Yes, it appears the perfect storm has definitely arrived and cannot be avoided, even with the Fed pulling out all the stops to forestall a recession in an election year. This will seal W’s fate as a new Hoover and make certain his legacy as one of the very worst presidents in history — as he so richly deserves.

Dear Prof. Roubini,are you now in hyperactive mode? More bullocks coming from you? Just take a break and don\’t give any advice on the stock market.You already destroyed a big junk of my fortune. I shouldn\’t havelistened to you. My bad, though. But I won\’t listen to you any more.Had enough of that crap.Kind regards.

my question to the previous post, how did you destroy a big chunk of fortune by listening to the Prof ?? I would have thought that a person would save his fortune by listening to him as I did.

The below teachings may very well apply to current world events:Rabbi Yitzchak said: \"The year that the King Mashiach reveals himself, all of the nations of the world will be provoking one another. The king of Persia will provoke the King of Arabia and the King of Arabia will go to the King of Aram to take advice from them. The king of Persia will [then] return and destroy the entire world and all the nations of the world will be in an uproar and will be confounded and they will say \’Where shall we come and go, to where shall we come and go.\’ And He (HaShem) shall say to them (the Jewish People), \’My sons, do not fear, everything that I have done, I have done only for you. For what are you fearing, do not fear, the time of your redemption has arrived…\" Pirkei D\’Rabbi Eliezer, Yishayahu, 499 YALKUT SHEMINIWRITTEN 800 YEARS AGO

\"China is increasing minimum wages in provences, increasing inflation pressures\"you think just China? don\’t count out of BRIC. that is why eventually they have to appreciate their currency to export inflation to countries that is devaluing its currency like USA.

@Professor: Thank you again for your update.

There is a lot of fear in this Blog as usual. However one should be comforted knowing that Big Ben and Bank Hank are at the helm. Do not fret they will save us.

\’You already destroyed a big junk of my fortune.\’I imagine \"junk\" is almost certainly the operative word here.

Guest on 2008-06-08 05:59:43You lost a fortune listening to Dr Roubini?? Hmmm, thats funny, I protected mine based on the information in this forum. Perhaps you did something wrong . . . .Thank you Dr. Roubini for opening my eyes before anyone else saw it coming.

Nouriel, Do you still think we are going to a have a U shaped recession? Seems like recent events have really changed the math. Here are a few of the developments since you posted about the likely shape of the recession. 1. Dodd-Frank bill is stalled in Congress. 2. Accoutants have decided that banks must put 5 trillion in off balance sheet liabilities back on the books soon, which should markedly exacerbate the credit crisis and probably will accelerate bank insolvency. 3. Oil Black Swan has exceeded even the oil bulls\’ wildest imagination. 4. Fed cannot lower rates further, or risk exacerbating oil prices further. Rate hikes possible to combat inflation, which will further tank the economy. I would appreciate hearing your thoughts, on the effects of these recent events on your thinking. Seems like more of an L to me.

Dr. Roubini:In your January piece, \"2008 US and Global Economic Outlook and Implications for Financial Markets,\" you posed the question, \"Should we worry about global inflation or deflation?\"You pointed out that we were then seeing the beginning of deflation of housing bubbles across the world, already manifesting in Spain, the UK, and Ireland, and soon to appear in Italy, France, Portugal, Greece, Turkey, Central Europe, the Baltic nations, Australia, and New Zealand. You further noted the following important factors in considering the question: 1. High oil, energy and commodity prices (affecting especially, e.g., net importers of oil such as the U.S.)2. Rising headline and core inflation 3. Concerns about rising inflation and stagflation (low growth and rising inflation) You pointed out, however, that stagflation requires negative supply side shocks (like the 1973 OPEC oil embargo). In your view, do the tremendous additional price increases we have seen in oil in the last four months, which some attribute to our having achieved a peak in global oil production, constitute a negative supply side shock, or something else?You seemed to conclude in your January piece that a US recession and global economic slowdown is a negative demand side shock that will lead to lower – not higher – inflationary pressures. I guess the question I have is whether you believe that the deflationary negative demand side shock will offset the inflationary supply side shock at some point in the coming months. In other words, is there a prospect of sustained stagflation now, or is this combination of low or potentially negative growth and inflation a relatively brief transitional phase in a march to eventual deflation?Thank you,SWK

Dr. Roubini:You clearly stated in your most recent post that current rises in oil prices are, in part, the product of at least one negative shock: the prospect of a U.S. or Israeli attack on Iran (the \"fear premium\"). Would it be fair to characterize any of the rest of the factors you cited — a weakening dollar, speculative investment/demand for oil, short-covering by hedge funds, a rise in fundamental demand for oil from Asia, and the Morgan Stanley report predicting $150 per barrel oil prices — as \"negative shocks\" that individually or collectively could cause stagflation to occur? I assume they are not.Thank you,SWK

\"kilgores\"i see conflict within you. are you shaking in your conviction in NR\’s analysis??

The impasse of doubling spot steel prices on the car industry is an unfolding classic case for the markets to show the power of supply and demand, as outlined above by NR. Two-thirds of the weight of a 2400-pound car or a 3500-pound SUV is comprised of steel. The spot price for steel has gone from $500 a ton a little more than two years ago to over $1000 a ton. Car companies either will have to eat the $500 or pass it on, and, eventually, if customers resist, will have to cut back and/or institute a change in autos offered. Steel prices eventually will come down because inventory will go up.For example, as a result of the past 30 years of weight-reduction efforts to save fuel, the typical passenger car dropped about 1,000 pounds, while average gas mileage climbed from 14 to 28 miles per gallon. In the meantime, iron and steel declined from about three-quarters of a car\’s total mass to about two-thirdsWrote David Enke on May 19, “We often hear a lot of discussion, and rightly so, about the prices of crude oil and the agricultural commodities. Their moves over the last year have, in some cases, been parabolic. Their effect on produced gasoline and food prices are also well documented. Less talked about, but increasingly visible and important, is steel.” http://seekingalpha.com/article/77813-can-steel-stocks-continue-to-climb“Steel prices are continuing to rise, with the alloy\’s average composite weighted price for all carbon-steel products around $1,000 per metric ton. He sites a chart from the WSJ, by way of MEPS International.“Stock prices of related steel companies have also seen a similar rise in the last few months…”In an interview I heard on radio last week, the increased price of steel means the cost of every vehicle will be up $500. IMO, the car companies will have to absorb it. And even though the car companies have contracts, the steel companies say they will go under if they provide product at the contracted price. They allegedly are trying to negotiate a surcharge.The interview also revealed that doubling prices for aluminum and for platinum (needed in catalytic converters for emission control) are affecting car production pricing.

I don\’t understand this phrase: \"and $16 dollar in the last two trading days (+13%) \"

@ Anonymous 11:57:23>I don\’t understand this phrase: \"and $16 dollar in the last two trading days (+13%) \"Oil was at $122/bbl at the beginning of trading on Thursday, and rose by $5. On Friday, it rose by $11, for a total of $16 in two days, or a two-day increase of 13% ($16/$122).SWK

Nice one Shogi. Thank you.

“Obama Capitulates – to the Israel lobby” by Justin Raimondo June 6, 2008Israeli Prime Minister Ehud Olmert\’s visit to the U.S. is part of a concerted effort, by the Israeli government and its American lobbyists, to convince U.S. lawmakers – and, most of all, President George W. Bush – that the time to attack Iran is now. The Israeli newspaper Yediot Achronot reports that Olmert will tell Bush \"time is running out\" on diplomacy and that he\’d better launch an attack. “In his speech to the AIPAC conference, Olmert\’s message was harsh and unrelenting: Iran, he said, \"must be stopped by all possible means\" from acquiring a nuclear capability. Yes, sanctions must be tightened, but these are only \"initial steps\": what\’s needed, he averred, are \"more drastic and robust measures\" – and that can only mean one thing. Israel would rather not act alone, but Olmert signaled that he was willing to do so if pushed: \"Israel will not tolerate the possibility of a nuclear Iran, and neither should any other country in the free world,\" he declared, in what was clearly a threat of unilateral action.Citing Israel\’s record in regard to Iraq in the eighties and Syria last year, Tim Butcher warned in the Telegraph: \"The speech shortens the odds significantly on military action against Iran\’s nuclear program.\" The U.S. would almost certainly be drawn into the conflict if Israel carried out its threat, and Olmert knows that. So does Bush, who, in any case, may not need much persuading. After all, in his speech to the Israeli parliament last month, the President declared:\"Permitting the world\’s leading sponsor of terror to possess the world\’s deadliest weapons would be an unforgivable betrayal for future generations. For the sake of peace, the world must not allow Iran to have a nuclear weapon.\"For the sake of peace, we must make war: a familiar refrain that echoes down through the years, mocking the living and the dead. The clock is ticking, and time is running out for the War Party: they must get in their licks before the most pro-Israel president, ever, leaves office. As Butcher writes: \"Among Israeli supporters of military action against Iran there is concern something must be done before Mr. Bush\’s end of office next January as Mr. Bush is perceived as closer to Israel than any potential successor.\" Don\’t look to Barack Obama for deliverance from this looming conflict. In his speech to AIPAC, he clearly signed on to the Lobby\’s latest project, departing from his prepared text to declare:\"I will do everything in my power to prevent Iran from obtaining a nuclear weapon. Everything in my power. Everything.\" \"Everything\" includes murdering tens of thousands of Iranians, mostly civilians – driving the price of oil up above $300 a barrel and destroying the US economy – and involving us in a war that will make the Iraq conflict look like a Sunday school picnic. And for what?The irony, of course, is that Iran is nowhere near obtaining nuclear weapons, as the President\’s own intelligence agencies recently informed him: but no matter. That\’s a small obstacle to those who disdain \"the reality-based community,\" and see themselves as Making History while the rest of us watch, helpless and aghast. As Ha\’aretz recently reported\"Olmert will try to convince Bush to set aside the National Intelligence Estimate on Iran\’s nuclear program in favor of data presented by Israel, and determine the administration\’s policy on Iran accordingly.\" The coming war with Iran has nothing to do with \"weapons of mass destruction\" – no more than the invasion of Iraq ever did. It\’s all about preserving Israeli hegemony in the Middle East by wiping any and all recalcitrant Arab-Muslim states off the map. First Iraq, then Iran – and Syria will have its turn soon enough, along with poor prostrate Lebanon, once the jewel of the eastern Mediterranean and now an economic and political basket case.It is almost certain we will be at war with Iran before a new President is inaugurated: now that Obama has capitulated to the Lobby, nothing but Divine Providence can stop it. God help us all…http://antiwar.com/justin/?articleid=12944

factual circumstances can and do change unexpectedly, and that if the underlying factual assumptions change, his assessments may well change, too.Well said! What if the Fed had listened to such as the Professor, remembered its raison d\’être and started to hold a line on the dollar decline? Still huge problems and a tanking economy, but the details and investment choices very different.\"When the facts change I change my mind. What do you do, Sir?\" To avoid a major crisis one would have to go back to, well, GWB\’s first stolen election would be an obvious locus to set the time machine to. In the absence of sci-fi no good way out presents itself.

kilgores,Like I said. I feel the conflict within you. Let go of your hate. Hate that NR might be wrong in his opinion. Hate that you take in his opinion.

I believe it will be difficult predict the future of oil, steel, or any other commodity in this coming crises, because we have never had Phil Gramm\’s Commodity Futures Modernization Act which he introduced on December 21, 2000. Remember, this is the law that allowed Enron traders avoid regulation; this is the law that allowed depository banks to trade in credit derivatives; and this is the law that allowed off-book betting. It\’s also the law that allows speculation in commodities.How can anyone anticipate, much less predict, the behavior of trillions of dollars, thrashing around electronic trading systems just below the speed of light, seeking out safe havens irrespective of social justice, a sense of fair play, or empathy for the less fortunate?

@ Guest on 13:48:18>Like I said. I feel the conflict within you. Let go of your hate. Hate that NR might be wrong in his opinion. Hate that you take in his opinion.Please refrain from making such childish attempts to goad me into some reaction in this forum. I assure you any such efforts will prove ineffective. Moreover, vacuous but provocative comments such as yours contribute nothing meaningful or constructive to the subject matter of this blog. They are simply boorish. SWK

Caveat Emptor: Fraud; Citibank et alhttp://globaleconomicanalysis.blogspot.com/http://globaleconomicanalysis.blogspot.com/2008/03/dear-citigroup-customer.htmlHo humPeterJB

Well … another visit to the gas pump in So. California.Today, regular unleaded (87 octane) is running at $4.66/gal, and super unleaded (91 octane) is running at $4.86/gal. Now, these prices come from a gas station that\’s a bit on the pricey side – but other stations won\’t be a whole lot lower.First point. Gas has now gone up by anohter 10% in just a couple of weeks. The total price increase is now at least 20% in a month. So the BLS stats for April on gasoline increases are getting blown out of the water (yeah, I know, that was April. But if they try to play that game again in May they will be laughed out of the country).Second point. Just filling up the family van cost $86. Do that 4 times a month and you\’re looking at almost $350/mo for one vehilce for fuel. Basically, that exceeds one typical major family grocery bill. So … the whole family budget for Americans is now changing rapidly. It would be a mistake to assume that food and energy cost only a small fraction of total monthly budgets now.When gas was at $4, our discretionary spending was already taking a significant hit. We\’re closing in fast on $5/gal now. Want to see discretionary spending literally drop off a cliff???PeteCA

Guest has been watching too much Star Wars.

Capitola, always jam-packed with people, poodles and Porches, was not its old self over the few days preceding and following Memorial Day. Always crowded to the gills on a weekend, it is not unusual to circle its winding streets for 30 minutes before finding a parking place. Not so, for the holidays. And Mr. Toots Coffeehouse, a quaint coffeehouse nestled above the village, was nearly empty while RV camps were deserted. This is Significant! Here’s a self-description of Capitola Village (notice its location):Capitola is an intimate beach village tucked in a river valley in Santa Cruz County on the Monterey Bay. Located an hour away from San Jose and an hour and a half from San Francisco, Capitola enjoys a lively population full of tradition and an interesting history. The City’s wharf and riverside areas remind one of a village in France or perhaps a Mediterranean coast in Italy. Capitola Village is located along a wide beach with a breathtaking view of Monterey Bay and is home to numerous craft galleries, boutiques and restaurants…Voted one of the best beach locations on the California Coast by Sunset Magazine, Capitola has fishing and boating services in addition to its beachfront restaurants, shops and entertainment.IMHO, less expensive restaurants are taking business away from more pricey spots, but I’ve noticed a fall-off everywhere. Radio news here yesterday said that “people are stopping dining out and in some ways it might be good in that people will get better nutrition (?)”. Peanut butter?Unleaded regular this weekend on the Central Coast is $4.69. What power monopoly! – a handful of Money Monopolists in NYC pumping down the value of the dollar as the Oil Monopoly pumps up the price, and 6.7 billion people pay. How much longer can Congress protect this leviathan?

@ Guest on 2008-06-08 17:00:35Many thanks for the plug of my Corporate Welfare Queens piece. Whether they are banks, oil companies, the military-intelligence complex, telecoms or other big coporates, they are all Welfare Queens to the extent that they have usurped control of the US government to serve their profitability at the expense of the electorate, damaging long term US prospects in the process.As for the exercise, I\’m sore and tired and having trouble motivating myself to get through the long list I have for today. Moderation in all things is still good advice.@ ProfessorDEBKAFile is not a credible source and has been predicting an imminent attack on Iran for three years. That said, I agree with you and with the oil markets that an attack on Iran is more likely as power shifts from Olmert and Bush to those more enlightened, responsible and far-sighted. Bush said this weekend that history will vindicate him. I\’m sure every war-mongering dictator would rather believe that than embrace the reality of being a mass murderer for the profit of oil companies and arms dealers.Perhaps American history books will gloss over the Iraq invasion and occupation, as they gloss over the native American genocide, the millions killed in the Philippines during the Spanish-American War, and the various assassinations, death squads, coups and terrorists funded by the American taxpayer during the Cold War. The rest of the world is less likely to edit truth out of history to the same extent, especially if the violence is compounded with an attack on Iran. War for oil and arms profits – the two most corrupting industries on the planet and the two most closely associated with the current occupants of the White House – is likely to be a chapter of history taught in our schools, regardless of whatever mythology is taught in the USA.

@ London Banker on 2008-06-09 04:17:35that youtube of McCain is scary……….

@ BobApologies. Of course Bush is not a dictator. He was democratically elected by the American people. That all members of the Bush administration lied to promote a war of choice is now beyond doubt, confirmed last week by the Senate Report on Pre-War Intelligence. Hundreds of thousands have died for those lies, and only a few have profited. Those few that profited are friends of Bush and Cheney in the oil and arms industries. You may not believe there is a connection, but I am free to draw one I believe.http://edition.cnn.com/2008/POLITICS/06/05/senate.iraq/

One thing that doesn\’t get much discussion here is the corporate culture of partying that exists on Wall St. Many readers may not realize it, but there is some pretty heavy drinking, partying (and other stuff) that is tacitly accepted in these Wall St companies. We know some people in our neighborhood who work for one of the big Wall St firms (no names). It\’s not unusual to hear these people partying until 4 am or 5 am on Friday or Saturday nights. Of course, that\’s the weekend. But these people are sometimes also out drinking, talking and socializing at 2 am or even 3 am on regular week nights. Then they sleep for a couple of hours, get into their cars, and go to the office the next morning. What\’s surprising is that we\’re not talking about junior level people. These are senior executives with responsibility over large accounts. Think about it. If you were a client with several million dollars invested, how much attention would your account really be getting? The same attitude on Wall St that fosters financial risk taking also turns a blind eye to excesses in personal behavior. Something to think about.Anonymous

Sorry, link cant work.This link is ok.http://www.ibanknet.com/scripts/callreports/filingupdates.aspx?ibnid=usa_480228&per=20071231&filing=20080605

For all you conspiracy theorists out there…..Washington Post this morning:\"Search the Internet for \"Bush Lied\" products, and you will find sites that offer more than a thousand designs. The basic \"Bush Lied, People Died\" bumper sticker is only the beginning. Sen. John D. Rockefeller IV (D-W.Va.), chairman of the Select Committee on Intelligence, set out to provide the official foundation for what has become not only a thriving business but, more important, an article of faith among millions of Americans. And in releasing a committee report Thursday, he claimed to have accomplished his mission, though he did not use the L-word. \"In making the case for war, the administration repeatedly presented intelligence as fact when it was unsubstantiated, contradicted or even nonexistent,\" he said. There\’s no question that the administration, and particularly Vice President Cheney, spoke with too much certainty at times and failed to anticipate or prepare the American people for the enormous undertaking in Iraq. But dive into Rockefeller\’s report, in search of where exactly President Bush lied about what his intelligence agencies were telling him about the threat posed by Saddam Hussein, and you may be surprised by what you find. On Iraq\’s nuclear weapons program? The president\’s statements \"were generally substantiated by intelligence community estimates.\" On biological weapons, production capability and those infamous mobile laboratories? The president\’s statements \"were substantiated by intelligence information.\" On chemical weapons, then? \"Substantiated by intelligence information.\" On weapons of mass destruction overall (a separate section of the intelligence committee report)? \"Generally substantiated by intelligence information.\" Delivery vehicles such as ballistic missiles? \"Generally substantiated by available intelligence.\" Unmanned aerial vehicles that could be used to deliver WMDs? \"Generally substantiated by intelligence information.\" As you read through the report, you begin to think maybe you\’ve mistakenly picked up the minority dissent. But, no, this is the Rockefeller indictment. So, you think, the smoking gun must appear in the section on Bush\’s claims about Saddam Hussein\’s alleged ties to terrorism. But statements regarding Iraq\’s support for terrorist groups other than al-Qaeda \"were substantiated by intelligence information.\" Statements that Iraq provided safe haven for Abu Musab al-Zarqawi and other terrorists with ties to al-Qaeda \"were substantiated by the intelligence assessments,\" and statements regarding Iraq\’s contacts with al-Qaeda \"were substantiated by intelligence information.\" The report is left to complain about \"implications\" and statements that \"left the impression\" that those contacts led to substantive Iraqi cooperation. In the report\’s final section, the committee takes issue with Bush\’s statements about Saddam Hussein\’s intentions and what the future might have held. But was that really a question of misrepresenting intelligence, or was it a question of judgment that politicians are expected to make? After all, it was not Bush, but Rockefeller, who said in October 2002: \"There has been some debate over how \’imminent\’ a threat Iraq poses. I do believe Iraq poses an imminent threat. I also believe after September 11, that question is increasingly outdated. . . . To insist on further evidence could put some of our fellow Americans at risk. Can we afford to take that chance? I do not think we can.\" Rockefeller was reminded of that statement by the committee\’s vice chairman, Sen. Christopher S. Bond (R-Mo.), who with three other Republican senators filed a minority dissent that includes many other such statements from Democratic senators who had access to the intelligence reports that Bush read. The dissenters assert that they were cut out of the report\’s preparation, allowing for a great deal of skewing and partisanship, but that even so, \"the reports essentially validate what we have been saying all along: that policymakers\’ statements were substantiated by the intelligence.\" Why does it matter, at this late date? The Rockefeller report will not cause a spike in \"Bush Lied\" mug sales, and the Bond dissent will not lead anyone to scrape the \"Bush Lied\" bumper sticker off his or her car.But the phony \"Bush lied\" story line distracts from the biggest prewar failure: the fact that so much of the intelligence upon which Bush and Rockefeller and everyone else relied turned out to be tragically, catastrophically wrong.\"

@martinthanks, keep us posted!

@AnonymousWritten by Guest on 2008-06-09 08:55:49the sh*thouse might be up in even bigger flames if they did not party — something to think about…..

SWK/kilgores,Fabricating stories is not necessary to justify your contempt for Bush and his policies, it is beneath you. Please see below for examples of common opinion on both sides of the isle related to this issue…..\"[W]e urge you, after consulting with Congress, and consistent with the U.S. Constitution and laws, to take necessary actions (including, if appropriate, air and missile strikes on suspect Iraqi sites) to respond effectively to the threat posed by Iraq\’s refusal to end its weapons of mass destruction programs.\" — From a letter signed by Joe Lieberman, Dianne Feinstein, Barbara A. Milulski, Tom Daschle, & John Kerry among others on October 9, 1998 \"This December will mark three years since United Nations inspectors last visited Iraq. There is no doubt that since that time, Saddam Hussein has reinvigorated his weapons programs. Reports indicate that biological, chemical and nuclear programs continue apace and may be back to pre-Gulf War status. In addition, Saddam continues to refine delivery systems and is doubtless using the cover of a licit missile program to develop longer- range missiles that will threaten the United States and our allies.\" — From a December 6, 2001 letter signed by Bob Graham, Joe Lieberman, Harold Ford, & Tom Lantos among others \"Whereas Iraq has consistently breached its cease-fire agreement between Iraq and the United States, entered into on March 3, 1991, by failing to dismantle its weapons of mass destruction program, and refusing to permit monitoring and verification by United Nations inspections; Whereas Iraq has developed weapons of mass destruction, including chemical and biological capabilities, and has made positive progress toward developing nuclear weapons capabilities\" — From a joint resolution submitted by Tom Harkin and Arlen Specter on July 18, 2002 \"Saddam\’s goal … is to achieve the lifting of U.N. sanctions while retaining and enhancing Iraq\’s weapons of mass destruction programs. We cannot, we must not and we will not let him succeed.\" — Madeline Albright, 1998 \"(Saddam) will rebuild his arsenal of weapons of mass destruction and some day, some way, I am certain he will use that arsenal again, as he has 10 times since 1983\" — National Security Adviser Sandy Berger, Feb 18, 1998 \"Iraq made commitments after the Gulf War to completely dismantle all weapons of mass destruction, and unfortunately, Iraq has not lived up to its agreement.\" — Barbara Boxer, November 8, 2002 \"The last UN weapons inspectors left Iraq in October of 1998. We are confident that Saddam Hussein retained some stockpiles of chemical and biological weapons, and that he has since embarked on a crash course to build up his chemical and biological warfare capability. Intelligence reports also indicate that he is seeking nuclear weapons, but has not yet achieved nuclear capability.\" — Robert Byrd, October 2002 \"There\’s no question that Saddam Hussein is a threat… Yes, he has chemical and biological weapons. He\’s had those for a long time. But the United States right now is on a very much different defensive posture than we were before September 11th of 2001… He is, as far as we know, actively pursuing nuclear capabilities, though he doesn\’t have nuclear warheads yet. If he were to acquire nuclear weapons, I think our friends in the region would face greatly increased risks as would we.\" — Wesley Clark on September 26, 2002 \"What is at stake is how to answer the potential threat Iraq represents with the risk of proliferation of WMD. Baghdad\’s regime did use such weapons in the past. Today, a number of evidences may lead to think that, over the past four years, in the absence of international inspectors, this country has continued armament programs.\" — Jacques Chirac, October 16, 2002 \"The community of nations may see more and more of the very kind of threat Iraq poses now: a rogue state with weapons of mass destruction, ready to use them or provide them to terrorists. If we fail to respond today, Saddam and all those who would follow in his footsteps will be emboldened tomorrow.\" — Bill Clinton in 1998 \"In the four years since the inspectors left, intelligence reports show that Saddam Hussein has worked to rebuild his chemical and biological weapons stock, his missile delivery capability, and his nuclear program. He has also given aid, comfort, and sanctuary to terrorists, including Al Qaeda members, though there is apparently no evidence of his involvement in the terrible events of September 11, 2001. It is clear, however, that if left unchecked, Saddam Hussein will continue to increase his capacity to wage biological and chemical warfare, and will keep trying to develop nuclear weapons. Should he succeed in that endeavor, he could alter the political and security landscape of the Middle East, which as we know all too well affects American security.\" — Hillary Clinton, October 10, 2002 \"I am absolutely convinced that there are weapons…I saw evidence back in 1998 when we would see the inspectors being barred from gaining entry into a warehouse for three hours with trucks rolling up and then moving those trucks out.\" — Clinton\’s Secretary of Defense William Cohen in April of 2003 \"Iraq is not the only nation in the world to possess weapons of mass destruction, but it is the only nation with a leader who has used them against his own people.\" — Tom Daschle in 1998 \"Saddam Hussein\’s regime represents a grave threat to America and our allies, including our vital ally, Israel. For more than two decades, Saddam Hussein has sought weapons of mass destruction through every available means. We know that he has chemical and biological weapons. He has already used them against his neighbors and his own people, and is trying to build more. We know that he is doing everything he can to build nuclear weapons, and we know that each day he gets closer to achieving that goal.\" — John Edwards, Oct 10, 2002 \"The debate over Iraq is not about politics. It is about national security. It should be clear that our national security requires Congress to send a clear message to Iraq and the world: America is united in its determination to eliminate forever the threat of Iraq\’s weapons of mass destruction.\" — John Edwards, Oct 10, 2002 \"I share the administration\’s goals in dealing with Iraq and its weapons of mass destruction.\" — Dick Gephardt in September of 2002 \"Iraq does pose a serious threat to the stability of the Persian Gulf and we should organize an international coalition to eliminate his access to weapons of mass destruction. Iraq\’s search for weapons of mass destruction has proven impossible to completely deter and we should assume that it will continue for as long as Saddam is in power.\" — Al Gore, 2002 \"We are in possession of what I think to be compelling evidence that Saddam Hussein has, and has had for a number of years, a developing capacity for the production and storage of weapons of mass destruction.\" — Bob Graham, December 2002 \"Saddam Hussein is not the only deranged dictator who is willing to deprive his people in order to acquire weapons of mass destruction.\" — Jim Jeffords, October 8, 2002 \"We have known for many years that Saddam Hussein is seeking and developing weapons of mass destruction.\" — Ted Kennedy, September 27, 2002 \"There is no doubt that Saddam Hussein\’s regime is a serious danger, that he is a tyrant, and that his pursuit of lethal weapons of mass destruction cannot be tolerated. He must be disarmed.\" — Ted Kennedy, Sept 27, 2002
\"I will be voting to give the president of the United States the authority to use force – if necessary – to disarm Saddam Hussein because I believe that a deadly arsenal of weapons of mass destruction in his hands is a real and grave threat to our security.\" — John F. Kerry, Oct 2002 \"The threat of Saddam Hussein with weapons of mass destruction is real, but as I said, it is not new. It has been with us since the end of that war, and particularly in the last 4 years we know after Operation Desert Fox failed to force him to reaccept them, that he has continued to build those weapons. He has had a free hand for 4 years to reconstitute these weapons, allowing the world, during the interval, to lose the focus we had on weapons of mass destruction and the issue of proliferation.\" — John Kerry, October 9, 2002 \"(W)e need to disarm Saddam Hussein. He is a brutal, murderous dictator, leading an oppressive regime. We all know the litany of his offenses. He presents a particularly grievous threat because he is so consistently prone to miscalculation. …And now he is miscalculating America�s response to his continued deceit and his consistent grasp for weapons of mass destruction. That is why the world, through the United Nations Security Council, has spoken with one voice, demanding that Iraq disclose its weapons programs and disarm. So the threat of Saddam Hussein with weapons of mass destruction is real, but it is not new. It has been with us since the end of the Persian Gulf War.\" — John Kerry, Jan 23, 2003 \"We begin with the common belief that Saddam Hussein is a tyrant and a threat to the peace and stability of the region. He has ignored the mandates of the United Nations and is building weapons of mass destruction and the means of delivering them.\" — Carl Levin, Sept 19, 2002 \"Every day Saddam remains in power with chemical weapons, biological weapons, and the development of nuclear weapons is a day of danger for the United States.\" — Joe Lieberman, August, 2002\"Over the years, Iraq has worked to develop nuclear, chemical and biological weapons. During 1991 – 1994, despite Iraq\’s denials, U.N. inspectors discovered and dismantled a large network of nuclear facilities that Iraq was using to develop nuclear weapons. Various reports indicate that Iraq is still actively pursuing nuclear weapons capability. There is no reason to think otherwise. Beyond nuclear weapons, Iraq has actively pursued biological and chemical weapons.U.N. inspectors have said that Iraq\’s claims about biological weapons is neither credible nor verifiable. In 1986, Iraq used chemical weapons against Iran, and later, against its own Kurdish population. While weapons inspections have been successful in the past, there have been no inspections since the end of 1998. There can be no doubt that Iraq has continued to pursue its goal of obtaining weapons of mass destruction.\" — Patty Murray, October 9, 2002 \"As a member of the House Intelligence Committee, I am keenly aware that the proliferation of chemical and biological weapons is an issue of grave importance to all nations. Saddam Hussein has been engaged in the development of weapons of mass destruction technology which is a threat to countries in the region and he has made a mockery of the weapons inspection process.\" — Nancy Pelosi, December 16, 1998 \"Even today, Iraq is not nearly disarmed. Based on highly credible intelligence, UNSCOM [the U.N. weapons inspectors] suspects that Iraq still has biological agents like anthrax, botulinum toxin, and clostridium perfringens in sufficient quantity to fill several dozen bombs and ballistic missile warheads, as well as the means to continue manufacturing these deadly agents. Iraq probably retains several tons of the highly toxic VX substance, as well as sarin nerve gas and mustard gas. This agent is stored in artillery shells, bombs, and ballistic missile warheads. And Iraq retains significant dual-use industrial infrastructure that can be used to rapidly reconstitute large-scale chemical weapons production.\" — Ex-Un Weapons Inspector Scott Ritter in 1998 \"There is unmistakable evidence that Saddam Hussein is working aggressively to develop nuclear weapons and will likely have nuclear weapons within the next five years. And that may happen sooner if he can obtain access to enriched uranium from foreign sources — something that is not that difficult in the current world. We also should remember we have always underestimated the progress Saddam has made in development of weapons of mass destruction.\" — John Rockefeller, Oct 10, 2002 \"Saddam�s existing biological and chemical weapons capabilities pose a very real threat to America, now. Saddam has used chemical weapons before, both against Iraq�s enemies and against his own people. He is working to develop delivery systems like missiles and unmanned aerial vehicles that could bring these deadly weapons against U.S. forces and U.S. facilities in the Middle East.\" — John Rockefeller, Oct 10, 2002 \"Whether one agrees or disagrees with the Administration�s policy towards Iraq, I don�t think there can be any question about Saddam�s conduct. He has systematically violated, over the course of the past 11 years, every significant UN resolution that has demanded that he disarm and destroy his chemical and biological weapons, and any nuclear capacity. This he has refused to do. He lies and cheats; he snubs the mandate and authority of international weapons inspectors; and he games the system to keep buying time against enforcement of the just and legitimate demands of the United Nations, the Security Council, the United States and our allies. Those are simply the facts.\" — Henry Waxman, Oct 10, 2002

http://www.ft.com/cms/s/0/500e4012-3586-11dd-998d-0000779fd2ac.htmlFunding imbalance linked to market tensionsBy Gillian Tett in LondonA dramatic imbalance between the funding patterns of US and European banks might be fuelling the continued tensions in money markets, new research by central bank officials has found.European banks have secretly increased their dependence on dollar funding by about $500bn in the last four years to some $800bn by mid-way through last year before the credit crisis turmoil struck. Much of the funding was apparently borrowed from US banks.However, American banks, by contrast, have been raising most of their US dollar funding from money market funds, which they have then lent on to other banks, such as those in Europe, new research by officials at the Bank for International Settlements has shown.This dramatic difference in the funding patterns may help to explain why Libor – the benchmark rate for interbank money markets – has continued to stay so high in recent weeks, in spite of the emergency measures introduced by the Federal Reserve, central bank officials believe.In particular, in recent months it appears many US banks have slashed their dollar lending to other banks because they have been hoarding funds. This has created tensions in money markets as European banks, unlike their US counterparts, do not have direct access to the liquidity programmes offered by the US Federal Reserve.Only three of the 16 banks that submit quotes to the British Bankers Association to calculate the Libor rate are domiciled in the US and have access to the Fed liquidity programmes. Central bank officials say this European bias may have exacerbated the upward pressure on dollar Libor.“These diverging positions of US and European banks suggest that the latter face relatively large US dollar funding requirements,” the BIS notes in its latest quarterly report, released on Monday. “This may help in understanding the liquidity squeeze in this market since mid-2007.”The BIS research is likely to be closely scrutinised by investors and bankers since it provides one of the first pieces of detailed analysis of bank borrowing patterns in the US and Europe.Many officials have suspected that a distinction had opened up between the way US and European banks were behaving in relation to their use of dollar funding. However, since most of this activity tends to be highly secretive, it has been difficult for investors or bank analysts to analyse this divergence.Copyright The Financial Times Limited 2008

Barron\’s talked up 1350 as the next big level in the S&P 500… they will fight and scrap today for at least unchanged or perhap up… an amazing accomplishment so far considering the hints of another atomic meltdown at LEH down 13% on a mere 112 million shares… despite another Wall Street investment bank going the way of the dinosaur, the indices are hanging in there today… it MUST be the REAL economy that is doing well – you know the real one outside of the airlines, auto industry, etc. the ones not affected by $135 oil – the real economy must be running on solar energy already

@ Guest on 10:47:42>Fabricating stories is not necessary to justify your contempt for Bush and his policies, it is beneath youPrecisely what \"stories\" do you believe I have \"fabricated?\" Your post is just a litany of quotes of statements, some well before 9/11, by prominent democrats, one foreign leader, and one former weapons inspector in Iraq. None of these quotations refutes what I set forth in my immediately preceding post. Notably, Senator Byrd and Senator Graham opposed the resolution. Senator Graham, who was on the Senate Intelligence Committee, went to great pains before the invasion to point out that the Bush Administration was misusing or mischaracterizing intelligence, while being unable to provide specifics because so much of the damning material was classified.Frankly, I think the record is clear that a number of leading democrats were complicit in supporting the President\’s misguided efforts. In fact, I think Congress shirked its constitutional duty by failing to issue a declaration of war, instead authorizing the President to use military force in his discretion by way of a resolution that legislators could then try to disclaim if things went south. That being said, Iraq\’s biological and chemical programs, even if they had remained active, did not pose an imminent threat to the U.S., which since the Cuban Missile Crisis has been the standard for justifying the use of military force under international law (and even that standard is debatable, given that the standard set forth in U.N. Conventions is actual attack, as opposed to an imminent threat of attack). What pushed me and other Americans to lend reluctant support to the war in Iraq was the claim of the Bush Administration that Saddam\’s regime was on the verge of producing a working nuclear explosive device that could wind up in the hands of Al Qaeda and clandestinely smuggled into the U.S. for detonation on our own soil. While not exactly equivalent to a Soviet nuclear missile 90 miles off the U.S. coast, it was a terrifying thought that led many Americans otherwise opposed to the invasion to support the President in that effort. The Bush Administration knew the intelligence to support its claim of an imminent nuclear threat was unreliable well before the invasion of Iraq, but continued to tout it as a fact well into the war. The President gave a speech in October 2002 in which he asserted that \"Satellite photographs reveal that Iraq is rebuilding facilities at [previous nuclear] sites.\" In its report to the Security Council in January 2003, however, the IAEA reported that after two months of inspections on the ground at these former Iraqi nuclear sites, no evidence of prohibited nuclear activities was found. When the President said in his State of the Union remarks in 2003 that \"Our intelligence sources tell us that he (Saddam) has attempted to purchase high-strength aluminum tubes suitable for nuclear weapons production,\" it was well known within the Administration that this was not true, as the International Atomic Energy Agency (IAEA) and dozens of leading scientists had already determined such tubes unsuitable for nuclear weapons production months before. In that same address, the President stated that the British government had learned that Iraq had \"recently sought significant quantities of uranium from Africa.\" The Bush Administration already knew at that time that the documents had been forged and that they were unreliable. In March 2003, on Meet the Press, the Vice-President stated that \"We know [Saddam has] been absolutely devoted to trying to acquire nuclear weapons, and we believe he has, in fact, reconstituted nuclear weapons.\" In a report to the Security Council a week earlier, the IAEA stated that it \"had found no evidence or plausible indication of the revival of a nuclear weapons program in Iraq.\"It is absolute nonsense, and historical revisionism of the most pernicious kind, to suggest that the Bush Administration had a bona fide and reasonable belief that the United States was faced with an imminent nuclear threat from Iraq at the time of the invasion. Attempts to insulate the Bush Administration from responsibility by reference to claims of \"Oh, everyone had the same bad intelligence\" are wholly without merit.In your penultimate post, you asked in reference to the Rockefeller Report:>Why does it matter, at this late date?It matters for the same reason it matter to remember the Holocaust: so it doesn\’t happen again. Of course, it\’s bound to happen again anyway. Sadly, remembering the Holocaust has not prevented genocide in Cambodia, in Bosnia, in Rwanda, and elsewhere. Remembering the Gulf of Tonkin incident that was ultimately exposed by the New York Times as a fabrication of the Johnson Administration to garner support for escalation of the U.S. military presence in Vietnam has not prevented a host of questionable military ventures by the United States since that time.SWK

housing / banking from my screens$BKX (PHLX Banking Index) bleeding bleeding approaching 2003 lows….and it\’s just getting started IMO. $HGX (PHLX Housing Sicktor) bleeding bleeding only hope here is for some kinda bailout It\’s a Dragon Attack

It is believed that on Cheops alone 100,000 men were employed for twenty years. And when it was finished all that Egypt had to show for 600,000,000 days of human labor was a frozen asset. Today in the USA, we have 6,000,000 well furnished unaffordable and decaying fixed assets as homes. No one will want them, a series of speculators will jump in…to the lose to other bottom feeding speculators. I like car derbies, especially the crashes. I like watching these markets more…(Ya, look me up in Wikipedia)

I stole this post by DC this morning from London Banker’s blog on RGE’s Financing and Banking site. Hope neither minds; I mean, it’s all in the family. Isn\’t it? I mean, I love to visit LB, and I love it when he visits here (wish he would every day) but, maybe I shouldn\’t take things (?).Bernanke Cries \"It\’s all China\’s Fault!\" By Mike_Whitney http://www.marketoracle.co.uk/Article4994.html He\’s at it again. Bernanke, that is. Thursday the Fed chief delivered a rambling 45 minute speech at the International Monetary Conference in Barcelona, Spain laying out all the reasons why the Federal Reserve is NOT responsible for the present crisis in the financial markets. That\’s a pretty long-winded way of saying the Chinese are to blame for everything that\’s gone wrong in the markets for the last 10 months. But is it true? Ask yourself this, dear reader; do \"savings\" cause massive equity bubbles or are bubbles the result of low interest rates and rotten monetary policy? It is universally agreed that Greenspan created the housing bubble by dropping rates below the rate of inflation for 31 months following the dot.com bust. This sparked a multi-trillion dollar speculative frenzy in real estate. Artificially low interest rates distort the market; bubbles appear. \"Savings\" had nothing to do with it; Bernanke is just trying to dodge responsibility by blaming the Chinese. It\’s the old \"dog ate my homework\" routine. The Fed is also responsible for the surge in oil prices. As Frank Shostak points out in his recent article \"The Oil Price Bubble\": \"There is a high likelihood that the massive increase in the price of oil that we are currently observing is the manifestation of a severe misallocation of resources — a large increase in nonproductive activities. It is these activities that have laid the foundation for the oil-market bubble, which has become manifest in the explosive increase in the price of oil. The root of the problem here is the Fed\’s very loose monetary policy between January 2001 and June 2004. (The federal funds rate was lowered from 6% to 1%.)\" Bernanke Cries \"It\’s all China\’s Fault!\"

Thirty year mortgage now back above 6%. Lehman on death watch. Sure is good to know the credit crisis is over.

@ Gloomy 14:29:01Gosh! I absolutely LOVE your wry sense of humor, Gloomy! SWK

Anyone have an opinion on Australian Government Bonds…do they look like a good safe haven? The bank I\’m using has lots of derivative exposure so I\’m trying to move cash someplace safer.

Last minute profit taking by shorts, or a desperate hurrah by the PPT to end the day in the green?

June 9, 2008 Central bank body warns of Great Depressionby Gill MontiaThe Bank for International Settlements (BIS), the organisation that fosters cooperation between central banks, has warned that the credit crisis could lead world economies into a crash on a scale not seen since the 1930s.In its latest quarterly report, the body points out that the Great Depression of the 1930s was not foreseen and that commentators on the financial turmoil, instigated by the US sub-prime mortgage crisis, may not have grasped the level of exposure that lies at its heart. According to the BIS, complex credit instruments, a strong appetite for risk, rising levels of household debt and long-term imbalances in the world currency system, all form part of the loose monetarist policy that could result in another Great Depression.The report points out that between March and May of this year, interbank lending continued to show signs of extreme stress and that this could be set to continue well into the future.It also raises concerns about the Chinese economy and questions whether China may be repeating mistakes made by Japan, with its so called bubble economy of the late 1980s.http://www.bankingtimes.co.uk/09062008-central-bank-body-warns-of-great-depression/

Just found another reference to the above. Funny how it didn\’t make it into the mainstream media.BIS warns of Great Depression dangers from credit spree http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/06/25/cncredit125.xml

@SWKReally why is this not top of front page everywhere? It\’s not like this analysis is from some peripheral organization. It\’s from the top. The lambs are being led blindly to the slaughter.

@ Gloomy 15:46:48Fear, plain and simple. The U.S. media doesn\’t want to be accused of causing a panic that could help to fulfill the prophecy…SWK

Talking of deep (kimshi) and bullsh#t:Does anyone else get the impression that Lehman Brothers keep repeating itself over and over? Perhaps when the repetition is over, then it is all over. LOLHo humPeterJB

Er…duh. Just saw that should have said June and Gloomy linked to the same article. When I saw the June \’08 entry first I thought it was a new report.

Stocks have appeared to reach a permanet high plateau… T Geithner…Bubble boy USa..

Marc Faber, managing director of Marc Faber Ltd., says \"Oil, Stocks, Real Estate Are Overvalued” in a June 9 video talk with Bloomberg\’s Carol Massar and Erik Schatzker about the outlook for stocks, oil and commodity prices, and investment strategy. Faber says we are in a different environment today from the past 25 years when leveraging was increasing. Now that we are in a period of de-leveraging, it will affect profits across the board, he said. Corporate profits will disappoint, he said, in particular because retained earnings for 2009 are still too high and when assets are adjusted downward, values will become less compelling. Said Faber:·The U.S. already is in a recession.·Equity prices are too high – “valuations” are becoming less compelling.”·We’re in a kind of “water torture bear market.”·Materials, cyclical stocks, and energy stocks have held up well in the recent past, but all will now come under pressure and are likely to be weaker. Nickel, wheat, lead and zinc already are down. ·Financial stocks have been very weak, are unattractive and are likely to get weaker.·If anything, investors should look for what can be sold, not always be looking for what to buy. “I don’t believe investors should be buying all the time.”·The problem with the economy is we have a “money printer,” Bernanke. His policy of printing money excessively inevitably leads to inflation and a lower dollar.·While not the only cause, Bernanke is partly responsible for soaring food and energy prices. By pushing the Fed’s fund rate from 5.25% to 2%, his monetary policy helped push oil from $75 to $140.·An increase in the quantity of money is happening when fixed commodities such as gold and oil can’t increase at the same pace. ·Oil has had its “big upside” increasing 12 fold since 1998 from $12 to $140 and while it could go another $20, the big upside is gone. ·The problem is that Bernanke keeps pushing the Fed funds rate toward zero.·What can people do? Faber sees no compelling values in cash (“it’s purchasing power is down because of the dollar”), commodities, real estate, equities. “Take a holiday.” ·Faber refuted Massar’s contention that Bernanke “inherited this situation from Greenspan.” He did not, Faber said. Bernanke was a Fed governor under Greenspan and was a major influence behind the Greenspan policies that under his charge continue to hurt the economy, including the lowering of interest rates beginning in January 2001 and keeping them down to June 2004.·Fed officials’ economic knowledge is “extremely limited.”·Fed officials are all “collectively responsible” for this damaging economic policy.While the video is still available, you might want to catch it today. It’s worth the listen.Audio/Video Reports http://www.bloomberg.com/news/av/

To all who sent emails my way last week on the alternative energy options, I thank you very much. I am in hopes of being free of oil\’s hold very soon (as far as my home is concerned – though my bicycle legs are in pretty good shape these days too).Written by Medic on 2008-06-08 09:26:39Medic – I am trying to catch up on these threads and will do so. If you have any good materials or advice (because we are relatively in the same climate) you can e-mail me at lrlcyn@gmail.com.Much thanks and I am glad that it seems as though you ave a solar solution. There is so mucvh crap out there on this. Not to mention backlogs in production…..Yankee

thanks hazleton for the confirmation on aussie bonds…swiss annuities also look safe to me…as do gold and silver held at perth mint…

Let adds some perspective.Since 2005, oil prices have increased by almost 130%,and the global economy still looks in reasonable good shape.The eurozone economic growth for instance has been surprising,given the circumtances.The USA economy is still battling to avoid a recession, due to sub prime housing crisis,however not yet because oil prices increases.The world oil dependence, is different today than it was in the seventies.It requires less oil to produce the same product.On the other side,the world economy is more productive,which means that there is some space to counterbalance oils prices increases.Therefore the question is:Is the global economy close to the inflextion point concerning oil prices increases?. If it is so,the expectation should be for lower oil prices into the near future, because of expected decreasing demand.If it is not,oil prices might be still higher without hurting the fundamentals of global economy.Sure there is speculation as well which count for more than a third of oil prices increases.What about unemployment in the USA economy?.It seems to me, that it represents the adjustment in the labor market,from the non tradable to the tradable sector.In fact, construction sector had the highest share in the unemployment increase.However,is the unemployment out of control,signalling a deeper than predicted a slow down (recession) in GDP ?.It seems that it is not the case yet, after all ,there is still a deep adjustment in the non tradable sector(housing construction).So ,the economy is crossing some turbulences,but still within the expected.-

SSEC Shanghai Composite 3,154.494 10:40PM ET down 175.176 (down 5.26%)HSI Hang Seng 23,611.82 10:57PM ET down 790.36 (down 3.24%)Also,Bernanke Says Risk of `Substantial Downturn\’ Receded By Craig Torres and Scott LanmanJune 9 (Bloomberg) — Federal Reserve Chairman Ben S. Bernanke said the economic outlook has improved from a month ago, and central bankers will combat any increase in inflation expectations. “The risk that the economy has entered a substantial downturn appears to have diminished over the past month or so,\’\’ Bernanke said today in remarks to a Boston Fed conference in Massachusetts. “The Federal Open Market Committee will strongly resist an erosion of longer-term inflation expectations.\’\’ http://www.bloomberg.com/apps/news?pid=20601087&sid=alX0XUOW65GI&refer=homeEither we or Ben is living in an alternate reality!

@Roubini: “Over 18 months ago this forum argued that three ugly bears – the worst housing recession in decades, a severe credit crunch and financial crisis, and sharply rising oil prices – will smash Goldilocks and lead to a severe recession. This economic contraction started on the weight of the first two bearish factors; but now with oil well above $130 the final thick nail on the coffin of the US economic expansion has been hammered. Sharply rising oil prices mostly swamped the effects of the recent tax rebate and while the rebate is temporary the effects of permanently higher oil prices – let alone further rising ones – are severe.”According to Kevin DePew on Minyanville today, here is how various companies are responding to the resultant severe effects of higher gasoline prices. I thought the response by the U.S. House of Representatives a little like treating a case of food poisoning with a wet cloth – these people just don’t get it. And Sun’s estimate of a $540 savings on 135 gallons of gas a year for people who work a home seems a little erroneous – that works out to be 2.6 gals a week. Do these people live on the roof? And Wilsker’s estimate of 26 million telecommuters is completely false, IMO. Personally, I am battening down the hatches. USA Today this morning reported on the rise of more flexible work weeks by companies ranging from IBM to Sun Microsystems as fuel prices increase workers\’ commuting costs. Sun estimates that its more than 18,000 employees who can choose to work at home or the nearest office avoid buying 135 gallons of gas a year, which at $4 a gallon would save $540 each, the newspaper reported.Chuck Wilsker of The Telework Coalition estimates that more than 26 million Americans now telecommute at least some days, which would be about 18% of people employed nationwide. \"It\’s affecting people\’s disposable income,\" Wilsker told the newspaper. \"And all of the sudden they\’re saying \’I\’ve got to do something about this!\"\’But telecommuting, long popular at tech companies such as Sun, is now beginning to gain traction in other areas of the economy, notably public employers. The U.S. House of Representatives approved legislation last week requiring the head of each federal agency to set policies allowing qualified workers to work from home or another convenient location.http://www.minyanville.com/articles/ibm-KO-wwy-JAVA-PEP-kr/index/a/17485

I suspect that the $540 savings is by reduced rather than eliminated travel…When do you think that the grocery clerks, restaurant workers, janitors etc. will be able to telecommute? And then there are the doctors… Just the upper crust gets to have some relief. Meanwhile I\’m sure that public transportation costs go up for the poor smucks who HAVE to show up someplace for work. Fortunately for me I live close to where I work; I ride a bicycle (and actually am lucky to receive \"commute trip reduction\" money to boot!).Mark

AfA on 2008-06-09 22:43:54“Not only Ben, Paulson and Bush all talking the same time about \’stronger\’ dollar. They are either preparing for a sooner-than-expected rate increase, or they are playing a dangerous and foolish hide & seek game with the markets.” The dollar made a historic low in March; why wasn’t Ben concerned about it then? Because, IMO, it’s not really the dollar he / they are worried about; it is the price of oil. All this talk of an improving economy and raising rates to fight inflation is pure bullocks. I have learned to expect lies from politicians, but I naively believed that the Fed chairman would be truthful or at least keep his mouth shut instead of lying. IMO, Ben knows there is about a snowball’s chance in Hades of a rate hike this year. They are just trying to talk up the dollar in the hopes that it will burst the oil bubble, IMO.But it could backfire. The prospect of higher interest rates will cause money to be pulled out of Treasuries, and in a rising interest rate and inflationary environment, that money is not likely to go into equities. So where will it go? Much of it could go into more commodity speculation; thus fueling the very bubble they are trying to pierce.

Negative feedback is taken out of the financial system: investment banks are encouraged to close their eyes for the risks and, human, all too human, they can\’t resist the call of the the potential huge profits for themselves by risking other people\’s money.\"Either Lehman Brothers, Goldman Sachs and Morgan Stanley will use the implicit government guarantee to underwrite their relentless pursuit of incredible sums of money for themselves — and thus create problems for the Fed and the financial system that will make the undoing of Bear Stearns seem trivial. Or some government agency will explicitly prevent them from taking those risks.\"http://www.bloomberg.com/apps/news?pid=20601039&sid=auTF3zYwY13Q&refer=home

\"…Mr Paulson also indicated that Washington has no current plan of action to deal with the rising price of oil.Like everything else I guess.\"@ Matthias on 2008-06-10 05:36:21Yes… indeed: SOooooo Sad, but Alas… er, true. The bottom is a long, long, long way off, yet… a long way off.Ho humPeterJB

@ London BankerFirst and foremost, I’m not a Bush supporter. There is no doubt in my mind that when it’s all totaled up, Bush will go down as one of our worst presidents. Candidly, I find what our government has done over the past 30 plus years, from a financial perspective, extremely sad. And this comes from both sides of the isles. That said, I think you do yourself a disservice when you make diacritical remarks like … ‘I\’m sure every war-mongering dictator would rather believe that than embrace the reality of being a mass murderer for the profit of oil companies and arms dealers.’ These seem like emotional remarks that are off the mark and I don’t know why you make them. However, your comments and astute observations about the financial world are well worth reading. And has it has been stated by many, we all look forward to reading them. Thanks for giving it some thought!

remember the Shanghai drop / shot heard around the world when the Shanghai tanked for the first time 3/07 (i think) sending the world markets down in dramatic fashion ? taking the DOW down what 500-600 points ? all the punters were dialed into the Shanghai after that. so now these casino operators following the Shanghai essentially imploding down 7 f ing % and 50 % from the high are going to show the US markets up. when too many people bet on up, we go down. when too many people bet on down, we go up. perhaps, the only reason we have not gone down / crashed in the US to reflect the harsh, dark reality of the near end of financial times is due to too many freaking hedgees and others being short this piece of shite… as Miss America has alluded to – the right people have to profit from the move and then it can happen. This shit is not tied in any way whatsoever in the short to intermediate to long term to fundamentals. It is tied to who has their chips on black and who has them on red…

of course, this is impossible but what if the PPT in the midst of this financial molotov cocktail volatility got caught long a crash ? what do we know, they have clear technical marching orders to buy futures at certain levels, the desk is probably staffed by 30 somethings who believe they are god as so far they have been god – they buy and the market day punters follow the lead plain and simple. what happens if a day comes where all do not fall in line and they have purchased substantial futures ? does the plunge protection team then become the plunge propulsion team unloading their longs for the first time ever into an already down market ? BTW – they are not god – they are mere mortals toying with catastrophe

With oil at these prices, and maybe going higher, you should be able to short equities to smithereens! But S&P will take all summer to get to 1150! Why? If the market was efficient it would go there now! Like you said: The right people are not yet set up for such a move. When they are the move will happen!

@Miss Americajust received a mail from Octavio, he should be in Venezuela now enjoying the sun.as always I enjoy your cryptic posts.

WHAT HOLDS THE MARKET UPIMO what keeps the market afloat against all reason is crap like this from Reuters (on CNBC website):\"Economists have trimmed forecasts for U.S. growth in the second half of this year and in 2009, but more have come to the view that the United States will dodge a recession, a survey released on Tuesday showed.\" With so many economists clearly missing the boat or deliberately lying at the urging of their employer and so few people able to excercise rational independent thought, is it really surprising that investors haven\’t really got the point yet? Hard as it may seem to believe, most people would rather depend on the words of so called experts (economists and stockbrokers)than believe what they see with their own eyes and feel in their own pocketbooks. Lambs to the slaughter.

READE \’EM AND WEEPToday\’s 30 year mortgage rate is 6.12%. 1 year arm is 6.07%. These rates should really help the housing market!!

WHAT GOES AROUND, COMES AROUND1. Housing crisis leads to slowing economy.2. In response to slowing economy Fed lowers rates.3. Lower rates weaken dollar and lead to inflation.4. Inflation leads to higher 10 year treasury yields and therefore higher 30 year mortgage rates.5. Higher 30 year mortgage rates worsens housing crisis.

When trying to figure out how financial markets can hold up relatively unscathed with the daily bloodbath of debt destruction and asset write-downs, we need to keep the in mind the insane game played by the foreign central banks (China and Saudi Arabia in particular). The FCB are underwriting an absolutely astounding amount of government debt that turns immediately into lifeline support for banks (via the alphabet soup FED facilities) and for the retailers (via the scam known as stimulus package).Those who follow Brad Setser know that the whole US current account deficit is now financed by FCB alone. In 2008 the PBoC has been lending to the US goverment more than it needs to balance the trade deficit. This means that China is selling stuff to us Europeans and the PBoC lends the proceeding to the US goverment at a sure financial loss.The money getting into the market is not coming \"from the sidelines\", it comes from Asia after a quick stop at the treasury department.I can\’t figure why Asia is participating to this scam (safe from blatant corruption of those in command), but as long as Asia provide the lifeline, the party can go on.

@ MA“The “aftershock” (bad pun) of the earthquake will flush out speculative gains, along with the need for MASSIVE debt/credit creation from China (at a time when EVERYTHING is at a peak price) The needs of this powerhouse market, will be too expensive in comparison what can be paid, or created through debt. A current forgiveness (T-maturity) will be exchanged for future forgiveness (C-new debt). This will lead to more evaporation of the of the supply side of USD, thus turning its value up.”I’m not sure I even understand you. But if I do, then I believe you’re wrong. China is a special case. China does not need to accumulate US$ in order to insure the value of their own currency or even to secure the capital to develop their own internal economy. It’s a mystery to me that they have poured so much into the export sector anyway. They don’t have to do it. And they don’t have to buy $ assets. They can, at any moment, use the cash flow off that export industry – or not: they can just print their own money – to finance any internal development. No external debt needed. But if they were to do that, and not to buy US assets, the consequences to the US$ would be 180 degrees out of phase to what you have suggested. And worse.

ABK Death WatchABK is now trading below $2 at about $1.90, down another 10% today.

@ Free TibetIn my opinion, if China were to just “print more money” they would only increase inflation that is already running +8%. China’s wants a stronger USD, so what they’ve purchased in UST’s will be paid back at a premium. What I speak of, is not “them accumulating more” USD. It’s what to do with the USD (and US debt) they already own. Their internal development will need immediate cash flow. MASSIVE!!!+5million homeless! Destroyed infrastructure! Etc…If the Gov’t banks fund this, they will run serious risks of needing to recapitalize. (to meet 17.5% reserve requirements) IMO – They will need, EXTERNAL debt financing, and strong USD repayment.Miss America

MAThey\’re printing more money right now just to sop up all that FX that comes in through the export sector and probably FDI (speculative money getting past the capital controls) too. If they were to not buy $ assets inflation might not change terribly.You\’ve got to be right that they are asking themselves about the debt they already own. But I\’m afraid they just might be willing to write that off and go on.I\’m not on the inside there. I don\’t know.

I\’m not a bond expert, but looks like bonds are on fire.http://www.bloomberg.com/markets/rates/index.html

@ KJ, GuestI think the selloff is because ABK will be removed from the S&P 500. So all investors and funds (hedge funds) tracking S&P have to sell the stock. From there, I believe that the road to delisting, as stated by Guest, is quite short.

@ Free Tibet (or “not so free” Tibet)“But I\’m afraid they just might be willing to write that off and go on.”By China “writing off the debt”, they are Evaporating USD! Thus, shrinking dollar supply, increasing value of the USD they own, strengthening the overall prospects for the dollar (and what the USGov’t owes), and then slowing the inflation that has taken place in commodities that are priced in dollars. That’s the whole: “EVAPOR-FLATION”With WORLDWIDE inflation, debt needs to decrease. Period! Wealth can then be re-created through new debt. (which China will then have a stake in creating) Debt creation is wealth at it’s greatest. The richest person you know, also has the largest debts!Miss America

@Miss America,It\’s hard to argue with someone with a track record as good as yours, but if China decides that enough is enough, the way they realize the financial losses on the US debt is to stop buying new debt (that would instantly kill the bond market) and actually sell US bonds for dollars and then exchange those dollars for whatever else they feel is a better store of value: euro, gold, houses, stocks or (god forbid) oil and rice futures. They will get huge financial losses, but the mighty US will be history.If (once?) China (or Saudi Arabia, for the matter) decides they are out of the dollar Ponzi scheme the game is over.Do you argue that China will restructure (aka forgive) part of the debt in order to avoid the collapse of the dollar? I mean with the US gov\’t still running a national deficit north of half a trillion dollars yearly?

BTW, folks, there\’s a new thread.SWK

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