The Housing Bubble

The Fed audit failed in the Senate but look on the bright side! At least we got Cash for Caulkers to pass the House!

Some slicksters made big bucks on the “unexpected” flash crash.

Six Mega Drops of the Flash Crash; Sam Adams Goes Flat

Exelon Corp. is one of the largest, most powerful utilities in the world, typically worth some $30 billion. For a brief moment Thursday, the stock market said it was worthless.

Exelon was just one of a number of stocks that produced bizarre, and presumably garbled, market quotes during the “Flash Crash” of the afternoon.

http://blogs.wsj.com/deals/2010/05/06/four-mega-drops-of-the-flash-crash-sam-adams-goes-flat/

Thank you Ben. Thank you everyone.

Wife and I bought a house outside of Boston at auction a couple months ago. We were the only people to bid at the auction. The bank bid 260k. We got if for 265k. Our bank then came and assessed it at 420k for the loan. Two weeks before that we lost a “bidding war” (by a lot) for a smaller, house for $390k.

Our rent was 1,100, now our mortgage, taxes and insurance are now $1,400 a month. That’s an increase, but we have tripled our living space and maybe more importantly five days after moving in, Mrs. A gave birth to a future ipod user.

I found this blog in 2007 (maybe 2006?). Looking for other people who thought the world had gone mad. Talk about hitting the jack-pot.

Donation coming….

Employment in U.S. Probably Rose for Third Time in Four Months

May 7 (Bloomberg) — Employment in the U.S. probably grew in April for the third time in four months, a sign the recovery is becoming self-sustaining, economists said before a government report today.

Boosted by temporary workers hired to conduct the census, payrolls climbed by 190,000 workers last month, the most in three years, according to the median estimate of 84 economists surveyed by Bloomberg News. The jobless rate may have held at 9.7 percent.

Companies such as General Electric Co. are adding staff as sales improve, leading to gains in incomes that may spur consumer spending and additional hiring. At the same time, unemployment may take time to recede as Americans who had dropped out of the workforce resume the job hunt, one reason why the Federal Reserve says it will keep interest rates low.

“We’re seeing broad-based job growth,” said John Herrmann, a senior strategist at State Street Global Markets in Boston. “It’s all part of this building economic momentum. We expect the unemployment rate to grind lower this year.”

California students sent home for wearing American flag shirts on Cinco de Mayo

MORGAN HILL, Calif. (AP) — The parents of several high school students who were sent home after showing up in clothing with American flags on Cinco de Mayo are blasting the school’s decision.

An assistant principal at Live Oak High School in Morgan Hill south of San Jose told the group of boys Wednesday to take off bandanas and shirts bearing American flags or turn the shirts inside out, according to some of the boys. At least one of the boys was also wearing shorts with the U.S. flag.

“They said we could wear it on any other day,” Daniel Galli, one of the boys, told San Jose’s KNTV. “But today is sensitive to Mexican-Americans because it’s supposed to be their holiday, so we were not allowed to wear it today.”

The boys say they were told the clothing was offending some Hispanic students and could spark fights.

They were given the choice to leave or face suspension, they said.

E-mails and phone messages left Thursday for school and district officials were not returned. But in a statement, the district called the incident “extremely unfortunate” and said it was investigating.

“While campus safety is our primary concern and administrators made decisions yesterday in an attempt to ensure campus safety, students should not and will not be disciplined for wearing patriotic clothing,” the statement read.

The boys said they had no intention of sparking conflict. At least two of them said they are part Hispanic.

Julie Fagerstrom, mother of one of the boys, said they were just being patriotic and displaying their individuality.

The boys have since met with a district official and been allowed to return to school and continue wearing the clothing.

But some students at the school objected.

“I think they should apologize ’cause it is a Mexican Heritage Day,” Annicia Nunez told KNTV. “We don’t deserve to get disrespected like that. We wouldn’t do that on Fourth of July.”

Everyone gets a do over.

Nasdaq to Cancel All Trades of Stocks Moving More Than 60%
By Michael P. Regan

May 6 (Bloomberg) — Nasdaq OMX Group Inc. said it will cancel all trades of stocks at prices that were 60 percent above or below the last price at 2:40 p.m. or immediately prior.

Should statements like this one be interpreted to mean the Fed might soon stop backstopping the housing market with implicit price supports? I still don’t understand why the Fed is meddling in the asset price support business, as according to their own rhetoric, asset prices have nothing to do with inflation. Hopefully that is a non-monetary policy question a Congressional audit could explore.

Friday May 7, 2010
Bullard Says Fed Can Sell Assets Before Policy Change (Update1)
May 06, 2010, 12:40 PM EDT

(Updates with Bullard comment in fifth paragraph.)

By Steve Matthews

May 6 (Bloomberg) — Federal Reserve Bank of St. Louis President James Bullard said the central bank can start selling some mortgage-backed securities before it increases its key interest rate.

“One way to get started with balance sheet normalization is to very gradually start selling MBS securities,” Bullard said in response to reporters’ questions after a speech today in St. Louis. “We can do that before we feel we are ready to raise the federal funds rate.”

The Fed cut the benchmark interest rate almost to zero in December 2008 and turned to purchases of Treasury, housing agency and mortgage-backed securities as the main tool for monetary policy. Policy makers are now debating when to begin withdrawing record liquidity from the financial system as the economy emerges from the worst recession since the Great Depression.

Bullard called an asset sales approach a “last-in, first- out policy.”

“The first thing you would do is at least start to unwind that slowly,” Bullard said. The precise timing “should also depend on economic developments,” he said.

He said any increase in the discount rate on direct loans to banks should come “sooner rather than later so we can keep it separate from actually tightening broader monetary conditions.”
…

I have this feeling that a great opportunity to buy the dip is coming up really soon. Stay tuned!
=========================================================
Equity selloff snowballs
Natsuko Waki
LONDON
Fri May 7, 2010 7:11am EDT

European Union Economic and Monetary Affairs Commissioner Olli Rehn displays a graphic during an eurozone finance ministers meeting on Greece at the EU Council in Brussels May 2, 2010.

Credit: Reuters/Francois Lenoir

LONDON (Reuters) - World stocks extended sharp falls on Friday while government bonds rose as a global rout triggered by fears of contagion from the euro zone debt crisis prompted investors to dump risky assets.

Sterling hit a one-year low against the dollar and tumbled against the euro after incomplete results of a UK general election suggested no party had emerged as a clear winner, raising the risk of a political stalemate that could hamper efforts to reduce the country’s huge public debt.

U.S. stocks fell as much as 9 percent in the last two hours of trading on Thursday before recovering slightly and the Dow suffered its biggest ever intraday point drop as a suspected trading glitch and euro debt fears threw markets into disarray.

Concerns Greece’s debt woes would spread into other parts of Europe are fanning risk aversion, with a lack of new anti-crisis measures from the European Central Bank on Thursday triggering a new wave of flight to safety. World stocks have erased all of this year’s gains to stand down 4 percent on the year.

“It is clear that the euro zone is in a very difficult situation and there is no quick fix,” said Tammo Greetfeld, equity strategist at UniCredit.

“It looks like foreign investors, particularly U.S. investors, yesterday for the first time significantly acknowledged that there are some risks emanating from the euro zone that could be severe.”
…
Related News

* Stocks routed, euro tumbles, gold soars
Thu, May 6 2010
* Euro tumbles broadly as Greece concerns escalate
Thu, May 6 2010
* FOREX-Euro tumbles broadly as Greece concerns escalate
Thu, May 6 2010
* FOREX-Euro tumbles to 14-month low after ECB stands pat
Thu, May 6 2010
* TREASURIES-Bonds rally as ECB fails to offer new measures
Thu, May 6 2010

I thought the banking panic was over and recovery was here to stay. Who moved my green shoots?

My inner conspiracy theorist is impressed with the coincidental timing of this flare up in the international banking panic (including the largest-ever intraday drop in the DJIA) with consideration of the “Audit the Fed” measure in the U.S. Senate.

THE CONTAGION EFFECT
Greece’s debt crisis could spread across Europe
By Neil Irwin
Washington Post Staff Writer
Friday, May 7, 2010; 3:40 AM

MADRID — A third straight day of decline in world financial markets on Thursday was vivid evidence of a scary proposition: That the fiscal crisis that began in Greece months ago is spreading across Europe like a virus, causing growing doubt even about the fates of nations with far more manageable levels of government debt.

It is called the contagion effect, economists’ metaphor for the rapid and hard-to-predict spread of a financial crisis, and it’s driven by the fragility of investors’ perceptions. Contagion is a function of vicious cycles in which confidence in a country’s ability to repay its debts falls. If investors lose piles of money on the debt of one country, they assume that owning the debts of other countries with similar finances might cause them to lose even more. So they sell their investment in the second country, which in turn must pay higher and higher interest rates to get any loans, which adds to its debt and creates a fiscal death spiral that can well move on to the next country.

Spain is in the path of the storm and at the mercy of global investors, who are operating under the twin pressures of fear and greed. The country has less debt relative to the size of its economy compared with the United States or Britain, but contagion can threaten even countries that have managed their government debt responsibly if investors change their views about the country’s future deficits or ability to handle debt.

The odds of a full-blown sovereign debt crisis have risen significantly over the past two weeks and especially after the market turmoil Thursday, such that Europe in 2010 looks increasingly like East Asia in 1997 and 1998, when a currency devaluation in Thailand sparked a broad crisis in South Korea, Indonesia and elsewhere.

Once a panic starts and contagion is spreading, it often takes dramatic government action to reverse the tide — including external bailouts and steps to address the underlying cause of the crisis that are more aggressive than those needed in a non-panic situation.

In the case of Asia in the late 1990s, it took a wall of money from the International Monetary Fund and the United States to arrest the series of crises, combined with painful austerity measures in the nations involved. Banking panics have similar dynamics, and during the 2008-2009 financial crisis, the U.S. government stepped forward with the $700 billion Troubled Assets Relief Program, a series of unconventional lending efforts from the Federal Reserve, and stress tests for major banks that required many of them to raise more private capital.
…

That was a glitch on the stock market yesterday, yep, uh-huh.

Black Friday coming up????

World stocks slide on Dow collapse, debt crisis
AP | 5/7/10 | PAN PYLAS

World stocks slide on Dow collapse, debt crisis By PAN PYLAS (AP) – 1 hour ago LONDON — World markets fell sharply Friday following a huge sell-off on Wall Street and amid fears that Europe’s debt crisis could spread and derail the global economic recovery. In Britain, where investors were grappling with uncertain general election results, the FTSE 100 index was down 53.05 points, or 1 percent, at 5,207.94 following a slide in the pound. Germany’s DAX fell 71.80 points, or 1.2 percent

Across Asia, stocks were hit hard even though the government debt crisis is centered on Europe — all the main indexes ended lower with Taiwan, Indonesia, Thailand and New Zealand down sharply. China’s Shanghai Composite Index closed 1.9 percent lower while Hong Kong’s Hang Seng index ended around 1.1 percent down.

ALSO in Greece today:

18.73% for 2 years
www dot bloomberg.com/apps/quote?ticker=GGGB2YR%3AIND

14.8% a year for 5 years
www dot bloomberg.com/apps/quote?ticker=GGGB5YR%3AIND

and 12.42% for 10 years bonds
www dot bloomberg.com/apps/quote?ticker=GGGB10YR%3AIND

To compare: Germany pays at around 3% for 10 year

Yesterday I checked a book out of my library titled, “More Mortgage Meltdown” written by Whitney Tilson and Glenn Tongue. The book was published in 2009.

Have any of you read this book? I’ll post some comments after I read the book.

Looking good.

Exit poll points to hung parliament in British election+ Breitbart 2010-05-07
LONDON, May 7 (AP) - (Kyodo)—Britain could be heading for a hung parliament on Friday, with the Conservatives led by David Cameron looking likely to be the biggest party but falling short of a governing majority, according to an exit poll during voting in Thursday’s general election. The poll conducted for the BBC, Sky and ITV broadcasting networks covered 18,000 voters in over 100…

The good old days. 1929 and 1974

By Richard Martin
The last time Britain saw a hung parliament was in 1974 [GALLO/GETTY]

The phrase “hung parliament” has seldom been used in British politics. It doesn’t happen very often.

It’s common enough in countries with proportional representation voting systems, like Germany or Italy.

But the last time Britain saw a hung parliament was in 1974 – 36 years ago. Before that, the only hung parliament was after the election of 1929.

This year though, the prospect of a hung parliament is looming large. Some believe voters will decide that neither leading party – or party leader – deserves all the power.

Frugality among consumers is outliving recession
A new frugality among consumers whose wealth has shrunk is outliving the recession ~ AP News

Even as the economic recovery plods ahead, many American consumers are refusing to come along.

They’re not spending freely — and they have no plans to.

Many of them have steady income. They aren’t saddled by high debts. They don’t fear losing their jobs. Yet despite recent gains, they’ve lost so much household wealth that they’re far more cautious about spending than before the recession.

Their behavior suggests that the Great Recession may have bred a new frugality that will endure well into the recovery. And because consumers fuel about 70 percent of the economy, their tightfisted habits means the rebound could stay unusually sluggish.

That’s the picture that emerges from an Associated Press survey of leading economists and interviews with more than two dozen ordinary Americans. The new AP Economy Survey asked 44 leading economists whether the recession created a “new frugality” among consumers that will outlive the recession. Two-thirds said yes.

http://wire.antiwar.com/2010/05/02/frugality-among-consumers-is-outliving-recession/

“It would be disastrous to risk a member of the European currency union, Greece, becoming insolvent.”

~ Wolfgang Schäuble

So on Monday Obama proposed ANOTHER $100 Billion to the IMF, for its NAB program. Link to follow.

Don’t forget that we were put on the hook for a $100 Billion just three weeks ago by a tenfold expansion in the NAB. It appears this is in addition to that, from what I can tell.

At what point do his actions go from being disastrous to being treasonous?

I have news for you “audit the Fed” folks. The Fed is already audited — except for monetary policy.

What is proposed is having the Congress oversee the Fed’s monetary policy, with the implicit power to force changes.

What would a Congress consisting of Republicans who want ever more tax cuts for the wealthy and investors, Republicans and Democrats who insist on no benefit reductions (or slowing of Medicare benefit increases), an Democrats who don’t want to cut benefits for tomorrow’s seniors, want the Fed to do.

Monetize the debt. If you are in favor of the audit, you are in favor of monetizing the debt. Doesn’t make it wrong, given the fix we are in, just understand that.

From today’s Denver Post:

Most consumers don’t think recession is over

Consumers remain nervous about the economy, with more than three-fourths believing the U.S. is still mired in a recession, according to surveys and retail reports released Thursday.

“Nobody has told American consumers that the recession is over, although some officials have rosy predictions of growing consumer spending”

denverpost DOT com/ci_15035277

April Payrolls Rise the Most in 4 Years; Unemployment Hits 9.9%- AP

Employers stepped up job creation in April, expanding payrolls by 290,000, the most in four years. The jobless rate rose to 9.9 percent as people streamed back into the market looking for work.

German Lawmakers Approve Greek Rescue
nytimes May 7, 2010

German lawmakers on Friday approved the country’s share of the rescue package for debt-laden Greece after a boisterous debate in which the finance minister told them they had no alternative to the unpopular measure, The Associated Press reported.

The lower house of Parliament voted 390-72, with 139 abstentions, to authorize granting as much as 22.4 billion euros ($28.6 billion) in credit over three years. That is part of a wider 110 billion euro package backed by eurozone members and the International Monetary Fund.

Chancellor Angela Merkel’s center-right governing coalition was joined by one of the three opposition parties in approving the aid. Germans dislike the idea of rescuing another country from its financial irresponsibility.

The upper house of parliament, which represents Germany’s 16 states where Merkel’s government also has a majority, was expected to add its approval later Friday.

The Citi people are predicting stocks are going to soon go on sale for 20% off. Don’t be caught on the sidelines holding your liquidity under the mattress when this weekend shopper special comes into play.
=========================================================
May 7, 2010, 8:51 a.m. EDT

Citi sees up to 20% correction over Greece
Strategists say investors should avoid a fire sale, caution on euro weakness

By Barbara Kollmeyer, MarketWatch

MADRID (MarketWatch) — Just hours after one of the most bruising sessions for Wall Street, strategists in Europe on Friday painted a poor outlook for rebound prospects in the near term.

Citigroup got things off to a bearish start with a prediction that fears of sovereign debt contagion over Greece could trigger a near-term correction of up to 20%.

They said that while there have been financial crises with international implications in the recent past — Northern Europe in 1992, Southeast Asia and South Korea in 1997 — the Greek crisis is “graver than these were.”

Global stock markets have perhaps rallied too far, too fast since the March low of 2009 to the April 2010 high, Tsutomu Fujita, an analyst at Citi, commented.

“With global equities having rallied 79.9% in a scant 13 months through April, we feel it would be only natural to go through a correction of around 10% or 20% over two or three months,” Fujita wrote in a research note.

From the April high to the May 6 low, Japanese stocks are down 4.2%, the U.S. has dropped 7.6%, and Europe has fallen 9.5%.

While Fujita said global stocks should resume their “upward trajectory in June,” the period in between could be dicey.
…

What’s up with the oil price? Is Gollum backing away from its oil price support role? Maybe reasonable fuel prices are in the future outlook?

Bank Risk Soars to Record, Default Swaps Overtake Lehman Crisis

May 7 (Bloomberg) — The cost of insuring against losses on European bank bonds soared to a record, surpassing levels triggered by the collapse of Lehman Brothers Holdings Inc., as the sovereign debt crisis deepened.

The Markit iTraxx Financial Index of credit-default swaps on 25 banks and insurers soared as much as 40 basis points to 223, according to JPMorgan Chase & Co. The index closed at 212 basis points March 9, 2009. Swaps on Greece, Portugal, Spain and Italy rose to or near all-time high levels.

Credit risk rose for a sixth day on concern the Greek debt crisis is spiraling out of control and triggering concern banks may face losses on their sovereign bond holdings. The Group of Seven plans to hold a conference call today to discuss the turmoil, after a global stock rout that briefly erased more than $1 trillion in U.S. market value.

Why are these gloomsters setting their sites so low by predicting the Dow will only make it up to 12,000? Haven’t they ever read Dow 36,000: The New Strategy for Profiting From the Coming Rise in the Stock Market? Used copies can be found on Amazon dot com for as little as $0.01 (hard cover edition).
==========================================================
Why The DJIA Will Renew Its Assault On 12,000
Posted: May 6, 2010 at 7:12 pm
24/7 Wall St Real Time 500

The DJIA will once again begin its move toward 12,000 after the market collapse of the last several days. The quick drop of almost 1,000 points on May 6 seems to have been due to a trading or software anomaly. A look at the market before and after the incident confirms that the index was moving toward a 300 point drop during most of the two hours of trading expect for the frightening and brief disruption. The correction of the last five days has brought the DJIA down about 1,000 points, or 9%.

There are very few reasons for the market to stay down and many of reasons for it to advance.

Some pessimists about the long position of the market argue that it had no business moving from 6,700 early last March to over 11,200 a few days ago. Under normal circumstances, that would be a fair assertion. but the US economy has emerged from the worst recession in eight decades and reasonable GDP growth has begun. The talk of a double dip recession, still fairly loud 60 days ago has nearly ceased.
…

looks like the stock market is glitching again today.

“Payrolls surged with an unexpectedly strong 290,000 jobs last month, the Labor Department reported on Friday, while the unemployment rate rose to 9.9 percent.”

Well, say no more.

PPT Blows Gasket, Market Tanks

Today on CNBC Steve Lieseman said that he was at a meeting with Geithner when the market dropped 998 Dow points yesterday. TTT glanced at his blackberry and stated “That can’t be right” just before he excused himself and left. How did he know “that can’t be right”? Because he knows the PPT would never allow that to happen. The PPT (which I am sure has had its little hands full recently with the Greek-debt stuff) obviously had a temporary problem with their “system” yesterday which probably scared the hell out of Bernanke/Geithner/Obama and any other “insiders” of the whole scam that we refer to as our FInancial System. Remember folks, anything man-made is prone to eventual failure: i.e. Tianic (first “unsinkable” ocean-liner), Hindenburg (world’s safest air travel), Space Shuttle (they blow-up occasionally), Deepwater Horizon…

NEW YORK (Reuters) – New York City Mayor Michael Bloomberg on Thursday unveiled his revised $63 billion budget plan for fiscal 2011, which includes shedding 11,000 public employees through layoffs and attrition.

The mayor, an independent, repeatedly blamed the city’s problems on the state, saying Governor David Paterson’s $135 billion budget plan could take $1.3 billion from the city — though the state gets half of its money from the city.

coming to a city county and state near you.

In case any of you are wondering why a rising unemployment rate is good news:

http://finance.yahoo.com/news/Why-a-Rising-Unemployment-usnews-341062548.html?x=0&sec=topStories&pos=2&asset=eb508f27d1ea25dc5c8182d2258a2e2d&ccode=rd

…and, just in case you are still having any doubts about positive-spin here is why yesterdays 998 point dow-drop is “good news” for the economic recovery:

http://finance.yahoo.com/banking-budgeting/article/109480/throwing-in-the-towel;_ylt=AknusROaI4QuX4Z9A2I_kaa7YWsA;_ylu=X3oDMTFhZGttN3VjBHBvcwMxMARzZWMDdG9wU3Rvcmllc0Nva2UEc2xrA3doeXllc3RlcmRheQ–?sec=topStories&pos=8&asset=a89d2493808d8b44e3f1e7c17efd5914&ccode=rd

BWAHAHHAHAHAHHAHAHHAHHAHAHAHHHHHHHHHHHHH!!! (fpss™)

Anne D’Innocenzio, AP Business Writer, On Friday May 7, 2010 AP

GoldenmanSucks creating committee to review its practices:

GoldenmanSucks CEO says bank is creating a business standards committee to review its practices

Our Goal: “Becoming a “TruePurity™” / “TruePatriot™” American Corporation.”

MOSCOW – The pirates seized by a Russian warship off the coast of Somalia have been released because of “imperfections” in international law, the Defense Ministry said Friday, a claim that sparked skepticism — and even suspicion the pirates might have been killed.

I wonder if this technique could be applied to American Pirates?

Barry sez… “The regulatory agencies are looking into what happen on wall street and will make sure nothing like that ever happens again”.

High-End Homeowners Falling Into Foreclosure Trap
7 May 2010 | CNBC News

Heated pools, ocean views and media rooms are not what most people would expect to find in a foreclosed property, but more high-end homes—priced over a million dollars—have been falling into the hands of banks this year.

Foreclosures of homes worth over $1 million began increasing at the end of 2009, according to exclusive data provided by foreclosure tracking website RealtyTrac. Foreclosures reached a high in February 2010, the last month data is available, when 4,169 homes were somewhere in the foreclosure process; either having received a foreclosure notice, had an auction scheduled or the lender took ownership of the property. That’s a 121 percent increase from a year ago.

The deterioration comes just as housing experts say that foreclosures in the low- and mid- ends of the housing market are showing signs of stabilization.

“They were able to stave off foreclosure longer,” says independent real estate analyst Jack McCabe, CEO of McCabe Research and Consulting in South Florida. “Lower-end homeowners were the first ones to see the escalating foreclosures because they generally do not have the cash reserves or credit available that the luxury homeowners do. They had the ability to take their credit cards and pull out thousands of dollars while the lower end buyers were already tapped out.”

Global warming fears seen in obsessive compulsive disorder patients.
AUCKLAND, New Zealand ~ Psychiatry Congress

A recent study has found that global warming has impacted the nature of symptoms experienced by obsessive compulsive disorder patients. Climate change related obsessions and/or compulsions were identified in 28% of patients presenting with obsessive compulsive disorder. Their obsessions included leaving taps on and wasting water, leaving lights on and wasting electricity, pets dying of thirst, leaving the stove on and wasting gas as well as obsessions that global warming had contributed to house floors cracking, pipes leaking, roof problems and white ants eating the house. Compulsions in response to these obsessions included the checking of taps, light switches, pet water bowls and house structures.

“Media coverage about the possible catastrophic consequences to our planet concerning global warming is extensive and potentially anxiety provoking. We found that many obsessive compulsive disorder patients were concerned about reducing their global footprint,” said study author Dr Mairwen Jones.

a little trip down memory lane.

http://www.youtube.com/watch?v=GkAtUq0OJ68

In a nutshell, Greece borrowed way too much money, and does not want to drive old cars and eat rice and beans for years to pay it back. That’s why you are seeing riots in Athens. The problem with Greece is it cannot print money like the United States. Its debts cannot be simply inflated away. Bills have to be paid with big cuts to pensions and social programs, and it is not going over well. That brings us to the other option, and that is to simply not pay the money back and default.

There is one other option, print money and bail out Greece. Here’s how investment guru Monty Guild sums up the bailout scenario: “This is happening because if Europe does not support Greece, the government debt contagion that we have been discussing in recent memos will continue and spread. It will spread to Spain and Portugal and later to many countries in Europe including Italy and possibly France. Because they fear the spreading contagion, Europe wants to stop the crisis as soon as possible. In other words, Europe is getting a bailout, not just Greece.”

~~ Greg Hunter

Ringleader of Va. mortgage fraud gets 5 years

http://www.wtopnews.com/?nid=25&sid=1951837

Real estate agent Ruben Rojas led a criminal enterprise that resulted in 20 arrests last year. Police investigated after residents in some Fairfax County neighborhoods complained that the homes in question were serving as illegal boarding houses.

Woa, what a glitch, sorry I’m so late. This morning I accidently hit the wrong keys on my computer and ended up in thearousingbubbleblog instead of here.

After years of generous pay raises, Pentagon warns of fiscal calamity
By Craig Whitlock
Washington Post Staff Writer
Friday, May 7, 2010; 12:12 PM

The Pentagon, not usually known for its frugality, is pleading with Congress to stop spending so much money on the troops.

Through nine years of war, service members have seen a healthy rise in pay and benefits, leaving most of them better compensated than their peers in the private sector.

Congress has been so determined to take care of troops and their families that for several years running it has overruled the Pentagon and mandated more generous pay raises than requested by the Bush and Obama administrations. It has also rejected attempts by the Pentagon to slow soaring health-care costs — which Defense Secretary Robert M. Gates has said are “eating us alive” — by hiking co-pays or raising premiums.

Now, Pentagon officials see fiscal calamity.

Sir Greenisspent: “…Adequate capital and collateral levels would place the burden of losses on shareholders, not taxpayers.”

Greenspan Says Lehman Brought ‘Most Virulent’ Crisis:
By Vivien Lou Chen May 7 (Bloomberg)

Who stuck his head in the pencil sharpener?

i have a general question for everyone here.

if you could pay cash for a house…would…or better yet…should you?

I’m with the “glitch is a BS excuse” folks. How is it that someone’s fat little sausage fingers have never done this before?

Or, does this have something to do with those quants I hear of, but know nothing about?

Time to crank up the virtual printing press again, as the global market is running out of dollars.

The Financial Times
Bank of Japan pumps funds into market
By Robin Harding and Lindsay Whipp in Tokyo and Peter Smith in Sydney
Published: May 7 2010 04:47 | Last updated: May 7 2010 12:03

The Bank of Japan offered Y2,000bn ($21.6bn) in overnight liquidity on Friday to “increase markets’ sense of security” because of turmoil resulting from the debt crisis in Greece.

It is the bank’s first exceptional offer of overnight funds since the scare over Dubai’s sovereign debt in December 2009 and its biggest since the height of the financial crisis in December 2008.

The move shows that fears about sovereign debt default in Europe are rippling across global markets, with the Bank of Japan the first central bank to react by adding liquidity. This, however, does not reflect any significant market disruption in Japan or any fears of contagion to Japan, despite its own debt woes.

Instead, the bank’s action reflects global demand for dollar liquidity as investors move out of the euro. That has pushed up short-term US dollar interest rates and created a knock-on demand for yen liquidity as a substitute.

“It’s because of signs of difficulties in the global money markets. There is lots of demand for US dollars,” said one fixed income strategist.
…
EDITOR’S CHOICE
‘Crash of 2.45’ paralyses market participants - May-07
New York pulls back from turmoil - May-06
US shares plunge amid fears over debt - May-07
FT Alphaville: Live chat on market sell-off - May-06
Gapper blog: Watching financial fear - May-06
Debt fears spark plunge across markets - May-06

Can the Federal Reserve provide a quick fix to tame Europe’s growing financial crisis? Probably not. But it might be able to help if conditions in Europe worsen.

The Fed is considering whether to reopen a lending program put in place during the financial crisis in which it shipped dollars overseas through foreign central banks like the European Central Bank, Swiss National Bank and Bank of England. The central banks, in turn, lent the dollars out to banks in their home countries in need of dollar funding.

The Fed has felt that it is premature to reopen this program — which was shut down in February as the financial crisis appeared to wane — because it wasn’t clear that foreign banks were in need of dollar funds. Still, trading floors on Wall Street are abuzz with anticipation today that the Fed might use the program again.

WSJ, link to come

http://blogs.wsj.com/economics/2010/05/07/a-closer-look-at-europe-and-the-feds-central-bank-swap-program/

Link to wsj story above

It is damn nerve wracking to take in so much Schadenfreude over the span of a few days!

Stocks down on day, week, year
By Alexandra Twin, senior writer
May 7, 2010: 6:03 PM ET

NEW YORK (CNNMoney.com) — Stocks slumped Friday, with the three major indexes ending in negative territory for the year as investors mulled the Greek debt crisis and the aftermath of one of the most gut-churning days in Wall Street history.

The Dow Jones industrial average (INDU) lost 140 points, or 1.3%, after seesawing in the morning, having gained as much as 59 points and lost as much as 279 points. The S&P 500 index (SPX) lost 17 points, or 1.5%. The Nasdaq composite (COMP) lost 54 points, or 2.3%.

All three indexes ended in negative territory for the year. All three indexes also closed lower for the fourth straight session and the second straight week.

The selloff from the late April highs has been substantial enough that the Nasdaq, with a loss of 10.5%, is now considered to be in a correction.

The Dow and S&P 500 are also approaching double-digit losses, down 7.4% and 8.7% respectively.

Stocks were extremely volatile throughout the session, with the major indexes criss-crossing the breakeven line several times during the day. Investors looked past a big rise in April payrolls and instead focused on Europe in the aftermath of Thursday’s roller-coaster ride.

Europe’s debt woes were in focus as riots continued in Greece. British elections failed to produce a ruling majority, resulting in a hung Parliament for the first time since the 1970s.

Meanwhile, U.S. investors remained rattled after a session in which the Dow lost almost 1,000 points before rebounding two-thirds of the way back.

“Investors are very confused about how the market could drop hundreds of points in minutes, and until there are concrete answers, they aren’t going to feel better,” said Andrew Neale, head of wealth management at Fogel Neale Partners.

“The market erased two months of gains in a few days, and it’s nerve wracking,” he said.

Wall Street’s fear gauge, the CBOE Volatility index, or the VIX (VIX), rose 26% Friday, to $41.43, ending at a fresh 13-month high.
…

The stock market’s Ashlee Simpson moment?

A few years ago, rising pop singer Ashlee Simpson began singing a song on Saturday Night Live. However, another song came out of the speakers. She ran offstage, having been outed as being a lip-syncher. Her career was (at least temporarily) crushed.

With the possibility that one trader at one keyboard was able to move the market a 1000 points, the question is raised that perhaps financial companies, with access to vast networks and powerful trading algorithms could also manipulate the market, albeit in more subtle and sophisticated ways.

I think as people begin to ponder the implications of the Thursday market gyrations, they may not like some of the conclusions they reach. What is the value of the logical constructs - the stocks - they hold, if companies can manipulate their value at will?

Stock Traders Find Speed Pays, in Milliseconds
by Charles Duhigg
New York Times, July 23, 2009

It is the hot new thing on Wall Street, a way for a handful of traders to master the stock market, peek at investors’ orders and, critics say, even subtly manipulate share prices.

It is called high-frequency trading — and it is suddenly one of the most talked-about and mysterious forces in the markets.

Nearly everyone on Wall Street is wondering how hedge funds and large banks like Goldman Sachs are making so much money so soon after the financial system nearly collapsed. High-frequency trading is one answer.

And when a former Goldman Sachs programmer was accused this month of stealing secret computer codes — software that a federal prosecutor said could “manipulate markets in unfair ways” — it only added to the mystery. Goldman acknowledges that it profits from high-frequency trading, but disputes that it has an unfair advantage.

http://www.nytimes.com/2009/07/24/business/24trading.html

I found this - http://news.slashdot.org/comments.pl?sid=1643810&cid=32118140 - intriguing. A variety of stocks moving in concert. Dunno what to make of it.

Good News

The unemployment rate rose for the right reason. Instead of shedding jobs, employers added 290,000 jobs in April, the strongest showing since 2007. The reason the unemployment rate went up is that a lot more people are suddenly looking for work. The government said that the labor force swelled by 805,000 people in April. That’s more than three times the number of new jobs, so the proportion of people looking for a job but unable to find one went up. Still, that big increase in the labor force marks an important shift in sentiment among people on the fringes of the economy.

I wonder if this increase in people looking for work has more to do with unemployment checks ending than actual optomism. Journalism is truely dead in this country.