Wal-Mart misses profit view Tue Aug 14, 2007 11:26AM EDT  By Nicole Maestri  NEW YORK (Reuters) – Wal-Mart Stores Inc. (WMT.N: Quote, Profile, Research) reported a lower-than-expected quarterly profit on Tuesday and cut its full-year earnings forecast on Tuesday, saying “economic pressures” like higher fuel prices have depleted shoppers’ wallets.  ”It is no secret that many customers are running out of money toward the end of the month,” said Lee Scott, chief executive of the world’s largest retailer.  The company’s shares fell 5.5 percent and helped drag down the overall market.  U.S. retail stocks have fallen in recent days as investors fret that turbulence in the housing market and high gasoline prices have curbed consumer spending.  Those difficulties appear to be rippling across the globe, and Scott said on a recorded call that higher fuel prices, interest rates, utility costs and “more financial pressure” were hurting sales in markets like Mexico and Canada.  Wal-Mart’s earnings rose to $3.1 billion, or 76 cents per share, in the second quarter ended July 31, from $2.08 billion, or 50 cents per share, a year earlier, when the company took a charge for selling its German stores.  Earnings per share from continuing operations were 72 cents per share before a gain of 4 cents. Analysts on average were expecting 76 cents, according to Reuters Estimates.  Sales rose nearly 9 percent to $91.99 billion.  U.S. sales at stores open at least a year, a key retail gauge known as same-store sales, rose 1.9 percent. Same-store sales increased 1.2 percent at Wal-Mart stores and 5.9 percent at the Sam’s Club warehouse division.  At international stores, sales were up almost 16 percent at $21.6 billion.  In an interview, Chief Financial Officer Tom Schoewe said Wal-Mart expected many of the trends it saw in the second quarter to continue in the current period, but the retailer was still “feeling pretty good” about prospects for the holiday season.  SALES STRUGGLES  With more than 127 million customers visiting a U.S. Wal-Mart store or Sam’s Club location every week, the company is considered a barometer of the health of the nation’s retail sector.  But Wal-Mart has been struggling with slowing U.S. sales growth and announced plans earlier this year to cut the number of U.S. supercenters it will open.  It has also returned to emphasizing its low prices after efforts last year to play down its discount roots backfired with its core low-income shoppers.  For this back-to-school shopping season, which began in July, it has slashed prices on thousands of items by as much as 50 percent to boost sales at its U.S. stores. The retailer said last week that while the price cuts attracted shoppers, they also hurt margins.  ”While we still think Wal-Mart is taking the appropriate steps to ‘right the ship,’ we think the turnaround has been extended and today’s unfavorable macro backdrop is creating a slippery slope for Wal-Mart to climb,” wrote JP Morgan analyst Charles Grom.  He downgraded the company’s shares to “neutral” from “overweight.”  Schoewe said the back-to-school season had gone “OK,” but more consumers were waiting until closer to the first day of classes to make their purchases.  ”We’re pretty encouraged by back-to-school, but surprised by how late it’s coming,” he said.  On the recorded call, Eduardo Castro-Wright, CEO of Wal-Mart’s U.S. operations, said the company still faced poor clothing sales and was cutting prices to move out merchandise.  He also said strong sales of low-margin items like groceries and weak sales of higher-margin goods like clothes were hurting profit margins.  In addition, Schoewe said Wal-Mart was contending with higher levels of “shrink” — inventory that is lost employee theft, shoplifting, errors in paperwork or vendor fraud.  ”If you think about the macro environment, where customers are under pressure, there’s generally a correlation between theft and macro economic pressure,” Schoewe said. “Unfortunately, that’s what we’re seeing.”

Credit contagion spreading to money market funds  Sentinel Management Seeks to Freeze Redemptions (Update1)  By Jenny Strasburg and Katherine Burton  Aug. 14 (Bloomberg) — Sentinel Management Group Inc., a Northbrook, Illinois-based money manager, has asked regulators for permission to halt investor withdrawals.  The firm contacted the Commodity Futures Trading Commission for approval to halt redemptions “until we can honor them in an orderly fashion,” according to an Aug. 13 letter to clients.  The firm managed $1.6 billion as of last month, according to a filing with the U.S. Securities and Exchange Commission. Sentinel’s investments include short-term commercial paper, investment-grade bonds and Treasury notes, according to its Web site.  “Investor fear has overtaken reason and has induced a period in which most securities have simply ceased to trade,” according to the client letter, which does not specify which funds are affected. “We are concerned that we cannot meet any significant redemption requests without selling securities at deep discounts to their fair value and therefore causing unnecessary losses to our clients.”  Eric Bloom, the firm’s president and chief executive officer, didn’t immediately return a call seeking comment. An assistant who declined to be named said the CFTC hasn’t granted the firm’s request yet.

“The risks of a US hard landing are meaningfully rising.”  Calling what is likely coming a “hard landing”, is probably being very generous and circumspect. 

cash injections can bail out the financials? who is going to save the retailers?  

12:35 Hungary’s second-quarter GDP growth is slowest in 11 years 

Dean Baker has an interesting idea that might appeal to Ryskamp. He suggests that homeowners who are about to lose their houses not be thrown out onto the street, but be allowed to stay in the house as long as they pay a fair market rent for it. At least until the storm blows over.

 From Businessweek, Outright Criminal Fraud at Big Mortgage Lenders http://www.businessweek.com/magazine/content/07_34/b4047043.htm?campaign_id=yhoo   It was a common and open practice at Ameriquest for account executives to forge or alter borrower information or loan documents. For example, account executives openly engaged in conduct such as altering borrowers’ W-2 Forms or pay stubs, photocopying borrower signatures and copying them onto other, unsigned documents, and similar conduct. The culture at Ameriquest encouraged account executives to engage in any conduct necessary to close the loan, to close the loan as quickly as possible, and to maximize the total loan amount.  

the markets tested 13,100 on the Dow again and of course it held. Looks like the powers that be aint gonna let ‘er drop hard today..Looks like they want a green close today. “Free markets”, yeah, right…..

AC, why don’t you double that 10% number…

US market is moving lower now.   Significantly, the 200-day moving average for the S&P 500 (at 1448) has now been violated to the downside. We’re at 1433 right now … still fairly close, but any further momentum downwards could trigger a much bigger selloff. let’s see what happens.  Danielle says: “my poor opinion is that VERY important Banks, both American & European, are involved in this mess. “  RESPONSE: Looks like you could be right, Danielle. Take a look at this new article by Ron Kirby on http://www.dollarcollapse.com  http://www.financialsense.com/Market/kirby/2007/0813.html  Ron has done a pretty good job of digging into the books at Bear Stearns, Citigroup, Bank of America, and JPM. The results indicate that there is the potential for losses, based on derivatives dealings. Could be a headache for Citi right now. This would explain the Fed’s actions over the weekend. Keep in mind that some of these players may have already exchanged some very bad debt – by cashing it in with the Fed. So it’s not necessarily a case of things going bust. Hopefully?? But not good.  Pete, CA  

CNBC:  ”Inflation Gauge Ticks Up as Trade Gap Narrows  The Fed said last week that inflation remained its predominant concern, although it acknowledged that credit conditions had tightened for some households and businesses.  U.S. producer prices rose by a more-than-expected 0.6 percent in July, Labor Department data on Tuesday showed, but the gain was driven by energy costs”  No cuts … dudes … LOL!!! Greenspan ain´t there anymore.

 Countrywide delinquencies soar to multi-year high http://money.cnn.com/2007/08/14/news/companies/bc.countrywide.lending.reut/index.htm?postversion=2007081411  Delinquencies rose to 5.10 percent from 4.11 percent last July, and June’s 4.98 percent. July’s totals are the highest that Calabasas, California-based Countrywide has reported in its monthly data reports since at least March 2002. 

The market is gone now.  Unless Zorro shows up before closing time with a black mask and a sword.  Lets’see why … looking at latest news from Bloomberg:  Citigroup may forfeit a billion dollars in profits. [Could be an understatement!] http://www.bloomberg.com/apps/news?pid=20601087&sid=aMzsFNVEPSxQ&refer=home   Coventree in Canada cannot find lenders to cover emergency funding! That would, of course, create a default situation. We’re assuming the Royal Bank of Canada will step in here. Aren’t we?? http://www.bloomberg.com/apps/news?pid=20601087&sid=aMzsFNVEPSxQ&refer=home  Pete, CA

SENTINEL: This is the first money market fund to suspend redemptions. Get everything out and put it in a bank account–but no more than the maximum insured in each bank’s account.

Aegis Mortgage is bust.  But hey … who cares i guess.

We don´t need Zorro. We have John Ryskamp.

Guest on 2007-08-14 14:15:05:  > Aegis Mortgage is bust.  That’s last week’s news. Check out this pre-press discussion about Aegis on a mortgage broker’s board. Scout around — they have some funny gallows homor about the sorry state of their profession. 

We don´t need Zorro. We have John Ryskamp.   Written by Guest on 2007-08-14 14:20:56   YES, AND I WANT THAT LITTLE FASCIST INSECT GEORGE BUSH TO SIGN OFF ON A HOUSING EVICTION BAN RIGHT AWAY.

“YES, AND I WANT THAT LITTLE FASCIST INSECT GEORGE BUSH TO SIGN OFF ON A HOUSING EVICTION BAN RIGHT AWAY.”  Yeah .. but you heard him. Everything fine in loonyland, no problems, no ban.

MARKET CLOSE  ”HERE COMES ZORRO!!! “  Senor, did you see him? I thought just briefly, around 3 pm, that I saw a man gallop by the market very fast. I tried to snap him with my digital camera – but it doesn’t click when you push the button. Darn!!  BTW, if Catherine Zeta-Jones gets down off the horse – please get me her photo and autograph. I always thought she was cute in that show.   ”"This is the 6th time below the 200 dma this month for the s&P500, they will save it again. 1428 ic the crucial line in the sand”  We crossed that line. S&P500 = 1426.56  Tomorrow is redemption day for the funds. Let’s see what happens now.  Pete, CA  

Wall Street Firms to Set Up Unregistered Securities Market By KEVIN KINGSBURY August 14, 2007 3:32 p.m.  A group of Wall Street titans are joining forces to create a rival venue to Goldman Sachs Group Inc.’s private system to trade the stocks of companies that don’t want the scrutiny and regulatory burdens of going public.  Separately, Bear Stearns & Co. announced its own private-placement platform for unregistered equity securities.  Citigroup Inc., Lehman Brothers Holdings Inc., Merrill Lynch & Co., Morgan Stanley and Bank of New York Mellon Corp. have established the Open Platform for Unregistered Securities. The firms say OPUS-5 “will provide trade reservation, shareholder tracking and transfer management for privately offered equity securities.”  Bank of New York Mellon will act as administrator of the system, which is intended to “promote liquidity and efficiency for qualified institutional buyers” who trade unregistered equity securities “and enhance issuers’ capital raising efforts.” The companies added that more securities firms are expected to participate in OPUS-5 over time. The market is slated to launch next month.  Isn’t the over the counter, illiquid nature of all of these derivatives blowing up all over the world one of the PRIMARY REASONS the current mess is unraveling ? In this environment they (at least the ones who survive) are going to take stock exchanges private ? This is absolute bull shit and I am so sick and tired of it all.

My mistake. The broadcast is Bloomberg

This credit crunch is a serious threat to the housing market. Even if Fannie and Freddie are willing to continue with lending, who will buy GSE bonds? China stopped buying them in May. Japan has admitted to being burned on our straw-spun-into-gold junk bonds rated AAA.  I think there is a serious question of how mortgages will be financed. As home buyers need to come up with down payment and prove income, house prices have to fall drastically, by 30-50%.  http://www.californiahousingforecast.com/

Ms. Berkland,  Is the prediction of prices falling 30% for the So. California market only? How much did prices fall in the early 90′s? For the vast “fly-over” country (midwest), prices may just remain flat for a while. I would like to hear from people on the east coast too. 

One scary thought did cross my mind… With the recent financial turmoil the US finds itself in leaves it very vulnerable to further surprises. I shudder to think of a possible repeat of a 9/11 incident in the midst of already being on the brink.

@Guest on 2007-08-14 19:19:23: I shudder to think of a possible repeat of a 9/11 incident in the midst of already being on the brink.  In any case it would not be desirable for the U.S. government to bring about unwanted changes to the current legal system in a (sorry to say this) Hitlerite fashion. In 1930′s a form of a gov’t rule came to power in the wake of a severe recession; this particular rule solved the economical issues in Germany at that time but caused other problems.

Jason B…  Please confirm that Housing and related activity was “6.5 percent of GDP in 2005.” I’ve been looking for this number and would love to understand your source.  Cheers… 

Welcome to GW Bush’s “Ownership” society. Thank G*d, he did not get his way with Social Security.  I am not sure how the USA will ever become solvent. I do know that I will take a “blue dog” Democrat or a Goldwater Republican over GWBush anyday.  Vote for either Ron Paul or John Edwards. I would accept either as an Independent.

“Can you explain how the precious metal ETF holders might get caught?”  Andy, a quick answer.   In the immediate future (short-term) the ETF’s are probably fine. They are a good vehicle for speculating with precious metals. Another alternative is to participate by opening a “pool account” at one of the big bullion dealers like Kitco. Same thing applies … probably an effective investment tool over the short-term.  It is not clear what will really happen to the ETF’s or pool accounts if a really big crunch comes in the precious metals market. I am talking about a dramatic upsurge in demand for gold, should a major political and economic crisis occur. It is conceivable that these investment vehicles could freeze up, if the underlying holdings of gold or silver becomes unavailable. Look at what has happened recently with liquidity on Wall St. Everyone thought it was flowing like water – until the day it dried up.  There has been speculation that not all the ETF’s are holding 100% of the physical bullion (gold or silver) that supposedly exists. Some of the holdings may actually be futures contracts for the metal – which is speculative paper and not the metal itself. There is also some concern that the people charged with verifying the ETF holdings may not be independent and without a conflict-of-interest. For example, if the verifying organization is in fact a big investment bank on Wall St, are you sure they don’t have stake in getting some of the bullion themselves in a crisis??  It pays to think about what your own personal objectives are. ETF’s and pool accounts are convenient and require less hassle. But if you really want security in a major crisis, you need to own physical gold or silver yourself. That’s the only way to be sure. In the case of gold and silver, it’s ALL about security – so make sure your investments are secure.  Just my point of view. Others may disagree.  Pete, CA 

the us of a, Now you need to pay!

Meanwhile, on the other side of the night…, the yen is tracking down through 117.26 as I write this.  The unwind has been orderly so far, but the risk of a rush for the door is increasing as the pressure builds.  Everyone wave goodbye to the cheap money as it walks out the door.

Here in the US we have these greedy, destabilizing power players in the financial sector who want to make a quick buck, way over leveraging (playing with money they don’t have) – waiting for their government bail out at the taxpayer’s expense if they make a wrong move, meanwhile taking humongous payments. What are they really adding to the economy? Can anyone really argue that LBOs are that beneficial? I have friends who fled companies bought out in this manner. They said everyone knew things were going to he**. WTF – is our financial system really better than China’s? I wonder.

Basis Capital Tells Investors Loss May Exceed 80%    Is the same happening in the us of a?

One reason exists why consumers have not pulled back more – credit cards. When the credit card companies start tightening up on credit card terms, i.e. reducing limits and actually evaluating risk of lending like the mortgage companies are now doing, consumers will have no where else to turn. With no savings, no home equity loans and no easy credit cards, spending will dry up which will drive this country into a depression.

http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_weil&sid=aOmLOmdkq73k Aug. 15 (Bloomberg) — You think your job is tough? Think about the poor schlimazels from Deloitte & Touche LLP who blessed the books at American Home Mortgage Investment Corp., mere months before it went belly up.  The Deloitte accountants faced a crucial decision as they finished their audit work in March. Deloitte could resign and walk away. The firm could qualify its audit opinion by saying there was “substantial doubt” about American Home’s ability to continue as a “going concern” through the end of the year — as many short sellers already had concluded. Or it could give the company a clean opinion, expressing no doubt, which is what Deloitte did. —————–  http://globaleconomicanalysis.blogspot.com/2007/07/fitch-discloses-its-fatally-flawed.html Disclaimers  S&P: “Any user of the information contained herein should not rely on any credit rating or other opinion contained herein in making any investment decision.”  Moody’s: “Moody’s has no obligation to perform, and does not perform, due diligence.”  How can it be that an entire system of investment decisions are based on ratings that the ratings companies tell everyone not to use for investment purposes? —————–  One would have thought that trust toward U.S. investments would have been restored after the new accounting rules after the Enron clones. But seems like the system itself provides a pathetic ongoing problem. Question is how long after foreign investors start pulling out of the cash strapped U.S. economy?

Coutrywide has hit the wires as stated above in AFFG’s post which has spooked the mkt. Currently the rumour doing the rounds in the street are that Fortis will halt redemptions in some of it’s funds and that Canadian ABCP conduit situation is getting worse. Crossover index is widening as we speak having been relatively static last few days. Finally, a bid is coming back into US equity futures and European indices so we should see a battle royale today in terms of sentiment.

USD/Yen down to 116.9 EUR/Yen down to 157.6 EUR/USD down to 1.347  Major unwinds of yen carry taking place now. Not a good day for the Dow.  Pete, CA 

Penalty rate? Nooo way! Bonus rate 4 5/8 instead of 5 1/4 Let’s party…

The s&p is at a crucial level and if it closes below 1425 today, thing swill get EXTREMELY ugly very fast. They will do everything they can to hold these levels in the markets, count on it. 

CEO confidence at five-year low  By Lina Saigol, M&A Correspondent   Published: August 14 2007 22:06 | Last updated: August 15 2007 00:34  Confidence among some of the world’s business leaders has slumped to its lowest level since the third quarter of 2002, suffering from concerns about financial market volatility and mixed US economic data, according to an investment bank’s survey.  The Goldman Sachs Confidence Index – which was conducted in the last week of July and the first one of August – is based on chief executives’ assessments of business conditions for the coming quarter and regarded as a leading indicator of company sentiment.  

Commercial paper woes could hit banks Tue Aug 14, 2007 3:13PM EDT   NEW YORK (Reuters) – Trouble is mounting in the $2.2 trillion commercial paper market, and further deterioration could trigger problems for banks that would rival what they’ve suffered from the subprime crisis.  While the problem could still subside, and there are no signs of a full-blown panic, at least five issuers of asset-backed commercial paper have had trouble refinancing that debt when it matured, forcing them to make investors wait before getting repaid. The asset-backed notes now makes up half of all commercial paper.  Most recently trustees for a Canadian asset-backed commercial paper issuer on Tuesday said it could not find the funds to repay investors in their outstanding asset-backed commercial paper.  Generally, trading in asset-backed commercial paper is choppier than it was before the isolated problems hit, and there is some danger that investors will be less willing to buy the paper, which offers only slightly higher returns than other forms of commercial paper, traders said.  If troubles among issuers spread, investors could suffer, but so could banks, which are most likely to be on the hook if issuers cannot sell new asset-backed commercial paper.  ”Asset-backed commercial paper problems could be much worse than what we saw in the subprime market,” said Josh Rosner, an analyst at independent research firm Graham Fisher in New York.  In some cases, banks may have sold bad loans to commercial paper issuers, which would only magnify trouble in the market, experts said….  

CNBC:  ”Fed Says It Will Go Ahead With Adding Funds to Banking System After Technical Problem Forced Delay”  Why do I always have the impression that things go wrong when they need to.

  ”Free” Market:  ”Free” to go up or stay flat …   ”Free” to go down only on our terms.  We’ll “let you know”.  

11:07 Fed accepts $4.5 billion in mortgage-backed collateral 11:07 Fed lends banks $7 billion in one-day repurchase operation

Other than rampaging armies on the move, no institution anywhere has more power than central banks. And no central bank has more of it than the US Federal Reserve unless it’s the secretive, unaccountable Bank of International Settlements (BIS) founded in 1930 and based in Basle, Switzerland. The BIS is central banker to its member banks (a sort of financial boss of bosses) that includes the Federal Reserve.  Some savvy financial experts believe the world’s ruling elites control this bank of banks and intend using it to establish a global borderless financial world controlled by them. It’s no hairbrained conclusion with the European Union in place, talk of a similar one in Africa, and a North American Security and Prosperity Partnership arrangement coming to a head that will create a borderless continent headquartered in Washington and likely will aim next to link with the EU for greater global control.  So what’s important about the Fed, and why should we care? Despite common belief, the Federal Reserve is not a government agency. It’s a privately owned for profit cartel of powerful banks (including Wall Street ones) protected by law, even though the Federal Reserve Act of 1913 violates the US Constitution. It’s Article I, Section 8 states “The Congress shall have Power To coin Money (and) regulate the Value thereof…” In 1935, the Supreme Court ruled only Congress has this power and cannot constitutionally delegate it to another group or body, and that includes private for profit bankers running the Fed.  Simply put, commercial banks in charge of printing and controlling the nation’s money supply constitutes criminal fraud. It’s the reason the Federal Reserve was designed to look like a government agency when, in fact, it isn’t. Being headquartered in Washington in the stately mausoleum-looking Eccles building is just part of the clever subterfuge.  But it’s even worse than that. By establishing the Federal Reserve, Congress and President Woodrow Wilson privatized the nation’s money creation system relinquishing the most important power governments have that got famed banker Baron MA Rothschild once to say: “Give me control over a nation’s currency and I care not who makes its laws.”  Ever since US private bankers got it, they’ve been empowered to print money in any amount, control its supply and price, and benefit hugely by loaning it out for profit. That includes making government pay interest on its own money it wouldn’t have to do by printing its own. This amounts to no less that government sanctioning the right to counterfeit the national currency for private gain with the Fed and private bankers being world class pirates masquerading as guardians of the public interest.  It’s no exaggeration to call this the all-time, greatest ever financial scam, still ongoing, and totally beyond the reach of public or any other type scrutiny. If there were any, it would be learned this institution was created as a scheme to transfer wealth from ordinary people to giant banks and Wall Street. It’s worked like a charm, and few people are the wiser.  But there’s more still to the story, and it keeps getting uglier. Supposedly, the Federal Reserve was established to stabilize the economy; smooth out the business cycle; maintain a steady, healthy rate of sustainable growth; create price stability and control inflation; and work for the betterment of everyone. So let’s grade it on its performance.  Since 1913, we had economic crashes in 1921, and the major one in 1929 followed by The Great Depression lasting until the outbreak of WW II. Post-war, we then had recessions in 1953, 1957, 1969, 1975, 1981, 1990, 2001, and we’re likely heading for future major trouble resulting from past Fed policy abuses under Alan Greenspan and his successor, Ben Bernanke, carrying on in the same fashion. We also had a serious inflation problem beginning in the 1960s that became crisis-level severe in the 1970s and early 80s. In addition, in the wake of reckless financial market deregulation in the 1980s and lack of government oversight (with the Fed’s blessing), we had a major financial crisis causing more bank failures than ever before or since in our history.  Further still, under the Fed, we’ve had -  – soaring consumer debt;  – record high federal budget and current account deficits;  – an off-the-charts national debt, far higher than the fictitious reported number;  – a high and rising level of personal bankruptcies and mortgage loan delinquencies and defaults;  – an enormous government debt service obligation we’re taxed to pay for;  – the systematic loss of manufacturing and other high-paying jobs to low-wage countries;  – a secular declining economy, 84% service-based, and mostly comprised of low-wage, low or no-benefit, non-unionized jobs;  – an unprecedented wealth gap disparity;  – growing rates of poverty in the richest country in the world;  – a decline of essential social services; and  – a lawless nation devoted to militarism and imperial conquest with the Federal Reserve complicit in supplying all the funds needed to fuel it, and all the while caring not for the public interest it’s supposed to serve.  This type record adds up to a clear conclusion. Above all else, the Federal Reserve failed to accomplish what it’s supposed to do revealing instead what’s really going on. The Fed doesn’t serve the public interest. It abuses it because that’s how bankers and all corporate predators make money. In the world of finance, ordinary people lose out because giant banks and Wall Street are allowed to pull off the grandest of grand thefts, their thievery continues unabated, and the stakes keep rising.  Some astute financial observers now believe current excesses and resulting turmoil were caused by the intentional engineering of the US housing bubble with the Fed in on the scheme. Insiders made loads of easy money in the process and now stand to cash in big buying troubled assets for a fraction of their value the way they always do in the wake of market meltdowns. It’s called “vulture” investing with shrewd buyers profiting hugely in good and bad times that are all good for them.  One analyst calls the subprime mortgage turbulence a global bank run with potential huge yet to emerge consequences. Writer Danny Schechter has another view in his article titled: “Subprime Or Subcrime? Time to Investigate and Prosecute,” and he makes a strong case. He calls the subprime credit squeeze a “sub-crime ponzi scheme (causing) millions of people (to lose) their homes because of criminal and fraudulent tactics used by financial institutions (posing) as respectable players in a highly rigged casino-like market system.” There’s nothing free and open about it.  The problem is deep, structural and aided by stripped away regulatory protections giving predatory lenders and Wall Street schemers free reign to target unsuspecting victims. Part of Schechter’s fix is calling for a “jailout,” not a “bailout,” but with friends in high places, don’t bet on it beyond a small fry or two. It’s sad and disturbing because this type behavior is part of the American “ethic” to scheme, defraud and prey on the innocent knowing big players nearly always get away with it, and under George Bush, it’s practically guaranteed.  With a clear field ahead and friends in high places, the “Masters of the Universe” are now heading for their perfect kind of buying opportunity if Jeremy Grantham and other worriers are right. Manipulation aside, Grantham’s persuasive evidence suggests we’re watching an unstoppable “very slow motion
train wreck” likely to be pretty ugly on “impact.” By his reckoning, it’s probably too late to undue the enormous damage done no one will escape from. His advice is that to be forewarned is forearmed to prepare as best as possible although for most people it’s practically impossible.  It’s a good time to think of the ancient Chinese proverb, that’s, in fact, a curse and not of Chinese origin, but it sounds good saying it is: “May you live in interesting times.” Whoever coined the phrase intended it to be ironic and “interesting” meant dangerous, turbulent or uncertain. That, indeed, is true now but to what degree we’ll only know in the fullness of time.    Stephen Lendman lives in Chicago and can be reached at lendmanstephen@sbcglobal.net.   Also visit his blog site at http://www.sjlendman.blogspot.com and listen to The Steve Lendman News and Information Hour on http://www.TheMicroEffect.com Saturdays at noon US central time and now archived for easy listening.    Stephen Lendman is a frequent contributor to Global Research. Global Research Articles by Stephen Lendman  

Moral Hazard towards Chaos:  December 2006 the USA entered into recession. Q1 results of USA GDP growth in April 2007 indicated a 2.7 growth GDP whereas by May 2007 – that figure had diminished to o.7% (Wow) so much for fraud and lagging indicators.  US inflation is 10% or more…  The DOW will now not rest until it reaches around 8000 or thereabouts after which it will plummet to lower level. My opinion!  Risk or computable uncertainty:  Risk left the occasion in December 2006 whereby Uncertainty has ruled since.  For the past few weeks Uncertainty has given way to Chaos. We are now in the mid-stage of the end-game of the cycle – or, it is all down from here.  Australia has gone past correction to about a 14% fall and this has immediately been exacerbated by an interest rate hike of a quarter point: Bad Move but the new head of the RBA is talking another rate hike in face of global instability – real bad news – Australia is finished and has just accelerated its decline (free-fall) which in turn will feed the rest of the global markets (Why didn’t these guys read Minski?)  Economic analysis: Useless – as that which can now only be effected is reporting that is, micro-analysis cannot be achieved in a Chaotic Moment.  There is now no risk of a Hard Landing – there is no Uncertainty about a hard land either – there is now only a guaranteed (certainty) Hard Landing.  Now we shall observe – have observed the human being at home in his cave (plato’s) while the leadership levels and or stratum will display their fine feathers of cowardice, dishonor and fear, a priori: flight! This seals the deal! Jekel become Hyde! A time when cornered rats eat their young…  I believe that Volker, Greenspan have both admitted (or warned) that the day would come when the USA could not pay its debts! That day is here, er but(?)  Note: … It still could be fixed – but not by current “leadership” and that has always been my point – it will not be fixed – Moral Hazard.  peter