Lehman Auction Leaves Cloudy Picture For Banks
Liz Moyer, 10.10.08, 5:40 PM ET

http://www.forbes.com/2008/10/10/lehman-bonds-banking-biz-wall-cx_lm_1010auction_print.html

Hedge funds and banks that bought insurance against a default in bonds of Lehman Brothers stand to be $365 billion richer.

That's because derivatives traders, using an auction Friday, set the price of Lehman's bonds at 8.625 cents on the dollar. The amount of insurance--in the form of credit default swaps--written to protect bond holders is estimated at $400 billion. Buyers of the insurance will collect the full face value of their holdings from the sellers of the insurance.

Of course that also means the banks, funds and insurance companies that sold it are out $365 billion, which is the difference between the price of Lehman's bonds as set in the auction and the remaining 91.375 cents in face value.

It won't be easy to draw up a quick winners and losers column, however. Buyers of insurance are also sellers and vice versa. The International Swaps and Derivatives Association says all this netting out means the ultimate payout among trading partners may be closer to 2% of the gross outstanding $400 billion, or $8 billion.

Still, the arcane, mostly unwatched, corner of the markets known as credit default swaps, estimated at $61 trillion in notional value, continues to drive the broader markets into a free fall because investors are skittish about which firms are exposed and to how much.

Morgan Stanley, whose shares tumbled 40% Friday on concerns about its ability to raise cash in the bond market, carefully pointed out in a regulatory filing Thursday that it had an "immaterial" exposure to Lehman at the end of August.

Credit default swaps have become one of the villains in the credit crisis, perhaps because they are so little understood. Trading in credit default swaps went haywire in the days leading up to recent major corporate defaults, including Lehman, American International Group, Fannie Mae and Freddie Mac. That suggests the derivatives markets have some predictive power, which makes the stock markets crazy, too.

Credit default swaps are privately negotiated contracts between trading partners. One criticism of them is that they trade and settle over-the-counter, beyond the reach of regulators. They are essentially contracts that insure a buyer against default of any bond holdings.

Traders who make a living short-selling stocks also amass credit default swaps as another way to bet against a company. (Buying them means you are betting longer term on default, and the position can be profitable if you buy the CDS when the spreads are low and then you close out the position when they open wide up, as Lehman's did before its bankruptcy.) Pershing Square's William Ackman has used this technique, as well as short-selling, to profit from the decline in the shares of bond insurers MBIA and Ambac Financial.

Federal regulators are talking about changing how credit default swaps are traded to shed some light on the matter and reduce the uncertainty that is taking a toll on the stock and bond markets. Friday afternoon, the Federal Reserve Bank of New York played host for the second time in a meeting to talk about creating a central counter-party or trading mechanism for credit default swaps.

Among those attending the session are representatives of Eurex, NYSE Euronext, CME Group, Citadel and Intercontinental Exchange. Major credit default swap dealers, hedge funds, the U.S. Securities and Exchange Commission, the Commodity Futures Trading Commission and the European Central Bank were also set to attend.

Advocates of the over-the-counter market say swaps don't kill companies, stupid management decisions do. "CDS contracts did not cause a firm to fail," says Robert Pickel, the chief executive officer of the International Swaps and Derivatives Association. "The underlying cause was the risks these firms took on."

Lehman filed for bankruptcy on Sept. 15, leaving more than $128 billion of senior holding company debt in the lurch.

The auction, conducted Friday at the invitation of the International Swaps and Derivatives Association and administered by Markit and Creditex, involved bidding by 14 of Wall Street's biggest (remaining) banks. There were more sellers than buyers in the morning, when the initial pricing was set at 9.75 cents on the dollar. An order imbalance of $4.9 billion, with more sellers than buyers, pushed the final price down by the 2 p.m. reporting deadline.

According to data released about the auction, the three biggest sellers were Goldman Sachs, offering $1.47 billion either for itself or customers, followed by Deutsche Bank, offering $870 million, and Credit Suisse, offering $755 million.

In all, more than 350 entities participated in the auction.

You bot the best with great % yield Relax.

l bot some Pilgrim's Pride PPC, l like chicken

USDA says chicken eggs last week slid 11 pct, biggest drop in 5 years, as producers cut back.

http://biz.yahoo.com/ap/081008/chicken_producers_sector_snap.html?.v=1

also bot some CDE

Goldman Sachs Takes on ‘Dr. Doom’
October 10, 2008, 1:28 pm Link to This
E-mail this
Topics Investment BankingIndustries Financial Services

Goldman Sachs is squaring off with Nouriel Roubini, a professor from New York University’s Stern School of Business, over his dire outlook for the investment bank.

The back-and-forth began with an opinion piece of Mr. Roubini’s that appeared on Forbes.com. The article made a host of gloomy predictions and included the claim that Goldman’s latest capital raising-effort was a “cosmetic” fix and that “most of its lines of business (including trading) are now losing money.”

Elsewhere in the article, Mr. Roubini — who has warned for years that a major financial crisis was brewing — suggested a “total meltdown of the U.S. financial system could occur.”

The article drew a forceful reaction from Lucas van Praag, Goldman’s global head of media relations and a partner at the firm.

In a letter to the editor, published Friday on Forbes.com, Mr. Van Praag called Mr. Roubini’s claim that the firm was losing money “curious” and suggested that it was based more on a “gut reaction” than fact. He pointed out that Goldman reported a profit in the third quarter and had done so for every quarter since the credit crunch began last summer.

Mr. van Praag also suggested that Mr. Roubini was painting Wall Street with too broad a brush. “Mr. Roubini does not distinguish between the differing performances at various firms,” he wrote in his letter. “As a result, he fails to acknowledge that the difference in performance is clearly a function of different business models, risk management practices and decision making.”

Asked about Goldman’s response, Mr. Roubini told Dealbook that he meant to say that Goldman “will” lose money in the future. He went on to say that their profits were down across the board from the same time last year and that “the only reason Goldman didn’t go bust” was because of the “direct and indirect support from the Fed.”

Mr. Roubini contends that this support is unsustainable and that even though “Goldman may be better managed” than many of its peers, it could not survive by itself given the fundamental changes in the market. “Look at Morgan Stanley,” he said. “They are teetering on the edge. Goldman is no different — it depends on the same model to make money.”

Mr. Roubini, whom The New York Times has called “Dr. Doom,” predicted in February that every major, independent broker-dealer in the United States would fall because of business models that depend on using lots of short-term leverage to finance illiquid, long-term assets.

In one sense, he has already been vindicated: Bear Stearns and Lehman Brothers have disappeared, and Merrill Lynch it set to be sold to Bank of America. The last of the independent broker-dealers — Goldman Sachs and Morgan Stanley — changed to bank holding companies last month.

While the firms said this change would make them more financially stable, Mr. Roubini says he still believes that Goldman and Morgan are vulnerable. His advice to both banks: Merge with a foreign bank as soon as possible.

– Cyrus Sanati

Go to Mr. van Praag’s Letter via Forbes.com »
Go to Mr. Roubini’s Opinion Piece via Forbes.com »

34 comments so far...

http://dealbook.blogs.nytimes.com/2008/10/10/goldman-sachs-takes-on-dr-doom/

Coeur Alaska Inc
Juneau, AK

Half of the workers at the Kensington Mine near Juneau are losing their jobs because of layoffs. Tony Ebersole, with the mine's development company Coeur d'Alene Mines, said about half of the mine's 82 employees will be laid off. Ebersole said the move is needed to reduce preproduction costs. Coeur d'Alene Mines is abandoning the permitting process for an alternative paste tailings plan for the mine. Ebersole said the company will continue to pursue its original tailings plan that calls for putting the tailings in Lower Slate Lake. Tailings are the waste left over after metals are extracted from ore. The original tailings plan is being challenged in court. A decision is pending in the U. S. Supreme Court. An appeals court found the Lower Slate Lake disposal plan violates the Clean Water Act. The alternative tailings disposal method was submitted after extensive mediated discussions between Coeur and local conservation groups. It was proposed in January. Permits were expected in the third or fourth quarter of this year.

Approximate Affected Workforce: 1-50
Source: The Associated Press - October 4, 2008

Coeur Alaska Inc
Juneau, AK

Half of the workers at the Kensington Mine near Juneau are losing their jobs because of layoffs. Tony Ebersole, with the mine's development company Coeur d'Alene Mines, said about half of the mine's 82 employees will be laid off. Ebersole said the move is needed to reduce preproduction costs. Coeur d'Alene Mines is abandoning the permitting process for an alternative paste tailings plan for the mine. Ebersole said the company will continue to pursue its original tailings plan that calls for putting the tailings in Lower Slate Lake. Tailings are the waste left over after metals are extracted from ore. The original tailings plan is being challenged in court. A decision is pending in the U. S. Supreme Court. An appeals court found the Lower Slate Lake disposal plan violates the Clean Water Act. The alternative tailings disposal method was submitted after extensive mediated discussions between Coeur and local conservation groups. It was proposed in January. Permits were expected in the third or fourth quarter of this year.

Approximate Affected Workforce: 1-50
Source: The Associated Press - October 4, 2008

MoneyTalk on the net with Bob Brinker


Brinker -KGO: http://www.kgoam810.com/listenlive.asp#

Show time is 4:00pm EDT Saturday & Sunday sometimes pre-empted 4 local sports event. So l have listed KGO @ same time frame, a Ca station with strong signal.
The 1st 10-15 min sets his take, then on to screened calls. [user friendly];)))

Fed. Ops: 20.00B Matures this week.**

Huge increase Debt, see reply to.

Wed: 20.00B 28day



========================================================
Temp Ops:


Perm Ops:


=======================================================
Public Debt:**

Limit ~ $10,600 T

10/9 ~~ $10,266 T

New $10.6 Trillion debt ceiling.
#msg-30998680

http://www.treasurydirect.gov/NP/BPDLogin?application=np
=========================================================
Fed:
http://www.ny.frb.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE

The Slosh Report:
http://www.gmtfo.com/RepoReader/OMOps.aspx
=========================================================

Earnings Calendar for the Week Ahead

B = Before-Market Hours
D = During-Market Hours
A = After-Market Hours

REPORTS TO BE ANNOUNCED FOR WEEK OF OCT 13 - Oct 17

#msg-32800035

Courtesy...Bullwinkle

Paulson endorses bank stock purchase plan

Friday October 10, 7:55 pm ET
By Martin Crutsinger, AP Economics Writer

Paulson announces government will move ahead with plan to buy stock in financial institutions

WASHINGTON (AP) -- Treasury Secretary Henry Paulson said Friday that the Bush administration will move ahead with a plan to buy stock in financial institutions.
Paulson said the program to purchase stock in financial institutions will be open to a broad array of institutions.

The administration received the authority to make direct purchases of stock in banks in the $700 billion measure Congress passed last week to rescue the nation's financial system.

It would mark the first time the government has taken equity ownership in banks in this manner since a similar program was employed during the Great Depression.

Paulson announced the administration was moving forward with the program during a news conference at the conclusion of discussions among finance officials of the Group of Seven major industrialized countries. That group endorsed the outlines of a sweeping program to combat the worst global credit crisis in decades.

"As we develop plans to purchase equity ... we are working to develop a standardized program that is open to a broad array of financial institutions," Paulson said in a statement.

Paulson said the government's program would be designed to complement the efforts of banks to raise fresh capital from private sources. He said the government's stock purchases would be of nonvoting shares so that the government will not have power to run the companies.

The purchase of equity stakes in companies would be in addition to the main thrust of the $700 billion rescue effort, which involves purchasing distressed assets off the books of financial institutions as a way of unthawing frozen credit markets and getting banks to resume more normal lending operations.

Paulson told reporters the administration was moving "swiftly and thoughtfully" to implement the new rescue package.

The administration is expected to start making announcements next week of the private sector asset management firms that will be selected to help run the program.

Asked how quickly the stock purchase program for banks could be implemented, Paulson said, "We are going to do it as soon as possible. We are not wasting time. People are working around the clock."

Paulson refused to provide an estimate of how much of the $700 billion program would be devoted to buying up distressed assets and how much would be used to purchase stock in financial institutions.

http://biz.yahoo.com/ap/081010/meltdown_paulson.html?.v=8

Schiff: The Party is Over

Euro Pacific Capital, Inc.
Friday, 10 October 2008

More than just a mere liquidity or credit crisis, the current financial storm represents the death throes of the old global economic order, and perhaps the birth pains of a new one. The sun is setting on the borrow and spend culture that has defined us for a generation. Our long ride on the global gravy train is finally coming to an end, and once it does nothing will be the same. The sooner we come to grips with this the better.

Despite the myriad of proposals that are coming from Washington and other world capitals, we must understand that this crisis cannot be cured by governments. In the United States, credit is gone because savings are gone. Our shallow pool of savings has been depleted through bad loans, and we can no longer entice foreigners to lend us their available savings. Given that we are already too loaded up on existing debt they we cannot realistically repay, who can blame them for not wanting to lend us more?

As a result, the free market is trying to put an end to our spending spree. Without savings or home equity to fall back on, Americans struggling with rising prices are finally being forced to cut back. This has terrified our leaders and is causing them to dismantle the remaining structure of our free enterprise-based economic system.

The intention of all these daily federal interventions is to keep the credit spigots open so Americans can go even deeper into debt to buy more stuff they can't actually afford. This should be clear enough to anyone who listens to what our leaders are actually saying. When speaking about the need for an even larger fiscal stimulus package, Barney Frank, chairman of the House Financial Services Committee, said, "We have to prop up consumption." He has it backwards. The government has been propping up consumption for far too long, and the best thing they can do now is remove the props so spending can be replaced by savings.

The sad reality is that we borrowed and spent our way into this crisis, and we are not going to borrow and spend our way out of it. Legitimate credit can only be supplied if there are genuine savings to finance it. Savings can't be magically concocted into existence by a printing press, but can only be created by consumers who spend less than they earn. Efforts to fool the market will not work and will ultimately lead to a monetary disaster and runaway inflation.

Were the government to allow market forces to work, Americans would now have to pay cash for their consumption. That would mean no instant credit for new cars, plasma TVs, appliances, consumer electronics, clothing, furniture, etc. Unless buyers actually had the cash in their checking accounts these purchases would have to be deferred. From an economic perspective this is precisely what the doctor ordered. But for an economy based 72 percent on consumer spending, the medicine will go down hard.

Ultimately, a serious reduction in consumer and mortgage credit, combined with an increase in personal savings, would again provide a pool of needed capital for businesses to produce products and provide employment opportunities. However, the danger is that this potential credit could be completely crowded out by massive borrowing by the Federal Government. In addition, prices for such things as houses and college tuition will fall sharply, as the credit artificially propping them up disappears. People would still be able to buy houses and send their kids to college only they would pay much lower prices when they do.

However, if the government keeps creating inflation to artificially sustain consumer borrowing and spending, there will be no savings left to fund anything and prices will be so high that despite massive consumer spending there will be few goods that Americans could actually afford to buy.

http://news.goldseek.com/EuroCapital/1223671266.php

Chesapeake Energy Corporation Discloses CEO's Involuntary Sale of Common Stock
Friday October 10, 4:56 pm ET


OKLAHOMA CITY--(BUSINESS WIRE)--Chesapeake Energy Corporation (NYSE:CHK - News) today disclosed that its Chief Executive Officer, Aubrey K. McClendon, involuntarily sold substantially all of his shares of Chesapeake common stock over the past three days in order to meet margin loan calls.
Management Comments

Mr. McClendon commented, “I am very disappointed to have been required to sell substantially all of my shares of Chesapeake. These involuntary and unexpected sales were precipitated by the extraordinary circumstances of the worldwide financial crisis. In no way do these sales reflect my view of the company’s financial position or my view of Chesapeake’s future performance potential. I have been the company’s largest individual shareholder for the past three years and frequently purchased additional shares of stock on margin as an expression of my complete confidence in the value of the company’s strategy and assets. My confidence in Chesapeake remains undiminished, and I look forward to rebuilding my ownership position in the company in the months and years ahead.”

Chesapeake Energy Corporation is the largest producer of natural gas in the U.S. Headquartered in Oklahoma City, the company's operations are focused on exploratory and developmental drilling and corporate and property acquisitions in the Fort Worth Barnett Shale, Haynesville Shale, Fayetteville Shale, Anadarko Basin, Arkoma Basin, Appalachian Basin, Permian Basin, Delaware Basin, South Texas, Texas Gulf Coast and Ark-La-Tex regions of the United States. Further information is available at www.chk.com.

http://biz.yahoo.com/bw/081010/20081010005735.html?.v=1

Congrats W@G

Nouriel Roubini: The world is at severe risk
of a global systemic financial meltdown and
a severe global depression.

Oct 9, 2008



http://www.rgemonitor.com/roubini-

Futures (3) + World Indices


http://www.cme.com/trading/dta/del/globex.html


http://money.cnn.com/data/premarket/


http://quotes.ino.com/exchanges/futboard/current/
- Has links for quotes and charts.


World Indices (2) Mini Charts

Updates every 60sec ~ Watch the dates!!


http://www.wwfn.com/commentary/oscharts.html

http://www.allstocks.com/markets/World_Charts/Asian_Stock_Markets/asian_stock_markets.html

gold + 22

gold + 22

Web of Debt Articles (2)

http://www.webofdebt.com/articles/


Who Owns the Fed?
http://www.webofdebt.com/articles/time_to_buy_the_fed.php

thanks guys, even more after 75ish

rayrohn weekly gold chart


http://investorshub.advfn.com/boards/read_msg.aspx?message_id=32742487

nice chart Ray

Futures (3) + World Indices


http://www.cme.com/trading/dta/del/globex.html


http://money.cnn.com/data/premarket/


http://quotes.ino.com/exchanges/futboard/current/
- Has links for quotes and charts.


World Indices (2) Mini Charts

Updates every 60sec ~ Watch the dates!!


http://www.wwfn.com/commentary/oscharts.html

http://www.allstocks.com/markets/World_Charts/Asian_Stock_Markets/asian_stock_markets.html

mtcinc0, chart collage updates crude
to front month...here

http://investorshub.advfn.com/boards/board.aspx?board_id=1804

Who Do We Blame for America's Financial Mess?

http://www.321gold.com/editorials/cooke_r/cooke_r100808.html

Ronald R Cooke
The Cultural Economist
Oct 8, 2008

Time for a reality check

The traditional checks and balances of America's financial system have been deliberately bypassed. The Real Estate industry encouraged the production of very high risk mortgage applications. With the full knowledge and support of Congress, most of the Banking System ignored its responsibility to monitor the credit worthiness of mortgage applicants. Wall Street then sliced and diced these worthless loans into $$ billions of highly questionable securities called Collateralized Debt Obligations. In the process, everyone involved dipped their hands into the cookie jar. Millions and billions of dollars. Get rich selling worthless paper.

But our folly doesn't end with mortgage market insanity. We have also created a colossal dog pile of derivative instruments tied to thin air, slopped at the trough of greasy debt, and turned Wall Street into a raucous gambling casino. Financial chicanery has been promoted as "investment". Our banking system, which only works if there is an environment of trust and institutional integrity, must now deal with an overwhelming fear of deception.

Dare I ask. Are the we victims of fraud and misrepresentation? Criminal conduct? Gonad driven hubris? Mindless greed? Or just outright stupidity?

In theory, this financial mess should never have happened. The Bush Administration should have provided the leadership and management necessary to ensure America's federal agencies were doing their job. And under our "system" of checks and balances, if the cognizant federal agencies continued to screw up, then Congressional oversight should have kicked in to fix any problems.

But the system is broken. Financial ruin is the norm. The stinking sludge runs both wide and deep. Ordinary Americans are being savaged by economic privation.

A Massive Failure Of Federal Governance

The Bush Administration
At first blush, it would appear the Bush Administration has been in a state of bureaucratic stupor. This situation has been developing for several years. One would think someone on the Federal payroll would notice the smell of rotting value. Now mind you, I'm just an old middle class American, but just what were America's Federal agencies supposed to be doing? Well. Here is what they claim ...

The Securities and Exchange Commission
"The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation."

The Federal Reserve
"The mission of the Federal Reserve is to provide the United States with a safe, flexible, and stable monetary and financial system."

The Department of the Treasury
"Serve the American people and strengthen national security by managing the U.S. Government's finances effectively, promoting economic growth and stability, and ensuring the safety, soundness, and security of the U.S. and international financial systems."

The Comptroller of the Currency, The Department of the Treasury
The Comptroller of the Currency is responsible for "ensuring a safe and sound national banking system for all Americans."

Office of Thrift Supervision [OTS], The Department of the Treasury
"To supervise savings associations and their holding companies in order to maintain their safety and soundness and compliance with consumer laws, and to encourage a competitive industry that meets America's financial services needs..."

"The OTS examines each savings association every 12-to-18 months to assess the institution's safety and soundness, and compliance with consumer protection laws and regulations. In addition, examiners monitor the condition of thrifts through off-site analysis of regularly submitted financial data and regular contact with thrift personnel. OTS examinations and its ongoing supervisory oversight are tailored to the risk profile of each institution."

The Justice Department
"To enforce the law ... to provide federal leadership in preventing and controlling crime; to seek just punishment for those guilty of unlawful behavior; and to ensure fair and impartial administration of justice for all Americans."

Now then. Have these agencies done their job? Can we trust their judgment?

You decide.

And what about Congress?
Who has ultimate oversight responsibility for America's Federal Agencies? Who holds hearings on agency operations? Who has the responsibility to enact regulatory legislation? Who determines what these agencies are supposed to do and then monitors them to be sure they are meeting their legislative objectives?

Congress. Republicans and Democrats. There are two key committees. Let's look at how they define their responsibility.

House (of Representatives) Financial Services Committee
"The Committee oversees all components of the nation's housing and financial services sectors including banking, insurance, real estate, public and assisted housing, and securities. The Committee continually reviews the laws and programs relating to the U.S. Department of Housing and Urban Development, the Federal Reserve Bank, the Federal Deposit Insurance Corporation, Fannie Mae and Freddie Mac, and international development and finance agencies such as the World Bank and the International Monetary Fund. The Committee also ensures enforcement of housing and consumer protection laws such as the U.S. Housing Act, the Truth In Lending Act, the Housing and Community Development Act, the Fair Credit Reporting Act, the Real Estate Settlement Procedures Act, the Community Reinvestment Act, and financial privacy laws."

(The Senate) Committee on Banking, Housing and Urban Affairs
"(The) Committee on Banking, Housing and Urban Affairs, ... (has responsibility for) all proposed legislation, messages, petitions, memorials and other matters relating to ...

* Banks, banking, and financial institutions.
* Control of prices of commodities, rents and services.
* Deposit insurance.
* Economic stabilization and defense production.
* Federal monetary policy, including the Federal Reserve System.
* Financial aid to commerce and industry.
* Issuance and redemption of notes.
* Money and credit, including currency and coinage.
* Public and private housing (including veterans housing).

Such Committee shall also study and review on a comprehensive basis, matters relating to international economic policy as it affects United States monetary affairs, credit, and financial institutions; economic growth, urban affairs, and credit, and report thereon from time to time."

Let us review the facts.

Do you believe Congress has done its job?

Did these Congressional committees perform their duties in a responsible manner?

Do you believe they should have been aware of the financial mess Wall Street was creating?

The Real Story

Blame
The Democrats will obviously blame the Bush administration for everything that has gone wrong. They conveniently forget that Liberal Democrats have been in charge of Congress while this mess was collecting in America's financial toilet. The Republicans, bless their hearts, will continue to be totally confused by just about everything. Let's face it. Neither the Democrats nor the Republicans have enough intellectual depth to even know what questions they should be asking. Even if they had the will. And do you really think anyone in the Washington establishment will take any responsibility for this massive failure of the Federal regulatory system?

Every American should demand an answer to this one question: Did the Federal bureaucracy fail because it did not have the authority (which infers Congressional legislative failure), or did it refuse to pursue its responsibility (which may infer massive corruption)? Either way, the Federal Government has effectively transformed $$ trillions of dollars of stinking paper into what will become very suspect Treasury bonds. New mortgages purchased by Fannie and Freddie will add to this dog pile of debt. Add it all up. Current debt plus mortgage debt. America's total Federal debt will exceed $12 trillion. That's $39,400 per American. Then add unfunded Social Security and Medicare obligations. NO - we can not afford it. The only recourse will be a devaluation of the dollar - all accompanied by a sharp increase in inflation, higher unemployment, declining "real" GDP, and the worst personal economic misery our nation has ever seen.

Is it time for real change?

Change
We Americans know the "system" is not working. We know it is incredibly corrupt. Incompetent. And totally dysfunctional. The only question is: how long will this go on before we the people are so fed up our nation explodes with anger?

Obama will talk about change. All political vapor. He will carefully avoid mentioning our Democratic Congress had multiple opportunities to avoid this mess. McCain will talk about change. But the Republicans are far to confused to be an effective legislative counterparty. House Speaker Pelosi and Senate Majority Leader Reid continue to be models of vitriolic ideology. Don't expect them to pursue a course of constructive leadership. And what about Senate Banking chair Dodd? Or House Financial Services chair Frank? Did they play a key role in creating this mess in the first place?

Are you confident the Washington Establishment will do its job? Will these individuals put the welfare of the American people before their own personal selfish best interest?

Conclusion

There is absolutely no excuse for the financial carnage that has occurred. Members of the House Financial Services Committee and Senate Banking Committee either knew, or should have known, that America was headed for financial disaster. But instead, our Federal system has failed the American people. It is unlikely the Washington establishment will fix our financial system because politics and ideology will be more important than decisive action. That can only lead to ill conceived legislation. Followed by the misappropriation of funds. Decisions based on political expediency rather than virtue. And endless corruption.

It's time for a radical change in the way we govern ourselves. If we want effective government, we must establish a better system of management with strong, positive, and constructive leadership.

Ron

Ronald R. Cooke
website: The Cultural Economist
email: tce@tce.name

About The Cultural Economist - Ron graduated with an A.B. in Economics from Bates College. He has been an auditor, line manager, computer salesman, marketing manager, product planning manager, and V. P. of Marketing. A management consultant by inclination, Ron has a comprehensive background in business development, product planning, market research, and industry analysis. He has authored multiple market research reports, contracts, business plans and operations research studies for corporate clients in 12 countries. Prior experience includes technology assessment, the evaluation of corporate financial performance, and the negotiation of corporate acquisitions.

Ron is a former instructor with UCSC, and developed the curriculum for a science based approach to decision analysis. He has pursued the study of Cultural Economics since 1969, and has authored "Oil, Jihad and Destiny," [Amazon,] a thought-provoking research report on oil depletion (Opportunity Analysis - 2004, and revised in 2007), and "Detensive Nation," a book that redefines the role of government in an Energy Detensive EcoSystem (The Cultural Economist - 2007).

321gold Ltd

ran hard last 40 min, it will be on
everyones chart scans tonight....lot new faces tomo.

nice run huh, like the old days

cde again

Speed load Test:

http://www.speedtest.net/index.php

Mine
upload 6895

download 365

Treasury to sell more debt to deal with borrowing
Wednesday October 8, 11:18 am ET
By Martin Crutsinger, AP Economics Writer
Treasury says it will expand size of debt securities to deal with rising borrowing needs


WASHINGTON (AP) -- The Treasury Department, facing huge borrowing needs because of the government's $700 billion rescue program, said Wednesday it will increase the size of Treasury securities being sold to the public.


The Treasury said it would expand the number of Treasury securities which are currently being traded as a way to boost borrowing.

In a statement, the department said this will also deal with what it called "severe dislocations in the market." The demand for Treasury securities has soared during the current credit crisis as investors park their money in safe-haven, U.S. government-backed bills, notes and bonds.

Treasury's effort will be done through what is known as a "re-opening" of securities that the government has already sold. The first announcements Wednesday added $40 billion to four securities already being traded, including seven-year and 10-year notes. The increases were in $10 billion increments.

The Treasury statement said the move should address "acute, protracted shortages" in the Treasury securities markets.

Treasury said it would hold discussions with other government regulators including the Federal Reserve and with bond traders to search for remedies to ensure that Treasury securities sales don't get hit with the same stresses in the future .

Fed. 1day RP + 20.00B



Fed:
http://www.ny.frb.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE

The Slosh Report:
http://www.gmtfo.com/RepoReader/OMOps.aspx

W@G2 QQQQ 10/08/08 for a 10/10/08 close


36.50 rayrohn
33.25 bob3

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Bernanke Signals Fed May Cut Rates as Crisis Deepens (Update3)

By Scott Lanman

Oct. 7 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke signaled policy makers are ready to lower interest rates as the credit freeze poses an escalating danger to the economy.

The world financial system is under ``extraordinary stress'' and history shows that severe instability ``can take a heavy toll on the broader economy if left unchecked,'' Bernanke said in a speech in Washington. ``The Federal Reserve will need to consider whether the current stance of policy remains appropriate.''

Today's remarks indicate the central bank's record loans to unblock credit markets are insufficient to prevent a deeper economic downturn. Investors increased bets the Fed will cut its main rate by as much as three-quarters of a point this month after stock indexes slumped to four-year lows and premiums on loans between banks climbed to a record.

``It would be unwise to wait'' after ``such a clear message'' from Bernanke, former San Francisco Fed President Robert Parry said in an interview with Bloomberg Television. A reduction by 1 percentage point would be the ``appropriate amount,'' though the Fed may not go that far, he said.

Stocks slid after Bernanke's remarks failed to assuage investors' concerns about deteriorating financial markets, with the Standard & Poor's 500 Stock Index falling 5.7 percent to the lowest close in five years.

Minutes of the Federal Open Market Committee's Sept. 16 meeting, released in Washington today, showed that some officials then saw a need for a rate cut should there be a ``significant worsening of the growth outlook.''

Fed Meeting

The FOMC, which next gathers Oct. 28-29, cut its target rate for overnight loans between banks by 3.25 percentage points from September to April, then left it unchanged at 2 percent for three meetings.

``With financial markets in such turmoil the odds of an inter-meeting cut are now above 50/50,'' said former Fed governor Lyle Gramley, now senior economic adviser at the Stanford Group Co. in Washington.

Traders see about 40 percent odds of a three-quarter-point cut in rates at or before this month's meeting, futures prices showed as of 4:09 p.m. in New York. The probability of at least a half-point cut remained at 100 percent.

Since Bernanke's last public address, on Sept. 24 to Congress, the Standard & Poor's 500 Stock Index has lost 14 percent, the three-month London interbank offered rate climbed 0.84 percentage point to 4.32 percent and government figures showed U.S. payrolls slid by the most in five years last month.

Change in Assessment

``The combination of the incoming data and recent financial developments suggests that the outlook for economic growth has worsened and that the downside risks to growth have increased,'' Bernanke said at a conference of the National Association for Business Economics today. ``At the same time, the outlook for inflation has improved somewhat, though it remains uncertain.''

The economic slowdown has now ``spread outside the housing sector,'' and consumer spending has ``contracted significantly'' since May when adjusting for inflation, the Fed chief said.

Even households with ``good credit histories'' are finding it harder to get home loans, and disruptions in the commercial paper market have made it more difficult for companies to get working capital, Bernanke said today.

Dangers posed by the intensifying credit crisis have justified the Fed and Treasury taking unprecedented actions in recent weeks, Bernanke said.

``We have learned from historical experience with severe financial crises that if government intervention comes only at a point at which many or most financial institutions are insolvent or nearly so, the costs of restoring the system are greatly increased,'' said Bernanke, 54, a scholar of the Great Depression and former Princeton University economist.

Pumping Cash

The Fed is pumping more than $1 trillion of short-term cash loans into the banking system to head off the global liquidity squeeze. Earlier today, Bernanke moved to backstop the short-term corporate debt market.

The Fed said today it would start buying three-month commercial paper, after the market slid to a three-year low of $1.6 trillion last week as investors fled even companies with few links to the subprime mortgage crisis. The effort comes on top of an expansion yesterday of the central bank's auctions of cash to banks to as much as $900 billion.

Also this week, the Treasury is putting in place its plan to inject as much as $700 billion into the financial system through purchases of distressed assets or potential direct investments into companies.

`Continued Efforts'

The Treasury program should, ``with time,'' help make credit flow and revive economic growth, Bernanke said today. ``Continued efforts to stabilize the financial markets are essential,'' and the central bank ``will continue to use the tools at its disposal to improve market functioning and liquidity,'' he added.

The Fed chief also reviewed the central bank's decisions to forego a rescue of Lehman Brothers Holdings Inc. last month, and its move days later to take over American International Group Inc. In March, the Fed agreed to buy $29 billion of Bear Stearns Cos. assets to prevent its failure and secure its takeover by JPMorgan Chase & Co.

Policy makers had limited choices as Lehman approached bankruptcy, even though the firm's collapse would contribute to ``extraordinarily turbulent conditions'' in financial markets, Bernanke said.

Lehman Risk

A government-facilitated sale, or outright support, would have required ``a sizable injection of public funds'' into Lehman and ``would have involved the assumption by taxpayers of billions of dollars of expected losses.'' Bernanke said that neither the Treasury nor the Fed had the authority to ``commit public money in that way.''

Bernanke has pushed the limits of the Fed's powers to create an array of unprecedented lending programs as the credit crisis spread from banks to securities firms, mutual funds, the biggest U.S. insurer and now corporate America.

Over the past week the Fed announced plans to pump an additional $1 trillion into the global financial system through auctions of cash loans to banks. That's on top of its $147 billion in loans to Wall Street bond dealers and $152 billion in lending to backstop money market mutual funds as of Oct. 1.

To contact the reporter on this story: Scott Lanman in Washington at slanman@bloomberg.net

Last Updated: October 7, 2008 16:50 EDT

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Ford shares hit lowest price in nearly 23 years
Tuesday October 7, 8:01 pm ET
Ford Motor shares hit lowest price in nearly 23 years as Street remains jittery after rout


NEW YORK (AP) -- Shares of Ford Motor Co. slid to their lowest price in nearly 23 years Tuesday following the previous session's marketwide sell-off, as investors remained jittery over the Federal Reserve's decision to buy up corporate debt and Fitch Ratings cut the automaker's credit rating.


Ford shares fell 77 cents, or 20.8 percent, to close at $2.92 -- a trade not seen since November 1985.

The Fed said earlier Tuesday it planned to buy up massive amounts of commercial paper, a short-term financing mechanism that many companies rely on to finance day-to-day operations.

But the news did little to help Ford's stock, as questions about the Dearborn, Mich., automaker's credit lingered. Monday afternoon, Fitch Ratings lowered Ford's credit rating deeper into junk status, citing the growing impact of the credit crisis on auto sales and other aspects of the company's business.

Auto sales have remained weak this year, with September sales falling below 1 million vehicles for the first time in more than 15 years.

Oil prices, meanwhile, reversed course Tuesday after five straight days of declines. Light, sweet crude for November delivery rose $2.25 to settle at $90.06 a barrel on the New York Mercantile Exchange.

Shares of other automakers also declined. General Motors Corp. fell 92 cents, or 10.9 percent, to $7.56.

Toyota Motor Corp. lost $4.84, or 6.6 percent, to $68.54. Honda Motor Co. dropped $1.23, or 4.9 percent, to $24.11. Nissan Motor Co. gave up 48 cents, or 4.4 percent, to $10.51.

Summary of FOMC minutes

In light of severe stresses in dollar funding markets, the Committee considered a proposal intended to provide the flexibility necessary to respond promptly to requests from foreign central banks to engage in temporary reciprocal currency ("swap") arrangements to be used in supporting dollar liquidity in their jurisdictions.

After the discussion, the Committee voted unanimously to authorize its Foreign Currency Subcommittee to direct the Federal Reserve Bank of New York as needed to expand existing swap arrangements and to enter into new arrangements with foreign central banks to address strains in money markets. This authority extends through January 30, 2009...

The information reviewed at the September meeting indicated that economic activity decelerated considerably in recent months. The labor market deteriorated further in August as private payrolls declined and the unemployment rate moved markedly higher.

Industrial output was little changed in July, but fell sharply in August. Consumer spending weakened noticeably in recent months.

Meanwhile, residential investment continued to decline steeply through midyear. In contrast, business investment in equipment and structures generally held up through July. On the inflation front, overall consumer prices rose rapidly for a third straight month in July but then edged down in August, because of a sharp drop in energy prices.

Core consumer price inflation remained elevated in July and eased somewhat in August. The labor market continued to weaken...

At its August meeting, the Federal Open Market Committee (FOMC) kept the target federal funds rate unchanged at 2 percent. The Committee's statement noted that economic activity expanded in the second quarter, partly reflecting growth in consumer spending and exports. However, labor markets had softened further and financial markets remained under considerable stress. Tight credit conditions, the ongoing housing contraction, and elevated energy prices were likely to weigh on economic growth over the next few quarters...

Although downside risks to growth remained, the upside risks to inflation were also of significant concern to the Committee. The Committee indicated that it would continue to monitor economic and financial developments and would act as needed to promote sustainable economic growth and price stability...

With substantial downside risks to growth and persisting upside risks to inflation, members judged that leaving the federal funds rate unchanged at this time suitably balanced the risks to the outlook.

Some members emphasized that if intensifying financial strains led to a significant worsening of the growth outlook, a policy response could be required; however, such a response was not called for at this meeting.

Indeed, it was noted that, with elevated inflation still a concern and growth expected to pick up next year if financial strains diminish, the Committee should also remain prepared to reverse the policy easing put in place over the past year in a timely fashion.

OT: out tomo Dr. Apt /e

drain $$ from intra day ops.

Fed. 1day Reverse RP 25.00B



Fed:
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W@G1 QQQQ 10/06/08 for a 10/08/08 close

38.41 rayrohn
34.25 bob3