STOCK MARKET WATCH, Monday May 17

Source: du

STOCK MARKET WATCH, Monday May 17, 2010

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Euro, Yen, Loonie, Silver and Gold

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

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

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

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

Read more: du

09:00 Net Long-Term TIC Flows Feb
Briefing.com NA
Consensus 40.0
Prior 47.1

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

The March TIC data was released. We will provide a longer analysis later in the day, but there is just one thing that readers need to know: UK has now gone exponential in its holdings of Treasuries, with total US Treasuries "held" by the UK increasing by $45.5 mbillion over February, or 20%, to a new total of $279 billion. As we now know that the UK is essentially running out of money, to assume that the UK government is buying up our debt when it itself needs to restart QE any minute, is childish at best. Total foreign holdings increased by $134.2 billion to $3,885 billion, with both China and Japan once again buying openly. And since China is now no longer bashful about disclosing its official increase in UST holdings, this leaves the only possibility for the UK ramping up UST purchases as being 1) either a proxy for hedge funds, which however are traditionally represented by Caribbean Banking Centers (which also increased from $144.5 billion to $148.3 billion in March), or 2) a shadow Fed purchasing operation, which also implicates the surge in Direct Bidder interest which we have been focusing on for many months now.

/More, charts, comments... http://www.zerohedge.com/article/march-tic-data-released-broke-uks-treasury-holdings-go-exponential

SINGAPORE – Oil prices dropped below $70 a barrel Monday in Asia as the euro sank to a four-year low and stock markets tumbled on investor concern Europe's economy will wither amid a debt crisis and fiscal austerity measures.

Crude fell as low as $69.82, the lowest since $69.59 on Feb. 5, as the U.S. dollar gained against the beleaguered euro, which was at a four year-low. Oil, which is priced in dollars, becomes more expensive to investors holding other currencies when the dollar advances.

The euro fell to $1.2279 on Monday from $1.2352 on Friday while the dollar slid to 92.03 yen rom 92.30 yen.

Asian stock markets also plunged Monday, and oil investors often look to equities as a sign of overall investor confidence.

In other Nymex trading in June contracts, heating oil fell 3.11 cents to $2.0393 a gallon, and gasoline fell 3.77 cents to $2.0931 a gallon. Natural gas was steady at $4.313 per 1,000 cubic feet.

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

The bubble is going out of oil rather quickly this year....

Bubbles tend to pop rather abruptly, don't they?

That has been the rule since at least the 1930s, prices go up in the spring, peak around Memorial Day, and then decline the rest of the year. The reason for this is the switch from diesel/home heating oil to Gasoline production. In any refining of oil you get so much gasoline and so much diesel/home heating oil per barrel. To a degree this can be adjusted, more gasoline during the summer to meet the summer gasoline demand, more heating oil in late fall and winter to handle winter home heating demand. The switch over cost money and causes shortages, mostly in the Spring (people still may need home heating oil as late as April, with gasoline stock at an yearly low at the same time). To meet this demand the oil refiners switch from Home Heating oil to gasoline in the spring, but as pointed out above, that can delayed till as late as April for the switch over to take place. That is barely two months to get production changed. Unlike the fall when most people do NOT buy oil till November (Using what they had from the previous year till then). Thus in the fall you have three months instead of two months for the switchover. These switch over's cause surplus in what had been wanted two months before, and a shortage of what is wanted then and two months in the future. Thus every year you see an increase from March to June, then a Decline. Thus what has happened over the last few months is "Normal" not a bubble. It is something to watch to make sure it is NOT the start of the Bubble (The 2008 Bubble started during the traditional spring rise in prices, but then continued till August unlike traditional spring price which ends around Memorial day).

not the supply. The supply is elevated because demand is depressed by the complete lack of economic recovery from the incipient Greater Depression. An elevated price in the face of dropping demand is the bubble...

Those traditional costs being the price to convert refineries from making Heating oil to gasoline (and back again in the fall). This upward pressure as to the price of gasoline is normal, occurring even in the 1930s, 1940s etc. A bubble has no connection with "traditional" costs, through many start during a traditional period of price increases (i..e in the spring of each year for gasoline). Please also note I am concentrating on US gasoline price NOT the international price of oil, which appears to have been falling the last few weeks.

So all the media attention on the getting the sippy straw pipe to work is just a distraction.


Just a sideshow to hide the fact they've got nothing.

WASHINGTON (Reuters) – The U.S. economy has begun to climb out of the worst downturn since the 1930 Great Depression but still needs additional steps by the federal government to stem a crisis in the job market, a senior economic adviser to President Barack Obama said on Sunday.

"What we need now is not the withdrawal of support, but further targeted actions that will help the private sector come back more strongly," Christina Romer, chairwoman of the White House Council of Economic Advisers, said in prepared remarks for a commencement ceremony at the College of William and Mary in Williamsburg, Virginia.

Romer urged Congress to a pass a series of measures Obama has proposed to jump-start growth, including the establishment of a lending fund to spur credit to small businesses and providing cash-strapped cities and states with aid to help them avoid layoffs of teachers and other local employees.

With the U.S. unemployment rate just under 10 percent, the Obama administration is juggling the need to spur economic growth with pressure to rein in ballooning U.S. budget deficits.

Romer, an expert on the Great Depression, used much of her speech to compare the current economic crisis to the long downturn of the 1930s.

http://news.yahoo.com/s/nm/20100516/bs_nm/us_obama_economy_romer

to get the Fraud out.

And taxes on the Obscenely Wealthy.

and that some of us (hopefully, all of us) will be here still to make the rafters ring with Hosannas....

(Debt up. Last week I missed some days when collecting the government reports. This means that the daily report of subtractions skipped a day in between. A Friday evening post re-posts the entire week. Link at the bottom. Good day.)

(Debt under Obama seems to jump up big then drop slowly maybe up a little and down a little for days--repeat.)
= Held by the Public + Intragovernmental(FICA)
= 8,420,541,100,207.82 + 4,506,870,167,721.42
UP 3,301,759,550.17 + UP 947,530,514.79

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

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 309-Million person America.
If every American, man, woman and child puts in $3.23 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.7, ABOUT TEN BUCKS for a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is the federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)

PERSONALIZED DEBT:
Every 13 seconds we net gain another American, so at the end of the workday of the report, there should be 309,261,039 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 $41,800.97.
A family of three owes $125,402.91. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 23 reports in the last 30 days.
The average for the last 23 reports is 4,183,386,271.24.
The average for the last 30 days would be 3,207,262,807.95.

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$/day.
There were 155 reports in 225 days of FY2010 averaging 6.57B$ per report, 4.52B$/day.
Above line should be okay

PROJECTION:
There are 983 days remaining in this Obama 1st term.
By that time the debt could be between 14.3 and 18.0T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
05/13/2010 12,927,411,267,929.24 BHO (UP 2,300,534,219,016.16 so far since Obama took office.)

FISCAL YEAR DEBT CHANGE, Sep 30 prior year to Sep 30 named year:
(One "* " for each 40B$ reached)
FY1994 +0,281,261,026,873.94 ------------* * * * * * * WJC
FY1995 +0,281,232,990,696.07 ------------* * * * * * * WJC
FY1996 +0,250,828,038,426.34 ------------* * * * * * WJC
FY1997 +0,188,335,072,261.61 ------------* * * * WJC
FY1998 +0,113,046,997,500.28 ------------* * WJC
FY1999 +0,130,077,892,735.81 ------------* * * WJC
FY2000 +0,017,907,308,253.43 ------------WJC
FY2001 +0,133,285,202,313.20 ------------* * * C&B
01-WJC +0,053,598,528,417.78 ------------* WJC 31% of FY, 40% of FY-Debt
01-GWB +0,079,686,673,895.42 ------------* GWB 69% of FY, 60% of FY-Debt
FY2002 +0,420,772,553,397.10 ------------* * * * * * * * * * GWB
FY2003 +0,554,995,097,146.46 ------------* * * * * * * * * * * * * GWB
FY2004 +0,595,821,633,586.70 ------------* * * * * * * * * * * * * * GWB
FY2005 +0,553,656,965,393.18 ------------* * * * * * * * * * * * * GWB
FY2006 +0,574,264,237,491.73 ------------* * * * * * * * * * * * * * GWB
FY2007 +0,500,679,473,047.25 ------------* * * * * * * * * * * * GWB
FY2008 +1,017,071,524,649.92 ------------* * * * * * * * * * * * * * * * * * * * * * * * * GWB
FY2009 +1,885,104,106,599.30 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * B&O
09GWB +0,602,152,152,000.60 ------------* * * * * * * * * * * * * * * GWB 31% of FY, 32% of FY-Debt
09-BHO +1,282,951,954,598.70 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * BHO 69% of FY, 68% of FY-Debt
FY2010 +1,017,582,264,417.50 ------------* * * * * * * * * * * * * * * * * * * * * * * * * BHO
Endof10 +1,650,744,562,277.28 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Linear Projection

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
04/23/2010 -000,156,047,055.50 ---
04/26/2010 +000,019,005,411.26 ------------******* Mon
04/27/2010 +000,734,843,937.10 ------------********
04/28/2010 -000,020,446,125.69 ----
04/29/2010 -019,519,315,418.04 -
04/30/2010 +098,427,087,705.17 ------------**********
05/03/2010 -004,329,381,263.93 -- Mon
05/04/2010 +000,043,170,775.25 ------------*******
05/05/2010 +000,598,834,211.91 ------------********
05/06/2010 -014,947,673,650.95 -
05/07/2010 +000,000,195,077.74 ------------*****
05/10/2010 +000,804,647,162.22 ------------******** Mon
05/11/2010 -000,148,047,510.67 ---
05/12/2010 +000,782,970,242.92 ------------********
05/13/2010 +003,301,759,550.17 ------------*********

65,591,603,048.96 Total of 15 above reports.

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

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

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=4379553&mesg_id=4382855

(Down a little. Good day.)

(Debt under Obama seems to jump up big then drop slowly maybe up a little and down a little for days--repeat.)
= Held by the Public + Intragovernmental(FICA)
= 8,420,100,716,520.27 + 4,506,589,063,716.41
DOWN 440,383,687.55 + DOWN 281,104,005.01

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

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 309-Million person America.
If every American, man, woman and child puts in $3.23 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.7, ABOUT TEN BUCKS for a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is the federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)

PERSONALIZED DEBT:
Every 13 seconds we net gain another American, so at the end of the workday of the report, there should be 309,267,685 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 $41,797.74.
A family of three owes $125,393.22. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 23 reports in the last 30 days.
The average for the last 23 reports is 4,486,841,044.41.
The average for the last 30 days would be 3,439,911,467.38.

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$/day.
There were 156 reports in 226 days of FY2010 averaging 6.52B$ per report, 4.50B$/day.
Above line should be okay

PROJECTION:
There are 982 days remaining in this Obama 1st term.
By that time the debt could be between 14.3 and 18.0T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
05/14/2010 12,926,689,780,236.68 BHO (UP 2,299,812,731,323.60 so far since Obama took office.)

FISCAL YEAR DEBT CHANGE, Sep 30 prior year to Sep 30 named year:
(One "* " for each 40B$ reached)
FY1994 +0,281,261,026,873.94 ------------* * * * * * * WJC
FY1995 +0,281,232,990,696.07 ------------* * * * * * * WJC
FY1996 +0,250,828,038,426.34 ------------* * * * * * WJC
FY1997 +0,188,335,072,261.61 ------------* * * * WJC
FY1998 +0,113,046,997,500.28 ------------* * WJC
FY1999 +0,130,077,892,735.81 ------------* * * WJC
FY2000 +0,017,907,308,253.43 ------------WJC
FY2001 +0,133,285,202,313.20 ------------* * * C&B
01-WJC +0,053,598,528,417.78 ------------* WJC 31% of FY, 40% of FY-Debt
01-GWB +0,079,686,673,895.42 ------------* GWB 69% of FY, 60% of FY-Debt
FY2002 +0,420,772,553,397.10 ------------* * * * * * * * * * GWB
FY2003 +0,554,995,097,146.46 ------------* * * * * * * * * * * * * GWB
FY2004 +0,595,821,633,586.70 ------------* * * * * * * * * * * * * * GWB
FY2005 +0,553,656,965,393.18 ------------* * * * * * * * * * * * * GWB
FY2006 +0,574,264,237,491.73 ------------* * * * * * * * * * * * * * GWB
FY2007 +0,500,679,473,047.25 ------------* * * * * * * * * * * * GWB
FY2008 +1,017,071,524,649.92 ------------* * * * * * * * * * * * * * * * * * * * * * * * * GWB
FY2009 +1,885,104,106,599.30 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * B&O
09GWB +0,602,152,152,000.60 ------------* * * * * * * * * * * * * * * GWB 31% of FY, 32% of FY-Debt
09-BHO +1,282,951,954,598.70 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * BHO 69% of FY, 68% of FY-Debt
FY2010 +1,016,860,776,724.90 ------------* * * * * * * * * * * * * * * * * * * * * * * * * BHO
Endof10 +1,642,275,148,250.39 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Linear Projection

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
04/26/2010 +000,019,005,411.26 ------------******* Mon
04/27/2010 +000,734,843,937.10 ------------********
04/28/2010 -000,020,446,125.69 ----
04/29/2010 -019,519,315,418.04 -
04/30/2010 +098,427,087,705.17 ------------**********
05/03/2010 -004,329,381,263.93 -- Mon
05/04/2010 +000,043,170,775.25 ------------*******
05/05/2010 +000,598,834,211.91 ------------********
05/06/2010 -014,947,673,650.95 -
05/07/2010 +000,000,195,077.74 ------------*****
05/10/2010 +000,804,647,162.22 ------------******** Mon
05/11/2010 -000,148,047,510.67 ---
05/12/2010 +000,782,970,242.92 ------------********
05/13/2010 +003,301,759,550.17 ------------*********
05/14/2010 -000,440,383,687.55 ---

65,307,266,416.91 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=4384774&mesg_id=4384778

LONDON (Reuters) – Stocks fell and the euro slumped to a four-year low on Monday as Asian markets caught up with Friday's sell-off in the West, shrugging off encouraging data and remaining fixated on troubles in the euro zone.

Shanghai stocks (.SSEC) were down 5.07 percent, reflecting the negative mood across Asia, as investors worried that European austerity measures would stifle a recovery, affecting Asian exports to the West.

The FTSEurofirst 300 (.FTEU3) index of top European shares opened down 0.43 percent, while core euro zone government bond futures opened nearly half a point higher as investors sought the safety of German paper.

Earlier in Japan, the Nikkei fell 2.17 percent to a 10-week closing low, mirroring falls in the rest of the region as investors ignored encouraging economic data from the United States, Japan and Singapore.

The euro extended its losses to $1.228, down about 0.6 percent on the day, and over 14 percent lower year to date, making it the worst performing major currency.

http://news.yahoo.com/s/nm/20100517/bs_nm/us_markets_global

LONDON (AFP) – The leading stock exchange fell at the start of trade on Monday as the euro slumped to a four-year dollar low and Asian equities plunged on mounting concerns about eurozone debt, traders said.

The FTSE 100 index shed 0.51 percent to 5,235.85 points in early morning trade.

The Topix index of all first section shares fell 16.02 points, or 1.71 percent, to 920.43.

http://news.yahoo.com/s/afp/20100517/wl_uk_afp/stocksbritain

THE UK government last night accused Labour of pursuing a “scorched earth policy” before the general election, leaving behind billions of pounds of previously hidden spending commitments.

The newly discovered Whitehall “black holes” could force even more severe public spending cuts, or higher tax rises, ministers fear.

Vince Cable, the business secretary, said: “I fear that a lot of bad news about the public finances has been hidden and stored up for the new government. The skeletons are starting to fall out of the cupboard.”

The new cabinet has been discovering previously unknown contracts and uncosted spending commitments left by their spendthrift predecessors.
Related Links

“There are some worrying early signs that numbers left by the outgoing government may not add up,” said Francis Maude, the Cabinet Office minister.

/... http://www.timesonline.co.uk/tol/news/politics/article7127819.ece

Arriving for work at the U.K. Treasury last week, the incoming chief secretary, David Laws, found a note from his predecessor, Liam Byrne, offering advice on the job.

According to Laws, it read: “Dear Chief Secretary, I’m afraid to tell you there’s no money left.”

“Which was honest,” Laws, whose position is the No. 2 in the Treasury after the chancellor of the exchequer, told a press conference in London today. “But slightly less than I was expecting.”

The note underscores the task facing Britain’s coalition government as it seeks to reconcile demand for improved health and education services with promises to reduce the largest budget deficit since World War II.

/.. http://preview.bloomberg.com/news/2010-05-17/u-k-has-no-money-left-treasury-minister-learns-from-predecessor-s-note.html

NEW YORK – Stock traders are worried that what happens in Europe won't stay in Europe.

Countries including Greece and Spain are being forced to make budget cuts because of soaring debts. Investors are concerned that this new frugality could slow not just the European economic recovery, but the global rebound as well. So they're shrugging off signs of a sustained U.S. turnaround and are instead taking cues from developments abroad.

It's clear that traders have lost some of their swagger. The Dow Jones industrial average posted a 14-month gain of 71.2 percent from March 2009. It's down 5.2 percent since late April. The Dow tumbled 163 points Friday after the euro fell to a 19-month low against the dollar. The market still closed higher for the week after falling in the two previous weeks, but there was no sense of relief on Wall Street.

As they sold Friday, traders looked past upbeat reports on retail sales and industrial production. The reason: They make their moves based on what they expect the economy and corporate profits will be six to nine months in the future. Investors are now factoring slower growth in Europe, and perhaps a recession, into stock prices. Good news from the U.S. economy last month is now almost immaterial in traders' eyes.

Many traders are predicting that the ride will continue to be rough. The Chicago Board Options Exchange's Volatility Index — called the market's fear gauge — is up 79 percent since April 26, when the Dow closed at its 2010 high of 11,205. The rise in the volatility index means investors are forecasting more drops in the market.

http://news.yahoo.com/s/ap/20100516/ap_on_bi_st_ma_re/us_wall_street_week_ahead

NEW YORK (Reuters) – U.S. stocks could face more volatility this week as growing doubts about whether Europe can solve its deepening debt crisis are likely to take center stage again.

A $1 trillion rescue package unveiled at last week's start gave only temporary relief to investors, who are increasingly worried about the impact of the crisis on the global recovery and the euro.

Wall Street also will be anxious to see the results from retailers this week, and will pay special attention to their forecasts for the rest of the year. Wal-Mart Stores (WMT.N) and Lowe's Co (LOW.N) are among companies expected to report.
Below-par results on Friday from retailers, including Nordstrom (JWN.N) and J.C. Penney Co Inc (JCP.N), cast some doubt on the consumer's health.

With results in from 459 of the S&P 500 companies, first-quarter S&P 500 earnings are expected to be up 56.6 percent from a year ago, according to Thomson Reuters data. That is up from an April 1st estimate for a gain of 36.6 percent.

Among the retailers on the week's agenda are Dow components Home Depot (HD.N) and Wal-Mart, which will report on Tuesday, along with teen retailer Abercrombie & Fitch Co (ANF.N).

http://news.yahoo.com/s/nm/20100516/bs_nm/us_usa_stocks_weekahead

BERLIN (Reuters) - German Chancellor Angela Merkel Sunday denounced speculation against the euro but said the EU could overcome the problem only by tackling the yawning gap between Europe's strongest and weakest economies.

...

"In the past week we have experienced ... how there has been speculation against the euro, our currency," she told the German Federation of Trades Unions, adding that the extent of speculation would have inconceivable only a short while ago.

"This calls for more regulation," she said in a speech. "But unfortunately this speculation was, and is only possible because there are considerable differences in economic strength and respective indebtedness between the member states of the euro."

...

But Merkel said far more was needed. "We've done no more than buy time for ourselves to clear up the differences in competitiveness and in budget deficits of individual euro zone countries," she said. "If we simply ignore this problem we won't be able to calm down this situation."

Merkel also called for more regulation of trade in derivatives -- provided this gained international acceptance -- and more restrictions on naked short selling.

But she said she could not push through a transaction tax, which German trades unions want, due to international opposition.

/... http://www.reuters.com/article/idUSTRE64F19W20100516

China's trade surplus will fall sharply in 2010, said Yao Jian, spokesman of China's Ministry of Commerce (MOFCOM) at a press conference today. In addition, the yuan's recent appreciation against the euro will add pressure on China's export-oriented sectors.

Data released by the MOFCOM today showed that China's trade surplus in the first four months of 2010 totaled 16.11 billion U.S. dollars, down 78.6 percent year-on-year. China's imports have grown by 60.1 percent from January to April, twice as much as its exports.

"These figures have generally set the trend of China's foreign trade in 2010," Yao said. "China's trade surplus for the whole of 2010 will see a sharp decline."

In addition, due to the rise of commodity prices and domestic demand, China recorded 39.3 billion U.S. dollars of deficit in general trade from January to April.

...

As to the impact of the Greek debt crisis, Yao noted that the huge fluctuations in the financial market, which was the result of the crisis in Europe, will hinder the global recovery.

The sluggish economic situation in the EU, China's largest export market, will affect China's export outlook. Meanwhile, the yuan gained by 14.5 percent against euro in the first four months of 2010, adding cost pressure on China's export-oriented enterprises.

"This will have influence on China when formulating trade policies," said Yao.

/.. http://english.people.com.cn/90001/90778/90861/6987925.html

From Naked Capitalism:


Ms. Smith goes on to describe how British sterling has been battered through its association with the euro.

the population of Europe won't just compensate by slapping down their Visa cards, USA style.

:donut: morning all!

We are still unreasonably cold, although perhaps out of danger of frost, finally. And the standing water from last week's monsoons is starting to drain off.

I could grow rice off my patio, if it weren't so darn cold. Wild rice would be a better bet--native and gourmet pricy....I will have to consult the grounds committee!

Little rain this morning, but I'm almost ready to start picking tomatoes and peppers. And I got a late start on the garden.

The Forecast: Hot and oily.

Cukes all rotted from the cold and damp in June..Slugs were even trying to get outa the damp by lining up at the doors every night.

This year we're way ahead of the curve...The weekend before Memorial Day is the typical garden tilling/planting time...we have squash and cukes at the five leaf stage and in the ground this year.

That cold snap a week ago forced us to move a few hundred seedlings into the living room to save from a couple hard frosts, but we expect that.

Mid May is the first time the mower usually gets fired up.....Yesterday was the third mowing this season.

May 17 (Bloomberg) -- U.S. 10-year Treasury yields stayed near the lowest in more than a week amid concern European austerity measures will derail the economic recovery, increasing demand for the relative safety of government debt.

Two-year notes rose for a third day and the dollar reached a four-year high against the euro after European Central Bank President Jean-Claude Trichet said the sovereign-debt crisis may be worse than the Great Depression. European finance ministers meet in Brussels today, facing pressure to reduce deficits fast enough to satisfy investors and police budgets once targets are met. Futures contracts on the Standard & Poor’s 500 Index slid.

The yield on the U.S. 10-year note slid one basis point to 3.45 percent as of 10:10 a.m. in London, according to data compiled by Bloomberg. It dropped as far as 3.38 percent, the lowest since May 7. The 3.5 percent security due May 2020 rose 2/32, or $0.63 per $1,000 face amount, to 100 13/32. The two- year yield was two basis points higher at 0.77 percent.

U.S. securities due in 10 years and longer held their place as the world’s best-performing bonds, taking into account gains in the dollar. The debt returned 5.5 percent in the past month, the most of 174 bond indexes, according to Bloomberg data.

http://www.businessweek.com/news/2010-05-17/u-s-10-year-note-near-one-week-high-as-euro-fall-boosts-demand.html

From Barry Ritholtz:


Most of Ritholt's suggestions are common sense ones. This really means that there's not a snowball's chance of survival in a bonfire of getting them enacted.

Although I'm not sure what the economic equivalent of shredded tires and old golf balls is.

Execs of Wall Street, TBTF Banks, drug makers and the health insurance industries would do the trick.

And if it fails, what's a little more shit in waters already fucked for the foreseeable future

Global systemic crisis – From « Eurozone coup d’Etat » to the tragic solitude of the United Kingdom, the pace of global geopolitical dislocation accelerates

Just as anticipated by LEAP/E2020 in issues N°40 (December 2009) and N°42 (February 2010), spring 2010 really marks a tipping point of the global systemic crisis, characterized by a sudden expansion due to the intolerable size of public deficits (see issue N° 39, November 2009) and the inexistence of the recovery, so often announced (see issue N°37, September 2009). Besides, the dramatic social and political consequences of this development clearly reflect the beginning of the process of global geopolitical dislocation as anticipated in issue N°32 (February 2009). Finally, the Eurozone leaders’ recent decisions confirm LEAP/E2020’s anticipations, contrary to the dominant chatter of these last few months, of the fact that not only will the Euro not « explode » because of the Greek problem but, on the contrary, a strengthened Eurozone will emerge from this stage of the crisis (1). One could even consider that, since the Eurozone decision, a kind of « Eurozone coup d’Etat » supported by Sweden and Poland, to create a huge apparatus to protect the interests of the 26 EU member states (2), the geopolitical deal in Europe has changed radically. Because it runs contrary to the prejudices which fashion their vision of the world, several months will be needed by the majority of the media and players to accept that, behind the appearance of a purely European budgetary-financial decision, lies a geopolitical split with worldwide impact.

In this issue N°45, we analyse in detail the numerous consequences for Europeans and for the world from what could be called the Eurozone « coup d’Etat » within the EU. In the face of the worsening crisis, the sixteen have indeed taken control of the EU reins of power, creating new tools and instruments which leave no other choice for the other members but to follow or find themselves isolated. Ten out of the eleven other member states have decided to follow, such as the two most important of them, Sweden and Poland, who have chosen to actively participate in the apparatus put into place by the Eurozone (the other eight are currently either in the course of negotiating their Eurozone entry, like Estonia from 2011 (3), or receiving direct help from the Eurozone, like Lithuania, Hungary, Romania, for example…). It is a (r)evolution that our team has clearly anticipated for over three years and we had even stated recently that events would rapidly unfold in the Eurozone once the German regional elections and the British general election had taken place. However, we would never have thought that it would happen in just a few hours, neither with such boldness as to the amount (750 billion Euros, or one trillion USD) and the character (EU control taken by the Eurozone (4) and a leap ahead in terms of economic and financial integration).

The fact remains that without knowing it, and without having asked their opinion, 440 million Europeans have just joined a new country, Euroland, of which some already share the currency, the Euro, and of which all now share the indebtedness and the joint means to solve the serious problems posed in the context of the global systemic crisis. The budgetary and financial decisions taken during the Summit of the weekend of the 8th May in terms of a response to the European public debt crisis can be evaluated differently according to one’s analysis of the crisis and its causes. LEAP/E2020 will roll out its own analyses on the subject in this issue N°45 but, without doubt, a radical unraveling of European governance has just taken place: a collective continental governance has just brutally emerged, ironically 65 years after the end of the Second World War, moreover celebrated with a big display in Moscow the same day (5) as the holiday celebrating the creation of the European Coal and Steel Community, the common ancestor of the EU and Euroland. This simultaneity isn’t a coincidence (6) and marks an important step forward in global geopolitical dislocation and the reconstitution of new global balances. Under the pressure of events set off by the crisis, the Eurozone has thus undertaken to grasp its independence with regard to the Anglo-Saxon world still expressed via the financial markets. This 750 billion Euros and this new European governance (of the 26) constitutes, at the one and the same time, the putting in place of the fortifications against the next storms caused by draconian Western indebtedness, and which will affect the United Kingdom and then the United States (cf. issue N°44 causing disturbances of which the « Greek crisis » has only given a small preview.

The EMF will, in the long run, deprive the IMF of 50% of its major contributions: those of the Europeans

Concerning this, LEAP/E2020 reminds readers of a fact that the majority of the media has been oblivious of for many weeks. Contrary to the prevailing discussion, the IMF is first and foremost European money. In effect one out of three IMF Dollars is contributed by Europeans, compared to only one in six by the USA (their share has been cut in half in 50 years) and one of the consequences of the European decisions of these last few days is that it will not be the case for very much longer. Our team is convinced that, within three years at the latest, when it is time to formalize the integration of the intervention fund created on the 8th and 9th May 2010 into the European Monetary Fund, the EU will reduce its contribution to the IMF by a similar proportion. One could guess already that this reduction in the European contribution (UK excluded) will be in the order of 50% at least. That will allow the IMF to become more globally representative by automatically rebalancing the BRIC share and, in the same breath, requiring the USA to abandon its right of veto (7). But that will equally contribute to it becoming heavily marginalized since Asia has already created its own emergency intervention fund. It is an example which illustrates just how many of the European decisions of the beginning of May 2010 are full of wide sweeping geopolitical changes which will scale out in all of the coming years. In fact, it is unlikely that the majority of the decision makers involved in the « Eurozone coup d’Etat » have clearly understood the implications of their decisions. But no-one has ever said that history was largely made by those people who knew what they were doing.

One of the simultaneous causes and consequences of this development is the complete marginalization of the United Kingdom. Its increasing weakness since the beginning of the crisis, along with that of its US sponsor, has created the possibility of a complete takeover, without concessions, of the march forward of the European project by the continental countries. This loss of influence reinforces, in return, Great Britain’s marginalization because British leaders are trapped in a denial of reality which they have made their people share as well. None of the British political parties, not even at this point the Liberal Democrats, even though showing greater clarity than the other political parties of the country, could consider reconsidering the decades of diatribe accusing Europe for all the ills and dressing-up the Euro for all the losses. Indeed, even if their leaders were aware of the folly of a strategy consisting of isolating Great Britain a little more day-by-day, even when the world crisis has moved up a gear, they will collide with this public Euroscepticism which they have fostered over the course of the past years. The irony of history was, once again, clearly shown during this historic weekend of the 8th/9th May 2010: in refusing to participate in the Eurozone’s joint defensive and protective measures, the British leaders have, de facto, refused to catch the last lifeline within their grasp (8). The European continent will now content itself with watching them try to find the 200 billion Euros which their country needs to balance this year’s budget (9). And if the leaders in London think that City speculators will have any qualms breaking the Pound sterling and selling Gilts, it is because they haven’t understood the basics of global finance (10), nor checked the nationalities of these same players (11). Between Wall Street, which will do anything to attract the world’s capital (one only needs to ask the Swiss market what it thinks of the war that world markets are currently delivering one another), Washington, which is knocking itself out to hover up all the world’s available savings, and a European continent which has, from now on, placed itself under the protection of a common currency and debt, the dice have been cast. At this stage, we are still in the drama, because the major English players have not yet realised that they are caught in a trap; a few weeks from now, we will move on to the British tragedy because, this summer, the whole country will have discovered the historic trap into which the country, on its own, has fallen.

So, at the moment when Euroland emerges in Brussels, the United Kingdom struggles with a hung parliament, compelling it to move on to the first coalition government since 1945 and which will take the country to a further election between now and the end of the year.

...

In any case, this weekend of the 8th/9th May 2010 in Europe dips a number of its roots directly into the Second World War and its consequences (14). It is, besides, one of the features of the global systemic crisis as foretold by LEAP/E2020 in February 2006 in issue N°2: it brings to « an end the West as one has known it since 1945 ».

Another of these features is the take-off in the gold price (compared to the US Dollar especially), in the face of the growing distrust in all fiat currencies (see issue N°41, January 2010 (15)). Indeed, whilst all the world speak of the Euro/US Dollar exchange rate, the Dollar remains at its historically lowest levels compared to its major trade partners (see chart below), a sign of the US currency’s structural weakness. In the coming months, as GEAB anticipated, the Euro will climb back to its medium-term equilibrium level of above 1.45/€.

In this issue, before giving our recommendations on currencies, the stock exchange and gold, LEAP/E2020 will analyse in greater detail the US pseudo-recovery which internally is basically a vast focused news operation aimed at re-starting household spending (an impossible task now) and externally at avoiding panicking foreign investors (at best, several quarters can be gained). Thus the United States maintains that it will be able to escape brutal austerity treatment, like the other Western countries, whilst, in fact, the recovery is an « unrecovery » as Michael Panzner, with a touch of humour, called his excellent article of 04/27/2010, published in Seeking Alpha.
--------
Notes:

(1) The strong relative weakness of the Euro compared to the US Dollar constitutes a huge advantage for Eurozone exports and, on the contrary, once again handicaps American attempts to reduce the country’s trade deficit (as a matter of fact, the US trade deficit increased in March 2010). The next few months will see this deterioration become more pronounced. Source: AP/NDTV, 05/12/2010

...

(8) On this subject, LEAP/E2020 wants to debunk the monetary fairy tale which is circulating in the economic media and parroted by the majority of economists: the fact of being able to devalue one’s currency « at will » is not at all a sign of independence nor a useful tool to get out of a crisis, it’s exactly the opposite. On the one hand, these devaluations are imposed by the « markets », that is to say external forces whose last thought are the interests of the people affected by the devaluation; on the other hand, these devaluations inevitably lead to an impoverishment of the country and its growing reliance on its partners with the strongest currencies which, in a system of freely circulating capital, can buy the « family jewels » of the country cheaply. The process currently taking place in the Eurozone which imposes strong austerity measures, is undertaken collectively with the objective of allowing the states affected to re-establish healthy public finances whilst, at the same time, retaining the major balances of the European socio-economic model. Facing the Eurozone, the IMF is only a secondary player which is only there to provide a bit of technical expertise and some tens of billions of Euros in small change, tens of billions which are really a small part of the major contribution the Europeans made to the IMF in 2010: more than 30% of the total, against barely 15% for the United States.

...

(11) It will be very interesting to follow the hostilities with the City, the coalition in power openly wanting to show its authority by announcing that it wishes to break up the giant British banks over the next year. Source: Telegraph, 05/12/2010

...

(14) And even beyond, since David Cameron (at 43 years old) is the youngest British Prime Minister for 200 years and George Osborne (38) the youngest Chancellor of the Exchequer for 125 years. Will that suffice? Nothing is less certain because GEAB readers know that we believe that the crisis questions a world order established nearly four hundred years ago, when the City of London became the world’s financial market place. Maybe it will be necessary to go and seek out British leaders with qualities not seen for over four hundred years? Source: Telegraph, 05/12/2010

...

Dimanche 16 Mai 2010

/... http://www.leap2020.eu/GEAB-N-45-is-available-Global-systemic-crisis-From-Eurozone-coup-d-Etat-to-the-tragic-solitude-of-the-United-Kingdom_a4666.html

http://gordongekkosblog.blogspot.com/2010/05/coming-financial-tsunami-redux.html

...A bit of history first. It really starts with the creation of central banking paper-money system in the US in 1913 - the Federal Reserve System, but for brevity's sake we'll just jump onto the story after World War II, as the biggest structural economic imbalances have occurred since then. After World War II, all the major countries decided on the US dollar as the reserve currency for international trade (since the US was the most powerful nation left, and with the biggest reserve of Gold at 20,000 tonnes). All countries would base their currencies on the US dollar, which was in turn backed by Gold. So, in effect, all countries' currencies were backed by Gold. This is also known as the Bretton Woods System. Under this system, all foreign countries could redeem their dollars for Gold. This kept a limit on the number of dollars in circulation and consequently, the debt in the world economy - basically it imposed discipline on all parties concerned. With the Vietnam War, US deficits started to soar and it could no longer afford to redeem dollars in Gold. Its gold hoard was down to 8,000 tonnes from 20,000 tonnes. So under President Nixon, they decided to delink the dollar from gold (Bretton Woods II). From now on, no country could exchange its dollars for gold. They called it a “floating” exchange system, but really, in terms of purchasing power, all currencies started to sink together. What followed was an explosion of money, as the US could now issue (print) virtually unlimited paper dollars for all its purchases. Other countries followed suit, in order to maintain their exports’ competitiveness. This explosion in money fuelled (or rather was fuelled by) an explosion of debt. I shall leave the detailed mechanics of all this for another post, but suffice to say that this explosion in paper money has caused massive misallocation of resources throughout the US, and indeed, the entire world. The stock market boom in (crashing in 2000) and the massive real estate boom (crashing in 2007) were both manifestations of these misallocations. The global boom starting in 2002 was caused by the Federal Reserve printing money and keeping interest rates artificially low (in order to boost consumption and maintain GDP "growth"), and thus injecting massive amounts of money into the economy - which had no basis in the real productive growth of the economy. Since the dollar is the reserve currency used for world trade, this artificially inflated the entire world economy, which is now crashing. This was done to alleviate the fallout of the 2000 crash, but the cure turned out to be worse than the disease. The "Subprime Crisis" was just the tip of the iceberg and, in fact, an effect not a cause of this meltdown. The real cause is unbridled growth of money supply and debt by the Fed and other Central Banks of the world.


At heart, this economic crisis is in fact a currency crisis. Throughout history no paper currency (or "fiat currency", since it is accepted as money by virtue of Government fiat or decree) has survived, and this time will be no different. The average lifespan of fiat currencies has been 16 years*. The present system is unique in that it has survived for 38 years and for the first time ALL countries throughout the world are on a fiat money standard. This means that the resulting crash will be on the scale of something the world has never seen. This will be a time of hardship for many, but for those who are "economically literate" and prepared - they will come through largely unscathed, even prosper. If there ever was a time to educate yourself about financial matters, this is it. And don’t listen to the stock-pumpers and so called “analysts” on television – who really are just a part of the Wall Street sales force. These are the same guys who peddled complete garbage as “AAA” securities and that there was no “bubble” in real estate. The rating agencies (Moody's, S&P, etc.) are in cahoots with these crooks, and in their pay. The same goes for the regulatory agencies in the US such as the SEC (and I think pretty much everywhere), which was caught not only napping, but deliberately ignoring the doings of the biggest "Ponzi Scheme" perpetrator of all time - Bernard Madoff. All they are interested is in making a quick buck off of you. Doing your own research on the internet is the only way of finding unbiased information. Just switch off the TV, and switch on the Internet.


I am no financial adviser or any kind of expert, but an ideal portfolio in my opinion would be majority in Gold (strictly physical – no ETF’s or any kind of “paper” gold), some Silver (again, physical) and some cash for day-to-day needs. As you must be aware, more and more banks are failing every day, so it’s not advisable to keep an amount over and above that insured by the FDIC in any single bank. If you are not sure about the solvency of your bank (which can be said of pretty much every bank these days), you can also park your cash in short term Treasury bonds. It is also advisable to keep some cash at home in case there is a “bank holiday” or withdrawal restrictions are imposed by the government. Why the bias towards gold, you may ask. Well, gold is a long and complicated subject so I can’t explain it here (although I do urge you to explore it on your own), but suffice to say that not only will it protect your assets in case of Financial Armageddon, but is sure to rise manifold in value as this crisis progresses. It has retained its purchasing power for thousands of years, and this time will be no different. The record of paper currencies on the other hand is quite dismal, to say the least. This is a once in a 100 year crisis, so you really need to have a historical perspective about this. I reiterate - NO other asset is safe, not even the dollar itself. If anything, gold is a sort of insurance for your portfolio that you will not regret buying. And beware of people who tell you that gold is just an "asset" or "commodity", for they don't know what they are talking about. It's not. It's a currency - the best there is.


At some point, after a huge crash has occurred, the stock market will rise. In fact, it may rise tremendously. It will rise not because of strong fundamentals of the economy, but because of the depreciation of paper currencies (hyperinflation). Hence, any steps that you take to retrieve your investments from the stock market will only prove useful if you invest the proceeds in Gold, as Gold will rise much, much more than the stock market at that point. In fact, in such a scenario, it may even become impossible to obtain physical Gold in exchange for paper currency.


There is a lot more to this than what I have just mentioned, so I urge you to do your own research and take the steps necessary to protect yourself and your family financially. We are heading towards a global currency crisis and it will affect everybody throughout the world.

http://www.oftwominds.com/blogmay10/market-unhinged-from-reality05-10.html

Joshua Kosman, author of The Buyout of America: How Private Equity Will Cause the Next Great Credit Crisis does a pretty good run-down on this scam on NPR’s November 16, 2009 “Fresh Air” .

According to the transcript, private equity firms (the new name for “leveraged buyout firms”) like the notorious Carlyle Group have purchased companies in a variety of industries and are now set to default on about a trillion dollars of their debts, close to the amount of default for the entire sub-prime mortgage market. Taking advantage of cheap money and lax lending, private equity firms will likely bankrupt about half of the 3,100 companies they bought, which currently employ one in ten American workers. Kosman estimates about 1.9 million jobs would be lost as a result.

By squeezing out workers, cutting research and development, private equity firms sell to each other at a massive short-term profit that devastates long-term viability. With the mattress industry, private equity firms bought Sealy, Simmons, and Serta. They then proceeded to essentially fix prices between themselves raising prices while lowering quality and durability. This worked short term, until competitors like Tempur-pedic gained market share and left the overpriced junk offered by their hollowed-out leveraged companies on the shelves. Market share and profitability for Serta dropped below pre-takeover levels.

The same formula is used with hospitals and other industries. Take a productive company with some reputation and loyalty, trash it, counting on lag time for people to depart, and make off with loot when it crashes.

Incredibly, going back to our theme of the market being “unhinged” from concrete reality, these private equity firms purchase companies with debt. Literally they put their fractional “money” down, and get the firm they are buying to take on the remainder of the debt! Ostensibly, since interest is tax-deductible, the reasoning goes, tax savings for the company accepting the debt will outweigh the disadvantages of paying down the interest and taking on the risks.

Of course, unsurprisingly, reality intercedes in a different direction. The scam is exposed. The equity firm walks away, and the company goes bankrupt. Many jobs are lost, and the whole country pays.

sound retirement funds....can't have that cash on the books just sitting around not lining investors pockets.

:FRSP:

I remember back when LTV bought Republic Steel. They used the "excess" pension funds for the purchase.

Now the pensions have been slashed by about 60%, and the PBGC took it over.

http://www.nytimes.com/aponline/2010/05/16/business/AP-EU-Greece-Financial-Crisis.html?_r=2

Greek Prime Minister George Papandreou declared he is not ruling out taking legal action against U.S. investment banks for their role in creating the spiraling Greek debt crisis.

Both the Greek government and its citizens have blamed international banks for fanning the flames of the debt crisis with comments about Greece's likely default, actions that are causing the country's borrowing costs to soar.

''I wouldn't rule out that (legal action) might be a recourse. But we need to let due process (take its course) and then make our judgments once we get the results from the investigations,'' Papandreou said in a CNN interview broadcast Sunday.

He did not elaborate further on any actions against U.S. banks.

Papandreou also said a parliamentary investigation will examine the rapid swelling of Greece's debt and international banking practices to examine whether the financial sector engaged in ''fraud and lack of transparency.''

...The Greek leader also urged more regulation of the markets which, in his view, are now betting against the European governments that have poured billions into them since the global financial crisis began in 2008.

Some European governments plan to push for tighter regulation of hedge funds this week -- a move opposed by Britain, home to the financial hub of London...

http://www.informationclearinghouse.info/article25436.htm

When the Industrial Revolution began in Britain, in the late 1700s, there was lots of money to be made by investing in factories and mills, by opening up new markets, and by gaining control of sources of raw materials. The folks who had the most money to invest, however, were not so much in Britain but more in Holland. Holland was the leading Western power in the 1600s, and its bankers were the leading capitalists. In pursuit of profit, Dutch capital flowed to the British stock market, and thus the Dutch funded the rise of Britain, who subsequently eclipsed Holland both economically and geopolitically.

In this way British industrialism came to be dominated by wealthy investors, and capitalism became the dominant economic system. This led to a major social transformation. Britain had been essentially an aristocratic society, dominated by landholding families. As capitalism became dominant economically, capitalists became dominant politically. Tax structures and import-export policies were gradually changed to favor investors over landowners.

It was no longer economically viable to simply maintain an estate in the countryside: one needed to develop it, turn it to more productive use. Victorian dramas are filled with stories of aristocratic families who fall on hard times, and are forced to sell off their properties. For dramatic purposes, this decline is typically attributed to a failure in some character, a weak eldest son perhaps. But in fact the decline of aristocracy was part of a larger social transformation brought on by the rise of capitalism.

The business of the capitalist is the management of capital, and this management is generally handled through the mediation of banks and brokerage houses. It should not be surprising that investment bankers came to occupy the top of the hierarchy of capitalist wealth and power. And in fact, there are a handful of banking families, including the Rothschilds and the Rockefellers, who have come to dominate economic and political affairs in the Western world.

Unlike aristocrats, capitalists are not tied to a place, or to the maintenance of a place. Capital is disloyal and mobile – it flows to where the most growth can be found, as it flowed from Holland to Britain, then from Britain to the USA, and most recently from everywhere to China. Just as a copper mine might be exploited and then abandoned, so under capitalism a whole nation can be exploited and then abandoned, as we see in the rusting industrial areas of America and Britain.

This detachment from place leads to a different kind of geopolitics under capitalism, as compared to aristocracy. A king goes to war when he sees an advantage to his nation in doing so. Historians can 'explain' the wars of pre-capitalist days, in terms of the aggrandizement of monarchs and nations.

A capitalist stirs up a war in order to make profits, and in fact our elite banking families have financed both sides of most military conflicts since at least World War 1. Hence historians have a hard time 'explaining' World War 1 in terms of national motivations and objectives.

In pre-capitalist days warfare was like chess, each side trying to win. Under capitalism warfare is more like a casino, where the players battle it out as long as they can get credit for more chips, and the real winner always turns out to be the house – the bankers who finance the war and decide who will be the last man standing. Not only are wars the most profitable of all capitalist ventures, but by choosing the winners, and managing the reconstruction, the elite banking families are able, over time, to tune the geopolitical configuration to suit their own interests.

Nations and populations are but pawns in their games. Millions die in wars, infrastructures are destroyed, and while the world mourns, the bankers are counting their winnings and making plans for their postwar reconstruction investments.

From their position of power, as the financiers of governments, the banking elite have over time perfected their methods of control. Staying always behind the scenes, they pull the strings controlling the media, the political parties, the intelligence agencies, the stock markets, and the offices of government. And perhaps their greatest lever of power is their control over currencies. By means of their central-bank scam, they engineer boom and bust cycles, and they print money from nothing and then loan it at interest to governments. The power of the banking elites is both absolute and subtle...

The end of growth – capitalists vs. capitalism

It was always inevitable, on a finite planet, that there would be a limit to economic growth. Industrialization has enabled us to rush headlong toward that limit over the past two centuries. Production has become ever more efficient, markets have become ever more global, and finally we have reached the point where the paradigm of perpetual growth can no longer be maintained.

Indeed, that point was actually reached by about 1970. Since then capital has not so much sought growth through increased production, but rather by extracting greater returns from relatively flat production levels. Hence globalization, which moved production to low-waged areas, providing greater profit margins. Hence privatization, which transfers revenue streams to investors that formerly went to national treasuries. Hence derivative and currency markets, which create the electronic illusion of economic growth, without actually producing anything in the real world.

If one studies the collapse of civilizations, one learns that failure-to-adapt is fatal. Continuing on the path of pursuing growth would be such a failure to adapt. And if one reads the financial pages these days, one finds that it is full of doomsayers. We read that the Eurozone is doomed, and Greece is just the first casualty. We read that stimulus packages are not working, unemployment is increasing, the dollar is in deep trouble, growth continues to stagnate, business real estate will be the next bubble to burst, etc. It is easy to get the impression that capitalism is failing to adapt, and that our societies are in danger of collapsing into chaos.

Such an impression would be partly right and partly wrong. In order to understand the real situation we need to make a clear distinction between the capitalist elite and capitalism itself. Capitalism is an economic system driven by growth; the capitalist elite are the folks who have managed to gain control of the Western world while capitalism has operated over the past two centuries. The capitalist system is past its sell-by date, the banking elite are well aware of that fact – and they are adapting.

Capitalism is a vehicle that helped bring the bankers to absolute power, but they have no more loyalty to that system than they have to place, or to anything or anyone else. As mentioned earlier, they think on a global scale, with nations and populations as pawns. They define what money is and they issue it, just like the banker in a game of Monopoly. They can also make up a new game with a new kind of money. They have long outgrown any need to rely on any particular economic system in order to maintain their power. Capitalism was handy in an era of rapid growth. For an era of non-growth, a different game is being prepared.

Thus, capitalism has not been allowed to die a natural death. First it was put on a life-support system, as mentioned above, with globalization, privatization, derivative markets, etc. Then it was injected with a euthanasia death-drug, in the form of toxic derivatives. And when the planned collapse occurred, rather than industrial capitalism being bailed out, the elite bankers were bailed out. It's not that the banks were too big to fail, rather the bankers were too politically powerful to fail. They made governments an offer they couldn't refuse.

The outcome of the trillion-dollar bailouts was easily predictable, although you wouldn't know that from reading the financial pages. National budgets were already stretched, and they certainly did not have reserves available to service the bailouts. Thus the bailouts amounted to nothing more than the taking on of immense new debts by governments. In order to fulfill the bailout commitments, the money would need to be borrowed from the same financial institutions that were being bailed out.

With the bailouts, Western governments delivered their nations in hock to the bankers. The governments are now in perpetual debt bondage to the bankers. Rather than the banks going into receivership, governments are now in receivership. Obama's cabinet and advisors are nearly all from Wall Street; they are in the White House so they can keep close watch over their new acquisition, the once sovereign USA. Perhaps they will soon be presiding over its liquidation.

The bankers are now in control of national budgets. They say what can be funded and what can't. When it comes to financing their wars and weapons production, no limits are set. When it comes to public services, then we are told deficits must be held in check. The situation was expressed very well by Brian Cowan, Ireland's government chief. In the very same week that Ireland pledged 200 billion Euro to bailout the banks, he was being asked why he was cutting a few million Euro off of critical service budgets. He replied, "I'm sorry, but the funds just aren't there". Of course they're not there! The treasury was given away. The cupboard is bare.

As we might expect, the highest priority for budgets is servicing the debt to the banks. Just as most of the third world is in debt slavery to the IMF, so the whole West is now in debt slavery to its own central banks. Greece is the harbinger of what is to happen everywhere...

REPUDIATE THE DEBT, TAKE BACK THE MONETARY SYSTEM FROM THE BANKERS--KILL THE FED AND WALL ST. AND GO SOLAR--THE ECONOMIC OVERLORDS ARE STIFLING DECENTRALIZED POWER BECAUSE PEOPLE CAN SLIP FREE OF THEM.

AND STOP CAPITAL FLIGHT DEAD. WITH TAXES AND LAWS{/B]

Permit me to issue and control the money of the nation and I care not who makes its laws

18th century?

http://quote.morningstar.com/Index/Quote.aspx?Ticker=XSHG:$000001

http://tools.morningstar.com/index_charts/ImageGenerator.aspx?Security=$000001&CountryId=CHN&ExchangeId=XSHG&TimeFrame=D1&Rndnum=127

5/16/10 Oil, credit and the velocity of money revisited
Here's Stoneleigh:

Stoneleigh: Let me try to resolve the apparent contradictions by answering some questions from a TAE reader:

Q: In 1933 there was a shortage of everything. Commerce had been dead for enough years - killed by gold- buggery - that there was shortages except for crops that were rotting in the fields (and petroleum that was wasted, according to Jeffrey Brown, who I believe.) No money meant no production = shortages = no commerce = no new money in the system in a self- reinforcing cycle....

....citizens hoarded paper dollars as they had hoarded specie. Paper dollars were still worth more than (pauperish) 1930's commerce.



Stoneleigh: Exactly. The lack of money led to shortages because without it one could not connect buyers with sellers, so production died. But not for want of raw materials. Farmers threw milk they couldn't sell in ditches while down the road people were starving. That is what I have been saying will happen again.

Money is the lubricant in the economic engine. Trying to run an economy without it is like trying to drive your car with the oil light on. The vast majority of the effective money supply consists of credit, and deleveraging will take care of that. As for the small amount of money left, people will be hanging on to it with both hands because they won't know when they'll be able to earn any more.

The fall in the velocity of money will aggravate credit collapse dreadfully. The result will be an unbelievably severe liquidity crunch, worse than the 1930s because the scale of the hangover is proportionate to the scale of the party that preceded it.

For a while it will look like we have surpluses, merely because production will be set to meet a level of aggregate demand that will no longer exist due to a collapse of purchasing power. Then production will disappear as well.

We tell people to make sure they have preserved capital as liquidity, as dollars (and other currencies) will indeed be worth a great deal in relation to available goods and services. Those who still have money will be the only ones with purchasing power.

lots, lots more!
and there is additional commentary by Stoneleigh in the comments section towards the end of this posting
http://theautomaticearth.blogspot.com/2010/05/may-16-2010-oil-credit-and-velocity-of.html

Or, you can just go directly to the comments section at this link, and look for Stoneleigh
https://www.blogger.com/comment.g?blogID=4921988708619968880&postID=5664142118062287018&pli=1



P.S. Stoneleigh has started giving presentations around the country, and soon will be in Europe. Keep checking her schedule for speaking dates, which is located in the top right portion of the blog.

Current Schedule
Agenda Stoneleigh Talks:

• Austin, TX, May 11, First Unitarian Universalist Church, 7 pm.

• Cook Memorial Library, Tamworth, NH, May 18.

• Public Library, Main St, Norwich, VT, May 19, 8 pm.

• Burlington, VT, May 20, Fletcher Free Library, Pickering Room, 4.30 pm.

• Unitarian Society Of Northampton and Florence, Northampton, MA, May 21, 7 pm.

• Wilmington, NC, May 25, location TBA

• Washington, DC, May 24 or 26, location TBA.


• There is still room for additional talks on the East Coast. Anyone interested in organizing one, please email Stoneleigh.


European dates:

• France June 3-5
• UK June 5-12
- Coventry June 10
- Totnes June 12
• Holland June 13-19
- Amsterdam June 14
• Belgium (Brussels) June 20
• France (east) June 21-27
• Italy early-mid July
• France (south and west) mid-end July
• Ireland August 1-5

Additional bookings available.


Edit: Stoneleigh is working on a schedule to visit Ohio, Wisconsin, Minnesota, Iowa, Kansas and Missouri.

For all information and bookings (dates available Europe June-July 2010, US August-October 2010), contact StoneleighTravels at Gmail dot com.



From reading commentors at the TAE blog and other blogs, the people who have heard Stoneleigh's presentation, give it much praise and very worthwhile. The presentation is appx 1 hour, followed by another hour or 2 of questions and answers. If anyone is in an area to hear her, please go!


Another edit:
Here is an interview that Stoneleigh gave in February 2010 for KBOO radio in Portland, Oregon.
You can hear MP3 at this link, or download. It is appx 30 minutes.

http://www.kboo.org/node/19246

http://www.marketwatch.com/story/more-homeowners-choose-to-default-on-loans-2010-05-17?siteid=YAHOOB

"Strategic defaults" are on the rise as more borrowers who are underwater on their home loans decide it's not worth it to stay current on their payments each month. That trend could have repercussions for the housing market, and for borrowers, in the future.

Strategic defaults are when borrowers who owe more on their homes than they're currently worth choose to stop paying their mortgage but continue to meet other financial obligations, according to a definition by Morgan Stanley in a research report on the topic.

In other words, these homeowners neglect their monthly principal and interest payments, but still pay other bills on time, including credit cards and auto loans.

The Morgan Stanley report estimates that 12% of mortgage defaults in February were strategic. Other reports estimate an even higher proportion of this type of loan default.

Growing social acceptance of this behavior could have ramifications not only for personal credit histories and the health of neighborhoods, but also for the future of mortgage lending, according to those studying the issue.

For one, there's a contagion effect: As more people watch their friends or neighbors choose to default, the more it becomes a viable option for homeowners who may otherwise wait years just to return to a positive equity position in their properties, said Sam Khater, senior economist for CoreLogic, a provider of consumer, financial and property information. The volume of foreclosures on the market today is also chipping away at the stigma that used to come with defaulting on a home loan.

"If you know someone who has defaulted strategically, you're more likely to declare you're willing to do it," said Luigi Zingales, professor of entrepreneurship and finance at the University of Chicago's Booth School of Business.

In areas where home prices are severely depressed, social acceptance of this decision could lead to pockets "where strategic default becomes the norm, versus the exception," Zingales said.

But look even farther in the future, and the repercussions of substantial strategic defaults could have a larger-scale effect.

"If it really does become a legitimate problem, the implications are pretty dramatic for anyone that wants to buy a home in the future," said Rick Sharga, senior vice president of RealtyTrac, an online marketplace of foreclosure properties. "The lenders would have to build this into their risk models with either larger down payments or higher interest rates."

Some owners 'mimic investors'

Many agree the ranks of people taking this route are growing, but putting a number on the trend isn't as easy. To measure the number of people who are strategically defaulting on their mortgage obligations, you have to assess borrower intent.

"Take all the numbers with a grain of salt, because it's one of those topics which is really difficult to get a firm grasp on," Sharga said. "The projections are based on limited sample sizes, and people are doing projections that have a lot of implications on societal behavior and political policy."

Researchers believe that being underwater on a loan is a prerequisite to strategic default, and the more underwater you are, the likelier you are to consider defaulting -- even if you can afford to keep making payments.

"In our data, what we've noticed is at about 25% negative equity, the behavior of owners begins to mimic that of investors -- they're more ruthless and rational, they're looking at it from a cash-flow perspective," Khater said. "The default rate rises as the negative equity gets deeper and deeper."

Here are some estimates of how big a problem strategic default is:

*Morgan Stanley's recent report examined the payment habits of 6.5 million borrowers with first-lien mortgages that originated in 2004 or later, and estimated that 12% of all mortgage defaults were strategic in February -- that is, the borrower who is underwater on his or her mortgage obligations and stops paying on that home loan, yet still meets other, "meaningful" non-mortgage obligations. The authors used data from TransUnion in their analysis. The report found that the incidence of strategic default is higher among those with higher credit scores and larger loan balances.

*Analysis from Experian and Oliver Wyman estimated that strategic defaulters made up about 18% of all borrowers who went 60 days past due on their mortgage in the fourth quarter of 2008; about 588,000 borrowers strategically defaulted in 2008, up 128% from 2007. Strategic default was also found to be most prevalent in areas that experienced steep price declines, including California and Florida, and among mortgages that originated in or after 2006, because those borrowers didn't experience home price appreciation before prices headed south.

*Research from the Chicago Booth/Kellogg School Financial Trust Index found a rising percentage of homeowners are willing to strategically default: The percentage of foreclosures perceived to be strategic was 31% in March, compared with 22% in March 2009. The data is collected through a survey of about 1,000 people.

One possible reason the numbers are rising is some homeowners' belief that lenders aren't aggressively pursuing those who default, according to the Chicago Booth/Kellogg School report.

"With more and more homeowners believing that lenders are failing to pursue those who default on their mortgages, there is a risk that a growing number of homeowners will walk away from their homes even if they can afford monthly payments," said Paola Sapienza, professor of finance at the Kellogg School of Management at Northwestern University and co-author of the report, in a news release. Zingales was a co-author.

People are also learning they often have one or two years before they get thrown out of a home after stopping payments, said Frank Pallotta of RH Reward, or Responsible Homeowner Reward, a program that works with lenders to provide financial incentives for borrowers who are at a high risk of strategically defaulting.

Getting above water

A recovery in home prices could give people hope to stick it out and stay in their homes, even if they're underwater, Zingales said. "If prices were to drop again, people might lose hope," he said.

CoreLogic estimates that the typical underwater borrower is five to seven years away from regaining their lost equity.

Eventually, those who do stick it out will see their equity increase due to simple amortization: Over time, less of your payment is going to interest and more is going to the paying down of principal, Khater said. "If they remain current on their home, simply paying their loan will help drive them back to positive equity," he said.

But for some homeowners, that won't be enough.

"Strategic default will begin to pick up in numbers as the housing market begins to stabilize," Pallotta said. "Now you can almost quantify how long it is to see the light at the end of the tunnel."

If people figure they'll wait more than a decade before regaining the equity they've lost, they're much more likely to cut bait and leave, he said.

LONDON, May 17 (Reuters) - Stocks steadied and the euro bounced off four-year lows on Monday as wary European markets seized on positive company news and bought back into the single currency on a squeeze of short trading positions.

Wall Street looked set to open slightly higher after a selloff of more than 1.5 percent on Friday.

European and global stocks retraced early morning losses sparked by fears that European austerity measures would smother the region's fragile recovery, while a brief widening of Greek government bond yield spreads versus German bunds reversed.

By early afternoon the spread between Greek and German 10-year government bonds was little changed at 546 basis points.

Core euro zone government bond prices fell, with some traders citing central bank debt buying of peripheral debt while others said Bunds had been overbought.

...

The FTSEurofirst 300 index of top European shares was up 1.03 percent after oil major BP reported some progress in containing the oil gushing out of its ruptured well into the Gulf of Mexico.

Banks, which have been amongst the biggest losers in the recent turmoil, were also mostly higher.

/... http://www.finanznachrichten.de/nachrichten-2010-05/16918222-global-markets-stocks-euro-steady-investors-still-wary-020.htm

NEW YORK, May 17 /PRNewswire/ -- More than 80 independent Kansas, Oklahoma and Texas oil and gas producers have filed lawsuits alleging that Goldman Sachs subsidiary J. Aron & Co. and British Petroleum subsidiary BP Oil Supply Company conspired with SemGroup to defraud them and convert millions of dollars worth of the producers' crude oil and gas that was delivered to SemGroup prior to the company's 2008 bankruptcy.

In addition to BP and J. Aron, ConocoPhillips, Plains Marketing and numerous other oil and gas companies are named as defendants in lawsuits that were filed in Kansas and Oklahoma state courts. The lawsuits for the independent producer plaintiffs say they are owed millions of dollars for the crude oil and gas that the defendants took from SemGroup just as margin calls were rapidly driving the energy company toward its Chapter 11 filing in July 2008.

"We believe the evidence will show that J. Aron deliberately took advantage of SemGroup's dire financial predicament when J. Aron took possession of our clients' oil and gas," says bankruptcy attorney Peter Goodman of McKool Smith, who represents the plaintiffs along with McKool Smith commercial litigator Kyle Lonergan.

The complaints allege that Goldman Sachs and J. Aron exploited their multilayered relationship with SemGroup in which they were the company's investment banker, offering agent, lender, and trading partner to take possession of the independent producers' oil and gas in violation of numerous state laws of Kansas, Oklahoma, and Texas.

http://www.prnewswire.com/news-releases/independent-oil--gas-producers-sue-subsidiaries-of-goldman-sachs-and-british-petroleum-for-conspiring-with-semgroup-to-defraud-them-93942884.html


There were more than two billion in margin calls in the SemGroup bankruptcy. Of course Goldman was in there somewhere.

Per
http://www.huffingtonpost.com/raymond-j-learsy/goldmanwall-street-profit_b_551460.html

But being aware of a counterparty trading positions can bring huge profits as well as disaster. There is the case of Semgroup Holdings, a private firm in Tulsa that entered into some enormous trades with J. Aron & Co., Goldman Sach's oil trading arm. In February 2008 Semgroup accorded options for 500,000 barrels of oil to Aron for July 2008 delivery at $96 a barrel. As prices shot past $96/bbl in June 2008 on their way to $147/bbl on July 12, Semgroup was caught in a massive short squeeze to the point that Forbes would comment "there was the smell of blood in the water".
Then quoting a John Tucker, attorney for one of the interested parties, "Nothing's been proven, but if someone has your book and knows every trade, it would not be difficult to bet against that book and put the company into a terrific liquidity squeeze".

The Forbes article goes on, "What's known for sure is that Goldman Sachs, through J. Aron & Co its commodities trading arm, was in a prime position to use such data- and profited handsomely from Semgroup's fall. J. Aron & Co was Semgroup's biggest counterparty trading both physical oil flowing through the pipelines and paper oil in the form of options and futures." A thought, did we see $147/bbl oil and $4.00 gasoline in 2008 because of Goldman's short squeeze on Semgroup??


---

My answer, yes.

They are dirtier than oil, which is hard to imagine

Coming right after lunch.

"After plunging to the mid 1.22, the EURUSD is now back to green for the day. This is due primarily to panicked buying by various central banks every time the EUR drops to support levels, a fact now fully transparent to the entire market. More importantly, the EURJPY which is much more critical as a carry funding source to buy stocks, is almost back to unchanged, which in turn has forced a spike in the market to retrace nearly half its losses in under an hour. If anyone believes stocks track any fundamental news flow, our condolences."

http://www.zerohedge.com/article/eurusd-now-swings-positive-day-central-banks-come-out-full-defense-euro


Martinis sound pretty good right about now, though!

We have so many eyes we can see nearly everything!