The Housing Bubble

Ignore the gloomsters and buy the dip. Always remember, the stock market always goes up, in the long run.
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Nick Godt’s Market Medics

May 6, 2010, 12:01 a.m. EDT

Stocks have miles to go before they sleep
Commentary: Market’s pullback could be heavier than any since March 2009

By Nick Godt, MarketWatch

NEW YORK (MarketWatch) — Fresh experience from the 1990s stock bubble and the more recent housing bubble serves to remind that few ask questions when prices are steadily rising.

But as reader traffic numbers at popular financial news Web sites reveal, public interest is much higher in times of crises: It’s human nature to want to know what’s going on, where, why, and — if possible — when it will end.

These are increasingly tough questions to answer in the case of the European crisis. Debt markets, cajoled by massive government interventions ever since the big 2007-2009 plunge, are now facing economic and political reality, in other words, uncertainty.

With Greece trapped by the euro, it’s unable to have a normal currency slide to adjust to the situation. As noted by Mohamed El-Erian, chief executive and investment officer of bond-investment giant Pimco, solving the crisis could be a long, drawn-out process.

Yet with stocks now firmly focused on the crisis and its impact on other European countries and the euro-zone economy, the “when” question for stocks can only be measured in terms of how far the market had run up ahead of it, and how high bullish sentiment had risen.
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Time to buy the dip? Or would it be wiser to wait until *after* the Chinese property bubble bursts?

Thursday May 6, 2010

Bloomberg
China Stocks Fall to Seven-Month Low on EU, Property Concerns
May 06, 2010, 1:26 AM EDT

May 6 (Bloomberg) — China’s stocks declined, driving the benchmark index to a seven-month low, on concern a European debt crisis and Chinese government curbs on property will hurt economic growth.

Jiangxi Copper Co. and Aluminum Corp. of China Ltd., the nation’s biggest makers of the metals, dropped more than 3 percent as commodity prices plunged. China Vanke Co., the largest listed developer, fell 2.4 percent even after reporting higher April property sales. Huaxia Bank Co. slumped 10 percent after saying it plans to raise as much as 20.8 billion yuan ($3 billion) in a private placement to replenish capital.

“In the long run, we face the risk of the property bubble bursting,” said Xu Lirong, who oversees about $2.6 billion at Franklin Templeton Sealand Fund Management Co. in Shanghai. “If that happens, it’ll be a catastrophe for the economy and the stock market.”

The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, slid 66.10, or 2.3 percent, to 2,791.06 as of 1:12 p.m., set for its lowest close since Sept. 30. The CSI 300 Index retreated 2.8 percent to 2,952.28. Futures on the CSI 300 expiring on May 21, or the most active contract, lost 1.3 percent to 3,039.2.

The Shanghai gauge has slumped 15 percent in 2010, Asia’s worst performer, as the government unwound monetary stimulus and stepped up measures to prevent a housing bubble inflated by record lending last year. The gauge surged 80 percent in 2009.

Concern that the Greek fiscal crisis will spread through Europe drove losses among Asian stocks today, with the MSCI Asia Pacific Index erasing its gain this year. Moody’s Investors Service yesterday placed its Portugal rating on review for a possible downgrade. The European Union is China’s biggest export destination.
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Heh heh… I somehow missed this recent story of the seemingly-dormant subprime volcano erupting and spewing ashes on to Wall Street.

P.S. Thank you, God, for timing the Icelandic volcano eruption to follow right on the heels of their banking system’s collapse. Could you please, please reactivate the nearest volcano to Wall Street and trigger a similar event some time soon?

Nick Godt’s Market Medics

April 17, 2010, 8:56 a.m. EDT
Ashes of subprime volcano fall on Wall Street
Commentary: The economy matters more than Goldman

By Nick Godt, MarketWatch

NEW YORK (MarketWatch) — It was mostly smooth sailing for stocks during the first week of earnings until Friday, when news of Goldman Sachs’ troubles with regulators cast over Wall Street a cloud of uncertainty almost as thick as the volcanic ash above Iceland.

Friday’s news that the Securities and Exchange Commission is charging Goldman Sachs (GS 148.19, -1.26, -0.84%) with fraud over its handling of securities tied to subprime mortgages felt more like another unexpected aftershock of the financial-crisis earthquake.

The Dow Jones Industrial Average (INDU 10,868, -58.65, -0.54%) sank 125 points, although it stayed above the 11,000 mark. The Chicago Board Options Exchange volatility index, or (VIX 24.91, +1.07, +4.49%) , also known as the market’s fear gauge, jumped or 15% after plumbing 30-month lows all week.

The broad S&P 500 index (SPX 1,166, -7.73, -0.66%) lost all of its weekly gains in one day and fell for the first week in seven.

The fact that regulators were looking into Wall Street firms’ shady practices in the wake of the most devastating financial crisis and economic downturns since the 1929 crash and the Great Depression shouldn’t have been a surprise to investors.

But in some ways, it was similar to the way Iceland, one of the industrialized countries most hit by the financial crisis, brought itself back at the top of media headlines as its erupting volcano grounded thousands of intercontinental flights.

The eruption of the Iceland volcano had been monitored by air traffic controllers for a while.

“We’ve known about this for weeks,” a British Airways pilot told me after he became stranded in New York City on Thursday while flights going back to the U.K. were postponed.
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Blowing bubbles

* May 5th 2010, 21:05 by R.A. | WASHINGTON

POP QUIZ: was the American housing boom based on fundamentals or was it entirely driven by speculation? A silly question, you say. Bubbles typically begin to inflate based on fundamentals-driven price signals, and they later graduate to unsustainable increases as credit expands and new buyers enter the market to speculate that prices will rise indefinitely. The answer, then isn’t either-or, it’s both-and. Or rather, one then the other.

Casey Mulligan seems to struggle with this concept in a new post at Economix. He writes:

Inflation-adjusted housing prices and housing construction boomed from 2000 to 2006 and crashed thereafter. Commentators ranging from President Obama to Federal Reserve Chairman Ben S. Bernanke have described that cycle as a “bubble,” by which they mean that, at least in hindsight, the housing price boom was divorced from market fundamentals.

But maybe there was a good, rational reason for housing prices to increase over the last decade.

Or maybe there was a good, rational reason for housing prices to increase in many markets, but in an environment of rapid credit expansion and growth in new buyers the housing price boom became divorced from market fundamentals. Contra Mr Mulligan, these explanations are complementary, not in conflict with each other.

His damning piece of evidence is this chart:

(CHART IN LINKED ARTICLE SHOWS U.S. REAL ESTATE CORRECTION IS BARELY PAST HALF WAY OVER)

Prices have not fallen all the way back to the level we’d expect if demand had remained constant from the 1990s. Based on this, Mr Mulligan concludes that fundamentals may explain “a large fraction” of the previous decade’s price increases.

Now it’s possible that the leveling off we’ve observed is due to government interventions, and prices will soon resume falling. But even if we simply take this chart and Mr Mulligan’s hypothesis as they are, this conclusion seems daft:

[A]nother interpretation is that a large fraction of the housing price boom was justified by fundamentals…If so, we are probably asking too much of the Federal Reserve and other regulators to accurately disentangle bubbles from fundamentals the next time that asset prices rise.

Really? According to Mr Mulligan’s own logic, the whole of the 20% increase in prices charted here involved a movement “divorced from market fundamentals” (and in the big bubble markets, values rose by 100% or more through this period). Is he really suggesting that we shouldn’t expect regulators to get that something fishy is going on under such circumstances?

Whenever I read about a research article which absolves the Fed from housing bubble culpability, three questions immediately come into mind:

1) Did the Fed provide grant funding for the study?
2) Are the authors hoping to some day work at the Fed?
3) Does at least one of the authors already work at the Fed?

UPDATE 1-Research may exonerate Fed for housing bubble
Wed May 5, 2010 5:06pm EDT

* Home prices rose 74 pct from 2000 to 2006

* Lower rates only account for gain of about 10 pct

* Authors blame bubble on psychology, tax incentives (Adds comment from Fed critic and study co-author)

BOSTON, May 5 (Reuters) - Low interest rates and loose lending policies were not to blame for the nationwide boom and subsequent crash in U.S. home prices over the past decade, according to a new paper by three university researchers released on Wednesday.

Contrary to conventional wisdom blaming the Federal Reserve for keeping rates too low or failing to enforce tighter mortgage standards, the paper blames “faulty expectations” of buyers and lenders who believed home prices would rise indefinitely.

“If economists are going to better understand housing bubbles, we will surely need to accept that home buyers often have very exuberant beliefs about housing prices,” the authors concluded.

The study was written by Edward Glaeser, a professor of economics at Harvard University’s Kennedy School of Government; Joseph Gyourko, a University of Pennsylvannia professor of real estate; and Harvard graduate student Joshua Gottlieb.

Presented on Wednesday at a conference on the roots of the housing crisis at the Federal Reserve Bank of Boston, the paper analyzed a variety of nationwide housing market data from 1980 through 2008.

The researchers found a 1.0 percent decline in real interest rates typically led to an 8.0 percent increase in home prices. Real rates on 10-year Treasury bonds used to set mortgage rates declined by 1.3 percent from 2000 to 2006, accounting for only about a 10 percent increase in prices.

Similarly, lending standards eased during the bubble years but not enough to explain the huge price moves, the paper found. Mortgage loans were made at an average of 84 percent of the value of homes in 1998, suggesting a 16 percent down payment, compared to a loan-to-value ratio of 88 percent, or a 12 percent down payment, by 2006.

“We found no statistically meaningful relationship between house value and the down payment size,” the authors concluded.
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Related News

* UPDATE 2-Obama to tap Yellen, others for Fed on Thurs-sources
Wed, Apr 28 2010
* Instant View: Fed holds rates steady; more upbeat on economy
Wed, Apr 28 2010
* Fed’s new chief regulator raises hopes, and doubts
Tue, Apr 27 2010
* FED FOCUS-Fed’s new chief regulator raises hopes, and doubts
Tue, Apr 27 2010
* UPDATE 1-Fed policy bets get new life at CME
Fri, Apr 23 2010

Mother of all things large and small!! Can’t we force them to quit backing loans already?! What on earth does it take for us to wake up?

Freddie Mac needs another $10.6 billion

“NEW YORK (CNNMoney.com) — Freddie Mac on Wednesday requested another $10.6 billion handout from the federal government.

The housing finance company, which reported an $8 billion quarterly loss, was put into conservatorship by the government during the height of the financial panic in September 2008 along with its twin Fannie Mae (FNM, Fortune 500).

Freddie has already received $50.7 billion from the Treasury Department. Fannie Mae has so far gotten $76.2 billion.

Since the housing collapse began in 2008, Freddie and Fannie have been propping up the mortgage market.”

Freddie Mac asks U.S. for $10 billion as losses pile up
Washington Post ~ May 6, 2010

Freddie Mac, the bailed-out mortgage-finance giant, reported Wednesday that it continues to lose money and needs an additional $10.6 billion in assistance from U.S. taxpayers.

The most recent earnings report follows three straight quarters in which the McLean-based company did not need infusions from the Treasury. Still, the firm is struggling to recover from the mortgage-market meltdown; it reported a net loss of $6.7 billion in the first quarter of 2010, compared with a loss of $9.9 billion a year ago.

Freddie Mac is turning to the Treasury again mostly because of a change in accounting. Revised rules that took effect this year require companies such as Freddie to move all mortgages they guarantee — but don’t own — onto their books. This shift alone caused the company’s equity to drop by $11.7 billion, helping to plunge its net worth into the red.

European Union, Currency Are Headed for Collapse: CNBC

The current European debt crisis likely will not end until the euro collapses as a currency and takes the entire European Union with it, said Dennis Gartman, hedge fund manager and author of “The Gartman Letter.”

“I think the whole thing will go down to defeat, the whole thing will eventually unravel,” Gartman said in an interview with CNBC.com.

Gartman said he doesn’t have a specific timetable for how long it will take for the collapse of the 17-year-old EU, but said, “it doesn’t look good.”

Greece says bailout is only hope, austerity measures must be taken, day after 3 die in riots

ATHENS, Greece (AP) — Greece’s only hope of avoiding bankruptcy is to take money from a joint EU and International Monetary Fund rescue package, the finance minister said Thursday during a heated Parliamentary debate overshadowed by the deaths of three people during protests against spending cuts.

Greece has to impose harsh austerity measures, including slashing salaries and pensions and increasing taxes, in order to get money from the euro110 billion three-year package, which will provide the country with loans from other eurozone countries and the IMF.

The loans are aimed at containing the debt crisis and keeping Greece’s troubles from spreading to other countries with vulnerable state finances such as Portugal and Spain. The euro has sagged as those countries have seen debt downgrades, falling below $1.28 Thursday; late last year it was as high as euro1.51.

The cuts have sparked outrage in Greece, with an estimated 100,000 people spilling onto the streets of Athens during a nationwide general strike Wednesday to protest the measures.

Demonstrations quickly turned violent, with protesters trying to storm parliament and clashing with police in extensive riots that saw banks, stores and hotel windows smashed and two buildings burned. A man and two women — one of whom was pregnant — died when they became trapped in a burning bank torched by protesters. Firefighters used a crane to rescue another four people from the building’s balconies.

Thought for the day:

If legal liabilities and judgements against BP sink the company,
would BP be bailed out under the “too big to fail” theory?

Creepy Pennsylvania Tax Agency Ad Goes Big Brother
FOXNews.com

A threatening TV commercial appearing in Pennsylvania has residents of the state spooked by its “Orwellian” overtones, and critics are calling it a government attempt to scare delinquent citizens into paying back taxes.

In the 30-second ad, ominous mechanical sounds whir in the background as a satellite camera zooms in through the clouds and locks onto an average Pennsylvania home. The narrator begins her cold and calculating message:

Your name is Tom … You live just off of 5th Street … Nice car, Tom — nice house. What’s not so nice is you owe Pennsylvania $4,212 in back taxes. Listen Tom, we can make this easy. Pay online by June 18th and we’ll skip your penalty and take half off your interest because Tom, we do know who you are.

The satellite snares its target — Tom’s house — and the screen flashes another menacing line as the ad peters out:

Why a Criminal Case Against Goldman Sachs Matters and Why Charges Could Stick By PAM MARTENS

Goldman Sachs used to be the firm that pursued top government posts; now government is in hot pursuit of it, and not in a good way. The SEC has charged the firm and an employee, Fabrice Tourre, with securities fraud and the Justice Department has commenced a criminal investigation, according to news reports.

Change appears to be swallowing Goldman Sachs. It began quietly moving out of its storied and staid headquarters at 85 Broad last Fall to flashy new multi-billion dollar digs at 200 West Street, including a 54,000 square foot gym (roughly the size of 20 homes for average Americans; those who can still afford one after the Wall Street pillage). And after the release of internal emails by the SEC and Senate, Goldman looks more like a sleazy boiler room pump and dump operation in drag than an investment bank (in drag as a bank holding company). Comedy talk show hosts are having a field day (Jon Stewart calls them “those f*!*!ing guys”) and Goldmanfreude (pleasure in watching Goldman shamed for the pain it inflicted on others) is in full swing.

It all sounds eerily familiar to the wealth transfer maneuver by Goldman Sachs Trading Company in the asset bubble of 1928. The Trading Company was a closed end fund (called a trust in those days) that Goldman Sachs created and offered to the public at $104 a share, stuffed with conflicted investments while paying Goldman a hefty management fee, only to end up a few years after the 1929 crash trading at a buck and change. On May 20, 1932, Walter Sachs, President of the Goldman Sachs Trading Company, was grilled by the Senate Committee on Banking and Currency. The implication was the same as the current round of Senate hearings: Goldman royally fleeced its customers to line its own pockets.

http://www.counterpunch.com/martens05042010.html

Team Barry was on it from day one! Riiiight.

While Oil Slick Spread, Interior Department Chief of Staff Rafted with Wife on “Work-Focused” Trip in Grand Canyon ~ ABC News

Though his agency was charged with coordinating the federal response to the major oil spill in the Gulf of Mexico, Department of the Interior chief of staff Tom Strickland was in the Grand Canyon with his wife last week participating in activities that included white-water rafting, ABC News has learned.

Other leaders of the Interior Department were focused on the Gulf, joined by other agencies and literally thousands of other employees. But Strickland’s participation in a trip that administration officials insisted was “work-focused” raised eyebrows among other Obama administration officials and even within even his own department, sources told ABC News.

Strickland, who also serves as Assistant Secretary for Fish and Wildlife and Parks, was in the Grand Canyon with his wife Beth for a total of three days, including one day of rafting. Beth Strickland paid her own way, Obama administration officials said.

Another great investment, I am sure it will be spent wisely and all accounted for…

Pakistan gets $656M from U.S. as terror link probed
The Hill

Pakistan received $656 million in security funds from the United States as authorities probed links between the country and the confessed Times Square bomber.

According to Dawn newspaper, the U.S. embassy in Islamabad transferred $188 million to Pakistan’s central bank last week and the remaining $468 million on Monday. The coalition-support funds compensate Pakistan for counterterrorim and counterinsurgency operations.

Faisal Shahzad, a Connecticut resident and the 30-year-old son of a retired official in Pakistan’s air force, was hauled off an Emirates airlines flight bound for Dubai on Monday night and charged Tuesday with attempting to detonate an SUV bomb in New York’s Times Square.

According to the criminal complaint filed against Shahzad, he admitted “after his arrest that he had received bomb-making training in Waziristan, Pakistan.”

It`s Hitler`s fault!

Greece: bail-out money is ‘reparation’ for Second World War
While high-finance will – or maybe not – save Greece, it is the low-ground that people both there and in Germany are scrabbling over to play the blame game.

Published: 11:52AM BST 05 May 2010

Communist labour union members march over austerity measures in Athens Photo: REUTERS Greece is already into a boycott of German goods and services, ranging from Miele fridges to VW cars to pharmaceutical products.

But it is the war, and the brutal German occupation of Greece, that really gets up the noses of Teutons whose leader pledged 22 billion euros this week to save them from themselves.

The mayor of Athens, Nikitas Kaklamanis, led the call for Germany to pay reparations for the conquest and occupation, saying; “You owe us 70 billion euros for the ruins you left behind.”

Greece’s deputy prime minister, Theodoros Pangalos, also dragged up the war, stating; “The Nazis took away the Greek gold that was in the Bank of Greece, they took away the Greek money and they never gave it back.”

Consumer rules, Fed audit next on Senate agenda

By JIM KUHNHENN (AP) – 5 hours ago

WASHINGTON — A partisan fight over consumer protections and a dispute over how intrusive Congress can be in overseeing the Federal Reserve loom as obstacles to the Senate’s efforts to rein in Wall Street.

Republicans offered a weaker alternative to consumer protection measures that are central to President Barack Obama’s Wall Street regulation plan. And a bipartisan group of senators, led by Vermont independent Bernie Sanders, was next in line with an amendment that would require the Federal Reserve to undergo a thorough audit by Congress’ investigative arm, the Government Accountability Office.

Votes on those measures could come as early as Thursday.

The Republican plan would limit the enforcement power of a proposed consumer protection bureau and make its rules subject to approval by a top banking regulator.

It would create a division of consumer protection within the Federal Deposit Insurance Corp. to oversee nonbank mortgage companies and write consumer regulations. The FDIC would have to sign off on those rules.

In contrast, the Democratic plan backed by the Obama administration would create an independent bureau within the Federal Reserve to police lending and other customer financial service transactions. It would have a freer hand to enforce its regulations.

“It creates one of the most important, one of the most powerful, all-powerful individuals in the entire federal government,” Sen. Roger Wicker, R-Miss., said, objecting to the autonomy Democrats would give the head of the bureau.
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What now?
Yip yip yip yip yip yip yip yip
Mum mum mum mum mum mum
Get a job Sha na na na, sha na na na na
Silhouettes - Get a Job Lyrics

What now? Nearly 142,000 Floridians out of unemployment benefits

From The Post and AP
By Marcia Heroux Pounds Sun-Sentinel Staff Writer
Posted: 9:07 a.m. Tuesday, May 4, 2010

Nearly 142,000 Florida residents have exhausted all their state and federal emergency unemployment benefits, though about 80,000 could qualify for extended benefits recently passed by the Florida Legislature, the state work force agency said Monday.

Extended benefits are paid by the federal government, but have to be approved by the state Legislature.

Even if Gov. Charlie Crist signs the bill, many Floridians may find that if they received extended benefits either earlier this year or in 2009, they do not have many weeks available. But the number of people affected should be small, said Robby Cunningham, spokesman for Florida’s Agency for Workforce Innovation.

Florida reached a new record unemployment rate of 12.3 percent in March with 1.4 million people out of work.

Bugatti Coupe Sets $30 Million Record as Investors Buy Classics

May 6 (Bloomberg) — A 1930s Bugatti has sold for about $30 million to become the world’s most expensive car — with dealers predicting more records as billionaires look for alternatives to risky financial investments.

The Type 57SC Atlantic was bought in a private transaction for nearly as much as its asking price, dealers with knowledge of the matter said. The coupe had been owned by the New Hampshire-based neurologist Peter D. Williamson, a former president of the American Bugatti Club, who died in 2008.

“Interest rates are low and some people have made a lot of money over the last year,” said John Collins, of U.K.-based Ferrari dealers Talacrest 2000 AD Ltd. “They want to buy real assets that have a limited supply and that won’t go down in value. Modern art and classic cars are tracking each other at the moment.”

Wealthy individuals are increasingly looking at physical objects such as art and cars because stock markets remain turbulent, dealers said. A 1932 painting by Pablo Picasso sold at Christie’s International in New York for $106.5 million on May 4, setting a record for any artwork at auction

The times they are a changing…

Paul Craig Roberts (born April 3, 1939, in Atlanta, Georgia) is an economist and a nationally syndicated columnist for Creators Syndicate. He served as an Assistant Secretary of the Treasury in the Reagan Administration earning fame as a co-founder of Reaganomics.” He is a former editor and columnist for the Wall Street Journal, Business Week, and Scripps Howard News Service. Roberts has been a critic of both Democratic and Republican administrations.

Cessation of journalistic activism
On March 26, 2010, in a farewell column titled, “Truth Has Fallen and Taken Liberty With It,” Roberts effectively announced his journalistic retirement. The article, published at Counterpunch dot org, begins: “There was a time when the pen was mightier than the sword. That was a time when people believed in truth and regarded truth as an independent power and not as an auxiliary for government, class, race, ideological, personal, or financial interest.”

It proceeds to a bitter chronicle of the demise of American intellectual integrity, particularly that of financial journalists and economists. These have been thoroughly corrupted by monetary inducements to misrepresent and ignore what has been, in effect, the systematic dismantling of the nation’s productive life, in the name of globalization. He holds the members of his own journalistic profession largely responsible for abetting relentless outsourcing of American industry, thereby gutting the American middle class and effectively dooming the nation’s future.

He describes his own ostracism from mainstream media access, the consequence of his relentless and unflinching criticism of the demolition process over the past decade. His column ends, “The militarism of the U.S. and Israeli states, and Wall Street and corporate greed, will now run their course. As the pen is censored and its might extinguished, I am signing off.”

wikipedia

Happiness/equality=Trust? America=Trusting? Why?

http://www.theglobeandmail.com/news/world/article716022.ece

Danes happiest people in the world Globe and Mail

(The) Danes — who are also among the world’s most prosperous people — have a tradition of equality and trust that is not widely replicated.

Denmark’s happiness (boils) down to the fact that people consume a relatively equal share of the wealth they generate, and trust each other.

“Denmark is one of the countries with the highest level of trust among people,” she told Reuters. In other countries, people are more cynical about institutions from government to business, as well as each other.

“Trust in peers — also institutional trust — but especially trust in peers is a significant and decisive determinant of your subjective well-being,” Fischer said.

“The Danes are ‘The Happy People’. Why?” said the Under-Secretary for Public Diplomacy, citing how Danes are comfortable with simple pleasures like swimming in the harbour on a summer’s day, which could be deemed too risky elsewhere.

“A woman is riding her bike with two kids in a box in front — and it is even raining — how can she do that? The Danes are devoted to biking and to fighting global warming locally. Those are some of the values that interest other people,” he said.

One woman cycling through Copenhagen, decorator Mette Ellevang Petersen, 26, said it meant a lot to her to feel safe and that she could rely on other people.

The Danish island of Samso, whose inhabitants have after a decade achieved a target of self-sufficiency in renewable power, is one example of a self-reliant community initiative that Denmark has to offer.

The OECD’s Ms. Fischer noted that economists have found a positive correlation between trust and economic growth.

“If you trust someone in a market transaction you have lower transaction costs. You do not even have to have a contract because you trust his or her words. So you have no contract costs, you have no enforcement cost.”

Mr. Bjornskov said Danish trust is very clearly connected with a better economy and a better competitive position.

“It means that the judicial system functions better in Denmark, education works better than in a lot of other countries. The trust contributes to the happiness, but it also contributes to concrete economic results,” he said.

Ms. Fischer cited a new interest in making social indicators — such as happiness or subjective well-being — acceptable to politicians as a complement to traditional GDP.

“The GDP indicator is very much a quantitative measure of well-being and we have to add a quality dimension to that,” she said.

Someone should send a jersey to Sarah “The Barracuda”

‘Los Suns’ Join Protest, Then Stop the Spurs:
By BILLY WITZ Published: May 5, 2010

“In the preceding 24 hours, it was Robert Sarver, the Suns’ managing partner and a native of Tucson, who had stepped into another tough fight with his decision to have the Suns wear their alternate “Los Suns” jerseys, something they did twice this season as part of the N.B.A.’s “Noche Latina” campaign.”

Nutballs to be shrugged off?

Coffee Party Radio - “Income Inequality & America on the Brink” - 5/6/10 6:00pm EDT
Coffee Party USA

Join us this Thursday, May 6th, at 6:00pm EDT for another installment of Coffee Party Radio!

Bruce Judson, author of “It Could Happen Here”, will discuss the central argument in his book that the current income gap in America is politically destabilizing and could ultimately lead to a serious political upheaval.

http://www.blogtalkradio.com/coffeepartyusa/2010/05/06/income-inequality-america-on-the-brink-6pm-et

Lesson #1: Batten Down the Hatches

Admittedly this is a pitch for a set of conference CD’s, but it does contain the following,

1.) The U.S. Constitution has been all but scrapped at this point — further degradation of what we consider our inalienable rights is a certainty. You need to begin thinking about ways to protect yourself, perhaps even internationalizing your assets, and maybe your life. (An hour-long panel at the Summit focused specifically on that subject.)

2.) The crisis isn’t over. The problems of the PIIGS are symptomatic of a global sovereign debt crisis that cannot be resolved by layering on more debt and more taxes, topped off with a large dollop of new regulations. (For an important legal analysis of the proposed derivatives legislation, click here.)

3.) The housing market will burn down in July. We can’t foresee the impact this will have on the markets, or how the government will (over)react to a resumed slide – but we’re pretty sure it won’t be good. Be careful, and look into ways to play market volatility. For more aggressive investors, shorting home builders, which have rebounded considerably from their 2009 lows, might be a good idea at the right time.

4.) Keep focused on precious metals and energy. Gold is insurance against the worst case and a hedge against the sovereign currency crisis we see as inevitable. The energy sector offers powerful, long-term upside thanks to a combination of the hard facts of Peak Oil, a new wave of political and legal constraints on further offshore oil drilling – and not just here in the U.S. – and the geopolitical realities of the West being outgunned by the Chinese and others in securing long-term energy assets in the Middle East and Africa.

http://www.caseyresearch.com/displayCdd.php?id=421

Follow the white rabbit. Bloomberg (Bank Swaps Surge):

Banking systems in Greece, Portugal, Italy, Spain, Ireland and the U.K. may come under pressure as the crisis worsens, Moody’s said in a report today. The ratings firm said yesterday it may downgrade the Portuguese government and its banks after Standard & Poor’s last week cut sovereign debt of Greece, Portugal and Spain.

“The risk is for the banking sector because they’re the ones that own most of the government bonds and in cases of extreme crisis banks rely on governments to bail them out,” said Juan Esteban Valencia, a London-based credit strategist at Societe Generale SA. “If governments can’t issue at relatively normal levels, it’s going to be very difficult to bail out banks and that means banks are getting hammered.”

market pulse

May 6, 2010, 9:30 a.m. EDT
Bernanke optimistic about bank lending outlook

By Greg Robb

WASHINGTON (MarketWatch) — Federal Reserve Board chairman Ben Bernanke said Thursday that there were some reasons for optimism about the outlook for bank lending although credit remains tight. In a speech to a conference on bank supervision sponsored by the Chicago Federal Reserve Bank, Bernanke pointed out that the Fed’s latest senior loan officer survey found no net tightening in lending standards for small businesses for the first time since the summer of 2007. “Senior loan officers tell us, at least outside of commercial real estate, they anticipate a modest reduction in their troubled loans over the coming year,” Bernanke said. “As a result, bank attitudes toward lending may be shifting,” he said.

market pulse

May 6, 2010, 10:16 a.m. EDT

Fed’s Lacker warns about inflation complacency
By Greg Robb

WASHINGTON (MarketWatch) — Federal Reserve officials must not get complacent about the inflation outlook even though the unemployment rate remains high, said Jeffrey Lacker, the president of the Richmond Federal Reserve Bank. “My worry is that we will let the obvious slack in the economy lull us into a false sense of security regarding inflation, which could allow inflation pressures to build before we raise rates,” Lacker said in a speech to an investment group in Richmond. Lacker said he would be happy if inflation remained about where it is - with the core consumer inflation rate at 1.1%. Lacker said he was troubled by “persistently high” readings on inflation expectations. “They said the possibility that people think the FOMC will be unable or unwilling to conduct monetary policy in a way that keeps inflation from rising significantly during this recovery,” Lacker said

Which California Republicrat gubernatorial candidate had the closest ties to Gollum? Enquiring minds want to know.

Whitman’s lead over Poizner plummets
Joe Garofoli,Carla Marinucci, Chronicle Political Writers
Thursday, May 6, 2010

Meg Whitman held a nearly 50-point lead two months ago. Steve Poizner is now 8 to 10 points down, new polls show.

Former eBay CEO Meg Whitman’s lead in the Republican race for California governor has shrunk dramatically as the billionaire candidate has been battered by her ties to Goldman Sachs, new Republican and Democratic polls suggest.

Whitman’s lead over state Insurance Commissioner Steve Poizner, which approached 50 points two months ago, has tightened to just 8-10 points just days until voters begin casting absentee ballots for the June 8 primary, according to polls by both Poizner’s campaign and by Democratic labor organizations opposing her candidacy.

Mike Murphy, Whitman’s top strategist, downplayed Poizner’s suggestions that the race was tightening to single digits, saying her campaign’s polls do not reflect that.

Since Friday, Poizner has run a TV ad statewide called “Vulture,” which depicts Whitman as an executive who profited from the nationwide financial meltdown through her Wall Street connections. In their televised gubernatorial debate Sunday, Poizner attacked Whitman for receiving sweetheart stock deals from the firm.

Starting in 2001, Whitman served on Goldman’s board of directors. She left the board 15 months later, in 2002, after she was singled out in a congressional probe of bond underwriters and the practice of “spinning” - a now-banned practice in which Goldman and other firms allegedly traded access to hot initial public offerings for bond business.

Whitman said Sunday she “did not do anything wrong.”

The Securities and Exchange Commission filed civil fraud charges against Goldman on April 16.

But Murphy claimed Wednesday in a telephone call with reporters that Poizner had also spun such sweetheart IPO deals with Goldman - a charge Poizner strongly denied during a visit Wednesday to The Chronicle’s editorial board.
…

Coldwell B*nker on the right (a few minutes ago) has a $8,000 buyers credit. Targeting buyers who don’t realize they are paying for that credit many times over. The sad part is that marketing malarkey will get them dumb clients.

His dis-pleasure in the parking lot fee lead to a a path seldom traveled: $266 Million dollars

“The couple owe their new mega-wealth to Gilbert Cisneros’ spur-of-the-moment decision on where to get dinner.”

“Though Jacki craved a KFC Double Down chicken sandwich, Gilbert wanted to stop at a Mexican restaurant as he drove home from jury duty in downtown Los Angeles. But he balked at the parking fee, so he ended up at a barbecue joint, where he also picked up 10 lottery tickets for good measure. He told KNBC that he picked the numbers at random.”

upscale condo in foreclosure by BoA in Seattle.

http://seattletimes.nwsource.com/html/businesstechnology/2011791112_lorig06.html

Retail Sales Confirm That Wall Street Got WAY Too Optimistic About The Recovery ~ Business Insider

After March same store retail sales (SSS) rose by a 9.1% year over year thanks to an early Easter, analysts had far more subdued expectations of 1.7% growth for April according to Reuters.

Yet the majority of retailers who have reported so far have missed these lower expectations. According to the data below sourced from CNBC, 15 companies have missed their same store sales expectations vs. 9 meeting or beating expectations.

Postal Service posts $1.6B quarterly loss
Washington Business Journal

The U.S. Postal Service reported a smaller quarterly loss but still warns it needs changes in order to stay afloat.

The Postal Service had a fiscal second-quarter loss of $1.6 billion, compared to a net loss of $1.9 billion in the same quarter a year ago, according to Bloomberg News, citing chief financial officer Joseph Corbett at the Postal Service’s board meeting Thursday. Mail volume has declined another 6.3 percent in the past six months.

“We cannot sustain those losses,” Bloomberg quotes Postmaster General John Potter as saying. “The Postal Service will run out of money next year unless there is legislative change.”

The Postal Service needs Congressional approval for its two biggest money-saving proposals; cutting delivery to five days a week and delaying retiree health benefits payments.

Japan’s Commercial Re Files for Bankruptcy Protection (Update1)

May 6 (Bloomberg) — Commercial RE Co., a Japanese real estate management company whose largest stakeholder is Goldman Sachs Group Inc., filed for bankruptcy protection today.

The Tokyo-based developer has had to sell assets at a cheaper price, hurting its income as Japan’s real estate market deteriorated following the subprime mortgage crisis, the company said in a release to the Tokyo Stock Exchange. Commercial RE had liabilities of 15 billion yen ($159.7 million) as at the end of March, according to the statement.

New City Residence Investment Corp., which sought bankruptcy protection in October 2008 with 112.4 billion yen in liabilities, was the first property trust to fail in the nation. In the fiscal year ended March 31, seven listed companies filed for bankruptcy including Joint Corp., a real estate developer saddled with 168 billion yen of debt.

New City was among 45 listed companies to file for bankruptcy in Japan in the year ended March 2009.

Tokyo-based Commercial RE is scheduled to be delisted from Osaka Securities Exchange’s Jasdaq on June 7.

Goldman Sachs had a 29.76 percent stake and Kenedix Inc., Japan’s biggest publicly traded real estate asset manager, 29.10 percent as of the end of March, according to the statement.

The various elements of the economy were trying to adjust to reality and the real prices of things were becoming apparent in 2008 when the government rushed in with tons of money to put a stop to this process. It resulted in stalling the correction and hiding true prices.

“Probably the most dramatic example of price hiding has been in the financial sector itself. There, the feds took away the risks of bad debt from the bankers and put it on the general public. The Fed bought the toxic loans, transferring hundreds of billions of losses from the banks’ balance sheets onto the balance sheet of the Fed.

“The Fed also lent the banks money at near zero percent…and then the federal government borrowed it back. The banks were able to make profits without doing any work or taking any risks. No wonder they didn’t lend money to private businesses or consumers. It was too much trouble. And they didn’t have to.” ~ Bill Bonner

Bonner thinks the U.S. will be more like Greece than Japan when the final correction breaks through. Trade of the Century

MLS #: FX7329779

wife and i toured this home when it was 99% complete and already sold.

i remember the both of us being absolutely, completley, totally, unbefrigginbelievably, bang your head against the wall, go home and cut your rist astonished at the fact that someone would pay $ 1.5M for this crapbox.

speaking of rist cutting…i bet that’s what the neighbors who bought the similarly priced home next door are doing right about now.

p.s. it’s still about 250k overpriced IMHO.

Filed under: “No one saw it coming” …or… “Bidness is Bidness” …or… “We don’t need no stinkin’ Gov’t regulation!”

Banks Hemorrhage Cash With Cards Wanting to Be American Express:
By Lisa Kassenaar, Bloomberg

“Janklow is the politician who, in 1981, brought Citibank to South Dakota. When he cut that ribbon to welcome the New York- based bank, he blew the lid off the U.S. credit card business, Bloomberg Markets reports in its June Issue.

The law inviting Citibank to South Dakota threw out limits on how much interest the state’s banks could charge borrowers — rules known as usury caps.

“Citi wanted the invitation, and they knew what we were doing with rates,” Janklow says. In a secret meeting at the governor’s residence with Walter Wriston, chief executive officer of Citicorp, the bank’s parent, Janklow agreed to drive through the legislation in a swap for 400 jobs.

“That was the deal,” Janklow says. “You have no idea, in a state of 750,000, how many 400 jobs is, all in one place.”

The business Janklow and Wriston set in motion with a handshake that evening transformed U.S. consumer lending. Once interest rates were allowed to rise as high as banks could push them, credit cards became a ticket to enormous profit. In the decade ended on Dec. 31, 2007, credit card issuers together earned more than $50 billion, mostly on the difference between their own cost of money and consumer rates of as much as 30 percent.”

Great call on (FXP) yesterday, up over 6% and climbing. Of course, the rest of my US portfolio is getting creamed.

Libor breaking out. Reach 4 tinfoil helmets. Armageddon?

WOOOOOOOWWW

Dow almost -1000!

Holy sh!t where the hell is the PPT? Gonna have to suspend trading?

Just wanted to emphasize my thanks and kudos to both the Mysterious Flying Miser and Bryan Hubbard of the OCC for today’s’ article “The Flawed Assumption”.

Very informative and helpful.

I had the pleasure of listening to Meredith Whitney’s housing commentary on Bloomberg Surviellence this morning. It’s well worth listening to and guess what my HBB Brothers & Sisters……. Mz. Whitney stated the price declines are far far from over.

This is annoying.

12000 Shares of P&G traded at 40.
4000 shares of 3M @ apprx. price 69

Cause a few billion $ gyration is stock market. Stocks like Apple droped close to 20 % for a few minutes.

P&G has contacted SEC.

Which ever exchange allowed this should have licence revoked.

So what set off the near 1000 point freefall?

Bernanke Warns Against Move to Audit Fed:
By TOM BARKLEY And MICHAEL R. CRITTENDEN WSJ

“Such amendments, if enacted, would seriously threaten monetary policy independence, increase inflation fears and market interest rates, and damage economic stability and job creation,” Mr. Bernanke wrote.

Hwy’s millionaire tax expert older brother, age 15:

“Dad, please….pleaaaaaassssseeee… don’t left up the mattress…”

Oil settles near $77 as stock market plummets
Oil prices slide with stock market, AP

“Gasoline prices reached levels that were eating into the consumer’s ability to pay rents or mortgages, and the higher price was acting as a massive tax on the economy. How prices act on the next rally will tell us more about how large a sell-off we may have coming.”

Cheers!

A first?

Is this the first stock “meltdown” in over 20 years that the stocks were crushed while Gold and PM’s advanced?? Gold up $32?? It’s been a long time since I saw an up day like that.

In every stock meltdown I can remember, PM’s got crushed as well.

Not today.

Violent Movie Declares War on Arizona for Immigration Law
FOXNews.com

A violent new film from cult director Robert Rodriguez is declaring war on Arizona with a “special Cinco de Mayo message” in the wake of the state’s controversial illegal immigration law.

That message is: “They just f—ed with the wrong Mexican.”

“Machete,” which features a knife-wielding Mexican assassin out for revenge against double-crossing gringos, won’t be in theaters until September, but it is already sparking a political melee over Wednesday’s stab at the Grand Canyon State.

In the trailer for the film, the title character is hired to assassinate an anti-immigration U.S. senator played by Robert De Niro. Protesters are seen waving nationalist signs as the senator speaks to a charged-up rally: “We are at war,” he booms. “Every time an illegal dances across our border, it is an act of aggression against this sovereign state — an overt act of terrorism.”

But before the trailer even begins, the battle-scarred title character stares out from the screen as he tells viewers that what’s about to unfold — an immigration-laced slasher grindhouse flick — is about the current border battle in Arizona.

Greek Debt Crisis On Verge Of ‘Going Global’: Pimco’s El-Erian
6 May 2010 CNBC.com

Riots erupted in Greece again on Thursday night to protest austerity measures.

About an hour or so after El-Erian spoke, global stocks sold off sharply with major US averages shedding more than 3 percent.

Speaking as Greek austerity measures won enough votes to be approved by parliament, El-Erian offered a stern warning about the potential of the crisis to escalate into something resembling, though not duplicating, the 2008-09 financial crisis.

“We’ve seen a crisis start in a country—Greece—become regional, impact the whole of the Euro zone and is on the verge of truly going global,” said El-Erian, CEO of the world’s biggest bond fund.

He said the debt is a “transmission mechanism to go from country to region to global. So we should take this very seriously.”

http://www.larouchepub.com/pr/2010/100505home_foreclosures_up.html

U.S. Housing Headed for New Collapse; Foreclosures Everywhere

May 5, 2010 (EIRNS)—The foreclosure tsunami in the United States, incredibly, is still rising in its fifth year, having increased another 7% in the first quarter, reaching 16% higher than the first quarter of last year, and headed for an unprecedented 4 million foreclosures in 2010, according to RealtyTrac. And the U.S. home market — home prices and the bank assets based on them — are now going into a second-wave collapse, joining the ongoing collapse of commercial real estate in a bank-destroying wave.

If LaRouche’s Homeowners and Bank Protection Act (HBPA) had been passed back in 2007, when he first proposed it, we would be telling a different tale.

Scorning Obama’s pathetic “foreclosure prevention” program for more than a year now, home losses were still spiking by another 19% even from February to March. And banks repossessed 35% more homes in the first quarter than they had in the terrible year 2009, reaching the highest level ever of repos in a quarter—56,000.

Now the White House’s speculation-driving “homebuyers’ tax credit” giveaway of $8,000/house has ended; and with literally millions of foreclosed homes to be sold by banks or “short sold” by distressed households, residential housing values—falling only slowly for the past four months—will go into a new plunge in the second and third quarter.

In the commercial real estate/securities collapse, the national average commercial real estate market price has now fallen 41% from its 2007 peak, and is continuing to plunge. In 2010, through last week, 64 U.S. banks had failed, totalling $61 billion in assets, more than double the 2009 rate of failures. Of the 100 banks that had the highest ratio, on Jan. 1, of commercial real estate loans to their total capital, 42 have already failed. “Commercial real estate exposure has become a frighteningly accurate predictor of bank health”—or death—reported Fox Business News.

http://larouchepub.com/hzl/2010/3718euro_not_greek.html

There Is No `Greek’ Crisis: It’s the Euro That Has Failed
by Helga Zepp-LaRouche

Greece and many other countries in the Eurozone and around the world are insolvent. The southern Eurozone countries are EU520 billion in debt to Germany alone, and about the same amount to other countries. Greece alone would need EU135 billion over the next three years. A wildfire is threatening to spread: Spain, whose banks are closely intertwined with those of Great Britain, is a much bigger problem, but also Portugal, Italy, and Ireland will soon require enormous sums of money. The crisis has long since developed into a systemic banking crisis, government bankruptcies, and, in reality, the failure of the euro. But Britain and the U.S. are also insolvent. We are dealing with a breakdown crisis of the system.

The therapy that the international financial institutions are ordering is fatal, and would lead directly to the death of the patient—namely, the world economy. What the IMF, European Central Bank (ECB), European Commission, and financial interests are demanding—on the one hand, endless rescue packages paid for with taxpayer money, and on the other, “draconian austerity measures” for the recipient countries—will lead to hyperinflation, and will plunge the recipient countries into a deep depression. These measures are just as disastrous in their effects as they are hair-raisingly incompetent.

The “tough austerity policy” that is being demanded of Greece means cutting the standard of living by 30% (!) and will destroy more jobs and capacity, not to mention any thought of new productive investment—Chancellor Brüning sends his greetings from the 1930s. The trade unions are talking about the most serious attack on workers’ rights since the military junta, and are planning a general strike. As Greece already has hardly any industry, the IMF demand, that it pay off its debts by increasing its exports, is downright absurd. How much more olives and wine will we have then? And if Finance Minister Wolfgang Schäuble says that the bailout would not cost the German taxpayer a thing, because Greece will pay everything back, then his nose must now be so long, that it reaches from Berlin to Athens.

IMF chief Dominque Strauss-Kahn and ECB President Jean-Claude Trichet have used massive pressure to thwart Chancellor Angela Merkel’s plans to delay a decision on the question of Greece until after the election in North Rhine-Westphalia on May 9. Now, the Bundestag is expected to approve, on the Friday before the election, a bill on the Greek package. Once the text of the law is known, the four professors Joachim Starbatty, Wilhelm Hankel, Karl-Albrecht Schachtschneider, and Wilhelm Nölling, who previously filed a lawsuit against the euro, will submit a new complaint to the Constitutional Court in Karlsruhe, and request a preliminary injunction. German participation in the rescue package could even pave the way for a return to the D-mark, for in the opinion of some constitutional lawyers, such as former federal judge Paul Kirchhof, German participation in the euro could be called question if the Monetary Union no longer upholds the principles of monetary stability. In a ruling of October 1993, the Karlsruhe court, in its so-called “Maastricht Judgment,” granted any future German government the right to leave the Monetary Union, if the stability of the euro should be exposed as a deception and its value should fall below the standard represented by the D-mark.

As Professor Starbatty stressed in an interview with Neue Solidarität, if Karlsruhe accedes to the complaint of the four professors, a dynamic situation will emerge; whereas if the suit is dismissed, “the Monetary Union slides into a state of instability and inflation….. But may God prevent that from happening.”

http://www.larouchepub.com/pr_lar/2010/lar_pac/100505gl-st_to_senate.html

With Obama Opposed, Glass-Steagall Heads to the Senate Floor

May 6, 2010 (EIRNS)—This release was issued today by the Lyndon LaRouche Political Action Committee (LPAC).

Economist Lyndon LaRouche has posed the one way to exit this worsening financial/economic disaster: a global restoration of the Glass-Steagall principle to separate real investment from toxic speculation in banking; and formation of a fixed-exchange-rate credit system by nations for new infrastructural investments.

In the United States, legislation to restore the authority of the 1933 Glass-Steagall Act—disastrously repealed a decade ago—will be put on the Senate floor for debate this week, in the form of a Cantwell-McCain amendment to the Restoring American Financial Stability Act of 2010 (the so-called “Dodd bill”). The Obama White House, the Federal Reserve, and Tim Geithner’s Treasury have made clear they oppose this Glass-Steagall amendment by Senators Maria Cantwell and John McCain. But the Senators have stated their intention to put Glass-Steagall forward, and Dodd has had to accept the amendment for debate, according to The Hill. Two days ago Sen. Mark Warner, who opposes Glass-Steagall restoration, acknowledged that it likely had the votes to pass the Senate.

In Senate action today, the Dodd bill was amended, 95-3, by changes pushed by GOP Sen. Richard Shelby, with which Dodd came to agreement. The key change Shelby demanded and got, was “a ban on the use of Federal funds to bail out banks,” as he put it, and strong restrictions on the Federal Reserve’s “emergency lending” to banks on indiscriminate collateral, under the “unusual and exigent circumstances” rubric used in the bail-outs.

This defense against bail-outs won by Shelby is significant for its reflection of the political mass strike underway in the nation. But it would turn out to be no more effective than the “Maginot Line” defense was, without a Glass-Steagall separation of commercial banking from speculative investment banking, and separation of investment credit from debt-leveraged “crap” securities—as Goldman Sachs executives derisively called what they were selling.

The agreement to the Shelby-Dodd amendment means this so-called “Wall Street reform bill” is likely to pass in coming weeks, and puts a focus on the amendments seeking to strengthen it. The key amendments, led by Glass-Steagall, are all being opposed by the Obama White House and Treasury. They must be rammed through the Congress by our mobilization of the mass strike ferment across the country.

One would have to look at the steepness of the drop in the market and say how leveraged is the market such that large in magnitude of a drop can happen. Be it one glitch or not.

Might be the market is all pumped with easy credit and people buying on margin.

Wonder if this is a wake up call. Warning danger warning danger.

Course, might have been some 25 yr old VP at goldman saying “Hey, what happens if I hit the big red reset button?”.

Nasdaq to cancel trades May 6, 2010 6:41 PM ET

All Thomson Reuters news NEW YORK (Reuters) - Nasdaq Operations said it will cancel all trades executed between 2:40 p.m. to 3 p.m. greater or less than 60 percent away from the consolidated last print in that security at 2:40 p.m or immediately prior.

Nasdaq said the stocks affected and break points will be disseminated soon.

(Reporting by Chuck Mikolajczak; Editing by Andrew Hay)

“Greece has convulsed with violent protest over the austerity measures, leading to the deaths of three bank workers yesterday.”

First I’d heard they were bank workers. Thanks Ambrose/UK Telegraph.

There was one precipitating factor which broke NASDAQ’s back during its monster climb, back in March of 2000. A few weeks before the peak, some Canadian teenager launched a massive denial of service attack, taking down many of the major multi-billion dollar companies - Yahoo, Amazon, etc.

It was that moment that I think set off a lightbulb in people’s heads, which led them to wonder just what it was that was supposedly worth so much money. And the rest is history. NASDAQ ten years later is less than half of its peak.

Today, with the Dow… one wonders what it could have been that could cause so much market change in the course of a few minutes. A trader fat-fingering a computer keyboard could cause this? Because if one trader could manipulate the market like this… this might make people wonder just what it is that is supposedly worth so much money.

Well, looks like the Fed audit amendment was killed.

Dang.

Plan for Congressional Audits of Fed Dies in Senate

Last-minute maneuvering in the Senate allowed the Federal Reserve to sidestep legislation that would have exposed its interest-rate decision-making to congressional auditors.

Thursday’s Senate showdown came after senators on the left and right joined forces to support Mr. Sanders’ provision.
…

How anyone on this board who reasonably knows what’s going on, and has gone on, can still support the Obama administration is beyond me.

Looks like the stocks slipped on greece {sp}

This is truly an investing tragedy: People with stop loss orders were among those who got creamed by the really big dip on Thursday. “Obviously” they deserve a government-sponsored do-over for their gambling losses.

* MARKETS
* MAY 7, 2010

Winners, Losers Wonder About Final Score

By RANDALL SMITH, JANE J. KIM and JENNY STRASBURG

Investors from day traders to professional money managers who made money during Thursday’s market gyrations wondered whether their trades would be canceled while those who lost money cried foul.

Steven Caruso, who represents investors in claims against Wall Street brokerages, said he got a call Friday from a couple who had sold stock via an order to do so at the market price during Thursday’s decline. The husband and wife received $100,000 less than they expected.

“The message was, ‘We got killed. Can you help?’ ” Mr. Caruso said. “The woman said her husband sold some securities and got taken out of the position at a very low price before things came back,” he said.

Alan B. Lancz, an investment adviser in Toledo, Ohio, said traders at his firm thought they had bought stocks at deeply discounted prices at the market bottom, only to learn many of the trades may get canceled.

“It’s an incredible situation. We have no idea how it’s going to turn out,” Mr. Lancz said. “It’s a little disheartening.”

Whether buying or selling, investors still were dazed Friday trying to understand the dynamics, and velocity, of the stock market’s largest intraday point drop in history. Volatility persisted Friday as the Dow Jones Industrial average fell 139.89 points after seesawing throughout the day.

Among Thursday’s biggest losers were people who had previously placed standing orders to sell if the shares fell below a certain price, also known as a stop-loss order.

Robin Raina, chief executive of Atlanta insurance-software maker Ebix Inc., spent part of Friday consoling investors who lost money because of their stop-loss orders when the company’s stock price slid to 75 cents a share from about $16. When Ebix’s stock price recovered later in the day, those investors were left on the sidelines.

“It’s a tragedy. All I could do was to sympathize with them,” said Mr. Raina.
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