't been recession-proof, with a local Church's Chicken franchisee, several Dunkin' Donuts franchisees and most recently an Arby's chain all going through bankruptcy proceedings.

On the personal bankruptcy side, industry players say the single-biggest driver is the ailing housing market. Moore says 75 percent of his workload involves cases where real estate is being surrendered.

Banks have been largely resistant to efforts to cut mortgage principals to help stressed homeowners. And they've been criticized for being slow and reluctant to modify mortgage payments.

In a report released Wednesday, the Treasury Department said the number of permanent modifications grew in March to 230,000 households nationwide, an increase of 35 percent in one month.

But the modifications still represent a fraction of underwater homeowners. And it may be a case of too little, too late to stem the tide of bankruptcies, particularly under the cloud of double-digit unemployment.

"People are trying to keep their homes, but many of them have suffered income reduction or the loss of jobs and obviously that's a problem," said Smith, the bankruptcy trustee in Tampa who specializes in Chapter 13 filings.

Most debtors with no assets file for bankruptcy liquidation under Chapter 7. But individuals with a steady income and assets they want to hold onto often file under Chapter 13 instead. A Chapter 13 filing halts foreclosures, protects some assets and gives filers three to five years to make up late payments.

The more than 1,500 Chapter 13 filings in the Middle District in March were an 18 percent increase from March 2009. Chapter 13 can help homeowners avoid being forced to pay off second mortgages or home equity loans. That, at least in part, could help explain the rise in popularity of Chapter 13 filings, especially given Florida's current housing crises.

(more)

April 15, 2010 - 10:58AM Railway porter-turned-billionaire financier George Soros has delivered a stark warning that the financial world is on the wrong track and that we may be hurtling towards an even bigger boom and bust than in the credit crisis.

...

“The success in bailing out the system on the previous occasion led to a superbubble, except that in 2008 we used the same methods,” he told a meeting hosted by The Economist in London on Tuesday night.

“Unless we learn the lessons, that markets are inherently unstable and that stability needs to the objective of public policy, we are facing a yet larger bubble.

“We have added to the leverage by replacing private credit with sovereign credit and increasing national debt by a significant amount."

...

US Federal Reserve chief Ben Bernanke delivered his own warning on Wednesday, saying the pace of the US recovery would not be quick and that "significant" time would be needed to claw back jobs lost in the recession.

...

Echoing recent comments that the world's largest economy must act swiftly to curb its soaring budget deficits, Mr Bernanke took his tough message straight to Congress.

He warned lawmakers they faced "difficult choices" in cutting the country's deficit and that action could not be delayed.

"Addressing the country's fiscal problems will require difficult choices, but postponing them will only make them more difficult," he told them.

He warned "the poor fiscal condition of many state and local governments" remained a restraint on the pace of economic recovery.

...

In his speech at the City of London's Haberdashers' Hall, Mr Soros also spoke out against the international community's efforts to help debt-laden Greece recover, London's Daily Telegraph reported.

...

He said the package, which was finalised on the weekend, should offer concessional interest rates, rather than the 5 per cent on offer from eurozone countries and 2.7 per cent from the IMF.

"While 5 per cent is better than what the market is willing to offer, a rescue package should offer concessional rates," he said.

"If they don't , they have then to tighten even further, then your tax receipts go down and the economy goes further into tanking and then you go into a debt spiral.

"That is the danger that is still remaining."

Mr Soros also called for the "oligopoly" formed by the four largest banks in the United States to be broken up.

He said he was supportive of the so-called Volcker rule, an American proposal to block banks from taking part in proprietary trading and owning hedge funds or private equity operations, Bloomberg reported.

/... http://www.theage.com.au/business/george-soros-issues-stark-economic-warning-20100415-seyy.html

http://news.yahoo.com/s/ap/20100415/ap_on_bi_ge/us_meltdown_investigation

A Senate panel contends regulators failed to stop "shoddy" lending and excessive risk-taking at Washington Mutual because they were too chummy with WaMu executives.

Panel chairman Sen. Carl Levin, D-Mich., says the Office of Thrift Supervision's chief called WaMu CEO Kerry Killinger a "constituent." The OTS was funded by fees from WaMu and other regulated banks.

Levin, who heads the Permanent Subcommittee on Investigations, says the OTS oversaw WaMu "on a collaborative basis, not a regulatory basis."

WaMu was a major subprime lender until 2008, when it became the biggest U.S. bank to fail. The OTS was its primary regulator.

The subcommittee on Friday will question WaMu's regulators, including Sheila Bair, chairman of the Federal Deposit Insurance Corp.

http://www.marketwatch.com/story/h-p-under-bribery-probe-in-germany-russia-2010-04-15?siteid=YAHOOB

Authorities in Germany and Russia are looking into allegations that Hewlett-Packard Co. executives paid millions of dollars in bribes to secure a contract in Russia, according to a media report.

Shares of H-P /quotes/comstock/13*!hpq/quotes/nls/hpq (HPQ 53.90, -0.33, -0.61%) were down 0.5% to $54.23 Thursday.

German prosecutors are investigating charges that H-P executives paid roughly $10.9 million to win a contract to sell computer gear through a German subsidiary to the office of the prosecutor general of the Russia Federation, the Wall Street Journal reported.

Meanwhile, the report said, Russian investigators raided H-P's Moscow offices on Wednesday in connection with the investigation.

In a statement late Wednesday, an H-P representative said the case involved "an investigation of alleged conduct that occurred almost seven years ago, largely by employees no longer with H-P."

"We are cooperating fully with the German and Russian authorities and will continue to conduct our own internal investigation," the statement added.

In a related development, the U.S. Securities and Exchange Commission is looking possible H-P violations of the Foreign Corrupt Practices Act in connection with the allegations in Germany and Russia, the Wall Street Journal also reported Thursday.

An H-P representative said in a statement that the company "has been in communication with the SEC and will continue to fully cooperate with the authorities investigating this matter."