The Crash of 2008?, billions in write downs and bond insurers collapsing Options

[Livyjr]

It makes a good base layer for a raised-bed garden ....

About an inch of it on the ground, with the mulch on top ...

The worms will inhabit that layer and convert it to soil ...

Ashes to ashes, so to speak ...

And speaking of toxic waste ...

With respect to this worthless paper out there as mortgage securities ....

WE OWN THEM NOW!

Yes ...

That's right ....

ON OUR BEHALF ...

The bearded Bushian financial savant Ben Bernanke handed out some $200 BILLION worth of U.S. treasurys to these various financial institutions that have been caught holding this TOXIC WASTE ...

And in exchange for the treasurys, Bernanke took in that TOXIC WASTE as collateral ....

So the Fed is holding worthless paper as collateral for U.S. Treasury certificates that it has no real way of getting back ....

From my perspective, Ben Bernanke has screwed us ROYALLY here .....

But then, in this game, we don't count .....

We're just chips on a board ....

And so ...

"Treasurys up on credit, economic worries"

By MADLEN READ, Associated Press

Last updated: 5:42 p.m., Wednesday, April 9, 2008

NEW YORK -- Treasury prices rose Wednesday as a rise in worrisome assets at major Wall Street investment banks and a slow start to the first-quarter earnings season drew investors to the safety of government bonds.

Goldman Sachs Group Inc., Morgan Stanley and Lehman Brothers Holdings Inc. said Wednesday that difficult to value assets known as Level 3 assets increased in the first quarter compared to the previous quarter.

Trading in Treasurys in recent weeks has been "kind of all over the place," said T.J. Marta, fixed-income analyst at RBC Capital Markets.

He said the economic fundamentals would argue for even lower rates in short-term notes, "but there are so many cross-currents going on in the market right now."

One big factor behind the erratic trading has been the Federal Reserve's issuance of hundreds of billions of dollars worth of Treasury notes to banks and other borrowers in return for other types of debt.

The Fed's aim is to keep money flowing freely through the financial system, but the effect on the Treasury market has been more pressure than there would normally be on short-term Treasury prices during times of economic weakness.

end quotes

And so ....

[Livyjr]

"Consumer confidence falls to new low"

By JEANNINE AVERSA, Associated Press

Last updated: 7:52 a.m., Friday, April 11, 2008

WASHINGTON -- Americans' confidence in the economy fell to a new low, dragged down by worries about mounting job losses, record-high home foreclosures and zooming energy prices.

According to the RBC Cash Index, confidence dropped to a mark of 29.5 in April, down from 33.1 in March.

The new reading was the worst since the index began in 2002.

It marked the fourth month in a row where confidence has fallen to an all-time low.

Pointing to the overall confidence reading of 29.5 in April, T.J. Marta, a fixed-income strategist at RBC Capital Markets, said:

"What confidence?"

"There is no confidence."

"It's like 1929."

[Livyjr]

You must live in NY ... your understanding, and interest in the minutia...is overwhelming to a country-boy like me.

I know it's the center of The World ... but it's hard to keep up.

If I may ask...every now and then offer the rest of us your opinion on the national macro situation.

And New York certainly is not the center of the world, Indianhead ....

Far from it ....

Although bankers and politicians like the PROSTITUTE USER and ex-governor of New York Eliot Spitzer would like all of us to believe that New York City is the CENTER OF THE UNIVERSE and FINANCIAL CAPITAL of the world ....

WALL STREET has become a very dangerous place, Indianhead, when the DELUSIONS OF GRANDEUR and EXCESSIVE GREED of a handful of lawyers and bankers on a short street only a handful of blocks long down in lower Manhattan can jeopardize the lives of countless thousands of people all over the world who were not GAMBLERS themselves and did not invest in the FOOL'S GAME known as the stock market ...

And so ....

"Consumer confidence falls to new low"

By JEANNINE AVERSA, Associated Press

Last updated: 7:52 a.m., Friday, April 11, 2008

WASHINGTON -- Americans' confidence in the economy fell to a new low, dragged down by worries about mounting job losses, record-high home foreclosures and zooming energy prices.

According to the RBC Cash Index, confidence dropped to a mark of 29.5 in April, down from 33.1 in March.

The new reading was the worst since the index began in 2002.

It marked the fourth month in a row where confidence has fallen to an all-time low.

Pointing to the overall confidence reading of 29.5 in April, T.J. Marta, a fixed-income strategist at RBC Capital Markets, said:

"What confidence?"

"There is no confidence."

"It's like 1929."

"Fed worried in 2002 about deflation"

By MARTIN CRUTSINGER, Associated Press

Last updated: 4:12 p.m., Friday, April 11, 2008

WASHINGTON -- Just-released transcripts show the Federal Reserve was worried about the threat of deflation when it decided to cut a key interest rate by a half-point in November 2002.

Then-Federal Reserve Chairman Alan Greenspan called the prospect "pretty scary."

Those transcripts, released Friday, showed that Greenspan and his colleagues were focused on what should be done about a sluggish economy and the threat that the country could tumble into a period of deflation, something the country had not experienced since the Great Depression.

While the Fed strives to achieve low inflation, it does not want to see the economy enter a period of serious deflation with the value of real estate and other assets dropping because that sets off destabilizing forces that can have serious consequences.

The United States was battered by deflation during the 1930s and Japan experienced a lost decade of growth in the 1990s after its real estate bubble burst, causing a severe bout of deflation in that country.

Some critics have argued that there was never a serious threat of deflation in the United States in the period of the 2001 recession and that the extremely low interest rates engineered by the Fed created a housing boom that drove prices and sales up to record levels only to burst in 2006, sending shock waves through the economy that are still reverberating.

The transcripts released Friday show that Fed officials at the time were not that worried about the effects low interest rates might have, arguing that if inflation started rising, the Fed could reverse course and start raising rates but that a bout of deflation would be harder to combat.

The Fed did cut the federal funds rate, the interest that banks charge on overnight loans, by a half-point at the November 2002 meeting, moving it from 1.75 percent down to 1.25 percent, the lowest level in 41 years.

That was the only rate cut the Fed made that year.

During the discussions, Greenspan expressed concern about the country falling into a "deflationary hole."

"It's a pretty scary prospect and one that we certainly want to avoid," Greenspan told other members of the Federal Open Market Committee, the Fed panel that meets eight times a year to set interest rates.

The Fed would cut the funds rate one more time the next year, pushing it to a 45-year low of 1 percent on June 25, 2003.

The central bank left the funds rate at that level for an entire year until it began a gradual move to raise rates in June 2004.

While Greenspan was hailed when he left the Fed in early 2006 after 18 1/2 years as chairman for safely guiding the U.S. economy through a number of dangers, the bursting of the housing boom that year and a resulting severe credit crunch have prompted a reassessment of those actions.

But in an interview on CNBC this week, Greenspan said he had "no regrets" about Fed policy during his tenure and said there was little Fed officials or other regulators could have done to avert the housing crisis.

In the interview, Greenspan blamed the housing crisis on "egregious lending practices" in the subprime mortgage market.

Critics charge that Greenspan pushed rates too low and left them there too long, fueling a housing bubble that has now burst, causing severe troubles including the possibility that the country has fallen into a recession.

But at the time, Greenspan and his colleagues clearly saw the biggest dangers coming from weak growth and possible deflationary forces.

On the possibility that a half-point cut might be too much, Greenspan said at the November meeting, "It's a mistake that does not have very significant consequences."

"On the other hand, if we fail to move and we are wrong, meaning that we needed to, the costs could be quite high."

William McDonough, president of the New York Federal Reserve Bank, argued that if the Fed cut rates by only a quarter-point, financial markets would consider Fed officials "a bunch of wimps, which is not an attractive assessment for a group that is supposed to be a very important public body."

Current Fed Chairman Ben Bernanke, a former Princeton economics professor who had joined the Fed earlier that year as a board member, supported Greenspan's recommendation to cut rates by a half-point.

Bernanke said the country seemed to be experiencing the same type of "jobless recovery" that had occurred for a prolonged period after the 1990-91 recession and that a cut in rates was needed to boost growth.

While the Fed releases minutes of its closed-door discussions three weeks after the meetings are held, the full transcripts are only released with a lag of five years.

------

On the Net:

Federal Reserve: http://www.federalreserve.gov

[Indianhead]

The poorer countries always feel it first...

http://www.bloomberg.com/apps/news?pid=206...mp;refer=africa

Strauss-Kahn Warns Food-Price Inflation May Trigger Starvation

By Christopher Swann

April 12 (Bloomberg) -- Further gains in food prices would be ``terrible'' for the world's poor and throw hundreds of thousands of them into starvation, International Monetary Fund Managing Director Dominique Strauss-Kahn said.

Governments throughout Asia, Africa and the Middle East are seeking to combat food inflation and avoid social unrest by curbing exports or lifting import duties on basic food staples such as rice. Global food prices surged 57 percent last month from a year earlier, according to the United Nations, and the World Bank warns civil disturbances may be triggered in 33 countries.

If food inflation keeps accelerating at its current rate ``the consequences will be terrible,'' Strauss-Kahn told reporters at the IMF's semi-annual meeting in Washington today. ``Hundreds of thousands of people will be starving, leading to a disruption in the economic environment.''

Haitian Prime Minister Jacques Edouard Alexis was voted out of office by the country's senate today after violent protests over rising food prices, news agencies reported today.

President Rene Preval, who called the no-confidence vote ``unjust,'' announced a 15 percent cut in the price of rice, which had doubled this week to $70 for a 50-kilogram (110-pound) bag, Agence France-Presse reported. No replacement for Alexis was announced.

Price Outlook

Consumer-price inflation in poor or so-called developing countries will accelerate this year to 7.4 percent, compared with a January forecast of 6.4 percent, the IMF said this week. Food prices will probably remain comparatively high until at least 2015, the World Bank said in a separate report.

``Economic progress made over the last years could be destroyed,'' Strauss-Kahn said.

Rice, the staple food for half the world, has surged 96 percent in the past year, reaching a record $21.60 per 100 pounds on April 8. That's forced China, Egypt, Vietnam and India, which export more than a third of the world's rice, to curb shipments of the grain. Argentina and Russia have also sought to discourage food exports in a bid to boost domestic supplies.
--------------------

Looks like our best foreign policy might be figuring out how to feed some folks.

[Livyjr]

Looks like our best foreign policy might be figuring out how to feed some folks.

"Port aims for ethanol project - Alternative energy plant is commission's pick for site; plan faces hurdles"

By ERIC ANDERSON, Deputy business editor, Albany, New York Times Union

First published: Tuesday, April 1, 2008

ALBANY -- An ethanol production plant costing up to $350 million and capable of producing 165 million gallons of the corn-based fuel annually is planned for 18 mostly vacant acres at the Port of Albany.

The project was selected from among four submitted to the Albany Port District Commission, which has been seeking proposals for the land that would also make use of port facilities.

The developer, Albany Renewable Energy LLC, would bring in 60 million bushels of corn annually -- about what is produced in all of New York state -- from regional and Midwest farmers.

And the plant could consume as much as 900 million gallons of water annually, producing additional revenue for the city of Albany, said Cross, who is also the city's water commissioner.

[Livyjr]

Looks like our best foreign policy might be figuring out how to feed some folks.

FOLLOW WHERE THE PUBLIC MONEY GOES, HOWEVER ...

"Public funds fuel for ethanol plant - Empire Zone aid, tax breaks, other incentives likely to boost facility"

By ERIC ANDERSON, Deputy business editor, Albany, New York Times Union

First published: Wednesday, April 2, 2008

COLONIE -- The ethanol production plant to be built by Albany Renewable Energy LLC at the Port of Albany likely will receive public support from a number of sources.

Other incentives also might be available from state agencies.

Ed Stahl, president of BioPro, said Tuesday afternoon that he didn't yet know how much of the $350 million investment might come from grants and other public assistance.

"We will certainly be exploring every opportunity to enhance the long-term viability, including state incentives, absolutely," he said.

[Livyjr]

"Corn falls on improved weather"

By STEVENSON JACOBS, Associated Press

Last updated: 3:52 p.m., Friday, April 11, 2008

NEW YORK -- Corn prices fell sharply Friday as forecasts for dry weather in the U.S. corn belt eased concerns that farmers will have to delay their spring planting.

Corn prices have shot up 23 percent this year amid dwindling stockpiles and surging demand to feed livestock and make alternative fuels such as ethanol.

Corn first breached the $6 threshold last week after the government predicted that American farmers -- the world's biggest corn producers -- will plant sharply less of the crop in 2008 compared to last year.

[Livyjr]

If I may ask...every now and then offer the rest of us your opinion on the national macro situation.

And speaking of toxic waste ...

With respect to this worthless paper out there as mortgage securities ....

WE OWN THEM NOW!

Yes ...

That's right ....

ON OUR BEHALF ...

The bearded Bushian financial savant Ben Bernanke handed out some $200 BILLION worth of U.S. treasurys to these various financial institutions that have been caught holding this TOXIC WASTE ...

And in exchange for the treasurys, Bernanke took in that TOXIC WASTE as collateral ....

So the Fed is holding worthless paper as collateral for U.S. Treasury certificates that it has no real way of getting back ....

From my perspective, Ben Bernanke has screwed us ROYALLY here .....

But then, in this game, we don't count .....

We're just chips on a board ....

And so ...

"Powers back plan to halt financial crux"

By JEANNINE AVERSA, Associated Press

Last updated: 7:02 p.m., Friday, April 11, 2008

WASHINGTON -- Finance officials from the world's top economic powers endorsed a plan Friday aimed at preventing another financial crisis like the credit and mortgage debacles that erupted in the United States and quickly sent tremors around the globe.

Risks to the United States and the global economy have intensified since finance officials from the Group of Seven countries last gathered here in October.

Many economists now believe the United States has fallen into a recession and the odds of a worldwide downturn have risen sharply -- to one in four -- according to the IMF, a global financial firefighting institution.

Even as the financial officials talked about the best ways to battle future financial emergencies, Wall Street took another plunge.

"The turmoil in global financial markets remains challenging and more protracted than we had anticipated," the G7 officials said.

In the United States, where credit troubles sprang forth with a vengeance last August and quickly spread financial turmoil worldwide, the damage is sorely felt.

Foreclosures have surged to record highs, job losses in the first three months of this year have neared the staggering quarter-million mark and financial companies have racked up billions of dollars in losses.

The once mighty Bear Stearns, the fifth-largest investment bank in the United States, crashed, prompting a takeover by JP Morgan in a controversial deal backed by the Fed.

Worldwide financial losses could approach $1 trillion over two years, the IMF said earlier this week.

[Indianhead]

Yes, the push for ethenol will add to the world food problem.

They should go for sugar cane (like Brazil) all we'd lose are
some cavities and rum.

And, the paper we all hold will drag down the economy for years.
It's one reason I think National Health Insurance as conceived by
the two Democratic candidates will be hard to reach, if not impossible.

(BTW: it's harder to read in red...is it a preference for you?)

[Livyjr]

If I may ask...every now and then offer the rest of us your opinion on the national macro situation.

From my perspective, Ben Bernanke has screwed us ROYALLY here .....

But then, in this game, we don't count .....

We're just chips on a board ....

And so ...

"Fed worried in 2002 about deflation"

By MARTIN CRUTSINGER, Associated Press

Last updated: 4:12 p.m., Friday, April 11, 2008

WASHINGTON -- Just-released transcripts show the Federal Reserve was worried about the threat of deflation when it decided to cut a key interest rate by a half-point in November 2002.

Then-Federal Reserve Chairman Alan Greenspan called the prospect "pretty scary."

Those transcripts, released Friday, showed that Greenspan and his colleagues were focused on what should be done about a sluggish economy and the threat that the country could tumble into a period of deflation, something the country had not experienced since the Great Depression.

While the Fed strives to achieve low inflation, it does not want to see the economy enter a period of serious deflation with the value of real estate and other assets dropping because that sets off destabilizing forces that can have serious consequences.

The United States was battered by deflation during the 1930s and Japan experienced a lost decade of growth in the 1990s after its real estate bubble burst, causing a severe bout of deflation in that country.

Some critics have argued that there was never a serious threat of deflation in the United States in the period of the 2001 recession and that the extremely low interest rates engineered by the Fed created a housing boom that drove prices and sales up to record levels only to burst in 2006, sending shock waves through the economy that are still reverberating.

While Greenspan was hailed when he left the Fed in early 2006 after 18 1/2 years as chairman for safely guiding the U.S. economy through a number of dangers, the bursting of the housing boom that year and a resulting severe credit crunch have prompted a reassessment of those actions.

Critics charge that Greenspan pushed rates too low and left them there too long, fueling a housing bubble that has now burst, causing severe troubles including the possibility that the country has fallen into a recession.

William McDonough, president of the New York Federal Reserve Bank, argued that if the Fed cut rates by only a quarter-point, financial markets would consider Fed officials "a bunch of wimps, which is not an attractive assessment for a group that is supposed to be a very important public body."

Current Fed Chairman Ben Bernanke, a former Princeton economics professor who had joined the Fed earlier that year as a board member, supported Greenspan's recommendation to cut rates by a half-point.

And New York certainly is not the center of the world, Indianhead ....

Far from it ....

Although bankers and politicians like the PROSTITUTE USER and ex-governor of New York Eliot Spitzer would like all of us to believe that New York City is the CENTER OF THE UNIVERSE and FINANCIAL CAPITAL of the world ....

WALL STREET has become a very dangerous place, Indianhead, when the DELUSIONS OF GRANDEUR and EXCESSIVE GREED of a handful of lawyers and bankers on a short street only a handful of blocks long down in lower Manhattan can jeopardize the lives of countless thousands of people all over the world who were not GAMBLERS themselves and did not invest in the FOOL'S GAME known as the stock market ...

And so ....

"Investors await bank earnings this week"

By MADLEN READ, Associated Press

Last updated: 2:32 p.m., Sunday, April 13, 2008

NEW YORK -- Investors knew the first three months of the year were bad for companies, but now it looks like they were downright abysmal -- and that there might be more pain to come.

With the nation's banks releasing their quarterly results this week, anxiety has returned to the stock market.

Economic reports will probably take a back seat to earnings this week, but any hint that consumers are spending even less than individual retailers' dismal March sales figures implied last week could influence investors in the long term.

"The last four months, we've essentially had no growth in retail sales when adjusted for inflation."

A severe recession could mean sluggishness in the stock market for several months, if not longer.

"This is a consumer-led recession," Hampel said, noting that households are paring back spending because their debt is unmanageable, and that drop in spending is dragging down the economy.

"How long they do this is how long the recession ends up being."

The soaring cost of necessities, like food and gasoline, is also dampening spending.

The Commerce Department reports this week on producer prices and consumer prices in March.

Both are expected to increase, but fairly modestly -- and furthermore, the Fed's main concern right now is economic growth.

"Although the Fed cannot say this, I think for the most part, as a group, it doesn't matter to them what happens to inflation this week," Hampel said.

[Indianhead]

"This is a consumer-led recession," Hampel said, noting that households are paring back spending because their debt is unmanageable, and that drop in spending is dragging down the economy.

That makes sense to me. Since I've done the same for more than a year.
But, I watered my garden today, and smiled when I parked my motorcycle
returning from work. My wife has even been sweet. To hell with the market.
Our debt is under control, because we started awhile back...but what do I know?
These fools are still refining corn for ethenol when Johnson grass can be bailed
and produce as much without paring the world's food supply. Give La. five years,
we'll be among the best economies in the US of A.

[tomhye]

People don't spend money they don't have and can't borrow? Whoda thunk it?

[Livyjr]

Dead on the money, tomhye ...

This is the story of the goose that laid the golden egg all over again ...

In fact, it is my belief that economic computer models were first used in the case of the goose who laid golden eggs ...

The computer model, based on past performance, predicted that each time the goose had its neck squeezed, it would lay another golden egg ...

So ...

The solution according to the computer model for if and when the king wanted more money?

Wring its neck harder and it will lay even more eggs ...

And so ...

[Livyjr]

I live where I have lived since 1949, Indianhead, with some time out to be here and there for a bit ...

And I was born into what the genteel folks might call "poverty" ...

But to me, it was simply country living ....

We grew what we ate, in large part, and so did not have to depend on the "system" to provide our food for us ...

And we lived within our means ....

And all these years later, that is where I have gotten myself back to ....

I heated my house with firewood this year, going cold-turkey on oil ....

I go down into the woods with a wheelbarrow and bring out the wood a load at a time ....

Gives me peace and quiet and some exercise ....

I "pollard" my tree stumps when I cut down a tree so that off the same stump where one tree grew, I will have several new ones growing in its place for the future ...

I don't drive much anymore ....

And as they push the price of a gallon of gas ever higher, I'll use even less of it ....

I am not "consuming" like a "GOOD AMERICAN" is supposed to be doing ....

To the contrary, I am a practicing NON-CONSUMER to the greatest degree that I can be ....

And if the American "economy" can't deal with that, it can go to hell for all I care ...

I'm tired of feeding INSATIABLE GREED ...

I don't have a mortgage ....

If something costs a dollar that I need, and I don't have the dollar, then I simply do without ....

And to me, all I have done is to go back to what I started out with, which wasn't much at all ...

Except for myself and my wits ....

Which is the essence of THE AMERICAN WAY to me ...

And so ...

These OIL BARONS and WALL STREET types can go pound sand for all I care ....

If they need some money, let them get a real job and earn some ...

The goose that laid the golden eggs is dead ...

And so ...

[Livyjr]

The goose that laid the golden eggs is dead ...

And so ...

"Higher energy and food prices boost March consumer inflation; bigger increases expected"

By MARTIN CRUTSINGER, Associated Press

Last updated: 5:52 p.m., Wednesday, April 16, 2008

WASHINGTON -- Inflation rose again last month, reflecting big jumps in the cost of energy and airline tickets.

And the forecast is for even bigger energy-related increases to come, including the possibility of $4 per gallon gasoline by Memorial Day.

Those inflation pressures are occurring just as the economy seems to be sinking into a recession, with consumers cutting back on spending and the housing industry, where all the troubles started, sinking further.

That was the somber news from a batch of economic reports released Wednesday that depicted an economy still struggling with multiple problems from a prolonged slump in housing, soaring energy prices, a severe credit crisis and rising unemployment.

The Labor Department said consumer prices rose by 0.3 percent in March, after being unchanged in February, as energy prices jumped by 1.9 percent and airline fares, reflecting higher fuel costs, increased 3 percent, the biggest one-month gain in six years.

Food prices, which have been steadily rising for more than a year, were up by 0.2 percent in March and 4.4 percent over the past 12 months.

The price of some food staples showed even bigger increases over the past year, including a 14.7 percent rise in the price of bread and a 13.3 percent increase in milk prices over the past year.

With crude oil prices briefly touching a new record near $115 per barrel this week, and food prices remaining under pressure because of global shortages, analysts predicted consumers will feel more inflation pressures in the months ahead.

Gasoline pump prices hit a new nationwide record of $3.40 per gallon on Wednesday, up 53 cents from a year ago, according to the Oil Price Information Service and AAA, and many economists believe that price will hit $4 per gallon by Memorial Day.

"People are going to be paying a lot more for gasoline and groceries in the months ahead," said Mark Zandi, chief economist at Moody's Economy.com.

"Nothing is going right at the moment."

"That is why consumer confidence has fallen to the lowest point since the early 1980s."

Wall Street ignored all the bad economic data and instead focused on better-than-expected quarterly results from JPMorgan Chase and two other companies to send stocks higher.

The Dow Jones industrial average rose 256.80 points Wednesday to close at 12,619.27.

Zandi said the rise in food and fuel prices has been a significant drain on consumers' purchasing power, another reason he and other analysts believe the country has fallen into a recession.

Consumer spending accounts for two-thirds of economic activity.

While the Bush administration is hoping that economic stimulus checks being mailed to households starting next month will make any slump short and mild, Zandi said the $100 billion in payments consumers will get this year will be just enough to offset their higher gasoline bills, leaving nothing left to boost consumer spending in other areas.

In its latest look at business activity around the country, the Federal Reserve said Wednesday that "economic conditions have weakened," citing sluggish consumer spending and rising costs to businesses for raw materials.

Many analysts expect the Fed, which has been aggressively cutting interest rates and shoveling money into the banking system to combat the credit squeeze, will cut rates again when officials next meet on April 29-30.

The Fed also reported Wednesday that industrial output managed a 0.3 percent rise in March but the gain in manufacturing was a weak 0.1 percent as auto production continued to fall.

And the housing industry, where the troubles began two years ago, remained under severe strain with construction of new homes and apartments plunging by 11.9 percent in March, the Commerce Department reported, double what had been expected, to a seasonally adjusted annual rate of 947,000 units, the slowest pace in 17 years.

Many analysts said construction is likely to fall more in coming months, reflecting a huge overhang of unsold homes that includes not only new homes but also houses being dumped on the market as foreclosures rise to record levels.

David Seiders, chief economist at the National Association Home Builders, said he believed construction activity would fall to just 948,000 units this year, the third straight decline and the lowest level of activity in the post World War II period.

For March, construction fell in all parts of the country, led by a 21.4 percent drop in the Midwest and declines of 12.6 percent in the South, 8.5 percent in the Northeast and 5.7 percent in the West.

The Consumer Price Index showed that overall prices are up 4 percent over the past 12 months while core inflation, which excludes energy and food, has risen by 2.4 percent in the past year, including a 0.2 percent March increase.

Clothing costs fell by 1.3 percent, the biggest drop in nearly a decade.

In another reflection of the squeeze on ordinary Americans, the Labor Department said that average weekly earnings for nonsupervisory workers dropped by 1 percent last month, compared with a year ago, the sixth straight month that inflation-adjusted wages have fallen.

[Livyjr]

With Ambac's loss of their AAA rating a domino has fallen that might lead to a deep recession and economists trying to figure by the summer if we are headed into depression, IMHO.

Having predicted the DJIA would be at 12,000 by the end of January...and watching as it happens...I'm now looking to later in 2008 and the potential of a drop to 10,000...or even below.

This ain't funny y'all take care of your own and vote Democrat ASAP.

I do not enjoy writing this, as I didn't like writing nine months ago about my predictions for the market by the end of this month.

But we have to face it - the neo-cons may have flushed the economy along with the government.

Shizen!

"Higher energy and food prices boost March consumer inflation; bigger increases expected"

By MARTIN CRUTSINGER, Associated Press

Last updated: 5:52 p.m., Wednesday, April 16, 2008

WASHINGTON -- Inflation rose again last month, reflecting big jumps in the cost of energy and airline tickets.

And the forecast is for even bigger energy-related increases to come, including the possibility of $4 per gallon gasoline by Memorial Day.

Those inflation pressures are occurring just as the economy seems to be sinking into a recession, with consumers cutting back on spending and the housing industry, where all the troubles started, sinking further.

That was the somber news from a batch of economic reports released Wednesday that depicted an economy still struggling with multiple problems from a prolonged slump in housing, soaring energy prices, a severe credit crisis and rising unemployment.

The price of some food staples showed even bigger increases over the past year, including a 14.7 percent rise in the price of bread and a 13.3 percent increase in milk prices over the past year.

With crude oil prices briefly touching a new record near $115 per barrel this week, and food prices remaining under pressure because of global shortages, analysts predicted consumers will feel more inflation pressures in the months ahead.

"People are going to be paying a lot more for gasoline and groceries in the months ahead," said Mark Zandi, chief economist at Moody's Economy.com.

"Nothing is going right at the moment."

"That is why consumer confidence has fallen to the lowest point since the early 1980s."

Zandi said the rise in food and fuel prices has been a significant drain on consumers' purchasing power, another reason he and other analysts believe the country has fallen into a recession.

While the Bush administration is hoping that economic stimulus checks being mailed to households starting next month will make any slump short and mild, Zandi said the $100 billion in payments consumers will get this year will be just enough to offset their higher gasoline bills, leaving nothing left to boost consumer spending in other areas.

In another reflection of the squeeze on ordinary Americans, the Labor Department said that average weekly earnings for nonsupervisory workers dropped by 1 percent last month, compared with a year ago, the sixth straight month that inflation-adjusted wages have fallen.

Whatever technical terms you want to put to it, I would say that the economy is now being re-ordered ....

And radically so, in terms of the people that I talk to up here where I am, anyway ...

And outside of this forum, that is all any of us can really know, what is going on up or down the road just a short distance from ourselves ....

I have been down to Louisiana in the Army, Tiger Land at Fort Polk, and that part of the world is nothing like what it is up here where I am ...

What might grow down there might not grow up here, and vice versa ...

And the economy's are not the same, although in many respects they would have to have similarities ....

And so ...

One part of any discussion in here of what is going on in the "national scene" must of necessity try to determine in the eyes of the various beholders what that national scene might in fact be ....

Up here where I am, it is my impression that the economy is melting down ....

It is fracturing ....

And each day, I follow the published news reports to see what the "chat" might be in the main stream media ....

And then in my various threads, I condense it all down as I perceive it ...

And where I can, I draw links back to the beginnings, such as going back to Indianhead's original post in this thread, so that I am staying "on-topic" as closely as that can be in a dynamic situation such as is unfolding in the world around us now ...

A young person and I up here talk about all of this quite frequently, as the price of heating oil continues to go right on out of sight, and food along with it, and the analogy that I use with him to compare us countryfolks living simple out here to the "INVESTOR" CLASS in this on-going financial FIASCO is this:

He is like an Eskimo hunter up on an iceberg, and I'm sitting there in my kyack, and we're talking about the weather and polar bears, when all of a sudden .....

WHAMMMMM!!!!!!!!

Out of the clear blue, along comes this ocean liner full of tourists and it smashes right in to the ice berg and nearly kills us, and then all of these tourists in tuxedos come running out of the bars and casinos on board, and they start yelling and swearing down at us:

"WHAT IN THE HELL IS THE MATTER WITH YOU FOOLS, PARKING YOUR ICEBERG RIGHT IN OUR PATH LIKE THAT!"

And on and on and on, until somebody else yells, "C'MON BACK IN KIDDIES, THE CAPTAIN SAYS ALL THE DRINKS ARE NOW FREE!"

And he and I take a look at each other, and simultaneously say we ought to get out of here, because that thing is sinking and if we're around when it goes down, it will take us with it ...

And so ....

I would say that people are simply abandoning the American Dream these days ....

Or they are jettisoning it, like we jettisoned helicopters off the sides of Navy ships during the evacuation of Saigon in 1975 ...

The Federal Reserve is like the captain of the sinking ship who decides to sooth the passengers by giving them free drinks ...

The stock market is seen as nothing more than a fancy Baccarat game for a privileged few PLAYERS ....

And Ben Bernanke is seen as the CASINO OPERATOR ....

The HOUSE ....

The GAME is what is of importance to him ....

Not our lives ....

We truly do not matter in this equation as we perceive it ....

And so ...

We have abandoned the AMERICAN DREAM as being a nightmare .....

We've stopped being in need, so we really don't need to buy much, and we see no reason to change now .....

The rebates will go in the bank, and that will be that ....

The oil companies will get most of everybody else's .....

So I'm seeing the start of the next cold season up here as the really interesting times yet to come ....

But between now and then, it is my belief that spending is going to largely dry up, because the higher gas gets, the less people up here are driving, and the first thing that gets shut off in that case is unnecessary trips to the store for anything but requirements ....

And so ....

Merely my thoughts at this moment in time is all ...

And so ...

[rla]

"Fed worried in 2002 about deflation"

By MARTIN CRUTSINGER, Associated Press

Last updated: 4:12 p.m., Friday, April 11, 2008

WASHINGTON -- Just-released transcripts show the Federal Reserve was worried about the threat of deflation when it decided to cut a key interest rate by a half-point in November 2002.

Then-Federal Reserve Chairman Alan Greenspan called the prospect "pretty scary."

Those transcripts, released Friday, showed that Greenspan and his colleagues were focused on what should be done about a sluggish economy and the threat that the country could tumble into a period of deflation, something the country had not experienced since the Great Depression.

While the Fed strives to achieve low inflation, it does not want to see the economy enter a period of serious deflation with the value of real estate and other assets dropping because that sets off destabilizing forces that can have serious consequences.

The United States was battered by deflation during the 1930s and Japan experienced a lost decade of growth in the 1990s after its real estate bubble burst, causing a severe bout of deflation in that country.

Some critics have argued that there was never a serious threat of deflation in the United States in the period of the 2001 recession and that the extremely low interest rates engineered by the Fed created a housing boom that drove prices and sales up to record levels only to burst in 2006, sending shock waves through the economy that are still reverberating.

The transcripts released Friday show that Fed officials at the time were not that worried about the effects low interest rates might have, arguing that if inflation started rising, the Fed could reverse course and start raising rates but that a bout of deflation would be harder to combat.

The Fed did cut the federal funds rate, the interest that banks charge on overnight loans, by a half-point at the November 2002 meeting, moving it from 1.75 percent down to 1.25 percent, the lowest level in 41 years.

That was the only rate cut the Fed made that year.

During the discussions, Greenspan expressed concern about the country falling into a "deflationary hole."

"It's a pretty scary prospect and one that we certainly want to avoid," Greenspan told other members of the Federal Open Market Committee, the Fed panel that meets eight times a year to set interest rates.

The Fed would cut the funds rate one more time the next year, pushing it to a 45-year low of 1 percent on June 25, 2003.

The central bank left the funds rate at that level for an entire year until it began a gradual move to raise rates in June 2004.

While Greenspan was hailed when he left the Fed in early 2006 after 18 1/2 years as chairman for safely guiding the U.S. economy through a number of dangers, the bursting of the housing boom that year and a resulting severe credit crunch have prompted a reassessment of those actions.

But in an interview on CNBC this week, Greenspan said he had "no regrets" about Fed policy during his tenure and said there was little Fed officials or other regulators could have done to avert the housing crisis.

In the interview, Greenspan blamed the housing crisis on "egregious lending practices" in the subprime mortgage market.

Critics charge that Greenspan pushed rates too low and left them there too long, fueling a housing bubble that has now burst, causing severe troubles including the possibility that the country has fallen into a recession.

But at the time, Greenspan and his colleagues clearly saw the biggest dangers coming from weak growth and possible deflationary forces.

On the possibility that a half-point cut might be too much, Greenspan said at the November meeting, "It's a mistake that does not have very significant consequences."

"On the other hand, if we fail to move and we are wrong, meaning that we needed to, the costs could be quite high."

William McDonough, president of the New York Federal Reserve Bank, argued that if the Fed cut rates by only a quarter-point, financial markets would consider Fed officials "a bunch of wimps, which is not an attractive assessment for a group that is supposed to be a very important public body."

Current Fed Chairman Ben Bernanke, a former Princeton economics professor who had joined the Fed earlier that year as a board member, supported Greenspan's recommendation to cut rates by a half-point.

Bernanke said the country seemed to be experiencing the same type of "jobless recovery" that had occurred for a prolonged period after the 1990-91 recession and that a cut in rates was needed to boost growth.

While the Fed releases minutes of its closed-door discussions three weeks after the meetings are held, the full transcripts are only released with a lag of five years.

------

On the Net:

Federal Reserve: http://www.federalreserve.gov

It takes incompetence and corruption multiplied together to f**k up our system.

[Livyjr]

Don't forget insatiable GREED, which seems to be the fuel on which the engine called CORRUPTION runs .....

Never having enough of your own ...

So that you got to take your neighbor's too ....

Using the "law" as your tool to do so ...

And so ...

[Livyjr]

It takes incompetence and corruption multiplied together to f**k up our system.

"Investment firms pull back on borrowing from emergency lending program"

By JEANNINE AVERSA, Associated Press

Last updated: 5:52 p.m., Thursday, April 17, 2008

WASHINGTON -- Big Wall Street investment companies are reducing their borrowing from the Federal Reserve's emergency lending program, a sign that credit problems may be easing.

As part of the effort to relieve credit strains, the Fed auctioned nearly $25 billion in super-safe Treasury securities to investment firms Thursday.

At the auction -- the fourth of its kind -- the Fed made another $24.999 billion worth of the securities available.

The Fed received bids requesting $35.1 billion of the securities.

In exchange for the 28-day loan of Treasury securities, bidding firms can put up more risky investments, including certain shunned mortgage-backed securities, as collateral.

In the four auctions held so far, the Fed has provided close to $158.95 billion worth of the Treasury securities to financial firms.

It also is aimed at providing relief to the distressed market for mortgage-linked securities.

DO TWO AND TWO MAKE A FOUR HERE?

BY PAPERING WALL STREET WITH SECURE TREASURY SECURITIES IN EXCHANGE FOR WORTHLESS TOXIC WASTE, HAS THE BEARDED BUSHIAN FINANCIAL SAVANT BEN BERNANKE MADE THE TREASURY SECURITIES AS WORTHLESS AS HE HAS MADE THE GREENBACK DOLLAR?

"Treasury prices slip despite mostly negative economic data - Treasurys slip after economic data; uncertainty over British rate weighs on short-term prices"

By MADLEN READ, Associated Press

Last updated: 5:43 p.m., Thursday, April 17, 2008

NEW YORK -- Treasury prices fell slightly Thursday, with investors hopeful the credit crisis is largely over but uncertain about the prospects for the U.S. economy.

Economic data on Thursday was mostly negative.

The Conference Board said its March measure of leading indicators rose for the first time in five months, but the Labor Department reported a jump in unemployment claims last week by 17,000 to 372,000, and the Philadelphia Federal Reserve said the region's manufacturing contracted at a faster pace in April than it did in March.

Despite the downbeat outlook for the economy, however, there have been a number of factors weighing lately on Treasurys, which are normally popular assets in times of economic turmoil.

One is the feeling that the worst of the tightness in the credit markets has past.

"As the market starts to focus on the notion that we're past the worst .... there's increasing talk of Treasurys being a very overvalued asset," said Joel Marver, a Treasury technical analyst at Thomson Financial.

He said there remain some worries about the credit markets, which continue to prop up the market to a certain extent, but "it looks to me that prices are going to go lower."

So after falling on Wednesday as stocks surged, Treasurys continued to slide on Thursday.

"From a technical prospective, the fact that the market broke down yesterday has turned the mindset negative," said John Spinello, bond strategist at Jefferies & Co.

The benchmark 10-year Treasury note fell 4/32 to 98 4/32 and yielded 3.73 percent, up from 3.71 percent late Wednesday, according to BGCantor Market Data.

Prices and yields tend to move in opposite directions.

The 30-year long bond fell 2/32 to 97 23/32 and yielded 4.52 percent, up from 4.51 percent late Wednesday.

The 2-year note fell 7/32 to 99 11/32 and yielded 2.10, up from 1.99 percent.

In late trading, some prices showed modest moves.

The 30-year yield rose to 4.53 percent, the 2-year yield rose to 2.11 percent and the 10-year yield remained at 3.73.

The 3-month Treasury bill's yield was at 1.28 percent, up from 1.15 percent late Wednesday, while its discount rate was at 0.91 percent.

Another factor causing some investors to sell Treasurys is concern about the legitimacy of the Libor rate, the rate set by British banks, Spinello added.

Libor is a short-term lending rate that many other lending rates are based on.

With reports circulating that an investigation into the banks' rate quotes could result in a sharp rise, investors are unsure about the value of various fixed-income assets right now.

Additionally, because Treasury yields have fallen so hard over the past several months, investors are looking to different types of safe-haven assets, said Kevin Giddis, managing director of fixed income at Morgan Keegan.

"What we're seeing in Treasurys in particular is that flight-to-quality is moving into other securities," said Giddis said.

With yields so low in Treasurys, investors are moving money into higher-yielding safe assets, he said -- including gold and highly rated mortgage-backed securities.

"It's not a big step-up in credit risk, but it's a big pickup in yield," Giddis said.

"There's a reliance on safety -- it's just in alternative sources."

[Livyjr]

Whatever technical terms you want to put to it, I would say that the economy is now being re-ordered ....

And radically so, in terms of the people that I talk to up here where I am, anyway ...

Up here where I am, it is my impression that the economy is melting down ....

It is fracturing ....

And each day, I follow the published news reports to see what the "chat" might be in the main stream media ....

And then in my various threads, I condense it all down as I perceive it ...

And where I can, I draw links back to the beginnings, such as going back to Indianhead's original post in this thread, so that I am staying "on-topic" as closely as that can be in a dynamic situation such as is unfolding in the world around us now ...

And so ...

SLOWLY, BUT SEEMINGLY INEXORABLY, MONEY KEEPS DRAINING OUT OF THE SYSTEM ....

AND WHERE IT IS GOING IS ANYBODY'S GUESS ....

INTO THIN AIR IS ONE COMMON AND POPULAR ANSWER UP THIS WAY ...

And so ...

"MGIC Investment loses $34.4 million as claims continue to rise due to weak housing market"

By EMILY FREDRIX, Associated Press

Last updated: 3:02 p.m., Thursday, April 17, 2008

MILWAUKEE -- MGIC Investment Corp. shares soared more than 19 percent on Thursday when the nation's largest mortgage insurer beat Wall Street's expectations for first-quarter results even though it lost $34.4 million.

The Milwaukee-based company said it lost 41 cents per share in the quarter ending March 31.

That compares with profit of $92.4 million, or $1.12 per share, a year ago.

Analysts had predicted MGIC would lose $1.69 per share, according to a poll by Thomson Financial.

Some analysts over-estimated the amount of incurred losses -- claims and money saved for future losses -- MGIC would post in the quarter, $691.6 million, which was up from $181.8 million last year.

MGIC's shares rose $2.03 to $12.53 in afternoon trading.

They're off more than 80 percent from their 52-week high of $67.05.

Revenue rose more than 14.6 percent to $423.9 million from $369.6 million in the quarter.

But that fell short of Wall Street's forecast of $434.6 million.

MGIC has been hit hard by the deteriorating mortgage and housing markets.

As more Americans default on mortgages, the holders of those mortgages turn to insurers such as MGIC, making claims to recoup their losses.

The company paid $371 million in claims in the most recent quarter and expects to pay up to $2 billion in claims this year.

By comparison, MGIC's payouts last year totaled $870 million, which was a 42 percent increase over 2006.

MGIC said delinquent loans and foreclosures increased as housing prices fell and the economy slowed.

The company also saw higher losses and lower cures -- meaning fewer homeowners who could get back on track with payments -- in California and Florida, two places hit hard by the housing crisis.

The company paid $82 million in claims in California in the quarter and $30 million in Florida.

MGIC does not expect to turn a profit this year.

The company reported an annual loss of $1.67 billion in 2007.

------

On the Net:

MGIC: http://www.mgic.com